Manitoba Public Insurance in talks to raise rates

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Manitoba Public Insurance in talks to raise rates

The Crown utility says it wants to protect customers from future massive rate shock.

The Canadian Press on September 23, 2016

A rate increase of up to seven per cent for drivers will be on the table when Manitoba Public Insurance meets next month with the province’s Public Utilities Board.

The Crown utility says it wants to protect customers from future massive rate shock caused by years of lower-than-predicted interest rates.

The corporation announced in June that it will go to the PUB looking for a two-per-cent hike after what it calls an unprecedented year for non-collision claim payouts.

But an MPI submission to the board last month shows a second increase of anywhere from zero per cent to five per cent on top of the original request.

Both increases would take effect March 1 and must be approved by the board before they are implemented.

Since 2000, the highest rate increase was in 2004, when rates increased 3.7 per cent.

The second application is officially called an interest rate forecast risk factor.

“It’s to mitigate the risk of a significant increases in the future,” said MPI spokesman Brian Smiley. “We are using forecasts that are established by the major Canadian banks. The IRFRF will mitigate any shortcomings that are happening.”

Smiley said the corporation makes its forecasts for investment income using interest rate predictions by the banks, which consistently come up lower than predicted.

“It means we have a shortfall of revenue. So essentially, what we are asking for is that we want to have a discussion and mitigate future possible premium increases.”

Dan Guimond, MPI’s president and chief executive officer, also warned at a recent Crown corporations committee meeting that climate change has led to an increase in payouts for MPI.

“What we’re seeing is an increased frequency in hail and hail claims, which mean that from an insurance perspective, based on the deductible we have with the reinsurers, we pay for the hail.”

Guimond said the claims cost the corporation $52 million last year. In comparison, claims in 2014 only amounted to $13 million _ a difference of 4,000 to more than 13,000 in 2015.

Andrew Swan, who served as minister responsible for MPI under the NDP government, said he is disappointed Crown Services Minister Ron Schuler refused to question the board’s intentions to raise rates during the committee meeting.

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Manitoba Public Insurance in talks to raise rates