Fourth Session - Thirty-Second Legislature of the Legislative Assembly of Manitoba STANDING COMMITTEE on PUBLIC UTILITIES and NATUR AL RESOURCES 34 Elizabeth 11 Chairman Mr. C. Santos Constituency of Burrows VOL. XXXIII No. 1 - 10:00 a.m., TUESD AY, 23 AP RIL, 1985. Printed by the Office of lfle Queens Printer, Province of Manitoba ISSN 071 3-9 454

MANITOBA LEGISLATIVE ASSEMBLY Thirty-Second Legislature Members, Constituencies and Political Affiliation Name ADAM, A.R. (Pete) ANSTETT, Hon. Andy ASHTON, Sieve BANMAN, Robert (Bob) BIR T, Charles T. BLAKE, David R. (Dave) BROWN, Arnold BUCKLASCH UK, Hon. John M. CARROLL, Q.C. , Henry N. CORRI N, Q. C. , Brian COWAN, Hon. Jay DESJARDINS, Hon. Laurent DODICK, Doreen DOERN, Russell DOLIN, Mary Beth DOWNEY, James E. DRIEDGER , Albert ENNS, Harry EVANS, Hon. Leonard S. EYLER, Phil FILM ON, Gary FOX, Peter GOURLAY, D.M. (Doug) GRAHAM, Harry HAM MOND, Gerrie HARAPI AK, Hon. Harry M. HARPER, Elijah HEMPHILL, Hon.

Maureen HYDE, Lloyd JOHNS TON, J. Frank KOSTYRA, Hon. Eugene KOVNATS, Abe LECUYER, Hon. Gerard LYON, O.C. , Hon. Sterling MACKLING, Q.C. , Hon. AI MALINOWSKI , Donald M. MANNESS, Clayton McKENZIE, J. Wally MERCI ER, Q.C. , G.W.J. (Gerry) NORD MAN, Rurik (Ric) OLESON, Charlotte ORCHARD, Donald PAWLEY, Q.C. , Hon . Howard R. PARASI UK, Hon. Wilson PENNER, Q. C., Hon. Roland PHI LLI PS, Myrna A. PLOHMAN, Hon. John RANSOM, A. Brian SANTOS, Conrad SCHROEDER, Hon. Vie SCOTT, Don SMI TH, Hon. Muriel STEEN, Warren STORIE , Hon. Jerry T. URUSKI, Hon. Bill USKIW, Hon. Samuel WALDING , Hon. D. James Constit uency Ste.

Rose Springfield Thomp son La Verendrye Fort Garry Minnedosa Rhi neland Gimli Brandon West Ell ice Ch urchi l l St. Boni face Riel Elmwood Kildonan Arthur Emerson Lakeside Brandon East River East Tuxedo Concord ia Swan River Vir den Kirkfield Park The Pas Rupertsl and Logan Portage la Prairie Sturgeon Creek Seven Oaks Niakwa Radisson Ch arleswood St. Ja mes St. Johns Morris Roblin-Rus sell St. Norbert Assinib oia Gladstone Pem bina Selkirk Transcona Fort Rouge Wolseley Dauphin Turtle Mountain Burrows Rossm ere ln kster Osborne River Heights Flin Flon lnt erlake Lac du Bon net St.

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LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES AND NATURAL RESOURCES Tuesday, 23 April, 1985 TIM E -10:00 a.m. LOCATION -Winnipeg, Manitoba CHAIR MAN -Mr. C. Santos ATTENDANCE - QUORUM -6 Mem bers of the Committee present: Hon. Messrs. Bucklas chuk, Cowan, Harapiak Me ssrs. Fox, Malino wski, Manne ss, Santos, Brown and Scott APPE ARING: Mr. Olafur P. Sigurdson, Ch airman of the Bo ard Mr. Carl Laufer, President and Gene ral Mana ger MATTERS UNDER DISCUSSION: 1984 Annual Report of the Manitoba Public Insurance Corporation MR.

CHAIRMAN: I call the Comm ittee on Public Utilities and Natural Resour ces to order in order to consider the Annual Repor t of the Manitoba Public In surance Corporat ion. I would like to invite the Hon ourable Min ister to make his op ening statement and to introduc e the staff who are prese nt here today. MR. D. BLAKE: Mr. Chairman, are you sure you ha ve a quorum? MR. CHAIRMAN: Yes, we do. MR. D. BLAKE: Who is all on the comm ittee? MR. CHAIRMAN: Manne ss is he re - you ha ve a copy . MR. D. BLAKE: Oh, I didn't see him. Ok ay, well, you sn eaked in on me behind my back. MR. CHAIRMAN: The Hon ourable Minister.

HON. J. BUCKLASCHUK: I ha ve made cop ies of the statement. MR. CHAIRMAN: Copies of the statement are available for distribution. HON. J. BUCKLASCHUK: Mr.

Chair person, mem bers of the comm ittee, I am pleased to report tha t the Man itoba Public In surance Co rpora tion has again achi eved conside rable success in meeting the insurance need s of Manitoba ns , and I welcome this oppo rtun ity to review the corpora tion' s 1983-84 Annual Report with you today. 1 As in the past, a num ber of MP IC officials are on hand to assist me in an swering your questions and, with the Chairm an's permission, I would like to introduc e them before we begin. Sitting to my left is Mr. Ola fur Sigurdson, Cha irman of the M PlC's Board of Directors; Mr.

Carl Laufer, President and Gene ral Mana ger of the corpora tion; Mr. Ken Jordan, Vice- President, General In surance; Mr. Henr y Dribnenk y, Vice- President, Finance; and Mr. Len Brucki, Controll er. As I men tion ed, the Mani toba Public Ins urance Corporation has again reached and in many cases sur passed its goals of prov iding com pr ehensiv e insurance coverage to the pub lic at a reasona ble cost.

At the same time, it is gratifying to note th at the 1983-84 financial results represe nt the four t h co nsecutive year, and the tenth year in M PlC's 13 -year his tory, tha t the corporat ion has reported an overall surplus on its operations. The se are tangi ble direct benefits which are shared with Manitoba motorists, homeowners, tenants, farmers and business people in the form of lower insurance premiums and extensive protection against a wide range of risks. Eq ually important, however , are the indirect benefits which all Man itobans derive from the corporation's participation in the province's economy .

During the 1983-84 fiscal year, for exam ple, MPIC emplo yed a total of 867 Man itobans, who reinvested a total payro ll of $23.2 million in various cities, towns and villages across the province. In addition, the corporation is represented by 397 agents throug ho ut Man itoba, and during the fiscal year un der review, paid $15. 1 million in com missions to its agenc y force. The corporation 's assets, which consist mainly of invest men ts, increased to $336 .6 million in the 19 83- 84 fiscal year from $280.3 million in 19 82-83.

Provisions for un paid claims and une arned premiums are the major source of funds for the investment portfolio, which now totals $295. 1 million. Of this amount, $2 19 .2 million is invested in long­ term, Man itoba-ba sed holdin gs, such as provincial hospitals, schools and municipal bon ds. As well as contri buting to the economi c growth and development of the province, these investments reduce the overall cost of insurance to policy holde rs by inc reasing the amount of revenue available to the corpora tion through sources other than premiums.

The provi nce benefits from the corpora tion 's operat ions in several other ways as well. During the 1983-84 fiscal year, for example, MPIC paid a total of $473,000 in grants towards the cost of mun icipal and school services, and $6.7 million in levies assessed unde r The In surance Cor porat ions Tax Act. The corpora tion also contin ues to pla y an important role in traffic safety promotion and educa tion, working with a wide range of safety organ izations to reduce the ec onomic and social costs of motor vehicle acciden ts.

Sign ificant advances were made in this area during 1983-84 fiscal year when M PlC began contri buting $1 10

Tuesday, 23 April, 1985 of the total course cost of $1 63 per student for the province's High School Driver Educ ation Program . As a result, Man itoba students now enjoy one of the lowest driver education registration fees in Canada and, with inc reased participation in this important program, I am co nfident tha t M PlC's investment will be returned many times over as you ng mo torists acq uire the attitudes, skills and experience which will make them safer drivers.

As Min ister respon sible for M PlC, I am proud of this record of public service, ac hievement and fina ncial success, which can be attributed mainly to the efforts of the corporat ion 's board of directors, mana gement, staff and agents. Their profess ionalism and ded ication ha ve contributed immeasurabl y to MP IC's growth over the past 13 years, and I would like to take this op portun ity to thank them for their assistance. Mr. Chair person, this con clude s my statements on the corporat ion's operat ions during the 19 83-84 fiscal year. Before an swering your questions, however , I would like to call on Mr.

Olafur Sigurdson, the Chair person of M PlC's Board of Directors to provide a brief overview of the 19 83-84 financial results. MR. CHAIRMAN: Mr. Sigurdson. MR. 0. SIGURDSON: Thank you, Mr. Buckla schuk. As the Minister has just mentioned, the Man itoba Public Ins urance Corpo rat ion ha s reco rded its fourth consecutive overall surpl us, and I am pleased to provide the comm ittee with a brief overview of' 83-84 financia l results. You will see in the annua l report before you th at the corporation earned a consolid ated net profit of $14 million in the fiscal year ended October 31, 19 84.

Total earned revenues rose to $255 million from $231. 7 million in 19 82-83 fiscal year, while the cost of clai ms incur red increased to $206 .3 million from $18 9.2 million. Help ing to offset the rise in claims cost was the significant increase in investment inc ome which grew to $33.6 million from $27 million in 19 82-83 fiscal year. The Automobile Ins urance Division, or Autopac, as most people kno w it, earned a net surplus of $1 8.8 million on total earned revenues of $220 million.

Although the num ber of claims processed rose to 208,000 from 19 5,000 in the previous year, increases in prem iums earned to $18 9.9 million from $18 2. 1 million, and investment inc ome to $30.1 million from $24.3 million contri buted to the positive financial picture. The $18 .8 million surplus earned by the Automobile Insu rance Division enabled the corporation to inc rease its rate sta biliz ation reserve by $7.8 million, its catastrophies reserve by $10 million and its con tingenc y reserve by $1 million.

I am pleased to report tha t the financial stability ach ieved by the Automobile In surance Division has pla ced the corporat ion in an enviable pos ition in the automob ile insurance industry.

While the division's reserves cush ion Manitoba motorists against future increases in claims cost, the corporation offers no-fa ult­ ac cident benefits superior to tho se provided in most other jurisdictions and at the same time has reduc ed rates by an average of 2 percent for the 1985 insurance year. 2 Unf ortuna tely, the 19 83-84 financial results for MPIC'1 General In surance Division were not as en courag in! due mainly to the un cer tainty and instability whicl cur rently exists in the internat iona l reinsurance market T he division which markets a broad range of propert} casualty coverage in com petition with other insurer: recorded a $4.8 million loss in the year un der revie111 Dra matic in creases in claims cost arisi ng fro n internat ional reinsurance operat ions which affecte• many other insurers in a similar fash ion, accou nt fo the entire opera ting loss.

Whil e the reinsurance losses had a nega tive impac on the division's 19 83-84 financial performance, th• corpo rat ion has reacted prom ptly to the cur ren unc ertainty by shif ting more of its reinsurance portfol i• to the domestic market.

This shif t is expected to lea• to improved results over the long term. lt is also import ant to no te tha t without th reinsurance losses, the general insurance division wouh ha ve recorded favourable results in the 19 83-84 fisc� year , offer ing further evidenc e tha t MP IC en joy widespread support in the gene ral insurance markE by providing much needed products and services t, Man itobans. Mr. Ch airman, com mittee mem bers, tha t conclude my statement on the 19 83-84 financial results of th Man itoba Publ ic In surance Corporat ion. Thank you. MR. CHAIRMAN: Thank you, Mr. Sigurdson.

We are now about to con sider the report of th Man itoba Public Insur ance Corporat ion. Shall w co nsider it page-by-page? The Mem ber for Min nedo sa. MR. D. SLAKE: Yes, thank you, Mr. Chairman. I than the Minister and Mr. Sigurdson for the remarks an the overview tha t Mr. Sigurdson has provided to u this morning. We are pleased to see tha t Autopac ha enj oyed anothe r pr ofi table year , and of cour s disappointed to see that the general insurance busine� which is in a competit ive market has had a rathE disastrous year. Mr.

