MPI looks for overall rate increase of 2.7% for 2018/19

The public insurer also looks to make changes to its driver safety rating program

Manitoba Public Insurance (MPI) has requested a 2.7% overall rate increase for the 2018 and 2019 insurance year in its general rate application with the province’s Public Utilities Board.

If approved, the average passenger vehicle owner will pay about $29 more in premiums per year, or less than $3 per month.

“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,” says Dan Guimond, president and CEO of MPI, in a statement. “Without these efforts, the indicated rate requirement would have been significantly higher at 7.7%.”

From the archives: Premiums for 57 percent of Manitoba vehicles will decrease or stay the same

“We recognize 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,” he adds. “We believe this application continues to deliver on that mandate.”

Changes are also being proposed to driver’s licence premiums under the “driver safety rating” program that is meant to better align the premiums paid by high-risk drivers to the actual risk these drivers present to the insurance fund. The goal is to create a stronger financial incentive for dangerous drivers to adjust their driving behaviour and it is expected that MPI will see an increase of $17.5 million in driver premium revenue.

The public insurer’s rate application also looks to establish a rate-stabilization reserve that can be used to absorb variations in revenues, claims costs and ongoing volatility in the financial markets. This is in response to concerns over significant undercapitalization of MPI’s basic auto insurance program, referred to as Basic Autopac.

Related: Drug use found among 10% of tested Manitoban drivers: MPI

In addition, MPI is proposing that 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, according to the announcement.

MPI also recently released its 2016 annual report, which details a net loss of $85.2 million from operations. 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 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.

Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.