Pallister government accused of interference for dictating size of Manitoba Public Insurance reserves

Premier Brian Pallister's government is being accused of meddling in the independent process of setting Manitoba's auto insurance rates, the Public Utilities Board heard on Tuesday.

The Consumers' Association of Canada's Manitoba branch made its case on the final day of a hearing regarding Manitoba Public Insurance's auto rates for 2020.

The association alleges that by hiking the minimum amount in a reserve fund that's supposed to cushion against unexpected rate shocks from increases in claims, the provincial government is interfering in the utility board's ability to set rates.

Decisions on the reserve account have traditionally been left to the PUB, but that changed this spring when Pallister's government decided the reserve should be maintained at approximately $350 million.

"That has been in the purview of the Public Utilities Board for many years because it has a direct and huge, sometimes, impact on rates," Gloria Desorcy, the Manitoba executive director of the consumer association, said after the hearing.

Legislatively, she said, the association believes the board has "full control over the determination of rates for Manitoba Public Insurance basic auto insurance."

Inflating the reserve account, the association argues, may mean the board feels compelled to hike rates to meet the new minimum reserve amount, and undermines the independent nature of the rate approval process.

Accusations of undermining

The group questions the legality of the government's actions, and is asking the Public Utilities Board to either rule the government's directive as "invalid," or to not enforce it when it considers rate applications every year.

When asked for comment, a spokesperson said only that the Manitoba government believes cabinet's decision is valid, and it would be inappropriate to discuss the matter while the PUB considers it.

During the hearing Tuesday, the attorney general's representative said the government sought to bring an end to a "perpetual and prolific debate over the magnitude of MPI's reserves" by changing the regulation.

"It is entirely appropriate that cabinet has therefore set the magnitude of MPI's reserves prospectively, in a way that suits its preferred risk tolerance," the attorney general's submission read. 

Manitoba Public Insurance declined to comment on the regulation change. 

This isn't the first time the Progressive Conservative government has faced accusations of interfering in MPI's dealings.

The province was accused of lobbying on behalf of insurance agents who were worried that MPI would shift some of its services online and cut brokers out of the process, the Winnipeg Free Press reported earlier this year.

More choices

The Insurance Brokers Association of Manitoba became an intervenor in the recent PUB hearing to argue it shouldn't be sidelined in the future of service delivery.

In its closing submission, the Consumers' Association of Canada did not say whether it believes insurance brokers should be involved in every transaction. But the association argued the current in-store, broker-involved model isn't suited to a changing technological world.

The CAC said it wants consumers to have a wide range of options, from stores to online services and enhanced phone options.

MPI has asked the utilities board for an average 0.6 per cent reduction in auto insurance premiums for 2020.

The board is expected to announce its decision later this year.