Manitoba Public Insurance to undergo review after costs, staff rise

The Manitoba government has ordered an external organizational review of its Crown-owned auto insurance provider after a sharp jump in the cost of technology upgrades and a steep rise in projected staffing levels.

Kelvin Goertzen, the minister responsible for Manitoba Public Insurance, said the review was also prompted by other factors including untendered contracts.

“It wasn’t one thing. It was all of these things that led me to believe … that this organizational review would be important.” Goertzen said Monday.

The highest-profile trouble at MPI has been an overhaul of its core information technology systems, called Project Nova. The projected cost has nearly tripled in three years from its original $106-million price tag.

Goertzen said last year the corporation did not realize the scope of the work needed to make the new technology secure.

Recently, the corporation submitted plans to increase its staffing by 420 people, or 21 per cent, from the level before the COVID-19 pandemic. Much of the new staff would be linked to Project Nova.

That prompted a caution from the Public Utilities Board, the province’s independent regulator. The board said in January that the hiring seemed imprudent and Project Nova was lacking in management control.

The board ordered the corporation to submit updated projections and discuss budget details with the board. At the same time, the board approved a much lower increase in driver insurance premiums than MPI had sought.

The MPI logo can be seen against a Winnipeg skyline in this file photo. (Photo Credit: Morgan Modjeski, CityNews)

MPI did not comment in detail on Goertzen’s decision.

“As MPI has not yet received an official directive from government, the corporation cannot offer commentary on the details of the review at this time,” spokesperson Kristy Rydz wrote in an email.

“MPI will fully co-operate with the review and commits to providing information in a forthcoming manner as needed.”

There was no decision on who is to conduct the review, which Goertzen said should be complete by the end of the year.

Despite this, the Crown Corporations’ CEO says there’s no reason for members of the public to lose faith in MPI, Eric Herbelin says the provincial insurance provider is confident it can continue to deliver as it goes through a massive change.

“We’ve embarked on the largest transformation ever in the history of MPI. Modernizing our technology and further strengthening our business capabilities. And that is something that is unprecedented, it requires a lot of effort and work from all of our people and I’m pleased to say we’re on track with all these efforts. And we’re actually very confident in our ability to deliver on the day-to-day, but also on the transformation ahead,” said Herbelin.

Eric Herbelin, MPI CEO and President, says MPI will cooperate fully with the government’s review of the Crown Corporation. (Photo Credit: Morgan Modjeski, CityNews)

“We’ve been working very collaboratively and transparently with the government on a day-to-day basis and we will continue to do so and certainly provide all of the facts and transparency that is being requested of us.”

On Tuesday, CityNews reached out to several members of the MPI Board of Directors for comment on the review, including Chair Mike Sullivan, a working dentist in Portage La Prairie, but a response was not received by broadcast deadline.

“When you’re driving and you see a little bit of oil leaking out of the bottom of your car, the smart thing is to get it checked out right away and not wait until your engine seizes up on the highway,” said Gage Haubrich, prairie director with the Canadian Taxpayers Federation.

Haubrich says things rising staffing costs should be one of the first things examined, saying government can’t look to taxpayers when the review is done and next steps and potential solutions are determined.

“Basically at the end of the day this problem seems to be a financial mismanagement issue and shovelling more money to fuel that fire won’t help. It needs to be done from the top down.”

Until the review is complete, Goertzen says MPI has been directed to not propose any changes to rates for service, or materially change its operations, with its deadline set for Dec. 31.

In addition, the government appointed a member of the Progressive Conservative caucus to MPI’s board of directors. Ron Schuler, who once served as minister responsible for the corporation, has been given the task.

The Opposition New Democrats called Monday for the government to have MPI officials appear before the legislature’s standing committee on Crown corporations so that the officials could be questioned in a public forum.

“We don’t even know at this point the scope of the problem,” said Matt Wiebe, the NDP’s critic for MPI.

“We don’t know what the organizational issues may be. Having an opportunity to sit down with the CEO, with senior leadership, and ask those questions at a Crown corporations (committee) meeting could be one way that we could get to the bottom of this.”

-With files from Morgan Modjeski, CityNews