Manitoba Committee Hansard — Public Utilities Committee, Sitting 3 (36th Legislature, 4th Session)

36-4-pu3

Manitoba — Debates (Hansard)

Fourth Session - Thirty-Sixth Legislature of the Legislative Assembly of Manitoba Standing Co mmittee on Public Utilities and Natural Resources Chairperson Mr. Peter Dyck Constituency of Pembina Vol. XLVIII No.3- 11 a.m., Tuesday, December 15, 1998 ISSN 071::1-!:J4�4

Member ASHTON, Steve BARRETI, Becky CERILLI, Marianne CHOMIAK, Dave CUMMINGS, Glen, Hon. DACQUA Y, Louise, Hon. DERKACH, Leonard, Hon. DEWAR, Gregory DOER, Gary DOWNEY, James, Hon. DRIEDGER, Albert DRIEDGER, Myrna DYCK, Peter ENNS, Harry, Hon. EVANS,Ciif EVANS, Leonard S. FAURSCHOU, David FILMON, Gary, Hon. FINDLAY, Glen, Hon. FRIESEN, Jean GAUDRY, Neil GILLESHAMMER, Harold, Hon. HELWER, Edward HICKES, George JENNISSEN, Gerard KOWALSKI, Gary LAMOUREUX, Kevin LATHLIN, Oscar LAURENDEAU, Marcel MACKINTOSH, Gord MALOWAY, Jim MARTINDALE, Doug McALPINE, Gerry McCRAE, James, Hon. McGIFFORD, Diane MciNTOSH, Linda, Hon.

MIHYCHUK, MaryAnn MITCHELSON, Bonnie, Hon. NEWMAN, David, Hon. PENNER, Jack PITURA, Frank, Hon. PRAZNIK, Darren, Hon. RADCLIFFE, Mike, Hon. REID, Daryl REIMER, Jack, Hon. RENDER, Shirley ROBINSON, Eric ROCAN, Denis SALE, Tim SANTOS, Conrad STEFANSON, Eric, Hon. STRUTHERS, Stan SVEINSON, Ben TOEWS, Vic, Hon. TWEED, Mervin VODREY, Rosemary, Hon. WOWCHUK, Rosann MANITOBA LEGISLATIVE ASSEMBLY Thirty-Sixth Legislature Constituency Thompson Wellington Radisson Kildonan Ste.

Rose Seine River Rob lin-Russell Selkirk Concordia Arthur-Virden Steinbach Charles wood Pembina Lakeside Interlake Brandon East Portage Ia Prairie Tuxedo Springfield Wolseley St. Boniface Minnedosa Gimli Point Douglas Flin Flon The Maples Inkster The Pas St. Norbert St. Johns Elmwood Burrows Sturgeon Creek Brandon West Osborne Assiniboia St. James River East Riel Emerson Morris Lac du Bonnet River Heights Transcona Niakwa St. Vital Rupertsland Gladstone Crescentwood Broadway Kirkfield Park Dauphin La Verendrye Ross mere Turtle Mountain Fort Garry Swan River Political Affiliation N.D.P. N.D.P. N.D.P. N.D.P. P.C.

P.C. P.C. N.D.P. N.D.P. P.C. P.C. P.C. P.C. P.C. N.D.P. N.D.P. P.C. P.C. P.C. N.D.P. Lib. P.C. P.C. N.D.P. N.D.P. Lib. Lib. N.D.P. P.C. N.D.P. N.D.P. N.D.P. P.C. P.C. N.D.P. P.C. N.D.P. P.C. P.C. P.C. P.C. P.C. P.C. N.D.P. P.C. P.C. N.D.P. P.C. N.D.P. N.D.P. P.C. N.D.P. P.C. P.C. P.C. P.C. N.D.P.

49 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON PUBLIC UTILITIES AND NATURAL RESOURCES Tuesday, December 15, 1998 TIME - 11 a.m. LOCATIO�- Winnipeg, Manitoba CHAIRPERSON - Mr. Peter Dyck (Pembina) VICE-CHAIRPERSON- Mr. Denis Rocan (Gladstone) ATTENDANCE - 9- QUORUM- 6 Members of the Committee present: Hon. Mr . McCra e Messrs. Ashton, Dyck, Helwer, Maloway, McA lpine, Rocan Substitutions: Mr . Penner for Mr . Tweed Mr. Faurschou for Mrs. Driedger APPEARING: Mr .

Jack Zacharias, President and Chief Executive Officer, Manitoba Public In surance Corporation MATTERS UNDER DISCUSSION: Febru ary 28, 19 98, Annual Report ofth e Manitoba Public Insurance Corpora tion * * * *(1 1 10 ) Mr. Cha irperson: Order, please. Before we get started with the official words this morning, I would like to, on behalf of the commit tee, welcome our new page, Sarah Marchand. She is fr om the Nel son Mci ntyre Colle giate in S4 or Grade 12. Welcome here. Will the Standing Com mittee on Public Utilities and Natural Resources please come to order.

This morning the committee will be considering the Febr uary 28, 19 98, Annual Report of the Manitoba Public Insurance Corpora tion. Previously, the Febru ary 28, 19 98, report had been considered by the Standing Committee on Public Utilities and Natural Resources on June 9, 19 98, but the com mittee did not complete consideration of this re port at that meeting. Comm ittee Substitutions Mr. Cha irperson: Prior to the consideration of the repo rt before the committee, I would like to advise the committee that I have received the resignation of Mr .

Tweed as mem ber of the Standing Committee on Public Utilities and Natural Resources effective im mediately. Are there any nominations to replace Mr. Tweed? Mr. Edward Helwer (Gimli): Mr. Chair man, I would like to recommend Mr. Penner, the MLA for Eme rson, to replace Mr . Tweed. Mr. Chair person: Mr. Penner has been recommended. Is the substitution agreed to? [agreed] I also have before me the resi gnation of Mrs. Driedger as a memb er of the Standing Committee on Public Utilities and Natural Resources effective im mediately. Are there any nominations to replace Mrs. Driedger? Mr. Helwer: Mr .

Chairm an, I would like to recommend Mr. Faurschou, the me mber for Portage Ia Prairie.

50 LEGISLATIVE ASSEMBLY OF MANIT OBA December 15, 19 98 Mr. Chair person: Mr . Faurschou has been nominated to replace Mrs. Driedger. Is the substitution agreed to? [agreed] * * * Mr. Chair person: Did the committee wish to indicate how long it wishes to sit today? Mr. Steve Ashton (Thompson): Given the late start, I would suggest we target one. I was hoping actually more for twelve-thirty, but I think we should start aiming towards one. We can assess around twelve-thirty. Mr. Cha irperson: Okay. We will assess at twelve-thirty. We will try for twelve-thirty.

That is agreed to? [agreed] Did the minister responsibl1e have an opening statement? And would he introduce the officials in attendance fr om the Manitoba Public Insurance Corporation, please. Hon. James McCrae (Minister char ged with the admini stration of The Manitoba Public Insurance Corporation Act): Good morning, Mr. Ch airman and memb ers of the committee. I am pleased to be here to continue the review of the An nual Report of Manitoba Public Insurance for the period ending February 28, 19 98. The corporation has completed a num ber of steps that provide premium stability for Manitobans.

As a result, this year Manitoba Public Insurance applied to the Public Utilities Board for no increase in revenue. The Public Utilities Board ruling made in early Decembe r supports the plan of Manitoba Public Insurance to hold its revenue requirement at the 19 98 level next year. Con sequently, nearly 400,000 Manitoba drivers will pay less for their insurance in 1999. That is 50 percent of all premium holders. I guess the rest eitht!r pay the same or slight ly more.

Even with a I percent rollb ack on the basic in surance rate stabilization reserve next year, substantial steps have contributed to bui lding this fund that protects customers fr om high rate increases in the future. am in deed accompanied today by corporat ion officials who will assist us this morning, and I would like to introduce them. Mr. Bernie Thiessen is chair man of the corporation's board of directors. Mr . Jack Zacharias, a long-time employee of Manitoba Public Insurance, is president and chief executive officer. We have with us as well Mr. Barry Galenzowski, vice-presiden t of finance; Mr.

Kevin McCulloch, who is general counsel for the corporation; and other officials fr om the corporation as well, should their input be required. With your permass10n, Mr . Chairman, I would like to continue today with consideration of the 19 97 Annual Report of Manitoba Public Insurance and have the report adopted. Thank you. Mr. Cha irperson: We thank the ministe r. Did the critic for the official opposition have a few comments? Mr. Ashton : Mr. Chairperson, I was actually wondering this morning if we are going to have a new spokesperson replacing the minister, Nick Hill, after seeing the ads recen tly.

I thought we might have had a sli ghtly diff er ent approach to Autopac. I must admit, they are talking about creative marketing, sort of half the people of Manitoba are paying less. Of course, the ministe r let it slip that by defin ition that means half are paying the same or more. So I must say that the creative marketing types got parti cularly creative on that. I will be asking some questions on rates because I am just wondering how many of the people, the celebrities appearing, for example, will be motorcyclists talking about what has happened with the motorcycle rates the last few years.

People living in my area, north of 53, I notice there is goi ng to be a northern celebrity, but I am wondering if the people will have the opportunity to express what they feel about paying much higher rates than other areas of the province. As I said, I am really intrigued by this creative marketing device, but I could provide the minister with all sorts of people who would love to appear, and an ad says: why is, fi ll in the

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANITOBA 51 blank, Autopac rates going up, and why have they gone up for the last number of years.? It does cut both ways, but I notice the mi nis ter did not say, "Come on down," so I guess he is not taking advice fr om Mr. Hill , although I certainly respect Mr. Hill. He cert ainly knows how to market various items.

So I am looking forward to asking some updated questions, because we are back now after the most recent rate incr eases, and I just want to indi cate on the record, just to update people in terms of where we were at last time, essentially we saw last time -and I have a copy of the Hansard in fr ont of me for anybody who is interested-what we have seen essentially in terms of rates is that the main reason for the current rates being stable, not for motorcycli sts, not for certain categories of people, is because of the dramatic cuts that have taken place in terms of what people are receiving or, in this case, would have been rec eiving under the old system, bodily injury coverage, as compared to the new PIPP system.

I think one of the most im portant revelations at the last comm ittee is that without PIPP the payout would have been about $340 per cover age, per ins urance coverage, as comp ared to what people are paying for and getting now, which is $14 0. That is the reason, and there have been some adjustments on bodily mJury. I would note that, according to the indication in the last commit tee, the Uskiw report did add, I believe, between $2 milli on and $3 mill ion on the cost of bodily injury cover age, but it is cert ainly a min or factor compared to what is happening.

So, if MLAs are getting concerns and complaints about some of the diffic ulties they see with PI PP, that is the reason why. There is a bottom li ne here. You get what you pay for in terms of ins urance coverage, and people are getting less bodily injury coverage under the cur rent system, and I would say the reduction and I have said this again as someone who has suppor ted the principle of no fault, as did our caucus. The point , once again, is that the reduction in the amount going to people is far less than anything that can be attribu ted to legal costs.

