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Manitoba Public Insurance’s position on loss transfer

On May 10-12, 2005, the Public Utilities Board (PUB) is holding hearings to allow groups to make public their views on a loss transfer system. The PUB is charged with ruling on Manitoba Public Insurance’s annual rate proposal.

What is loss transfer?
Loss transfer refers to the transfer, for rate-setting purposes, of all claims costs to the vehicle classification category of the at-fault driver’s vehicle. For example, if the driver of a passenger vehicle was found to be at-fault in a two-vehicle accident involving a tow truck, the full claims costs would be assigned to the passenger vehicle’s classification. The possible impact of assigning all claims costs to this class could be a future increase in Autopac premiums for owners of vehicles in this class.

Our view on loss transfer
Manitoba Public Insurance now assesses vehicle risk and assigns claims cost on a first party basis. This means that, when setting annual Autopac rates, Manitobans owning passenger cars are assigned risk and claims costs related to this vehicle class, with the same rationale applied to the owners of vehicles in other classes. Those classes with higher inherent risk, such as motorcycles, are assigned risk and claims costs that reflect their risk.

Benefits of the first-party system:

• All motorists and vehicles are treated similarly and equitably.
• It makes appropriate use of generally accepted means to assess the likelihood of claim cost frequency and severity.
• It ensures that motorists have a say in their Autopac rates by using their ability to choose to own vehicles assigned lower risk and claims costs.

We believe this system is fair and equitable for all vehicle owners, and it has been supported by the PUB in past years.

Increased safety is the best solution
There is no question that insurance rates for motorcycles and other higher risk vehicles have increased, reflecting their higher risk and claim costs. But implementing a loss transfer system isn’t the answer. In fact, if applied, motorcyclists would still be facing annual double-digit increases in insurance costs.

The best way to reduce risk and decrease claims costs associated with motorcycles and scooters is to focus on safe driving practices for all drivers. Manitoba Public Insurance works with the Safety Services Manitoba to deliver motorcycle safety courses. We also use TV and print advertising to promote motorcycle and scooter safety messages. We join the Coalition of Manitoba Motorcycle Groups and Safety Services Manitoba in sending an annual letter containing safety tips to Manitobans who have registered a motorcycle in the previous year.

For more information
A full explanation of Manitoba Public Insurance’s position on loss transfer is contained in the Loss Transfer Position Paper and Frequently Asked Questions on loss transfer.

Information on motorcycle risk can be found in Manitoba Public Insurance’s study.

Visit our Road Safety section for motorcycle and scooter safety information. For information on motorcycle safety courses, please visit the Safety Services Manitoba’s website.

Motorcycles and risk

Question: Are motorcycles more dangerous than passenger vehicles?
Answer: Unlike a passenger vehicle, a motorcycle doesn’t provide its riders or passengers with the protection of a tonne of steel. The cost of the average motorcycle claim ($14,000) is nearly six times higher than the cost of the average passenger vehicle claim ($2,500).

Question: As it relates to at-fault collisions, how do motorcycles compare to passenger vehicles?
Answer: Since 2001, in multi-vehicle accidents involving a motorcycle, the motorcycle was held ‘at fault’ 31 per cent of the time. Manitoba Public Insurance data indicates that 50 per cent of motorcycle-related crashes were single-vehicle collisions.

Question: Would it be more equitable to have a loss transfer system that would reflect the cost of at-fault accidents only?
Answer: In the past, the Public Utilities Board has considered such a system for motorcycles and rejected it. In December 2003, the PUB concluded that the current rate-setting approach is fair, reasonable, non-preferential and non-discriminatory.

Question: Are motorcycle rates lower elsewhere in Canada?
Answer: In most jurisdictions, motorcycle insurance is becoming more expensive, restrictive or difficult to obtain. When comparing cross-Canada rates, it’s important to understand that Manitobans are covered by the Personal Injury Protection Plan. Motorcyclists in other jurisdictions often receive little or no coverage after sustaining an injury.