Portage Mutual Insurance

Chapter 10

Expansion Troubles Again - the Erratic 1970's

he 1970's started on a good note for The Portage Mutual. Gross premium income hit over $7 million. A new premium payment plan, called "PORTAGE AUTOMATIC BILLING" or "PAB", was instituted, to allow cash policyholders the privilege of paying their premiums in monthly installments.

However, then came the ominous news that Manitoba's NDP government would take over the automobile insurance business on November 1, 1971.

In the last three months of 1970, the Company issued new automobile policies for a maximum term of six months. Automobile insurers staged a march on the Legislature, there were public hearings and Brown met with the Premier. Verbal shots are also taken at the Saskatchewan Government-run insurance program which had reduced The Portage Mutual business written there.

Portage Mutual Chief Blows Horn At Car Insurance Probe

A publicity campaign on behalf of the Portage la Prairie Mutual Insurance Company is the proposal of the company's secretary and general manager, E.M. Brown.

Mr. Brown appeared before the provincial government's auto insurance committee recently, presented a brief, and answered questions from the panel which includes municipal affairs minister, Howard Pawley.

"Up to now," he said, "we have been a little reluctant, to blow our own horn because frankly this costs money."

He said he would be spending material to the company's 60,000 policy holders pointing out the benefits of his company.

Would he compare his company with others, a panel member asked.

"No I am not interested in other companies."

He said the farmers in Manitoba insured with his company were enjoying the lowest insurance rates in Canada.

In answer too more questions he said that in 1968 his company paid out 99.8 percent of the premiums collected in Winnipeg on claims.

Last year on investments his company made $370,000. This he said was returned to the policy holders in one way or another.

"This is why we can in some cases reduce the rates. That is why it is called a mutual company."

His company he said, in the early 1920's was nearly made bankrupt after the cyclones which devastated parts of Manitoba.

Since then it has had the policy of holding a certain amount of money in the event of another such catastrophe.

Like many other people who have appeared before the committee, he believed that erring drivers should face heavier penalties.

He said a teenage boy should drive under a sort of probation system.

If he were caught speeding instead of going to court and having his father pay a fine he should be suspended from driving for six months.

"Personally this would be about the worst thing that could happen to me," he said.

He warned the panel that before they considered recommending the government to take over the auto insurance industry to make sure they could actually improve on the present set up.

Mr. Pawley asked if he could visit Mr. Brown's offices at Portage la Prairie.

"Come any time you want," Mr. Brown replied," we are rather proud of it. I hope we can sell you some insurance."

In his brief Mr. Brown made the following points.

"We feel:

- That the Manitoba Vehicle Registration Branch is making every effort with its limited means to control the ever growing number of accidents.

- That the tendency towards leniency on the part of court authorities toward juvenile offenders has considerable effect on the premium it is necessary to charge this group of drivers.

- That examination for licence of the over 65 year group, would have a desired effect on this group's insurance rates."

- Winnipeg Tribune

In addition to automobile, the NDP also introduced property insurance making for stiffer competition. The Portage Mutual announced it would not increase its automobile insurance rates for 1970 or 1971 in rural areas, but would increase rates by 10% to 15% in Winnipeg. It was the first company to declare that Winnipeg would face an increase in its automobile rates due to higher accident rates and inflation which was escalating salaries and personal injury settlements.

Loss of Manitoba automobile insurance cost the Company $1.6 million in premium income. Total automobile insurance premiums in 1970 accounted for over $1.4 million of the company's $7 million-plus premium income. Roughly 45% of all company business was done in Manitoba in 1970, 40% in 1971 and 40% for 1972. The Portage Mutual was the third largest automobile insurance writer in Manitoba in the early 1970's.

Surprisingly, at the close of 1972, the Company had written 3% more total automobile insurance than in 1971. Total premiums written in 1972 amounted to $7.5 million with automobile accounting for over $4.75 million. To replace the lost Manitoba automobile insurance, the Company had to become more aggressive on all fronts.

The year 1972 also saw the latest in the long line of Tidsburys, Ron Tidsbury, elected as a new Director. Meanwhile, Doug Campbell retired and, the following year, Joe Miller retired at age 75. R.E. Braden was made Vice President in 1973 and holds that position today.

D.L. Campbell makes presentation to J.C. Miller on his retirement as president after
23 years of service - 1973

By late 1973, trouble was brewing as the investment market turned sour.

The Company's investment portfolio, like most insurance companies, is non-risk oriented. Much of its cash is invested in long-term, bonds and debentures, short term bank deposits and some blue-chip stocks. A large drop in the bond market affected the value of the Company's investment portfolio. At the same time, they were in stiff competition with other insurance companies. Low rates combined with investment losses, caused reserves to drop by as much as $1 million late in 1973.

