Auto insurer seeks fourth consecutive rate decrease

Manitoba Public Insurance (MPI) is requesting a small average auto insurance rate decrease, its fourth consecutive annual rate-decrease request.

It filed a provisional 2023/24 general rate application with Manitoba’s Public Utilities Board last week, requesting an average rate decrease for consumers of 0.9%. MPI attributed its latest request primarily to “emerging claims trends and the continued strength of MPI’s rate-stabilization reserve.

“During this time of widespread volatility in financial markets as well as increasing inflation, we are pleased to be in a position to request a rate decrease for Manitobans as a result of the corporation’s ongoing prudent fiscal management,” MPI vice president and chief financial officer, Mark Giesbrecht, said in a press release.

MPI reported it’s seen “claims volumes increase substantially from the beginning of the COVID-19 pandemic as Manitobans returned to more predictable driving patterns through a very difficult winter season as well as continued inflationary pressures.”

This makes the reserve additionally important in 2022, the auto insurer said.

“Over the course of the last two years, the COVID-19 pandemic resulted in fewer claims, which meant MPI returned nearly $500 million to policyholders in rebates ─ $312 million in February 2022, $110 million in May 2020 and $69 million in December 2020,” said Giesbrecht. “However, as many Manitobans have returned to previous driving behaviours, so have our overall claims and subsequently our financial forecasting, as reflected in this year’s application.”

MPI is also proposing expansion of its driver safety rating (DSR) system in this year’s application to allow the “safest drivers to receive the greatest benefits, consistent with the five-year plan first brought forward in last year’s application.”

If approved, the top of the DSR scale will expand one level, possibly meaning a higher vehicle premium discount.

The latest rate application also requests removal of the capital release provision, which had previously translated into a 5% discount as part of the overall rate.

The capital release was a one-time discount based on the state of the capital reserve fund when rates were being determined. It appeared on customers’ annual statements of accounts and renewal notices and did not affect base premiums in future years, MPI explained. All of the corporation’s excess capital has now been returned to consumers through the latest round of rebates.

MPI also routinely adjusts its overall rate indication after the initial filing as it refines its forecast closer to the start of the Public Utilities Board hearings. The hearings will begin in October, and conclude later in the month.

The board normally issues its order in December. The proposed rates would be effective April 1, 2023, but because renewal dates are staggered, some vehicle owners won’t pay their new rates until March 31, 2024.

Feature image by iStock.com/mysticenergy