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This article was published 22/9/2016 (1461 days ago), so information in it may no longer be current.

The highest insurance-rate hike in decades for motorists could be in the cards when Manitoba Public Insurance meets with the Public Utilities Board in October.

A rate increase of up to seven per cent is on the table as the Crown corporation attempts to protects customers from a massive "rate shock" caused by years of lower-than-predicted interest rates, MPI officials said. Since 2000, the highest rate increase was in 2004, when rates increased 3.7 per cent.

The corporation already publicly announced plans in June to go to the board in October to ask for a two per cent increase after an "unprecedented year" for non-collision claims payouts. An August submission given to the board as part of MPI’s 2017 application shows a second increase is on the books by MPI.

It’s officially called an interest rate forecast risk factor (IRFRF), and MPI said in its submission it will mean a request for an increase of anywhere from zero per cent to five per cent on top of the two per cent.

"We are going to be asking for the two per cent in addition to discussions about IRFRF, but to put a number on it would be purely speculative," MPI spokesman Brian Smiley said. "It is to mitigate the risk of a significant increases in the future. We are using forecasts that are established by the major Canadian banks; now the IRFRF will mitigate any shortcomings that are happening."

Smiley said the corporation makes its forecasts for investment income using interest rate predictions by the banks, which consistently come up lower than predicted, "which means we have a shortfall of revenue. So essentially, what we are asking for is (that) we want to have a discussion... and mitigate future possible premium increases."

The corporation’s president and chief executive officer, Dan Guimond, also warned at a recent Crown corporations committee meeting that climate change has led to a increase in payouts for MPI.

"What we’re seeing due to climate change is an increased frequency in hail, and the other thing that’s happening to us is that there are a lot more little hail claims, which means that from an insurance perspective, based on the deductible we have with the reinsurers, we pay for the hail," he said, later adding hail claims cost the corporation $52 million last year.

In comparison, claims in 2014 only amounted to $13 million; a difference of 4,000 claims to more than 13,000 in 2015.

Andrew Swan, who served as justice minister and minister responsible for MPI under the NDP government, said he is disappointed Crown Services Minister Ron Schuler refused to question the board’s intentions to raise rates during the recent committee meeting.

"He has made it clear to everybody that he has nothing to do with the decisions the corporation makes, and it looks like he is going to sit on his hands while MPI may very well ask for the largest year-over-over increase in at least two decades," said Swan, who noted in the NDP’s 17 years in power they kept rate increases below four per cent, along with several years of no increases.

"It sounds like this minister knows there is going to likely be larger increases in the next few years, and he is going to put up his hands and say it is not his responsibility... that is not good enough. The Crown corporations are important to Manitobans."

During this week’s Crown corporations committee meetings, Schuler was adamant the Progressive Conservative government will have no political interference in the decisions of the Crowns.

"Where our Crown corporations have gotten into trouble over the years is where ministers felt they had a right to go into the Crown corporations and start dealing with employees directly," Schuler said in the meeting. "The minister does not have a right to go into the corporation and undermine the CEO or any of the leadership team and start reaching into the corporation and demanding things and requesting things and getting involved in the micromanagement and politically interfering in a corporation."

Both increases would take effect March 1 and must be approved by the board before they are implemented.

kristin.annable@freepress.mb.ca