The maximum figure I heard was about 25 percent that was part of the court costs and legal costs. Obviously, when you are dealing with $14 0 versus $340, $340 is the figure of what we would be paying today, according to MPIC, and receiving in terms of cover age. So I say that because I continue to receive concerns fr om people about bodily injury claims.

I think the min ister is cert ainly used to getting letters fr om myself and many other people, both di rectly, and I am sure other MLAs, including government MLAs, have had simi lar concerns. * (1 12 0) So I look forward to the opportunity to ask these questions and particularly focus in on some of the issues we were not able to deal with last time.

What I do want to do is finish off, though, with the fact that I always say this as a critic for our party and a number of Crown corporations that, when I make these comme nts, I am hopefully trying to im prove what I consider to be a quite well- run corpora tion gener ally and a good concept, which, I thi nk, is one of the greatest legacies of the Schr eyer government in the 19 70s that has wit hstood the time.

It is out of that strong support for this kind of public endeavour that my criticism is not aimed at criticizing the concept of A utopac or even necessari ly Autopac its elf but trying to make sure that we have the best system possible for Manitoba motorists. It certai nly is sti ll one of the lowest-cost providers of automobile ins urance across the country. I think most esti mates show as much as a 25 percent prem ium on average across the board because of the public util ity aspect of MPIC.

I want to note that on the record because for the next hour and a half or so I may be asking some questions that may be seen by some as criticis m, but it is more in the constructive element and not cert ainly to criticize the concept of Autopac, which continues to be one of the best elements of public enterprise in this prov ince. Thank you. Mr. Chair person: We thank the honourable member for those comments. Did the officials fr om MPIC have any opening statements? Okay, if not, then we will proceed. How did the

52 LEGISLATIVE ASSEMBLY OF MANIT OBA December 15, 1998 comm ittee want to proceed this morning? On a page by page or the report in tmtirety? Report in entirety. An Honourable Member: y,es. Mr. Cha irperson: Okay. It is agreed. Then we shall proceed with the report in its entir ety. Ar e there any questions? Mr.

Ashton: Yes, what I would like to do to begin with since we do have this new inf ormation, I realize it is not covered in the '97 report, but since the min ister has ref erenced what is happening, just to ge1t an update on the current financial situation foll owing the implemen tation of the rate structure for next year which in volves, as the minis ter has said, some rate in creases, some rate: decreases for Manitobans. Mr. McCrae: Before asking Mr. Zacharias to give an overview of the current financial position of the corpora tion, I would just like to respond to the honourable member for Thompson (Mr.

Ashton), who has made it clear that he needs, as critic for this particular area, to express his feelings. I cert ainly accept that, and that is one of the ways that the corporat ion is able to be as responsive and successful as it is at this time in our hi story, because we do lis ten. We lis ten to Manitobans and we will also lis ten to the honourable member for Thompson. Under init iatives brought in by the present admin istration, there is a requirement for this corporation to report and make! application to the Public Util ities Board with regard to its rates.

There is a requirement for this corporation to be accountable not only to this Legis lature through this particular procedure we: are engaged in today, but also accountable to the Crown Cor porations Council with respect to many of the business activities of the corpora tion.

The honourable member is right that the corporation is quite well run, and I am sur e that the people who work at Manitoba Public Ins urance will appreciate hearing that being said, in addition to the comments the honourable member said about separating his whatever criticisms he has fr om any attack on the people who work day in and day out to serve their fellow Manitobans in their employment with this corporat ion. So that groundwork having been laid, we accept that, but we do say that there are many vehicles of accountabili ty for this corporation, more than before the present adminis tration came along.

We do listen carefully to the feedback we get at the meetings that this corporation is mandated to have throughout the province on an annual basis. We obviously lis ten to the reports that are made by the Crown Corporations Council as well as the Public Util ities Board. The honourable member made a re ference to the Personal Injury Prote ction Plan and made the point that levels of claims per person are lower than they used to be under the tort system . I will ask Mr. Zacharias perhaps to comment on that point as well.

I think that great efforts have been made to make the program somewhat more egalitarian in the sense of pro viding coverage to people who need it on a timely basis. Unfortunately, under the old system, which I recognize the honourable member is not asking that we go back to that system, but under the old system there were people who got precious lit tle or nothing at all because of the fault system that was in place.

We have, through the PIPP, addressed that, and I believe that any knowledgeable comm entator on ins urance programs would have to say that benefits over all are as generous here in Manitoba and cert ainly as comprehensive as anywhere on the North Ameri can continent. We can be proud of that as Manitobans. In fact, I am not sure where we are today, but we may even be better than Saskatchewan or other publicly owned insur ance companies that provide benefits, and we are certainly right up there at the top when it comes to our overall rates.

The honourable member will note that I talked about revenue rather than rates. Due to the automobile rating system that ins urance companies use, certain types of vehicles command a higher rate of pr emium, because they either are more expensive to replace or repair or they do more damage to other vehicles in collisi ons. Those words are meant as sort of a general response to the honourable member, but perhaps Mr. Zacharias could take us through the present financial situation of MPI .

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANITOBA 53 Mr. Jack Zacha rias (President and Ch ief Executive Officer, Manitoba Public Insurance Corporation): Thank you, would be glad to. At the end of last year, the sur plus with respect to the basic program, the RSR, was just over $20 mil lion. Built into the rate is a 5 percent load earmarked to rebui ld the RSR, and that will generate roug hly $19 million on an annual basis, so that at the end of this year we need the $19 million to add to the rate stabilization reserve. In addition to that, we had budgeted for a modest-about a $5-million operating sur plus.

At this point in time that is certainly tracking well that we will be able to achieve that. The last few months without snow have helped, but our premium comes in on one twelfth per month basis. Our claims costs vary considerably month to month with our winter months always bein g the highest, and we would be expecting to lose on a monthly basis from now through to the end of our fiscal year.

So, depending on the weather, it very mu ch can dictate how the bottom line wi ll shape up, but at this point in time we certainly see that we would be able to put the $19 million into the rate stabilization reserve that is generated by the 5 percent and hopefully a small contribution or a further contribution from the operating sur plu s. Mr. Ashton: I would like to focus in on the rates because there are these cryptic comments about 50 percent are not getting any incr ease at all. It sort of remin ds me of a bottle that is half empty; it is also half full . It is rather a cryptic way of looking at it.

I am wondering if we could get some in forma ti on on how many people will be seeing incr eases and what degree of incr eases will be in place in addition to the well-a dvertised fact that some people are going to be paying som ewhat Jess. * (1 130 ) Mr. McCrae: Just while Mr. Zacharias is getting some informa tion available to bring for ward, I am not sure which messages the honourable membe r is referr ing to. I have seen one which I thought in a rather balanced way set out to the people of Manitoba the imp lications of the Public Utilities Board ruling.

I do not know how cryptic it is, but it seems to me that that message that I saw was pretty clear that some people are goi ng to be paying mor e and- {inter jection] Sorry ? In any event, there is nothi ng here for us to attempt to spin, if that is the word the honourable member is referr ing to or thinking about.

Simply put, we are in a position where as a corporati on we go to the Public Utilities Board, we make our appli cation based on what the corporati on thinks it is going to need to meet its commitments to the people of Manitoba, and we are examined and cross-examined and interventions are made by organizations who have the consumers' interests at heart. Th e whole thing has gone through extrem ely thorough ly, and the Public Utilities Board makes its decisions. Well, as it turns out, when you go in with a zero rate incr ease and you come out of that process with a zero rate-rat e, I went and did it myself.

Revenue incr ease is the word that I should be using. When you go in with that and you come out with that, that is a pretty good place to start when one compares it with the past experience in Manitoba where we have experienced different scenarios altogether. Because of the stewardship of this corporat ion in recent years, we are now able to speak with some confidence about rate stability for the foreseeable future, and by that I refer to at least three years that we can say to Manitobans that we are going to require zero revenue incr eases each year for the next three years, if not longer.

I mean, it is pretty hard to go beyond that because we do not know what all the factors are going to be down the road. The rate stabilization reserve is an imp ortant part of the deli very of an ins urance product, and regulators across the country dem and of insurance companies that they have a reserve there so that, should the worst happen, claims, ri ghtful claims, are prop erly paid out.

So this is sort of the business sid e of the equati on, but I invite the honourable member to check with his relatives in Ontario or B.C. or his fr iends in Alb erta and find out what they are getting and what they are paying. He will be pretty proud to return here to Manitoba next year when we come before this com mittee and tell us again that our corporati on is quite well run. Mr. Zacharias: There are two items that in conjunction with PUB hearings in the past we

54 LEGISLATIVE ASSEMBLY OF MANITOBA December 15, 1998 are addressing . I think befcJTe I get into the actual numb ers the pr inciples are im portant. What we are trying to do is eli minate cross subsidi zati on so that each particular under writi ng group is paying their own way. For in stance, taxis in Winnipeg should pay enough to cover claims fr om taxis in Winnip eg; farm trucks in Territory 2 should pay enough to cover farm trucks. No matter what part of the province we are looking at in a particular group, what we are trying to do is elimi nate the cross subsidiz ation.

In some cases, that means that certain groups, based on their actual experience for that group, have to face an incr ease; in other places, there is a decrease. So there is some adjustment that takes place and has been over the last thr,ee years as we try to balance that system out so everybody is paying what they should be paying. We are close to compl etion of that process. There wi ll be some yearly adjustments that do occur based on experience, but the cross-subsidization is being very much elimina ted.

The second major change that we have introduced and, again, are phasing in over a period of time deals with vehic les. It used to be that all insur ance companies set rates for vehicles based on the cost of the vehicle . In actual fact, when you look at the claims experience, it is quite di ff erent.

If you have a large vehicle that might have a considera ble price tag attached to it, when you look at the injury ratio and find out that it is only half of what you might find in a small car that off ers little passenger protection andl that it has sound safety features attached to it such as ABS and padded dashes and locking mechanisms, the actual claims experience with that vehi cle is quite di fferent than the list price.

So what we have done is combine data that we have with other data fr om across Canada to come up with a relative ranking of vehicles, a rating of vehicles, based solely on the actual claims costs associated with those vehic lt:s. We are now starting to charge people a premium based on the risk that that vehicle br ings to the table rather than the purchase price. That is another adjustment that is being phased in over a period of time, and we are, again, pretty much on the home stretch of doing that.

At the end of the day, our goal is to make sure that the premium everybody pays refl ects the actual risk that they bring to the table, and we can actually quantify that. Through the PUB 's process, our actuaries, their actuaries and others have spent a lot of time looking at the statistical data and satisfying themselves that this is indeed a fair method.