Chairman, as I mentioned earlier, the corporatio ha s appeared before the co mmittee rathe r quickly. was away on Friday and I fou nd out yesterday abm 2:00 o'clock tha t the corporation was going to be u this morn ing - I thought it was the Man itoba Telephon System - but tha t got switched around so we ha ve ha some bit of a rush in prep aring some questions an wh atno t and I hope the Chair will allow us some latituc in ques tioning because we won 't be maybe in chr onolo gical order or any syste matic order.

I kno some of my col leagues ha ve some questions to a� pertaining to individual const ituency prob lems an things of tha t na ture tha t they may be bringing forti So just ho w we consider the statement in tha t ligh I don't kn ow.

We won 't be able to do it page by pa, I don't think , because we'll be sort of all over tt waterfront and then we can maybe get to the financi statements near the end of our question ing and pa1 it on tha t basis, if tha t would it be acce ptable to tt com mittee and those tha t are here from the corporatic to answer questions tha t myself and othe r mem be• of the caucus might ha ve.

Tuesday, 23 April, 1985 IR. CHAIRMAN: So wha t is the preference of the >mmittee? R. D. SLAKE: I would sugge st Mr. Cha irman, tha t >mmittee mem bers be all owed to ask just general Jestions and when we get all of tha t out of the way, en we can get to the report and probably pass it hen we've had our questions an swered. R. CHAIRMAN: Ther e appe ars to be no proble ms, > initially we shall cons ider only general questions as 1 pol icy and then we shall go to the report page by 1ge. Mem ber for Minnedo sa. R. D. SLAKE: The first question, Mr.

Cha irman, tha t would like to ask is the cost of produc ing the fine 1ancial statement, the glossy pict ures tha t are quite 1p ressive. Could the members of the corpo ration give ; the cost of produc ing that? ON. J. BUCKLASCHUK: Mr. Cha irperson, I'm advised at the cost of the prod uction of the Annual Report $1 0. 16 a copy. However, members of the comm ittee 1ou ld be aware tha t th ese are un like the nor mal annual ports we receive for various department s, in tha t this really a pub lication tha t is circula ted world-round to 1ri ous insu rers, reinsu rers, and so on.

So in fact, we ould hope tha t it would act as an effective pub lic •lations tool in addition to providing the inform ation at is normally fou nd in an annual statem ent. R. D. SLAKE: The Minister didn' t really ans wer all y question. How many co pies were printed? ON. J. BUCKLASCH UK: I am advised tha t 2,000 >pies were printed . R. D. SLAKE: Thank you, Mr. Chairman. Going to the overview of the remarks of the Cha irman, 1e reserves, I just didn' t keep up with them all, but imagine all of the $14 .4 million, wh atever the figure as, was pla ced in reserves.

I wonder if you could bring e up-to-date on wha t the status of the reserves of e corpor ation are at thi s time, and if the auditor has >mmented on the satisfactory level, un satisfactory level · excessive level, wh atever it may be, of the reserves the corpo ration. R. CHAIRMAN: Mr. Laufer. IR. C. LAUFER: The entire $1 8.8 million of 1approp riated surplus for the year ending Oc tober I, 1984, was distributed into appropr iated retained irnings under the follo wing headings. We ha ve reser ves for catast rophe s which were cr eased by $1 0 million, and now stand at $38.5.

We IVe reserves for contingen cies which were incr eased 1 $1 million, and no w stand at $6 million. Then the ilanc e was appr op riated to the rate stabilization fund hich previously stood at $9.599 million and cu rren tly ands at $1 7.4 44 million. So the change in pos ition on app rop riated retained irnings, 1983 over 1984, is $43.099 million in 1983 1 $6 1. 944 million in 1984, reviewed by the auditors 3 ca refu lly and discus sed and is en tirely to the ir satisfac tion . MR. D. SLAKE: I suppo se we could probably start some questioning on the general insurance business, Mr. Cha irman.

I wonder if the Minister or some of the staff could report on our po sition in the general insuranc e business. Wha t was the largest reason for the loss recorded thi s year? Then we can maybe go into some other questions from th ere. MR. C. LAUFER: The direct and agency business, which is a portion of the General In surance Division, and constitutes tha t business tha t we market in the Manitoba marketpla ce in com petition with the other insu rance compani es here, produc ed acc eptable results, in tha t it was a break- even situation, given a very very tough marketplace.

I can give you some statistics as to wha t happ ened nationally and internati onally , if you wish to ha ve th em. The problems tha t we encou ntered arose in wha t we call our Reinsu rance Assumed area, which is also a portion of the General Insur ance Division, and tha t is an inward flow of insurances placed by other companies th roughout the world. As you probably kno w, that when very large risks are unde rtaken, th ose risks are not assu mable or afford able by a single insurance company even compa nies like Lloyd's of London or the Munich Re, or wha t ha ve you.

So portions of the se large risks are seeded out th roughout the world to various insu rance com panies. We pick up portions of tha t and th at's our assumed portfolio. The business tha t we're dealing with tha t has caused us some pro blems has been on our books since 1975, '76, '77 and '78, and because of various fact ors tha t ha ve arisen in the world, the wide situation today, are developing losses tha t were really not forecast or expect ed.

So the entire $4.8 million loss of the General In surance Division arose from tha t portfolio and is reflective of wha t is ha ppening in the intern ational reinsurance situation. MR. D. SLAKE: Was th ere any particularly large loss tha t we suffered as a result of reinsuranc e under this portfolio? MR. C. LAUFER: They don't necessarily fall into single­ los s categories, while the re are a few of th ose; the y generally fall into treaties tha t may have wide-reaching results.

One of our worst treaties is one tha t's calle d Pine Top, and it's a casualty treaty tha t in the early years had sh owed us some very nice surplus es. However, in the last two or two- and- a-half years has begun to deteriorate rather severely and is now showing us some very heavy los ses. it's not just an individual loss, it's a group of losses and th at's mostly casualty or liability business. A MEMBER: A point of order. MR. CHAIRMAN: A point of order is being raised. A MEMBER: We ha ve great difficu lty hearing at this end of the tabl e, I wonder if he could speak up a little, so we can hear .

Tuesday, 23 April, 1985 MR. D. SLAKE: Who are you ha ving trouble he aring, me or Mr. Laufer? A MEMBER: Mr. Laufer primarily. MR. D. SLAKE: Oh, tha t's the important one. Wha t I'm primarily interested in, Mr. Cha irman, it was the Brighton Hotel tha t was bom bed exten sively when Mrs. Tha tcher was holding her convention there. Was this one of the losses that contributed to the Pine Top casualty treaty losses? MR. C. LAUFER: No, I'm happy to say tha t we were not on the Brighton Hotel. MR. D. SLAKE: Mr.

Chairman, are we still reinsuring other compani es tha t are in com petition to our general insurance line and offering lines that may be broader coverage than what we're offe ring our agents under the general insurance? MR. C. LAUFER: We have, thr ough thi s vast ne twork of reinsurance placements, and it is an intricate network that some times cros ses lin es, I think some small holdings in treati es that wou ld come across the Manitoba marketpla ce as well. MR. D. SLAKE: I wonder if Mr.

Laufer could comm ent on wha t our results would ha ve been if we had taken the reinsurance premiums and losses out of the picture. lt's a profitable business, reinsurance, in most cases. If we had taken our reinsurance profits out of our financial statements, what would our picture have been? MR. C. LAUFER: The General In surance Division would have shown a breakeven position. MR. D. SLAKE: I wonder if the y could tell us how much Autopa c's pr emiu m was under reinsu rance; what percentage of our Autopac's premiums were reinsured? MR. C.

LAUFER: Ok ay, the area of reinsurance tha t you are dealing with now is what we call seeded reinsurance, which is opposed to assumed reinsurance. Wha t, indeed, we do on the automobi le side is, th ose areas and levels of risk tha t we can' t afford to retain, because of the magnitude of the exposu re, are seeded off into various interna tional marke ts, primarily through Lloyd' s of Lon don, th rough the Munich, thr ough SCOR in Paris, through the Folk shem (phone tic) in Sweden and through some of the Cana dian compani es as well.

The premiums seeded off on tha t area would be app roximately 1 percent of the premiums written. MR. D. SLAKE: Tha t seems reasonably low. Ther e are some of them tha t are substanti ally higher than tha t in some other corpor ations. MR. C. LAUFER: Yes, we are ha ppy to say tha t we are enjo ying a rather good pos ition in the reinsurance marke tpla ce.

We ha ve had much liaison with the und erwriters and I think we ha ve conv inced them tha t Manitoba is a good pla ce to pick up insu rance from the primary carriers, particula rly MP IC, and we enjoy rates tha t are probab ly, in some cases, one -t hird to 4 on e-sixth tha t other compani es may be paying for the same cover. MR. D. SLAKE: Yes, I think Wawanesa is 1.8, one of the other really lower ones as far as perc entage of reinsurance to premiums written is and, as we all kn ow, th at's a very successfu l company . Mr.

Cha irman, some of my other col leagues have some questions about reinsuranc e, so we can turn it over to them. MR. CHAIRM AN: The Mem ber for River Heights. MR. W. STEEN: Yes, Mr. Cha irman, to Mr. Laufer. Did I hear you corr ectly when you said tha t it costs about 1 percent of premium for reinsurance and, if tha t is the statement you made, is tha t pertaining to the automo bile sectio n? MR. C. LAUFER: Yes. MR. W. STEEN: Wha t is the cost of the reinsuranc e in the general sectio n? MR. C. LAUFER: The general insurance portfolio, the rein surance costs are 10 perc ent of the written premiums. MR. W.

STEEN: Mr. Cha irman, to Mr. Laufer. Did I hear you corr ectly when you said tha t it was the reinsuranc e aspect of the general insurance portion of your business tha t caused you the $4.8 million loss on the general sectio n? MR. C. LAUFER: Th at's corr ect . lt's the reinsuranc e assumed portion of the General Insu rance Division tha t cau ses a loss. The premiums to wh ich I referred, in ans wer to your question, are the seeded premiums, the outgoing premiums. MR.

W STEEN: Wha t would be the limits of insu ranc e coverage tha t you would pla ce tha t you would not reinsure, or at what point do you reinsur e your general coverages? MR. C. LAUFER: We ha ve several types of protection th at we buy.

We buy a numb er of facult ative covers which are done on an individual basis on large risks, such as, a large building or a large business; we buy general catast rophe cover in the event of storms or other catast rophes, such as, a large fire tha t spr eads through many buildings and so on; we buy certain layers of protection for individual liability or casualty risks; we buy certain layers of protection for prop erty risks, and the y vary. We buy them in strips because we can get better premium advantages at various layers from different places in the world, so we shop tha t part of the bus iness very actively.

Our maximum retention on anything which would be on cat, I believe is a million dolla rs. MR. W. STEEN: I would gather tha t MP IC will only insu re pro perties within Manitoba un der its Gene ral In surance Division. When you reinsure, are you obligated to, in return, or in turn, purch ase reinsurance from other insuranc e compani es for pro perties outside of Manitoba?

Tuesday, 23 April, 1985 IR . C. LAUFER: We only write prop erty insuranc e in 1e Province of Manitoba, un less we are dealing with Mani toba - based company tha t has a national or an Jternational ope ration, in which case we are able to rrite the entire book. So we do ha ve exposu res in rovinces other than Manitoba when we write a national ompany , Manitoba-b ased . tR. W. STEEN: Mr. Cha irman, to Mr. Laufer, will you 1uy rein surance sectio ns of proper ties outside of �a nitoba from other insu ring compani es? �R. C.

LAUFER: We buy reinsurance protection on he en tire book of business when we are dealing with reinsu rer. We show him what the book is at the 'articular time tha t we are dealing with the renewal or he acquisition of a treaty, and we give forecasts as to 1hat we believe will be the developm ent of tha t book 1ver the cou rse of the treaty.

As you can appr eciate, a treaty written on Day One vith a certain numb er of risks in it can change ignificantly by the end of the year, and the treaty loesn' t add th ose risks risk- by-risk, it's written as a 1lan ket sort of policy to deal with all the situations tha t trise over the cou rse of the treaty year. Tha t wo uld nc lude any proper ties or exposu res, liability-wise, 1utside of the province as well. Certainly, on the assu med side, we pick up portions 11 books of bus iness tha t may be written on a na tiona l 1asis; indeed, a U. S. basis or an intern ational basis. !fR. W. STEEN: Mr.

