I'm away at the Jersey shore and won't be posting again until January 7th. I will likely still be using my Twitter account. Wishing everyone a happy and prosperous New Year and a some NHL hockey.
Willie
Friday, 28 December 2012
Happy New Year!
I'm away at the Jersey shore and won't be posting again until January 7th. I will likely still be using my Twitter account. Wishing everyone a happy and prosperous New Year and a some NHL hockey.
Willie
Thursday, 27 December 2012
Insurance News - Thursday, December 27, 2012
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, December 27 2012:
- New Alabama law and online insurance verification system targets uninsured drivers starting Jan 1.
- EU gender price ban raising insurance costs for women but not giving men corresponding lower rates.
- Progressive Insurance in the U.S. reports a 30% increase in single vehicle claims on New Year’s Day.
- Police across the country struggle as Twitter users reveal impaired driving checkstops.
- Progressive Insurance releases terms for usage-based insurance licensing program.
Thursday, 20 December 2012
Insurance News - Thursday, December 20, 2012
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, December 20 2012:
- Supreme Court won’t hear appeal of Deering sisters car crash case.
- Letter to the Editor: Independent medical examinations provide "necessary check and balance."
- Insurance companies among top GTA employers on CI Top Broker.
- Insurance safety group releases car ratings based on new crash test.
- Sudy shows that traffic accidents are the leading cause of high-severity workers’ comp injuries.
- A look at new US insurance laws taking effect in 2013.
CCIR Report On Credit Scoring Is Inconclusive
The Canadian Council of Insurance Regulators (CCIR) Credit Scoring Working Group released its Findings Report: Use of Credit Scores By Insurers in late November 2012. Unfortunately, the report has little new to offer despite spending a considerable amount of time looking at the issue.
The working was established in 2009 to gather the facts surrounding credit‐based insurance scores and how they are used in today’s regulatory environment. Public consultation was undertaken in 2011. That process turned out to be a disappointment as only 15 submissions were received and all from either the insurance sector or credit bureaus.
No feedback was received from consumers. That is not surprising because insurance consumers are not really organized. There are consumer groups, such as the Consumers Association of Canada, but their scope of issues are so broad and their resources so stretched that it is unlikely that you would ever get them to respond to these types of consultation. That is why organizations tend to rely on marketing research firms to reach out to consumers.
The report itself highlights what we already know about this issue, insurers and brokers are on different sides of the debate on the use of credit scores. The report acknowledges the IBC Code of Conduct for Insurers’ Use of Credit Information. However, it notes that not all insurers are members of IBC and not even all IBC members have “signed on” to the Code, which makes it difficult to consider this code an industry standard.
As well, since few regulators have authority (outside of automobile insurance) to reject underwriting criteria, the decisions on which, if any, actions to take on the use of credit scoring for underwriting rest with the policymakers in the various provincial and territorial governments.
So we are essentially in the same spot we were in 2009.
The working was established in 2009 to gather the facts surrounding credit‐based insurance scores and how they are used in today’s regulatory environment. Public consultation was undertaken in 2011. That process turned out to be a disappointment as only 15 submissions were received and all from either the insurance sector or credit bureaus.
No feedback was received from consumers. That is not surprising because insurance consumers are not really organized. There are consumer groups, such as the Consumers Association of Canada, but their scope of issues are so broad and their resources so stretched that it is unlikely that you would ever get them to respond to these types of consultation. That is why organizations tend to rely on marketing research firms to reach out to consumers.
The report itself highlights what we already know about this issue, insurers and brokers are on different sides of the debate on the use of credit scores. The report acknowledges the IBC Code of Conduct for Insurers’ Use of Credit Information. However, it notes that not all insurers are members of IBC and not even all IBC members have “signed on” to the Code, which makes it difficult to consider this code an industry standard.
As well, since few regulators have authority (outside of automobile insurance) to reject underwriting criteria, the decisions on which, if any, actions to take on the use of credit scoring for underwriting rest with the policymakers in the various provincial and territorial governments.
So we are essentially in the same spot we were in 2009.
