For the first time in five years, Manitoba Public Insurance has asked the Public Utilities Board for an increase to Basic Autopac rates that will increase premium revenue by 2.5 per cent.

If approved, the increase will add about $21 to the price of the average family passenger vehicle when the new rates take effect on March 1, 2004. Because of staggered renewal dates, some vehicle owners will not pay the new rates until February 2005.

“Insurance companies throughout Canada have been hit hard by escalating claims costs and most have responded with double-digit rate increases,” said President and Chief Executive Officer Jack Zacharias. “In Manitoba we’ve had a great run of keeping a lid on rate increases and offering Manitobans the best insurance value in the country.

“But after five years of holding the line on rates, including three rate reductions, today’s reality is that higher claims volumes and costs mean we must seek an increase next year.”

While the corporation is seeking a 2.5 per cent increase in revenues, the amount a vehicle owner pays for insurance depends on the make and model of the vehicle, how and where it is driven, and the owner’s individual driving record, said Vice-President of Corporate Insurance Operations Marilyn McLaren.

Rates for family passenger vehicles will increase 2.9 per cent while trailer and off-road vehicle owners will see reductions of more than 30 per cent. However, higher motorcycle claims costs will increase rates an average 20 per cent under the proposal.

If approved, 306,113 vehicle owners will see their premiums decrease or stay the same in 2004. Of the vehicles that will receive premium increases, most will be less than $50. Overall:

• 36 per cent of premiums will go down (297,000 vehicles)
  (80 per cent – 239,000 vehicles – will decrease by $50 or less)
• One per cent of premiums will remain unchanged (9,000 vehicles)
• 63 per cent of premiums will increase (512,000 vehicles)
  (almost 69 per cent – 355,000 vehicles – will increase by $50 or less)

No changes to Basic Autopac coverage or benefits are included in the application.

Manitoba Public Insurance has been warning vehicle owners for more than a year that rising claims costs were challenging the corporation’s ability to maintain stable rates, Zacharias said. In 2002 the number of claims, and more importantly their associated costs, increased again. There were 227,259 claims reported in Manitoba during 2002/2003 at a cost of just over $506 million, an increase of $27.2 million over 2001/2002.

“Manitoba Public Insurance collects premium to reflect projected claim costs, and we are addressing the business reality that claims costs are continuing to rise,” Zacharias said. “This rate application responds to the trend, but Manitobans have an important role to play, too.

“Every driver in the province can affect what they pay in auto insurance through their driving record. Safety behind the wheel not only saves lives, it reduces insurance costs.”

In Canada, auto insurance premiums increased on average 13.1 per cent in 2002, according to information provided by Statistics Canada. Manitoba’s system has been heralded as a model for eliminating spiraling rates and coverage caps. Zacharias pointed out that Manitoba’s proposed increase next year will be less than one-fifth the national average, and coverage continues to be second to none.

Annual report: Three decades of service and stability

Manitoba Public Insurance also filed its 2002 annual report with the Legislature today. The report reflects the corporation’s history of prudent fiscal management and customer service commitment and demonstrates the corporation’s continued ability to offer all Manitobans comprehensive coverage at among the lowest rates in the country.

The corporation’s fiscal performance was affected by the ongoing downturn in the investment market and increased claim costs, resulting in a net operating loss of $22.6 million.

Last year, Manitobans filed an average of 913 claims, and the corporation paid out $2 million in benefits, every working day. Manitobans were involved in 8,000 more collisions last year driving up the number of injuries and the average cost per claim by $229 to $2,228.

“We remain concerned about the number of claims being filed,” Zacharias said. “While we will continue to keep our operating costs at half the industry average through loss prevention initiatives including auto theft, fraud and road safety education, we need every Manitoban to join the fight and drive safely to prevent accidents before they happen.

“Together we can provide the rate stability Manitobans value so much.”

News media please note: Reference charts and graphs can be downloaded from the News Room on the Manitoba Public Insurance Web site.

Contact:
Brian Smiley/Twila Allen
Media Relations
Manitoba Public Insurance
(204) 985-7300 or 1-888-554-9549 (toll-free in Manitoba)