As we move through those adjustments, whi le we have a flat or a decr ease in actual revenue requir ements, it does result that those people who have actually been overpaying, subsidizing others get a break, and their premium is going down to reflect their own risk, whi le those who have been subsidized are asked to pay more, which is actually their fair share. So whi le this year we have 400,000 that will be decr easing, if we start looking at where the incr eases go, there are another 220,000 that will have an incr ease of less than $25.

So again we have tried to phase this in over a period of time so that there are not the big hits. Where you have a situation where a vehicle has a very poor claims record and needs to go up considerably and the experience for that group needs to go up too, then that could relate into some more significant increases, but we have capped those, so we are phasing it in for year over year. The experience adjustment that we are applying is capped at 15 percent, and the vehicle movement again is being gradually moved into their home s.

Those people that are paying considerably diff erent than what they should be paying, we are actually balancing that over a five-year period so that we can gradually move them to the home to try and avoid some of the rate shock .. Mr. Ashton: Rate shock, a term I know quite a bit about fr om another involvement, but I wi ll not get into that. One of the things I 'would like to rai se is this move to what essentially is an experience rati ng system for cars. What inf ormation is being made available to motorists?

I mean, you have to under stand first of all the fr ustration of people who bought cars, assuming they did check the previous insurance, it is quite a shock when this new system comes into place and, even with the cap over time, you are saying people are looking at a significant incr ease in what they are paying for ins urance. But does Autopac have any plans to provide

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANITOBA 55 Information to motorists, sort of a consumer's guide? Because that would cert ainly help people who are purchasing now--it does not help those who currently have cars--m ake an in formed decision as a consumer. Mr. Zacharias: Yes, both in trying to get the public aware that the changes are being made, we have had a number of-it has been incl uded in all our advertising materials for about the last four years. In addition, for about four years now as well, we have had brochures that list all the latest vehi cle models in their relative ranking scale.

For the last two years, or little more than a year ago, we have a publi cation that is available through all our broker offices or from MPI that gives the last five model years comparison by car. So if you are car shopping and want to have some idea what the ins urance cost attached to that mig ht be, you can stop in and pick up the latest five model years, which are all laid out. Then it will tell you the premium, because it varies based on whether you are living in Winni peg, rural, or what you are using the vehicle for, but it gives you the relative ranking of those vehicles.

So you know which ones will be the more expensive and which ones will give you a break on your in surance. Mr. Ashton : I want to focus again in terms of the rate system and express some fru stration at the current rate system. I understand the question of not cross-subs idizing, and that is an interesting concept in itself, because traditionally, you know, the public utilities had some level of cross-su bsidiz ation between diff erent regions in the province.

One of the fr ustrations that a Jot of people in my area have is that we have a separate rate system nor th of 55 and, surprise, surprise, we paid more than even in The Pas and Flin Flon and cert ainly more than rural Manitoba. One of the obvious questions is why that specific rate grouping was pi cked. It is certainly not in the basis of population. Th eir mix ture of communities there would have di fferent claims experiences, but obviously you would end up wit h the same situation even wit hin rural Manitoba.

I mean, not all rural Manitoba communities are the same. *( 1140) I am wondering if Autopac has been willin g, and I have raised this before, to look at a system that does not sort of cherr y-pick out north of 55, which is about 30,000 peopl� lot of communi ties do not have roads, et cetera, so it is just basically the city of Thompson and about four or five other communities wit h a signific ant number of vehicle s--a nd look at the current rate structure geographically because, you know, I personally feel that that is one of the difficulties you run in to if you just sort of select the small areas like north of 55.

It is very easy to play around wit h the numbers, but the fact is we are no different from anywhere else. I think the mi ni ster and I have a running battle in terms of correspondence on this, and I want to put this on the record too. There are obviously some of the concerns expressed by Autopac over the years have been the cost of autobody repairs in northern Manitoba, but another obvious one is the number of accidents. Now, okay, we do have snow today; there is no snow here.

We cannot control the weather, but the mini ster is quite aware too that we have raised numerous concerns about the condition of roads in northern Manitoba. We have a lot of gravel roads; we have some of the worst roads in the pr ovi nce. Actually, let me rephrase that. We have all of the worst roads in the province in northern Manitoba, and the accident rate is higher and I have the figures. Well, I will tell you, we should be like Saskatchewan. They have a competition for the worst road.

I will tell you, compare 391- comp are 383, how many roads do you have where you run the risk of the road being closed in its enti rety? Mr. Chair, 383 was a while ago. The fir st time I drove to Cross Lake, by the way, I got stuck in the middle of the road in a pickup truck, okay? I could get into statistics I have fr om the Department of Hig hways. We have three and four times the number of fatalities. You know what happens? If you are in an accident, you get this little response that says, well, you know, driver error.

I will tell you the roads that you cannot even drive 20 kilome tres an hour and you are likely to get a stone chip or end up off the--o kay, I am getting in to an issue that obviously I could spend a lot of

56 LEGISLATIVE ASSEMBLY OF MANIT OBA December 15, 1998 time on. But I am sure the: mi nis ter has the statistical evidence to show that. So what I want to ask again is how the minis ter in Autopac can justify in a way-and I will say this on the record. In any of the cost factors, if we have a hig her claims experience, I will put on the record that is because of our weather, yes, but also our road conditions, something we have no control over. I am wondering how the min ister can sort of pick a small area of the province and then coincidentally we end up wit h the hig hest rates. Mr.

Zachar ias: Territory groupings that are within the province had been establis hed based on the claims experience and the actuarial records from differ ent areas. What we try to do is find groups of in surance that are simi lar. Cert ainly within Winnipeg you have simila r driving condition s. Rural Manitoba, you have the same kind of scenario. Wt� did introduce the comm uter rate a few years ago for people from outside of Winnipeg that were driving in because their risk was diff erent.

We have had the North as well, and statistically certainly there is validity in showing that the claims experience north of 55 is different than south of 55. We introduced another territory several years ago, maybe 10, which is basically the middle ground between 53 and 55 because again their claims experience as a group was diff erent than north of 55. So the terr itories have all been set based on actuarial evidence and statistical evidence coming out of various regions to find where there are comparisons and where there are not. We have looked at those periodically.

PUB has looked at the territory issue and said: where are you drawing the boundaries, and are they fair? They have reviewed thalt practice and said there is some sense to what WI� are doing. But I guess wit h respect to roads or comm ents on that line, that is not within MPI. Mr. McCrae: Yes, I think I heard the honourable member say he is not blaming Autopac for the condition of roads.

As one who does not like to pass the buck, I am som ewhat compel led, however, to say the annual expendit ures for hig hways maintenance and hig hways is the subject of review on an annual basis as we address the estimates of the Department of Hig hways. I believe I hear echoing the words of my col league the honourable Minis ter of Hi ghways and Transport ation (Mr . Findlay) that, in terms of equity of spending per mi le and all of that, he makes his case on an annual basis to people who have concerns about hig hways and roads in our provin ce.

I know, for example, that at the annual meeting of the Association of Manitoba Municipalitie s--t hat is the new name for the UMM -he meets with various ru ral munici palities and munici pal g�>Vernment officials on an annual basis at that venue as well as dealing wit h his Estimates and answers the questions that come for ward. I know that he does the best he can wit h his department to provide the hig hest and best level of road conditions that it is possible to do, given all of the cir cumstances. Mr. Zacharias has made a response as well.

The territories, as they are laid out in the policy of the corporat ion, as I understand it and Mr. Zacharias has said, has been reviewed by the Public Utilities Board, but I also know that these territorial desig nations have been in effect for many years. It is not something that from day one-and Mr. Zacharias would know, he was there at day one-it is not that anything has happened in this past year or even the past number of years, that any new lin es have been drawn on the map that somehow was designed to im pact negatively on northern Manitobans.

I think that when you consider in surance as a partnership between the ratepayer and the corporat ion, it behooves all of us to drive according to conditions, and those principles are not unknown to the honourable memb er. So I have just added my comments to those of Mr. Zacharias in response to the concern. Mr. Ashton: Every Estimates I have raised this. I have raised it in the House. The fact is that we are getting far less of a percentage of the capital budget than we have had in the past.

It is only I think the last year where it started to go up somewhat from the hi storic low of 5 percent of the capital budget, and that does not meet the needs of nort hern Manitoba.

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANITOBA 57 I want to ask a fol low-up question of Mr. Zacharias in terms of the claims experience. I am wondering, in terms of the claims experience, is that the higher cost because of the cost of fixing vehicles or is it the numb er of accidents or is it both? Mr. Zacha rias: A comb ination. We pay more for labour rate to the body shops in the Nor th than we do in the south. Th ey are competing in Thompson with ln co.

I know that body shops were losing all their trained people to lnco and we had to provide a labour rate that allowed the body shops to re tain some of that staff. Freight costs to bring windshie lds and things of that nature to northern locations and have them arrive with no breakage adds to the cost of doing business in that particular area. Accident ratio per population stuff, I do not have numbers re adily handy, available there , but I know that, again in terms of fatalities, we have mor e in the rural areas than we do in the city.

Particularly glass claims on gravel roads, whether that be southern gravel roads or northe rn gravel roads, you end up with more stone chips on gravel roads than you do on paved, so there are some factors there. So the cost of providing this service, the cost of claims as far as vehicle re pairs, that all goes into the equation with respect to the ultimate cost that we are faced with and, consequently, the pr emiums are a re flection of that. Mr. Ashton: I am wondering if it would be possible to get a breakdown of this.

This is exactly what I have been saying, that if you net out some of the additional costs in terms of repairs, you are confirming what we have been saying. I look at our former Highways critic, and we have been saying for a numb er of years that when you have the number of gravel roads that we have in northern Manitoba, which is the case certai nly north of 55, apart from Highway 6, which is supposedly paved all the way to Winnipeg, 391 is 90 percent gravel, 280 is 100 percent gravel, 383 is 100 percent gravel, those are the main arteries, let alone the winter roads, which are often somewhat rough.

I know the former critic has had the experience of travelling into York Landing by winter road, so he can testif y to that. * (1 150) The bottom line, you were saying there is evidence of a higher fatality rate and a higher accident rate in the Nor th, and that is why the rates are highe r. Mr. Zacharias: No, I mentioned the fatality rate in rural comp ared to city, not particul arly Nor th, and gravel roads do play a factor with re spect to windshield claims. Winkler is actually our windsh ield capital of Manitoba because of the gravel roads driven there.

But the average cost to fix a vehicle in the North because of extra freight and labour and parts costs. Mr. Ashton: Well, I am just wondering why there is not a separate rate category for Winkler then. I mean, this makes my point. I wi ll tell you, this cherry-picking of comm unitie s-if you just happen to be the windshie ld capital of Manitoba, but you are stuck in this big blob of a rate category that is called southern Manitoba, you are okay, but if you are up North, you pay through the nose. I get back to my point again about the arbitrary nature of that.

