2012 Canadian Auto Insurance Statisfaction Study

This week the J.D. Power and Associates released its 2012 Canadian Auto Insurance Satisfaction Study^SM.  The study, now in its fifth year, measures insurance customers' experiences with their primary insurer. Customer satisfaction is measured across five factors: interaction; price; policy offerings; billing and payment; and claims. Insurers are ranked in three regions: Western (British Columbia; Alberta; Saskatchewan; and Manitoba); Ontario/Atlantic; and Quebec.

Customer satisfaction in the Ontario/Atlantic region has increased by 11 points from 2011, primarily due to an increase in satisfaction with insurer policy offerings (+17 points). Policy offering satisfaction is most often influenced by the quality of discounts offered. In fact, 60 per cent of customers in this region received multiple (three or more) discounts on their policy, a six-percentage-point increase from 2011. Nearly 30 per cent (29%) of customers reported an insurer-initiated rate increase in 2012, representing a four-percentage-point decrease from 2011.

Obviously a big factor has been more stable premiums which continually has a significant impact on overall customer satisfaction.  However, J.D. Power and Associates pointed out that there was increases in satisfaction in nearly every factor across the board.

 Below is customer satisfaction in Atlantic/Ontario region broken down by insurer.

Are Non-Driving Rating Factors Unfairly Weighted in Auto Rates?

Rating factors that have little to do with an individual’s driving abilities appear to have considerable bearing on the price consumers pay for auto insurance, a report from Consumer Federation of America (CFA) asserts.

CFA also says the rating factors in question discriminate against low- and middle-income drivers.

The CFA released its third report this year examining the affordability of auto insurance and its impact on moderate income individuals’ mobility and access to better paying jobs.

In this latest report, the consumer-advocacy group examined how non-driving rating factors can affect the cost of auto insurance, increasing the price of coverage by as much as 50 percent or more depending upon location and insurer.

The report examined the price of minimum-liability insurance for a 30-year old woman working as a bank teller, with a clean driving record, high school education, and insurance coverage that lapsed 15 days ago. Quotes were sought from the websites of the five largest U.S. insurers in Baltimore, Miami, Louisville, Houston and Los Angeles. A quote was obtained for the individual under the standard information provided. Then new quotes were obtained adding five different rating factors:
• Married.
• Homeowner.
• Professional.
• No break in coverage.
• Higher-income zip code.

With each factor, the price of insurance declined, and when all five rating factors were added to the quote, the change in price was as high as 73 percent.

In Ontario, only marital status and some lapses in coverage are rating factors.  As well, territorial rating is permissible but not at the postal code level.

The report also includes a survey of 1010 adult Americans performed by CFA and ORC International asking what they thought about the use of specific factors to set auto insurance premiums (see chart below).

In response, Willem Rijksen, a spokesman for the American Insurance Association points out that the use of these factors, such as credit-based insurance scoring, location of the vehicle, driver experience, and traffic citations, helps insurers to more accurately price risk.  Neil Aldridge, senior vice president for state and policy affair for the  National Association of Mutual Insurance Companies commented that rating factors should not be “regulated by popularity,” adding, that “is not exactly a precise way to measure risk.”

read more here...

CFA report is here...

Retroactive Claims For Attendant Care

Section 42(5) of the SABS states:

An insurer may, but is not required to, pay an expense incurred before an assessment of attendant care needs that complies with this section is submitted to the insurer. 

A similar provision (39(3)) can be found in the SABS that applies prior to September 1, 2010.  Seems pretty clear.  An insurer would not have to pay for attendant care expenses before a Form 1 is submitted by a claimant. 

Well it seems that might not be true according to T.N. v. The Personal (FSCO A6-0003999, July 26, 2012) which deals with s. 39(3) of the Old SABS.

The provisions of s. 39 (Old SABS) clearly indicated that an insurer was only obliged to begin payment within 10 business days after receipt of the Form 1. Similarly, the insurer’s right to assess attendant care needs and correspondingly adjust payments appeared to arise only after receipt of the Form 1. Pending receipt of the Form 1, the insurer had no explicit right to assess the claimant's attendant care needs.

Arbitrator Bayefsky found that s. 39(3) did not displace the insurer’s obligation to pay “reasonable and necessary Attendant Care Benefits” determined in accordance with a submitted Form 1. While s. 39(3) provided that an insurer was not required to pay Attendant Care Benefits before the Form 1 was submitted, this did not, in Arbitrator Bayefsky’s view, mean that a claimant forfeited their right to attendant care benefits prior to submitting a Form 1.

These provisions were included in the SABS specifically to prevent retroactive claims for attendant care in an effort to contain fraud in the system. An insurer is at a considerable disadvantage when presented with a claim for 6 months of retroactive attendant care benefits during which it may have limited or no information as to the extent of the attendant care needs or “expenses incurred”.