Cha irman, to Mr. Laufer. Wha t 1e rcentage of Manitoba 's general insurance business s written by MPIC , the total business tha t is pla ced n the province? III R. C. LAUFER: At the present time, MPIC has 14 o 16 percent of the market sh are, which I believe places JS very cl ose to No. 1, pro bably No. 2 behin d Wawanesa. III R. W. STEEN: Tha t's fine for now. III R. CHAIRMAN: The Mem ber for Rhinelan d. IIR. A. BROWN: Thank you, Mr. Chai rman. My first 1uestion is, and ther e always seems to be some ;onfusion in thi s, wha t cl assification should an ML A le in on his registration card?

Should he be all-pu rpose? 3hou ld he be pleasure? Should he be business? it's ;o mething tha t seems to come up contin uously. I had :o have a wind shi eld replaced in my car and the y asked ne, well, when did thi s happen? I said while I was :lriving to the Legislature. - (In terjection) - He was le ginning to wonder . Well, hav e you got the right ;lassifica tion? So fin ally the determina tion tha t this chap made was that it was okay for me to drive from my home to the _egislature and that all-pu rpose would be fine.

But when . drive from my apartment to the Legisla ture, I would 10t be covered under all-pu rpose. Now tha t again didn' t make sense. I would like to hear wha t Mr. Laufer has to say about this. Wha t cl assification should we be in? MR. C. LAUFER: If you have an all-pur pose cover , .vhich I assume tha t you ha ve, driving from your home 5 to you r pla ce of work which is the Legislative Building or your cons tituency office or pla ces like tha t, all­ purpos e cover would suffice.

If you are selling magazines on the side and you'r e driving more than 1,000 miles a year doing tha t or some other occu pation such as tha t, then business insu rance would be required. MR. A. BROWN: Ok ay, wha t about the fact tha t for part of our mileage at least we receive remune ration? We receive a travel allowance for part of the mileage tha t we drive. Does tha t come into effect? MR. C. LAUFER: The compens ation tha t you receive for the ope ration of your vehicle does not affect the cover change between all-purp ose and business. MR. A. BROWN: From wha t I un derstand then, Mr.

Cha irman, it's all right for us to have all-pu rpose licen ces, becaus e most of us do have all-pur pos e licences. So tha t would be sufficient, un less we sell beans on the way. MR. C. LAUFER: Tha t is co rrect . MR. A. BROWN: Thank you. My next question is, Mr.

Cha irman, tha t one of the areas of concern which are exp ressed by cons tituents is tha t the pr ocess of arbitration th at we have at the present time, if somebody is not ple ased with the settlement of the cla im then he can take thi s to arbitration, but it's the same group of people who do the arbitrating who made the decision in the first pla ce and the y're rather un happy about that. I wonder if the M PlC has given serious cons ideration to ha ve an independent to do the arbitration because, Mr.

Cha irman, the people who are not satisfied with the cla ims feel tha t th ese people have a vested interest tha t are settling the cla ims now , to uphold the ruling which would ha ve been made in the first pla ce. MR. C. LAUFER: The arbitration procedu re, as was originally set up, was set up in an effort to mitigate the costs of any dispute tha t might arise between the c orporatio n and the owner of the vehicle. I think it's a fair and an equitable system if, like anything else, it's given the proper operating rules.

We try to couns el the insured to some extent or to the extent tha t we can as to how thi s proced ure ought to take place. First of all, when the adjuster and/ or the supervisor or the cla ims centre manager ha s reac hed the point where the y feel they can offer no more for a given vehicle and the re is still a fairly substan tial disparity of opinion between what it's worth between tha t offer and tha t of the owner, the arbitration proced ure is put into place. We do no t use anyone tha t was invo lved in the arrival of the final offer of the corpor ation in the arbitration procedure.

Tha t's strictly avoided. We select from a group of peop le tha t we've come to kno w over the years who have expertise in evaluating automob iles and the se are usually people from the indu stry, from the dealerships, from the trade. We try to couns el an insured or a vehicle owner to seek similar professio nal help as his no minee to the

TUesday, 23 April, 1985 arbitration comm ittee. If he does that, if he gets a person from the trade and we offer to allow him to view any list of th ose qualified peo ple tha t we kno w of to make a selec tion from, but if he elects to get a profe ssional, usually the two of them can get together , the y view the vehicle togeth er, and can come to a conclus ion. Th ere is the odd time when even tho se two can' t agree, and the two of them then get together and th ey select a third person who acts as the ump ire. The umpire and one of the two othe r pa rties can reach an agreement, and tha t is binding.

If ther e is still a dispute between the thr ee of them, the umpire can make the decision on his own . Wha t does happen fro m time to time which causes some confusio n is tha t the insured will, rather than get a qualified professional to do an ap praisal , will get his brother- in-la w or his uncle or somebody else, and tha t person will come in and say, yeah, this car is worth 10 times more than you're ask ing for it, and we get a compl ete impasse.

Even then when the ump ire is appointed , the person repres enting the claimant feels ha rd done by because the thing come s down at a value tha t is nowhere near what the y're look ing for. So we do have problems like tha t with it. We ha ve, in the last th ree or four months now, begun to review the whole process to see if ther e might be a more concis e way of doing it. We ha ven't come up with any real answers as yet, but we'll be con tinuin g to work on that. MR. CHAIRMAN: The Mem ber for Swan River. MR. D. GOUR LAY: Thank you, Mr. Chairman .

With respect to the type of insurance tha t an MLA should be covered , I che cked into thi s concern this current licens ing year. My agent advised me tha t I should ha ve business insurance on it, and he checked with the office in Brandon. He was advised tha t if we were using our vehicles for over 1,000 miles a year and claiming mileage, tha t it was imperative tha t we ha ve busine ss insurance on our vehicles. I only had all-p urpose up until this year, so I've changed it to business insurance which is cons idera bl y mo re mone y for busine ss insurance, as you can appreciate.

You indicated tha t all-purp ose is suffice for MLAs. MR. C. LAUFER: If the travelling tha t you're doing can be equated to going to and from work, in other words, if you're co ming in to the Legislative Buildings or you're going to your cons tituenc y office, tha t's wher e the confusion might arise. Someone may be counting tha t as business mileage. lt is no t busine ss mileage when you're travelling to and from work. If you're doing extensive constituency work and running a whole bunch of miles up that way, tha t could reasonably be cons trued as busine ss mileage too, if you' re doing an awful lot of that.

But if you're running und er 1,000 miles on act ual constituenc y work and the rest of the mileage related to your work as an ML A is driving in here to your job or to your constituenc y office tha t should n't be cou nted in that 1,000 miles. MR. D. GOURLAY: You seem to put bearing on the numb er of miles travelled , and bec ause I live in Swan River, it does amount up to a lot of miles in the cou rse 6 of a year, but stric tly it's just getting to and from m� constit uency to the Legislature. So it would be proper for me to ha ve all-pur pose rat her than bu siness insurance? MR. C.

LAUFER: If tha t is where the mileage is being run up, to come back and forth here, then all-pur pose insurance is all that you require. MR. D. GOUR LAY: Now, with respect to claims offices throughout Manitoba, I notic e th ere are six listed here Do the y differ from one loca tion to another or are the} basically the same kind of claims offices? Maybe I coulc add a little more. In the case of Swan River, we havE two adjusters the re, but we don' t have an estimator and I' m just won dering, do all the claims officers jus· ha ve adjusters or are estimators located in spec ifi( areas of the province. MR. C.

LAUFER: The offices, very generally, we'vE been trying over the last five or six years to upgradE the level of service and the quality of service in thE rural areas and, by and large, we ha ve estimatin! perso nnel available in most rural areas no w, a goo( percentage of them ha ve estimators tha t are on site The areas where the volume of claims is low, it is stil difficult to econ omically justify an on-staff estimator a the site. Swan River, I believe, h as an estimator comin! in from either Th ompson or The Pas - (Int erject ion - coming in from Dauphin to do the estimating of tht more serious losses.

The smalle r one s are done by tht staff adjusters. MR. D. GOURLAY: How is the determination made when will an estimator be called in to estimate or wher will an adjuster be allowed to handle the claim? Where': the cut off th ere? MR. C. LAUFER: We don' t ha ve a rigid cuto ff.

Th• estimator travels into Swan River on a weekly basi an d, again , if you ha ve something tha t is of an urgen natu re, the adjuster may go ahead and auth orize certai1 types of repairs and the estimator will have a look a it in prog ress so tha t we don' t hold up the claimanl Generally losses of $500 or so should readily be hand le• by an adjuster, and, as I say, th ose thi ngs tha t requir immediate attention he'll give auth ority to, to begin th repairs, and then the estimator will check it out to b sure tha t everything is in order.

Certainly he'l l do th route of the garages and estimate th ose vehicl es thE are there which the adjuster hasn' t looked after. MR. D. GOURLAY: Is it possi ble for an adjus ter t move up to be an estimator and, if so, wha t additiom training or what would he ha ve to go through to b able to change his status? MR. C. LAUFER: Gene rally, the adjusters don' t go t that route. We're bringing people in as estimators wh are jou rneymen autobody repair mechanic s havin received the proper training in Red River Communi1 Col lege, or like institutions, having served the propE appr entic es hip on the benches.

Usually the people wh we choo se are people who ha ve risen in the trade t foremen or shop supervisors or the like. Those are th

Tuesday, 23 April, 1985 <in ds of people whom we are looking for and th ose are the type of people generally who are hired. The road adjusters are given certain types of in-hous e training.

At the present time, we ha ve a program in Jlace called ICAR, which deals with the newer type of �ons truc tion of the alphab et cars - the K-cars, the A­ �ars, the X-cars - tho se various vehicles that don' t ha ve 1o rmal frames in the ir construction, and there is a spec ial repair tech ni que so we're run ning all the E!Stimators and a goodly numb er of our road adjusters through this training program in order to update them to th ose technol ogies. We ha ve had specialized cou rses in frame repairs and thi ngs like tha t for the estimating and adjusting staff.

We bring them up-to-date from time to time on any advanc es in technolo gy such as pla stic welding of bumpers, and different types of repair for the fibreglass that's ap pearing more and more on vehicles. The adjusters, generally , when the y're looking to advance, 111 0uld go through the adjuster to examine and supervise a route as oppo sed to moving over into the estimating group. lt' s a better career path for them. MR. D. GOURLAY: I'll move onto another area. Where a cla im is the result of fire to a vehi cle, it appears tha t it takes an extremely long time to settle th ose particular claims.

I'm just wonder ing what the reason for that IIIOUid be. MR. C. LAUFER: As you probably kno w, vehicles of themselv es do not normall y burn to a crisp. Th ere is a lot of fire-re tardant material in them. For ins tanc e, if a fire starts unde r the hood, you ha ve a su bstantial fire wall th at's ther e to restrict the fire to the hood co mpa rtment and so on. So when we ha ve a fire tha t does mo re than wha t normally could be expected of it to do, we attempt to look for the cau se, and naturally ha ving some 400 or 500 adjusters, we can't have all of them expert in dealing with inc endiary losses.

So we have a special department which we call our SI U who ha ve been trained in the past before we hired them in areas of fire investigation. The investigation itself often takes a long time. lt requires sifting through the burned-out vehicle, sending material away for testing for presence of accelerants or other materials not no rmally found in a vehicle. lt entails a very detailed inspe ction of the vehicle for such things are discon nected gas lines backf iring thr ough the carbu retor, missing gas caps, any numb er of things tha t may sho w some contr ibuting fac tor to the fire.

All of th ose things ha ve to be then co-ordin ated with the investigations done by the fire department and the Fire Commissione r's Office. The result is then analy zed and some conclus ions reached. If the physical evidence sh ows tha t th ere was an acce lerant of some kind invol ved in the fire, then further investigation has to be made as to how th is came about. Oftentim es, tha t invo lves con tacting a lot of people , doing a lot of backtracking and doing a lot of interviews of the owners in order to determine either the legitimacy or the fraudulent ness of the cla im, and that's why the y take so long.

