Underwriting loss up 77% at Manitoba Public Insurance as ‘arduous’ winter leads to more auto collisions

Manitoba’s compulsory auto insurance carrier has reported an underwriting loss of nearly $220 million in the fiscal year ending Feb. 28, 2014, as the total claims cost increased 15% from the previous year.

Manitoba Public Insurance Corp. reported in its annual report that its net claims in 2013-14 were $861.1 million, up 15% from $746.5 million in 2012-13. Direct claims incurred (which includes the amounts ceded to reinsurers) were $866 million in the fiscal year ending Feb. 28, 2014.

“This past winter was an arduous one with severe weather that led to a large number of collision claims,” MPI chairperson Jake Janzen stated in MPI’s annual report. “The hard winter and ensuing jump in claims, combined with the global economic realities, has contributed to an extremely challenging environment in which cost restraint is imperative.”

MPI’s total claims cost was $1.009 billion in 2013-14, up 13% $889.2 million in 2012-13.

MPI is a crown corporation that runs both an auto and a discontinued general insurance division. The auto insurance division provides for basic universal compulsory automobile insurance, dubbed Autopac, which is compulsory in the province.

MPI also provides extension and special risk coverages. Rates for the basic coverage are approved by the Public Utilities Board of Manitoba. Basic coverage includes personal injury, third-party liability and  “all-perils collision,” which includes collision, upset, vandalism, hail and fire.

In 2013-14, MPI reported gross written premiums of $995.6 million, up 5% from $948.8 million in 2012-13.

The underwriting loss in 2013-14 was $219.97 million, up 77% from $124.27 million in 2013-14.

The net loss in 2013-14 was $44.8 million. In 2012-13, MPI lost $34.9 million while in 2011-12 it reported net income of $37.4 million.

Investment income in 2013-14 was $175 million, up 96% from $89.3 million in 2012-13. The 2013-14 investment income included a $114.2-million gain on sale of equities.

Claims expenses in 2013-14 were $132.6 million, up 4.6% from $126.8 million in 2012-13. Operating expenses were $115.8 million in 2013-14, down 7.2% from $124.8 million in 2012-13.  Total expenses (which includes commissions, premium taxes and regulatory/appeal) were $223.7 million in 2013-14, down 2.5% from $229.4 million in 2012-13.