MPI requests rate drop that will save Manitoba drivers around $130 a year

Manitoba Public Insurance wants to slash auto insurance rates next year by an average of 10.5 per cent — which would be the largest rate cut in three decades, according to the Crown corporation.

The vast majority of drivers will see their insurance bill reduced next year if the rate cut is approved. The decrease for the more than 800,000 private passenger vehicles in Manitoba would average 11 per cent, or about $130.

The Public Utilities Board will deliver the final decision on the proposed rate decrease.

"I actually think it's a great day for the corporation, but it's also a great day for Manitobans," MPI CEO Ben Graham said Wednesday morning at a media briefing at City Place.

A large part of the proposed rate cut is derived from excess capital, he said, since MPI has met its capital target — the minimum amount the company should hold in reserve to protect against market volatility. 

Graham also credited overall fiscal prudence and clamping down on fraud for contributing to the additional savings.

'Well-run public insurance company'

"MPI is really demonstrating the strength of a well-run public insurance company, where basic products are priced at a break-even rate," Graham said, adding that in setting its rates, the corporation is "aiming to make zero profit from all of these basic products."

Graham said the proposed rate decrease has nothing to do with the coronavirus pandemic. The corporation already returned $110 million to ratepayers in the form of rebate cheques earlier this spring. That followed a drop in claims because there were fewer vehicles on the road during the start of pandemic, as well as stronger than anticipated year-end numbers.

However, if the corporation generates additional pandemic-related savings after mid-May, Graham said he hopes MPI can amend its rate application to pass along those savings to drivers.

The proposed rate decrease follows a more modest 0.6 per cent decrease in auto premiums last year. MPI had not previously asked for a rate cut of any kind since 2012.

"At the same time we asked for that smaller decrease [last year], we were building up the capital reserves of the corporation to absorb those bumps in the road — we are there now, we are now at industry best practice."

He said layoffs played no role in MPI's rate application. No MPI employees have been let go during the pandemic. 

Public Utilities Board hearings typically begin in October, and if approved, the rates will come into effect next April. The PUB is an independent tribunal that considers the rates of Manitoba's public utilities. 

Motorcyclists are the only class of vehicle owners not scheduled to see any relief on their premiums. MPI is planning for a 1.8 per cent hike in motorcycle rates.

"It would have been great" to offer motorcyclists a rate cut, Graham said, but there hasn't been a reduction in the motorcycle claims being paid out — 90 per cent of which are for bodily injuries — and other vehicle classes with a better financial picture do not subsidize motorcycle owners.

No rate change has been requested for off-road vehicle owners.

The other proposed rate changes are:

• 4.8 per cent decrease for commercial vehicles.
• 6.1 per cent decrease for public transport.
• 11.4 per cent decrease for trailers.

MPI announced last month it would provide higher deductibles for Manitoba drivers as part of a suite of changes taking effect next April. As an example, the basic deductible will rise to $750, from the current $500.

Graham said MPI collected a 250 per cent increase last year in recoveries from fraudulent claims relating to bodily injuries. Overall, frauds involving personal injuries and physical damage totalled around $15 million last year.