Insurance News - Friday, March 1, 2013

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

• IBC met with the NDP today to discuss auto insurance premiums and initiatives that can reduce rates including implementing anti-fraud measures, implementing reforms to FSCO DR system and revising the catastrophic impairment definition.
• Andrea Horwath says she had a productive meeting with industry leaders but warns of election if auto insurance premiums aren’t cut.
• Auto insurance battle under way in the North Carolina legislature as insurers look to opt out of rate making process administered by their Rate Bureau.
• Check out Shepstone v. Cook, an Ontario Superior Court decision dealing with the verbal threshold. The Court ruled that shoulder & low back pain was not a permanent serious impairment.

Insurance News - Thursday, February 28, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, February 28, 2013:

• Arch Insurance non-renews 2,500 taxis and limos as the business remains unprofitable despite 2010 auto insurance reforms.
• Ontario Human Rights Tribunal rules that Ontario insurers can charge elderly drivers higher premiums.  Ruling is consistent with 1992 Supreme Court of Canada decision Bates v. Zurich.
• Today was the launch of Fraud Prevention Month.

Insurance News - Wednesday, February 27, 2013

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

• Insurers using mobile, social media to tackle customer retention problems.
• Maine Bill requiring ‘full disclosure’ of credit use in insurance-scoring models fails.  So much for transparency.
• NDP and Tories claim Ontario highways not cleared of snow fast enough leading to higher collisions and fatalities.
• Ontario Court of Appeal decides that insurance brokers may take book of business elsewhere, absent an agreement.
• Finally, how to protect your car from hail damage:

Insurance Topics - Tuesday, February 26, 2013

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

• Georgia state House approves use of electronic auto insurance card, proposal now heads to state Senate.
• Opinion piece by Howard Pawley in Windsor Star: Public auto insurance: Why not? 
• Fraud Prevention Month begins on Friday. FSCO and others will be attending media launch at Toronto Police Headquarters on Feb 28th at 10 am.
• Aviva planning to return to Usage-Based Insurance but instead of a 'black box' they intend on using smartphone technology.
• British Columbia Automobile Association has introduced a free online tool to calculate the cost of vehicle ownership.
• Strange but true, it can cost you $448 to drive just one mile.
•  This is a collision you don't see every day:

Insurance News - Monday, February 25, 2013

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

• Anonymous tip line in Sudbury to ‘rat out’ unfit elderly motorists unfairly targets seniors according to CARP.
• NDP continues to press for auto premium reductions in the Ontario budget.  My guess is that any insurer that was planning to reduce rates will now wait and see. 
• 2010 Ontario auto insurance reforms has a significant impact on Accident Benefit claim costs in 2011.
• Good weekend for stunt driving charges.  Suspended driver clocked at nearly 150 kilometres an hour on Don Valley Parkway and then a second man was clocked at 188 kilometres an hour on the Gardiner Expressway.
• New Forum Research poll suggests that Hudak Tories could form a minority government, Horwath NDP have lost some support and Wynne Liberals have stopped falling in the polls. An election right now would be impossible to call.

Insurance News - Thursday, February 21, 2013

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

• Another blog post on usage-based insurance: Auto insurers bank on Big Data to drive new business.
• How insurers thrive in an era of ‘stable instability.’
• Hey it's not just the Ontario NDP. Florida Senate Leader to Insurers: Where Are Savings from PIP Reforms?
• Florida apologizes to Canadians for driver’s licence mix-up, seems we do speak English. But the law is still in force so what happens to Canadian drivers that get into accidents?
• NDP reiterate their pre-throne speech demands for lowering auto insurance rates, closing tax loopholes and a 5-day home care guarantee.
• Economical Insurance reports 2012 net income of $152.7 million, compared to $91.0 million in 2011, increase of 67.8%.

Insurance News - Wednesday, February 20, 2013

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

• State Farm sues Assessment Direct Inc. for $11 million over false and fraudulent documentation.
• 7 US states now allow digital proof of insurance instead of a pink slip. When will Ontario and the rest of Canada?
• SMA survey shows 70% of U.S. auto insurers plan some form of usage-based insurance.
• From the Ontario Throne Speech: implement the recommendations of the Auto Insurance Anti-Fraud Task Force and work to reduce insurance rates across Ontario; improve rural roads and bridges, suburban transit, and solve gridlock that threatens to cripple the GTA and Hamilton; and restrain program spending to reduce Ontario's debt-to-GDP ratio to 27%, while eliminating the deficit by 2017-2018.
• Fraser Institute Study: Ontario debt is worse than California, Province must address soaring public sector wages to slay deficit.

Insurance News - Tuesday, February 19, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, February 19, 2013:

• Steep hikes proposed for motorcycle insurance by Saskatchewan Government Insurance.
• What if the black box in your new car becomes a tool to invade your privacy? What if, on the other hand, it winds up saving your life after an accident?
• NICB reports a 27 percent rise in questionable claims since 2010 covering property, casualty, commercial, workers’ compensation, vehicle and miscellaneous. 
• Small tweaks will cut fraud at root of high auto insurance premiums.
• Car insurance based on driving habits comes to Utah.
• Calls for a national accreditation system to identify top body shops and pay them better rates.
• Movement against texting while driving develops across U.S. 