MR. CHAIR MAN: The Mem ber for La Verend rye. MR. R. BANMAN: Thank you, Mr. Cha irman. I ha ve a num ber of issues I' d like to raise today. The first one 7 is with regard to the M PlC attitude to some legislative ch anges which would force th em to pay interest on outstanding claims tha t are not settled, in other words disputed cla ims, tha t are not settled within a 30-day period. lt would be primarily aimed at the disputes tha t erupt when a farmer loses a hog barn or loses a dairy barn or when a small entr epreneur loses a pla ce of business.

I say tha t, because I kno w from personal experience over the last numb er of years, ther e are some people who, when they lose the ir onl y means of supp ort and then have a claim dragged on for one reason or anoth er, th ey then are put in the position of not ha ving any income, still carrying fairly heavy mortgages on tha t particular piece of prop erty which no w, of cou rse, isn't bringing them any return, and as a result are put in the pos ition of having to, I think, some times maybe settle a little quicker than the y shou ld. Thi s is not aimed only at MP IC.

This, of cou rse, would include all the gen eral insurance people tha t are doing fire and theft. I am wondering if MP IC has done any studies, any work on this at all as far as to the ramifications tha t it would have with regard to the settling of cla ims and to the general rates charged within the system right no w. MR. C. LAUFER: We're certa inly aware of the problem tha t you ha ve raised. We ha ven't done any specific studies on it. lt is something, I believe, tha t would have to be tackle d by an industry group to see what the overall impact would be.

In most cases, I would like to say tha t, given a hog barn or tha t type of small bu siness being destroyed or put out of business because of a fire, we give tha t a very high priority, and we work on it very quickly to establish the cause of the loss and if it's straightforward, we get th ose settlement cheque s out fast. Sometimes th ere is a question. Sometimes we just don't kno w wha t caused the loss, and we ha ve to get some experts in to check it out, electrical or oth erwise and the y're not always readily available. So th ose kind of delays which you mentioned can oc cur.

To calcu late what the impact would be by adding interest to the settlement from the date of loss would be a little bit difficult. I th ink, as you say, also tha t cost would then have to be calc ulated in the overall loss exper ience and added back into the premium to be picked up by future insu reds. MR. R. BANMAN: I guess wha t I would recommend, Mr. Cha irman, is not as date of loss, allo w for a 30- day time period like we all have to pay our invoices tha t we receive from different compani es.

But after tha t period if there is a large amount of mo ney tha t a person ha s to ha ve in order to make payments or go ahead and make a living, I think it would be only reaso nable , as you mentioned, the cost might not be tha t big.

But I know from some people who have had, because maybe an inspector from the Fire Commissione r's office isn't quite sure and maybe a local fire chi ef isn' t quite sure and is very cautious tha t they don' t want to make any mistakes, something can be held up for two or thr ee mont hs, four months , and the anxiety tha t th ese people go thr ough kno wing tha t they ha ve not done anything wrong, but the bureauc ratic system ha s to be gone

TUesday, 23 April, 1985 thr ough. If there at least was some ass urance tha t the y would not lose everythin g, then I think tha t tha t peace of mind to th ese people would be worth a lot. I kn ow a colleague of mine, the Mem ber for St. Norbert, is contempla ting br inging in a Pr ivate Mem bers' Bill which would see all insur ance comp anies ha ving to live un der tha t type of guideline. Of cou rse, tha t would n't put anybody at a compe titive disadvantage because the cost of tha t would ha ve to be borne right across by everybody paying.

So, I say I think th at's so mething we should all be looking at and working with. The other question I raised during the Department of Highways Estimates under the Motor Vehicle Branch, I raised several questions dealing with the problem of salvage vehicles which are being sold to pr ivate individuals, and are then being repaired at home in the garage and then being sold privately again to some un suspecting consumer , and tha t vehi cle ne ver ha ving to go through a motor vehicle testing station.

I ha ve no argument with MP IC conduc ting the auctions the way the y are, but I think because we do not require all motor vehicles in the Province of Ma nitoba to ha ve safety certificates when the y are registered, ther e is a real loophole here. I kno w from personal experience, I had a young girl who bought an alm ost-ne w car , I think ther e was about 4,000 kilometres on it. lt was bought through the salvage, taken home by an individual, repaired in the back shop, in his backyard, then put an ad in the paper, sold it to this person at nighttime - she didn' t kn ow - she thought she was getting a good deal.

Two weeks later she finds out sh e's bought an Autopa c write-off -i t was a front-wheel drive car - tha t had n't been lined up properly or anything because when she went to register it, it didn' t req uire a safe motor vehicle certificate.

I'm wonde ring if Autopac could n't work out some kind of a system where before tha t car is registered - if it goes through a registered dealer then of cou rse tha t dealer has to pro vide a certificate - isn't ther e some sys tem, when either a wrecker or somebody is buying tha t car , that th ose people then will ha ve to ha ve a safe motor vehicle certificate with tha t car?

Because oth erwise not onl y from a safety stand point - we're getting cars on the road tha t are very un safe - but also from a consumer protection stand point I think th ese people should be protected, and we should not allo w a loophole in our law right now to ha ve the se cars come on to the high way un less the y ha ve been fixed properly and we are assured tha t they are in good repair. MR. C. LAUFER: We certa inly share your concerns in tha t regard . We ha ve been working cl osely with the Motor Vehicle Branch in an effort to develop some kind of system tha t would cap ture th ose cars.

As you kno w, when the y're sold on the auctio n, even though the car may be a stolen vehicle recovered in good condi tion, th ose cars are sold with a non- safe vehicle certificate which specifi cally says that the car can' t be put back on the road and registered without going thr ough a safety check. We make the Motor Vehicle Branch aware by a listing of all the vehicles tha t we sel l by auction in tha t fashion; 8 and if the person who purch ases the car from the salvage compound tries to register it, it automa tically comes up on the machi nery and the car is called in for an inspecti on.

However, the situation such as happ ened to the person tha t you kno w is the one tha t eludes us. If the original purchaser from MPIC salvage does not re­ register the car, in other words, he sel ls it to another party before it comes back into the registration area, we lose track of it and we can' t get a hit on the machin ery. it can very well get registered without going through or ha ving a recall for an insp ection.

I might say tha t given the concern tha t we have, and I'm sure the motor dealers and a numb er of peo ple ha ve brought it to our attention, we've kept a fairly clo se eye on wh at's hap pening and I'm relieved to say, tha t to the best of my kno wledge we haven't had a repeat acc ident on a car th at's come out of the auc tion, repaired and put back on the road, where we can pinpo int the acci dent to improper repair of the vehicle. So we're than kful for tha t. Th at's not to say tha t it can' t happen in the future. But so far, we hav en' t had any " experience like that.

We're continuing to work to see if we can perfect a method of ensu ring tha t when th ose cars leave us, we can keep track of them un til such time as the y are registered again and make sure tha t we can get them safety checked. But it is tough. MR. B. BANMAN: The difficulty we have, and you put your finger on it, what happens even I as a motor dealer, when I sell a car, I can sell a car to my colle ague, the Mem ber for Turtle Mou ntain, which is absolutely not roadworthy , and he can turn around and sell it to another col league here.

I can sell it to him uns afe, give him an un safe vehicle sticker, so he can' t register it. But he turns around and sells it to the Member for Kirkfield Park who goes down to a local Autopac agent and there is nothing to stop her from registering it and you can ha ve a car, which is totally un safe, hit the road without ever having to pass thr ough a safe motor vehicle sticker; and you identified one of the problems.

Somebody can buy a salvaged car, and is not allo wed to register it, but can sell it to his brother or a friend for a dol lar and tha t person right after they've bought it, can put plates on it and drive it down the road. I think ther e's a real loophole here which should be addressed because we're introducing new legisla tion, like seat-belt legislation and all the se things for safety reasons, and her e we can put motor vehicles on the road without ever having to pass through any inspection.

So I hope th at the Public In surance Corpo ration, along with the Motor Vehicle Branch, can come up with some kind of system which would ensur e tha t th ese car s al least some where along the line, are safety che cked before th ey hit the road. The other question I'd like to ask, is whether the corpo ration has done any research on the effect o1 raising the drinking age from the prese nt 18 to 19, 20 or 21 .

There ha ve been some very extensive studies done in the States, and of cou rse we see now th at a lot of the Federal Govern ment in the United States has told the States, tha t if they're not going to raise their drinking age to 21 , th ey've encum bered certain road· building funds which now ha ve been an incenti ve for

Tuesday, 23 April, 1985 all the States to raise the ir drinking age. When you read some of the statistical inform ation that comes out with regard to drinking and driving and the acci dent rate and claims tha t are related to the younger drinking age, it's pretty shocking and I wonder if the corpor ation has done any asse ssment as to wha t the effect would be on raising the drinking age. MR. C. LAUFER: We hav en't done specific studies by age group on drinking and driving.

We ha ve during the course of our work on safety unco vered some statistics much along the line of th ose which you mention, which certainly indicates tha t in the serious accid ents among the young drivers the percentage of time tha t alcohol is involved, is su bstanti al. MR. R. BANMAN: I'm going to ask an unf air question here maybe, but I think many of us would be interested in the answer. Does the corp oration feel tha t if the drinking age was raised, tha t it would ha ve a positive impac t on the rate struc ture in thi s province? HON. J. BUCKLASCHUK: Perhaps I could respond to that.

I don't kno w tha t the corp oration is in the position to respond to tha t when the y hav en't done the necessary research. Just apropos to the comments tha t the mem ber made previous to Mr. Laufer's respons e, I, too, have read considerable literature on the issue of young drivers' drinking and I think to a large extent, the Memb er for La Verend rye would agree, th ere's a matter of interp retation. lt's not quite as conclus ive as many reports would lead us to believe.

Whi le I ag ree the re are many organi zations or associa tions tha t see tha t as being the pan acea, the reality is tha t simply by raising the drinking age does not necessarily mean tha t it won't take place; it then just becomes illegal rather than legal. But we are well aware though - and we shouldn't zero in on just you ng people - the fact is tha t drinking is a very serious conce rn. Tha t's why the corpor ation la st year pa rticipated in our drinking and driving advertising cam paign. lt's of major conce rn. MR. R. BANMAN: Well, Mr.

Cha irman, let me tell the Minister and I kno w this is a political problem and -not one that the corpora tion will deal with. But I sugge st to you tha t if we would raise the drinking age, from all the statistical informa tion available, tha t you would see not only the accid ents rate drop in tha t age group, we would also see a substantial reduc tion in some of tho se areas as far as the premiums are conc erned . One of the problems we had he re, Mr.

Ch airman, is tha t the gover nment is adop ting an ALER T Program which we all are happy for, they are trying to reduce the numb er of people tha t are driving and drinking at the same time. We ha ve identified - and the United States has done the studies and our sister provinces ha ve done some studies - to indicate clearly tha t the raising of the drinking age does reduce the accid ents and the fatalities in tha t age group.

We ha d introduc ed seat-belt legisl ation to make the roads safer, to try and reduce the inju ries to people and I cannot see how the Minister in cha rge of Manitoba Publ ic In suranc e Corpo ration canno t get up he re today and tell us tha t, yes, he is in favo ur of raising the drinking 9 age because it will do a numb er of the things tha t the government is talking about promo ting; and tha t is to try and get the driving-dr inker off the road and reduc e the fatalities on our roads; and, Mr. Cha irman, as Minister of Public Ins uranc e, he might even be able to lower the rates a little bit.

If the y decide not to call the election this year maybe he can annou nce another rate decrease before they do call the election. So I say to the Minister, I don't think this is something tha t should be taken light ly. I believe th ere is a time now for them to move. The statistical inform ation is available and I suggest to him if it might be on any other issue, he would jump on it.

But I would ask hi m to seriously review it, to ask the Manitoba Pub lic Ins uranc e Corpo ration to do a study and com pile the statistical inform ation tha t is avail able from other jurisdictions and then pro vide us with tha t document. If , Mr.

Cha irman, we can save - the Memb er for Kirkfield Park says one life - but if we can really reduce the amount of drunk drivers on the hi ghways by instituting a simple legislative change tha t will basica lly no t affect the lives of anyone, we all kno w from personal expe rience when the drinking age was 21 - and I am dating myself - tha t really it was 18 because everybody tha t was 18 was trying to get in. Really, wha t we ha ve done ... MR. CHAIR MAN: Order please. If members want some some co nversatio ns to take place, they can go out in the hal lway. MR. R.

