MPI income drops due to claims cost and investment slump

Manitoba’s public insurer is feeling the crunch, with poor investment returns and higher than expected claims costs leading to an almost 85% drop in income for the first three quarters of 2001.
For the nine months ending November 30, 2001, Manitoba Public Insurance (MPI) reports income dropped to $11.6 million, down from $67.1 million for the same period in 2000. Higher than normal summer claims were mainly to blame, MPI reports, including hail claims that forced the insurer to open up an emergency claims center to deal with almost 10,000 claims.
Overall, claims costs rose 17.7% for the period, to $411.4 millino, almost $62 million higher than in 2000. The number of claims rose 15.4%, to 182,307 for the period. MPI also saw investment income drop in line with the economic downturn.
“The number of claims reported during the summer was at an unusually high level,” says Barry Galenzoski, vice president of corporate finance and CFO for MPI. “But the volume has since slowed somewhat so that now we are closer to normal levels.” While last August’s hail claims cost $20 million, MPI’s catastrophe reinsurance should pick up much of the tab.
MPI had hoped to lower rates for drivers, but in light of the high claims costs, will have to increase rates for just under half its policyholders. That said, more than half of Manitoba’s drivers will pay the same or slightly less than in 2001.