Thursday 25 July 2013

FSCO Mediation Backlog Will Soon Be Eliminated

Between 2007 and 2012 FSCO experienced an unprecedented 99 per cent increase in Applications for Mediation (from 14281 to 28,389), which resulted in a substantial backlog of files.

FSCO successfully implemented an aggressive action plan to address the backlog. This included initiatives such as the eCalendar, Consent Failures, mandatory settlement blitz days, and the use of a private service provider to supplement FSCO’s mediation and arbitration services. As a result, the mediation backlog has been substantially reduced from 29,142 files at the end of March 2012. In fact, the backlog will be eliminated by the end of August 2013.
 

Wednesday 24 July 2013

Insurance News - Wednesday, July 24, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, July 24, 2013:

Thursday 18 July 2013

Round 2 of Henry v. Gore Mutual, Claimant Wins Again

The Court of Appeal has released its decision in Henry v. Gore Mutual, unanimously upholding the motion judge’s decision on the meaning of the “economic loss” threshold under the post-September 1, 2010 SABS.

Henry v. Gore Mutual was the first court decision to deal with the SABS definition of "incurred expense" which was introduced on September 1, 2010.

Justice Ray found that as long as a family member providing attendant care sustains "an" economic loss, regardless of the amount of the loss, presuming the injured person pays, promises to or is obliged to pay for the attendant care, the insurer must pay "all reasonable and necessary attendant care".

In this case the actual economic loss was just over $2,000.00 per month. The family was claiming $6,000.00 as determined by a Form 1 submitted to the insurer. The Court found that test of "economic loss" was a threshold finding for there to be an "incurred expense", "but is not intended as a means of calculating the quantum of the incurred expense".

The Court of Appeal agreed with the motion judge and dismissed Gore’s appeal. The Court held that under the SABS, economic loss serves as a threshold for entitlement to (and not as a measure or factor in quantifying the amount of) reasonable and necessary attendant care benefits to be paid by an insurer.  The Court of Appeal refused to provide its own definition of “economic loss” despite Gore’s request to do so.

So what is the impact of these decisions?

I have been told by some in the insurance industry that the benefit payments are intended to be limited to the family member's economic loss. I've also been advised by the plaintiff bar that if a family member used $5 in gas to travel to the claimant then it allows them to claim the full attendant care benefit.

For almost several years I've expressed the view that neither of these interpretations would likely prevail. The intent of the SABS drafting was not to limit payments to the amount of the economic loss. If it had been different language would have been used. In fact during consultations on the Regulation in 2010, some insurers were concerned that the proposed definition was unfair if it limited family members from being compensated for providing attendant care services.

However, to suggest that any economic loss, even the most trivial one, would trigger thousands of dollars in benefit payments would also be contrary to the intent of the Regulation. In fact such an interpretation would make the definition meaningless. Justice Ray recognized that the drafters had intended to exclude non-professional caregivers if they did not incur an economic loss. In his decision he is clear that they type of economic loss that would trigger benefit payments was lost income.

However I am sure there will be lawyers that will take the arguments made in Henry v. Gore Mutual and try to extend it to other economic losses not just income loss. They may even suggest that the $5 in gas consumed to travel to the claimant qualifies as an economic loss under the definition. For now we have to rely on the courts to follow the original intent of the provision. 

Monday 15 July 2013

2nd Quarter Auto Insurance Rate Filing Approvals Drop By 0.09%

FSCO reports that rate filings approved during the second quarter of 2013 declined on average by 0.09%, based on the entire market. However, you can't really read too much into these figures since only about 25% of the market had new rates approved during the quarter and the majority of those involved no rate increase or decrease at all but rather re-adjusting their rates.  Only 5 companies had rate changes approved representing just 4.5% of the market.

With the government commitment to reduce rates by 15% in the backdrop, insurers have not been filing for rate changes but instead waiting to see how the rate rollback will play out.

The FSCO quarterly rate change announcement can be found here.


