Ontario Government Moves Forward On Its Rate Reduction Strategy

This week the amendments to the Automobile Insurance Rate Stabilization Act, 2003 (AIRSA) were proclaimed in force effective August 16, 2013. 

In addition, the government filed an Industry-Wide Rate Reduction Target Regulation which calls for an average rate reduction of 15% by August 15, 2015.  The government is also aiming to make an average 8% rate reduction by August 15, 2014. It will also expect a report in January 2014 from FSCO to show an approved rate reduction of 3% to 5%.

This was followed by FSCO releasing a bulletin that begins the process for insurers in Ontario to refile their auto insurance rates. 

Also announced today was the appointment of  Douglas Cunningham also has been appointed to lead a review of Ontario’s auto insurance dispute resolution system and make recommendations on transforming the current system.  Mr.  Cunningham is a former Associate Chief Justice of the Ontario Superior Court of Justice.

Insurance News - Thursday, August 22, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, August 22, 2013:

• California could be the 5th U.S. state to allow e-delivery of insurance documents. A state Senate bill would allow policy renewals to be sent electronically to policyholders’ computers, tablets and mobile devices.
• Eventually insurers will need to move beyond discounts to attract consumers to user based insurance.  After all not every driver can be given a discount once UBI becomes mainstream.
• Insurers looking for ways to stand out in terms of the kind of billing experiences they are providing policyholders using technology such as portals, websites and mobile apps. More and more consumers prefer online payment systems.
• Georgia is most expensive state to own a car and Oregon the least expensive. Although insurance costs are part of the difference, the gap is largely unrelated to car ownership but rather state taxes.
• Ontario court rules in favour of the government thereby allowing new regulations governing physiotherapy for seniors to take effect immediately.  The government claimed the existing system delivered by for-profit clinics was being abused.
• Study suggests gender differences in Post Traumatic Stress account for why women are more at risk after a motor vehicle accident.
• Finally, a Minnesota man has lost his driver's licence for driving too slow.

Insurance News - Tuesday, August 20, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, August 20, 2013:

• Fatal collisions by 'distracted drivers' up 17% in Canada and distraction surpasses impaired driving deaths in 3 provinces.
• One in five fraudulent claims are never detected so here are five keys to countering claims fraud.
• According to the Insurance Research Council, in 2009 the proportion of uninsured drivers in the U.S. was 13.8%. - The state with the highest rate was Mississippi at 28.0% and the lowest state was Massachusetts at 4.5%.
• Another article on telematics which is now reaching the mainstream media: New software allows insurers to track driving habits and personalize premiums.
• The pattern is the same in every jurisdiction.  In the U.K. as auto insurers tighten up claims handling, fraudsters are moving away from just exaggerated claims to staging accidents.

Insurance News - Thursday, August 15, 2013

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

• There are 41 U.S. states with distracted driving laws on the books. So is here adequate enforcement and are the laws making a difference?
• A study by JAMA Pediatrics has evaluated teens with ADHD who have also experienced distracted driving and it shows that they are even a greater driving risk. 
• The cost of driving is delaying teens in getting licensed. Since they tend to be high risk drivers does that work out to be a good think or bad thing?
• A Metro Vancouver project is monitoring private cellphones to track traffic jams using anonymous GPS data.
• In St. Petersburg, Florida, 60% of the city’s car thefts happened because the victims had left their keys inside.
• Data monitoring is saving some people money on their auto insurance, yet some people will end up paying more.  But didn't we always know this would happen?

Will Ontario's Experience With Licensing Clinics Be Better Than Hillsborough's?

Florida's Second District Court of Appeals has effectively ended Hillsborough County's attempt to regulate clinics that enabled an epidemic of staged auto accidents.  The appellate court upheld an injunction issued in January that blocked enforcement of the ordinance.

Back in January a Circuit Court judge issued a temporary injunction against the county preventing it from enforcing licensing requirements for clinics that do most of their business treating people injured in auto accidents.