The Company decided on two remedial courses. It increased its rates by as much as 35% and stopped writing new automobile business.

For Manitoba farmers, 1973 produced widespread hail that flattened crops. In Winnipeg, almost every house roof had damage. This eventually led The Portage Mutual and several other companies to introduce a Limited Residential Form. It covered the repairs to damaged roofs rather than complete replacement. To get full roof coverage, a higher premium would be charged.

In mid-1974, Portage Mutual dropped the extra or extended automobile coverage, the additional coverage which the Manitoba Public Insurance Plan doesn't provide. In August, the Windsor office was closed.

Inflation had also caught up with the Company and policy holders. All policies except premium notes were subject to annual renewal.

By 1975, the investment market had picked up and reserves were higher. New automobile policies were being written again. The cycle was again on the upswing.

The insurance industry as a whole had good and lean times. Companies all wish to grow, and are tempted to take added risks and lower premiums to gain more business. Eventually, however, as risks and losses rise, reserves begin to get inadequate. Companies become more cautious, pull back and generally raise premiums to get more cash.

E.M. Brown makes a presentation to A.C. (Art) Carver after
42 years with the Company. At the time of his retirement,
Art was Chief Underwriter, Assistant General Manager, and
Secretary of the Company. - 1975

The end of 1974 was the bottom end of a down cycle; 1975 marked the beginning of a more aggressive period for The Portage Mutual. As a result, business jumped quickly in 1975 through 1977 with increases each year of around 15%, except for a dip down to 9% in 1979 when the Company recorded $15 million of gross premium business.

W.H. Sherritt does the honours, as E.M. Brown retires as General Manager, while
Mrs. Brown holds the flowers. - Sept. 1976

In 1973 Brown had become President with Owens taking his seat as General Manager in 1976. A year earlier, both Owens and McCartney were made Assistant General Managers. When Owens became Manager, the younger McCartney remained as the Assistant Manager and became Chief Underwriter.

Two new Directors, who were elected in 1973, did not share the traditional longevity of members of the Board. Their tragic passings were a shock to all.


Len H. Smith 1973-1974	Earl McKellar 1973-1976

The Farm Homeowner's Policy was introduced. It allowed the farmer to have the same benefits as the city homeowner policy holder. This included fire and theft on the house and contents plus theft away from home, and of credit cards and breakage of residential glass. The farmer could also cover his buildings, equipment, livestock, loss of use and extra expenses plus Comprehensive Liability. Both Town and Farm Homeowner policies are available today.

Mary Burton retires in 1977 after 47 years of employment.
Agent Willis Greenway makes a presentation.

An advertising idea of 1975

A 1971 editorial page cartoon concerning the auto insurance take-over

Says province should not
enter into the field

Portage city council is in opposition to the province of Manitoba entering into the auto insurance field.

In a brief for presentation to the provincial government which is studying possible changes in car insurance, the city council has said it feels the entrance of the province into such a program "could not provide an equitable atmosphere for all Manitobans."

The brief, to the special commission studying auto insurance in Manitoba, expressed some of the fears of the Portage council with regard to consequences that may result form the implementation of a government-operated automobile insurance program.

The brief, presented by Mayor W.A. Linden, points out that the Portage la Prairie Mutual Insurance Company provides some 64 jobs in the city. It was felt that if auto business were denied the company it would be forced to reduce largely its staff and this would reduce the opportunity for the people of Portage to find employment in their own community.

"We view this as a serious matter because the inability of residents of this community to find employment locally has already been aggravated over the past five years," the brief goes on.

Mentioned specifically were the community's exclusion from designated area status until recently, the currently reduced farm income, the recurring threat of the closing of CFB Portage and recent rumors of the relocation of the Home for Boys from Portage la Prairie to Winnipeg.

"All these factors together,' said the Portage brief, "prompt the city council to be very concerned about job opportunity in this community and to take whatever steps are needed to protect those jobs that we now have in the city.

Council also said that if premiums were averaged out across the province following the precedent established in other jurisdictions "we would like now to register our strong objection to this approach.

"We feel that this approach is unfair and inequitable for the reason that the risk factor is much greater in large urban centres than in rural areas and small cities and towns, with the result that claims and associated costs are proportionately greater in large urban centres.

"The averaging of these costs in the form of premiums would serve to further aggravate the disparity between the average incomes of the rural and city dwellers."

- Daily Graphic

Changing face of Manitoba's Autopac

JAN., 1971: PREMIER ED SCHREYER said that compulsory government auto insurance will be cheaper and "more humane" because the mechanism to make it so is within the hands of the public.