I would like to ask actually for Autopac to have that information, because I will tell you, my goal, quite fr ankly, I would love to see the roads imp rove d to the point wher e I do not have to make this argument and it will then lead to a decrease in terms of that, but there is a lot of cherry-picking that goes on in terms of that. Winkler does not pay that mu ch more.

The other thing I would like to ask too: in terms of some of the storm damage that has happened in recent years, hail and various other storms, is that then attributed to that rate category area, or has that been inclu ded in the overall rate incr ease? Ar e those assessed according to the geographic location in which those storms occurr ed? Mr. Zacharias: The experience-based rating takes into account by terr itory, so if there is a storm in the south of Manitoba, then it would go against the south rati ng. That is where re insur ance comes in, and we have actually

58 LEGISLATIVE ASSEMBLY OF MANITOBA December IS, I9 98 recovered all the costs from th1� storms in excess of the $5-million retention. So the reinsurance costs are applied, the costs of the premium, but we do not have to apply the $50 million from the storm other than the $5-million deducti ble. So, when a catastrophe like that occurs, because of the reinsurance protection we have, it does not necessi tate everybody across the board seeing an incr ease from that. Mr. Ashton: Who pays for the reinsurance? Is that the general ratepayer or is that by reg ion, again, based on the ri sk of the place? Mr.

Zacharias: It would be done per vehicle. The rei nsur ance would cover <Catastrophe losses as well as individual claims where there is a catastrophe type of injury involved. Once that injury cost goes beyond a cc�rtain limit, then, again the experience of that t,err itory would be modified by the recovery on the reinsurance side. So it is more of a per-ve hicle cost. Mr. Ashton: Which then really means that, if you live in Thompson or if you live in Flin Flon or you live in Winkler or you live in Winnipeg, everybody is paying for that rei nsur ance.

The reason I am asking that is because it is fine to say the additional costs that are above the reinsurance are assessed to that rate reg ion, but if everybody is paying for the reinsurance, obviously the cost of the rei nsur ance, if it is being spread across the provi nce, is being paid by everybody, regard less of the risk of those types of occurrences. Is that correct? Mr. Zacharias: No, we are talking about some pretty small dollars. I am talking $5, $6, maybe $7 at the most per vehic le.

When you are talking maybe the south is more prone to a hailstorm than the North, but in the ruml area, again, is where a lot of your serious fatalities and accidents occur, outside of the cit ies. At the end of the day, I have not done the calculation, but if I looked at where accidents are occurring in the Nor th, how much they contributed and how much they got out of the reinsurance fund, and the same thing in the south, I think there would be pretty com parable numbers. Mr.

Ashton: Well, I want to get to the bottom line again, such as Winkler has the lowest rates of any rate category, and Thompson has the highest, even though we now hear that Winkler is the windshield capital. I want to point again to the-however you set up a rate structure and whenever you put commun ities in, you end up with some arbitrary decisions. I am not saying this is a new factor necessarily, but when you mo ve towards experienced rating, it has that much mor e of an imp act on a particular region if you happen to pick a region that is considered higher in terms of claims and ri sk.

So, believe you me, it is a concern in my area, and a lot of people say, for example, why not just have one rate for all of the Nor th or rural Manitoba because in fact rural Manitoba pays less despite some of the other factors that you have rai sed. This is where I get back again to the fact, yes, there are some cost factors that are higher in northern Manitoba-that is always recogniz ed. But also it is clear that if you get a higher number of claims, I think that can be pegged directly at the road conditions.

I mean we talked about windshield claims in Winkler and accidents and gravel roads in southern Manitoba, but even given all of that, the claims costs and the assessment of Autopac rates is lower in rural Manitoba than it is anywhere else in the province basically, and it traditionally has been. So I would urge once again that there be a review of these structures, and I will tell you what fr ustrates me. On the one hand now we have the newly privatized MTS talking about elimina ting rural and northern rates entire ly.

Their latest application would make you pay the same costs in Winnipeg as you do in rural and northern areas. Of course that means that rural and northern consumers are going to be bumping up on their phone rates. With Hydro you actually pay marg inally mor e if you live in a rural or northern comm unity, an,d how it fr ustrates people; it comes fr om our own backyard. Of course with Autopac you pay more again if you live in the Nor th, although that is not the case in rural Manitoba. I would like to ask the minister for a review of this.

Once again, it is much mor e of a prob lem if you make a decision that there is no "cr oss subsidization," however defined. You then have a reg ion that is in that category, and I will get into some other categories of motorists that are also facing the same kind of pressure on rates. - -

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANITOBA 59 ' So I would like to ask the minist er-I think we have had about four letters back and for th from this-he has had letters from Leaf Rapids, I know from the council and I believe from the Chamber of Commer ce. I believe the new mayor of Leaf Rapids has been very vocal on this. People just do not think it is fair that we are sort of arbitrarily picked out north of 55 and we end up paying higher rates than anyone else in rural and northern Manitoba. I would like to ask the minister to revi ew it.

To my . mind, again, if you are making a decision to ' switch to this experienced rating system, you obviously have made a conscious decision to shift the rate structure. Well, I am arguing that if you do that, you should also at least look at the reg ions to look at the fairness of that and the fairness on individual motorists. I would like to publicly ask for that review. I obviously know what I would like to see the result of it, but I under stand what would have to happen in terms of that.

I will tell you a lot of my constituent s, a lot of people living in Leaf Rapids, Lynn Lake, Gillam, Split Lake, Nelson House, Cross Lake, Norway House, a lot of comm unities in the area would be very much interested in that kind of a review. Mr. McCrae: Mr. Chairman, I will respond to the honour able member in the affirmative. I think that it is safe to say that the rates in the various regions and territor ies as set out in the Autopac plan are the subject of review and on an annual basis by the Public Utilities Board.

There is nothing to prevent anyone from making the kind of case the honourable member wants to make before that body. The Manitoba Public Ins urance does its best to provide compr ehensive and fair coverage for Manitobans.

Sometimes at the end of the discussion it may be that the honourable member and I or the honourable member and MPIC might differ on this or other matters, but to suggest that these matters are not the subject of ongoing review not only by the corporation but by its regulator would be an in correct assumption that this is something-and besides that, the honour able member rai ses this and his col leagues do and others from the comm unities in northern Manitoba on a fairly regular basis as well. So it is not that the issues are not being taken into account in the rate setti ng practices of the corporation. *

(1200) Since the honour able member also has mentioned Winkler prob ably half a dozen times in the last few minu tes, I just want him to know that I have been doing my best sitting here next to our Chairman to keep him from getting involved in the discussion because, as Chairman, I think he is supposed to be neutral. It has re ally been hard, but I have been trying very hard to keep our Chairman, the honour able member who represents the Winkler area, fr om getting too involved in the conversation. Mr. Ashton: I think it is a slightly different situation.

Because the honourable member represents Winkler , he does not have to pay the highest rates of anyone in rura l northern Manitoba for Autopac. He may want to just let sleeping dogs lie on this one, I suspect, so he may actually be at an advantageous position being in the Chair. In terms of the rate structure shift, before getting into some questions about auto theft, I raised some questions back in May about motorcycles. Believe you me, motorcyclists know what rate shock means. They have been experiencing rate shock for quite some time.

One of the questions I want to ask is: are they going to be shocked even fur ther in the upcoming years? Has the full brunt of the in crease been received by motorcycle ri ders at this point in time? Mr. McCrae: In a moment I wi ll ask Mr. Zacharias to perhaps break out, if it is possible to do so, the impact this year on rates for motorcyclists but, again, it has to be underlined and it is on an annual basis-I talked to my friend and colleague the honour able member for Gladstone (Mr. Rocan) and the member for St. Nor bert (Mr. Laurendeau) and some members of the motorcycle association about this issu e.

It is through the clear rating system we can show where the costs are happening, and those things are refl ected in the rates that are set. It is not an easy pill to swallow. I am looking at my col league from Gladstone, who has been known to take a ride on a motorcycle in his ti me. He also knows, the honour able member for Gladstone and the honour able member for

60 LEGISLATIVE ASSEMBLY OF MANITOBA December 15, 1998 Thompson (Mr. Ashton), that there is not as much prote ction for the driver of a motorcycle as there is for the driver of a motor vehicle, some of the heavier ones where you ar(: sur rounded with steel and you have the benefit of seat belts and the benefit of airbags and all of these things that tend to cut down on the damages to human beings that can occur. It is a !tragic situati on in some cases, and sometimes it iis not the fault of the motorcycli st.

I know as a motorist myself that if you are not thinking about motorcyclists you can miss seeing them if you are pulling away from an intersecti on. I know that because I have had to re mind myself at few times about that. So no one is suggesting that all accidents or all col lisions are the fault of motorcyclists or that they are the fault of anybody else for that matter. The clear rating system is set up based on facts, based on experience, loss experience, and all of those factors. Mr.

Zacharias can answer the question much better than I can, but my point is that the concerns are not unaddressed; they are not something that we si mply do not want to account for, because we do. The fact is that when it comes to subsidizing, there are some policyholders over the years that have subsidized other policyholders. To the extent that we can fairly address that, we should do that for the sake of fairness across the system, but the specifics I will ask Mr. Zacharias to re spond to. Mr. Zacharias: Ther e are: two issues on motorcycles. One is how they pay their insur ance as far as earn their pr emium.

At one point in time, if we bi lled the motorcyclists for $500 worth of pr emium, he would pay that in the spring. The pr emium would be used up by the end of the motorcycle season, and if he turned in his plates at the end of the season he would get nothing back, because the pr emium was deemed to be earned during the riding months. That was changed at the request of the motorcyclists, because they wanted to get a re fund if they turned in their plates at a certai n point dur ing the year.

So if we then send him the same $500 bill and he only had the plate on the machine for six months, he in effect would now get a $250 ref und. So the contributi on went fr om $500 to $250. That process which they requested re sulted in the premium we actually earned from motorcycles being cut in half, which meant that there was a significant shortfall in the amount that they were paying because the claims cost did not change because all the claims still occur in the summer.

In order to get back to a place where they were mor e or less paying their way, there had to be some significant pr emium incr eases go out in the bills because at the end of the day they are sti ll only paying half that bi ll. This particular year the incr ease that motorcyclists wi ll see in the bi ll that goes out will be 13 .9 percent. The question that PUB and ourselves have been struggling with is how much extra car owners should pay so that those who like to ride bikes continue to enjoy that privi lege.

Or should they pay for that privi lege because even with this rate in crease the actual cost associated with motorcycle s-they are going to be paying about 60 cents on the dollar based on the claims dollars going out.

In our discussion with PUB and the motorcycle coalition, which is represented there, we have indica ted that we wil l look at some ways to try and mitigate some of their oblig ations by maybe capping some of the large losses, that if they have, say, a motorcyclist who leaves his bike and we have a $2-million PIPP claim, should that whole $2 million go against motorcycles or should we use some kind of cap and move the re st to the general fund?