The County Commissioners passed the ordinance in September 2011 in an effort to stop staged accidents which were used to collect money under Florida’s personal injury protection (PIP) insurance law. Florida law requires auto drivers to carry $10,000 in PIP insurance. Law enforcement and the insurance industry said criminal rings defrauding the system were aided by fake clinics that billed insurance companies for bogus treatment.  The Hillsborough ordinance requires that operators of certain clinics obtain a county licence, offer proof that they are associated with a medical doctor, don't employ convicted felons in any positions and submit to random inspections.

About 70 clinics had been approved for licences under the ordinance, which exempted medical providers whose businesses don't rely on crashes or that carry some other forms of accreditation. Enforcement of the ordinance has been on hold since the lower court ruling late last year.

The county noted that there was a 62 percent decrease in the number of staged accidents following the introduction of the ordinance.  Many of the fraudulent clinics just closed which impacted on the number of staged accidents and questionable claims.

About 30 facilities argued that the county ordinance unlawfully sought to pre-empt state law under which they are licensed by treating the clinic owners in Hillsborough County differently than any other clinic owners in the state  They also said it had an arbitrary and subjective process for people challenging the denial of a licence, subjected them to unlawful searches from a broad array of law enforcement and included other requirements that made it all but impossible for otherwise legal clinics to operate.


It is still unknown how the county will respond to the decision. 

As Ontario moves towards the licensing of clinics operating in the auto insurance system, there may be some lessons to learn from the Hillsborough experience. 

Statutory authority to introduce a licensing system for all clinics in Ontario is a much better approach than Hillsborough going out on its own.  FSCO has been given jurisdiction to license the clinics by the Legislature.  However, in developing and enforcing business standards for clinic owners and operators, the regulator needs to be cautious and ensure that it does not act in an arbitrary or subjective manner.  Reputation alone cannot be the basis for denying a licence.

Insurance News - Wednesday, August 14, 2013:

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, August 14, 2013:

• Court challenges by clinics in Hillsborough County, Florida have pretty much killed the county ordinance requiring licensing for clinics treating auto accident victims.  Less likely to happen in Ontario since province has created statutory authority for licensing system.
• Grumblings from New Brunswick where auto insurers anticipated higher accident rates and therefore charged drivers excessive premiums leading to excessive profits.
• Vancouver's transit authority is considering driverless buses guided by computerized maps and laser technology.

Insurance News - Tuesday, August 13, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, August 13, 2013:

• According to a survey by Hanouver Insurance Group, 60% of customers of direct writers eventually return to independent agents.
• Another study has found that insurance customers are more likely than other types of consumers to switch after bad service.
• It appears as if a significant proportion of drivers is not open to the idea of user based insurance according to the company with the largest number of policyholders enrolled in its UBI program.

No Fee Increase For Health Care Providers In 2013

A recent bulletin issued by the Financial Services Commission of Ontario released an updated Professional Services Guideline.  The main purpose of the revised Guideline was to recognize that kinesiologists are now regulated health professionals as defined in the Statutory Accident Benefits Schedule now that they are governed by the College of Kinesiologists of Ontario.

In an effort to avoid increasing costs in the auto insurance system, FSCO has not changed the hourly rates in the Guideline from the 2012 levels. This is in line with the commitment by the government to reduce auto insurance rates by 15% as outlined in the 2013 Spring Budget. The hourly rates of kinesiologists have also not changed.

The revised Guideline is effective August 3, 2013 but technically there is no change.

The FSCO bulletin and revised Guideline can be found here.

Insurance News - Thursday, August 8, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, August 8, 2013:

• Data released by the National Highway Traffic Safety Administration suggests that just as drinking and driving can be deadly, so is drinking and walking, Thirty-five percent of  pedestrian fatalities had blood alcohol content levels of .08 or higher, the legal limit for driving. 
• Ever since the recession hit in 2007, Americans have been driving less and less. And a big chunk of that decline has been due to the fact that kids these days aren't even getting a driver's license. Why?  Too much hassle.
• Another impact of the recession, he average age for vehicles in America has climbed to an all-time high of 11.4 years. 
• The Insurance Bureau of Canada has launched a database of damaged vehicles from the Alberta and GTA floods.