BANMAN: . . . is we ha ve brought it into the high schools and, of cours e, tho se are the . . . MR. CHAIR MAN: The Mem ber for La Verendrye. MR. R. BANMAN: Really what we have done is we brought it from 18, where it was when we were at 21, and we ha ve brought it to 15 and 16, and th ose are the new drivers who are ha ving a hard enough time adjusting to tha t freedom tha t the driver's licence gives them and you mix alcohol in with it and you've got a problem .

So I say to the Minister tha t if it means more safety on the roads, if we can get some people off the roads who shou ldn't be on the roads because the y are over the .08 or are involv ed with excess use of alcohol while they are driving, I think everything should be done to try and ac commoda te that. I suggest to the Minister tha t he move on tha t and as quickly as poss ible. Barring that, I hope he suppor ts a private mem bers' resolution should one come in. MR. CHAIR MAN: The Mem ber for Mo rris. MR. C. MANNESS: Thank you, Mr. Chairman.

Following on the line of questioning developed by the Member for La Verend rye, I am wond ering if the insuranc e corpo ration - th ey ha ve cond ucted studies as to the savings tha t ha ve been brought forward since the use, the advent of seat belts. I look on Page 16 and I see where Claims Costs incurr ed within the Automo bile Division ha ve incr eased roughly $4 million. I guess I am searching for a furthe r in-de tail breakout as to ho w bodily injure reclaims, or

Tuesday, 23 April, 1985 spe ci fic cl aims associated with accid ents, wha t experience the y ha ve gone through over the last year since seat belts ha ve come into place. MR. C. LAUFER: The nu mbers alone , if you look at them, and th ose nu mbers tha t you are looking at are dolla rs, don' t tell the story ac cura tely. There certa inly is an increase in Claims Costs attributable to two things. Infla tion, as you kno w, th ere is an impact on the cost of repairing automobiles, the cost of labour of doing so and all the peripheral costs with tha t.

There is also an upward pressure on settlements of bodily inj ury claims. So the same injury tha t was settled a year ago costs more to settle today. The other thing tha t one mus t look at is what is happ ened in frequenc y. We found tha t 19 84 over 19 83 saw an increase in cl aim frequenc y of over 6 perce nt. Now, even given all of th ose fac tors of more claims and greater costs, you see a very small incr ease in the dollar cost of the cl aim. I think tha t can be attributed to a large extent because th ere are fewer inju ries.

The stat istics that are required to really quan tify tha t accu rately are not available because, as you kn ow, I think I mentioned last year, we were only begin ning to colle ct statistics for compa rative purpo ses thi s past year. We cou ld only make a sort of a broad-brush comp arison against wha t hap pened the year prior because we didn' t ha ve systems set up to analy ze each type of injury one against the other tha t would give you the kind of informa tion tha t you require. Next year we will ha ve tha t and be able to demons trate wha t kind of savings tha t we're effecting in tha t area.

If you look on Page 12 , you will see tha t the no-fault acci dent ben efits in the bar ch art in 19 83 cos t the corpor ation, as a perc entage of its total expenditu re, 5.5 percent; and in 19 84 only 4.2 percent, given even the fact tha t th ere was a 6 percent inc rease in claims. Now tha t might give you a little better idea. The accident benefits were 5.7 percent reduced to 5.3 percent. So some thing is ha ppening the right way, but to ac tually quan tify it specifica lly is most difficult at this time. MR. C. MANN ESS: Well, Mr. Ch airman, I thank Mr. Laufer for his explana tion and I certa inly accept it.

I suppose you could make one come to the conclus ion, and I can under stand why the department and certa inly the Government of the Day would want to see continued the ana lysis within that area. But I would then ask the Minister why he would not initiate some similar analysis with respect to the drinking age between 18 and 21 as requested by my colleague?

Quite ob viously th ere may be further potential thr ough some type of change within legisla tion tha t improve the same situation; it seems to be improving because of the advent of seat belts. 1 would ask the Minister whether it's his intentions to give a direction to MPIC to initiate the studies tha t would, in a Manitoba experience, try to cast some conclu sive light on thi s prob lem of young drivers drinking? HON. J. BUCKLASCHUK: I am not in disag reement tha t ther e may well be a problem with young drivers drinking.

Wha t I did say, though, and while ther e is cons iderable evidence to tha t effect in other 10 jurisdictions, th ere is also evidence tha t the mag nitude is no t necessarily as large as some people would believe it. By simply raising the age, as the Mem ber for La Verendrye has requested, to 21 does not mean tha t the con sumption of alcohol will necessarily decrease. Tha t's rather a simplistic viewpoint of the problem.

As a matter of fact, I kno w ther e are some associatio ns or organi zations in Manitoba tha t are ver} close to the issues of traffic safety do not necessaril} sup port an increase in the drinking age. Tha t is certain!} some thing tha t we could take a look at, and we are add ressing it to some extent through our ALIVE cam paign through our advertising of drinking anc driving. it doesn' t really matter whether the person is 19 01 whether the person is 39, the driver who is drinking i! still a ha zard on a highwa y, and we should do wh ateve1 we can to decr ease tha t incidence. MR. C. MANNESS: Mr.

Cha irman, the Mini ste indicates tha t it's not a simplistic matter. You jus t can ' read, at least into the results tha t he has seen presentee in the reports tha t he has read, a conclu sive type o answer. I accept tha t, but why would he not and wh] would he not ha ve before this time ha ve issue< instruction to M PlC to develop some Manitoba researcl with respect to this question?

I realize th ere are parties within society who, of cou rse would be oppo sed to incr easing the drinking ag< beyond 18 , but why is it tha t he is reluctant up to thi: point in time to ask MP IC to use the ir wealth o experience and statistics to try and determine on th< Manitoba experience a logical set of statistics th at wil try and help us along thi s area of discu ssion? HON. J.

BUCKLASCHUK: In respons e to the Membe for Mo rris, it's not a question of a reluctanc e, it's ' question of my not having seen this as being a priori!] Certainly I will take the views expressed by the member of thi s committee into cons ideration, and we may we ask MPIC to do a detailed study on this issue. MR. C. MANNESS: Associated with this, Mr. Cha irmar you were in comm ittee the other night when I pose several questions to the Minister of Transp ortation wit respect to the accid ent statistic rate over 19 84 sine the implementation of the seat-belt law.

I'm wond erin whether this particular Minister and M PlC ha ve had a opportuni ty to review an

article and a statemer presented by one Mr. John Martens from Sanforc Ma nitoba, who has compiled a fair am ount < information and who has reached certain conclus ion with respect to the seat-belt law. I'm wond ering if the Minister in ch arge ha s had a opp ortunity to peruse this statement which I think w� left with his col league, the Minister of TransportatiOI and whether he has forwarded it to MP IC for the cons ideration. HON. J. BUCKLASCHUK: I'm aware of H corr espond ence, but I ha ve not had tha t forwa rded 1 me for further review.

I presum e tha t the Minister < Highways and Transpor tation is ha ving his staff loc at it, but it's not been sent on to me. lt may well t tha t it will work its way th rough to the corpo ratic

Tuesday, 23 April, 1985 th rough the Departm ent of Highwa ys and Tra nspor tation. MR. C. MANNESS: Mr. Cha irman, then on tha t basis I really can't present any more questions to the Minister with respect to thi s area. Moving to a more general area, could the In surance Corpor ation tell us wha t the experience has been now with fro nt-wheel drive cars tha t are involved in accidents? Ob viously, the premium rate reflects wha t may be the additional cost of repairs associated with th ese cars tha t are invo lved in acc idents.

Is th ere any clear indication as to front-wheel drive vehi cles, or is all the evidence in and the concl usions no w reflected in the existing rate sched ule? MR. C. LAUFER: The evidence isn't all in. We ha ve been keeping a fairly close eye on it, because of some of the obvious things tha t happen with front-wheel drive vehicles. A lot of the components at the front of the vehicle are pla stic, fibreglas, etc. There is a lot of aluminum used in the engines and sometimes the tran smissions and parts of the drive train .

In very cold weather , front-end colli sions can caus e more exten sive damage than might ordinarily be expected from a rear­ wheel drive car. However, the last information statistically tha t we had on it was tha t the cars are still operating within the lo ss ratio designed around the premium tha t the y pay. Surp risingly to thi s point in time, the costs of repairing them are no t significantly greater tha n the rear-wheel drive cars. Tha t goes contrar y to wha t I would ha ve thought but to th is point in time the costs are comparable. MR. C. MANNESS: Mr.

Cha irman, I would like to ask a question with respect to windshields. Wha t roughly percent of the cl aim costs are associated with windshield repair, particula rly in rural areas where, of cour se, because of gravel roads th ere would ha ve to be a high incidence of thi s type of damage? What is hap pening within the area of windshield cl aims and windshield repair? MR. C. LAUFER: When you're referring to windshield repairs, are you referring to the actual repair of a damaged windshield as opp osed to replacement of tha t winds hield? MR. C.

MANNESS: Th at's right, the replacement due to stone damage particula rly. MR. C. LAUFER: We do two thi ngs. We have a program wh ere repairs are actu ally car ried out to damaged wind shi elds without repl acem ent, if the damage is not too severe. If it's a light chip, you kno w, half -m oon, things like that, th ere are repair techniques available tha t will preserve tha t windshi eld and remove the blemi sh so tha t it's not no tic eable or create any impairment to vision. Th ose more severely damaged, we rep lace.

The cost of windshi eld repl acem ents as oppo sed to our overall claim payments is about something in excess of $1 million worth of windshields a year. We spend about, I believe, $67 million to $69 million on other 11 repairs. When I say 67 to 69, tha t would include that million dolla rs for it. MR. C. MANNESS: Well, I' m glad to hear th at. lt' s putting into perspective th ose numb ers. I wasn' t aware of tha t. Changing the subject, Mr. Cha irman, I ha ve had a couple of situations no w, a couple of constituents who ha d new vehicles, let's say, within the period of ha lf­ a-year totally destroyed by fire.

Of course, they weren't upset with the cla im as such tha t they received from Autopac. Their greater concern was with respect to the sales tax tha t they had paid on a new vehicle and then, of cou rse, finding tha t nowhere was tha t insured, tha t portion of the costs, and then ha ving to buy a new vehicle shor tly afterwards and direct ing another $1 ,000 toward it. Is any part of sales tax covered within the existing act? If not, is th ere any discussion being given to looking at situations tha t might call for some suppor t in this area? MR. C. LAUFER: The sales tax is paid in full in the claims settlement.

If a new vehicle is purcha sed by an individual, they pay sales tax on whatever the retail price of tha t vehicle is, say, it's a $10,000 vehicle. Driving it perhaps for a year, nine, 10 months, 14 months, the car is destroyed by fire, it now has a value some 20 percent to 30 percent less than the original price. So the settlement would come in, say, $7,000 or $8,000.00. On tha t $7,000 or $8,000 which is deemed to be the act ual cash value of the vehicle is added 6 percent sales tax which is sho wn on the proof of loss document and is paid to the individual.

Sometimes I think the individual fee ls tha t the settlement they get, which includes, say, another $600 for sales tax or $500 is the full amount tha t they received for th eir car. I have had a couple of inquiries of that nature, and then when we went back over it with the insured, the y said, oh yeah, I realize no w th at the sales tax was put in there, I just overlooked it. Our adjusting staff is cautione d to ensure tha t the insured understands tha t the sales tax is being paid. MR. C. MANNESS: Mr. Ch airman , I thank Mr. Laufer for tha t clar ification. MR. CHAIR MAN: The Member for lnks ter. MR. D.

SCOTT: Thank you, Mr. Cha irman. I thought I'd follow up on a couple of questions tha t I raised last year, and thi s is in relation to the vehicles tha t we are losing probably still the most money on and I want to see if tha t is still true, and to see what kind of ratio we are losing funds on the se vehicles.

