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Thank you for visiting my site throughout the year.

Willie Handler

Insurance News - Wednesday, December 30, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 30, 2015:

• City of Toronto won’t block Uber’s new $5 commuter service but it is doing a legal review.
• Another legal battle for Uber as the Seattle city council votes to treat Uber drivers as employees by giving them collective-bargaining rights.
• California sets rules for self-driving cars; must have steering wheel and licensed driver behind the wheel. Google is not happy.
• Google plans to make its self-driving cars unit, which will offer rides for hire to compete with Uber, a stand-alone business under the Alphabet Inc. corporate umbrella in 2016,
• The self-driving car, that cutting-edge creation that’s supposed to lead to a world without accidents, is achieving the exact opposite right now.  Because driverless cars obey the laws, humans don't so much.
• Google and Ford are about to announce they are forming a partnership to build self-driving cars.
• Wawanesa Insurance is asking policy holders if they are driving for Uber. And cancelling policies if the answer is yes.

Insurance News - Sunday, December 27, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, December 27, 2015:

• Studies suggest that insurance customers will walk away if purchasing insurance is slow, complicated and difficult.
• The $75,000 problem for self-driving cars is going away as the cost of LIDAR sensors drop.
• Self-driving cars can lure drivers into false sense of security and even lull them to sleep.
• If you want to know why Uber ignores regulators and not intimidated by law suits?  Because they are worth around $85 billion.
• Uber is testing out food delivery in Toronto.  
• Uber is also trying out commuter service to compete with the TTC.
• In Uber fight, taxi drivers on wrong side of history – and consumerism.

Government Posts Proposed Changes to DRS Regulations

The Ministry of Finance has posted proposed changes to Insurance Act regulations to provide for the transition the Automobile Insurance Dispute Resolution System from the Financial Services Commission of Ontario (FSCO) to the Ministry of the Attorney General's Licence Appeal Tribunal (LAT), and the wind down of disputes filed at FSCO. 

Proposed amendments include:

 • The last date for submitting applications for mediation, neutral evaluation, or the appointment of an arbitrator to FSCO will be March 31, 2016. 

 • An application for an appeal to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • As well, an applications for a variation or revocation to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • The Office of the Director of Arbitrations will continue to function until all notices of appeal and all applications for variation or revocation have been finally determined. 

 • Statutory Accident Benefits Schedule (SABS) provisions that apply to the dispute resolution process at FSCO will continue to apply, as they read on March 31, 2016, to all applications that were received by FSCO before the transition date but are not finally determined before that date. The SABS will also be amended, where necessary, to apply to applications filed at the LAT on or after April 1, 2016.

Competition Bureau Supports Ride-Sharing Services

The emergence of Uber and other ride-sharing services has created increased competition for the Canadian taxi industry.  This has created a source of friction for the industry because of what they see is an "uneven playing field."  Taxi operators are required to follow regulatory rules while ride-sharing services largely operate unregulated.  The Canadian Competition Bureau recently weighed in on the subject.

The Competition Bureau recently released a study, Modernizing Regulation in The Canadian Taxi Industry, which concluded that the competition in the sector has benefited consumers.  However, there needs to be a balance between increased competition and the need for regulation.

The taxi industry has operated largely unchanged for decades.  Regulators have created rules to govern price, vehicle safety and insurance requirements.  But the regulatory rules often restrict entry into the sector by limiting the number of taxi licences.  The number of plates usually does not keep up with demand for services which creates artificial scarcity, but also higher prices, poor service and long wait times.

Ride-sharing companies have changed the landscape by offering consumers lower prices, variable pricing (higher fares when demand is high), shorter wait times, and convenience.  The software application used by ride-sharing companies provides automatic payment and the ability to track the number of vehicles available in the local area.  The software also allows consumers to rate drivers which creates an incentive to provide better service.  Low rated drivers receive fewer ride requests.

The innovations introduced by Uber and other similar service providers have benefited consumers.  There is a need for updated regulatory rules so that traditional taxi operators can respond to the competition.  But the one aspect not addressed by the Competition Bureau study is the insurance issue. 

In September 2015, Intact Financial announced plans to work with Uber to create products tailored for the ride-hailing service, after concerns emerged that person auto insurance policies may not cover drivers using their personal vehicles for commercial gain.   In the meantime, Uber claims it has adequateinsurance coverage and that every ride on the UberX platform is backed by $5 million of commercial auto insurance, which covers both bodily injuries and property damage stemming from a crash.  However, Alberta government said in July that it had determined the policies do not meet the requirements of the province’s Insurance Act.  It's all very confusing.  

Ride-sharing services are here to stay.  Consumers will benefit but only if the regulatory rules and updated and the insurance issues are addressed.

Insurance News - Wednesday, December 2, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 2, 2015:

• There is a substantive risk associated with relying on insurer examination reports to deny serious claims which can be compounded by taking a matter to arbitration without having sufficient evidence to support a position.
• Why auto insurance rates are so high in the Greater Toronto Area.
• There is a down side to low gas prices - more vehicle traffic and more accidents.
• LAT releases update on transfer of auto insurance disputes from FSCO. LAT still planning on accepting disputes beginning April 1st.
• Consumers big winners in new law regulating towing operators.
• Ontario’s auto insurance overhaul needs to put consumers first according to a former New Jersey regulator.