Tuesday, 18 December 2012
Insurance News - Tuesday, December 18, 2012
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, December 18, 2012:
- Windsor motorists corral driver who blew three times legal limit.
- Many Ontario drivers are not taking all the precautions they can to stay safe and keep calm on the roads in winter.
- Progressive Conservatives want Ontario to be a 'right-to-work' province.
- Strategy Meets Action (SMA), an insurance strategic advisory firm, released its new research report, Usage-Based Insurance/Telematics: a Catalyst for Change.
- As of Jan. 1, 2013, driver's licences and photo cards will now be clearly labeled as to whether the cardholder is of age.
- Are GTA auto premiums set to fall? Co-operators have dropped rates, will anyone follow them?
- 9 suspects have been arrested. 41 charges laid. A significant impact in stopping staged collisions in York Region.
Sunday, 16 December 2012
Update on Florida No-Fault Auto Insurance Reforms
Another jurisdiction to experience serious auto insurance fraud problems is Florida. In March of this year HB 119 passed in the State Senate and House after some heavy duty
lobbying by Gov. Rick Scott.
The new Florida personal injury protection (PIP) law was adopted in 1972 to make sure anyone injured in an auto accident would quickly get money to treat their injuries. The legislation provided that a driver’s insurance company pay up to $10,000 to cover medical bills and lost wages after an accident, no matter who is at fault.
PIP costs have risen by $1.4 billion since 2008, largely because of the runaway fraud that threatens the system, most notably in the metropolitan Miami and Tampa areas. Florida ranks first nationally in staged accidents.
The legislation requires an accident victim to obtain treatment within 14 days in an ambulance or hospital, or from a physician, osteopathic physician, chiropractic physician, or dentist. The full $10,000 PIP medical benefit is available only if a physician, osteopathic physician, dentist, or a supervised physician’s assistant or advanced registered nurse practitioner determines that the insured has an “emergency medical condition.” Otherwise, the PIP medical benefit is limited to $2,500.
Follow-up services and care requires a referral from a physician, osteopath, chiropractor or dentist. Massage therapists and acupuncture was eliminated from eligibility for PIP benefits.
Another provision in the bill requires the Office of Insurance Regulation to hire an independent consultant by September to calculate the savings expected from the Act.
The bill includes a 10 percent rate reduction on PIP that’s not guaranteed. If insurers who offer PIP do not provide their customers a minimum 10 percent rate reduction by October 1, 2012, they must explain in detail why not. A second rate filing required on Jan. 1, 2013, proposes insurers have a 25 percent premium reduction for policyholders unless they can show why they’re unable to provide the cut.
Of the 44 rate filings that were approved by the state's Office of Insurance Regulation by mid-November, the average PIP savings has been 2.5 percent. That reflects about a fourth of the 141 filings from companies selling all types of car insurance, with the rest still under review. As of December 13, 2012, there were 98 filings approved.
Florida regulators are optimistic that the state’s no-fault auto reforms are having a positive effect on the market and will eventually cut premiums for drivers. But for now they are telling the public that the recent law changes will likely only temper the size of insurers’ PIP rate requests as opposed to actually decreasing drivers’ premiums.
Regulators expect that the January 1, 2013 filings will represent a fuller picture of the influence of the reforms on the market.
Insurers have been reluctant to make deep cuts in their PIP rates because they want to see whether the law can withstand legal challenges. A group of health care providers filed suit in Leon County Circuit Court arguing the law is unconstitutional. The case centers on a decision by lawmakers to eliminate licensed massage therapists and acupuncturists from the list of approved PIP providers while setting a medical fee schedule based on Medicaid. In addition, the $2,500 benefit limit for non-emergency services will result substantially decrease chiropractor fees. Those three categories of providers represented the three highest average medical fees per PIP patient.
The first challenge of Florida’s reform to its personal injury protection system has failed with a denial of an injunction last week that would have stopped the law’s implementation. This is just a short-term procedural victory and the case will now proceed to trial.
The new Florida personal injury protection (PIP) law was adopted in 1972 to make sure anyone injured in an auto accident would quickly get money to treat their injuries. The legislation provided that a driver’s insurance company pay up to $10,000 to cover medical bills and lost wages after an accident, no matter who is at fault.
