New Manitoba law aimed to protect MPI’s current vehicle owner rate model

Manitoba’s justice minister introduced new legislation Monday to preserve the public auto insurer’s current rate-setting approach, which assesses the driving risk of the vehicle’s registered owner, and not the driving risk of the person behind the wheel.

Bill 49 states: “a discount from [an auto insurance] plan premium…must be based on the driver safety rating of the owner in whose name the motor vehicle is registered under The Drivers and Vehicles Act.”

Manitoba Justice Minister Matt Weibe says of the proposed new law: “Our government is making sure vehicle insurance rates remain affordable for Manitoba families. By keeping MPI public and protecting the registered owner model, our government is ensuring stable, affordable insurance for Manitobans, now and in the future.

“We’re putting MPI back on track and protecting Manitobans from future attempts to raise rates on families through changes to the insurance model.”

In media interviews, Weibe suggested basing rates on vehicles’ owners, instead of the drivers, helps protect auto insurance rates for teenagers and newcomers to Canada.

“We know here in Manitoba since the beginning of MPI, we’ve had the registered-owner model, and it works well,” Wiebe said Monday at the Manitoba Legislative Building, as cited on MySteinbach.com.

Background

This is the latest salvo in a longstanding battle between the public insurer and the Manitoba Public Utilities Board (PUB), the province’s auto insurance rate regulator.

Currently, for setting auto insurance rates, MPI classifies drivers based on where they live, the type of vehicle they drive, and how the vehicles are used. Also, risk is based on the registered owner of the registered vehicle, not the drivers of the vehicle. This is commonly referred to as the registered owner rating model.

After years of discussion, the PUB issued an order in 2022 requiring MPI to take steps towards moving to a new model based on an assessment of driver risk.

“Over the last three GRAs [general rate applications], the PUB has thoroughly canvassed the DSR [driver safety rating], including alternative models, the actuarial soundness of the DSR system, and public opinion of the rating models,” the PUB directive reads. “After the 2021 GRA, the PUB found that [MPI] should be in a position to take steps towards a more actuarially sound model, and PUB still finds this to be the case.

“The pub is perplexed as to why [MPI] is adamantly opposed to implementing a primary driver model.”

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MPI challenged PUB’s order at the Manitoba Court of Appeal. It argued the auto insurance rate regulator had no authority to require MPI to change its current approach for determining premium discounts based on the registered owner rating model.

Manitoba’s Appeal Court rejected MPI’s argument in a decision released in October 2022.

“The statutory framework and past decisions of this court demonstrate that the PUB’s rate approval mandate includes jurisdiction over the DSR [driver safety rating] system, including the authority to examine and designate the specific methodology by which customers are grouped to ensure premiums are just and reasonable,” the Appeal Court found.

“If the PUB were to require [MPI] to change plan premium discounts or additional amounts based not on the registered owner, but on the primary driver, that would be a change in rate-setting methodology over which the PUB has jurisdiction.”

The Appeal Court noted only two provinces in Canada, Manitoba and Saskatchewan, use the vehicle’s registered owner to determine risk and associated premium discounts.

Before the Court of Appeal, MPI said the change in methodology mandated by PUB would be unwieldy, triggering “rate dislocation,” IT changes, and potentially privacy issues related to driver data collection.

The Appeal Court observed government has the authority to make legislative changes mandating drivers’ data collection and how it should be protected.