Insurers can expect for retroactive attendant care benefit claims which will likely be used as leverage for settlements. The best advice for containing exposure is to proactively request submission of For 1s where the claim does not involve a minor injury.

Lindsay Lohan Could Be Paying Six Figures For Car Insurance

It may be a struggle for Lindsay Lohan to be insured on movie sets given her troubled history, but it seems the actress, despite multiple run-ins with the law and multiple auto-related incidents, is still somehow able to get auto insurance.

Lohan was arrested in New York City on Wednesday for leaving the scene after allegedly clipping a 34-year-old chef while driving a 2010 black Porsche Cayenne SUV in an alleyway between two hotels.

In June, Lohan’s Porsche crashed into a dump truck on Malibu’s Pacific Coast Highway, and was totaled.

In March, Lohan reportedly attempted to maneuver a Porsche in a crowd of paparazzi in Hollywood and hit the manager of a popular VIP hangout.

In 2007, she received two DUIs in the span of three months. In addition, the actress’s name routinely pop up in association with dings, bangs, bumps and law breaking – including a spin in her Porsche this past July in which she tapped the back of a silver mustang, getting pulled over by police for running a stop sign in Beverly Hills, and reports that she pulled her high-powered Maserati out of her West Hollywood apartment building and ran a red light before running into a stroller being pushed by a nanny. 

But given this history, how on earth is Lohan still able to get motor vehicle insurance, and what kind of premium must she be paying?

“Lindsay’s auto insurance policy is likely to be in the hundreds of thousands of dollars a year, not to mention that some insurance providers in California may require a bond,” according tp a spokesperson for AutoInsuranceQuery.com, Roger Brideaux.

source

Teens Copy Parents' Bad Driving Habits

A new survey from Liberty Mutual Insurance and Students Against Destructive Decisions (SADD) finds an alarming percentage of teens report their parents have risky driving behaviours.  Even more concerning is that the surveyed teens repeat their parents' poor driving habits.

The survey was based on focus groups held in Boston and Atlanta earlier this year involving 1,700 teens.

	Parent bevaviour (observed by teens)	Teen behaviour (self-reported)
Talking on phone while driving	91%	90%
Speeding	88%	94%
Texting while driving	59%	78%
Driving without seatbelt	47%	33%
Driving and drinking	20%	15%
Driving under marijuana	7%	16%

Given the high percentage of teens who report their parents engage in unsafe driving behaviour while their teen is in the car, it follows that two-thirds (66 percent) of teen drivers report their parents live by different rules than the ones they expect of their teens.  These findings highlight the need for parents to realize how their teens perceive their actions.

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FSCO Rate Approvals Flat For 2nd Quarter Of 2012

Rate filings approved by the Financial Services Commission of Ontario (FSCO) during the second quarter of 2012 remained flat, averaging +0.06%, based on the entire market. As a result, auto insurance rates declined by 0.12% in the first half of 2012.

In the 7 quarters since the introduction of the latest reforms in September 2010, rate filings approved by FSCO have increased by approximately 6.64%. The first quarter of 2012 was the only quarter in which approved rate filings declined during this period.

To date Ontario policyholders have not fully benefited from reforms that decreased coverages for a broad range of no-fault accident benefits.

Michigan Drivers to Test Crash-Avoidance System

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Image: General Motors

The largest-scale test of whether lives could be saved by giving cars the ability to communicate with each other on the road got under way here last month in a program that could steer the future of auto safety regulation.

For the next year, about 3,000 Ann , Michigan Arbor residents will go about their daily driving in cars outfitted with electronic gear that tracks their vehicle’s location and the locations of other similarly-equipped vehicles.

If two vehicles appear to be on a collision course, alarms will chime—or in some cases a machine-generated voice will issue a warning. The systems, for example, can alert a driver when a vehicle three or four cars ahead in a line of cars jams on its brakes, and sound a warning to prevent a rear-end collision.

The project, funded with $25 million from the U.S. Department of Transportation, will generate data that regulators will use as they weigh whether future cars should have such “vehicle-to-vehicle” crash avoidance technology as federally-mandated standard equipment.

Safety regulators and automotive technologists are enthusiastic about the potential of vehicle-to-vehicle safety technology, but officials cautioned that they need to know more about how drivers react to the warnings the systems provide.

But until his agency gets more data on how vehicle to vehicle technology works in day-to-day driving with ordinary citizens regulators won’t start work on new rules requiring such systems.

Efforts to push widespread adoption of vehicle-to-vehicle safety systems could encounter various obstacles, including tight federal and state budgets, consumer resistance to technology that tracks their location, the costs of the hardware and software, and uncertainty about where liability would rest if a system failed to prevent an accident.