Insurance News - Tuesday, August 6, 2013

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

• A U.S. study has revealed that insurers couldn’t accurately detect fraud potential based on any single behavioral characteristic viewed in isolation. Precise detection comes from bringing together multiple characteristics to create an overall picture of the probability of fraud. 
• Here is an interesting consequence of high auto insurance rates in Michigan. In Detroit where rates are highest, there is low voter participation rates because voter registration is tied to one's drivers' licence. Drivers are choosing insurance fraud over voting.
• Nearly 500,000 motorists in 18 New Jersey towns are receiving notice about a $4.2 million settlement the from a class-action lawsuit over tickets generated by red light cameras.
• Quebec Tribunal agrees with SAAQ which had rejected Montreal developer’s auto insurance claim after would-be assassin shot him in his car.
• U.S. hospitals are billing auto accident victims directly to get around discounted rates from health insurers in order to maximize revenues. The victims must pay the hospital out of their auto insurance settlement.

Insurance News - Friday, August 2, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, August 2, 2013:

• The Federal government is taking another run at removing the HST exemption for independent medical evaluations or assessments. A tax lawyer suggests they may the proposed amending language may fail.
• Driving to the beat of the music may lead to higher auto insurance rates. Here are some infographics which demonstrates how the music drivers listen to in the car has an impact on driving behaviours, from accidents to speeding tickets.
•  If you think driverless cars are just a pipe dream, well four U.S. jurisdictions are setting ground rules for self-driving cars on the roads.
• An interesting articles about the ethics of saving lives with driverless cars.  Things get murky when you factor in that some people might actually be killed by a robot car.

Insurance News - Wednesday, July 31, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, July 31, 2013:

• Ontario auto insurers are setting aside higher reserves because of rising litigation at the same time the government is committed to lowering rates by 15%.
• 90% of customers in Canada are satisfied with the settlement of their auto insurance claim according to a J.D. Power study.
• Toronto police are targeting e-bikes (they don't need to be licensed or insured) in an attempt to enforce HTA and city by-laws.
• A Claims Canada article headline is: MIG: Gone with the wind? Has the Scarlett decision really changed anything?
• Researchers are suggesting that obese drivers are less likely to wear a seatbelt and more likely to be injured in an auto accidents.
• California, New Jersey and Hawaii have auto insurance programs geared to drivers below the poverty line in order to keep them insured.  Would a similar program in Ontario reduce the number of uninsured drivers?
• You know all those stories about the risk of connected cars getting hacked and causing accidents?  Well read this story.
• Good news about drinking and driving campaigns, young Canadians heed the message and are using designated drivers.

Insurance News - Monday, July 29, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, July 29, 2013:

• Which U.S. city has the worst drivers? According to an informal survey it's Miami followed by Atlanta and New York. 
• Self-driving cars will set off an economic and cultural earthquake. 
• Making best use of social media within the insurance sector.
• British auto insurance rates have fallen by 9.8% after insurers get tough on fraud.
• The provincial government's attempt to address abuse by private clinics in the delivery of physiotherapy to seniors hits a roadblock. These same clinics operate in the auto insurance sector.
• Ontario by-elections are being held this week and Liberals are only leading in one riding. All of the contested ridings were held by Liberals prior to the by-elections.

Insurance News - Friday, July 26, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, July 26, 2013:

• Ontario auto insurance rates are to come down by 15% this year but they are going up 5% in Alberta. 
• If you think auto insurance fraud is bad in Toronto well Britain is considered the "whiplash capital of the world" with £1.1 billion in fraud in 2012.
• Then there is the Italian mafia gang making millions from car crash insurance scams.
• A cyclist found guilty of manslaughter for running down a pedestrian; could be the first such conviction in the U.S.
• The age of the connected car will bring new safety, comfort — and the threat of your car getting hacked.
• Did you know that different genres of music affect driving habits? So insurers may want to avoid drivers who listen to heavy metal and sports talk radio.