Insurance News - Friday, November 20, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, November 20, 2015:

• Uber operations in Toronto spark possibility of strike in taxi industry.
• Ontario highway incident management the "missing piece" of auto insurance fraud reform.
• A fascinating article on how Uber manages the marketplace and why taxis are doomed.
• Evolution of transportation may change the auto insurance industry.
• The Florida Insurance Commissioner thinks it may be time to eliminate no-fault.
• Toronto Star reports there is a lot of confusion regarding the snow tire discount that becomes mandatory beginning January 1.

Insurance News - Tuesday, November 17, 2015:

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, November 17, 2015:

• Ontario Conservatives seek to regulate Uber, AirBnB and the sharing economy province-wide.
• Insurer cancelling policies of UberX drivers: “considered commercial use and is unacceptable for personal vehicles”.
• Uber says it needs self-driving cars to avoid ending up like the taxi industry.
• A decline in accident frequency due to safer vehicles and the adoption of autonomous vehicles could shrink the U.S. personal auto insurance sector by 60 percent within 25 years,
• Ready or not, Tesla Autopilot means self-driving cars are already on Canadian roads.
• Public consultation on Ontario tow truck regulations coming to a close.

Insurance News - Thursday, November 12, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, November 12, 2015:

• Ontarians pay more than double in car insurance than in some provinces.
• Trial lawyers have updated their report on profitability in the Ontario auto insurance market.
• Self-driving cars will be tested on Canadian roads in 2016.
• Car companies intend to accept full liability for self-driving car accidents.
• Tesla just beat Google to make the self-driving car.
• Could Google be auto-piloting itself into the insurance business?

FSCO Mandate Review Undecided on Auto Rate Regulation

The preliminary report by Panel reviewing the mandate of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) has been made public by the Ministry of Finance.  Panel members are George Cooke, Lawrence Ritchie and James Daw.

The report is virtually silent on how auto insurance rates should be regulated in the province.

The report recommends the creation of a regulatory body - the Financial Services Regulatory Authority (FSRA).  The FSRA would be self-funded and arm's-length from the government.  There would be three distinct functions - pension regulation, prudential regulation and market conduct regulation.  Under market conduct regulation, there would also be product regulation which might include auto insurance responsibility.

The FSRA would have a board of directors and reporting to the board would be a CEO.  Each regulatory function would be headed by a Superintendent.   The FSRA would have rule making authority.

FSRA would be given authority over any self-regulatory body operating within the financial services sector in Ontario not otherwise overseen by another statutory body. All relevant participants in the Ontario financial sector, such as payday lenders and loan brokers, consumer credit reporting agencies, debt and credit counsellors, and guarantee and warranty insurers would also fall under the FSRA. Regulatory oversight of the Cooperatives sector would be transferred to an agency or entity other than the FSRA. The administration and funding of the Motor Vehicle Accident Claims Fund should be transferred to the industry operated Facility Association.

The Financial Services Tribunal would operate separately from FSRA, with its own budget, subject to normal government process. 

The Panel made no recommendation with respect to the prior approval of auto insurance rates. It appears a preference would be to move away from the rate setting approach currently used in Ontario.  The Panel has reservations about continuing this approach within FSRA as it might unnecessarily dominate the agenda of FSRA to the detriment of other sectors.

At least three options were presented to the Panel during the consultations: continue rate approval within FSRA as practiced today; remove this function from FSRA and transfer it to a formal rate-setting board, or; give FSRA authority/responsibility for rate regulation, the approach to which to be determined through its rule-making authority.

Feedback on the preliminary report is being solicited by the government.  The deadline is December 14, 2015.  A final report will submitted to the government in the winter

Ontario Rate Approvals Fall in the Third Quarter

FSCO approved 45 private passenger automobile insurance rate filings during the third quarter of 2015.  A total of 40 insurers submitted the filings.  These 40 insurers represent 77.45 percent of the market based on premium volume.  Approved rates decreased on average by 0.50 percent when applied across the total market.  For the first three quarters of 2015, approved rates have decreased by 0.85 percent.

Rate approval decreases since 2013 now total 6.95 percent.  The government rate reduction strategy calls for a 15 percent reduction by August of this year.

Finance Minister Charles Sousa reminded drivers this week that auto insurance discounts will be introduced on January 1, 2016 for consumers who drive with winter snow tires.  The discount amount is still unknown.  Additional reforms are being implemented on June 1, 2016 which is also expected to further reduce premiums.

Insurance News - Wednesday, October 14, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, October 14, 2015:

• Finance Minister Charles Sousa appoints David Marshall as auto insurance, pension advisor.  Are more reforms coming?
• Can a self-driving car maneuver through a moral maze?
• State Farm has plans to use biometrics to price auto insurance.
• Volvo says it will take the full liability if one of its self-driving cars crashes.
• Hands-free technology not keeping drivers hands-free.

Insurance News - Wednesday, September 23, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, September 23, 2015:

• B.C. auto insurance rates are going up due to higher bodily injury claims and fraud.
• Allstate insurance files patent for “Traffic-based Driving Analysis”tool to spy on car owners/drivers.
• Should police have the capability to take control of driverless cars?
• Intact working with Uber on new products for ridesharing but will the regulator approve them?
• Competition from Uber motivates Beck Taxi to start a petition to lower taxi fares in Toronto.
• Toronto’s most expensive car insurance is found in areas of Downsview in North York.

