Last year, when Manitoba Public Insurance got a new CEO and board appointed by the new NDP government, there was hope that its recent dysfunction would be in the rearview mirror.
Unfortunately, this week we got a reminder that the Crown corporation is still very much stuck in a muck of its own making.
On Tuesday, the Public Utilities Board ordered MPI to raise auto insurance rates by an average of 5.7 per cent over the next year, and approved a further $10 increase in the basic insurance premium. Add them together, and the average Autopac premium will be going up nearly 6.9 per cent.
MIKAELA MACKENZIE / FREE PRESS FILES
The Public Utilities Board ordered MPI to raise auto insurance rates by an average of 5.7 per cent over the next year.
“Ordered” is the key word here.
MPI had initially sought an increase of only three per cent, a request that was summarily dismissed by the PUB as being insufficient, given a broad array of financial challenges.
Of greater concern is the fact the PUB found MPI’s own actuaries — the highly trained people who calculate future risks and premiums — had recommended a rate increase of six per cent.
That’s right. MPI asked for half of what its own people said was needed to stabilize finances and keep a lid on future rate increases. And the new CEO, Satvir Jatana, and the new board appointed by the NDP government had submitted a rate application that was an utter fiction.
How remarkable is this? In its order, the PUB acknowledged that this was the first time ever that MPI asked for a rate increase that was less than its own actuarial calculations.
It should be noted that the rate increase ordered by the PUB is not, in and of itself, controversial.
MPI, sometimes at the PUB’s insistence, cut Autopac rates by roughly 15 per cent over the past few years. However, rising costs of vehicle repairs, hailstorms, a costly 2023 strike by unionized workers and the resumption of pre-pandemic traffic levels have combined to increase operating costs.
Most of those factors are outside the public insurer’s control. However, there are other financial issues of concern that are creatures of MPI’s own creation.
The PUB found that MPI continues to struggle to control its administrative costs. There were also lingering concerns about the completion of Project Nova, the chronically delayed and spectacularly inflated information technology project.
Designed to give Manitobans more opportunity to acquire Autopac online, Project Nova is expected to cost more than $290 million when completed, $200 million more than its original estimate.
Put it all together, and the PUB remains concerned about MPI’s financial future. Although the corporation promised it would return to “financial stability within five years, the board is not confident of that based on the evidence adduced at this hearing.”
With language like that, you don’t have to be an expert in actuarial calculations to know that something really bad is going on at MPI and that the NDP government needs to do something about it, quickly.
Unfortunately, the government’s response is decidedly underwhelming.
Justice Minister Matt Wiebe, who is responsible for overseeing MPI, told the Free Press his government supported the PUB’s order, which he said was aimed at “cleaning up the mess left by the former Progressive Conservative government.”
“People are feeling it in their pocketbooks right now and they need to see that MPI is aware of that and is doing everything that they can to keep auto insurance affordable,” he said.
It would be an understatement to say that Wiebe seems blissfully unaware of the broader concerns at MPI. Or, that the issues at stake in this most recent PUB order are more focused on what’s happening now, not when the Tories were in power.
When you have a multibillion-dollar Crown corporation that is failing at some of the foundational tasks for which it is created, government needs to respond with a degree of urgency. Unfortunately, Wiebe’s response showed none.
This is most troubling because, it should be noted, a lazy and indifferent government was at the heart of the Project Nova debacle and other instances of financial mismanagement at MPI.
The PC government allowed former corporation CEO Eric Herbelin to burn money hand over fist in pursuit of the project’s completion. Herbelin hired often and indiscriminately, jacked up spending on perks such as travel and gave himself and other executives significant and completely unjustified bonuses and wage bumps.
When the Free Press finally revealed the extent of the mismanagement, audits were ordered and Herbelin was unceremoniously terminated. But none of it happened until the Tories and the board they appointed were confronted by headlines about the CEO’s misdeeds.
Wiebe should not need headlines to become more actively engaged with MPI. The Tories delivered a master class in what happens when government ignores the obvious signs of trouble at a valuable Crown corporation.
Wiebe and the government will now either work closely with MPI’s board and executive team to get it back in its proper lane, or allow it continue weaving all over the road until it crashes head-on into Autopac customers.
dan.lett@freepress.mb.ca
Dan Lett
Columnist
Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986. Read more about Dan.
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