MPI vows to cut auto insurance rates, argues shift to online sales is a must

Manitoba Public Insurance is asking to cut auto insurance rates next year, as it considers all options to save customers' money — including a shift online that has drawn the ire of the province's insurance brokers. 

The Crown corporation began making its case Monday, in front of the Public Utilities Board, for an average 0.6 per cent reduction in auto insurance premiums.

Most drivers would face a reduced insurance bill next year, if MPI's proposal is accepted. 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.

On the other hand, motorcycle premiums would increase an average of 5.1 per cent.

It is the first overall rate reduction MPI has sought in eight years. 

"We are one of the few auto insurers in Canada to be asking for a rate decrease," MPI spokesperson Brian Smiley said.

Feud with brokers hangs over

"From a Manitoba perspective, this is very good news."

The new rates would take effect on March 1, 2020, if it is endorsed by the PUB.

In addition to the usual debate over the proposed rate change, this year's hearing is coloured by a months-long feud between insurance brokers and the public insurer over the future of service delivery.

Manitoba Public Insurance wants to move more of its services online, and the corporation is questioning if insurance brokers should still be involved in every transaction. The brokers say their critical role shouldn't be sidelined.

No decision has been made, however, as the province has mandated a negotiated end to their dispute. The conciliation process will start shortly.

"The old way of doing business is simply not working," Steve Scarfone, MPI's lead counsel, said in his opening statement.

"With transparency comes the expectation of providing Manitobans with value for their money," he added. "If compensation paid to service providers is too high, or not fair to the customer, then the compensation model is broken and must be fixed."

The lawyer representing the Insurance Brokers of Manitoba said the agency finds it curious they are suddenly being targeted by MPI. 

"They've pointed their guns at a broker channel that has been in place for 48 years," Curtis Unfried said.

He argued the public believes that brokers don't want online service, but he says that isn't true. IBAM embraces online transactions, but maintains brokers should be involved in a complicated insurance process where advice is needed.

"It is unfortunate that this impression has been given to consumers, who have viewed brokers as the only obstacle to achieving this outcome," Unfried said.

In his opening remarks, MPI president and CEO Ben Graham acknowledged the corporation has been slow to adopt to customer interests in online sales.

As of now, Manitobans must visit a broker for even the simplest of auto insurance transactions, like changing an address on a driver's license. MPI wants to shift some of these services online to appease customers and save cash, since it feels insurance brokers aren't necessary in every instance.

'I should be given that choice'

"We are not replacing existing distribution channels, we are augmenting them," Graham said.

"MPI has no plans to build any more service centres, any more bricks and mortar [stores]," he explains. "We will not be spending taxpayers' money in that way."

Graham argued Manitoba Public Insurance has no choice but to give consumers the option to renew their insurance online, though it was unclear from his statement whether insurance brokers would have a say.

"If I want to walk into a broker's office at 12 o'clock and buy my insurance, or if I wanted to renew online at 9 p.m. because I forgot, because I was busy, I should be given that choice," he said.

"It would be remiss of us to not provide customers with an option of at least how they transact with MPI."

He said the current in-store, broker-involved model has produced "extremely low" insurance rates for customers, but MPI shouldn't rest on its laurels.

"We can't rely on the fact that we have low rates to not pull the covers back," Graham said.

The Public Utilities Board hearing is expected to last the next three and a half weeks.