FSCO Prepared to Introduce New Minor Injury Protocols

Why is FSCO releasing new treatment protocols?

In the Superintendent’s report on the Five Year Review released in 2009, a recommendation was made to develop a treatment protocol for minor injuries that reflects current scientific and medical literature.  This recommendation was accepted by the government and confirmed in the 2012 Ontario Budget, which acknowledged that newer scientific and evidence-based approaches can be applied to the treatment of minor injuries resulting from automobile accidents.

How were the new treatment protocols developed?

In 2012, Dr. Pierre Côté, Associate Professor, Faculty of Health Sciences, University of Ontario Institute of Technology, was awarded a consulting contract to develop the Minor Injury Treatment Protocol (MITP) after an open competitive Request For Proposal process.

The Ontario Protocolfor Traffic Injury Management Collaboration includes a multidisciplinary team of expert clinicians (from medical, dental, physiotherapy, chiropractic, psychological, occupational therapy and nursing disciplines), academics and scientists (epidemiologists, clinical epidemiologists and health economists), a patient liaison, a consumer advocate, a retired judge and automobile insurance industry experts.  I played a small role on the project team.

Over the 2-year course of the project, the project team drew upon three sources of information concerning traffic injury rehabilitation.

1.    The team critically reviewed the contents and evidentiary basis of published clinical practice guidelines for the management of traffic injuries.

2.    They carried out an exhaustive search followed by a rigorous methodological evaluation of the current scientific literature concerning the management of traffic injuries published in peer-reviewed journals in the English language. They screened 234,995 abstracts and conducted in depth reviews of 597 scientific papers. This effort was summarized in 43 new systematic reviews of the literature.

3.    They also conducted a new study in which they gathered and carefully considered the narratives of Ontarians who have sustained injuries in traffic collisions and received health care.

The Final Report of the Minor Injury Treatment Protocol Project, titled "Enabling Recovery from Common Traffic Injuries: A Focus on the InjuredPerson" (Final Report) was delivered to FSCO at the end of December 2014

What does the Final Report recommend?

The Final Report recommends a new classification of traffic injuries. The natural history of the initial injury is the basis for classification. A Type I injury is likely to recover within days to a few months of the collision; but during the period of recovery the patient may benefit from education, advice, reassurance and time-limited evidence-based clinical care. Type I injuries are the focus of this report. A Type II injury is not likely to undergo spontaneous recovery, and the injured person may require medical, surgical and/or psychiatric/psychological care. Type III injuries are a subset of Type II injuries, that involve permanent catastrophic impairment or disability. The care for Type II and Type III injuries is not covered in this report.

Persons with Type I injuries should be educated and reassured from the outset that their own inherent healing capacities are likely to lead to a substantial recovery. They should also be informed that only a discrete set of treatments show evidence of any benefit; and that the same evidence shows that benefit is largely on the basis of pain alleviation. Healthcare professionals need to listen to the patient’s concerns and emphasize measures to assist them to cope, recognize and avoid complications.

The MITP includes clinical prediction rules to screen for patients who may be at higher risk for developing chronic pain and disability. In addition, it focuses on treatment outcomes, and provides health care providers with numerous milestones to measure progress.

Interventions for Type I injuries should only be provided in accordance with published evidence for effectiveness, including parameters of dosage, duration, and frequency; and within the most appropriate phase. The emphasis during the early phase (0-3 months) should be on education, advice, reassurance, activity and encouragement. Health care professionals should be reassured and encouraged to consider watchful waiting and clinical monitoring as evidence-based therapeutic options during the acute phase. For injured persons requiring therapy, time-limited and evidence-based intervention(s) should be implemented on a shared decision-making basis, an approach that equally applies to patients in the persistent phase (4-6 months).

Sixteen care pathways have been developed to cover the clinical management of:

·         Neck pain and associated disorders

·         Soft tissue disorders of the upper extremities

·         Temporomandibular disorders

·         Mild traumatic brain injuries

·         Low back pain

What’s next?

FSCO had been conducting a consultation process with stakeholders.  Before any final guidelines can be implemented, the government will need to make changes to the Statutory Accident Benefits Schedule. 

The complexity of the proposed changes will require a substantial educational initiative.  Clinicians and insurance company claims staff will need to be educated and trained on the recommended care pathways.  In some cases there may be resistance.  In addition, it is advisable that a public education campaign be undertaken to educate the general public on the proper management of soft tissue injuries.  It is not clear who would fund such a significant education campaign.  

New Catastrophic Impairment Definition To Be Introduced June 2016

The Ontario government has finally amended the SABS definition of catastrophic impairment.

The government's 2010 auto insurance reforms included recommendations most seriously injured accident victims. The government directed FSCO to consult with the medical community to amend the definition of catastrophic impairment as set out in the Statutory Accident Benefits Schedule. 

In 2010 FSCO announced the appointment of Dr. Pierre Côté as Chair of the Catastrophic Impairment Expert Panel.  The Panel submitted it's recommendations to the FSCO Superintendent in the spring of 2011.  In December 2011, the Superintendent submitted his report to the government. 

The new definition is effective for accidents on and after June 1, 2016.  The revised definition also provides for an automatic designation of catastrophic impairment for children with traumatic brain injuries in specified circumstances. 