Insurance News - Friday, February 15, 2013

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

• Oklahoma insurance commissioner creates new advisory board to increase the effectiveness of the Oklahoma Insurance Department’s Anti-Fraud Unit.
•  New teen drivers would face cellphone ban under proposed U.S. Senate Bill approved by the Senate Committee on Public Safety.
• The Co-operators report 2012 net income of $257.7 million, compared to $150.3 million in 2011, an increase of 71.5%.
• Distracted driving is the new DUI, having cost 100 B.C. lives (30% of road fatalities) in 2012.

Insurance News - Thursday, February 14, 2013

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

• Florida now requires Canadian drivers carry an international driving permit. Exemption may be coming but not before spring break. UPDATE: State Police indicate they will not enforce new requirement on Canadians.
• According to an American Trucking Association study, 70%-75% of fatal car-truck collisions are caused by the driver of a car. 
• Windsor Star Editorial: "Auto insurance: Dealing with high premiums" - looks like the NDP plan to make auto insurance rates into an election issue.
• Oregon bill would boost fines for drivers on phones to up to $1,000.
• When putting together a fraud case keep this story in mind - New York dentist smeared in Spitzer Medicaid fraud witchhunt wins $7.7 million from former governor's staff.

Insurance News - Monday, February 11, 2013

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

• Google and regulators at odds over timing of self-driving cars, but they are coming. 
• Residents of Florida retirement community upset over insurance rules for souped-up golf carts, are they motor vehicles?
• Should socio-economic factors affect auto insurance?
• Big financial impact from weekend blizzard, especially for businesses still recovering from Sandy.
• Charles Sousa likely to become Ontario's next Finance Minister and get the auto insurance file, will he move forward on DR review, catastrophic impairment definition changes, implementing anti-fraud task force recommendations?
• Abacus Data online poll shows Wynne, Hudak and Horwath in dead heat. 

table source: Abacus Data

Insurance News - Saturday, February 9, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, February 9, 2013:

• NB consulting on minor injury cap and definition, both changes will allow more people to sue for damages.
• Star: Ontario’s NDP tiptoes back into the auto insurance minefield.
• Canadian Underwriter has a story on recent developments helping auto-fraud fighting efforts in Ontario.
• Fraud is driving auto insurance rates through the roof in New York City but still no reforms in sight.
• NICB Report: Pickup Truck Tailgate Thefts - if you don't know what that is watch this video below.

Insurance News - Thursday, February 7, 2013:

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, February 7, 2013:

• Dwight Duncan confirms resignation on Twitter yesterday, gives up his seat on February 14, so are the rumours true that Charles Sousa will be the next Finance Minister.
• AAA Foundation Study: Traffic safety attitudes show 'culture of indifference' to bad behaviour like drunk driving, text/cellphone use while driving and speeding. 
• Sun Editorial: Ontario auto insurance system a disgrace, cutting rates won't fix it. 
• Proposed New Jersey legislation would create statutory right for insured to file “bad faith” claim against insurer and recover legal fees.
• Oklahoma considering confiscating license plates of uninsured drivers.

Insurance News - Wednesday, February 6, 2013

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

• Google sees self-driving cars available to consumers in 3 to 5 years, regulators and insurers aren’t so sure it can happen that quickly.
• Premier-designate Kathleen Wynne signals her government will stay the course, says fighting auto insurance fraud is best way to cut auto insurance rates.
• Michigan politicians considering capping no-fault medical benefits on catastrophic claims which has triggered a clash between insurers and medical providers.
• Intact reports 2012 net operating income of $675 million up $215 million (47%) from 2011 on higher underwriting and investment income.
• Colorado lawmakers are debating a change in state law that would allow cars without drivers on roads

Judge Rules Auto Insurer Must Defend Policyholders Even After Paying Policy Limits

A recent Ontario Superior Court ruling has created some confusion regarding an insurer's responsibility to defend a policyholder in an action.  The confusion is the result of language used in the Insurance Act and the standard Ontario Automobile Policy (OAP 1).

Section 245 of the Insurance Act states:

Every contract evidenced by a motor vehicle liability policy shall provide that, where a person insured by the contract is involved in an accident resulting from the ownership, or directly or indirectly from the use or operation of an automobile in respect of which insurance is provided under the contract and resulting in loss or damage to persons or property, the insurer shall,

(a)  upon receipt of notice of loss or damage caused to persons or property, make such investigations, conduct such negotiations with the claimant and effect such settlement of any resulting claims as are deemed expedient by the insurer

(b)  defend in the name and on behalf of the insured and at the cost of the insurer any civil action that is at any time brought against the insured on account of loss or damage to persons or property;

(c)  pay all costs assess against the insured in an civil action defended by the insurer and any interest accruing after entry of judgment upon that part of the judgment that is within the limits of the insurer’s liability;

(d)  where the injury is to a person, reimburse the insured for outlay for such medical aid as is immediately necessary at the time.