Clearly doing anything of that nature means that car owners are subsidizing motorcycle owners, and that is against the principles we have been ins tructed to deal with in our rate-setting applications in front of the P.UB where they want to elimi nate cross-su bsidization. But we are working with the motorcycle coalition to try and address some of the safety issues, try and first of all re duce the number of accidents, education.

We are spending a lot more dollars and working much closer with that group but also from the underwriting side during this year, exploring some further opportunities that we will take back to the Public Utility Board to see if there is a way that we can mitigate some of the in creases that they had been faced with because they are still significantly short on dollars contributed com pared to dollars goi ng out on their claims. Mr. Ashton: One of the concerns, though, and I rai sed this before, is that if you have an accident the cost of the accident goes with the vehicle, - -

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANIT OBA 61 regard less of fault. I know you pointed out that there are a lot of single-vehicle accidents, but I have seen cases wher e--one of the reasons I stopped riding a bike myself is because of numerous cases where I was almost in an accident because people did not see me. Now, of course, what happens if you are in an accident, the question then becom es-the bike suffers a greater degree of damage than a vehicle; that tends to be the case.

In some cases you get vehicles that have vir tually no damage, but is it fair to assess that to the motorcyclist or to the car driver? If I had the Hansard, even though you are right to point to the single vehicle accidents, there are cases, obviously, where you end up with a mixture of fault or a number of cases where the motorcyclist is not at fault, the car driver is at fault. I believe there are still more cases wher e that is the case. That is one of the big concerns I know with motorcyclists, being assessed for any of the costs where they are on the road, and I do not think it is a luxury issue.

I perso nally feel that people have the right to ride motorcycles, period. There should be a much greater onus on car drivers to be aware of them, and I would certainly encourage MPI to do a lot more public education. I will tell you what happened one time when I got hit with my-I had a friend of mine on the bike. Someone said, oh, they did not see you. I guess you have a right to be on the road. Well, it was sort of like it was something that was not taken for granted. I thought I paid for my licence, paid for my ins urance, took my test. I had a right to be on the road.

I still think, and maybe it is our culture here a bit because we have such a winter no rmally, not recently, but you kno'Y it is sort of like you can only ride a bike on a seasonal basis. I know a lot of places whe're bikes are an essential form of transportation, period, and motorcycles are driven 12 months a year. So there may be this sense here that it is a luxury item or it is a hobby or whatever. I do not believe that. I think if you are on the road and you pass the qualifications and what I want to suggest is that that should be reviewed, where the cost of the accident is allocated.

I do not think it should be going especially in the case of where the car driver is .at fault, I believe the cost should go to the car driver pool not the motorcyclist pool. * (1 210 ) The second thing is that there is a lot of advertising, a lot of work that is being done in terms of safety. Why not make safety for motorcyclists a top priority? Third, and I know that other memb ers have had similar ideas about thi s--I know the member for Gl adstone (Mr. Rocan) and other s-- it has been something that I have been raising for a number of years.

You know, I remember a number of years ago when motorcycle helmets were brought in, some people as an alternative talked about graduated licens ing, various items of that nature, and I would be interested to see if Autopac has any statistics on this because my sense has always been that the greatest risk tends to be with new motorcyclists. I also, by the way, question, and as someone who has ri dden a motorcyc le, whether the blood alcohol content, especially for new motorcyclists, is · sufficient.

I actually believe that if you are riding a motorcycle for the first time-and you have to remember, you can go and pass the written test and you have a motorcycle licence or the Ieamer's. You can then go to the bar; you can then drink and be quite marginally inebr iated but not within the confines of the law; and you get on your bike. I tell you, I know the minister and I exchanged sort of details about machines we had and even on the relatively small machine I had, not quite as small as the ministe r's 50 cc, you have more torque than you have in a car.

You get on a Harley, and you have more torque than any car on the road. So I am wondering if we might want to consider, in stead of this across-the-board approach, having graduated licences. I would say even alcohol-fr ee licences for motorc ycles, most definitely alcohol-fr ee licences for learners, understanding that you are by yourself, you have no one else on the motorcyc le, you are not required as you are in the car, and build in an incentive, I would say a greatly enhanced incentive, for people who have been riding a motorcycle.

In many cases, I know people who have ridden for 30 years without an accident, without a claim, and yet they are lumped in with som ebody who can go and pass a written test and ride on the same motorcycle the next day, partially under the infl uence-and I want to throw that out because we often get accused of

62 LEGISLATIVE ASSEMBLY OF MANITOBA December 15, 1998 the opposition not coming up with constructive alternatives. I note that not all of it was within the confines of Autopac, but I want to ask speci fically whether you will consider fol lowing up on the education and the graduated ins urance premiums givi ng a much higher percentage benefit to motorcyclists who have a safe driving record. Mr.

Zacharias: Wit h respect to loss transfer, where the costs go with the vehicle that is responsible, that has been a topk of considerable discussion at the Public Utilities Board, but I think we have to remember that the motorcyclists have been very strong on the point that those costs where they are not liable should be transferred away from their pool. They have not talked about where they cause an accident with a car and that the car cost did not have to go to the motorcyclis t as well if you are going to move based on responsibility.

Even if we did that, if motorcycles-and these are not the exact numbers, but I think order of magnitude-are short 40 percent today based on actual experience, if we did the loss transfer both ways, they would still be short somewhere around 32 percent. So it does not make a big difference to them because the costs that go out are almost offset by the costs coming in. There is a bit of a savings that they gather ther e.. but not a big savings. With respect to graduated licensing and things of that nature, those are: not within our purview.

We would respond to whatever the rules of the law are, but as the ins urance provider we have to take the situations as they sit today. Mr. Ashton: I would appreciate too getting some statistical information, be:cause I want to stress again that, apart from the graduated licensing, one thing that I am thr owing out as an option here would be to look at much more of an experience-ba sed system based on the experience of the rider, because I know that most motorcyclists I know feel that there is a direct correla ti on. You would have those statistics available.

If you do not havt! them, I would suggest it is something that should be determined, cross-r eferenced with the Motor Vehicle Br anch, when there is an accident whether it was caused by an experienced rider or an inexperienced rider. I am not saying that experienced riders do not get into accidents. That does happen. It happens with car drivers as well, but we know that with car drivers, there is a big element of it, but I think in the case of motorcyclists, my sense would be, not having in formation but just from people I know, that it would be even greater.

So I under stand that graduate licences are not something MPIC can bring in, but you can look at better incentives for safe riders based on the obvious fact that I would say that you would find that experienced ri ders have fewer accidents. Mr. McCrae: believe Mr. Zacharias was going to comm ent. I have a commen t when he is finished. Mr. Zacharias: We cannot lose sight of the fact that most people who ride motorcycles in the summer also drive cars in the winter, and there has to be a carryover of driving record of an individual.

You cannot isolate his summer motorcycle record from the rest of his year driving record. Consequent ly we do have the discount program, where people can get discounts based on claims- fr ee driving records and conviction-free driving records. Whether that should be deeper or wider or something is certainly-where we sit today, that program has been approved by the Public Utilities Board. It does get reviewed from time to time, and it may well be that over time that is one of the areas that we could look at again to see if there is some mer it in moving those parameters. Mr. McCrae: Mr.

Chairman, I appreciate the accommodating response made by Mr. Zachari as to the suggestions made by the honourable member for Thompson (Mr . Ashton). We will see what comes of that, but I know that there is an openness on the part of the corporation to try to deal fairly with its customers, many of whom are motorcyclists. We simply are not of the mind set set out by the honourable member when he referred to the motorist who admitted that the motorcyclist did somehow have a ri ght to be there. That is not our mind set at Manitoba Public Insurance.

December 15, 1998 LEGI SLATIVE ASSEMBLY OF MANITOBA 63 My reason for wanting to comment was si mply on the issue of motorcycle safety education. We are mandated by the Public Utilities Board to engage in safety education issues and campaigns. RoadWise is a major part of our strategy, and we will take that comment to heart with respect to motorcycle safety education and look at what we can do in that area. As a publicly owned ins urance company, maintain that it is entirely appropriate that Manitoba Public In surance be involv ed in public road safety campaigns.

It has spawned and assisted in some very mer itorious activities such as Operation Red Nose and assistance with police departments in tryin g to catch impaired drivers and keep them off the roads. The honourable member knows very well from his experience the tragedy and calamity that can befall people because of drinking and driving. I believe that the MPI RoadWise message is being well received by Manitobans, and Manitobans are responding posit ively. Unfortunately we do not have a perfect record out there yet, but we are moving in the right direction . It is very supportable.

But I support what the honourable member said about road safety messages and education respecting motorcycles, and I think the corporation does as well. Mr. Ashton: I will just move on to a couple of other issues, and I know Mr. McA lpine indica ted he has some concerns he wants to raise too. I want to ask some questions on the advertising, if the minister and MPI can indicate who has been doing the advertisin g and what the basis of the selection of the advertising agencies was and the cost of the various adverti sing programs that MPI is currently undertaking.

If the informa tion is not readily available, I can take it as notice. Mr. McCrae: Mr. Chairman, I know that Mr. Zachari as and his staff will be reviewing Hansard from this com mittee meeting. If we do not get total detail on all of the answers, we will certainly be making it available at a later date. With respect to this particular question , that falls into that category. We wiii get the informa tion the honourable member is requesting and make it available to him by letter. Mr. Ashton: Thank you and I appreciate that. I would like to move on.

I rai sed a series of questions at the last com mittee hearin g on the epidemic of auto thefts in this province. I noted at the ti me the shift from the origin al position that the government took which was to penalize the victim with the assessment of deductibles. Believe you me, I have talked to a lot of angry motorists who have had quite a few things to say about that. We are now in a sort of an in between position whereby if you buy coverage to reduce your deductible, you are essentially buying extension coverage which covers the antitheft portion.

That is sort of a halfway move, but it certain ly I think did respond somewhat to the concerns that are out there. * (1 220) I did rai se back in-I believe we sat in June, if I remember correctly, on Tuesday, June 9, in terms of antitheft because, for the life of me, the thing that we should be doing is fairly obvious and that is, given the epidemic we have, in addition to some of the things that the government has brought in, the additional police resources and whatnot, which deals with the back end, is start givin g motorists an incentive to install antitheft devices.

Now we raised the issue of the club at the time. Since that time I have read several articles of new technology involving everything fr om satellite tracking to sort of the equivalent of a DNA transcription for the car itself that cannot be destroyed with auto theft. Given the fact that certain cars are particularly subject to this, and I would assume that under this new experience-rat ing system that one of the eleme nts we are dealing with is if a car is more likely to be stolen, your rates go up.