Below is a chart that compares the current SABS definition, the Superintendent's recommended definition and the new SABS definition that will be introduced next year.

Current SABS	Superintendent’s 2011 Report	2016 SABS
Paraplegia or quadriplegia;	paraplegia or tetraplegia that meets the following criteria i  and either ii or iii: ii. The neurological recovery is such that the permanent ASIA Grade can be determined with reasonable medical certainty according to the ASIA  and iii. The permanent ASIA Grade is A, B, or C or, iv. The permanent ASIA Grade is or will be D provided that the insured has a permanent inability to walk independently as defined by scores 0–5 on the Spinal Cord Independence Measure item 12 and/or requires urological surgical diversion, an implanted device, or intermittent or constant catheterization in order to manage the residual neuro-urological impairment.	Paraplegia or tetraplegia that meets the following criteria: i. The insured person’s neurological recovery is such that the person’s permanent grade on the ASIA Impairment Scale can be determined. ii. The insured person’s permanent grade on the ASIA Impairment Scale is or will be, A. A, B or C, or B. D, and 1. the insured person’s score on the Spinal Cord Independence Measure, Version III, item 12 and applied over a distance of up to 10 metres on an even indoor surface is 0 to 5, 2. the insured person requires urological surgical diversion, an implanted device, or intermittent or constant catheterization in order to manage a residual neuro-urological impairment, or 3. the insured person has impaired voluntary control over anorectal function that requires a bowel routine, a surgical diversion or an implanted device.
The amputation of an arm or leg or another impairment causing the total and permanent loss of use of an arm or a leg;	Severe impairment of ambulatory mobility, as determined in accordance with the following criteria: i. Trans-tibial or higher amputation of one limb, or ii. Severe and permanent alteration of prior structure and function involving one or both lower limbs as a result of which it can be reasonably determined that the Insured Person has or will have a permanent inability to walk independently and instead requires at least bilateral ambulatory assistive devices [mobility impairment equivalent to that defined by scores 0–5 on the Spinal Cord Independence Measure item 12, ability to walk <10 m).	Severe impairment of ambulatory mobility or use of an arm, or amputation that meets the following criteria: i. Trans-tibial or higher amputation of a leg. ii. Amputation of an arm or another impairment causing the total and permanent loss of use of an arm. iii. Severe and permanent alteration of prior structure and function involving one or both legs as a result of which the insured person’s score on the Spinal Cord Independence Measure, Version III, item 12, and applied over a distance of up to 10 metres on an even indoor surface is 0 to 5.
Total loss of vision in both eyes	Legal blindness in both eyes due to structural damage to the visual system. Non-organic visual loss (hysterical blindness) is excluded from this definition.	Loss of vision of both eyes that meets the following criteria: i. Even with the use of corrective lenses or medication, A. visual acuity in both eyes is 20/200 (6/60) or less as measured by the Snellen Chart or an equivalent chart, or B. the greatest diameter of the field of vision in both eyes is 20 degrees or less. ii. The loss of vision is not attributable to non-organic causes.
Brain impairment that results in, (i) a score of 9 or less on the Glasgow Coma Scale, according to a test administered within a reasonable period of time after the accident by a person trained for that purpose, or (ii) a score of 2 (vegetative) or 3 (severe disability) on the Glasgow Outcome Scale, according to a test administered more than six months after the accident by a person trained for that purpose;	Traumatic Brain Injury in Adults (18 years of age or older): ii. Catastrophic impairment, based upon an evaluation that has been in accordance with published guidelines for a structured GOS-E assessment to be: a) Vegetative (VS) after 1 months or b) Severe Disability Upper (SD+) or Severe Disability Lower (SD -) after 6 months, or Moderate Disability Lower (MD-) after one year due to documented brain impairment, provided that the determination has been preceded by a period of in-patient neurological rehabilitation in a recognized rehabilitation center.	If the insured person was 18 years of age or older at the time of the accident, a traumatic brain injury that meets the following criteria: i. The injury shows positive findings on a computerized axial tomography scan, a magnetic resonance imaging or any other medically recognized brain diagnostic technology indicating intracranial pathology that is a result of the accident, including, but not limited to, intracranial contusions or haemorrhages, diffuse axonal injury, cerebral edema, midline shift or pneumocephaly. ii. When assessed in accordance with the Glasgow Outcome Scale and the Extended Glasgow Outcome Scale, the injury results in a rating of, A. Vegetative State (VS or VS*), one month or more after the accident, B. Upper Severe Disability (Upper SD or Upper SD*) or Lower Severe Disability (Lower SD or Lower SD*), six months or more after the accident, or C. Lower Moderate Disability (Lower MD or Lower MD*), one year or more after the accident.
An impairment or combination of impairments that, in accordance with the American Medical Association's Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more impairment of the whole person;	A physical impairment or combination of physical impairments that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition 1993, (GEPI-4), results in a physical impairment rating of 55 per cent whole person impairment (WPI). i. Unless covered by specific rating guidelines within relevant Sections of Chapters 3-13 of GEPI-4, all impairments relatable to non-psychiatric symptoms and syndromes (e.g. functional somatic syndromes, chronic pain syndromes, chronic fatigue syndromes, fibromyalgia Syndrome, etc.) that arise from the accident are to be understood to have been incorporated into the weighting of the GEPI-4 physical impairment ratings set out in Chapters 3 – 13. ii. With the exception of traumatic brain injury impairments, mental and/or behavioural impairments are excluded from the rating of physical impairments. iii. Definition 2(e), including subsections I and II, cannot be used for a determination of catastrophic impairment until two years after the accident, unless at least three months after the accident, there is a traumatic physical impairment rating of at least 55% WPI and there is no reasonable expectation of improvement to less than 55% WPI.	A physical impairment or combination of physical impairments that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 per cent or more physical impairment of the whole person.
