Ontario auto insurers shouldn’t feel singled out that they are the only ones trying to meet rising claim costs, as Manitoba Public Insurance is under pressure to cut costs before raising rates.
Manitoba Public Insurance (MPI) is seeking a 3.4 per cent rate increase from the Public Utilities Board, citing poor driving conditions this past winter that led to a record number of claims.
“Last winter, we had a lot more claims in a very short period of time,” says Dan Guimond, president and CEO of MPI. “When people have accidents in bad winters, they tend to be more severe. It costs more money to fix them. You have two things going against you.”
According to MPI, the cost of claims increased by $114.6 million, while the number of claims jumped from 160,000 to 168,000. The average claim cost $3,000.
Ontario insurers were mandated to reduce premiums 15 per cent by 2015, with a stage one reduction of 8 per cent for this August. That province’s insurers and associations cited the need for anti-fraud legislation to be passed to allow the industry to begin making those cuts.
A crucial piece of legislation – Bill 171 – died in the legislature when the minority ruling Ontario Liberals called an election when the NDP indicated that it would not support the spring budget.
In contrast to neighbouring Ontario, the ruling Manitoba NDP government was hinting that a rate increase could be on the horizon even before the snow melted. Andrew Swan, minister responsible for public insurance, said in April that Manitoba had experienced one of its worst winters, so it wasn't surprising MPI received a large number of claims.
And in another direct contrast to Ontario, the opposition Tories argued that the public insurer should look at cutting costs internally before going to ratepayers. (continued.)
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The Public Utilities Board, which will ultimately decide whether to grant the increase, voiced similar concerns last year when it refused to grant a 1.8 per cent increase to MPI.
In a decision last December, the board stated that it continued to have “significant concerns about the corporation's operating expenses, and finds that it must control its expenses;” adding that “the board also has concerns with respect to the corporation's staffing levels.”
Guimond said the corporation is looking at how to reduce operating costs. But he added that MPI is also coming under pressure from a rocky global economy and higher inflation.
“Our operational costs have not increased,” says Guimond, adding that while the corporation is looking at how to reduce operating costs, MPI is under pressure from higher inflation and an uncertain global economy. “We can show that, overall, we're doing OK.”
Guimond points out that customers should understand that two bad winters in a row will have an effect on premium, and that despite half of the province’s drivers paying an extra $20 a year, it will still have Manitoba as one of the lowest rates in the country for auto insurance.
