MPI asks for rate hike, posts $85M in losses after taking a beating from hailstorms

The average driver could be forced to spend an extra $29 per year as Manitoba Public Insurance seeks a rate hike through the Public Utilities Board, arguing it needs to make up $85 million in losses it blames in part on climate change.

MPI wants to raise rates by 2.7 per cent next year, which would increase premiums by under $3 per month for most drivers insured in the province.

The hike comes at a time when the Manitoba government is focusing on "fiscal prudence and cost containment," MPI president Dan Guimond said in a statement released on Friday.

"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," Guimond said.

"We believe this application continues to deliver on that mandate."

While the increase would be less than what has been seen in previous years, one consumer advocate worries that paired with an anticipated Manitoba Hydro rate increase, it will be too much for ratepayers.

"This is bad news for Manitoba consumers, particularly in a year where Manitoba Hydro is seeking rate increases of almost 7.8 per cent. It's a double whammy," said Byron Williams, with the Consumers' Association of Canada's Manitoba branch.

"This is not an inflation-level rate increase, this is above the rate of inflation," he said.

"I guarantee you that the salaries of working Manitobans are not going up at nearly the levels of the rate increases being sought by these Crown corporations."

Excluding trailers and off-road vehicles, nearly 630,000 vehicles in Manitoba would be affected if rates go up, with about 54 per cent increasing by less than $50 annually, according to MPI.

Another 35 per cent of vehicle owners would see no change to rates.

If approved by the Public Utilities Board, the rate hike would take effect March 1, 2018.

The proposed increases still have to be approved by the PUB and ratepayers still have the chance to have their say.

"If they feel that combined, these rate increases are too much, they should be sending that strong message to the Public Utilities Board," said Williams.

Hail damage contributed to $85M shortfall: MPI

The increase request comes as the Crown corporation posts $85.2 million in net operating losses. In its annual report, MPI pointed to climate change as a contributing factor, with just over $45 million in hail damage claims last year.

"Weather patterns are changing and this means that past claims experience is no longer a strong predictor of future claims costs," said MPI spokesperson Brian Smiley.

"Hailstorms are more common throughout more of the summer season and winter weather in Manitoba is becoming more unpredictable with frequent freezes and thaws," he said.

The report says that prior to 1996, the insurer did not experience significant claims costs due to hail.

In the last two years, MPI saw over 25,642 claims for hail damage. That's about 5,000 more claims than the previous three years combined.

Smiley also said because today's cars are more complex in design and use computer technology, they are more expensive to fix.

He also cited volatility in the financial markets, which affects investment revenue.

The annual report points to a need for "an adequately sized rate-stabilization reserve." That would mean more money in the coffers to ride out any instability in the future from rising claims costs, MPI said.

Williams says the Public Utilities Board has consistently disagreed with MPI about the need for a bigger reserve, and he says the corporation needs to better manage the money it has, not ask for more.

"The more money that is in the pockets of Manitoba Public Insurance, the less money that is in the hands of Manitoba consumers," he said.

Bad drivers will pay more

MPI has also proposed changes to its driver safety rating program that it says would create "stronger financial incentives" for dangerous motorists to change their behavior.

Only drivers who sit on the demerit side of the scale will be affected, with drivers at the bottom of the scale paying up to $500 more.

Currently, a driver who sits at the bottom of the scale pays $2,500 for their driver's licence renewal. Under the proposed increase, that driver would pay $3,000.

Since it came in about a decade ago, this is first time MPI has asked for a change to the safety rating program that would see drivers paying more money 

The change would increase revenue from premiums by $17.5 million.