Manitoba government was meddling when it dictated size of auto insurer’s reserves, PUB rules

By | December 3, 2019

The Manitoba government had no right to interfere in the process of setting auto insurance rates without passing a new law, the Public Utilities Board has ruled.

Premier Brian Pallister’s government did not have the authority to pass a regulation earlier this year to increase the size of the reserve fund for Manitoba Public Insurance, the independent board said.

The government wanted to inflate the reserve fund to cushion against unexpected rate shocks in the future, but during the PUB hearing, a consumers advocacy group argued that move undermined the independent nature of the rate approval process.

The board may feel compelled to hike rates to meet the new reserve target, said representatives of the Consumers’ Association of Canada’s Manitoba branch.

On Tuesday, the PUB ruled in its decision the government’s regulation “circumscribed the rate-setting jurisdiction of the board,” which can only happen through law, and thus the regulation is “invalid.” 

Decisions on the reserve account traditionally have been left to the PUB, but this spring the Progressive Conservative government decided the reserve should be maintained at approximately $350 million, which would nearly double its size.

0.6% auto insurance drop

The Public Utilities Board also approved MPI’s proposed 0.6 per cent overall cut in auto insurance premiums next year.

The public insurer had estimated the rate decrease for private passenger vehicles — there are more than 800,000 in Manitoba — would be an average of 0.9 per cent, or $10.

Some customers would face higher premiums. Motorcycle rates would increase an average of 5.1 per cent per year, MPI’s proposal said.

A significant portion of the PUB hearing this fall was devoted to the future of auto insurance delivery and whether insurance brokers would be sidelined if more services were offered online.

In its decision, the board said it did not have the authority to direct MPI’s interactions with service providers. 

“Accordingly, the board is not in a position to issue directives to MPI as to how to offer online services to the public,” the ruling said. 

The Progressive Conservative government has previously faced accusations of interfering in MPI’s dealings.

The province was accused of lobbying on behalf of insurance agents who were worried that MPI would shift some of its services online and cut brokers out of the process, the Winnipeg Free Press reported earlier this year.