An impairment that, in accordance with the American Medical Association's Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorde	The post-traumatic psychiatric impairment(s) must arise as a direct result of one or more of the following disorders, when diagnosed in accordance with DSM IV TR criteria: (a) Major Depressive Disorder, (b) Post Traumatic Stress Disorder, (c) a Psychotic Disorder, or (d) such other disorder(s) as may be published within a Government Guideline. ii. Impairments due to pain are excluded other than with respect to the extent to which they prolong or contribute to the duration or severity of the psychiatric disorders which may be considered under Criterion (i). iii. Any impairment or impairments arising from traumatic brain injury must be evaluated using Section 2(d) or 2(e) rather than this Section. iv. Severe impairment(s) are consistent with a Global Assessment of Function (GAF) score of 40 or less, after exclusion of all physical and environmental limitations. v. For the purposes of determining whether the impairment is sufficiently severe as to be consistent to Criterion (iv) - a GAF score of 40 or less - at minimum there must be demonstrable and persuasive evidence that the impairment(s) very seriously compromise independence and psychosocial functioning, such that the Insured Person clearly requires substantial mental health care and support services. In determining the demonstrability and persuasiveness of the evidence, the following generally recognized indicia are relevant: a) Institutionalization; Repeated hospitalizations, where the goal and duration are directly related to the provision of treatment of severe psychiatric impairment; c) Appropriate interventions and/or psychopharmacological medications such as: ECT, mood stabilizer medication, neuroleptic medications and/or such other medications that are primarily indicated for the treatment of severe psychiatric disorders; d) Determination of loss of competence to manage finances and property, or Treatment Decisions, or for the care of dependents; e) Monitoring through scheduled in-person psychiatric follow-up reviews at a frequency equivalent to at least once per month. f) Regular and frequent supervision and direction by community-based mental health services, using community funded mental health professionals to ensure proper hygiene, nutrition, compliance with prescribed medication and/or other forms of psychiatric therapeutic interventions, and safety for self or others.	An impairment that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993 results in a class 4 impairment (marked impairment) in three or more areas of function that precludes useful functioning or a class 5 impairment (extreme impairment) in one or more areas of function that precludes useful functioning, due to mental or behavioural disorder. A mental or behavioural impairment, excluding traumatic brain injury, determined in accordance with the rating methodology in Chapter 14, Section 14.6 of the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 6th edition, 2008, that, when the impairment score is combined with a physical impairment described in paragraph 6 in accordance with the combining requirements set out in the Combined Values Table of the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in 55 percent or more impairment of the whole person.
if an insured person is under the age of 16 years at the time of the accident and none of the Glasgow Coma Scale, the Glasgow Outcome Scale or the American Medical Association's Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, referred to in clause (2) (d), (e) or (f) can be applied by reason of the age of the insured person.	Paediatric Traumatic Brain Injury (prior to age 18) i. A child who sustains a traumatic brain injury is automatically deemed to have sustained a catastrophic impairment provided that either one of the following criteria (a or b) is met on the basis of traumatic brain injury sustained in the accident in question: a) In-patient admission to a Level I trauma centre with positive findings on CT/MRI scan indicating intracranial pathology that is the result of the accident, including but not limited to intracranial contusions or haemorrhages, diffuse axonal injury, cerebral edema, midline shift, or pneumocephaly; or b) In-patient admission to a publically funded rehabilitation; Paediatric catastrophic impairment on the basis of traumatic brain injury is any one of the following criteria: ii. At any time after the first 1 months, the child’s level of neurological function does not exceed the KOSCHI Category of Vegetative. iii. At any time after the first 6 months, the child’s level of function does not exceed the KOSCHI Category of Severe. (2) May be fully conscious and able to communicate but not yet able to carry out any self care activities such as feeding. (3) Severe Impairment implies a continuing high level of dependency, but the child can assist in daily activities; for example, can feed self or walk with assistance or help to place items of clothing. iv. At any time after the first 9 months, the child’s level of function remains seriously altered such that the child is for the most part not age appropriately independent and requires supervision/actual help for physical, cognitive and/or behavioural impairments for the majority of his/her waking day.	If the insured person was under 18 years of age at the time of the accident, a traumatic brain injury that meets one of the following criteria: i. The insured person is accepted for admission, on an in-patient basis, to a public hospital named in a Guideline with positive findings on a computerized axial tomography scan, a magnetic resonance imaging or any other medically recognized brain diagnostic technology indicating intracranial pathology that is a result of the accident, including, but not limited to, intracranial contusions or haemorrhages, diffuse axonal injury, cerebral edema, midline shift or pneumocephaly. ii. The insured person is accepted for admission, on an in-patient basis, to a program of neurological rehabilitation in a paediatric rehabilitation facility that is a member of the Ontario Association of Children’s Rehabilitation Services. iii. One month or more after the accident, the insured person’s level of neurological function does not exceed category 2 (Vegetative) on the King’s Outcome Scale for Childhood Head Injury. iv. Six months or more after the accident, the insured person’s level of neurological function does not exceed category 3 (Severe disability) on the King’s Outcome Scale for Childhood Head Injury. v. Nine months or more after the accident, the insured person’s level of function remains seriously impaired such that the insured person is not age-appropriately independent and requires in-person supervision or assistance for physical, cognitive or behavioural impairments for the majority of the insured person’s waking day.