I am wondering when the government and MPIC is goin g to get to the point of doing what I think makes sense which is gi ve people incentives to prevent auto theft, prevent, not necessarily deal with it at the rear end, or at least incentives to put in devices that wi ll help in the tracking of automobiles because we are incr easingly dealing with not just the joy-riding aspect, which is a problem, I think we all know that. I am sure there is some correl ation with some of the gang activity as well, but the classic joy-ride situation, but when you have vehicles and I pointed out last time the vehicles that have

64 LEGISLATI VE ASSEMBLY OF MANIT OBA December 15, 1998 resurfaced in Bulgaria from Manitoba. There are international auto theft rings and they particularly target such vehicles as, for example, Jeeps, Mustangs, the member for Gladstone (Mr. Rocan) points out. Ther e are some that you know from your experience rating and I am wondering if certainly those vehi cles-it seems to me that give n the high rate of theft of Jeeps, for example, it would make sense to set out a system wher eby people have an incent ive to put in a device.

It may cost several hundred dollars, but if it can be proven to be somewhat successful, I think is the case, and by the way, I even get back to the Club. I know there has been some question about whether it is used or not, the fact is I believe that most Manitobans, if they got an ince ntive to use any sort of device, would use it. I re ally do not understand the logic of dealing with that. I think those devices have been proven to have some effi!ctive ness. But when we are dealing with the n(:w technology, I think there is every indi cation that they do work.

So I am wondering, will the government bring in incentives for motorists who will take their own initiative, either through purchase or installation of equipment, to preve nt theft? Mr. McCrae: Mr. Chairman, as with any problem that confronts an insm ance company, re sponses to that problem are always the subject of study and review by the corpor ation. Obviously Manitoba Public Insur ance wants to do the right thing by our policyholders.

That should go without saying and it is re ally part of the mindset of the corporat ion, and we are re minded that customer senrice issues are im portant and we are also told from time to time that we do a good job with respect to that. Any discussion of auto theft that leaves out the issue of gang activity in the dty of Winnipeg is not a com plete discussion. I was heartened in re cent weeks to learn of the arTest of 35 or so alleged gang leaders. It is to b1! hoped that will have some imp act and the work of the Winnipeg police in partnership with Manitoba Public Ins urance will continue to show some re sults.

We always want more re sults and we keep the pr essure on But with re spect to antitheft devices, this matter has been looked at very carefully, and it is still the subject of study. There will be in the future, I would think, all cars rolling off assembly lines going to be equipped with devices that would deter theft, and, of course, we lobby and press for these sorts of things to be happening. To this point, it is not happening everywhere, so we still have the issue. The honourable member re ferred to this device called the club, and we have discussed that before as well.

Suffice it to say, the whole issu e of auto theft re mains a concern for us at the corpo ration. It costs our policyholder s lots of money, and that is a matter of concern to us. I think I wi ll leave off at that point and ask if Mr. Zacharias has anything more speci fic to add. Mr. Zacharias: Yes, I am pleased to advise that we have been working very hard on this issue, not only in Manitoba but as an indu stry as a whole-- we as part of the industry, I guess. For the fir st time ever, Canada now has an antitheft device standard for vehicles.

This comes about as a lot of work by the insur ance ind ustry, manufacturers, the police, the fr aud coalition all working together and coming up with some defi nitions as to what is a satisfactory antitheft device. The manufacturers have bought into this, and they have been part of that discussion and part of the agreement.

Based on the rati ng system that we now have, as vehi cles come to market equipped with this particular device, we have built right into our base rates, because it is part of the rati ng system, a credit for vehicles coming to market with those devices, so they, in fact, will have a lower pr emium than vehi cles that do not, not as part of a discount but part of the underlying rate structure.

After-m arket equipment, and there is Jots of it out there, the national testing labs ·have now been appointed to any manufacturer of after market equipment can go there and have their device appraised to see if it meets the Canadian theft standard or not. If it does, then through the clear rati ng system, again, there are guidelines being built to re flect that in ins urance pr emiums. If we look at our car theft costs going from roughly $3 million to a little over $20 mil lion, that is a big in crease. With 750,000 re gistered units, that works out, though, to just over $30

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANIT OBA 65 per car, and if I offered you a I 0 percent discount on the theft port ion of the premium, which is part of the basic program at this point in time, it would be $3 or $3.20. That is not going to be a big incentive for people to spend several hundred dollars to put an antitheft device in their vehicle. If I gave away the full $32, that means I have nothing left to pay theft claims, and we know there is still going to be a number because the thief walking down the street, while he may avoid your vehicle if it has the club, he is going to take the next one.

So at the end of the day, I still have the same number of dol lars in theft claims as I did before I started giving the discount. So what I have to do to start with is I go to the Public Utilities Board, apply for a premium in crease which leaves me enough slack in the premium to give part of it away, and I am not sure that everybody would appreciate a premium incr ease in order to fund a discount program . But we have looked at the tracking devices for certai n types of vehicles.

Certa inly , there are some manufacturers who have come out with some excellent models that we previewed just a few days ago, and I think there are some big str ides being made, but when you look at nearly 40 percent of the vehicles being stolen still exhibit no degree of protect ion by the owner, either leaving the keys in the car, the keys under the mat, the doors unlocked, things of that nature, public education, that they have a duty to protect their vehicles and can make a diff erence is still a theme that I think needs to be further explored.

Working on that theme in conjunction with some greater enforcement with the police, which we have supported and worked quite closely with, and working with the in dustry as a whole to make sure there are some standard devices that are going to be used and recognized that .are cert ified as being effective. Those are the areas that we are pursuing at this point in time rather than a discount program where it is very hard to administer and in fact would require a premium incr ease in order to fund something like that. Mr. Cha irperson : As previ ously agreed, at 12:30 we were to assess the situation. Mr.

Ashton : I indicated before that I think we can finish by one. We did start a bit late, which I thi nk is a bit unfortunate, but we can proceed. * (1 230) I just want to stress again, by the way, that I have no problem if someone leaves their keys in the car and the car is running that they would be dealt with in a different situation where there is an auto theft as com pared to someone who takes precautions, uses the club, sets up another kind of a device, Jocks their car.

I still do not quite under stand, when we are dealing with an epidemic of auto thefts--we all know it is a major problem -w hy we do not get down to the root, which is to prov ide some incentives for citiz ens who take precautions. You know, that can be dealt with in the same way we deal with other issues as well. I believe if you leave the car running with your keys in downtown Winnipeg on Portage A venue and the door is open, that is like an open invitati on. I tell you, I have talked to enough people who had to pay the deductible init ially who took all the precautions.

I talked to one guy who got his car broken into twice, and he had to pay the deductible two ti mes. In that case, he had the vehicle locked. It just happened to be the wrong underground parking lot and what not. He said what happens to the person who has the car running, the keys are in the car, the door is wide open. It is very dif ficult for me to respond because I know what the answer is. So I think you have to deal with theft through having prevention, and other in surance companies are doing that, I know, in some cases, some companies in other jurisdict ions. So I will leave it at that.

I will tell you I will be rai sing this again and again and again. I know our coll eagues wi ll. We want to see some ways of getting that down, and I think the way, by the way, is to make a hundred percent of motorists aware that theft is at a pretty high level, especially in certain areas such as the city of Winnipeg and that maybe 20 years ago you did not lock your car, nowadays you have to do it. You certainly do not leave the keys in the car. It is just crazy to do that.

I have a couple of other issues I want to deal with, but I want to indicate too that I will not have time today to deal with some cases that I have been dealing with, and I know the minister has been recei ving letters. By the way, I want to give the minister credit for responding. I do not

66 LEGISLATIVE ASSEMBLY OF MANITOBA December 15 , 19 98 always get the answer I want, but I do get answers. I want to credit Autopac because I know they are the ones that often are dealing with that. There are some departments of government and mi nisters that I do not get responses back as qui ckly from.. I am not trying to criticize them right now. I will do that at the appropri ate time. Sometimes this gets lost in the shuffle wher e you do get answe:rs, and I want to give the min ister credit.

I know I have raised issues such as I have had a number of people who have diff erent concerns about release of information, both medi cal and income tax. I think Mr. Thiessen and Mr. Watts are both well aware of the cases that are inv olved there. I have had some rehab issues, and this is an issue that is ongoing, Paul Beaudet, but I have had other rehab issues that have been raised with myself and with our caucus. Elba Redhead, a case I will be raising di rectly with the minis ter following a traffic accident in volving her son, a very di fficu lt cir cumstance. Gary Enns, I have raised.

It is involving a leasing situation and denial of coverage in that case. Maurice Pankhurst [phonetic], who ended up having his licence suspended because--he says he has proof of payment that was not acknowledged at that time and I intend to pursue it. I would lik e to ask specifi cally, getting back to the issues of release of information, whether the mi nis ter will review a couple of the cases where it has basically been admitted that in formation was released that should not have been, certainly income tax in fonnation, and also a look at the release of medical information.

This is an issue we dealt with Workers Com pensation a number of years ago. We brought in legislation that allows injured workers to have access to all medi cal files that have been received by Workers Com pensation from their doctors so they know what is being said. There were many cases where people were not told what the doctors were saying pri vately to Workers Compensation. I am wondering if there would be a review within Autopac of procedures.

I mentioned a couple of specific cases, but I would at this point ask if there would be a review of that because I have received concerns of people who felt that in some cases they were not getting access to their medi cal records, and in other cases Autopac had far greater access than it needed to both income tax records and med ical records. So there is an imbalance between the claimant and Autopac on that basis. Mr. McCrae: Mr. Chairman, I appreciate the comments of the honour able member.

There are times when dealing with issues related to our constitu ents that it is quite easy to put aside all partisanship and just deal with what is the right thing to do for our constituents. I think the honourable member feels that way too. With respect to information, Manitoba Public In sur ance, to my knowledge, unless there have been any matters come forward to the contrary that have been the subject of allegations, is bound by the Jaw of the land and it attempts to work within the li mits of all regulatory and legislative rest rictions there mig ht be with respect to the sharing of information.

They attempt to share only that information that they are supposed to under the law or to release informatio n--only that which is governed by law. Sometimes it is not always that clear what the rules are. I know that in one ease--l remember the name of the case--but we, I think, issued an apology to somebody because information was either released or not shared. I cannot remember the details at the moment. But the routine work of this corpora tion is done in accordance with the applicable laws and regulations of this jurisdiction.

If the honour able member has specific allegations, then we will deal with them on a one-by-one basis, but if the� should point to a conduct of our business that needs review and it is indic ated by these particular cases, that would then happen, and I would dir ect that that be done. I invite the honour able member to stay in touch with me on these matters. If concerns arise with sufficient frequency that some type of review is indicated, I would be the first to want to see that that was done. Mr. Ashton: I thank the minis ter. I believe Mr. McAlpine and Mr.

