The cost of auto insurance claims is accelerating at Manitoba Public Insurance, with the Crown corporation spending $1.2 billion last year to cover more than 264,000 injuries, collisions, and write-offs.
MPI attributed a 15.5 per cent jump in claim costs in the 2022-23 fiscal year to inflation, rising labour rates, supply chain issues, and the increased cost of used vehicles in its annual report, released Tuesday.
“All of that combined led to some significant challenges in 2022,” MPI board chairman Ward Keith said.
MIKAELA MACKENZIE / WINNIPEG FREE PRESS FILES MPI attributed a 15.5 per cent jump in claim costs in the 2022-23 fiscal year to inflation, rising labour rates, supply chain issues, and the increased cost of used vehicles in its annual report, released Tuesday.
MPI received 264,102 claims in 2022-23 — down by 29,547 (or roughly 10 per cent) compared to 2019-20, the last fiscal year before the COVID-19 pandemic, when claims dropped dramatically with fewer people on the roads.
While the number of claims has not rebounded to pre-pandemic levels, MPI did report “modest growth” compared to last year, at 2.1 per cent. Over the past decade, MPI has had its total claims decrease by 8.2 per cent.
Last year, the average cost per claim was $3,935, up 15.3 per cent compared to 2018-19.
MPI is hopeful it will not return to pre-pandemic claim levels, although it is possible the Crown auto insurer will continue to see increased demand annually, Keith said.
“If it increases at a rate of two per cent per year, that is likely very manageable. The real challenge in 2022, again, was the cost of claims, and that affected all of the corporation’s insurance lines.”
Claims costs for commercial truckers covered under special risk extension products also increased substantially, with a year-over-year increase of 37.2 per cent. MPI said the massive jump was primarily due to losses in the United States.
“It’s not uncommon, quite frankly, for a (special risk extension) incident… to cost the corporation $10 million or more,” Keith said.
Last year, hail damage cost MPI $29.6 million in gross claims.
Meantime, the corporation reported $4.2 million in net income in 2022-23, well-below its $28.1-million target.
Overall, MPI earned $1.5 billion in revenue, an increase of 2.1 per cent compared to last year, with revenue boosts coming primarily from its extension and special risk extension products.
MPI also noted a loss in investment income of $119.6 million, netting a loss in its Asset Liability Management program of $15.5 million, which is within the year-end target range of plus/minus $21.3 million.
The total fair value of MPI’s investment portfolio was $3.6 billion, down $18.1 million. The portfolio, on a market value basis, had a negative 0.7 per cent return during the fiscal year, according to the report.
Despite failing to reach its budgeted revenue target, Keith said he’s pleased with the financial results and MPI is on solid financial footing with its capital reserve targets exceeded, as of March 31.
MPI did not request a rate change in its latest filing with the Public Utilities Board, but said the actuarially indicated rate change would have been a 0.13 per cent reduction.
“This (revenue) was achieved on an overall basis not withstanding an increase in both the number of claims reported and the cost of those claims,” Keith said.
MPI also reported a $31-million increase in its corporate operating expenses, representing 24.9 per cent of its total expenses. Total non-claims related expenses were $314.7 million.
The increase was attributed to increased technology costs associated with Project Nova (the MPI systems modernization program), employee salaries and “special services to support ongoing improvements.” Spending on operating expenses remains within MPI’s annual target.
Commissions, including fees paid to brokers, increased by $4 million, to $99.4 million.
Manitoba drivers continue to pay some of the lowest insurance rates in Canada, Keith said.
For example, it costs $1,355 for a 35-year-old couple with a clean driving record from Winnipeg to insure a 2018 Ford 150 XLT SuperCrew (the most common passenger vehicle registered in Manitoba). In Calgary, it would cost $2,692, and $3,108 in Toronto, according to MPI.
