Manitoba Public Insurance Proposes To Hold The Line On Rates

$49-million rebate would provide average policyholder $90 next spring

June, 2007 – In its general insurance rate application filed with the Public Utilities Board recently, the corporation is proposing no increase in premium revenue for the 2008/09 insurance year. It is also proposing a 7.5-per-cent rebate, which would be the fourth rebate it has provided in six years. The rebate for the average vehicle would be $90.

“We know that Manitobans expect and require rate stability because it helps them manage the family budget,” president and chief executive officer Marilyn McLaren said. “This rate application means that over a 10-year period, Manitobans will have had only one rate increase, with five rate decreases and four years of holding the line on auto insurance rates.

“During that same time, we will have provided our customers with four rebates worth $250 million.”

The corporation is also using the rate application to suggest changes to streamline the PUB process. Manitoba Public Insurance will continue to annually update its financial forecast and rate- making procedures with emerging claims and financial information. It is proposing rules to the PUB that will allow adjustments to be made without the need for hearings where there is no substantive rate change. All these rate-making rules and procedures have been used by Manitoba Public Insurance and approved by the PUB for the last 12 years.

“This year, we are spending $1 million on a process and application that asks for no increase to overall rates,” McLaren said. “We believe that we can suggest rules to save the costs of some hearings”

McLaren said the time is right to make these changes because the corporation’s forecasting process and rate-setting methodology have been tested for nearly two decades. She said every aspect of both processes has been carefully examined and stress-tested by the PUB and participating parties such as the Canadian Consumers Association.

“More than a decade of rate stability demonstrates that we have achieved the institutional security and rate stability that Manitobans value so much,” McLaren said. “Our model has matured to the point where greater efficiencies are possible.”

While the corporation is not applying for additional revenue in this rate application, some customers will pay more. As always, individual insurance premiums are calculated by examining the owner’s driving record, the kind of vehicle they drive, where they drive it, and what they use the vehicle for.

If the application is approved by the public regulator, 411,116 Manitobans will pay less for basic compulsory coverage next year, 69,167 will pay the same amount, and 401,223 vehicle owners will pay more. Most increases and decreases will be less than $50.

The proposed rates would be effective March 1, 2008, but because renewal dates are staggered, some vehicle owners wouldn’t pay the new rates until February 28, 2009.

The average family passenger vehicle premium will be $833 – the same as it was last year. Overall, the total premium paid by family passenger vehicle owners in 2008/09 will be reduced by $517,000.

In response to escalating injury claims costs, the corporation has requested a 9.2-per-cent overall increase to motorcycle rates, boosting the average premium to 1,018. In the last year, reported motorcycle injury claims increased by 29.4 per cent.

Stronger investment income, continued operational efficiency, and revenue increases from a larger and more modern provincial vehicle fleet will offset projected increased claims costs and contribute to the rate reduction, McLaren said. In 2006/07, 269,135 claims were reported in Manitoba at a cost of $628.4 million, and the value of the average claim decreased $101 to $2,335.

“As claims costs continue to build, we are reminded that every Manitoban can play a direct role in the insurance rates we all pay,” McLaren said. “Safety behind the wheel not only saves lives, it reduces insurance costs.”

The rate application confirms what Statistics Canada has already shown – Manitoba continues to lead the country in auto insurance rate stability. A study released by the federal statistics monitoring agency in February 2007 showed that since 1999, auto insurance rates for Canada as a whole have increased seven times faster than they have in Manitoba. Further, Manitoba’s decade of price stability has not come at the expense of coverage or service.