No. 1, I bel ieve farm trucks are probably still one of the largest loss leaders, if you could call it tha t; four­ wheel drives, and unf ortuna tely I don' t under stand why both of the se catego ries have such low insurance premiums when they ha ve such high damage statistics behind them and such a poor record of paying for th emselves . The other category is moto rcy cles. I believe last year - (Inter jectio n) - no, farmers get a lot of benefits tha t other people don' t get, I guess, and thi s is one area tha t I wonder about. lt' s not a lack of suppo rt of

Tuesday, 23 April, 1985 farmers. Farmers, I think, don't want subs idies. You people are the ones tha t say tha t the farm communi ty is the one tha t's against subs idies the most and th ey want to stand up and hold the ir heads proud. I would like to kno w if Mr. Laufer could give us the loss ratios for motor cycles, fou r-wheel drives and farm trucks, and if th ere are any other catego ries such as th ose which ha ve high -lo ss ratios on them. Hopefu lly, it has turn ed around since last year.

But last year the only num ber I got was for motorcycles and the y said for every dollar's worth of premiums, there's about $1 .80 worth of claims. I am wonder ing if tha t is still the case, and what the ratios would be for fou r-wheel drives and farm trucks. MR. C. LAUFER: Last year, as you rec all, we made some specific adjustments on th ose cl asses which has improved the los s ratio some what.

I think at tha t time, in respons e to your question, I also pointed out tha t it was a long rather than a shor t-term sol ution, and th at we would be adjusting tho se catego ries over a period of four or five years, not necessarily each year in a row, in order to bring them more in line with the risks tha t they pose to the sys tem. So I can say broadly tha t, yes, there ha s been an imp rov ement as a result of la st year's additional premium in th ose areas. I don 't expect tha t the re will be an improvement thi s year because we made no special adjustments in tho se areas this year. MR. D.

SCOTT: Would it be possible for you to sen d a no te arou nd or something to give us the loss catego ries? I don't expect you ha ve it with you today. MR. C. LAUFER: Yes, normally I would have had it with me, but I didn' t think the question would come up. So I didn't bring it. MR. D. SCOTT: I'll raise it every year, Mr. Laufer. MR. C. LAUFER: Ok ay, so we' ll ha ve it with us every year, but I'll make tha t available to you indeed. MR. D. SCOTT: On the motor cycle

part in particular , you often hear people raising questions as whether or not th ey should be covered as a req uirement of compu lsory colli sion insu rance on them, and whether it would be feasible for motor cycles in particular to drop the the ft, or at least to ha ve the option for the person to drop purcha se of th eft insuranc e, which I unde rstand to be one of the major reaso ns for the losses, so the motorcycle driving public thems elves can decide whet her the y want the additional cov erage. lt would, I believe, cut down drama tically on our los ses at the same time without ne cessarily ha ving a gr eat impact on rates.

I'm wondering if tha t ha s been reviewed by :i1e corpo ration, if it would be possible, I guess, No. 1, to drop the theft in motorcycles and have tha t as an option the y would purchase on the ir insuranc e, and the same thing with colli sion.

On the colli sion, I am cogni zant to some extent tha t the litigation charges may be higher then for proo f of an acci dent where the y were involv ed with another vehicle in an acci dent, in other words, if a car runs 12 into a bike or vice versa where both are insured with colli sion, th ere isn 't the same litigation that one has if one was covered for the colli sion and the other not covered for colli sion. I'm wond ering if you could give us some idea of whether th ose avenues have been pur sued. MR. C.

LAUFER: Ok ay, on the first question tha t you raised, the compuls ory part of the motorcyc le package entails colli sion only , and thi rd party liability, and no­ fault accident benefits. lt does not include fire and theft, comprehens ive or pass enger ha zard. Those latter coverages are all available on an optional basis thr ough our Brandon office and through any of the other private insur ers tha t write tha t coverage in Manitoba. The question as to whether colli sion coverage cou ld be freed up, certain ly it cou ld.

I think it would do a bit of a disservice to the no-f ault aspect of the insurance plan as it's put into pla ce. As you kno w, for phy sical damage coverage th ere is a minimum of litigation involv ed in trying to es tab lish who should pay what. Every body gets paid in excess of th eir deductible and if th ere are other insu rers involv ed, it's just a small squabble over ho w the deductible portions will be paid out to each party, and that's the end of it.

If you remove the colli sion coverage, you enter intc a whole area of tort tha t could exten d, you kno w, intc many thousands of dolla rs which the bikes are no v. worth, and cause un necessary legal costs, unn ecessar) delays and certain ly compli cate the system a lot more. So I think wha t we have in pla ce for the motorcyc les list is the best of both worlds.

The y have a good compr ehens ive package wher e, if the y'r e involv ed witt ano ther vehicle , things are settled cleanly and quickly For th ose areas of coverage tha t don't involv e othe1 peop le, fire, the ft, compr ehens ive, the y can elect tc buy them or not buy them. Of cou rse, then the y car elect to protect thems elves against thi rd-party injurl cla ims to the extent they wish over and above the basic cover as well. MR. D.

SC OTT: So wha t you are saying then, if wE did away with colli sion on motor cycles, the premium! ins tead of going down would likely overall rise, becausE of legal costs incu rred in litigation. MR. C. LAUFER: I think tha t there would be somE pressure on the costs of settling th ose cla ims becausE of tha t. Certain ly th ere are some economi es of scalE to be gained when you write them all, as op posed i some people write some and others write others thE pressure on the costs would certain ly be upward.

I think you're probably aware tha t the cost o motor cycle insu rance in Manitoba is a real bargain com pared to other jurisdictions. MR. D. SCOTT: Mr. Cha irman, we ha ve soml comparable data on cars and automobi les. We don' ha ve anything between Manitoba and other provinces We ar e rem arkably low com pared to mos t othe jurisdic tions, especi ally for you ng er-age drivers, th osl und er the age of 25 for males and 24 for females.

I'< certain ly like to extend congratula tions to the firm 01 the good mana gement of being able to maintain th eSl lower rates and not have such an incre dible penalt: tha t one has in other jurisdictions against young people

Tuesday, 23 April, 1985 Jus t to compar e, in Winnipeg, for a Volkswagon Rab bit 1982, a two-d oor Rab bit in Winnipeg, it's $526 for a male under age 25 and the same in Toronto is alm ost th ree times tha t, at $1 ,467.00. In Kenora , just 100 miles from her e, it's mo re than th ree times tha t, it's at almo st $1 ,700.00. In Northern Alberta it's $1 ,600, which is almo st four times wha t it would be in Dauphin for a similar, co mparable jurisdiction.

When one looks at our rates com pared to other provinc es, for all categ ories, they are significa ntly lower than other provin c es, especi ally the se sec tors tha t ha ve - (In terjectio n) - private insu rance. No, the Member for Morris says are they loss leaders?

I'd say no, it proves tha t insuranc e compani es can be offered or can be run to offer general insuranc e or automobile insuranc e both to younger drivers-and older drivers, drivers at age 25 and older, at su bstantial ly less than is being ch arged in other jurisdictions. lt shows and pro ves the worth of pub lic automo bile insuranc e and it proves the logic of pu blic automo bile insu rance.

Every province tha t has publ ic insuranc e has lower rates than provinces without out it, with the possible exception - I don't ha ve stats yet on B.C., because they'v e done th eir darnede st to try and destroy the pu blic insuranc e system through the ir administration in British Columbia. Could we ge t some stats as well to comp are motorcycle registration fees in Manitoba comp ared to other jurisdictions? lt would be quite helpful for us in responding to concerns raised to us by mem bers of the pu blic. MR. C. LAUFER: We'll certa inly attempt to get tha t for you.

The difficulty tha t we will ha ve is to get representa tive premiums because moto rcycles written by the private sector are underwritten very very carefu lly. The sel ect groups, the groups tha t are trouble free and so on, I think we could get tho se kind of rates without too much difficu lty. Whe re the problem I th ink will come in is when moto rcycles belonging to gangs, to groups and so on, are tested against tha t sys tem, we won 't be able to get rates, because the y are very very tightly underwritten and in a lot of cases simply refused.

Wh ere ours deals with a cross-section, we have to ensure every motorbike tha t comes forward for registration and the private sector doesn 't. The liability part of the motorcyc le insurance can be pushed off into a facility or a pool and the phy sical dama ge is simply excl uded if the y feel it's an una ccep table risk either morally or phy sica lly. So while we can get you num bers, I don't think the y will be all tha t meaningf ul. MR. D. SCOTT: Thank you very much, Mr. Laufer, and keep up the good work. MR. CHAIR MAN: The Mem ber for Kirkfield Park. MRS. G. HAMMOND: Thank you, Mr. Chai rman .

I ha ve a compla int from a cons tituent tha t I'd like to deal with but before I do I'd like to ask the Minister, he mentioned when he was ans wering about raising the drinking age that th ere were certain organi zations tha t would not be in favour, I wonder if he was in a position to say wh ich organi zations th ose would be. HON. J. BUCKLASCHUK: I don't ha ve th ose names at my fingertips, but I do ha ve some corre spondence 13 in my files tha t would indicate tha t th ere are some groups in Manitoba tha t do not see the raising of the drinking age as being the answer to drinking and driving.

I'll certain ly provide tha t information to the member. MRS. G. HAMMOND: I thank the Minister. A cons tituent of mine had written to Mr. Sigurdson about a cla im and it's about the write-off of an automob ile. I kno w thi s isn 't in isolation, because this is one of the areas tha t you do hear about very often, tha t people buy older cars tha t are in good condi tion and then th ey're in an accid ent of no fault of the ir own and of cou rse they are not getting anywhere near the price they paid.

This particular consti tuent had just bought a car - it was his daught er who had bought a car a year ago at $1 ,900 and after much ha ssle, first of all, the y offered $850 and then after he wrote to Mr. Sigurdson. Mr. Sigurdson answered indicating tha t they had che cked some other used car dealers to find another value. The y rose the figure to $950 plus tax, and if the y wanted anything further , then they were to go to arbitration. Further to tha t, then the y came back and said the y' d made another error and the price went up to $1 ,100 plus tax.

Now, the problem with this cons tituent - and he was really irate - was the fact tha t he had gone to bat for his daught er. He wond ered how many other people couldn't afford the luxury of tha t and indicated in his letter tha t it would be a hardshi p for people who were low wage earners to ha �sle the corpo ration in any way, because, first of all, th ey probably need the ir car and the y cou ldn't afford to go thr ough the luxury of fighting the corpo ration.

I just wonder some times, after hearing th is and hearing from different people who ha ve had thi s type of thing , if part of the surplus tha t maybe the corporation has is because people are given unr ealistically low figures for the write-off of the ir cars. He was particu larly concerned with the arbitration process and really felt tha t it wouldn't be very fair because he gets an app raiser and Autopac would get an app raiser and the two of them come togeth er. But in his question it was how fair would it be when the MP IC ha s so much ju risdiction over the whole autom ob ile indus try?

He had wanted to ha ve an appointment with the Minister, but he got intercepted by a fello w by the name of Tom Laporte who indicated tha t the Minister just didn't see people for this type of thing. The other concern he had was tha t if he wanted to go to arbitration tha t the cost would be about $200 .00. I guess my question is: what is the cost of the arbitration process to a claimant? MR. C. LAUFER: As I mentioned earlier this morning, the cla imant or the vehicle owner is respo nsible for picking his own arbitrator.

A professio nal from a car dealership or some other related source would probably do an app raisal, depending again on how much time tha t they would spend on it - from $50 to $1 00.00. If the dispute escal ates between the two app raisers and an umpire is cho sen, the cost of tha t umpire would be split between the corpo ration and the individual. Tha t could probably add another $25 to $50 to the bill. MRS. G. HAMMOND: That seems to me to be very hi gh. When you 're getting ha ssled about a car tha t

Tuesday, 23 April, 1985 you' ve paid $1 ,900 worth to start with, and then you're offered $850 and, if you go to arbitration, th ey sugge st tha t you may well no t even come out with tha t figure, tha t the y could come in with a figure tha t's lower which certainly doesn't encou rage anyone to go to arbitration. I wonder, does the Minister have a policy of not seeing people who would like to discuss something like the arbitration process with the idea tha t maybe it should be more independent than it is right now. HON. J. BUCKLASCHUK: First of all, I'm not aware of thi s particular cl aim.

