The CEO of the Insurance Brokers Association of Manitoba (IBAM) has labelled recent departures from Crown corporation Manitoba Public Insurance (MPI) “bitter-sweet” and has stressed that Autopac agents and brokers want to see the organization moving towards online service amid criticism over IT update costs that has seen broker commissions thrust into the spotlight.
“In some ways, situations like this are bitter-sweet and we wish everyone the best of luck,” IBAM CEO Grant Wainikka told Insurance Business. “Looking forward though, we are pleased to see new appointees including Ward Keith as chairperson and Marnie Kacher as acting CEO.”
Kacher was named MPI interim CEO in May, with former chief Eric Herbelin exiting the corporation after just over two years in post. Also in May, Keith was named chair, replacing four-year incumbent Dr Michael Sullivan.
“Both are experienced and understand MPI’s service offering and also have an understanding of MPI’s unique position in the Manitoba economy,” Wainikka said of the recent appointees. “Importantly for IBAM and our membership, I think both executives have an understanding of the critical role brokerages play in providing cost effective service to Manitobans across the province.”
Changes came with MPI under fire from politicians, provincial legislators and its regulator, the Public Utilities Board (PUB), which has oversight of designated monopolies and public utilities in Manitoba. Rising staffing levels, spending and a costly IT update have featured in allegations. Leaked emails, purportedly from MPI staff and reported on by CBC, regarding $12 million consulting costs concerns have added to controversy.
In April, the Manitoba government ordered an external review of MPI, with Justice Minister Kelvin Goertzen having cited a need to hold it accountable on “service, expenditures and operations”.
PUB has raised concerns over the spiralling projected cost of MPI’s Project Nova IT update, part of the public insurer’s five-year ambition plan, which has swelled from an initial $106 million to almost $290 million as of 2023. Initially the project forecast to provide net present value (NPV) – or longer-term benefit – of $18.4 million. As of January this year, based on additional costs and lower savings benefits, this had about turned to a negative $188.9 million, according to PUB.
The Nova project has also been accused of facing delays, though MPI has reiterated that it is now running on track. Initially slated to last 40 months, the project timeline was later updated to 60 months following a mid-2021 reconsideration.
Project Nova is intended to make it easier for Manitobans to buy their auto insurance online, as well as replace clunkier legacy systems. But with costs spiralling, broker commissions have at times come under scrutiny and been tipped by some commentators as one way to cut down on excess.
“Unless MPI further reduces overall broker commissions and finds other cost savings within, MPI will take a large loss from Project Nova,” former MPI acting president and retired PUB chairman Graham Lane said in an April comment piece published by think tank Frontier Centre.
IBAM and MPI have inked a broker of record deal on commissions effective from April 2021 with terms running into 2026.
As per the agreement, policyholders who buy their cover online will pay lower commission levels than those who purchase their auto insurance face-to-face. Both online users and in-person buyers will be required to select an agent under current plans.
In February of last year, after IBAM stepped in with concerns, PUB clarified that while agents may not be involved in certain online applications this would not necessarily be the case in all instances.
Brokers have set out that their advice and availability is needed to prevent underinsurance issues, and that MPI previously confirmed that it does not carry errors and omissions insurance.
Access to an agent or broker is a critical part of the process for insureds, according to IBAM’s CEO.
The current Broker of Record model agreed between IBAM and MPI means that “Manitobans will continue to have access to an independent and licensed broker irrespective of how they purchase their insurance,” Wainikka said.
Commissions may be lower for online service, but Wainikka stressed it was paramount that MPI continued working towards this to ensure customer choice - and this is something brokers back.
“Insurance brokerages in Manitoba have been working with clients in an online environment in other forms of insurance for many years,” Wainikka said. “So servicing Manitoba’s auto-insurance clients in this fashion gives brokerages the ability to provide Manitobans the protection and choice they deserve for all of their insurance needs, where and when they want it.”
IBAM and MPI “continue to work together for the betterment of our customers”, Wainikka said.
An MPI spokesperson hailed the “important role” that brokers play in Manitoba’s insurance system.
“Together, we help provide customers with access to affordable products and services that meet their needs – and have been doing so for decades,” the spokesperson said.
The spokesperson said that Project Nova continues “on schedule and within budget”, with brokers having moved from a paper-based system to a digital platform in February as part of the first release.
The second release, targeting International Registration Plan customers, is expected to roll out “in the coming months”, according to the MPI spokesperson.
“The third and fourth releases will follow in 2024 and 2025 respectively,” the spokesperson said. “These latter releases will mark the beginning of visible change for Manitobans, with replacement of front-end systems used by brokers and MPI staff to issue products and services to customers, as well as the introduction of some online services.”
Do you have any thoughts about this story? Share them in the comments below.
