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This article was published 5/12/2014 (2117 days ago), so information in it may no longer be current.

COLIN CORNEAU/BRANDON SUN Insurance rates are going up for many Manitoba drivers.

Manitoba Public Insurance has received the go-ahead to increase overall Autopac rates by 3.4 per cent in the coming year.

The Public Utilities Board released its order this morning, essentially giving MPI everything it had asked for.

Owners of private passenger vehicles and trailers will see their rates go up by 3.7 per cent and 6.1 per cent respectively. Meanwhile, the cost of insuring motorcycles (-5.8%), commercial vehicles (-1.8%) and off-road vehicles (-14.3%) will all go down. Government owned vehicles will cost 6.2 per cent more, on average, to insure.

Actual rates paid by individual policyholders are based on their driving record, the kind of vehicle (make, model and year), the purpose for which the vehicle is driven and where the policyholder resides. A vehicle owner’s claims history is also a factor.

The PUB said there will be no change in permit and certificate rates, driver license premiums and vehicle premium discounts, service and transaction fees, fleet rebates or surcharges, or the discount on approved after-market and manufacturer/dealer installed anti-theft devices.

It noted that MPI has projected a net loss of $82.5 million for the current financial year. MPI says the losses have been caused by higher claims costs due to last year’s severe winter, a drop in interest rates, an increase in collision and comprehensive severity costs, the increase in the provincial sales taxes and higher negotiated vehicle repair shop labour rates.

"MPI is unduly exposed to significant interest rate risk from falling interest rates; a drop in interest rates negatively impacts its financial results," the PUB said in its order. "Steps must be taken to mitigate this risk."

"Future basic (Autopac) insurance revenues need to increase because of cost increases due to inflation and higher collision costs due to changes in manufacturer vehicle design in the order of $30 million per year in the outlook period."

The PUB says in its order that this is the third rate increase in 15 years, a period during which there were five rate decreases, and that there have also been $597 million in premium rebates ordered by the Board over the last 15 years.

The province’s rate watchdog says the rate increase is needed to improve the financial results of basic Autopac insurance, which has seen sustained combined losses for 2012-13 and 2013-14 of $132.2 million.

The PUB also says the past losses and the loss forecast for this financial year will decrease MPI’s Rate Stabilization Reserve (RSR) balance to $17.4 million, well below the PUB’s previously approved target range of $82.3 million to $164.3 million.

The RSR is intended to maintain rate stability and to protect vehicle owners against rate shock. Too low a reserve means that a few unexpected events, such as a severe hail storm and winter storm, could trigger losses that would require a very significant rate increase.

MPI originally requested an overall 2.4% rate increase plus a 1% RSR rebuilding fee. MPI has now decided to transfer over $100 million in excess retained earnings from its other lines of business into the rate stabilization reserve. If MPI generates excess revenues from its basic insurance in the future, these will also increase the RSR.