MPI to refund $110M to customers as claims plunge during pandemic By: Danielle Da Silva Posted: 12:11 PM CDT Thursday, Apr. 23, 2020 Last Modified: 4:50 PM CDT Thursday, Apr. 23, 2020 Updates

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Manitoba Public Insurance customers can soon expect a rebate cheque in the mail, as social-distancing measures keep people off the roads and vehicles out of collision-repair shops.

Crown Services Minister Jeff Wharton said Thursday the provincial auto insurer will begin issuing rebates equivalent to 11 per cent of policy-holder premiums — on average $140-$160 — by the end of May or early June.

According to MPI, as of mid-April, collision claims are down 48 per cent compared to the same period a year ago. The total rebate program is valued around $110 million, and is one of the biggest drivers have seen since 2011, when the corporation returned $320 million to customers.

“It’s a flexible and creative response to a material change in circumstances and the acute financial distress that many Manitobans find themselves in (due to COVID-19 pandemic impacts),” said Byron Williams, a lawyer with the Consumers’ Association of Canada — Manitoba.

MPI is in a financial position to rebate customers due to strong year-end results and a stable financial reserve, Wharton said. The fiscal year for the Crown corporation concluded at the end of March.

The corporation can, under legislation, immediately return $50 million to ratepayers, but will have to apply to the Public Utilities Board for approval to rebate the remainder.

The rebate plan differs from others, Williams said, in that it pulls from two cash streams: one is likely a surplus of funds MPI has in reserve and from extension insurance purchases; the other is money collected to cover forecasted claims against basic auto insurance.

The PUB has to green-light MPI’s plan to dip into the second cash stream before it can issue the rebate cheques, Williams said.

Wharton said the rebate is not tied to potential payroll and staffing reductions at the Crown corporation and would not comment on what potential layoffs may look like at the public insurer.

“This is obviously related directly to COVID(-19),” Wharton said. “There have been several large reductions in claims over the last several weeks, and certainly that’s bolstered MPI’s bottom line — and where that money should go is right back to the ratepayers and Manitobans.”

Applications to the PUB to approve the $60-million refund will be submitted in the coming days, Wharton said.

If approved, the full rebate amount would be distributed in a single payment.

MPI estimates the reduction in claims has saved roughly $29 million between March 15 and April 15. Similar savings are projected to continue into the “foreseeable future,” the Crown corporation noted.

Grant Wainikka, chief executive officer with the Insurance Brokers Association of Manitoba, said the organization had been asking for such action.

“Premiums continue to go into MPI and they’re not paying out on claims,” Wainikka said. “Brokerages on a daily basis are hearing from families, from people, from businesses that are really up against it financially — they’re trying to make payroll and trying to make rent.

“Anything that the provincial government can do to support that, we’re very happy to see.”

MPI will file its general rate application to the PUB in May. The rate has yet to be determined, but will be based on pre-pandemic financial forecasts and figures.

Williams said a future rate reduction is less likely, as MPI’s capital reserves will also be lower.

danielle.dasilva@freepress.mb.ca

Danielle Da Silva
Reporter

Danielle Da Silva is a general assignment reporter.

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