The biggest uncertainty with new safety technology is how drivers will respond to warnings—particularly if they come too frequently or are too often false alarms. Recent research by the Insurance Institute for Highway Safety found that lane departure warning systems installed on a growing number of new vehicles have so far had no significant impact in reducing crashes, according to its analysis of crash data.

Eight major auto makers have provided vehicles and engineers to the yearlong Ann Arbor road test called he Connected Vehicle Safety Pilot Program, which will be overseen by researchers from the University of Michigan’s Transportation Research Institute.

source

Coming of Age

FSCO's recent report to the Ontario finance ministry suggest that evidenced-based health care has taken centre stage in the province's auto insurance system.

by Dr. Pierre Cote and Willie Handler

August 2012 issue of Canadian Underwriter

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Evidenced-based health care has existed in Ontario for years, but only until recently has the concept been introduced into Ontario’s auto insurance system. The recent recommendations made by FSCO’s Superintendent regarding changes to the definition of “catastrophic impairment” as well as the soon to be announced review of minor injury protocols are examples of how evidenced-based health care is slowly gaining acceptance.

Evidence-based health care aims to apply the best scientific evidence to clinical decision-making. This helps clinicians understand whether treatment will benefit their patient or as in some cases do them harm.

Professor Archie Cochrane, a Scottish epidemiologist, through his book Effectiveness and Efficiency: Random Reflections on Health Services (1972) introduced growing acceptance of the concepts behind evidence-based health care. The explicit methodologies used to determine "best evidence" were largely established by a McMaster University research group in 1990.

Changing practices and incorporating the best available scientific evidence into one’s practice is often challenging for clinicians, insurers and policy makers alike. Barriers to the adoption of new evidence are grounded in one’s own preferences, beliefs, experiences, expertise and education. Improving the use of evidence-based recommendations requires that stakeholders develop a better understanding of the benefits of evidence-based practice for patients and society.

In Ontario, the evidence-based management of injuries is gaining acceptance. The WSIB developed a number of Programs of Care over the last 15 years which are evidence-based health care delivery plans that describes treatments shown to be effective for workers diagnosed with specific types of injuries (eg., acute low back injuries, upper extremity injuries). FSCO adopted the Program of Care concept when it released two Pre-Approved Frameworks for WAD Injuries in 2003 and the Minor Injury Guideline in 2010.

The Catastrophic Impairment Expert Panel

The Government’s 2010 auto insurance reforms included a recommendation that the Superintendent appoint a panel of medical experts to review the definition of “catastrophic impairment.” A panel was appointed by the Superintendent in December 2010 and asked to identify the ambiguities and gaps in the current SABS definition in order to reflect emerging scientific knowledge and judgment. The panel submitted two reports to the Superintendent during 2011 and in December of the same year the Superintendent reported back to the Minister of Finance. The Superintendent’s report was made public on June 12, 2012.

The Superintendent’s report

The Superintendent has accepted the panel’s recommendations regarding the use of clinical measurement tools to improve the accuracy, relevance, clarity, validity, reliability and predictive ability of catastrophic impairment determinations. The use of these tools will introduce more fairness into the system because catastrophic impairment determinations will be based on tools that will limit the amount of errors. Moreover, accident victims will not have to rely on the persuasiveness of their representatives that they are deserving of the designation.

The following chart outlines the new proposed measurement tools and the evidence provided by the panel for adopting those tools.

Impairment	Current Test	Proposed Test	Evidence
paraplegia and tetraplegia (quadriplegia)	None	American Spinal Injury Association classification of spinal cord injuries	standard in medical practices literature suggests classification system is valid and reliable
amputations	none	None	clinical and scientific judgment of Expert Panel members
burn and crush injuries to limbs	not covered in SABS	Spinal Cord Independence Measure	clinical and scientific judgment of Expert Panel members The scientific evidence supports the validity and reliability of the SCIM
blindness	None	Legal blindness
traumatic brain injuries in adults	Glasgow Coma Scale Glasgow Outcome Scale	Extended Glasgow Outcome Scale	strong psychometric properties and reliable when used with a structured interview and standard scoring algorithm
other physical impairments	whole body impairment rating using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition	whole body impairment rating using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition, Chapters 3-13	very little scientific literature supporting use for determining catastrophic impairment but Expert Panel found no alternative rating system
psychiatric impairments	class of mental or behavioural disorder using American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th Edition, Chapter 14	Global Assessment of Functioning Scale	literature suggests scale has adequate reliability and validity
combining physical and non-physical impairments	none but the courts have assigning whole body impairment scores to impairments under Chapter 14 of AMA Guides to allow combining with scores under Chapters 3-13	no combining	no scientific literature to support combining physical and non-physical impairment ratings The physical and mental/behavioural impairment rating chapters were not developed to be combined
traumatic brain injuries in children	None	King’s Outcome Scale for Children Head Injury	little scientific evidence to support so Expert Panel recommended a study be conducted

The panel identified a number of areas where there was little scientific evidence to support a recommendation. In these cases they relied on their collective clinical judgment. Their goal was to eliminate or reduce the inconsistencies that have existed in the process for determining catastrophic impairments.

