Coming off an unprecedented year for comprehensive (non-collision) claims payouts, Manitoba Public Insurance has asked the Public Utilities Board for a two per cent increase to Basic Autopac rates. If approved, the increase will result in the average passenger vehicle owner paying about $17 more in premium.
“The Corporation experienced an unprecedented 68 per cent increase in comprehensive claims costs,” Dan Guimond, president and chief executive officer of Manitoba Public Insurance said today.
“Hail claims were the big driver in this increase, coming in $50 million over our projected forecast. Last year’s payout for comprehensive was $125 million, compared to the previous five-year average of $74 million.”
There were approximately 13,000 hail claims opened last year, compared to about 4,000 in 2014. As with other insurers, a number of other financial factors had a negative influence on the Corporation’s overall financial performance in its 2015 fiscal year. Forecasted return for Canadian and U.S. equities was $14 million, or 17.1 per cent, below previous forecasted amounts. Investment income for Basic Autopac was $6 million below previous forecasted amounts.
The Corporation’s financial strength was somewhat stabilized with the transfer of $72.7 million to the Basic rate stabilization reserve from non-Basic lines of business. Ongoing efforts to control costs and reducing operating expenses have also mitigated the effect of rising claims costs and lower investment income.
“Higher claims costs and a negative financial climate resulted in the Corporation seeking a small overall rate increase for next year,” said Guimond. “Manitoba Public Insurance collects premiums to reflect projected claim costs, and we are addressing the business reality that claims costs are continuing to rise.”
If approved, a total of 674,894 vehicles (excluding trailers and off-road vehicles) will receive a premium increase ─ 83 per cent of these vehicles (558,561 vehicles) will increase by $40 or less.
The average premium for the private passenger vehicle class will be $1,018.
|
Major Use |
Applied for Rate Changes |
|
Private passenger |
1.7% |
|
Commercial |
5.4% |
|
Public |
3.7% |
|
Motorcycles |
-1.7% |
|
Trailers |
11.1% |
|
Off-road Vehicles |
0.0% |
|
Overall (applied for) |
2.0% |
If approved, this will be only the third overall rate increase in the last ten years. The proposed rates will be effective March 1, 2017 but because renewal dates are staggered, some vehicle owners won’t pay the new rates until February 28, 2018.
Motorcycle Rates Decreasing
The Corporation has requested a 1.7 per cent overall average decrease to motorcycle rates. If approved, the rates for 77 per cent of motorcycles will decrease or remain the same, while the rates for 23 per cent will increase. In total, 11,699 motorcycle owners will receive a decrease in their premiums. The majority of those owners are registered in Winnipeg and central and western Manitoba.
Mopeds and small-engine displacement motor scooters (2,553units) rates will increase an average of $9 to $313 per year, up from $304.
“Over the last five years, motorcycle rates have decreased overall by 19.8 per cent,” said Guimond. “The Corporation works very closely with the Coalition of Manitoba Motorcycle Groups on topics relating to both safety and rates, and this collaboration is making a positive difference for all motorcyclists in our province.”
Interest Rate Forecast Risk Factor
In addition to an overall 2% increase in Basic Autopac rates for 2017, the Corporation has requested that the Public Utilities Board consider introducing an Interest Rate Forecast Risk Factor, effective March 1, 2017, the form and magnitude of which would be developed through a collaborative process with the Board and intervenors. The purpose of the Risk Factor would be to mitigate the risk of a significant premium increase in the future, due to year-over-year underperformance of interest rates against the forecasts established by the major Canadian banks, and which has an ongoing affect on the Corporation’s ability to achieve investment income forecasts.
Annual Report
Manitoba Public Insurance also released its 2015 annual report this week. The Corporation reported a net loss from operations of $31.3 million. A $4.7 million investment income loss reflected the current market conditions around equities and bonds.
Last year, Manitobans filed an average of 1,102 claims every working day. This represents about $2.7 million in claims every working day.