Feud over: MPI will include brokers in online sales of auto insurance

Most Manitobans will be able to renew their auto insurance online in two years’ time — and insurance brokers are joining the ride.

A new agreement reached last month will keep auto insurance sales in the hands of private brokers, even in online transactions.

The decision settles a long-running feud between Manitoba Public Insurance (MPI) and the Insurance Brokers Association of Manitoba (IBAM) over the future of online sales.

MPI had questioned if brokers should still be involved in every transaction, while IBAM said their members’ role in the insurance process shouldn’t be sidelined.

The provincial government mandated an end to their dispute by bringing on a conciliator. It worked, said Grant Wainikka, IBAM’s CEO.

“Rewind two years … we were not on friendly terms with MPI, but I think that we were able to see areas of commonality,” Wainikka said.

‘Both sides can live with’ this deal

“What happened is that we were able to build off of those areas of agreement and to come up with something that isn’t perfect for either side, let’s be clear, but it’s something that both sides can live with, and most importantly, we think, actually will benefit the motoring public of Manitoba.”

He added it is good for Manitobans to have the convenience of online renewals, and rely on the advice of brokers at the same time.

The five-year agreement, which takes effect next April, said MPI expects to permit additional online transactions on or about April 2023. A spokesperson said online renewal will generally be offered to all passenger vehicle owners, except those with a history of defaulting on their payments.

Manitoba Public Insurance service centres will continue to play a role in the sale of auto insurance, such as the insuring of a new vehicle purchase. (Jaison Empson/CBC)

By that point, the insuring of new vehicle will still have to be done at either a brokerage or MPI service centre.

Some renewals and reassessments could be conducted online at that point. A MPI customer could log into their account and be referred to their previous broker. They could also press a button and be handed a choice of four or five brokers geographically close to them.

The deal also changes the compensation rate for brokers, which already fluctuates depending on the transaction.

By the end of the deal, brokers receive more for in-person transactions of basic insurance (4.2 per cent) and less if done online (2.3 per cent).

The compensation rate is presently 3 per cent, according to MPI, which Wainikka said is nearly two percentage points lower than Saskatchewan, a jurisdiction which also has public auto insurance.

He added customers who buy other forms of insurance online regularly call a broker for help.

“The majority of consumers, as we’ve confirmed by our own research and through other research, don’t have a very solid understanding of things like insurable value, of things like third-party liability, of things like vehicle classification, of things like personal injury protection plan limits,” Wainikka said.

“These need to be discussed with a professional so that people can understand their own risks and their own liabilities and the coverages that they might require.”

Customers free to choose, MPI says

Curtis Wennberg, MPI’s chief operating officer, said customers will appreciate going online to handle more of their insurance needs.

“The fair compensation that has been agreed will differentiate commissions to brokers when customers choose to go online instead of in-person,” he said in an email. “That said, customers will be free to choose any method of interaction as they see fit.”

The clash between MPI and IBAM was sent to a conciliator to resolve in July 2019. 

It happened one month before internal documents, obtained by the NDP, showed the corporation felt it was being pressured to involve insurance brokers in every transaction because of the insistence of the Progressive Conservative government. MPI was worried it would cost more money to involve brokers.

The government has denied any role — but the NDP’s critic for MPI, Mintu Sandhu, isn’t buying that.

“This is another one of the Pallister’s backroom deals that benefits his well-connected friends but does nothing for regular Manitoban families. They are trying to pass their interference off as an improvement but even MPI has said this deal lacks value for money,” he said in a statement.

One of the principles applied to the conciliation process was that government is “committed to supporting the stability and health of small businesses,” the new agreement said.

Minister of Crown Services Jeff Wharton said the government is pleased to hear of the new agreement, which he said in a statement will strengthen the relationship between MPI and IBAM.

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