Manitoba Public Insurance requests 2.7% overall rate increase for 2018/19 insurance year

Manitoba Public Insurance (MPI) has announced that it has requested a 2.7% overall rate increase for the 2018/19 insurance year.

MPI requested the rate increase for the 2018/19 insurance year in its general rate application filed with the Public Utilities Board on Friday. If approved, the average passenger vehicle owner will pay about $29 more in premiums per year, or less than $3 per month, MPI said in a press release.

“The overall premium revenue requirement for the Basic insurance program in 2018/19 results from an ongoing focus on fiscal prudence and cost containment, which results in a direct financial benefit for Manitoba rate payers,” Dan Guimond, president and chief executive officer of Manitoba Public Insurance said in the release. “Without these efforts, the indicated rate requirement would have been significantly higher at 7.7 per cent.”

Guimond added that MPI recognizes that “our customers expect us to deliver comprehensive auto insurance coverage and service at rates that are predictable, stable and among the lowest in all of Canada. We believe this application continues to deliver on that mandate.”

This year’s rate application also addresses concerns over “significant undercapitalization” of the Basic Autopac insurance program by seeking to establish an adequately sized rate stabilization reserve that can be used to absorb variations in revenues, claims costs and ongoing volatility in the financial markets, which affects investment income and future claims liabilities.

Also under the proposal, the interest rate forecast for rate setting purposes would be updated as at the end of November 2017, with final approved rates established through a compliance filing to the general rate application in December 2017 to take effect for policies effective on March 1, 2018 or later. Doing so will provide a better basis for interest rate forecasting for the 2018 insurance year, the release said.

“Our goal is to continue working collaboratively with the Public Utilities Board to reach consensus on these important issues, which will ultimately help to ensure the Basic insurance program operates on a self-sustaining basis for the benefit of all Manitobans,” added Guimond.

If approved, a total of 637,440 vehicles (excluding trailers and off-road vehicles) will receive a premium increase, with 54.2% of these vehicles increasing by less than $50 per year, MPI reported. Approximately 35.5% of all vehicle owners will see no change or a decrease in premium over 2017/18 rates.

The average premium for the private passenger vehicle class will be $1,086.

While individual rates will continue to vary based on the type of vehicle being insured, vehicle use, rating territory, and driving history, the overall rate increases listed below have been requested by major vehicle class:

The proposed rates will be effective March 1, 2018, but because renewal dates are staggered, some vehicle owners won’t pay the new rates until Feb. 28, 2019.

MPI has also requested a 2.7% overall average increase to motorcycle rates. If approved, rates for 16.8% of the motorcycle class will decrease or remain the same, while the rates for 83.2% will increase. Of those increasing, 77.1% will be increased by less than $50.

If approved, the rates over the last five years for motorcycles will have decreased overall by 14.2%, Guimond said.

Changes are also proposed to driver licence premiums under the Driver Safety Rating program that will better align the premiums paid by high-risk drivers to the actual risk these drivers present to the insurance fund. The intent is to create stronger financial incentives for dangerous drivers to adjust their driving behaviour, which in turn will improve road safety and benefit all road users, MPI said. These changes are expected to increase driver premium revenue by $17.5 million.

If approved, the proposed driver premium increases will only impact drivers on the demerit side of the Driver Safety Rating scale and no demerit driver will face an increase in their 2018/19 driver premium compared to what they paid in 2017/18, if they qualify to move up on the scale because of an incident-free year of driving, the release said.

Last week, MPI released its 2016 annual report, indicating a net loss from operations of $85.2 million. The corporation’s overall claims costs increased by approximately $212.7 million compared to the previous year “due primarily to actuarial adjustments and continued underperformance of interest rates, which negatively affected claims reserves,” the insurer said. The increase in claims costs was partially offset by an increase of $61.8 million in revenues, an increase of $101.4 million in investment income and a reduction in corporate operating expenses.

Last year, Manitobans filed an average of 1,220 claims every working day, respresenting about $3 million in Autopac claims every working day.