The OAP 1 which is intended to provide a plain-language description of the law states:

3.3.1  If Someone Sues You

By accepting this policy you and other insured persons irrevocably appoint us to act on your or their behalf in any lawsuit against you or them in Canada, the United States of America or any other jurisdiction designated in the Statutory Accident Benefits Schedule arising out of the ownership, use or operation of the automobile.

If someone sues you or other insured persons insured by this Section for losses suffered in an automobile incident, we will provide a defence and cover the costs of that defence, including investigation costs. We will pay all legal costs the court assesses against you and other insured persons in the lawsuit we have defended.

If there is a judgment against you or other insured persons, we will pay any post-judgment interest owed on that part of the amount the court orders that falls within the liability limits of your policy.

We reserve the right to investigate, negotiate and settle any claim out of court if we choose.

If you are sued for more than the limits of your policy, you may wish to hire, at your cost, your own lawyer to protect yourself against the additional risk.

The Judge noted that the Insurance Act provides no qualifications with regards to defending a policyholder who has been sued while the OAP 1 indicates that the policyholder is expected to hire a lawyers if sued for more than the policy limits.  Since the Act takes precedence over the policy language, the insurer was held to be fully responsible to defend the policyholder in this case. 

 In this particular case Jevco Insurance has written an auto insurance policy for Vishal Malaviya, who was sued as a result of an auto accident in October 2005. In 2008, after hiring a lawyer who filed a statement of defence for Malaviya, Jevco offered to pay $200,000, which was the limit of Malaviya's policy, to the party suing Malaviya.

The action against Malaviya was still proceeding, so Jevco applied to the court to get a declaration it has "has no continuing duty to indemnify or defend" Malaviya, who argued that the policy "requires a full defense ... until it is tried on the merits or a final settlement is reached."
 

Insurance News - Tuesday, February 5, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, February 5, 2013:

• Two-thirds of the states could be restricted in how they spend some of their federal highway funds this year because they haven't complied with mandates to combat drunken driving.
• Almost half of U.S. states are considering changing legislation to allow drivers to use smartphones to show proof of insurance coverage.
• IBC responds to NDP: Lower rates require lower costs, let's work together on a sustainable auto insurance product.
• Researchers identify links between driver visibility and road safety as a result of roadway lighting.

Studies Confirm that Multitasking, Such As Driving And Texting, Affects Performance

Zheng Wang, assistant professor of communication at Ohio State University, has conducted considerable research on multitasking. One study she conducted in 2012 indicated that multitasking hurts performance, but makes people feel better.  “There’s this myth among some people that multitasking makes them more productive,” according to Wang.  She noted that “they seem to be misperceiving the positive feelings they get from multitasking. They are not being more productive – they just feel more emotionally satisfied from their work.”

The study appears in the Journal of Communication.

Another study she conducted in 2012 has significant implications for distracted drivers.  Her research indicated that trying to do two visual tasks at once hurt performance in both tasks significantly more than combining a visual and an audio task.  So a driver who is texting on their phone is likely more “impaired” than if they were speaking on their phone.  They are both dangerous but the research showed that texting is much more dangerous.

But what’s really scary is that when people who tried to do two visual tasks at the same time were asked to rate their performance they rated themselves as better than those who combined a visual and an audio task.  In fact, their actual performance was worse.

The study appears in the journal Computers in Human Behavior.

Another recent study showed that those who frequently multitask are actually bad at it.  The study by Professor David Strayer and  Professor David Sanbonmatsu, both at Utah University, shows that people who frequently talk on their cellphone while driving are probably the ones who shouldn’t be doing it.  Their perception is that they are good at multitasking.

The study indicated that those who scored highest on the ability to multitask tended not to engage in it because they were more able to focus attention on what they are doing.

Their study is available on an online journal PLOS ONE.

Recently a woman distracted by a text fell feet-first into a frozen canal in Birmingham — and the entire incident was caught on tape by one of England's many CCTV cameras. This vividly illustrates have difficult it is to multitask.  What would have been the outcome has she been driving instead of walking?

So what is this all mean?  Distracted drivers are a greater hazard than they realize.  They do not believe that texting or talking on their phone impairs their driving ability and those who are worst at doing both are actually more likely to multitask.

Insurance News - Monday, February 4, 2013

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

• The Ontario NDP is calling for a 15% drop in auto insurance rates as one of their demands to support Kathleen Wynne's minority Liberal government.
•  Medical identity theft and fraud is a significant problem in the U.S. - although not as prominent, still an issue for Ontario auto insurance and HCAI.
• If marketing Usage Based Insurance for lower premiums doesn't attract drivers, how about offering them free Tim Horton's coffee for a policy year?
• Phase 2 of Nova Scotia's auto reforms is coming on April 1 and will introduce DCPD, limited vicarious liability for rental companies and minor injury treatment protocols.

Insurance News - Friday, February 1, 2013

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

• Thomson, Rogers video on anticipated changes to catastrophic impairment definition.
• In the U.S. auto insurers spends billions on marketing, but fewer drivers switching companies, maybe consumers only care about price.
• Fraser Institute likens Ontario to economic basket-cases as province’s debt climbs.  I guess that means what Greece is to Europe, Ontario is to Canada?
• According to a recent Insurance Market report by Marsh, favourable Canadian P&C market conditions will continue into 2013 with some possible upward rate pressure in second half of the year.

