Canadian Underwriter

MPI requests no overall rate increase for 2016-2017 auto insurance year

June 15, 2015   by Canadian Underwriter

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The head of Manitoba Public Insurance (MPI) says the decision not to request an overall rate increase – the twelfth time in 15 years – for the 2016-2017 insurance demonstrates rate stability and the strength of the public auto insurance system.

There was a transfer of $75.5 million to the Basic rate stabilization reserve from non-Basic lines of business

With Manitoba’s Public Utilities Board’s (PUB) “approval of last year’s rate application (a 3.4% overall increase), we were able to apply to hold the line on rates this year,” says Dan Guimond, MPI’s president and CEO. “This rate application confirms the strength of the public auto insurance system.”

The approved increase, he explains, “helped to ease the deficiency in premiums that was being experienced by the Corporation. Normal levels of claims costs being forecasted and the Corporation’s ongoing efforts to control operating costs, has resulted in not requiring a rate increase for 2016-2017.”

With regard to the corporation’s financial strength, MPI reports that this has been further stabilized with the transfer of $75.5 million to the Basic rate stabilization reserve from non-Basic lines of business.

If PUB okays the MPI request, the public auto insurer reports that almost 400,000 passenger vehicles will see rates go down, notes a statement from MPI, which filed its general rate application Friday. In addition, 547,032 vehicles will receive reductions in their Basic premium, while 78,442 vehicles will remain the same.

Specifically, with regard to major use category, MPI notes that the applied for rate change for private passenger is -0.1%; 2.5% for commercial; 6.26% for public; -7.63% for motorcycles, including moped and motor scooters (95% of motorcycles will see decreases and 5% will see increases, while mopeds and scooters will see an average decrease to $310 annually from $322 annually); -3.82% for trailers 0% for off-road vehicles.

“Over the last five years, motorcycle rates have decreased overall by 28%,” Guimond reports. “The Corporation will continue to work with the Coalition of Manitoba Motorcycle Groups relating to both safety and rates,” he adds. [click image below to enlarge]

Since 2001, rate changes have been 0% seven times

The rates individuals pay for Basic Autopac will be determined by their driving record, the kind of vehicle (make, model and year) they drive, what the vehicle is used for and where they live, notes the MPI statement. “In any given year, an individual’s premium may be adjusted based on the actual claims experience associated with these rating factors.”

Although the proposed rates take effect Mar. 1, 2016, because renewal dates are staggered, some vehicle owners would not pay new rates until Feb. 28, 2017.

In its 2014 annual report for the fiscal year ended Feb. 28, 2015 – released last week – MPI reported net income from operations of $57.6 million (compared to a loss of $44.8 million) in and investment income of $226.1 million, a result buoyed by strong investment income, which was $226.1 million compared to $175.1 million, and a lower underwriting loss. Total claims costs were also down at 992.9 million compared with 1,009.3 million, the report shows.

In addition, the public auto insurer reports that it met or exceeded corporate-wide customer service standards 96% of the time.

“Our Corporation is committed to rate stability and predictability for our customers,” Guimond says. “The Corporation will continue to move forward in customer service and cost efficiencies,” he adds.

Since 2001, the rate changes have been 0% seven times; there have been three increases (3.4% in 2015, 0.9% in 2014 and 3.7% in 2004); and there have been six decreases (-8.0% in 2012, -4.0% in 2011, -1.0% in 2009, -2.6% in 2007, -1.0% in 2005 and -1.0% in 2003).

Manitoba has among the lowest car insurance rates in the country. [click image below to enlarge]

Manitoba has among the lowest car insurance rates in the country