MARCH 25, 1971: Premier Ed Schreyer said that the public auto insurance scheme will result in immediate savings of 15 per cent to all Manitoba motorists and predicted that a reduction in premiums could total as much as 20 per cent by the third or fourth month of operation.

"The percentage saving on premiums will be at least as good as we have been projecting and maybe marginally better than we have been projecting." said Schreyer then.

MARCH 26, 1971: Ed Schreyer says that if the people of Manitoba give the compulsory auto insurance scheme one year to work they won't want to give it up.

"There is no question at all that almost 100 per cent of motorists will enjoy significant savings."

JULY 20, 1971: Premier Schreyer said that under the Manitoba government's Autopac rates should not go up for three years. The present rates were designed to prevent the need for an increase soon, said Schreyer. "Our premiums will be kept constant next year, the year after that, and the year after that.

NOV. 9, 1971: Premier Ed Schreyer revealed that automobile premiums under the Autopac scheme were deliberately inflated by five to eight per cent so rates could remain at the current level for two or three years. "There is a slight marginal surplus...the rates were set to provide a slight margin so that we could stabilize the rates for a few years."

NOV. 14, 1971: Municipal Affairs Minister Howard Pawley says Autopac's projected surplus during its first year of operation is possible because some of the premium money not needed immediately to pay claims will be invested.

AUG. 9, 1972: Although there will be no general rate increase or decrease, there will be minor changes in public automobile insurance rates next year, said Howard Pawley.

SEPT. 29, 1972: Autopac premiums for new automobiles will probably increase each year to reflect increased purchase prices and repair costs Ed Schreyer said. At the same time, however, premiums could be reduced for new automobiles with additional safety features or for older cars that are constantly depreciating in value, Ed Schreyer added.

OCT. 24, 1972: Premier Ed Schreyer said that Autopac will end its first year of operation "with a modest surplus" of $1 million or $2 million which will likely be used for rate stabilization purposes.

MARCH 28, 1973: Premier Ed Schreyer said that Autopac is such a success that the government might consider using the Manitoba Public Insurance Corporation to provide increased insurance for ships using the Port of Churchill.

NOV. 21, 1973: Autopac rates will increase by approximately 10 to 15 per cent next year because of an unexpected 36 per cent increase in damage claims, Ed Schreyer said.

DEC. 11, 1973: William Uruski, minister responsible for the Manitoba Public Insurance Corp. branded as "speculation" an estimate that premiums for extended Autopac coverage could increase by as much as 35 per cent. Mr. Uruski indicated that coverage up to 20 per cent more. The premier mentioned a 10 to 15 per cent increase.

FEB. 24, 1974: Autopac announces a deficit of $10.1 million, $2 million more than was suggested three months earlier.

APRIL 2, 1974: Bill Uruski states that motorists in Manitoba are paying the lowest insurance premiums in Canada. He did not mention the $10.1 million deficit of the year previous.

APRIL 16, 1974: Bill Uruski states there is no chance that Autopac premiums would ever reach the level of private premiums.

APRIL 23, 1974: Autopac premium increases in 1975 will be in "the same neighborhood" as this year's 9.5 per cent increase, said J.O. Dutton, Autopac general manager.

APRIL 26, 1974: The blame for Autopac's disastrous $10.1 million loss last year and continued problems this year lies directly with the drivers, said Bill Uruski.

JAN. 3, 1975: Manitobans will pay 14 to 19½ per cent more for basic compulsory automobile insurance in 1975, Bill Uruski announced.

JAN. 21, 1975: Owners of super-luxury cars face increases of up to 55 per cent in their premiums and owners of cars considered middle-sized could face increases of 20 to 30 per cent more.

JAN. 27, 1975: A senior Autopac official admitted that 30 per cent of Manitoba's motorist will pay between 21 and 75 per cent more for basic coverage this year.

MARCH 10, 1975: Bill Uruski accuses both Winnipeg daily newspapers of a filthy campaign against Autopac to cover their own failure to report accurately his announcement of rate increases.

MARCH 28, 1975: It is announced that Autopac lost $9,978,600 in 1974.

FEB. 6, 1976: NEWS ITEM: The Manitoba Public Insurance Corporation launches lawsuit against Winnipeg Free Press over published reports about corporation's financing. The libel suit follows a report in the newspaper which MPIC claims is erroneous.

FEB. 10, 1976: It has been discovered after researching files that the MPIC has been known to make erroneous statements in the past.

ANYONE CARE TO SUE THEM?

- How the Winnipeg Tribune saw the auto take-over.

Please note: The information provided within this page was originally published in 1984. Any "current", "new", "present" or other such references within this information were correct in 1984 but are not necessarily so now.