Insurance News - Wednesday, January 30, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, January 30, 2013:

• Fraud concerns linger over Illinois driver license law that issues licenses to illegal immigrants.
• Why are drivers with clean driving records not always charged lowest auto insurance rates?
• According to Moodys, the Global economy is still a headache, but P&C insurers positioned to weather headwinds.
• Check out my article in January 2013 issue of Canadian Underwriter on regulating the towing industry in Ontario.
• Less than 20% of fraudulent insurance claims are detected or denied. Seems like we could do better.

Anti-Fraud Regulations Come Into Effect June 1

The Ontario Government has made public the regulatory changes that will be made to help combat auto insurance fraud.  The changes were approved on January 21, 2013 and are scheduled to come into effect 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.

Interesting that the government chose to only amend section 38(8) which deals with requiring insurers to give reasons for denying medical and rehabilitation claims.  The same language exists in 12 other sections of the SABS (listed in a previous post) and those sections were not amended.  That would suggest there are now two standards for communicating denials to claimants.  As well the language change from “the medical and any other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable or necessary” to “the medical reasons and all of the other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable and necessary” does appear substantially different.

The Cost of Goods Guideline was issued by FSCO in January 2012.

FSCO also plans to issue a standard form prior the regulation coming into effect that insurers will be required to use for the purposes of the bi-monthly benefit statements to claimants.

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 - Monday, January 28, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, January 28, 2013:

• Consumer Federation of America Report: Largest auto insurers often charge higher premiums to safe driver.
• Multitasking and Distracted Driving: You Are Not the Exception.
• Most brokers are not using basic social media platforms: Twitter, Facebook, Google search engine, blogs. 
• Liability Issues Create Potholes on the Road to Driverless Cars.

FSCO Arbitrator Further Clarifies Meaning of 'Economic Loss'

In the recent case of Simser and Aviva (FSCO A11-004610, January 16, 2013), Arbitrator Lee examined the meaning of “economic loss” in s. 3(7)(e) of the SABS.

The insured provided a report from an economist regarding the definition of “economic loss”.  He argued that since it was not defined in the SABS it should be defined to include “opportunity cost”, as well as loss of time devoted to labour or leisure. The arbitrator indicated that if a broad interpretation of "economic loss" was accepted, it would negate the intent of introducing the amendment.  The outcome would be no change to the interpretation prior to September 1, 2010.

Aviva argued that economic loss should mean a financial or monetary loss. The arbitrator rejected the insured’s argument and accepted that of the insurer.  As a result, he concluded that no economic loss was sustained and as such the claimed benefits were rejected.

The insured had applied for attendant care and housekeeping benefits following his accident of November 10, 2010. None of the three providers provided supporting documentation to that would have demonstrated an actual loss. The only witness was vague and was unable to sufficiently support the claims. 

The significance of this decision is that it recognizes that the amendment made in September 1, 2010 was intended to narrow the interpretation of incurred expense. For an expense to have been incurred:

(1) the insured person has received the services;

(2) the insured person has paid or promised to pay or is otherwise legally obligated to pay the expense; and

(3) the person who provided the goods or services:

(i) did so in the course of the employment, occupation or profession in which he was ordinarily engaged, but for the accident; or
(ii) the person sustained an economic loss as a result of providing those goods or services to the insured person.

 In this particular case, part 3 of the definition was not met.

Insurance News - Saturday, January, 26, 2013

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

• Thinking of starting a diet? A new study concludes that obese drivers are more likely than normal weight drivers to die in a car crash.
• A J.D. Power study indicates that auto insurance claims satisfaction climbs as payment times decrease.
• Telematics could change how personal insurance is sold. 
• State Farm Rapidly Expands its Usage-Based Insurance Program in the U.S.
• Haven't seen a car pile up like this one in a quite a while: Major Highway 401 crash near Newcastle involves up to 80 vehicles, some people critically injured.

Texting Also Distracts Pedestrians

A woman distracted by a text fell feet-first into a frozen canal in Birmingham — and the entire incident was caught on tape by one of England's many CCTV cameras.

Laura Safe, a newsreader for the Capital FM Breakfast Show, later joked about the tumble on Twitter, saying she "should really be called Laura UNsafe after the day I've had."

Lets hope Laura doesn't do this behind the wheel.

Insurance News - Thursday, January 24, 2013

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

• Kanetix study shows Ontario auto insurance rates for Q4 2012 were 3.3% lower compared to Q4 2011 (FSCO indicates a 0.26% decline).
• 36 percent of New York City no-fault auto insurance claims in 2010 had some element of fraud.
• Missouri man has 2 vehicles stolen on same day - in case you're wondering only 1 had the keys in the ignition. 
• IBC study shows insurers are key contributors to Ontario's economic success.
• Low interest rates put upward pressure on P&C insurance premiums and solvency risk according to Standard & Poor.

