MPI leadership not fooling anyone by forcing PUB’s hand

It is not a question you will hear raised at Public Utilities Board hearings into Autopac rates, but you can bet it’s the one on most people’s minds.

When will the NDP government step in and repair leadership at Manitoba Public Insurance? For the third year in a row, MPI has limped into PUB hearings like a badly damaged vehicle that should have been written off years ago.

This week, the Crown corporation’s chief actuary admitted the 2.38-per-cent increase requested for the 2027-28 fiscal year was too low, in part because of the impact of last summer’s multiple hailstorms and the premiums MPI pays for re-insurance that protects the public insurer from surges in claims costs.

Chief actuary Cara Low said the rate application was not updated because of “uncertainty.” That is sort of like a firefighter complaining about not being able to do the job because there was too much smoke and flame.

MPI is in the business of managing uncertainty and forecasting the future.

The last major hail event occurred in the last week of July; MPI, working with its brokers and re-insurers, should have been able to come up with a figure before the fall hearings on how much more it was going to cost to buy third-party coverage for weather events.

This was a troubling admission on its own. But it’s significantly more troubling because the previous two years have seen similar acts of sloppiness.

Two years ago, MPI had the audacity to ask the PUB for a two-per-cent basic Autopac rate hike even though its own actuarial data (the complex mathematical and statistical calculations to measure risk and forecast increases in premiums) showed the need for a bigger increase.

Last year, under the oversight of a provincial government committed to “affordability,” MPI tried valiantly to keep increases to basic Autopac rates down to just two per cent, but did that by increasing the deductible for basic coverage and premiums for extension coverage.

As of April of this year, MPI authorized a $250 increase in the basic Autopac deductible. This latest upcharge means the basic deductible has doubled from $500 to $1.000 in just five years.

That would be bad enough, but in one of the most cynical moves MPI has ever taken, it also started charging more for extension coverage to buy a lower deductible.

Interveners at the PUB howled in protest about these changes, largely because the PUB is not legally permitted to control things such as deductibles and extension coverage.

Which brings us to this year and the painful admission that on the opening days of the PUB hearings, MPI’s rate application was woefully out of date. Or, as Low was forced to admit, the application was “wrong.”

“We know it’s wrong. (But) 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,” she said.

This is a telling and worrisome admission. Although nobody can predict the future with 100 per cent accuracy, the business of insurance is about generating a picture of the future that is close to accurate.

However, a tentative approach to predicting the future is not the only thing that should worry drivers and the NDP government.

MPI appears to think its only option for managing increased costs is to take more from policy holders, either through PUB-reviewed basic policy premiums or opportunistic increases in deductibles and added coverage the PUB cannot control.

But there are other ways to control costs, such as finding the intestinal fortitude to take a long, hard look at overhead.

It would be wrong to suggest that current CEO Satvir Jatana has turned MPI into the bloated and inefficient entity it is today. Just as she cannot be totally faulted for the nine-figure losses associated with the failed Project Nova information-technology upgrade.

Those accomplishments fall squarely on the shoulders of her predecessor, Eric Herbelin, who was summarily fired in the spring of 2023 after running Nova off the tracks and going on an intensive hiring spree, adding hundreds of positions without any clear idea of what they were expected to do.

Since Herbelin’s departure, however, there has been little progress in reducing head count or finding other cost savings through the claims process, which has been hammered by repair-cost inflation.

At some point, Jatana has to show that she has the vision and commitment to bring MPI operations back to a sustainable level. That commitment seems to be lacking.

Instead, the corporation seems happy to lowball its rate applications in some sort of desperate ploy to let the PUB take the blame when rates increase more than MPI requested.

If that’s the case, it’s a pretty naive strategy. When Autopac customers open their annual rate notices, and see that it’s more expensive to insure their vehicles, they will focus the scorn on MPI, not the regulator that may have forced the corporation to do the right thing.

One year of incompetence could be an aberration. Two years could be bad luck.

But three years of sloppy, inaccurate and poorly argued rate applications is a problem that requires immediate government attention.

dan.lett@winnipegfreepress.com