Manitoba Public Insurance reported a net income of $38.9 million for the first three months of its fiscal year ending May 31, 2017 – an increase of $31.4 million over the same time period last year. This includes net income from the Basic insurance line of business of $15.4 million in the first three months of the 2017/18 fiscal year.
“We are pleased with these operational results, although we know that rising claims and their costs are dependent on seasonal and specific weather factors,” said Peter Yien, acting vice-president, Finance and Chief Financial Officer, Manitoba Public Insurance.
“Historically, the first two quarters of the Corporation’s fiscal year generate a positive net income, which is then offset by an increase in claims during the winter months. Every Manitoban can directly affect how much they pay for auto insurance through their daily driving behaviour. We will continue to monitor the Corporation’s financial results over the next three quarters.”
Total earned revenues for the first three months rose by $17.0 million from the same period last year, driven mainly by a 3.7 per cent increase in overall premiums approved by the Public Utilities Board effective March 1, 2017, and increases in motor vehicle premium revenue due to an increase in the number of motor vehicles insured and the value of these vehicles.
“The overall financial picture was affected by an increase of $33.7 million in total claims costs – including a $34.5 million increase in bodily injury claims and a $5.5 million decrease in physical damage claims compared to the first three months of 2016,” said Yien.
The $34.5 million increase in bodily injury claims was impacted by an increase of $41.5 million in unpaid claims liabilities due to the interest rate adjustment on unpaid claims. The current interest rate continues to underperform against both the standard interest rate forecast ordered by the Public Utilities Board, and the flat interest rate forecast used by the Corporation.
In June 2017, Manitoba Public Insurance applied to the Public Utilities Board for an overall increase of 2.7 per cent in Basic insurance premiums for the 2018/19 insurance year. The proposed rate increase is linked to three factors affecting claims and claims costs; an increase in comprehensive losses – including hail claims, ongoing volatility in the financial markets, and changes to the design, construction and technological advances in vehicles that affect vehicle repair costs.
In addition to the 2.7 per cent overall rate increase, the Corporation is proposing changes to premiums charged under the Driver Safety Rating program to better align the premiums high-risk drivers pay to their actual claims costs.
To protect vehicle owners from future unpredictable rate increases, the Corporation is also committed to continue working collaboratively with the Public Utilities Board to establish an adequately-sized rate stabilization reserve that can be used to absorb variations in revenues, claims costs and ongoing volatility in the financial markets. The Corporation is optimistic consensus on this important issue can be reached through the upcoming GRA process for the benefit of ratepayers and all Manitobans.