Insurance News - Wednesday, January 23, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, January 23, 2013:

• The 2010 Ontario auto reforms has produced a shift from statutory accident benefits to tort.
• A recent FSCO arbitration decision only reinforces it's time to replace the Glasgow Coma Scale when determining catastrophic impairment.
• Bizarre auto accident: Woman killed by runaway truck at a car wash.
• National Insurance Crime Bureau (NICB) has released a report that examines the impact that organized crime groups have on insurance fraud.
• Ontario's projected 2012-13 deficit falls by $3 billion to $11.9 billion due to higher than expected revenues and lower expenses. Minister Duncan indicates corporate taxes up over $1 billion and there will $1.2 billion saved because of lower interest payments on debt and reduced banked sick days for teachers.

What Impact The Proposed Anti-Fraud Regulatory Amendments Have?

As previously mentioned the Ontario government plans to introduce new regulatory amendments as part of its anti-fraud initiative.  These amendments are just some of the recommendations made by the Anti-Fraud Task Force.  Here is a brief description of those proposed amendments and how they will impact on the auto insurance system. 

Requiring insurers to provide claimants all reasons for denying a claim

Currently subsections 36(4)(b), 36(7)(b), 37(4), 37(6)(c), 38(8), 38(14)(a), 38(14)(b), 42(3), 42(13)(b), 43(2), 44(5)(a), 45(3)(b) and 45(5)(b) of the SABS require insurers to provide claimants with "medical and any other reasons" for denying a claim for accident benefits.  These subsections were amended in September 2010 to specifically provide a full explanation to claimant for denials.  The Anti-Fraud Task Force heard from stakeholders that adjuster were not providing an a proper explanation and often just indicated that the claim was "not reasonable and necessary."  It will be interesting to see what language the government comes up with to motivate adjusters to change their behaviour.  There is also an enforcement aspect that will be needed to have an impact.

Giving claimants the right to receive a bi-monthly, detailed statement of benefits paid out on their behalf

In September 2010, the new SABS introduced by the government included section 50 which requires insurers to provide a bi-monthly benefit statement to claimants indicating the amount paid by the insurer on behalf of the claimants for medical, rehabilitation and attendant care benefits as well as the amount spent on insurer examinations.  The statement also required to inform the claimant the amount of benefits still remaining.  The experience has been that insurers have been providing these statements but with no more detail than required under the SABS.  The statements do not breakdown payments by provider or service.  Consequently, consumers are unable to determine whether the payments made on their behalf are legitimate.  The government plans to amend section 50 to require the insurer to provide more detail.  The amount of detail is not known publicly at this time.
 
Increasing the role of claimants in fraud prevention

This involves adding two new provisions to the SABS.  The first would require claimants to confirm attendance at treatment facilities. The second would require facilities to provide a copy of invoices for goods and services billed to insurers. These proposed provisions expand on an amendment made to the SABS in June 2011.  Section 46.2 was added to the SABS to require facilities to provide an insurer with information to support any invoice for goods and services billed to that insurer.  These amendments would require facilities to copy claimants on invoices and for claimants to confirm that they received those goods and services.


Making providers subject to sanctions for overcharging insurers for goods and services and banning them from asking consumers to sign blank claim forms

The government press release is rather sketchy but the Ontario government Regulatory Register is more specific on the proposed changes. First there would be an amendment to Reg. 283/95 to provide insurers with the ability to examine a claimant under oath, where this is necessary to determine which insurer should be responsible for coverage. This would be in addition to the right for an examination under oath that now exists under section 33 of the SABS. The SABS requirement is limited to matters related to entitlement to benefits.  The SABS provision is an anti-fraud measure but currently insurers sometimes use it to determine liability and therefore no longer have access to an examination under oath to determine entitlement.  A new provision in Reg. 283/95 will resolve that problem.

The government will also amend Reg. 7/00 to expand business practices that would be considered an unfair or deceptive acts or practice. In the future it will include when providers charge insurers much more for goods or services than the ordinary retail price.  This provision is currently covered by a Superintendent's Guideline.  A further amendment will ban the practice of having claimants sign blank claim forms.  

Lastly the government has signalled that it will also amend Reg. 7/00 to clarify the exemption for lawyers and paralegals in the unfair or deceptive acts or practices regulation applies to lawyers and paralegals only when they are acting in a legal capacity.  This means that lawyers will continue to be regulated by the Law Society of Upper Canada when they act in a legal capacity.  However, if a lawyer is an owner of a clinic and not acting in a legal capacity, then any business practice that is in contravention of the Insurance Act would be subject to regulatory action by FSCO.

Insurance News - Tuesday, January 22, 2013

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

• Man acquitted of careless driving after coughing caused driver to close his eyes and kill pedestrian.
• Ontario Ministry of Finance announces that new auto insurance anti-fraud regulatory amendments are to be introduced.
• Man assaulted in his car denied accident benefits by Ontario appeal court because injuries not connected to use or operation of vehicle.
• Catastrophic impairment cases continue to vex insurer.
• Accident benefit dispute process makes no sense.
• Forbes lists the 10 cheapest and most expensive 2013 cars to insure.
• iPhone has an app that lets you report a car accident.
• Survey finds 75 percent of claims systems should be upgraded or replaced within five years.
• Toronto Star endorses Sandra Pupatello as Liberals' best chance to hold on to power.