However, I believe ther e are some 208,000 cla ims reco rded for last year and I don' t think I'd find enough time in a day to deal with every inquiry tha t comes into the office. For tha t reason I, as a Minister, have a special assistant, Tom Lapo rte, who does interview quite a num ber of persons who telephone our office, or visit our office, and then pursue tha t matter thr ough the Corpo ration, so tha t the client or the motorist's concerns are attended to. it's impossible to please everyon e's desires and I do, on occasio n, see some persons whom I feel ha ve a very legitimate claim.

Th ese are reviewed by the Corp oration and a response is provided to me and, in most cases, I would say tha t the matter is resolved to the satisfaction of the cl aimant. I should indicate also tha t, while the mem ber may feel tha t all we hear are compla ints, I can also assure the mem ber tha t we receive, on occasion, letters from very satisfied cla imants from within the province, and from outside of the province, and I rec ently saw one I think tha t came in from the United States commending the Manitoba Public In surance Corpor ation for the effic iency and the cour teousne ss tha t was extended.

In terms of the arbitration process, I ha ve certain ly not had tha t many compla ints. As a matter of fact, I think it would be hone st to say tha t I've had more just off- the - cuf f remarks from fellow Manitobans who feel tha t MPIC is being very generous, or in some cases, almo st overly generous. I think the arbitration process is working; it's the fairest one , shor t of taking it to the cou rts, and if the member feels tha t the costs of arbitration are expen sive, the mem ber should perhaps review what the costs of dealing with matters of thi s natur e are th rough the cour ts.

The y're very much mor e subs tantial and if th is cost was to be burdened on the Corporation, tha t would be reflected in higher insurance premiums. I do think we ha ve a fairly efficient sys tem. I, certainly, have no t had tha t many compla ints; certa inly, we will hear the occasi onal compla int, but I think when you're dealing with 208,000 cla ims we're bound to hear tha t occasio nal comp laint. MRS. G. HAMMOND: Mr. Cha irman, I appr eciate the Minister's answer. I cer tainly wasn't, and neither was my consti tuent, talking about cou rtesy in any way.

He was just talking about the process and was extrerT, �·'y disgruntled about the fairness tha t he perceived as the process of arbitration. The other point tha t he made was tha t when th ey went to make the cla im it was very difficult to get through to the Claims Centr e because of sno wstorm, or something else, and the ans wer from Mr. Sigurdson was tha t, with respect to the handli ng of incoming calls , the Corpor ation had found tha t the present system is 14 satisfact ory during perio ds of normal vol ume , but problems can oc cur during peak periods.

In view of this, several altern atives are presently being consi dered to corr ect the problem. I wonder if the problems have been co rrected and, if so, wha t ha ve the y done? MR. C. LAUFER: Yes, we found tha t the switch board equipment and the telephone equipment tha t we had in the Cla ims Centr es which was installed back in '71 , was no longer capable of dealing with the kind of volumes and the kind of system tha t we ha ve now, with Dial- A- Cla im being the major of reporting clai ms.

That system is being removed from the centr es and a totally revamped, up- to- date and modern system is being installed, ho pefu lly, to be finished by the end of Jun e or mid- Jul y tha t will take care of all incoming calls; tha t will cue the calls in the ir proper order so tha t the switch board operator doesn' t inadvertently pick up a call out of sequen ce; will give super visors a moni toring device to know exactly ho w long a person has been waiting to speak to an adjuster in seco nds ; how many rings were required before the phone was an swered; what each individual station is doing with respect to respon ding to the ir telephon e, whether the y're promp t; how long each adjuster takes to deal with a situation on the telep hone.

So we'l l ha ve, in addition to a far superior an swering system, a system whereby it'll provide management reports so tha t we can pick out the ho t spots and deal with them and stream line it even more so. MRS. G. HAMMOND: I just ha ve one last question, and it has to to with the disparity between the first offer of $850 and a further of $950, and then of $1 , 100, plus tax. Wha t happens when someone refuses and then the y come back? Do th ey always give bottom line, or is ther e no fair assessment given in the first instanc e? MR. C.

LAUFER: I can' t, of cou rse, respond to the particular claim with which you're dealing becaus e I just can' t bring it to mind, although I probably have seen it. Generally wha t the adjusters do is the y review what the y call the Sanford Evans gold book on used car prices for the Province of Manitoba and they take a general evaluation of the car from there. When an individual comes in and reports the cla im he says, gee tha t ca r's badly damaged, do you think it's a write­ off? And the adjuster will say, well if you feel it's tha t badly damaged it probably is.

And he'll say, well wha t do you think it's worth? And th ey'll ballpa rk it, given the Sanford Evans book, and tha t's really wha t it is, a sort of ball parking it, and the y could say, about $800.00. They're not going to say, $1 ,500, which may be way in excess of the value. So, in tha t instance, they may say tha t, but tha t isn't necessarily a settlement offer as such .

When it's confirmed tha t the vehicle is a total loss, and the estimato r's report comes back with a description of the vehicle cond ition; tha t is, rust, paint condi tion, previous damage, interior condi tion, is the uphols tery soiled, clean, torn, what ha ve you, tire condi tion, engine condi tion, mil eage and all the accessories on tha t car , only then can th ey pin point the val ue more accurately . So there are a lot of pl uses and minuses tha t go on to the base figure. Then if

Tuesday, 23 April, 1985 there's any doubt, if it's the kind of a car tha t's a drag on the market, for instanc e, with a very large engine - 460 cubi c inch engines right now are a drag on the market. So while all the plus es and minus es may have added up to a certain figure, the fact tha t the car is not readily saleable would reduce that. On the other hand th ere are some ca rs, because of the ir design or wh atever, are very popul ar. The y may bring in a value hig her than what th ose calcula tions might bring.

So when the y ha ve situations where ther e may be th ose kind of circu mstanc es, the y will do other things. They will check the local news papers to see if th ere are any similar cars for sale and what the asking price is; and (

b) the y will check with the dealers tha t handle th ose cars, and perhaps even a couple of dealers tha t don 't, in an attempt to see wha t the y feel the car would be worth given the equipment and con dition. Tha t com bin ation of figures is then averaged out. As we say, it's not entirely satisfacto ry. it's averaged out and tha t is put forward as an offer.

Then if the insur ed comes in and says, but look, I spent another $700 fixing the engi ne, whi ch isn 't visible to the adjuster or the app raisal, and I ha ve done new brakes or I redid the trans mission, or I' ve done this or tha t or the other thing, the y say, well, bring in th ose receipts and let's ha ve a look at them; and when tha t is done the price is adjus ted if indeed tha t work tha t was done is reflective of additional value on the vehicle and then a final offer is put forward .

If the insu red is still un satisfied, there is a little bit of negotiating room tha t may be there and the figure can move a couple of hundr ed dolla rs on a settlement, as was in the case tha t you sugge sted, perhaps a little bit mo re. I am sure the same thing happens when you go in to buy a car from a dealer. You ha ve a trade- in, he gives you an offer, you counter , and you barg ain back and forth un til you reach something that's acc eptable to you and that's where the purcha se takes place. The same sort of process happens to some degree in our settling of cla ims.

I might say tha t because a person pays $1 ,900 for an automo bile, people ha ve been kno wn to overp ay, so you can't just car te blanche take what the y paid for the car as the value of the car. The y may ha ve paid $1 ,900 for a $1,7 00 car, so we can't say t77 will insu re the culpab ility of the individual. If an individual pays $5,000 for a $1 ,000 car and totals it the next day, we' re not go ing to pay him $5,000 for it. We are going to pay hi m $1 ,000 for it. it would be a heck of a business if you could work it around, as you can appr eciate. So we deal with ac tual cash value.

We deal with it as accu rately as we can. We write off about 9,000 vehicles a year. We probably arbitrate one- quarter of 1 percent of th ose and we ha ve disputes probably , on 1 or 2 perc ent. I think that's a pretty env iable reco rd. MR. CHAIRMAN: We ha ve agreed at the begin ning tha t we will accept all questions. it's no w 12:00 noon. Shall we go to the report and then ask for a specific question? MR. D. BLAKE: Mr. Cha irman, it's not our intention to finish the report today.

We have some mem bers of our caucus tha t are unable to be here and the y ha ve some questions to bring up, and we have quite a num ber 15 of questions tha t we hav en't covered yet. So if we can maybe get all them out of the way and get the other questions out of the way, then we can pass the report fairly quick ly. MR. CHAIRMAN: Ok ay. The Member for Portage. MR. L. HYDE: Thank you, Mr. Cha irman. I have a question tha t is regarding a cl aim tha t a farmer made to the Portage Claims Centre.

Thi s farmer, in October of 1984, had an unf ortun ate accid ent of rolling his truck in the field while the hoist was some third way up loaded and moving to a very slo w pace or rate of speed . - (Int erjec tion) - it's guys like this her e tha t disturbs the whole commi ttee. A MEMBER:: How do you drop gravel if the hoist is up? MR. L. HYDE: Mr. Cha irman, the Autopa c, as I un derstand, would only cover the damage tha t resulted when thi s truck ac tually hit the ground.

The visual damage to tha t truck when it struck the ground was very minimal, it was. lt was just a matter of a few dents on the side of the vehicle. However, the damage tha t did occur to the frame and the ho ist resulted in something like $1 ,200.00. Now, Mr. Cha irman, the farmer took the truck to ha ve it adjusted by two frame shops in Winn ipeg her e and the result of th eir examination, the y cla imed tha t the springs of the truck brok e, all owing the load to sh ift and create the damage. I feel, Mr.

Cha irman, that in th is case it was the adjusters in Winnipeg cla imed tha t it was the result of a mechani cal malfunc tion tha t allo wed tha t to dip. I am wonde ring, Mr. Cha irman, if the Minister would be ready to take another look at this he re particular cla im because the farmer, he is just up and against it. HON. J. BUCKLASCHUK: Yes, certa inly, if the Memb er for Portage will provide me with the details, cl aim numb er and so on, I will get a full report and we will review tha t claim. MR. L. HYDE: Thank you, Mr. Cha irman. I am wonder ing if at the same time, Mr.

Cha irman, if the Minister is cons idering reviewing the act and improving the coverage on cl aims such as I ha ve spoken to here thi s morning. Th is, as I un derstand, is not only the first time that we've had cla ims such as thi s appear before Autopac. lt is something tha t I am sure will be appearing on more than one occasion in the future. HON. J. BUCKLASCHUK: Well, I would like to look at the details of thi s particular cl aim.

I must admit, I ha ve certainly not seen too many of thi s natu re, and I don' t kno w if the corpor ation wants to get itself into a po sition where it's insu ring design defects or mechani cal defects. Primarily, we are an insurance against accid ent s, but we will review tha t particular situation and take it from there. MR. L. HYDE: Thank you. MR. CHAIRMAN: The Mem ber for Turtle Moun tain.

Tuesday, 23 April, 1985 MR. B. RANSOM: Thank you, Mr. Chairman.

Pursuing some of the line of questioning tha t was being put forward concerning arbitration, it seems to me tha t a corpora tion such as this tha t has a mono poly, a hold on the insuring of vehicl es, tha t th ere is a special resp onsib ility on the part of tha t corporation to give satisfact ion to their clients because, as you kno w, in a situation where the re is competition such as in the private sect or tha t if an individual has a claim, and they're unha ppy with the claim, they can always tell the private company to stick it in their ear and th ey'l l go and do business with somebody else.

T hey may not get a better deal with somebody else but they get a certain amount of satisfact ion from at least being able to take tha t kind of action. No w, in dealing with a corpora tion tha t ha s a monopo ly, of cou rse, the individual can' t do tha t and even though the corpor ation may feel tha t the y ha ve been treated fairly, the individual may not feel th ey've been treated fairly and they ha ve no alterna tive but to continue to do business with tha t corpora tion.

Ther e are a great many out ther e, perhaps not a large percentage of the people tha t the corpo ration does business with, but there are peop le out th ere who are unh appy. I kno w from some personal experience tha t when a question is raised with the Minister, for instanc e, about someone 's dissatisfactio n, tha t the Minister will ask the corp oration, ha ve we treated this person fairly? Have we treated this person unf airly? Of cou rse, the natural response of the corpor ation is going to be to come back and say, yes, Mr. Minister, we ha ve dealt fairly with this individual.

