Manitoba Public Insurance announced it has requested a 2.2 per cent overall rate increase for the 2019/20 insurance year in its general rate application (GRA) filed with the Public Utilities Board. If approved, the average passenger vehicle owner will pay about $27 more in premiums per year as a result of the requested increase, or $2.25 per month.
“The overall rate increase is required to maintain the Corporation’s Rate Stabilization Reserve which is used to absorb adverse financial results,” Ben Graham, president and chief executive officer of Manitoba Public Insurance said today.
“We fully recognize that our customers expect us to deliver comprehensive auto insurance coverage and service at rates that are affordable, predictable and stable over time. We believe this rate application continues to deliver on that mandate.”
Operationally, the Corporation continues to experience higher physical damage costs directly related to newer-model vehicles. Over the past five years, collision claim costs have been growing about five per cent annually, compared to the prior long term average of about two to three per cent annually.
“Newer vehicles have a wide-range of complex materials and driver assist technology features which are costly to repair or replace after a collision,” said Graham. “Understandably, newer vehicles of today are more expensive to repair than vehicles a decade ago.”
Manitoba’s weather can also have a major influence on the Corporation’s financial results. Fortunately, last year there was a significant reduction in vehicle hail claims – 2,100 claims filed in 2017, compared to 11,000 and 13,000 in 2016 and 2015, respectively.
The Corporation also continues its focus on fiscal prudence and cost containment, having lowered its expense forecast by $6 million, which builds on the forecasted staff and expense reductions identified in last year’s GRA.
“The combination of corporate cost containment, combined with a reduction of weather-related comprehensive claims both contributed to this modest rate increase,” said Graham.
Maintaining Adequate Capital
All insurance companies hold funds to pay claims, as well as to maintain a buffer of capital to endure unexpected adverse circumstances. Manitoba Public Insurance’s ‘buffer’ is known as the Rate Stabilization Reserve and to remain effective it must grow with the business. For the 2019/20 insurance year, the Corporation is proposing a Capital Maintenance Provision which accounts for 2.1 per cent of the overall 2.2 per cent increase.
“This will ensure the financial strength of public auto insurance is maintained, and that the Rate Stabilization Reserve can continue to protect motorists against rate increases due to unexpected variations and adverse circumstances,” said Graham.
Finalizing Vehicles For Hire Rates
The 2019 GRA will also seek final approval of the Vehicle for Hire (VFH) rates approved on an interim basis by the PUB in January 2018. VFH rates are available to private passenger vehicle and light truck owners interested in offering ride-share services in accordance to municipal by-laws starting March 1, 2018. VFH rates also apply to existing types of vehicles for hire such as taxicabs, limousines and accessible vehicles.
If approved by the Public Utilities Board, a total of 547,166 vehicles (excluding trailers and off-road vehicles) will receive a premium increase in 2019/20, with 39.5 per cent of these vehicles increasing by less than $50 per year. Approximately 37.7 per cent of all vehicle owners (excluding trailers and off-road vehicles) will see no change or a decrease in premium over 2018/19 rates.
Proposed rates will be effective March 1, 2019 but because renewal dates are staggered, some vehicle owners won’t pay the new rates until February 28, 2020.
While individual rates will continue to vary based on the type of vehicle being insured, vehicle use, rating territory, and driving history, the following overall rate increases have been requested by major vehicle class.
Applied for Rate Changes
- Private passenger: 2.4%
- Commercial: 2.4%
- Public: 0.6%
- Motorcycles: 3.1%
- Trailers: -4.7%
- Off-road Vehicles: -20.0%
- Overall (applied for): 2.2%
Annual Report
Manitoba Public Insurance also released its 2017/18 annual report this week. The Corporation reported a net income from operations of $91.1 million. The Corporation’s overall claims costs decreased by approximately $72.5 million compared to the previous year due primarily to the fact that a significant actuarial adjustment was made in 2016/17. Fewer hail claims also contributed to the decrease in claims costs, although offset by increases in collision and property damage claims over the same period.
The increase in net income was also due to an increase of $65.3 million in revenues, and an increase of $38.2 million in investment income.
Last year, Manitobans filed an average of 1,203 claims every working day. This represents about $3.1 million in Autopac claims every working day.
