Reforms to Ontario’s Dispute Resolution System Are Long Overdue

Full disclosure here. I worked with Justice Douglas Cunningham on his review of Ontario's Dispute Resolution System (DRS) and fully support his recommendations. In the process of coming up with his recommendations, Justice Cunningham listened to a lot of users of the system, ADR experts and other interest parties. He spent considerable time analyzing what he heard before making his conclusions and recommendations. Obviously, not everyone is going to agree with all the recommendations.

 The current system is definitely broken despite some suggesting to the contrary. The system is too slow, which adds unnecessary costs and hardship. The culture within the system contributes to the problems. Justice Cunningham's report proposes a culture change starting with pulling the DRS out of FSCO and significantly speeding up the process. Should all his recommendations be adopted, we will have a much more responsive and efficient system. In 1990, the government created the DRS specifically to provide accident victims with a cost effective and timely alternative to the courts. The proposed reforms are intended to return the system to those first principles.

A number of stakeholders have come out against Bill 171 which is unfortunate. Some have suggested that Justice Cunningham's report requires more consultation. I've been working in this system a long time and that is just a stall tactic to provide more time to lobby to protect your interests. Trial lawyers are opposed to Justice Cunningham's recommendation to end accident victims' ability to choose to go to court or arbitration to resolve a dispute. However, Justice Cunningham was of the view that a simpler and quicker DRS would provide appropriate access to justice and therefore, the court option would no longer be necessary.

Accident victim groups are understandably disappointed that Justice Cunningham did not address their long-term complaints regarding the independent assessment industry. They believe that unless independent assessment providers are regulated, all other reforms are pointless. I disagree. Many accident victims will benefit from the reforms. Settlements or the restoration of benefits will occur sooner. Justice Cunningham indicated that the type of regulatory system proposed by stakeholders was clearly outside the scope of his review. As such it will have to wait for another day.

The Opposition parties have been critical of Bill 171 but they have shown a willingness to allow the bill to pass at second reading and go to a Standing Committee for review. I believe beyond the rhetoric the Legislature recognizes changes are needed.

Insurance News - Friday, March 28, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, March 28, 2014:

• The Ontario government is reconsidering the privatization of winter road maintenance in the province after questions are raised about road safety.
• Toronto Police are dressing up as panhandlers to catch people texting while driving.
• We all know distracted driving is wrong. So why don’t we stop? Well because these devices are addictive.
• This is an interesting prediction, self-driving cars will reduce the need to own cars and park them downtown. That frees up space downtown currently being used to park cars.
• In light of all those Toyota and GM recalls, how safe will self-driving cars really be?

Insurance News - Monday, March 24, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 24, 2014:

• Foreshadowing a clash between auto makers and a prominent auto insurance company, a bill is being debated in California aimed at loosening car manufacturers' grip on data generated by vehicles.
• To ensure safety and reliability self-driving cars are going to have to consume and process enormous amounts of information.
• If cars could drive themselves, how many would we actually need? Will self-driving cars revolutionize car ownership?
• Drivers for ride-sharing services are being accused of fraud.  Following an accident some are claiming their car was being used for personal use.
• About 3,400 people die each year in frontal crashes with no airbag deployment in their vehicle according to U.S. data.

Insurance News - Tuesday, March 18, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, March 18, 2014:

• The Ontario Court of Appeal has ruled against insurer over limitation period in OPCF 44R. The insurer is likely to appeal to the Supreme Court of Canada.
• 80% of Canadians support a ban on texting while driving but then how many will actually comply with such a law?
• Uber, the popular U.S. ride-sharing service, has arranged for insurance to cover the gap exposed late last year when a 6-year-old girl was killed by an Uber driver.
• This Long Island con artist staging accidents may be an all-time low for insurance fraud.
• A U.S. insurer has introduced a smartphone app to allow an insurance rep to carry out a video appraisal using a client's smartphone's camera to assess damage remotely.
• This is certainly a privacy concern, auto insurance plug-ins may soon track motorists' locations, not just driving habits.

Insurance News - Monday, March 17, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 17, 2014:

• The government introduced a road safety bill (Bill 173) that if passed will toughen up distracted driving penalties by increasing fines to a maximum of $1,000 along with 3 demerit points.  Penalties for "dooring" a cyclist increase and drivers will need to stay at least a meter away from cyclists.
• FSCO has approved The Co-operators’ usage-based car insurance plan which will be launched this April.
• The Toronto Star believes the Ontario government is doing the right thing by testing self-driving cars.
• Driverless technology and the issue of liability: Who’s responsible?
• Parents invent device to track teenage son's driving and now they are marketing the device.
• B.C. woman could lose her auto insurance coverage after racking up over $5,000 in unpaid bridge tolls.

Insurance News - Thursday, March 13, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, March 13, 2014:

• Is the demand for regulation of insurer examinations gaining any traction?  And who should be responsible the Ministry of Health or the Ministry of Finance?
• However, usage-based insurance and telematics are definitely getting more traction in Ontario.
• Telematics technology plays a key role in thwarting a fraudulent auto insurance claim.
• This ride-sharing smart minivan may be the future of self-driving cars.
• California pushes to finish rules for driverless cars by the end of this year to stay ahead of the rapidly developing technology.

Insurance News - Tuesday, March 11, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, March 11, 2014:

• Not everyone is convinced that dispute resolution reforms will make a difference if no culture change takes place.
• Opinion: The Liberals are hijacking the NDP's auto insurance strategy.
• The myth about being good at multi-tasking is creating a serious road safety problem in the form of distracted driving.
• In the U.S., auto injury medical costs continue to rise faster than inflation despite a decrease in injury severity.
• Some time in the future insurers will be using drones to do the job of a mobile adjuster.