In addition to new measurement tools the Superintendent recommends some further changes to the definition and the process for determining catastrophic impairments. Children (claimants under age 18) with serious brain injuries that have been admitted to a major trauma centre will be automatically designated as catastrophic. No assessment will be necessary.

As well, the Superintendent recommends interim benefits be made available to certain claimants where due to their injury types, making an early catastrophic impairment determination would not be possible until much later. He recommends a $50,000 monetary cap which maximizes the chances of achieving the fullest possible recovery. The Superintendent recommends that the interim benefits be available to claimants with serious brain injuries and those awaiting a final determination using the AMA Guides following a traumatic physical injury.

Although the Superintendent indicated that catastrophic impairment evaluators need specialized training, in particular in the use of the proposed measurement tools, he did not accept the panel’s recommendation that evaluators be required to complete university-based training.

Stakeholder Consultations

The Superintendent conducted stakeholder consultations in the spring of 2011 following the release of the panel’s first report. FSCO received 33 submissions which are posted on the FSCO website. As is common when initially presented with evidence-based recommendations, not all stakeholders were supportive of the panel’s report. Again, this emphasizes the need for education about the merit of the recommendations.

In his report, the Superintendent has made it clear that moving ahead with changes to how catastrophic impairment is determined introduces evidence-based health care to the Ontario auto insurance system.

Conclusion

Should the government make regulatory changes based on the Superintendent’s report it will usher in the adoption of evidence-based methodology to not only the evaluation and treatment of minor auto accident injuries but also when evaluating the most serious ones. It will also be important that the definition be examined periodically to ensure it still reflects emerging scientific knowledge and judgment.

Is Ontario Ready For Public Auto Insurance?

I was pretty surprised when I saw Toronto Sun columnist Alan Shanoff propose that Ontario consider public auto insurance in his column on September 1, 2012. There have been similar columns over the years since Bob Rae tried to introduce such a system after his election win in 1990. However, they have never appeared in the Toronto Sun which has always criticized big government and shown a strong preference to private enterprise over government bureaucracy. After all, if the government can't properly regulated the price of auto insurance, will it be more successful at delivering the product?

So has the Ontario auto insurance system fallen to such a low level of disrepute that the Sun is calling for public auto?

I happen to have a lot of interest in the topic having worked on the public auto insurance project until Bob Rae pulled the plug on it in 1991. Those auto insurance reforms continued and concluded with the passage of the ill-conceived Bill 164.

Shanoff points to the success of government-run systems in British Columbia, Saskatchewan, Manitoba and Quebec. It's true that drivers in those provinces are not lobbying to return to private-delivered insurance. For the most part premiums have been stable in those jurisdictions while in Ontario we seem to go through a cycle of rising rates every 5 years or so.

I personally believe government-run auto insurance could succeed in Ontario - under the right circumstances. However, it is also possible that public auto insurance could fail to deliver lower rates or a fairer system. The Workplace Safety and Insurance Board (WSIB) is not a shining example of a stable government-run insurance system. That system has undergone benefit cuts and underfunding for the past two decades. Would a public insurer be more like the SAAQ in Quebec or the WSIB in Ontario?

Shanoff points to the presentation made by Howard Pawley, former premier of Manitoba, to Ontario’s Standing Committee on Finance and Economic Affairs in July. According to Pawley, “administrative costs of public plans avoids costly administrative duplication and are only one half as much as those incurred by private insurance companies.” That also happens to be one of the advantages our OHIP system has when compared to private health insurance in the U.S. - i.e., lower administrative costs.

Ontario auto insurance companies collect about $10 billion in premiums annually. If administrative savings could reduce costs by just 5% that could translate into an overall saving of $500 million. If a government-run insurer could take advantage of such things as preferred providers and beter control over health care pricing, as is the case with the WSIB, there could be additional savings. Other savings could be achieved by integrating vehicle registration and auto insurance renewals. Perhaps higher benefit levels could be restored.

I don't see government-run auto insurance happening in Ontario. Too much strong opposition from interest groups and other more important priorities for the government. But more than a few people must be wondering what would have happened if Bob Rae had gone forward with his public auto insurance initiative.