Maloway have some questions, and I have a couple of final comments. Mr. Gerry McAlpine (Sturgeon Creek): Mr. Chairman, an issue I want to deal with is-there

December 15, 1998 LEGISLATIVE ASSEMBLY OF MANITOBA 67 are a couple of issues, and they are mainly to do with inter pretation by MPIC and legis lation- Mr. Chair person: Order, please. Could you pull up your mike so we can hear a little better. Mr. McAlpine: Thank you, Mr. Chairman. Is it on now? Mr. Chair person: No. Mr. McAlpine: Thank you, Mr. Chairman. What I want to deal with here is a matter of inte rpretati on. I think that it is serious enough that it is going to--1 look around this table here-a ffect every one of you in terms of serving your constituents at some time or another. It is to do with what is classified an

interpretation of permanent residency and education. I have had the occasion to work with a particular young hockey player that has been playing hockey in Al berta. This particular hockey player had a claim on his car. Actually it was registered in his father' s name. This particular hockey player had a claim with a broken window, the back window in his car. When the father reported the claim, the adjuster indica ted to him that, well, he has been out in Al berta since October or late September, whatever the case was--but the adjuster had indica ted to him that because it was a vandalism claim they would cover it, but if it were a more serious claim, they may have a diff erent

interpretation of that. This gives me serious concern. My concern here is whether or not MPI is making interpr etations on the basis of claims, the size of claims, or is it based on the interpretat ion of residency and education, because I think I can address the issues in both these cases in terms of permanent residency and education. I guess re ally what I would like to do is to get an answer, if there is any interpretat ion made based on the matter of the type of claims that there are, whether it is a claim that has no liabilit y or just what the situation is. Mr.

Zachar ias: I hope I can shed some light on that issue. For Manitobans moving away or temporari ly moving away and things of that nature, first of all there is provi sion within the legislation and The Highway Traffic Act where students, people who move to, say, Manitoba and go to Toronto to go to university. While they are attending university they can maintain their Manitoba regi str ation, and we wi ll provide the full coverage.

But our act also says that individuals, when they move away or are in another jur isdiction for a considerable period of time, they have to comply with the local registrati on requirements. For in stance, if an individual moves to Al berta and Al berta law says that you cannot operate a vehicle regi stered in another jur isdiction there for more than 30 days or whatever the period of time is, after that you have to regi ster in Al berta.

Once that vehicle is required to be reg istered in another jurisdiction they are no longer entitled, that vehicle is no longer entitled to also be reg istered in Manitoba and consequently therefore is no longer entitled to the coverage here. * (1 240) I am not familiar with the individual case, but if the Al berta law said that that particular vehicle was required to be registered in Al berta because of the length of time it had been there, then we would be bound to take that into consid eration, meaning that he is no longer entitled to be regi stered in Manitoba.

That is a situation we do run into from time to time, where people move out of Manitoba and want to hang on to their Manitoba plates for extended per iods of time because usually the premium where they are moving to is going to be more. It is all governed by the local legis lation. If it is Alber ta, we would have to go by Al berta law; if it is Ontario, we go by Ontario law. Once the law where they move says that they have to change the registrati on, that is the deter mining factor. That is written ri ght into the MPI act, that we have to turn around and look at what are the regist ration requirements.

Are these people still entitled to be regi stered here? If wherever they are oper ating the vehi cle says that they cannot be operating there without regi steri ng there, then that is the determination as to whether we should continue to provide coverage or not. Mr. McAlpine: Mr. Chairman, I hate to give some challenge to what Mr. Zacharias has indi cated here. According to Polks, Canadian

68 LEGISLATIVE ASSEMBLY OF MANITOBA December 15 , 19 98 International Regi str ation Manual, Volume 3: Vehicles operating in Alb erta must be re gistere d after three months of re sidency in that province except for vehicles operated by an out-of province student. Now, my question is here, if that is correct, and we often re fer to these mganizati ons that make int erpr etations on behalf of all Canadians across the country, if that is the case, then to me it boi ls down to a matter of what is re sidency and what is education. According to what Mr.

Zacharias is saying-! want to have some understanding of this, I want a clear understanding of this, and I do not want to leave this to the inte rpretati on of an over zealous adjuster who is going to make an

interpretation based on what the claim is. That is my concern. I mean, there is a potential here for a constituent of any one of us here to be caught between the inte rpretati ons of the various legislations, whether it be Alb er ta or Saskatchewan, Br itish Columb ia or Washington, D.C., or Spokane, Washington, and I am talking about hockey players who are, in many cases, re gistere d to an education. What is the

interpretation of education as far as the MPI is concerned? To me, this hockey player is being educated in the profession of hockey by playing in the Western Hockey League or any other hockey league in order to gain emp loyment at a higher level and to be paid for that. So I am looking at this with these concerns in mind, and I think that there has to be some clear understanding and clear direction in terms of what MPI is doing, because it is going to affect every one of us. Now, this has been goi ng on for a long ti me . I mean, this just has not happened.

These hockey players have bee111 in this situation not knowing, but when this was brought to my attention, I had serious concern, and I have ser ious concern for these people today because of in terpr etations. Mr. Zacharias: As I mentiom:d, we are bound, and whether he is allowed to operate that vehicle in Alb erta is bound by Alb er ta legislation. Alb erta says that if you are a student and you come here, you can hang on to your Manitoba plates.

They also defin e student, and nearly all the highway traffic acts are very clear on the defin ition of student, and that means a person who is there for education, and as a student, nearly all jur isdictions say you cannot earn income simply for education. If this individual is getting paid for his occupation, whether it be as a hockey player or something else, that would mean that he is no longer considered a student under Al berta law, and therefore the Alb er ta legislation would say that he could not operate that vehicle there for more than I think it was 90 days that you mentioned.

This is not an unusual proble m. A student leaving Manitoba to go to school in Toronto, Waterloo, wher ever, out of provi nce, as long as they are a student, and again the Ontario defi nition-in fact, the Manitoba defin ition for people coming here to university also says that if you are a student and very clearly not earning income, you can hang on to your Ontario plates, Alb er ta plates or wherever you come from; but, once you start earning income, then you would have to re gister here. So that is a pretty universal re quir ement across the country.

I am not familiar with the case, but from what has been said, after 90 days operating that vehicle in Alb erta, he would not be entitled to the student exem ption because he is earning some income and, as such, has to re giste r in Alb er ta and therefore would no longer be entitled to Manitoba plates. Certa inly, because of maybe not knowing or some gray areas, if the adjusters said, we are not going to hit you over the head on this, but point out to them that they have to make this change or that there is a re quirement to be changed, then I believe that it is their duty to do so.

But, again, it is not our interpr etation; it is what the law of the land says. When ,you move to another jur isdiction and are going to spend some time there, you have to comply with the laws there. If it is as a student where he does not earn income, he is allowed to keep Manitoba plates. That is fine; we will continu e to provide the coverage.

But, if he does not fall into that category, and the law of where he is operati ng says you have to re giste r here, at that point that is when the issu e would become that he is no longer entitled to our re gi stration because the law has said he needs to comply with the province juri sdiction of where he is at the time.

December 15 , 1998 LEGISLATIVE ASSEMBLY OF MANITOBA 69 Mr. McCrae: In any event, Mr. Chairman, as I listened to the exchange between the honourable member for Sturgeon Creek (Mr. McAlp ine) and Mr. Zacharias, I was struck that there are probably two main points here : there may or may not have been some discr etion or int er pretation involved by an adjuster, and then there is the issue of the defin ition of what a "student" is. I would simply re mind all honour able members that, when disputes arise between customers and MPIC, we have stages beyond the in itial contact with the adjuster.

We have internal re views that are possible to be done. We are setting up the system where we are going to have a fair practices officer in the company more or less to work as an ombudsm an-type of thing between clients and the corporat ion. At the end of the day, we have the independent auto ins urance appeal commission. So those things are there to assist when it is alleged that discretion is improperly applied or interpr etation has been incorrect or some such things.

So there are ways to resolve disputes, and if it is about the policy re lated to what is going on in Al berta or some other juri sdiction, we are simply not able to do very much about that. Mr. McAlpine: I thank the minister for that. I do not want to be in the situati on where a constituent is caught between interpr etations of two different jur isdictions, but Mr. Zacharias has indica ted another concern and an inte rpretati on that I rai sed here today and then what the interpretat ion of "income" is.

Would you consider a hockey player who is given $85 or $50, which is an honorarium kind of thing for whatever reason, every two weeks for some spending money- would you inte rpret that as income? I This is unusual from the aspect of these circu m stances, and I guess re ally I do not know how you deal with it on an overall basis. Maybe we have to deal with it on an individual basis.

I just do not know, but there are people out there that are really going to be caught between a rock and a hard place because they want to know who is going to interpret what and what the interpr etation is of the various jurisdicti ons. * (1250 ) Mr. McCrae: Mr. Chairman, I do not profess to be an expert on what a student is, but I have seen

definitions for various things that incl ude being enrolled in a ful l-time course of study, and I do not know if I am agreeing or disagreeing with anybody here. This is obviously a matter that can only be taken care of on an individual case basis. We have policies at Autopac that I think withstood the test of time. If the honour able member has a constituent who is having a rough time over something, I can only re commend the avenues of re view that I have. I simply do not know how much further we can take this discussion. Mr.

McAlpine: I appreciate the minist er's comment on that, and I would be prepared to work with the MPIC and the department on an individual basis to make sure that the people are getti ng the proper interpr etation before a claim actually happens. I think that is re ally what the concern is. We do not know-they are in kind of a no ma n's land in some of these situations. So I would be prepare d to try to work with MPIC and the minister to find some resolve for this on an individual basis. I thank the minister for that. Mr. Zacharias: Just one comment.

Our normal advice and what we have asked our agents to tell people is that, when they go to another jurisdiction and are going to spend some time there, the best advice that we can give them is to go to the local authorities and say what is the local requir ement. For instance, whether this individual in Al berta requires to be registered there or not would be a determination of the Al berta motor vehicle branch because they would say, yes, you have to change the re gistrati on, or, no, you don't. It is their legislation and their interpr etation of "student," things of that nature.

So the best advice that we can offer and do offer both ourselves directly and through our brokers is that, when you are going to spend some time in another jurisdiction, check with the local authorities. Some have 30- day grace period, some 90, some six months, and some special provision for students. But it is up to the individual to make sure that they are comply ing with the laws of wher ever they are residing.

70 LEGISLATI VE ASSEMBLY OF MANITOBA December I 5, I 998 Mr. Jim Maloway (Elmwood): Mr. Chairman, I would like to ask the minister several questions, the fir st of which concerns the accounting changes that have occur red at the MPIC vis-a-vis the reserve funds. Ever since 1972, it was deemed appropr iate, I believe, that 15 percent of earned prem iums was a proper figure to establish the n:serves of the corpora tion, but recent ly, I belif:ve, I noticed that these standards have now been changed, and a new standard that results in a higher limit has been adopted.

Could you tell me when these changes were made and where they are noted in the fin ancial statements? Mr. Zacharias: The 15 percent of premium was not there since '72. That came about as a result of the Kopstein rev iew and some of his recommenda tions in about '86-87, and the corporation has maintained that target level. What has occurred in the last year is that we have looked at where our vul nerability is, and basically it is more on the claims side than on the premium side because that is where you have the large fluctuations.