Insurance News - Friday, January 18, 2012

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, January 18, 2013:

• Will auto insurance vanish? Maybe not but there's an interesting debate going on.
• Toyota settles first wrongful death suit amid hundreds involving sudden, unintended acceleration problem.
• Supreme Court allows seizure of drunk driver's truck in Quebec after five convictions, opens door for more seizure.
• SABS Attendant Care Benefit: More Clarification on the Meaning of “Economic Loss”, does include opportunity cost.
• My old colleagues have been busy - FSCO lays 84 charges against 2 Toronto rehabilitation clinics and 4 invidivuals for auto fraud.

Documentary On Texting While Driving

Ontario Ministry of Finance Has Provided Notice On Intent To Introduce Anti-Fraud Regulations Recommended by Task Force

The Ontario government Regulatory Registry has posted a notice that the Ministry of Finance intends to move forward on some of the recommendations made by the Automobile Insurance Anti-Fraud Task Force. 

The Task Force's final report contains 40 recommendations, some of which can be introduced by amending existing regulations. The regulations that are being considered for amendment are:

Amendments to Ontario Regulation 34/10 (Statutory Accident Benefits Schedule - Effective September 1, 2010)
Ontario Regulation 283/95 (Disputes Between Insurers) 
Ontario Regulation 7/00 (Unfair or Deceptive Acts or Practices)

The amendments are based on the following recommendations from the Task Force Steering Committee's Final Report:

Recommendation 4(c):  Amend the SABS to make it clear that insurers are required to provide claimants with a full explanation when refusing to pay for treatment, assessment or other benefits.

Recommendation 17:  Amend the SABS to:
- require claimants to confirm attendance at treatment facilities and receipt of goods and services billed to insurers; and
- require insurers to itemize the list of invoices they have received when they provide a benefit statement to a claimant every two months.

Recommendation 18: Amend Reg. 283/95 to provide insurers with the ability to examine a claimant under oath, where this is necessary to determine which insurer should be responsible for coverage, without prejudice to the right for an examination under oath that now exists under the SABS.

Recommendation 28:  Amend Reg. 7/00 to include as an unfair or deceptive acts or practice:
- charging insurers much more for goods or services than the ordinary retail price; and
- requesting a claimant to sign a blank form.

Recommendation 36:  Amend Reg. 7/00 to clarify the exemption for lawyers and paralegals in the unfair or deceptive acts or practices regulation applies to lawyers and paralegals only when they are acting in a legal capacity.

Ontario's Regulatory Registry provides information on new proposed regulatory initiatives that could affect Ontario businesses and recently approved regulations that affect business.

Regulations are approved by the provincial Cabinet.  Once a regulation is approved, a plain language summary of the regulation is posted on the Registry website, with a link to the regulation posted on the Government of Ontario's e-Laws website.
 

Caution Against Insurer Examination Physician Upheld By Appeals Board

The Health Professions Appeal and Review Board has confirmed the decision of the Inquiries, Complaints and Reports Committee of the College of Physicians and Surgeons of Ontario (CPSO) to issue a caution to an occupational medicine physician regarding her inadequate and inaccurate report.

The physician has not been named as it is the policy of the health regulatory Colleges to only named disciplined regulated health professionals not those cautioned.   In fact, I could not find an anonymized report of doctors who have been cautioned on the CPSO website.  However, as reported yesterday, the Ministry of Health intends to change that policy and increase transparency by allowing the Colleges to name professionals who have been cautioned.

In this particular case, the an auto insurance claimant was injured in a motor vehicle collision on November 1, 2010. The insurer, State Farm, sent the claimant to the occupational medicine physician (Dr. K.I.) for an insurer examination under s. 42 of the SABS. The assessment was a paper review to determine whether the claimant required further psychological assessment as a result of the accident.

The claimant complained to the CPSO that the physician failed to provide an accurate opinion of her claim for psychological services to her insurer.  The CPSO's Inquiries, Complaints and Reports Committee determined that occupational medicine physicians do perform psychological impact assessments and that the Dr. K.I. had the qualifications required to make a determination as to whether the claimant was eligible for a psychological assessment.  Dr. K.I. showed that she was trained in psychiatry and psychiatric/psychological issues and that assessments are a regular part of her practice.

However, the Committee noted that Dr. K.I.’s report contained inaccuracies with respect to the details of what happened at the time of the collision. The report omitted the fact that the police were called, the car was damaged to the extent that it had to be towed away and was written off, which the Committee wrote, “speaks to the extent of the motor vehicle accident”.    Further, the Committee found that the physician failed to address important information that supported a claim for psychological services such the fact that the claimant's family physician felt that a referral for psychological services was indicated and a number of psychological test results.

While the primary focus of the complaint to the Appeals Board was whether a psychologist rather than a physician should have conducted the assessment, the Board did not find the complaint limited to this issue.

The Board also reviewed the concern that Dr. K.I. had “failed to provide an accurate opinion of [the claimant’s] claim for psychological services to the insurer." The Board considered that the accuracy of the opinion to be the central issue and the appropriate expertise was an example of the concern.