Insurance News - Monday, August 31, 2015:

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, August 31, 2015:

• New JOLT monitoring phone app offers protection against insurance fraud.
• The coming age of self-driving cars: What will auto insurers do when there are no drivers left to insure?
• Uber and the University of Arizona partner to develop mapping technology for self-driving cars.
• A new survey from Kanetix.ca shows Canadians' bad driving habits haven't changed much in three years. We're not so polite.
• An accident runner, a chiropractor, and the push to curb no-fault insurance in Michigan.
• UberX drivers may find themselves without insurance in the event of an accident.

Insurance News - Monday, August 24, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, August 24, 2015:

• The puzzle of reforming Michigan no-fault auto insurance.
• Market dynamics: Uber and the future of automated cars.
• With the help of new technology services such as Uber, Lyft and Sidecar (ride sharing services) and FlightCar, GetAround and RelayRides (car sharing), this industry is among the fastest-growing in America and around the world.
• Factors unrelated to driving can affect car insurance.
• Mapping the link between obesity and car driving.
• Waterloo moves forward to regulate Uber and other ride sharing services.

Insurance News - Thursday, August 20, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, August 20, 2015:

• Toronto UberX driver involved in serious accident has claim denied by his insurer and now threatens to sue Uber.
• Why self-driving cars will likely raise your taxes.
• Why are auto insurance rates so high in Michigan?
• How driverless vehicles are used (eg solo, carpool) will weigh heavily on their utility and environmental footprint.
• U.S. National Highway Traffic Safety Administration endorses self-driving cars.
• Canadian cities being forced to question value of taxi permit system.

Implementing the 2015 Ontario Budget

The Ontario government continues to implement auto insurance announced in the 2015 Ontario Budget.  More regulatory changes are expected in the fall.

Ontario Regulation 664

 Regulation 664 has been amended to require that all insurers offer a discount to policyholders for the use of winter tires. The winter tire discount must be made available for contracts issued or renewed on or after January 1, 2016. Insurers are encouraged to implement the discount before January 1, 2016, where feasible.

 Insurance companies that do not currently offer a winter tire discount must file an application for approval with FSCO no later than August 28, 2015.

Ontario Regulation 461/96 

Regulation 461/96 has been amended to ensure that the deductible amounts for damages for non-pecuniary loss (pain and suffering) reflect the effects of inflation since 2003. The regulation amendments include the following: 

• The $30,000 deductible amount prescribed in the case of damages for non-pecuniary loss is adjusted to $36,540 from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this amount will be revised by adjusting the amount by the indexation percentage published under Insurance Act subsection 268.1 (1) for that year. 
• The $15,000 deductible amount prescribed in the case of damages for non-pecuniary loss under clause 61 (2) (e) of the Family Law Act, is adjusted to $18,270 from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this amount will be revised by adjusting the amount by the indexation percentage published under Insurance Act subsection 268.1 (1) for that year. 

Regulation 664 can be found here.

Regulation 461/96 can be found here.

Insurance News - Monday, July 27, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, July 27, 2015:

• Google self-driving car accidents show why humans don’t belong behind the wheel.
• Why the difference between self-driving and autonomous vehicles really matters.
• New towing rules in the Town of Richmond Hill are working.
• It's almost August and the Ontario's rate reduction promise will not be met.
• City revenues may fall drastically when driverless cars provide fewer fines.
• How Uber is ending the dirty dealings behind Toronto's cab business.

Second Quarter Rate Filings Up 0.6 Percent

FSCO approved 30 private passenger automobile insurance rate filings during the second quarter of 2015. A total of 26 insurers submitted the filings. These 26 insurers represent 52.75 percent of the market based on premium volume. Approved rates increased on average by 0.60 percent when applied across the total market.

Rate changes since 2013 now total 6.45 percent. The government rate reduction strategy calls for a 15 percent reduction by August of this year.

Ongoing tinkering with the product is not working. It is time for the government to get away from tinkering with the system and eliminate the existing design flaws. A public debate is badly needed. See my plan for moving forward.

Insurance News - Tuesday, June 30, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, June 30, 2015:

• New KPMG report warns insurers unprepared for self-driving cars.
• Smart cars and accident benefit cuts could decimate the personal injury bar.
• The long history of the fight against Uber - the Luddites have returned.
• California reveals details of self-driving car accidents.
• Bill Gates thinks Uber has the best shot at self-driving cars.

OMPP Introduced 25 Years Ago Today

On June 22, 1990, the Ontario government under David Peterson introduced the Ontario Motorist Protection Plan (OMPP).  The OMPP disappeared long ago but no-fault auto insurance has prevailed in Ontario.  For a look back on how the system has evolved please see my earlier article.