We have looked at what protection might be needed there, and, cer tainly, with our board of directors we have said that a target between 15 percent to 20 percent of claims liabilities made more sense than 15 percent of premi um, because, again, we wanted to reflect where the vulner ability was. In our rat€: application, we advised the Public Utilities Board that we were trying to come up with a target that was a litt le more meaningful and reflective of the actual risk and put forth the fact that the target should now be 15 percent to 20 percent of li abilities.

In their order they have said we are not sure that the numbers you have are acceptable to us and during the next year we would like you to do some more work with respect to changing that target as far as satisfying them that they should be using that target for rate setting. Certainly wit hin the organiz ation, at this point in time, the corporation has the policy that the target should be 15 percent to 20 percent of claims liabilities rather than premiums. Mr.

Maloway: Well, gi ven that information, then, I under stand that using the old standard, 15 percent of earned premiums based on last year's premiums would mean that you should have around $69 million or so in the reserve. Now, using your new standard with those same premiums, what would the figure be then using that new standard? Mr. Zacharias: The range would run from about $80 million to $1 00 million. Mr. Maloway: Mr.

Chairman, I real ly question why you would have to change the standard, and you give as your justification for it the argument that there is mor e volatility on the claims side, and that, as you probably know, is certainly not true comp ared to what would have been the case before no-fault. I mean, let us look at what we have done here. We had volatility before because we had open-ended liability claims, but we took care of that back in 19 94 by bringing in no-fault.

So we elimin ated the volatilit y, we restricted it very tight so we would rough ly know what our claim costs are going to be from one year to the next. On the other side of it, we have reinsurance tr eaties which cover volatility on claims side as far as disasters are concerned. We have a situation where the corpora tion, no matter how bad the snowstorm is, no matter how bad the hailstorm is, we will not be hit for mor e than $2 million at a time. We know that, so I do not buy the argument that somehow there is more volatility today than there was before. That is not true. There was mor e volatilit y before.

You have taken steps to tie down the volatility. You have done that. You should be reducing, using that argument, reducing the amount that is to be put in the reserve under those conditions, not incr easing it. Mr. Zacharias: If we go back to the 15 percent target-a nd it has never come under a lot of scrutiny- I believe that Judge Kopstein in writing that repor t sa id: we think the corporation should have some kind of reserve. We know that privat e companies need rough ly 30 percent or a little better. Autopac would probably need less than that, so 15 percent was the magic number that popped out.

There was no science around it. Nobody ever looked at it . We had never been in a position where we were going to be close to achieving that target and therefore the validity of that

December 15 , 19 98 LEGISLATIVE ASSEMBLY OF MANITOBA 71 target, while used over a period of time, was never really scrut inized. When we did try to look at what could happen, and certainly on the in juries side, PIP P versus tort, there are arguments that can be made. If we have a severe winter, if we have a catastrophe, we have reinsurance, but if we have a severe winter wher e we have a mu ltitude of accidents everyday for an extended period of time, it can have a drastic im pact on us on claims' costs that is not covered by rei nsurance because it is not one occurrence. It is an ongoing event.

Al so with respect to PI PP, whi le the payouts are known, we are going to be paying people for lifetimes and for a youngster that could be 40, 50, 60 years, and the money we have set aside today has to cover that liability. When we are looking at discounts and interest rates and what is going to happen over time, we have long-term trends, but there is vulnerability in those calculations too to make sure that at some point in time you will have enough money to cover that liability for its entire duration.

So a lot of work has gone into that process to try and determine what a safe number might be with respect to both how much you need and the confidence level. That work is still going to be ongoing to try and come up with a number that says there is a reasonable degree of certainty here that the corporation can carry on without having some major exposures. * (1 300) Mr. Maloway: Mr.

Chairman, I would like to ask the minister what meetings, studies, conversations are currently going on or that are contemplated as far as the proposition that the private insu rance companies would be gett ing back into the ti n and glass porti on of the insurance. This has been an issue now that keeps resurfacing a couple of times a year. We keep hearing stories about representations being made to the min ister, to the board, to the To ry caucus with the view to getting back in.

The latest informa tion seems to ind icate that they have been told just to wait until the next election and then it would be open season. I just wonder ed what can be added by the minister at this time. Mr. Chair person: Before we proceed, it was determined before that one o'clock was going to be our-I want to know whether we are proceedi ng. Mr. Ashton: I think we can pass the report with just a few more minutes. We were fairly generou s-- Mr. McCrae: I noticed the honourable member for El mwood did not tell us who said that. Maybe he wants to put that on the record. Mr.

Maloway: I do not think I wish to divulge my sources on this issu e at this point in time. Mr. McCrae: I listened with interest to the discussion between the honourable member and Mr. Zacharias about the level of the rate stabilization reserve. I hope there is some comfort for Manitobans in knowing that this is very carefully gone over

chapter and verse every year as we address what to put into our rate application and then as we address the application itself. We are examined and cross examined on it every year and everything like that. So I hope the honourable member is comfor ted by knowing-1 know he wants us to risk more. The honourable member wants us to cut down the size of that rate stabilization reserve and subject Manitobans to the potential for problem, problem in not being able to meet our claims' responsibilities or prob lems with respect to rate shock.. Manitoba has been there and done that, Mr. Chairman.

We have seen the wisdom of not proceeding in that risky, risky, walking the tightrope type of fashion that is being proposed by the honourable member. So with all due respect to him--and I can see he understands issues and analyzes them carefully--he simply puts two and two together and comes up with six or something, and it does not work for me and it does not work for most Manitobans. Now, with respect to the other qu estion about the tin and glass, again the honourable member has failed to reveal his source, which is all very sinister but, Mr.

Cha i rman, we have found that not running this corporat ion in to the ground is a good way of gaining the confidence of Manitobans, and we have found that Manitobans do have confidence in this corporation. The honourable member for Thompson (Mr. Ashton) has basically said that himself, and we are not

72 LEGISLATIVE ASSEMBLY OF MANITOBA December I 5, 1998 inter ested in the sort of surrept itious stuff going on as suggested by the honourable member for Elm wood (Mr. Maloway). Mr. Maloway: I am not sure that I believe the min ister, but I have to take him at his word. Mr.

Chairman, I would like to ask the min ister, in view of the faclt that Ontario I belie ve yesterday or within the last few days announced a plan to renew drivers' lic ences through the Internet, I wonder what is happening vis -a-vis that particular idea here in Manitoba and whether or not the whole concept of renewing Autopac transactions via the Internet has also been consider e:d by him and the board. Mr. McCrae: Well, I am certainly not the one to respond with respect to issues related to inf ormation technology and systems and those sorts of things.

I do know that signifi cant activity and effort is going on with regard to ensuring that MPIC is well ablt� to take on all of the challenges of the next mil lennium and the passing into thereof and all of that. With respect to li cence renewals, that still remains a department of Motor Vehic lt!S respons ibil ity. With respect to how we can im prove our services to our customers and make products easily available to them and all of those things, Manitoba Public Ins urance continues to be very much on the cutting edge of pro viding the newest and latest inn ovations to our customers.

We have been given credit by regulators for the way we have been handling our customer relations. The question put by the honourable member will no doubt be looked at by the corporat ion. If there is something going on today in that regard, maybe I cannot comment on that, and I do not think there are any immed iate plans to use the Internet in the way suggested by the honour able member. Mr. Maloway: I would like to ask the min ister to tell us, update us on what the status of the Y2K program is with MPIC.

We have a Free Press arti cle today with a picture here of what the Y2K computer bug looks like, so you will all see a copy of it. You may set: a lot of those in the next year. But here you have Win dows 98, which has just been out a few months now and is supposed to be Y2K compl iant, and now we are finding dozens of problems with this software. So it really kind of shakes your faith in the ability of the computer ind ustry to evidently solve these pr oblems. I would like to know just how much money-I know you are ref erring to $50 mil lion in your statements-but how much has been comm itted?

How much has been spent? What is the cur rent situation regard ing the Y2K compl iance program in the corporation? Mr. Zacharias: The corporation has been very proactive in dealing with all Y2K issues. I can ref er you to a couple of items, page 42 of the annual report, where we speak about year 2000 issues as to money that had been spent and, again, the $50 milli on is there. This year we have continued working on those particular pro jects, and I am pleased to advise that they are coming in at this point ahead of

schedule and under budget, so our costs look like they mi ght be a little less. At this point in time, if Y2K occur red today, I believe that all our critical systems would continue to operate. While there is still further testing going on, we do not see that as an issue.

The whole item of Y2K expenditures was very thoroughly reviewed at the Public Utilities Board, and in the board order they very clearly indi cate that the actions we have taken are prudent, that we have made good decisions which have been well managed and that the organization is signi ficantly compl im ented with respect to the initiatives on that particular fr ont. I guess, having read and seen enough, that I do not know if there is an ironcla d guarantee, but we are moving to get as close to one as we could possibly humanly do within our organization. Mr.

Maloway: Well, that was , really my question, whether you would be prepared to resign if it does not work, but I guess we will see the results. Mr. McCrae: It would be my advice to anybody around the table not to be asking or answering such hypothetical-type questions, extr emely hypothetical. Mr. Maloway: Mr. Chairman, the member for Transcona (Mr. Reid) wanted to know some inf ormation about the advertising contract that

December 15 , 19 98 LEGISLATIVE ASSEMBLY OF MANITOBA 73 MPIC has, the names of the bidders and the size of the contract, whether or not it was subm itted to an open tendering procedure. Mr. McCrae: Mr. Chairman, yes, the honourable member for Transcona did in deed ask about this, and we said that we would get details and make them available to him. Mr. Maloway: I would like to ask also, while you are doing that, whether you could provide me inf ormation on the Y2K contracts that were granted.

I would like to know who got them, the size of them and what stage they are at now in terms of their completion dates and also the testing program that you are employing. Mr. McCrae: Yes, Mr. Chairman, we will take note of that question and provide whatever inf ormation we are able to do. We under take to do it sometime before the year 2000. Mr.

Ashton: That completes our questions. do look forward to some of the written responses, and I just reiterate what I said at the beginning, the comments that we believe MPIC is a tremendous asset to Manitobans and, apart fr om some of our constructive criticism, very well run, and I want to state that on the record in terms of both the senior management and the emplo yees of MPIC, that we all in the Legislature appreciate the work they are doing on behalf of Manitobans. Mr. Cha irperson: Shall the February 28, 19 98, Annual Report of Manitoba Public Ins urance Corporation pass- pass.

The time being -what is the will of the comm ittee? An Honourable Member: Comm ittee rise. Mr. Chair person: Commit tee rise. Happy hol idays to all. COMMITTEE ROSE AT: 1:10 p.m.

Document details

Collection	Manitoba — Debates (Hansard)
Citation	36-4-pu3
Type	hansard
Volume / chapter	36th 4th hansardpdf pu3.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	bc4906db980f8f629885e3f92170da652b897f09

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