On the heels of Project Nova disaster, MPI rate application raises eyebrows

Winnipeg Free Press

17 hours ago

Opinion
Is it tough love for bad drivers, or another back-door tax to help pay for Manitoba Public Insurance Corporation's catastrophic, nine-figure technology boondoggle known to the outside world as Project Nova?
It's a question that will be difficult to answer for drivers and other informed observers even after studying MPI's latest rate application to the Public Utilities Board, which was made public this week.
On the surface, it all seems so reasonable: a 2.07 per cent hike to basic insurance which, if approved, would kick in April 1, 2026, and add roughly $21 a year to the average private vehicle Autopac policy.
But dig below the surface and another story appears.
Tucked into the fine print of the rate application is a plan to bump the deductible for the basic Autopac coverage to $1,000 from the current level of $750.
Autopac customers still have the option to pay a higher premium to get deductibles as low as $200 per claim. However, those drivers who can only afford basic level coverage are going to get hammered by what is in effect a 33 per cent hike on their share of the overall claims cost.
That is, in this economy, unreasonable and unacceptable.
MPI said the higher deductible was needed to mitigate rising claims costs, stabilize rates and compensate for recent inflation. Without the deductible increase, MPI said it would have had to ask for a five per cent general rate hike.
However, this is also about MPI trying to recover some of the wasted money it poured into Project Nova, its ill-fated technology overhaul. After more than three years and a nearly $200-million investment, MPI was forced to abandon the project earlier this year without having achieved any of its major goals.
Despite the obvious impact of Nova, it is quite telling that in an 18-page rate application backgrounder, the doomed project was not mentioned once. That is something MPI chief executive officer Satvir Jatana and her board of directors might want to explain.
Nova continues to represent one of the most significant sources of pressure on Autopac rates and leaving it out cannot be some sort of inadvertent omission.
The same goes for concerns about MPI's operating costs. Intervenors at the PUB have for many years demanded MPI trim its administrative overhead, which went up precipitously during the tenure of former CEO Eric Herbelin, who was fired in May 2023 after an internal performance review.
Instead of owning up to its own mismanagement, MPI has decided to use inflation as the crutch for the deductible decision.
Inflation has absolutely and dramatically increased the cost of both purchasing, replacing and repairing vehicles. However, inflation is an issue that is largely disappearing into the crown insurer's rear-view mirror.
To quantify the impact of inflation, MPI offered calculations based on a five-year average for the increase in vehicle values and repair costs. However, the 2026 rate application seems to be entirely reliant on economic data that is already more than a year old.
Inflation started going down in mid-2024 and currently sits at roughly 1.7 per cent, which is well below the peaks during the worst years of the COVID-19 crisis and more in line with pre-pandemic levels. Given this is a rate application taking effect in 2026, it's time to stop leaning on the inflation rates that hit hard in 2021 through to the early months of 2024.
It is fair to say that the entire insurance industry has been ravaged by inflation. It's also probably fair to say that insurance companies are likely still trying to recoup some losses from the most volatile years.
However, MPI's narrative for this rate application is so carefully crafted, it comes dangerously close to misleading.
This is the second year in a row MPI has submitted a rate application that is problematic. Last year, MPI tried to get by with a two per cent rate hike despite the fact that its own actuarial calculations showed it needed a five per cent bump. The PUB ordered them to increase rates and chastised MPI for failing to reconcile the rate ask with its own calculations.
This year, the rate application is nothing less than a disingenuous attempt to cover up their own incompetence by taking more money out of the pockets of basic policy owners who have the temerity to file a claim.
The NDP government has essentially sat by idly and allowed MPI management to colour outside the lines in ways that don't necessarily serve the public in two consecutive rate applications.
In this most recent application, MPI is increasing costs to basic Autopac customers who are already less able to absorb hundreds of dollars in increased deductible fees.
Premier Wab Kinew made affordability a key policy of his first year-and-a-half in office. It will be interesting to see if he and his cabinet flag the deductible issue as an unwarranted punishment to basic level Autopac drivers.
Not every issue at a crown corporation needs to become a political liability for the government of the day. But this one very well could be if it is ignored any further.
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Dan LettColumnist
Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986. Read more about Dan.
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