The Board agreed with the Committee that the report was both inaccurate and inadequate and failed to comply with the College policy, “Third Party Reports,” which notes that when providing a third party report physicians must "take reasonable steps to ensure that they have obtained and reviewed all available clinical notes, records and opinions relating to the patient or examinee that could impact the findings of the report ...” Moreover, the policy also states that physicians “should ensure to the best of their abilities that the information contained in the third party report is accurate.”

So what can we learn from this case?

1. Physicians can be used to evaluate requests for psychological services if they have appropriate training and experience.
2. IE providers need to consider all available clinical notes, records and opinions relating to the claimant.  If they have not, the report can be challenged and the provider could be subject to sanction from their College. 
3. The lack of transparency in these cases does not adequately protect consumers and insurers from inadequate assessors.
4. There is a need to implement the Automobile Insurance Anti-Fraud Task Force recommendation regarding the development of professional standards, guidelines and best practices to improve the quality of independent medical assessments. 

Insurance News - Wednesday, January 16, 2013

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

• Ontario Divisional Court supports insurer request for section 42 assessment under the SABS, providing defence against trial by ambush.
• Insurance adjusters get no respect: Daniel Day-Lewis backs out of film about insurance claims adjuster after just 5 hours researching role.  Says Day-Lewis: " I don’t know how these people do it."
• Want to compare auto insurance rates on your smartphone? There's an app for that.
• Andrea Horwath says the NDP open to working with Liberals, not ruling out coalition.
• Hard to know whether to laugh or cry: Six people claimed they were hurt on a Philadelphia bus, but video (below) shows that only one of them was on the bus and that man wasn't even hurt.

View more videos at: http://nbcphiladelphia.com.

Insurance News - Tuesday, January 15, 2013

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

• Auto telematics allows insurers to know their clients better and therefore protect against auto insurance fraud.
• People who take everyday doses of painkillers have a 20-to-40-per-cent greater risk of crashing their cars, a Canadian study shows.
• CAA South Central Ontario calls on Toronto to focus on public safety and repair deteriorating Gardiner Expressway. 
• Young female drivers in U.K. saw premiums rise 22% after gender-based pricing ruling by European Court of Justice. 
• Good news for consumers and insurers, Ontario Ministry of Health increases transparency by giving Regulatory Health colleges go ahead to make cautions public.
• Results of weekend voting: Pupatello 504, Wynne 463, Kennedy 257, Takhar 244, Sousa 198, Hoskins 104, Independent 67. This is not leadership vote but selection of delegates committed to vote for particular candidate in 2 weeks and who join several hundred other eligible voters.

Privacy Commissioner Supports Use Of Credit Scores, But Has Concerns About Transparency

The use of credit scores has been banned in Ontario personal auto but continues to polarize the industry, politicians and consumers.  As a result there is considerable interest in a recent Report of Findings released by the Office of the Privacy Commissioner of Canada.

The complainants are husband and wife, and were joint applicants on a property insurance policy with an Ontario insurer.  In 2009, they were surprised when their insurance renewal premium had increased considerably over the previous year’s premium. The company had been their insurer for six years and the complainants were claims free. When the complainants looked into the matter, they learned that the company had requested and received from a credit reporting agency access to their personal credit information. In their view, the company had done so without justification and without their knowledge and consent. They were also concerned about other purposes to which the company would use this information.

The insurer's position was that it had obtained express consent from the couple and its other customers for the collection of credit information at the time they apply for insurance. In the company’s view, the complainants consented when they signed their original application.  The company uses the standard Centre for Studies in Insurance Operations (“CSIO”) application form, which includes the following consent provision:

The Applicants agree that reports containing personal, credit, factual record, premium payment or claims history information may be sought or exchanged in connection with this application for insurance or renewal, extension, variation or cancellation thereof.

 In addition, the company also pointed to its website privacy statement which advises individuals that the company may collect their personal information from third parties for the purpose of administering insurance policies, as well as for other purposes.  Since 2003, the company has sent to all its Ontario policyholders a two-page notice on its policy on the collection and use of personal information at the time of their first policy renewal.  It includes an explanation that it may use the statistical score (an underwriting tool that rank-orders risk for underwriting and predicts the likelihood of delinquency over 12 months) from the consumer's credit file as one of many rating factors to determine eligibility for personal property insurance and premiums.

 Research on the issue conducted by the Office of the Privacy Commissioner of Canada revealed the following:

• There are studies supporting the claim that credit-based insurance scoring information is a valid predictor of risk of a future loss.
•  Despite the finding of industry studies, not all insurance companies in Canada are using credit scores for risk assessment.
• Many Ontario consumers were not aware that their credit scores were being used to determine how much they pay for their home insurance premiums.

In the end the privacy commissioner 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.  In addition, while the Ontario government has banned the use of credit information in auto insurance, it made a public policy decision to allow the disclosure of individuals’ credit information for purposes of assessing insurance risk for home insurance.

It was also acknowledged that  assessing risk is a fundamental component of the insurance business model. Therefore, underwriting tools are necessary to analyse and predict risk in order for insurance companies to be able to provide insurance products at the appropriate price.  It was also acknowledged that the statistical score is an aggregate number, which may be less intrusive than accessing an individual’s entire credit report.

