October 21, 2021 by Jason Contant
Manitoba Public Insurance (MPI) has adjusted its general rate application and is requesting a 1.2% rate decrease along with a $335 million rebate to customers.
MPI recently applied to the Manitoba Public Utilities Board (PUB) for a provisional 2.8% rate decrease in Basic insurance premiums for the 2022/23 insurance year. The public auto insurer routinely adjusts its overall rate indication after the initial filing as it refines its forecast closer to the start of the general rate application hearing, which opened Oct. 12 this year.
Its updated rate application now requests a 1.2% general rate decrease, an update “based on continued strong financial performance,” MPI said in a press release. “This will include requesting a rate decrease for a third year in a row and updating its separate application for a third customer rebate in a little more than a year.”
Combining the requested 1.2% decrease with the surplus rebate, customers can expect an average decrease in their 2022/23 insurance year Autopac premiums of approximately 26.1%, MPI reported. The proposed rates would be effective April 1, 2022, but because renewal dates are staggered, some vehicle owners will not pay their new rates until March 31, 2023.
In the latest rate application update, the government auto insurer removed the capital release provision, which previously had translated into a 5% discount as part of the overall rate. To replace the removal of this discount and return surplus capital to customers, MPI separately applied to the PUB to return excess capital to ratepayers by way of a rebate.
MPI has formalized its rebate request to $335 million from the original forecasted amount of $202 million. If approved, this will be the second largest rebate in corporate history (in 2011, MPI rebated ratepayers $336 million).
Rebate cheques will be mailed out in the winter of 2022, MPI reported. The average cheque amount and total number of cheques will be announced in coming months. To date, customers have received a total of $179 million in COVID-19-driven rebates.
Surplus from the Basic Autopac is a direct result of fewer collision claims combined with “having the public auto insurance model which allows for the return of excess capital back to our customers,” said MPI president and CEO Eric Herbelin.
Late last month, MPI reported 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.
MPI’s rate application hearing before PUB is scheduled for three weeks and the insurer expects the board to announce its ruling in December.
Feature image by iStock.com/MangoStar_Studio