PIP costs have risen by $1.4 billion since 2008, largely because of the runaway fraud that threatens the system, most notably in the metropolitan Miami and Tampa areas. Florida ranks first nationally in staged accidents.
The legislation requires an accident victim to obtain treatment within 14 days in an ambulance or hospital, or from a physician, osteopathic physician, chiropractic physician, or dentist. The full $10,000 PIP medical benefit is available only if a physician, osteopathic physician, dentist, or a supervised physician’s assistant or advanced registered nurse practitioner determines that the insured has an “emergency medical condition.” Otherwise, the PIP medical benefit is limited to $2,500.
Follow-up services and care requires a referral from a physician, osteopath, chiropractor or dentist. Massage therapists and acupuncture was eliminated from eligibility for PIP benefits.
Another provision in the bill requires the Office of Insurance Regulation to hire an independent consultant by September to calculate the savings expected from the Act.
The bill includes a 10 percent rate reduction on PIP that’s not guaranteed. If insurers who offer PIP do not provide their customers a minimum 10 percent rate reduction by October 1, 2012, they must explain in detail why not. A second rate filing required on Jan. 1, 2013, proposes insurers have a 25 percent premium reduction for policyholders unless they can show why they’re unable to provide the cut.
Of the 44 rate filings that were approved by the state's Office of Insurance Regulation by mid-November, the average PIP savings has been 2.5 percent. That reflects about a fourth of the 141 filings from companies selling all types of car insurance, with the rest still under review. As of December 13, 2012, there were 98 filings approved.
Florida regulators are optimistic that the state’s no-fault auto reforms are having a positive effect on the market and will eventually cut premiums for drivers. But for now they are telling the public that the recent law changes will likely only temper the size of insurers’ PIP rate requests as opposed to actually decreasing drivers’ premiums.
Regulators expect that the January 1, 2013 filings will represent a fuller picture of the influence of the reforms on the market.
Insurers have been reluctant to make deep cuts in their PIP rates because they want to see whether the law can withstand legal challenges. A group of health care providers filed suit in Leon County Circuit Court arguing the law is unconstitutional. The case centers on a decision by lawmakers to eliminate licensed massage therapists and acupuncturists from the list of approved PIP providers while setting a medical fee schedule based on Medicaid. In addition, the $2,500 benefit limit for non-emergency services will result substantially decrease chiropractor fees. Those three categories of providers represented the three highest average medical fees per PIP patient.
The first challenge of Florida’s reform to its personal injury protection system has failed with a denial of an injunction last week that would have stopped the law’s implementation. This is just a short-term procedural victory and the case will now proceed to trial.
Friday, 14 December 2012
Insurance News - Friday, December 14, 2012
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, December 14, 2012:
- Starting this weekend, harsher penalities for drunk driving in Manitoba including requiring offenders to pay to install an ignition interlock device in their car.
- Why Ontario has a strong economic case for seceding from Canada.
- Ohio minimum car insurance to jump to $25,000 (from $7,500) under bill waiting governor's signature.
- Starting Dec. 21, insurance companies in the European Union won't be able to use gender as a factor when they calculate rates for auto insurance.
Thursday, 13 December 2012
IBC Releases Annual List of the 10 Most Stolen Cars
The IBC's annual list of the most popular cars is out. Except the list isn't gauging consumer popularity, it's with thieves.
This year's hot target is the 2000 two-door Honda Civic Sir. Number two on the list is the 1999 two-door Honda Civic Sir.
The Civic replaces the 2009 Toyota Venza 4-door which was on the top of the IBC's list in 2011.
The list includes seven 4-wheel drive or all-wheel drive vehicles, including four Ford F350 trucks. The IBC reports that many of these higher-end vehicles are targeted by organized crime for shipment overseas. There were 82,411 vehicles stolen in Canada during 2011.
The top 10 most frequently stolen vehicles in Canada are:
This year's hot target is the 2000 two-door Honda Civic Sir. Number two on the list is the 1999 two-door Honda Civic Sir.
The Civic replaces the 2009 Toyota Venza 4-door which was on the top of the IBC's list in 2011.