 

Insurance News - Thursday, June 11, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, June 11, 2015:

• Google seems to be laying the groundwork to underwrite its own policies, displacing traditional insurance carriers.
• Google has hit a significant milestone. Its self-driving cars have now covered over 1 million fully autonomous miles.
• Google has started publicly disclosing details of accidents involving its self-driving cars. The company released the first of what it says will be monthly reports summarizing accident data and highlights from testing.
• Getting a full discount with usage-based insurance can be tricky.
• A recent survey shows that more men than women want to own an autonomous car, and more millennials than older generations.

Insurance News - Sunday, June 7, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, June 7, 2015:

• California has a new insurance product to help close the gap in coverage for drivers driving for ride sharing companies.
• As Michigan struggles to control costs, a State Senator proposes making auto insurance a second payer to health insurance.
• $1,000 tickets for distracted driving, $500 for biking without a light and other laws to hit Ontario streets.  Twelve things you need to know about Bill 31.
• Allstate says its Ride for Hire policy will cost $15 to $20 a year on average and will provide coverage for drivers using apps like Uber who get into accidents while they are on the way to pick up new fares. It said it can also help them deal with gaps in coverage between their own auto insurance and policies offered by the ride-sharing companies.
• Hundreds rally at Queens Park against cuts to auto insurance benefits on the same day Bill 91 passes.

Ontario’s 25-Year No-Fault Journey

On September 15, 1989, Murray Elston, Minister of Financial Institutions, announced the unveiling of a new plan to address rising auto insurance costs in Ontario. The plan would provide a “social safety net” where everyone injured in an auto accident would receive compensation without the need to sue. This trade-off between reduced tort access and enhanced accident benefits was meant to reduce costs in the system and stabilize premiums.

Move forward 25 years and the introduction of the Ontario Motorist Protection Plan (OMPP), the first no-fault auto insurance plan in the province, celebrates its silver anniversary on June 22, 2015. 

The Ontario system is nothing like any other private system or no-fault system. It has a broad range of accident benefits, access to tort, complex entitlement rules and an overburdened dispute resolution process. It also has the highest rates in the country. At approximately 25% of Canadian property and casualty industry premiums, the health of the Ontario auto insurance product is important to the industry. Many ideas have been tried over the years, but none have addressed cost pressures in the system for anything more than a short period of time.

WHY WAS NO-FAULT INTRODUCED?

Following the 1985 Court of Appeal for Ontario decision, McErlean v Sarel et al., the insurance industry grew concerned about liability claims which, in turn, precipitated a liability crisis. Liability insurance costs shot through the roof and capacity was scarce. Little changed when the case was reversed on appeal in 1987, albeit on liability. Ontario had a serious liability problem that went beyond drivers. The crisis was affecting many institutions, including small municipalities and charities. In response, the Ontario Task Force on Insurance was appointed to study problems of availability, affordability and adequacy of general liability insurance in Ontario.

Although the focus of the task force report, released in May 1986, was not auto insurance, it did include some recommendations concerning auto insurance and tort reform.

A more in-depth analysis of the automobile insurance issues raised in the report were tackled by Mr. Justice Coulter Osborne, appointed in November 1986 to report on the tort system of compensation for injury by automobile accident, the consequences of the implementation of a no-fault automobile accident insurance scheme, and the merits of public versus private automobile insurance delivery systems.

Justice Osborne’s Report of Inquiry into Motor Vehicle Accident Compensation in Ontario, issued in April 1988, identified rapidly increasing loss costs for third-party liability bodily injury claims in the early 1980s without offsetting premium increases as the basis for the auto insurance “crisis.” The report recommended the following:

• retaining the existing system of combined no-fault benefits and unlimited tort recovery, but expanding the type and level of no-fault benefits; 
• forgoing public delivery of automobile insurance; and 
• forgoing a no-fault insurance system. 

Faced with a continuing rate inadequacy problem, the Ontario government responded by introducing a no-fault product, believing it would be less costly. In September 1989, following extensive research and consultation, the government announced its intention to introduce the OMPP. Threshold/no-fault insurance came into effect June 22, 1990. Colleen Parrish, former director of policy for Ontario’s Ministry of Financial Services, says “it was hoped that the OMPP would be more consumer-friendly and many claims under the threshold could be settled with the involvement of just the claimant and insurer. Legislation addressed some of the volatility in the marketplace and went beyond the introduction of partial no-fault.”

 WAS NO-FAULT A GOOD IDEA?

Despite current concerns, the ability to access accident benefits following an accident was an important feature and still is. Kathy Bardswick, president and chief executive officer of The Co-operators Group Limited, maintains that “the industry supported no-fault because they believed it would allow more money to flow to accident victims quicker, and more of each claim dollar spent on injury would actually go to rehabilitation and support the injured party rather than in support of the administration of the tort system. Too often in a pure tort system, it was taking far too long for many accident victims to see financial support for their recovery. In addition, a no-fault system would provide insurers with the opportunity to deal directly with their own clients through the claims process.”

So what went wrong? Bill 164.

The NDP government abandoned its initial intention to introduce a government-run auto insurance scheme in favour of another set of reforms. On January 1, 1994, Bill 164 replaced the OMPP with a complex no-fault schedule and eliminated the ability to sue for economic losses. Designed for a public insurer, the requirements could not realistically be delivered by the private sector.

That system lasted less than three years with the passage of Bill 59, launching Ontario’s third no-fault system within a decade. Although Bill 59 restored some of the balance that existed under the OMPP, it retained the broad range of accident benefits, complex entitlement rules, and the overburdened and protracted dispute resolution process introduced under Bill 164.