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.

 

source

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:

• Deloitte report, Insurance Tech Trends 2013: Elements of Postdigital, says a convergence of five technology trends - analytics, mobile computing, social media, cloud computing and cyber liability - ultimately will reshape the way the insurance industry operates.
• Ministry of Health plans to shake up private physiotherapy sector on August 1 by diverting physiotherapy OHIP funding for seniors away from some large players (like Achieva, Centric Health) to LHNs and CCACs.
• U.S. consumer group says blue-collar workers and those without college degrees pay more for auto insurance.
• Paper by CNI Health Services: Malingering of Psychiatric Problems, Brain Damage, Chronic Pain, Controversial Syndromes in a Personal Injury Context. 
• American Civil Liberties Union claims that police are using licence plate readers to track and collect data on American motorists' location.  As a result, enormous databases of innocent motorists’ location information are growing rapidly. 
• Ontario Liberals are falling behind in recent polling and will likely lose at least 2 seats (in Windsor and London) in August 1st by-elections.  So will a Liberal set back impact on a possible fall election?
• On a related note, are the summer by- elections an exercise in voter suppression to give the Liberals a better shot at holding on to these ridings?

Insurance News - Monday, July 22, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, July 22, 2013: 

• One outcome of Superstorm Sandy was a drop in consumer satisfaction following a high number of total-loss auto insurance claims.
• Not only is Detroit bankrupt but it is a city where no one has auto insurance.
• Rhode Island governor signs bill limiting when insurers can declare a car a total loss into law to the strong objections to the insurance industry (see July 11 Insurance News update).
• Britain's Competition Commission will investigate auto insurance industry practices regarding physical damage repairs which has alleged to have increased premiums by £225 million a year.

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. 

Insurance News - Tuesday, July 16, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, July 16, 2013:

• Anatomy of a Florida staged accident ring where fraudster are after just $10,000 in medical benefits, not much different in Ontario.
• A PwC survey suggests that the following are the top international insurance risks: regulations, investment performance, macro-economic trends, business practices and natural catastrophes.
• Globe Commentary: Why insurance brokers routinely lose my business.
• This is one sordid auto insurance fraud case: Crooked doctor always used his injured hand to unhook my bra, mistress tells federal prosecutors.
• The downside of Big Data, U.S. data brokers are selling car locations for $10 online. 
• Jackson, Mississippi has a ‘Pothole Robin Hood’ who steals asphalt from city to fix pothole.  I think we can all share his frustration.
• If you think Toronto's July 8 storm was bad, South Carolina received 9" of rain on Saturday. The flood waters were so strong they washed cars off roads.

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:

• New auto insurance verification in Mississippi to be rolled out in 2014 to reduce number of uninsured which estimated to be at 28%.  Fines expected to collect $150 million.
• A video of a clinical and forensic psychologist explaining how adjusters can identify, avoid and diffuse potentially violent situations in the field.
• In Columbia, South Carolina wants to get tough on drunk drivers and will pay tipsters $100 for reporting someone driving drunk.
• Hard to believe how low some people can stoop but here is a story about children being endangered in a string of staged accidents.
• Baseline Telematics and Saskatchewan Government Insurance are piloting world's first motorcycle usage-based insurance program.