The list includes seven 4-wheel drive or all-wheel drive vehicles, including four Ford F350 trucks. The IBC reports that many of these higher-end vehicles are targeted by organized crime for shipment overseas. There were 82,411 vehicles stolen in Canada during 2011.
The top 10 most frequently stolen vehicles in Canada are:
- 2000 HONDA CIVIC SiR 2DR
- 1999 HONDA CIVIC SiR 2DR
- 2006 CHEVROLET TRAILBLAZER SS 4DR 4WD
- 2007 FORD F350 SD 4WD PU
- 2005 CADILLAC ESCALADE 4DR AWD
- 2006 FORD F350 SD 4WD PU
- 2002 CADILLAC ESCALADE 4DR 4WD
- 2005 FORD F350 SD 4WD PU
- 2004 FORD F350 SD 4WD PU
- 1999 ACURA INTEGRA 2DR
Wednesday, 12 December 2012
Insurance News - Wednesday, December 12, 2012
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 12, 2012:
- FSCO has released an auto insurance bulletin -- 2013 Indexation Percentages under SABS.
- An Ontario court has held that an auto insurer and home insurer are obliged to defend in an action for personal injury because of the potential for concurrent liability.
- An Ontario Court of Appeal decision finding the FSCO failed to mediate a number of accident claims within a 60-day time limit could mean up to $300 million in costs that insurance companies will pass on through premiums, a lawyer estimates.
- $1.4-billion in unpaid corporate taxes being written off in Ontario: Auditor-General.
Monday, 10 December 2012
Insurance News - Monday, December 10, 2012
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, December 10, 2012:
- An advocacy group representing auto accident victims is objecting to some of the recommendations in the recently released report of the Auto Insurance Anti-Fraud Task Force.
- A California IT company is launching an auto insurance company selling policies based on distance driven for people who drive much.
- Businesses including insurers need to thinking about how they will be impacted by driverless cars. Are you ready for the 21st century?
Tuesday, 4 December 2012
Appeals Court Confirms Mediations Are Deemed Failed If No Mediator Assigned After 60 Days
Last week a decision was released by the Court of Appeal for Ontario, Hurst v.Aviva Insurance Company (2012 ONCA 837), which upheld the lower court decision that Applications for
Mediation received by FSCO that have not been mediated within 60 days are
deemed failed. The lower court ruled that in cases where mediation has been deemed to fail because of the timeline, a mediator's report is not required for an insured to commence
litigation.
The decision involves a number of insureds who wanted to begin litigation without a mediator's report indicating that mediation has failed. In each case their Applications for Mediation had been filed at FSCO and the 60-day limitation period had lapsed because of the siginificant backlog of mediation applications.
The insurers involved in the case argued in court that mediation had not failed because the 60-day limitation didn’t apply in these situations, in line with FSCO’s view.
FSCO has always taken the position that the time limit does not start until an Application for Mediation had been marked as "complete". This technicality has allowed a backlog of cases to build up. Early this year the backlog was estimated to be approximately 36,000 although it has since likely dropped down to under 20,000.
A lower court judge dismissed those motions by the insurers, who appealed to the Court of Appeal and ultimately led to last week's decision.
FSCO's arbitrators have ruled similarly. On February 10, 2012, in Leone and State Farm, a FSCO arbitrator ruled that mediation was deemed to have failed because it did not take place within 60 days of an application being filed and that the parties could not extend the time limit on consent once 60 days had expired. On July 31, 2012, a decision was released by the director’s delegate that upheld the 60-day deemed failure.
Section 281(2) of the Insurance Act prevents insureds from initiating any action against their insurer unless they first sought mediation at FSCO. Section 280(4) requires the mediations to be conducted within the "prescribed time". Section 280(7) states that mediations have failed when the mediator has given notice to the parties that the mediation will fail or when the prescribed or agreed time for mediation has expired and no settlement has been reached. Section 10 of the Dispute Resolution Practice Code prescribes the time to be 60 days.
So what does this mean for insureds, insurers and FSCO?