Further reforms rolled out from 2003 through 2010, including those relating to health care provider fees and assessment, pre-approved treatment guidelines and an increased deductible for court awards for pain and suffering, as well as introduction of additional “checks and balances” upon the elimination of the designated assessment centre (DAC) system.

In 2010, standard accident benefits were scaled back, optional benefits were expanded and a minor injury definition and treatment cap were introduced. Over the past three years, additional reforms have been introduced to address fraud, but even these measures have increased the complexity of the system.

Today, the system is overly complex and confusing. It is an entitlement system with far too much moral hazard. The problems first appeared under the OMPP, became worse under Bill 164 and have never been properly addressed.

Philip Howell, former Superintendent of Financial Services, accurately describes today’s system as “part insurance and part social program.”

Many people contend it is as adversarial as the tort system. Consequently, lawyers are heavily involved in the accident benefit system, something that was not contemplated when no-fault was introduced 25 years ago, and has led to more disputed claims and higher transactional costs.

There is little accountability within the system. As soon as there are adverse conditions, the insurance industry begins to pressure the government into make changes. Rather than force the industry to take more ownership, the government is inevitably co-opted into yet another round of reforms. This ongoing tweaking has only made things worse. Nick Gurevich, founder and past chair of the Ontario Rehab Alliance, suggests that “insurers are hooked on frequent government intervention. This removes insurers’ motivation to search and implement long-term internal system improvements.” Since 2010, there have been 31 new or amending auto insurance regulations.

WHY HAVE RATES REMAINED HIGH? 

High auto insurance premiums in Ontario are driven by a number of factors. Some factors are unique to Ontario, such as urban density, weather and demographics, but many people believe the product largely contributes to stubbornly high rates. Ontario’s Insurance Act stipulates that auto insurance policies are second-payers to other public and private insurance plans, including the public health care system. However, the government has allowed the second-payer status to erode.

Eric Grossman, a partner at Zarek Taylor Grossman Hanrahan LLP, says “the public health care system has been downloading costs to auto insurance for years.” Not only public insurance, but private insurance plans have been allowed to write in auto accident exclusions in their policies.

Rob Sampson, a former Ontario minister with responsibility for auto insurance, agrees. “It is easier for insurers to pass on costs to drivers or persuade the government to make further changes than to address problems on their own. The product has become over-regulated and there is no confidence in the marketplace to manage costs,” Sampson contends.

Bardswick says she believes “there has been too much tinkering and not enough fundamental and significant change to improve the overall cost benefit equation long term. With each tinkering, the system has become more complex, more costly to administer, with any immediate cost savings quickly disappearing as players in the system adjust to the changes implemented. The regulatory burden has also driven out much of the ability or desire to innovate.”

The high cost of handling claims has become a serious problem. Greg Somerville, president and CEO of Aviva Canada, indicates that 48% of accident benefit costs are for non- treatment related activities.”

Grossman notes “the irony of the system is that the high cost of fighting claims encourages settlements which are incentive for more disputes.”

 Finally, fraud, something no one is able to either accurately quantify or define, continues to place cost pressure on the system. While everyone agrees a staged accident is fraudulent activity, not everyone is prepared to accept the notion of opportunistic or soft fraud.

HOW DO YOU FIX THE SYSTEM?

Many people would welcome a system that was simpler and would allow most accident victims to navigate the system without a representative. There is a lot of nostalgia for the OMPP because stakeholders remember it as a system that had few rules and procedures and fewer disputes.

However, it would be naïve to think that the OMPP would not have evolved. It would not have necessarily developed into the existing product, but there would have been pressure to reform the system as a result of growth in the rehabilitation sector, adverse arbitration and court decisions, increased involvement of lawyers, pressure for more consumer protection provisions and fraud.

The accident benefits system has been eroded over the past few years, but it must be acknowledged that eliminating these benefits does not eliminate those costs from the system. Some stakeholders would like to see a system with quite modest accident benefits and any additional compensation provided through tort. However, that would bring the industry full circle to the pre-OMPP, which experienced significant cost pressures.

It is the concept of using an insurance system to provide a social safety net that is flawed. The current no-fault system resembles a government program with special compensation and eligibility rules for caregivers, retirees, the unemployed and students. Bryan Davies, former CEO and Superintendent of Financial Services, says he believes that “if the government wants to provide a social safety net, then it should be delivered by government.”

So what is the answer? The Ontario product has always been different than what exists in other jurisdictions, but looking at elsewhere may not provide an answer. A made-in-Ontario solution should include private insurance companies continuing to provide third-party liability coverage and physical damage coverage, while the government creates a not-for profit Crown corporate to deliver accident benefits.

A single adjudicative body would introduce significant efficiencies, standardize claims practices and eliminate the adversarial nature of the product. Insurers would collect premiums on behalf of the Crown corporation, which would inform insurers how much to charge for accident benefit coverage based on accident benefit and overhead costs. This system would require reduced advocacy and a scaled down dispute resolution process, there would be no settlement of accident benefits, and claims would remain open as long as there were insurable losses to pay.

It is time for the government to get away from tinkering with the system and eliminate the existing design flaws. A public debate is badly needed. The past 25 years has not been a total failure, but it is not working.

*Published in the June 2015 issue of Canadian Underwriter