Premier Brian Pallister denies claims of cronyism: ‘Come on, man’ By: Dan Lett Posted: 7:00 PM CDT Wednesday, Jun. 26, 2019

Opinion

Hey there, time traveller!
This article was published 25/06/2019 (2012 days ago), so information in it may no longer be current.

When it comes to the simmering feud between Manitoba Public Insurance and private insurance brokers, Premier Brian Pallister would like all Manitobans to know one important thing.

Neither he nor his government are “for sale” to anyone.

Pallister has come under intense scrutiny following Free Press reports that senior officials in his government have exerted intense political pressure on MPI to continue using private insurance brokers as the retail arm of Autopac.

MPI wants instead to move most of its services — licence and vehicle registration, renewals and purchase of coverage — online to save money and provide better customer service. The move would cost brokers tens of millions of dollars in commissions.

In response to a request by the Free Press on Wednesday for comment, Pallister said that while he understands the keen interest Manitobans have in all things Autopac, he is adamant that no one in his government is improperly interfering with MPI.

“I don’t think there is a fair argument to be made that there is … an implicit agreement that (the brokers) get whatever they want from me or anyone in my government.”

Pallister went further in disputing the allegation that because he continues to own a licenced insurance agency, Pallister Insurance in Portage la Prairie, he is predisposed to support other private brokers. The agency, which is being run by a business partner while Pallister is premier, sells life, disability and home insurance but has never sold Autopac.

“I’m not going to deny that I have a lot of respect for small business people,” he said. “But the last thing you would ever advance about me is that I’m for sale…. Allegations of cronyism? Come on, man.”

Despite the premier’s assertions, internal MPI communications and other documents show that the Pallister government pressured the Crown insurance company in 2018 to approve a two-year extension of a commission agreement with brokers that earns them more than $85 million annually. The extension was offered to brokers against the expressed wishes of the MPI board and executive team.

MPI has been trying to reconfigure its deal with brokers to move most services online to save an estimated $237 million over five years, a sum equivalent to a 4.4 per cent reduction in basic auto insurance rates. Instead, the internal documents obtained by the Free Press reveal widespread concern within MPI about political pressure to keep the commission agreement with brokers.

Pallister said the impression left by the documents is misleading. Crown Services Minister Colleen Mayer has been involved in advising MPI but has never directed it to do anything and is not advocating for brokers.

“I would argue that where there are efficiencies that can be found to the benefit of the consumer,” the premier said, “it is incumbent upon us to pursue those. And that’s exactly what we expect will happen through the … fair and balanced dialogue that MPI will have with its traditional distributors of insurance products.

“This can’t be one side wins and one side loses. It’s got to result in an ongoing relationship where the savings can be found for the consumer.”

Pallister said that in neighbouring provinces like Saskatchewan — which is thought to have among the most affordable auto insurance rates in the country — private brokers remain a major part of government auto insurance services.

Saskatchewan Government Insurance (SGI) allows residents to satisfy the gross majority of their auto insurance needs — including licensing, registration, and renewal or cancellation of insurance — through an online portal operated by the Crown corporation. However, if you have allowed your registration or insurance to lapse, or you want to transfer registration, or you need a new photo for your licence, you need to go in-person to an authorized “motor licence issuer,” which is SGI lexicon for a private broker.

The premier’s arguments, while persuasive on some points, do not completely answer all concerns raised in the internal MPI documents. In particular, why the government would weigh in at all on an issue that is directly connected to MPI financial performance.

It does not help that this is actually the second time the Pallister government has changed policies in a way that could have upward pressure on Autopac rates.

As reported by the Free Press this past February, the Tory government issued an order in council changing regulations to allow MPI to use a new formula to determine how much money it needs to retain in reserve accounts.

MPI is required to keep a certain amount of money in reserve to help protect against a spike in claims. For many years, MPI has asked the Public Utilities Board for permission to use a private-sector standard to calculate its reserves that would require it to retain significantly more money than it currently has on hand. If the PUB had accepted that argument, MPI would keep most of its profits, rather than being forced to pay millions of dollars in rebates to Autopac customers.

However, the argument for higher reserves has been repeatedly rejected by the PUB after hearing evidence from MPI, experts and interveners. It is unclear why the Pallister government would pass a regulation that not only flies directly in the face of a decision by the regulator, but which could lead to higher Autopac rates.

It is currently unclear whether the PUB is obligated to change its position on reserve standards. It is possible the province would have to pass an actual legislative amendment to change the way MPI calculates reserves, and the way the PUB views that as part of a general rate application process.

Taken together, the pressure to keep brokers involved in Autopac and the new regulations on reserve levels are expected to have an upward pressure on Autopac rates. That is an odd, maybe even foolish thing to do with the Tory government headed towards a date with voters this September.

Pallister may be correct that there is no conclusive evidence that he or anyone else from his government have been bought and paid for in the Autopac controversy. However, there is no compelling evidence as well that his government’s meddling with MPI is really in the best interests of Manitobans.

dan.lett@freepress.mb.ca

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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