Insurance News - Thursday, July 11, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, July 11, 2013:

• A Nova Scotia driver found guilty of killing teens while impaired by drugs may be the first conviction of its kind in Canada.
• Rate evasion takes place in states with high auto insurance premiums like New York, New Jersey and Florida where drivers buy insurance in another state.  It's also considered insurance fraud.
• Rhode Island insurers are lobbying the governor to veto a bill that would permits auto repair shops to deem a car repairable or a total loss.  They are concerned about the impact on rates.
• Earlier this week Hamilton police pulled over an 11-year-old driver who was out doing errands for his neighbour.  Police have since charged a 68-year-old female with permitting an unlicensed driver to drive a vehicle and having no insurance. 
• Here is the story behind the $200,000 Ferrari that was abandoned in Monday's flood.  It is owned by a lawyer who was in a hurry to get to a hearing in Ottawa.  He actually made it out of town.

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:

• A self-driving Mercedes arrives in Canada this fall but lawmakers would prefer that drivers keep their hands on the wheel.
• Weed-stinking driver nabbed over the weekend doing 225 km per hour in Mississauga. Most weekends there are quite a number of these charges laid.  In one weekend in April there were 45 stunt driving and speeding charges in Ontario. 
• That was quite the storm yesterday and put a strain on homeowners, commuters and city personnel.  The most unusual would have to be Doug Ford spotted directing traffic at the corner of Dixon and Islington.  How is that for constituency work? 

•  Finally there was a $300,000 Ferrari abandoned on Lower Simcoe in a flooded underpass.  You don't see a floating Ferrari every day.

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:

• South Dakota has some of the youngest drivers in North America so they now have a law bars drivers from ages 14 to 16 from using cell phones. 
• How is this for a big tort award?  Jury awards $43 million to a Vermont woman paralyzed in car crash.
• New Brunswick has merged financial regulators.  The new Financial and Consumer Services Commission will be responsible for securities, insurance, pensions, consumer affairs, co-operatives, credit unions, caisses populaires and trust companies.
• California offers a no-frills auto policy to low-income drivers. Those policies just got cheaper as rates fall in that state.  The no-frill policies start at $226.
• FSCO's final 2013 Statement of Priorities is now available online.  A list of auto insurance related priorities can be found here.
• Also last week FSCO launched an auto insurance fraud hotline (1-855-5TIP-NOW ) and a new fraud web portal.
• The Consumerization Of Risk Management: Using technology to allow drivers to reduce their own risk.
• Talk about big sinkholes.  A sinkhole in Ohio was so large it swallowed entire car and the driver needs ladder to climb out. 
• A new way to heal broken bones: 3D-printed casts. I wonder what impact they will have on claims in the long run.
• A Chinese man has to be King of the Scammers. He was involved in 334 staged accidents to scam insurers, that's one every three days for three years.

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

Insurance News - Tuesday, July 2, 2013

We are in the dog days of summer still I bring you the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, July 2, 2013:

• The Florida Supreme Court rules new 'examination under oath' provision does not apply to cases before the new laws took effect as Florida continues to struggle with implementing auto insurance reforms.
• Distracted walking is the new public safety problem as injuries soar for pedestrians on phones.
• Alberta to see huge write off of water-logged vehicles but hopefully those vehicles don't find end up being bought by an unsuspecting consumer.
• Wireless vehicle networks such as the one being piloted in Ann Arbor, Michigan could make driving safer and more efficient but the cost of deployment will be significant.

Insurance News - Thursday, June 27, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, June 27, 2013:

• The Manitoba government will introduce new consumer protection rules for vehicle repair shops effective July 1.
• A U.S. analysts suggests that claims processing in the American P&C industry is inefficient and the industry could reduce claims costs by $36 billion. Claims operations are still extremely labour-intensive, heavily paper-based, and data-rich but information-poor.
• Social media is here to stay so the P&C insurance industry might as well learn to use it.  I've noticed that many insurers are now on Twitter.
• Is it really that easy to hack a car and cause a crash?

