LANE: Brokers recapture MPI

02/01/2021 • 20 hours ago • 3 minutes read

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Manitoba Public Insurance (MPI) is currently updating its computer programs and related practices. MPI plans to bring its online services to « customers » at an estimated cost of several million dollars.

With the long-needed revamped technology from MPI, licensed drivers and vehicle owners can select insurance options and pay MPI bills without attending or speaking to a broker.

In an agreement « brokered » by the government and signed in late November 2020, MPI signed a renewed contract with the Insurance Brokers Association of Manitoba (IBAM). The members of IBAM, owners of 300 brokerage agencies, receive commissions and fees for monetary transactions between MPI and its « customers ». A reading of the agreement reveals a « silent » third party in this business – that « third party » is Brian Pallister’s PC government.

Ben Graham, President and CEO of MPI from 2017 to Fall 2020, recognized the antiquity of MPI’s legacy systems. When Graham was hired, he compared it unfavorably to an Atari game console from the 1970s and 1980s. His striving for modernization, which enables online transactions directly between MPI and its « recorded » customers, would not be cheap to achieve. It was expected, however, that with the current annual flow of around $ 80 million a year in brokerage commissions and fees, huge savings could be expected.

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Last fall, Ben Graham resigned, apparently before the MPI board, apparently under pressure, surrendered to the government’s desire to please the brokers.

The arbitration agreement, which came into force in April of this year, connects MPI customers with a broker. MPI should also compensate brokers if MPI’s customers use MPI’s online system. IBAM brokers will continue to benefit from MPI transactions through 2026, with extensions expected beyond that. In addition to paying brokers through commissions and fixed fees for decades, MPI also paid the Brokers Association $ 250,000 per year, with IBAM continuing to believe that MPI will only handle the original 300 brokerage deals that existed in 1971.

Provincial Liberal Leader Dougald Lamont rightly calls for an « investigation into Brian Pallister’s interference in Manitoba’s public insurance, » declaring that « there must be a public investigation into years of interference by PC and NDP Crown Corporation, including Premier Brian Pallister’s recent transgressions at the MPI. « 

The chairman of the MPI board has changed twice since the PCs took control in 2016. Since the PC victory, three, yes, three MPI presidents. With PCs recently phased out the PUB as well, an independent investigation is needed.

MPI was founded 50 years ago. The then NDP government of Edward Schreyer – as the first NDP government – fought fiercely against insurance brokers in Manitoba who feared losing lucrative commissions on car insurance. The NDP « won » but at a price that gave real estate agents a virtual monopoly on servicing vehicle owners in Manitoba.

It is not surprising that the history of the MPI as a state auto insurance monopoly has been shaped by politics. Governments determine the coverage and the benefits offered. The government controls investments and the composition of the board of directors. Regardless of whether the NDP or the PC is in power, the brokers have a commission and flat-rate monopoly. And MPI continues to negotiate with the brokers, with “hands tied behind the back”.

– Graham Lane, a retired CPA / CA, had a career of more than 40 years as an executive in private and public operations, including serving as acting president of the MPI.

LANE: Brokers recapture MPI
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