So the Minister carries th at respons e back to the mem ber who may be raising the conc ern. Wha t I'm interested in is wha t the corporation is doing to assess the level of satisfact ion or dissatisfaction tha t people ha ve with the corpora tion. I think we discus sed this last year, and there was some mention of it. I'm think ing particularly of people who ha ve had claims with the corpo ration, because it is my impression generally from speaking with mem bers of the public in general, the y're quite happy with the corpor ation if th ey ha ven't had a claim .

But when you talk to the people who ha ve ha d claims , you naturally are going to find a higher percentage who are not happ y with the corpora tion anymore. So could someone advise me of exactly what the corpora tion has been doing to assess the satisfaction or dissatisfact ion that cl ients ha ve ha d with the cor poration? MR. C. LAUFER: Perhaps I can address a couple of the points tha t you raised.

When an individual, and I've had quite a bit of experience in dealing with the private sec tor as well, is deal ing with a private insurance company and is dissatisfied with the way a claim is hand led, he can indeed say I'll take my business elsewhere and do so. Tha t isn't wha t usually happens though. Wha t more often happ ens than not is tha t when the pr ivate individual has a claim with a private insuranc e compa ny, happy or not with the settlement, the private insurance company says, you ha ve no w put us in an unf avourable position with respect to your acc ount and we will do one of two thin gs.

We're going to ch arge you 30 percent 16 more for your insurance next year or, if you' ve been a good boy for th ree years and not had a claim, you're now going to lose your no-claim di scou nt, or we're not going to insur e you at all and then tha t individual has to scurr y around to other insurance companies and attempt to get the insurance placed . Believe me, once the y ha ve been turned down or surcharged by another insuranc e compa ny, they have a heck of a time even getting the insu rance, never mind worrying about the level of satisfact ion and th ere are any numb er of cases like that.

So ther e are pros and cons to both systems, and I would like to say that all is not hone y and roses on the private side eith er. When we're dealing with a level of satisfaction of claimants, and you make a very valid point here because anybody can be happy with having the lowest insurance rate in North America and say this is the greatest thing since sl iced bread, but if it doesn 't pay any thing once it comes time to make a claim then wh at's the good of the low premium.

We in the early years, say from 1974 on th rough about - well maybe earlier - 1973 on through 197 7, thereabout s, or 197 6, issued each cla imant tha t came into the cla ims centre, wha t we called a comment card . On that card we asked th ree or four simple questions tha t were check-o ff type questions. Were you looked after promp tly? Was the adjuster cou rteous - blah blah blah - and then provided a space for th eir general com ments.

The previous general manager - and I was in ch arge of claims at tha t time - and I reviewed each and every one of th ose cards, and we received hundr eds of them during the cou rse of each month and we tabula ted them. We followed up on every indic ation wh ere the level of satisfaction was not good. I can say, and perhaps even dig back to get th ose for you if you need, tha t the level of satisfa ction reco rded was better than 80 perc ent.

When you're dealing in a stressful situation such as adjus ting an automo bile insuranc e cl aim where ther e may be inj uries involved and wha t ha ve you, it's not always easy to achieve a high level of satisfaction because a person is simply distraught and no matter wha t you do for them, th ey're not going to feel entirely comfortable or entirely rewarded or, in fact, entirely vindicated of any fault because some son of a gun ran into him.

We ha ve recen tly cond ucted surveys of people who ha ve filed cla ims by way of sending out personal questionnair es on a ran dom basis, on a valid statistical sample , on both the general insur ance and the automo bile insurance side. The results of tho se two surveys were publ ished in the last issue of our Cou rier Magazine. I'll be happy to send you a copy so tha t you can see the areas tha t we addressed insofar as trying to assess level of customer satisfacti on, and the respons es tha t we received on a percentage basis.

Again, I think you'll find there tha t the results sh owed a very high level, 80-p lus percent satisfaction with the service offered by the corpo ration in the adjustment of claims. MR. B. RANSOM: Mr. Chairman, I wouldn' t want Mr. Laufer to think tha t I was attempting to get into a debate on the merits of the private insurance versus the

TUesday, 23 April, 1985 government-run insurance. I simply point out to him one of the relief valves tha t is available to an individual when the y're dealing with more than one sou rce of a service. Is th ere a spe cial sort of evaluation th at's done with respect to indi vidual assessors and adj usters to determine how the mem bers of the public tha t the y deal with see them as public servants?

And is th ere any special sort of training tha t's given to the se people so that the y do unde rstand the fact tha t indeed the y are public servants and tha t th ere is a way of dealing with the pub lic in difficult situations tha t can leave them more satisfied than might oth erwise be the case. MR. C. LAUFER: Yes, indeed, we attempt to make it very clear to our people tha t given the role tha t the y have it's even more important tha t the y con vey a good pub lic image and con vey a sense of fairness and jus tice in the way tha t the y deal with the public.

Quite apart from the training programs tha t the adjusting perso nn el undergo with resp ect to the techni cal aspects of insuranc e claims adjusting, we ha ve as an integral part of that training with respect to PR tech niques telephone ans wering technique s, and we ha ve jus t recen tly comple ted a manda tory course which is calle d a Wilson training cou rse over all pub lic relations. So we do tha t sort of thing, recognizing tha t not everyone who falls into an adjuster's role is necessarily equipped to handle the PR aspect of it. We do pick up on training the re.

To ensur e tha t is car ried out in the field what we've done is split the adjusting un its into smaller groups unde r the sup ervision of a cl aim supervisor who can view what is going on in front of him with his group of four, six or eight emplo yees. I don' t know jus t what it is offhan d. He has a day-to-day overview of what they're doing and how they're interacting with the pub lic, and indeed it's his respon sibility when he sees a situation deteriorate at a particular desk during a cla im interview to step over, intercede, see wh at's going on and see if he can he lp. MR. B.

RANSOM: I ha ve questions in other areas, Mr. Chai rman. Does the corpo ration an ticipate any significant impact from the Char ter of Rights with respect to the ir ope rations? MR. C. LAUFER: We ha ve probably pione ered in many areas the equality aspect of insu rance from a sales point of view and from other points of view. So the impact tha t the Ch arter will ha ve, it has some in some areas of our legisla tion, will no t be significant to the corporation from a cost point of view, from a policy point of view or from an administrative point of view. MR. B. RANSOM: Can Mr.

Laufer give me some inform ation about the num ber of cla ims tha t ha ve been made on the corpor ation with respect to vehicle s tha t ha ve been rejected for various reasons, the person might ha ve had the wrong licence , might ha ve had a T licence, for instan ce, when the y should ha ve had a CT licence, or wh ere th ere ha ve been cases where coverage wasn't provided because an individual didn' t ha ve tires in satisfactory condi tion or whethe r a driver might ha ve been inapprop riately licensed ? Are the re statistics tha t deal with th ose kind of situations? 17 MR. C.

LAUFER: We have statistics dealing with all cl aims tha t are rejected, and . there are a numb er of catego ries un der which the y fall. There are claims tha t are rejected for coverage br each es, as are straightf orward breache s, impaired driving, things like tha t. There are cla ims tha t are outside the scope of coverage because of things like failure to change from one territory to anoth er, but they're dealt with in ano the r fashion in tha t the y are then reviewed by the exgratia commi ttee and most cases are paid.

If we find tha t the possession of a lower insu ranc e premium is as a result of the individual simply not kn owing the difference, in other words, he didn' t deliberately set out to get the lowest insuranc e premium tha t he could get hoping he would n' t ge t caught, then tho se claims receive favourable exgratia cons ideration and the individual pays the difference between the premium he ought to ha ve paid and tha t which he did paid. Those cases where the thing is deliberate, th ose claims are denied, natur ally, and we ha ve all th ose statistics available.

I don't ha ve them with me, I'd certa inly make the m available to you if you wish. MR. B. RANSOM: I would app reciate seeing tho se statistics because I think perhaps in the rural areas, maybe more so than some other areas, tha t the re are people unc ertain about whether the y're covered or not, ha ving to do with the category of truck licences, especi ally, with the "T" licences only covering up to a radius of 15 miles, or tha t sort of thing, which means .. tha t out in the countr y. you can' t do very much_ with a · truck if you can only travel 15 miles. I would be interested in seeing tha t inform ation.

A couple of other specific questions. How are the pup trailers insured? My unde rstan ding of it is tha t you can get a licence for a pup trailer for some thing like $5 for five years, but it has obviously no insur ance attached to it. Now, are the re different categories of insurance tha t the operator of tha t pup trailer can either take out or leave? MR. C. LAUFER: Usually , vehicles tha t are towing pup trailers, or two trailers, or whatever are part of a large fleet, and the comm ercial operations always buy up on the liability end of the coverage anyway, which the y need to do.

They end up with a blan ket policy outlining all of the vehicles tha t they ha ve and the pup trailers are inclu ded the re. The y're rated individually on what type of pups the y are, and what's towing them, and over wha t distance. If they're towing, for instance, gasoline, the rate is different than if they're towing gravel or lumb er or whate ver. If the y're towing 25 miles from a gravel pit as oppo sed to 200 miles to an oil refinery, the rates are different.

So the y are rated more or less on an individual basis, but the whole policy is a blan ket policy outlining all the trailers and all the vehi cle s tha t a particu lar operator may ha ve. MR. B. RANSOM: And farm one s. MR. C. LAUFER: Farmers? They would be rated individually in tha t licence catego ry. MR. B. RANSOM: Wh at's the minimum then tha t a farmer would ha ve to take out on a pup trailer for hau ling grain?

TUesday, 23 April, 19 85 MR. C. LAUFER: The law would require tha t he carry a minimum of $200,000 thir d-p arty liability. There is nothing else tha t he need carry. That insurance, of cou rse, is available through our Brandon office or thr ough any other private sect or insurer. Usually the y insure the vehicle in the same fashion as the y would the truck that's pulling it, tha t is for phy sical damage coverage and for thir d-p arty liability coverage to wh atever limit the y ha ve on the towing vehicle. MR. B. RANSOM: One question to the Minister, Mr. Chairman, before 12:3 0.

The govern ment has had discussi on about taking profits from Manitoba Hydro, for instance, and putting them into general revenue. Has th ere been any discus sion conce rning the possibility of taking profits from the MP IC and putting it into general revenue? HON. J. BUCKLASCHUK: Mr. Chairman, th ere has been no conside ration of doing tha t at the present, or I ha ven 't had any thought of tha t at all. MR. B. RANSOM: Can I take that to mean tha t the Min ister is reject ing any pos sibility of tha t happe ning? HON. J.

BUCKLASCHUK: The existing legislation on the automobile side prohi bits tha t very thing from happe ning, and I certai nly ha ven 't gi ven any thought to amen ding our legislation. MR. B. RANSOM: The existing legislation on Hydro prevents it as well. Tha t hasn't stop ped considera tion of it. HON. J. BUCKLASCHUK: Well, as I ha ve indicated, I think twice now, I certa inly ha ve not given any considera tion to that. 18 MR. D. BLAKE: In closing, Mr. Chairman, it's run or a little long er.

Just to cl ose, there's one question l'c like to ask the Min ister, and maybe some thought coulc be given to it, does the Minister carry business insurancE on his automobile? HON. J. BUCKLASCHUK: Yes, I do. MR. D. BLAKE: That's something, Mr. Chairman, we'vE had many discus sions on. I travel a great deal in m� constitue ncy , and I consider tha t to be on business At one time when I worked part-t ime for my forme1 empl oyer, I carried business insuranc e and when reached tha t magic age where I took my pension someone on the other side of the House had checkec it out and he said you don't need it now.

You're jusl an ML A, and you are covered under the normal pol icy But I still ha ve some nervousn ess about it. Maybe thE general manager could look into it and see what thE duties of an MLA are, and come back to us and advisE us whether we should have business coverage 01 whether we' re covered under the normal policy. A MEMBER: We get reimbursed anyw ay, so there'! no problem. MR. CHAIRMAN: The time being 12:30, this Comm itteE on Public Utilities and Natural Resou rces shall continuE its cons ideration of the Report of the Manitoba Publi< Insu rance Corpora tion at its next meeting.

This comm ittee shall meet again at the date and timE to be annou nced in the Cham ber by the Governmen· House Leader. In the meantime, commit tee rise. COMMITTEE ROSE AT: 12 :31 p.m.