September 30, 2021 by Jason Contant
Manitoba Public Insurance (MPI) is reporting a 27% decrease in claims costs in the first quarter of 2021 compared to a year ago, primarily as a result of less vehicles on the road due to the COVID-19 pandemic.
Claims costs in Q1 2021 were lower than the same period last year by $89.4 million. This represents a 27.3% improvement, “primarily as a result of the impact of interest rates on unpaid claims and lower claims due to the impact COVID-19 has had on vehicle volumes on the road,” MPI said in a press release Sept. 24 announcing its latest financial results.
“The first quarter of 2021/22 saw a continuation of the favourable claims experience of 2020/21 with the frequency of collisions occurring at a rate approximately 20 per cent lower than generally expected,” said Mark Giesbrecht, MPI’s vice president and chief financial officer.
MPI reported a net income after surplus distribution of $115.5 million for the first three months of its fiscal year ending June 30, 2021, compared to nil for the same period last year. In the prior year, there was a surplus distribution of $110.1 million, which was intended as financial relief to policyholders during the pandemic.
Total earned revenues for the first three months of the year rose by $3.3 million from the same period in 2021. This increase was driven mainly by an increase in special risk extension (SRE) policies, which increased $6.3 million, offset by a decrease in motor vehicle and drivers’ premiums. SRE is commercial auto coverage, which can cover vehicles not eligible for third-party liability and all-perils coverage under MPI’s Basic Autopac plan.
MPI recently applied to the Manitoba Public Utilities Board for a provisional 2.8% rate decrease in Basic insurance premiums for the 2022/23 insurance year. Approximately 74.1% of vehicles will experience no change or a reduction in rates from the previous year, MPI reported.
“Due to the reduction of ongoing claims, the basic compulsory auto product continues to collect more revenue than is required which has led MPI to apply to the Public Utilities Board for a third customer rebate since the onset of the pandemic,” Giesbrecht explained. “MPI remains committed to delivering on its mandate to provide exceptional coverage and service at rates that are affordable, predictable and stable over the long-term.”
Feature image by iStock.com/NetaDegany