Insurance News - Tuesday, June 25, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, June 25, 2013:

• To combat distracted driving, Manitoba has announced it will assess drivers 2 demerit points if caught using hand-held electronics.
• Some legal advice from the UK for insurers on the use of telematics.
• The City of Toronto has announced that it is launching a review of the tow truck industry.  Supposedly they are looking at everything from fees to body shop recommendations to insurance scams. 
• An interesting Toronto Star article entitled: Big Data: the good, the bad and the ugly.
• A strong first quarter of 2013 for U.S. p&c insurers with an ROE approaching 10%. Here is an analysis on the results.
• The U.S. Supreme Court could indirectly reduce rates for same-sex drivers if they rule bans on same-sex marriage are unconstitutional.

Insurance News - Friday, June 21, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, June 21, 2013:

• A spike in personal injury claims in Alberta has sparked applications for a 13.5% hike in auto insurance rates and renewed calls for reforms to plug 'loopholes.'
• A FSCO arbitrator has determined the now obsolete stoppage of weekly benefits form (OCF-17) to be invalid.  This continues a tread of FSCO arbitrators invalidating Superintendent approved forms.
• The AAA Foundation for Traffic Safety has released a study on cognitive distractions in the car indicating voice-to-text e-mail is as significant distraction as cell phone use.
• Affiliated Brokers Exchange Ltd. has teamed up with Insurance Technology Solutions Inc. to offer a new policy administration system that allows for paperless policy issuance, among other capabilities.
• NAIC reports that more than 40% of teen auto deaths occur between 9 p.m. and 6 a.m. and for teens the relative risk of fatal crash increases as the number of passengers increases.
• There is a month left to comment on a CCIR paper dealing with e-commerce in insurance products.
• The Property Casualty Insurers Association of America has produced a map of states (25) that allow electronic proof of insurance using a smartphone or tablet.

Insurance News - Thursday, June 20, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, June 20, 2013:

• Canadian privacy advocates express alarm over the use of telematic devices after FSCO approves Desjardins pay-as-as-drive program. However, the program has been praised by Ontario Privacy Commissioner  Ann Cavoukian for the steps taken to protect privacy.
• This Florida case covers the classic insurance fraud from that state including staged accidents and the purchase of information on legitimate accident victims from bribed hospital staff.
• Isn't it gratifying when those arrogant fraudsters that brag about it on Twitter and Facebook discover insurers now check social media?
• A United Kingdom study suggests up to 60% of whiplash claims are either exaggerated or fraudulent.
• Consumer Federation of America reports that California is only state where auto insurance rates fell over two decades through 2010. The group attributes the decline to a law that gave regulators more control over rates. 
• A spike in personal injury claims has sparked applications for a 13.5% hike in Alberta auto insurance rates and calls for new reforms.

Insurance News - Thursday, June 6, 2013

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

• Illinois to become 25th state to allow electronic proof of insurance as legislation passed by state House and Senate and awaits the signature of the governor.
• Thomson, Rogers position on requests for insureds to sign consent forms when attending insurer exams, a recommendation from regulatory health colleges for providers conducting insurer exams.
• It seems on the power-plant scandal, the Liberal cover-up is worse than the crime. So will the voters remember on election day?
• Yesterday Bill 65 passed 2nd reading vote. The Legislature will have the final Budget vote, and rise for the summer on Tuesday, June 11th.

Take a 2-week hiatus for a vacation.  Will be back on June 20th.

Will Telematics Put An End To Age and Gender Discrimination?

Telematics has been one of the most talked about issues within the automobile insurance sector over the past several years.  Recently Desjardins Insurance launched Ajusto, the first widely-available automobile insurance program in Ontario which offers savings to drivers centered on usage-based insurance (UBI) technology. This is the ground-breaking territory in Canada despite the fact that pay-as-you-drive insurance has been available in the United States and Europe for some time.

Automotive telematics refers to the technology that uses hardware and software applications with remote communication devices, like cell phones, GPS, wireless devices and such, to obtain information about vehicles. Automotive telematics has been in use, mostly in high-end vehicles, for quite some time. But today newer technologies are helping unfold many opportunities for all stakeholders, more importantly in emerging economies.