Insurance News - Monday, March 10, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 10, 2014:

• A lot of media coverage on how the Ontario government has introduced Bill 171 to address fraud and high auto insurance premiums.
• Meanwhile, it is reported that Florida auto insurance reforms are working though the Hillsborough clinic licensing ordinance has run into numerous legal problems.
• South Carolina and Rhode Island will be the 31st and 32nd U.S. states to allow electronic proof of auto insurance. Still not available in Canada.
• Traffic congestion is growing three times as fast as US economy, with situation worst in Los Angeles. My guess is that the problem is just as bad in Toronto.
• To coincide with Fraud Prevention Month, a Toronto-area rehab clinic that pleaded guilty to UDAP charges in November has now been fined $75,000.
• Drivers have hit family members in three separate incidents at the same intersection in North York.  It also happens to be where FSCO is located.

Will the February 1st SABS Changes Reduces Claim Costs?

On February 1st, three amendment to the SABS became effective. These changes were met with criticism by some stakeholders because the Ontario government chose not to consult on the amendments before introducing them.  The reaction of stakeholders was predictable with respect to these particular changes, which may have been a factor in moving ahead without consulting.  The other contributing factor is the government's rate reduction strategy.  Following an initial round of rate filings, FSCO was able to only squeeze an average of about 5% rate reductions.  The next 10% are likely to be much more difficult to find.

The February 1st, SABS amendments are:

• those seeking an exemption from the $3,500 minor injury cap based on a pre-existing condition must provide medical documentation that precedes the accident;
• those providing attendant care services can only be paid up to any income loss incurred; and
• the section 35 election can only be used once by a claimant.

These amendments are part of a strategy to tighten up the system so that perhaps some savings trickle down and contribute to the promised 15% rate reduction.

Will there be any savings and, if there are, will they be significant enough to have an impact?

In a previous post, I had noted that the minor injury cap appears to be holding.  Those claims attempting to escape the cap either have a psychological component or pre-existing condition.  In the absence of arbitration decisions regarding the scope of the minor injury definition, there is still cost uncertainty regarding the current product.  Because of the number minor injury claims, the cost impact of a decision regarding the definition could be significant one way or the other.  Therefore, this amendment could lead to insurers re-evaluating their claim costs over time and lower premiums.

The attendant care amendment may not produce any real savings.  Let's say a claimant is eligible to claim  a monthly attendant care benefit of $2,000.  A family member has quit their job to provide the care and has been submitting invoices totaling $2,000.  If that family member was only earning $250 per week at their job, that person would only be able to invoice up to $1,000 per month under the SABS amendment.  The family is still eligible for another $1,000 per month and will more than likely use it purchase care either from a company or another family member or friend.  I suspect this change will produce no savings.

As for the third amendment, I don't have access to data that would indicate how many elections take place after an initial election is made.  Prior to 2010, there were claimants who would elect to receive the caregiver benefit and later elect to receive income replacement benefit or non-earner benefit when they no longer qualified as a caregiver.  However, since the caregiver benefit is now optional coverage except for those with catastrophic injuries, this scenario is likely quite rare.  The savings would have to be negligible.

Ontario Government Introduces Legislation to Begin Implementing the Cunningham Report

On March 4, 2014, the Ontario government introduced Bill 171 for first reading, which, if passed, would begin the process of implementing the recommendations made by Justice Cunningham in his review of the auto insurance dispute resolution system.

The Bill would amend the Insurance Act to change how disputes relating to statutory accident benefits will be resolved. Currently these disputes are dealt with by the director of arbitrations appointed under section 6 and arbitrators and mediators provided for under sections 8 and 9. Those sections are to be repealed and regulations will deal with proceedings going to the Tribunal [Cunningham Recommendations #4, 13, 24].   Regulation making authority would be added to the Insurance Act to cover the introductions of time limits and limitation periods. [Recommendation #6]

New section 280 provides that disputes will be dealt with by the Licence Appeal Tribunal under the Licence Appeal Tribunal Act, 1999. [Recommendation #1]  The new section 280 also prohibits taking SABS disputes to the courts except for appeals of arbitration decisions. [Recommendations #9, 28]

 The protection of benefits after a dispute is resolved, currently in section 287, is continued under the new section 281. 

 Under the new section 282, the Lieutenant Governor in Council will be able to assess insurers for the costs of the Licence Appeal Tribunal relating to these disputes. That power is similar to the assessment power under section 25 of the Financial Services Commission of Ontario Act, 1997. 

The new section 283 authorizes regulations for various transitional matters, ie, disputes that arise before the transition date.  Regulations may provide for the continuation of director of arbitrations and existing arbitrators and mediators during transition. 

The Bill only sets out a framework for a new dispute resolution system with nuts and bolts to be set out in regulations.

Insurance News - Saturday, March 1, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, March 1, 2014:

• Who owns all that data your car generates?
• New York "creates" highway texting zones at existing rest stops and service areas but will that stop drivers from texting?  After all, drivers who need to use their phone should already be stopping at these locations.
• Now a California court has ruled that hand-held cell phone law are only meant to apply to drivers making a call.  So it's fine to hold phone to use map.
• It's not just insurers who will be hurt by the introduction of self-driving cars. Everyone who makes money off of car accidents is going to feel it.
• Insurers are denying claims and cancelling policies of vehicle owners that are using their vehicles as part of a ridesharing service.