Storm costs left out of MPI rate request

WINNIPEG — Manitoba Public Insurance told the Public Utilities Board Tuesday it didn’t factor in reinsurance costs related to devastating summer storms in its application for an increase to vehicle insurance rates.

Cara Low, the Crown corporation’s chief actuary, told the board that given MPI anticipates an increase to reinsurance premiums, the 2.38 per cent increase listed in its application won’t be adequate to cover its costs.

“There’s going to be a significant increase. We still have to decide how much we want to retain, what we want the coverage to look like, and what the upper end needs to be,” she said on the opening day of a three-week hearing.

Nearly 41,000 claims have been submitted in relation to summer storms that swept across southern Manitoba from June to August. Floods, tornadoes and hail pummelled several communities and forced MPI to open satellite claims centres to deal with the record number of calls.

The board was told most claims filed relate to hail damage. MPI’s reinsurance premiums could double to $46 million next year owing to storm claims.

Reinsurance involves an insurance company transferring a portion of its risk to another insurer in exchange for a share of the premiums it collects.

MPI purchased an additional $200 million in reinsurance from July 2026 to April 2027.

MPI filed its application to raise basic insurance rates on June 24. It cited forecast claims costs, operating costs and investment income for the 2.38 per cent increase.

It noted “recent extreme weather events and the resulting increase in claims do not have an impact on the rate request for 2027-28,” but that rationale was tested during Tuesday’s hearing.

Todd Andres, a lawyer for the PUB, asked Low why MPI didn’t update its application when it was known reinsurance rates would rise significantly next year.

Low said the board looked at a number of factors and decided not to refile its application because of uncertainty.

“And so MPI is coming to the board with the knowledge that it needs more than 2.38 per cent, correct?” Andres asked.

Low responded: “Correct.”

MPI’s general rate application has been updated three times since the June filing.

The board estimates MPI requires an increase two percentage points higher.

“In the end, it’s all based on estimates. We know it’s wrong. We don’t know how wrong it is for any estimate because we’re forecasting into the future, and no one knows what’s going to happen in the future,” Low said.

In total, 29,614 vehicles were damaged by the summer storms and assessed by MPI. Seventy-two per cent were deemed repairable and 28 per cent needed to be written off.

In 2025, the board approved a 5.7 per cent rate increase for vehicle insurance — nearly double the rate sought by MPI — because it said the insurer’s three per cent increase request would result in prices rising later.

» Winnipeg Free Press