Telematics enables vehicle owners or customers to constantly be in touch with service providers through incorporated software and hardware in their vehicles. In turn, service providers too, can offer a host of new services based on their customers’ preferences. Also, data sent remotely from a vehicle allows stakeholders like auto makers, dealers, fleet managers, and insurance providers to build better customer-relationship strategies.

There have been tomes written on the benefits of telematics and UBI including lowering premiums for good drivers¸ reducing traffic congestion, allowing parents to monitor teenage drivers and combating auto insurance fraud.  What we haven’t heard much about is that UBI will allow insurers to begin to move away from historical rating criteria such as age and gender, both of which have been contentious over the years.

In 1983 Michael Bates alleged that he was discriminated against because Zurich Insurance charged him higher premiums for his automobile insurance than a young, single, female driver with the same driving record or than drivers over age 25. He alleged that the rate classification system discriminated by grouping drivers by age, sex, and marital status and determining their premiums based on these factors.

Moving forward to 1992 the majority of the Supreme Court of Canada found that Zurich  did not discriminate against Michael Bates contrary to the Ontario Human Rights Code by charging him higher premiums for automobile insurance because of his age, sex, and marital status.

The Supreme Court found that charging higher premiums to young, unmarried, male drivers was discriminatory and contravenes the Ontario Human Rights Code. However section 21 of the Code permits discrimination in automobile insurance because of age, sex, marital status, family status or handicap as and the court determined that statistical evidence showed that young, male drivers are involved in proportionately more, and more serious, accidents than other drivers.

However the insurance industry was not totally absolved by the Supreme Court.  The Court encouraged the industry to begin looking more closely at non-discriminatory alternatives in rate setting in the automobile insurance industry. It ruled that the insurance industry could continue to use discriminatory criteria such as age and marital status as a bona fide means of assessing risk, but that the industry could not do so indefinitely.

To a certain extent insurers have used the Bates v. Zurich decision as a green light to base automobile insurance premiums on age, sex marital status and other socio-economic factors where statistical evidence supports higher rates.  It may be a matter of time before another court challenge occurs.  However, the next time it would be difficult to defend the existing practices now that non-discriminatory alternatives actually exist.

The move away rating based on age, sex and marital status has already begun.  It is prohibited to use gender in considering rates for automobile insurance in five provinces, with Alberta only allowing its use for private policies, not through the government-mandated scheme.  Ontario which has the largest share of the privately delivered automobile insurance market in Canada still uses age, sex and marital status in determining premiums.

In the U.S., California has recently joined 11 other states that prohibit gender rating in the individual health insurance market.  Consumer groups in the U.S. have been battling insurance regulators to prohibit or restrict non-driving factors in setting automobile insurance premiums.  Currently, insurers have been able to maintain the status quo while developing UBI programs that provide an alternative.

The European Union, has recently outlawed gender-based insurance premiums.  The European Court of Justice’s ruling, which follows a ten-year legal battle against the proposals by insurers, will put an end to women getting better deals on car insurance.  The ruling has increased pressure on the industry to adopt better discriminating factors, like those available through telematics.

It’s not just rating based on age, sex and marital status that is under the microscope but other socioeconomic factors like credit scoring as well.  Ontario, Alberta and Newfoundland and Labrador have banned the use of credit scoring in auto insurance as a result of pressure from politicians.  Politician supported by insurance brokers have begun to turn their attention to home insurance market where the use of credit information is also used.

The Office of the Privacy Commissioner of Canada recently released a report stating that it did not object to the use of credit information for purposes of assessing insurance risk.  It was noted that section 8 of Ontario’s Consumer Reporting Act confirms that credit information may be disclosed for the purpose of underwriting insurance. 

However, the privacy commissioner noted that there is no obvious link between credit information and insurance premiums and little transparency in the use of credit information.

