Province ordered agreement involving brokers in online auto insurance at expected cost of $23M: MPI documents

The board of Manitoba Public Insurance will turn over all of its online services to insurance brokers in a deal it didn't want,but felt compelled to takebecause of the insistence of the provincial government, internal documents show.

A package of documents, emails and presentationsshowTory-appointed board members were squeamish about an agreement with insurancebrokers that MPIestimated will cost Manitobans an extra $23 million over five years.

The Crown insurer wanted to move some of its simplertransactions like renewingdriver's licences online. The move, MPI thought, would appease customers andsave cash, since it feltinsurance brokers weren't necessary in those transactions.

But the corporation and itsboard members saythe governmentintervened to ensurebrokers are involved in every transaction going forward.

Those MPI emailsdo not matchstatements from Crown Services Minister Colleen Mayer, who has said repeatedly thegovernment only asked the board of MPI and the Insurance Brokers Association of Manitoba (IBAM) to work together and did not prescribe any specific action.

She maintained that assertionon Tuesday.

Decision was government's: MPI

The internal documents, obtained by the OppositionNDPthrough freedom of information requests,showMPI will transfer some of its services online in five years, while ensuring that brokers will be part of the move.

The expected compensation to brokers as part of that move to online services will increase by$23 million over five years, above the $84.5 million they already receive.Autopac rates will rise by 0.4 per cent, a memo said.

In an email on March 11, 2019, describing the change, MPIpresident and CEO Ben Graham wrote "the [government] has made the decision."

The documents alsorevealMPI extended the current compensation agreement with brokers until Feb. 28, 2021, "on the advice of government," a letterwritten last November by former MPI chief administrative officer Ward Keith reads.

A month earlier, Graham wrote to a government officialthat "MPI does not believe it is appropriate or reasonable to increase broker funding to compensate for unnecessary services currently being provided that do not require the professional expertise of a broker."

A clash between theboard and brokers became public in March whenthe Winnipeg Free Press reported the province was lobbying on behalf of the insurance agents, which prompted MPI's board to seek a legal opinion to determine its rights.

The various emailsappear to add credence to the claim the province had a hand in the decision but the minister responsible for Crown services saysthe province's involvement doesn't violate legislation intended toreduce government interference since it never got in the way.

The Pallister government introduced legislation in 2017that compels the provinceto inform the public within 30 days of issuing a directive to the Crown corporation.

In this case, Mayermaintains the governmenthad no say inMPI's decisions, even though internal emailsfrom MPI staff say they were pressured.

"There was no official directive from Crown Services, the department has been involved in discussions with both organizations on how to deliver services most effectively for Manitoba consumers," Mayer said in an emailed statement.

"Both MPI and [the Insurance Brokers Association of Manitoba] are encouraged to work together to find a way to provide Manitobans with the services that meet their needs, while understanding the value of professional insurance advice provided by brokers."

MPI exposed to 'inconsistent directives'

In a letter to Mayer on Nov. 16, 2018, MPI's then-board chair Brent VanKoughnetexpressed frustration with signing a two-year extension with the insurance agents.

"Without a significant change in [the negotiating]process we are destined to relive the many communication challenges, misunderstandings and unmet expectations that regrettably erode trust, damage reputations, stifle innovation, and limit progress."

A month earlier, Graham wrote toGrant Doak, deputy minister of Crown services at that point, saying his words were being manipulated by brokers "aimed at getting their lofty and unquantified financial objectives adhered to by government."

VanKoughnetresponded later that night that Graham's address had a "little more edge" than he'd prefer, "but I understand the frustration and agree that we can't just keep exposing ourselves to inconsistent directives."

VanKoughnet was demoted aschairin February, but remained on theboard until May. He was replaced by Michael Sullivan, a dentist from Portage la Prairie, Man., the same city in which Premier BrianPallisterpreviously made his living in the insurance business.

The plan to transition all online services to brokerage oversight was approvedless than a month later, an email indicates.

Manitoba Public Insurancehas already spent $2.4 million as it evaluates the move to online service delivery.

The corporationestimated if brokers had been left out of the online services, the impact to the agentswould be minimal, since online adoption of the simplest transactions would be low.Based on an estimated 20 per cent adoption rate, broker compensation would drop$40,000 0.12 per cent of total compensation.

Should the Crown have eliminated insurance broker compensation outright, MPI would save$473 million, the corporation's documents say.

"Customers' needs are the driving factor in establishing an online service delivery strategy including a broker network that is invaluable in being a key distribution channel forMPIproducts and services," the Crown corporation said in an email Tuesday.

"We recognize this is a big change andMPIand IBAM will work in collaboration regarding online services and how they meet the changing needs of Manitobans."