In the late 1960s, the Manitoba government decided the private sector had failed to provide Manitobans with adequate, affordable automobile insurance, and passed legislation to create a Crown Corporation to provide basic compulsory automobile insurance.
This decision was spurred by the recommendations of a government-led task force (the Manitoba Automobile Insurance Committee), established to investigate the auto insurance business in the province. The task force identified the following problems with the private auto insurance system:
- Automobile insurance was not compulsory. The committee estimated that at least 10 percent of vehicles on the roadway carried no insurance.
- Insurance companies denied some people coverage. These people could pay into a special fund that paid claims for damage they caused, but they were indebted to the fund and were expected to repay the full amount.
- There were huge gaps in coverage. For example, "voluntary, unpaid" passengers who were injured in an accident caused by their driver received no compensation unless they could prove gross negligence or wilful and wanton misconduct on the part of their driver.
- Rates charged in Manitoba had as much to do with claims costs in the rest of Canada as with claims costs in Manitoba. As well, the rating system was complex and confusing, with many opportunities for manipulation by private insurers.
- Based on presentations to the committee, claimant and policy holder satisfaction was determined to be low, and the majority of the public was uninformed of their basic rights, duties and obligations.
- The committee also heard evidence that insurers used tactics to reduce their financial exposure, rather than adjusting claims in a manner that compensated people for their actual losses.
Based on its findings, the committee made six core recommendations to create a more equitable automobile insurance environment for Manitobans:
- An insurance plan designed to ensure that, for every $1 collected in premiums, at least 85 cents was returned to policy holders in the form of claim payments or benefits. This contrasted with the private sector at the time, which returned about 67 cents of every $1 in premium. This measure is generally recognized as the key measure of effectiveness and efficiency for automobile insurers because it can be applied without having to compensate for differences between coverage and insurance systems.
- All premiums were to be paid in cash in advance at the time the vehicle or driver was licensed. This, along with reserves for unpaid claims, would be invested and provide a source of investment income, which would provide additional revenue. As well, the investments were to be primarily in Manitoba bonds and debentures. This provided access to capital for Manitoba municipalities, universities, schools and hospitals and a secure, dependable return on investment for the insurance fund.
- The insurance plan would be administered by one government agency so that:
– There would be consistency in the coverage provided and in the interpretation and application of the plan.
– Duplication of administrative costs would be avoided
– The plan could be improved more easily with only one agency involved and a government agency would be sensitive and responsive to public reaction and needs.
- The plan would be compulsory. Along with that, there would automatically be guaranteed access to coverage – no one could be denied the right to insure their vehicle as long as they were eligible to register the vehicle for use on the roadway. Just as important was the provision that everyone injured by automobiles would have guaranteed access to compensation. The committee also foresaw that, by getting into the auto insurance business and with the inherent need to keep rates as low as possible, the government would be more motivated to take a lead role in traffic safety and to pursue progressive traffic safety legislation.
- The plan would provide claims processes that minimize inconvenience. Claim Centres would be established in communities across the province to provide qualified appraisals and more efficient adjusting services.
- The plan would provide a reasonable, basic limit of protection. Also, higher levels of coverage would be available from the private insurance industry, to the extent it wished to address these needs.
Manitoba Public Insurance began operations in 1971 to provide the basic, compulsory insurance coverage, which became known as Autopac. Both vehicles and drivers were required to be insured and the insurance was provided together with registration so that one was not available without the other.
This significantly reduced opportunities for uninsured vehicles and drivers and kept administrative costs and customer inconvenience low, since it combined two processes that were normally conducted separately. In addition to providing the compulsory insurance that was required to legally operate a vehicle on the roadway, Manitoba Public Insurance offered two types of optional coverage in competition with the private sector – Autopac Extension and Special Risk Extension.
Four decades later, our business is still grounded in our mission, values and founding principles. We've been accountable and customer-focused since day one.