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MPI seeks rate hikes after long winter of automobile crashes

Presents its case to Public Utilities Board

Emergency crews walk amid the wreckage after a two-vehicle crash on Highway 10 near Tower Road this spring.

COLIN CORNEAU / BRANDON SUN Enlarge Image

Emergency crews walk amid the wreckage after a two-vehicle crash on Highway 10 near Tower Road this spring.

The coldest winter in more than 100 years was also one of the worst years ever for crashes in Manitoba.

Manitoba Public Insurance made it official Monday: The high number of fender-benders is behind its request for an overall rate increase of 3.4 per cent for next year.

It means about half of Manitobans who own a car, pickup truck or SUV -- but not a motorcycle -- will pay up to $20 more on their premiums.

Dan Guimond, president and CEO of Manitoba Public Insurance, said driving the proposed increase is the winter months saw net claims increase by $114.6 million compared with last year. Overall, a total of 168,000 collision claims were opened last year with MPI, compared with 160,000 the year before.

The average claim cost for 2013-14 was about $3,000, a 9.12 per cent increase over the previous year.

"I think people realize that we had a bad winter and that it's cost us an extra $114 million compared to the year before," Guimond said. "Cars are also getting more complicated to fix and they're getting more expensive to fix. The cost of repairing cars has increased about 35 per cent in the last decade. Our rates have only increased by about 14 per cent."

MPI's rate request was filed with the Public Utilities Board Monday and, if approved by the regulator, will see the average passenger vehicle premium cost $949. The PUB will rule on the proposed 2015 rates this December.

Of the proposed 3.4 per cent increase, MPI wants to direct 2.4 per cent to its basic Autopac insurance line. The remaining one per cent will be used to help replenish the Crown's rate-stabilization reserve fund, a rainy-day account used to help cover unexpected cost increases such as those from extreme weather events such as hail storms and tornados.

Typically, the PUB does not give what MPI wants carte blanche, and if past board orders are any indication, Autopac rates for the coming year won't increase by the full 3.4 per cent. Last year, MPI applied for a rate increase of 1.8 per cent when it appeared before the PUB, but the regulator ordered an increase of just 0.9 per cent, saying the auto insurer needed to do more to control its costs.

Autopac rates decreased four per cent in 2011 and eight per cent in 2012 and remained stable in 2013. In 2011, the PUB ordered an unprecedented 45 per cent rebate of about $320 million to vehicle owners.

In the past, the PUB has said MPI has been too conservative in socking away ratepayers' money and its stabilization fund had grown too flush. The PUB said it wanted MPI to cap the fund on a percentage of written premiums, which works out to $156.9 million. MPI wants it capped at $172 million.

"We've been working very hard with them this year on that, and we'll see what happens," Guimond said. "It will be their decision, but it's very positive right now. I'm sensing some desire to put this behind us."

In its application, MPI said motorcyclists would see a 6.1 rate decrease or $61 per vehicle. If approved by the PUB, the average motorcycle rate will decrease to $939 from $1,000. The decrease excludes mopeds and other small-engine displacement motor scooters that are becoming more common on city streets and seeing increased claims costs.

If approved, the increase will take effect March 1, 2015. However, because of staggered renewals, some Manitobans will not start paying these rates until they renew their policy.

MPI also filed its 2013 annual report with the legislature Monday. It said its overall fiscal performance was affected positively by the investment markets but negatively by increased net claims-incurred costs, resulting in a net operating loss of $44.8 million. Despite inflationary increases, claims and operating expenses were $3.2 million or 1.3 per cent less than last year.

Last year, Manitobans filed an average of 1,151 claims daily, and the corporation paid out $2.6 million every working day.

bruce.owen@freepress.mb.ca

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