Insurance News - Monday, July 15, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, July 15, 2013:

Tuesday 9 July 2013

Insurance News - Tuesday, July 9, 2013

Most of the news has focused on the Toronto storm yesterday but here some of the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, July 9, 2013:
  •  Finally there was a $300,000 Ferrari abandoned on Lower Simcoe in a flooded underpass.  You don't see a floating Ferrari every day.

Saturday 6 July 2013

Insurance News - Saturday, July 6, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, July 6, 2013:

Thursday 4 July 2013

FSCO Releases Final Statement Of Priorities For 2013

Section 11 of the FSCO Act requires FSCO to deliver to the Minister of Finance and publish in The Ontario Gazette by June 30th of each year, a statement setting out the proposed priorities of the Commission for the fiscal year in connection with the administration of this Act and all other Acts that confer powers on or assign duties to the Commission or the Superintendent.

FSCO has released a final Statement of Priorities for 2013 which varies slightly from the draft released in April of this year. The changes largely reflect initiatves included in the provincial budget which passed last month.  Here is a summary of the auto insurance initiatives:

Design and implement an information technology Enterprise Development Program
  • FSCO will develop a web-based information technology system offering integrated services to stakeholders by giving them one-window access for all of their dealings with FSCO.
Work with the Ministry of Finance to implement a cost and rate reduction strategy for auto insurance 
  • FSCO will work with the Ministry of Finance on the implementation of legislative amendments from the 2013 Budget that commit to an average auto insurance rate reduction of 15 percent within a period of time to be determined by regulation, and provide the Superintendent with authority to require insurers to re-file their rates for approval.
Respond to the recommendations of the Auto Insurance Anti-Fraud Task Force
  • FSCO is addressing several recommendations. It is working with stakeholders to develop a consumer engagement and education strategy, developing an anti-fraud hotline, and will continue to work with the Ministry of Finance to implement recommendations from the Task Force, as directed by the government.
Respond to Auditor General’s 2011 Value-for- Money follow-up audit
  • The 2012 Ontario Budget included two initiatives that address the auditor’s recommendations.
  • In 2013, FSCO will begin the next five-year review of the auto insurance system which will include a review of cost containment strategies and benefit levels in other provinces.
  • FSCO considers several factors, including ROE, in reviewing the reasonableness of auto insurance rates filed by insurers.
  • FSCO is expanding its auto insurance attestation.
 Enhance auto insurance information and analysis
  • FSCO will conduct a closed claims study on third-party liability bodily injury claims in Ontario.
  • FSCO will review the data available through the Health Claims for Auto Insurance (HCAI) system.
Review and implement requirements for usage based auto insurance
  • FSCO is examining key regulatory issues and working with the auto insurance sector to ensure consumers are fairly treated when implementing voluntary usage-based auto insurance rating programs.
Work with Ministry of Finance on statutory and system reviews
  • FSCO will lead a mandated five-year review of the auto insurance system and a three-year review of the auto insurance risk classification and rate determination regulations.
Develop Minor Injury Treatment Protocol 
  • FSCO has retained medical and scientific experts to develop an evidence-based Minor Injury Treatment Protocol.
Work with the Ministry of Finance to develop and implement changes to the definition of Catastrophic Impairment

Work with the Ministry of Finance to complete a review of insurance company solvency regulation leading to recommendations for changes to the Insurance Act

Develop proposals to modernize disciplinary hearings for insurance agents and adjusters
  • FSCO will consult on proposals to create a model that aligns with the modern disciplinary, licensing, and enforcement processes and standards used in the other sectors FSCO regulates.
Implement fraud awareness stakeholder engagement strategy
  • FSCO will expand its fraud awareness social media outreach across all its regulated sectors.
  • FSCO will partner with law enforcement, the Ministry of Finance, the Ministry of Consumer Services, and industry associations in joint fraud awareness activities.
Work with other auto insurance rate regulators on common rate filing issues and requirements