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MPI says PUB should butt out

Crown insurer believes law lets it keep some information secret

MPI president and CEO Dan Guimond

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MPI president and CEO Dan Guimond (SUBMITTED PHOTO)

Manitoba's Crown auto insurer has drawn a line in the sand over how much financial information it should reveal for an upcoming hearing into its request for rate increase.

The first shots in what could be a long legal battle have been fired in an exchange of paperwork between Manitoba Public Insurance and a number of lobby groups that claim they need more information from MPI to see if its 3.4 per cent rate request for 2015 is justified.

The first face-to-face skirmish takes place today at the Public Utilities Board at a hearing in which MPI is to argue the regulator does not have legislative jurisdiction to delve deep inside its operations.

MPI's president and CEO, Dan Guimond, wrote in a letter this week MPI's decision is based more on prudence than withholding information.

"Leadership is required to solve this matter," Guimond wrote. "I have taken the lead to focus the information requests and ultimately the hearing, to that of rates and rate-setting. I believe this is what Manitoba ratepayers expect of Manitoba Public Insurance and its regulator."

MPI argues oversight by the provincial government and the auditor general is enough. The PUB and various intervenors -- including the Manitoba branch of the Consumers' Association of Canada, the Automotive Recyclers of Manitoba and the Coalition of Manitoba Motorcycle Groups, -- need not stick their noses into MPI's business decisions that have no bearing in determining basic Autopac rates.

"Under my direction, we did not respond to 40 per cent of the questions posed as they had no bearing on the reasonableness of the rates and rate-setting methodology," he said, adding if the jurisdictional impasse isn't settled, the basic insurance side of MPI's business is at peril.

"The basic line of business, as a result of this jurisdictional issue, now has a serious capital deficiency and a deficiency in premiums," he wrote. "The current level of the rate-stabilization reserve places the basic line of business at significant financial risk."

Information requests from the PUB and intervenors go beyond a Manitoba Court of Appeal ruling three years ago in a dust-up between MPI and the PUB, he wrote.

MPI says the court ruled the PUB's mandate is to review only information that pertains to basic rates.

However, the Court of Appeal also said the PUB has the power to order the disclosure of specific information and documents from MPI, and MPI is obligated to respond. If the event of an impasse, both sides must go back to the Court of Appeal.

The PUB and intervenors posed about 1,000 questions in the first round of its 2015 general rate application, MPI said. Many of these included supplemental questions. In 2014, MPI prepared 2,624 pages of responses compared with 854 pages in 1989.

Because it is MPI's rate application, it foots the bill for the PUB hearing and the work done by intervenors. It says it spends more than $2 million in the hearing process, including PUB costs, preparations and costs relating to answering questions. MPI adds it spends about 2,300 hours answering these questions.

Guimond said he wants to sit down with the PUB to develop a more structured rate-approval process rather than continuing the "confrontational" manner that threatens to further erode MPI's financial stability and fails to protect ratepayers from unnecessary expenses.

Consumers' Association of Canada lawyer Byron Williams said MPI's position is surprising.

He said it's been long established that internal workings at MPI, such as the amount of donations and sponsorships and investment income, are fair game.

"The PUB has always said you can make your own management decisions, you can pay your employees what you wish, do your IT investments as you wish, but don't expect us to rubber-stamp those decisions and just pass them on to ratepayers," Williams said.

Under provincial law, Williams said, the PUB is entitled to look at all elements of insurance coverage that affects rates.

Conservative MLA Kelvin Goertzen said MPI's position further hobbles the Selinger government, which saw its financial outlook downgraded by Moody's Investment Service this week.

"The problem for the NDP generally is that people don't trust them when it comes to financial matters," Goertzen said.

MPI has said it needs an overall rate increase of 3.4 per cent next year after a higher number of car crashes. If it's approved by the PUB, about half of Manitobans who own a car, pickup truck or SUV would pay up to $20 more.

Guimond said MPI needs to replenish its rate-stabilization fund, which was depleted when the PUB ordered rebates. Its balance last February was $99.9 million. MPI says the fund should be $172 million.

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