So while the use of age, sex and marital status as well as other socio-economic factors in rating drivers has been upheld by the courts and tribunals, their continued use attracts criticism and in some cases legislative action.  Although UBI is still not available to many drivers, insurers who are considering moving towards UBI ensures that predictive criteria continued to be available as governments prohibit or restrict traditional criteria. In Canada, automobile insurers are keeping a close watch on developments at Desjardins.

Insurance News - Tuesday, June 4, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, June 4, 2013:

• The federal government is hitting insurers with retroactive $1 billion GST hit going back to 2007 as a result of a legislative amendment that wasn't made until 2010.
• The Ontario anti-fraud regulations approved in January have now become effective.  However, FSCO has yet to release a benefit statement form.
• Illinois to become the 25th state to allow electronic proof of insurance as legislation passed by state House and Senate and going to the governor for his signature.  See my article Electronic Proof.
• Technology like telematics represents a shift from a “reimbursement” model to a “loss-control” model of risk.
• Ten things Toronto motorist do to make it more hazardous for commuting cyclists.

Anti-Fraud Regulations Became Effective on June 1, 2013

Earlier this year the Ontario Government released the regulatory changes that will be made to help combat auto insurance fraud.  The changes were approved on January 21, 2013 and became effective on June 1, 2013. 

Regulation 14/13 amends the Statutory Accident Benefits Schedule (SABS) - 34/10. 

The amendments to the SABS include:

• a requirement for insurers to provide all reasons when denying medical and rehabilitation claims; 
• providing FSCO with authority to stipulate additional information that insurers must provide in bi-monthly benefit statements to claimants; 
• giving insurers authority to require claimant confirmation of receipt of goods and services that have been billed; and 
• providing FSCO with authority to stipulate by Guideline the maximum payable by insurers for goods as well as services.

A revised Cost of Goods Guideline was issued by FSCO on May, 29, 2013.  The accompanying Bulletin (A-2/13) also releases a number of revised claim forms. Effective January 1, 2013, the maximum fines under Part XIX of the Act have increased from $100,000 to $250,000 for a first conviction for an offence, and from $250,000 to $500,000 for each subsequent conviction. 

The following forms have been revised to reflect these changes:

• OAP 1 – Ontario Automobile Policy, Owner’s Policy
• OAF 1 – Ontario Application for Automobile Insurance
• OCF-1 – Accident Benefits Application Package
• OAF 4 – Ontario Application for Automobile Insurance Garage Form
• OAP 4 – Ontario Garage Automobile Policy
• Garage Certificate of Insurance – (Ontario)
• Certificate of Automobile Insurance  – (Ontario)

Regulation 15/10 amends the Unfair or Deceptive Acts or Practices (UDAP) Regulation - 7/00.

The changes to the UDAP regulation include:

• an offence to request, require or permit a claimant to sign an incomplete claim form and 
• clarifying the exemption for lawyers and paralegals to ensure the regulation applies to lawyers and paralegals when not acting in a legal capacity.

Regulation 16/13 amends the Disputes Between Insurers (DBI) Regulation - 283/95.

The amendment to the DBI regulation allows for the insurer that receives the initial application for benefits to request one examination of the claimant under oath to assist in the determination of priority issues.

This amendment provides insurers with a second opportunity to request a claimant undergo an examination under oath.  The new DBI requirement is to assist an insurer to determine which insurer is liable to pay the claimant accident benefits.  The SABS provisions continues to assist an insurer to determine whether the claimant entitled to accident benefits.

Insurance News - Saturday, June 1, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, June 1, 2013:

• Driverless cars are closer to reality than you think. Here are four ways they are poised to shake up the insurance industry.
• New Jersey study indicates distracted drivers are ignoring state ban on texting and driving insurance costs higher.
• Yet another article on the catastrophic impairment definition.  Talk about flogging a dead horse. Certainly changes to the definition are possible but not likely considering the contentious nature of the proposed changes and lack of impact on rates. 
• Man accused of painting a crosswalk at a busy intersection is jailed and faces felony case. You just can't be taking on road safety initiatives on your own. 
• Sex while driving drunk never ends well.