However the privacy commissioner did express some concerns.  The privacy commissioner noted that there is no obvious link between credit information and insurance premiums. While the majority of risk assessment tools that insurance companies use have apparent links to the product being purchased by the consumer (claims history, for example), credit history does not. As well, how credit score is determined is closely guarded and most consumers have no way of knowing whether or how their credit information may factor into their insurance premiums. 

The privacy commissioner concluded that the company did obtained the complainants’ consent to use their credit information or the statistical score.  The language used in the consent provision on the insurance application form was found to be too general in nature. Further, it is not reasonable to expect a consumer to understand that their credit score will be used to determine the probability of them later filing an insurance claim.

Previously I had written on a report from a working group from the  Canadian Council of Insurance Regulators (CCIR) which failed to reach any conclusion on the issue, stating that it was a government issue and to reach any definitive solution would require work beyond its own scope. 

The two reports reinforce the use of credit scoring in rating home insurance policies as long as government does not introduce a prohibition similar to the one the exists in auto insurance.  However, insurers need to ensure the proper consent is obtained and that their policyholders understand how their credit information will be used.  Relying on standard industry forms and consent language may not comply with PIPEDA.

PIPEDA Report of Findings #2012-005

Insurance News - Friday, January 11, 2013

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

• West Virgina University is getting a federal grant to study effect of US cellphone laws on driver safety and accident rates.
• A proposal to issue driver’s licenses to illegal immigrants has received committee approval in the Illinois House.
• Car manufacturers are copying smartphones by commissioning software application developers to create apps for future vehicles. 
• A response to  "doomsday predictions" about drops in auto insurance premium as a result of new technologies. 
• Privacy commissioner supports the collection and use of credit information for rating purposes but is concerned about transparency.

Insurance News - Wednesday, January 9, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, January 9, 2013:

• Toronto Police Chief Bill Blair calls for return to photo radar: road safety measure or cash grab?
• 2012 will be 4th consecutive year for billion-dollar, weather-related losses for Canadian P&C insurers.
• Director’s Delegate agrees FSCO’s Settlement Disclosuree Notices is deficient.
• Toronto Police marine unit finds two cars in Lake Ontario, at least one stolen. So how many more cars are down there?

Insurance News - Tuesday, January 8, 2013

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

• Event data recorders, aka vehicle "black boxes," are at a tipping point for the technology.
• Court denies "trip and fall" claimant Statutory Accident Benefits after injury tripping over curb as the vehicle was not being operated or used it was parked.  
• Teen jailed after posting on Facebook: "Drivin drunk ... classic ;) but to whoever's vehicle i hit i am sorry. :P." People just love to share their lives on Facebook.   
•  Gerrard Kennedy says he would consider public auto insurance if he were to become premier.

Administrative Monetary Penalties Are Introduced In The Insurance Sector

In the 2012 Ontario Budget, the government announced that it would implement Administrative Monetary Penalties (AMPs) in the insurance sector. AMPs will allow the FSCO to address contraventions of the law more efficiently and promote compliance.  AMP’s are civil fines that a regulator, instead of a court, imposes on someone that has committed unlawful activity. Once they are implemented, AMP’s will encourage regulatory compliance within the insurance industry and provide FSCO with a quick enforcement tool that is flexible and targeted.

 The government introduced AMPs into the insurance sector by passing changes to the following Acts:

• Insurance Act
• Automobile Insurance Rate Stabilization Act, 2003
• Compulsory Automobile Insurance Act

These changes and new regulations (408/12, 409/12 and 410/12) came into force January 1, 2013.

AMPs can be imposed for contraventions of provisions of these Acts listed in the regulations that occur on or after January 1, 2013, as well as breaches of orders, undertakings and licence conditions.  The maximum penalty for an individual for a contravention of the Insurance Act and Compulsory Automobile Insurance Act is $50,000 and $100,000 for an organization or company.  The maximum penalty for a contravention of the Automobile Insurance Stability Rate Act, 2003 by an insurer is $200,000.

The contraventions to which an AMP can apply include listed Unfair or Deceptive Acts or Practices by any person or entity including insurers, agents, brokers, adjusters and those involved in the provision of goods or services to insurance claimants.

 

AMPs are not new to FSCO.  The Superintendent of FSCO already has the power to impose AMP’s on two types of financial services institutions – mortgage brokers and credit unions. AMP’s are also used by other regulators in Ontario and other jurisdictions.

The use of AMPs have been strongly supported by the insurance industry as a tool to finding fraud and was endorsed by the Ontario Automobile Anti-Fraud Task Force. 

Insurance News - Monday, January 7, 2013

Back from the holidays.  Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, January 7 2013:

• Canadian Underwriter has an article on how car sharing is growing (there are 40,000 Ontario members) - now Avis/Budget plans on buying Zipcar for $500 million. 
• Consumers posting negative reviews could face legal problems, so much for free speech.
• How scary is this? A Florida man was arrested for allegedly using Play-Doh to fix damaged car.
• Forensic investigators reveal top words used by fraudsters in your company - beware of employees that use phrases like "nobody will find out" in emails.
• New auto insurance PIP regulations in effect in New Jersey after Superior Court denies medical group's stay request.