Decisions regarding the 60-day limitations have been consistent - mediation is deemed to have failed once the timeline has expired. In addition, a mediator's report is not needed to move on to arbitration or litigation. That means that thousands of backlogged mediation cases are deemed failed and free to file for arbitration or go to court. The quickest route might be small claims court which is an option for many insureds with smaller claims.
FSCO has closed almost 8,000 mediation files as failed in the first nine months of 2012. However, it appears that the files may all have been failed with the agreement of the parties. The recent decision will likely make the number of failed mediations once again increase considerably. It may also require additional resources to handle the increase in arbitration files. They has partially been addressed by the contract with ADR Chambers. However, the limit of 500 files in the contract may not be sufficient. The current wait times in arbitration are six to eight months and will likely worsen. The alternative approach may not be any better. A large number of cases going to the courts will flood that system too.
As for insurers, the large number of files leaving the mediation system will likely increase their operating costs. Each application costs an insurer $3,000 and that does not include legal and preparation time in the event the application proceeds to a pre-hearing or hearing.
The decision involves a number of insureds who wanted to begin litigation without a mediator's report indicating that mediation has failed. In each case their Applications for Mediation had been filed at FSCO and the 60-day limitation period had lapsed because of the siginificant backlog of mediation applications.
The insurers involved in the case argued in court that mediation had not failed because the 60-day limitation didn’t apply in these situations, in line with FSCO’s view.
FSCO has always taken the position that the time limit does not start until an Application for Mediation had been marked as "complete". This technicality has allowed a backlog of cases to build up. Early this year the backlog was estimated to be approximately 36,000 although it has since likely dropped down to under 20,000.
A lower court judge dismissed those motions by the insurers, who appealed to the Court of Appeal and ultimately led to last week's decision.
FSCO's arbitrators have ruled similarly. On February 10, 2012, in Leone and State Farm, a FSCO arbitrator ruled that mediation was deemed to have failed because it did not take place within 60 days of an application being filed and that the parties could not extend the time limit on consent once 60 days had expired. On July 31, 2012, a decision was released by the director’s delegate that upheld the 60-day deemed failure.
Section 281(2) of the Insurance Act prevents insureds from initiating any action against their insurer unless they first sought mediation at FSCO. Section 280(4) requires the mediations to be conducted within the "prescribed time". Section 280(7) states that mediations have failed when the mediator has given notice to the parties that the mediation will fail or when the prescribed or agreed time for mediation has expired and no settlement has been reached. Section 10 of the Dispute Resolution Practice Code prescribes the time to be 60 days.
So what does this mean for insureds, insurers and FSCO?
Decisions regarding the 60-day limitations have been consistent - mediation is deemed to have failed once the timeline has expired. In addition, a mediator's report is not needed to move on to arbitration or litigation. That means that thousands of backlogged mediation cases are deemed failed and free to file for arbitration or go to court. The quickest route might be small claims court which is an option for many insureds with smaller claims.
FSCO has closed almost 8,000 mediation files as failed in the first nine months of 2012. However, it appears that the files may all have been failed with the agreement of the parties. The recent decision will likely make the number of failed mediations once again increase considerably. It may also require additional resources to handle the increase in arbitration files. They has partially been addressed by the contract with ADR Chambers. However, the limit of 500 files in the contract may not be sufficient. The current wait times in arbitration are six to eight months and will likely worsen. The alternative approach may not be any better. A large number of cases going to the courts will flood that system too.
FSCO is informing parties who filed applications for mediation with FSCO more than 60 days ago should submit a form
to FSCO indicating that they either jointly agree to extend the time
for mediation or that either party wishes to receive a failed Report of
Mediator. If FSCO does not receive this form from parties, by default,
their applications will remain in queue for assignment to a mediator.
Applications for Arbitration that were filed without a Report
of Mediator and have been held in abeyance, pending the Court of Appeal
matters, will proceed to arbitration. Upon request, FSCO will issue
Reports of Mediator for these cases.
As for insurers, the large number of files leaving the mediation system will likely increase their operating costs. Each application costs an insurer $3,000 and that does not include legal and preparation time in the event the application proceeds to a pre-hearing or hearing.
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