One would think that the standard auto
insurance card seems like a throwback in this increasingly paperless age, but
that it is not the case in Canada.
Despite smartphones, tablets and other
technological gadgets now being part of everyday life, providing proof of auto
insurance coverage is like a nostalgic trip back to the days of our parents or
grandparents. In Canada, insurance companies and brokerages mail, fax and
e-mail copies of the standard pink insurance slips to policyholders upon
renewal or policy changes.
In March 2013, Industrial Alliance
Insurance and Financial Services provides its group health customers in Quebec
with the option of an electronic version of their plastic insurance card.
However, there is currently no movement to do the same for auto insurance
policyholders.
In Ontario, the Compulsory Automobile Insurance Act
(CAIA) states that drivers must “have in the motor vehicle at all times, (a) an
insurance card for the motor vehicle; or (b) an insurance card evidencing that
the operator is insured under a contract of automobile insurance, and the
operator shall surrender the insurance card for reasonable inspection upon the
demand of a police officer.”
Despite confirming existence of a card,
fake or invalid insurance cards can be easily acquired. Obviously, an invalid
card is going to look legitimate if an unscrupulous driver cancels the policy
immediately after getting the card.
The Uninsured Vehicle Project, an initiative led by Ontario’s Ministry of
Transportation, provides an electronic means of determining whether or not a
vehicle carries mandatory insurance coverage when licence plates are being
renewed by checking with the insurance industry’s online database. The wrinkle
is that police officers do not have access to the database and accept as valid
any insurance card that appears to not have expired.
CHANGING TIMES
In Ontario, the five-year review report
of the superintendent of financial services at the Financial Services
Commission of Ontario (FSCO) raised the issue of electronic commerce back in
2009. The superintendent noted he had received feedback from insurers that they
would like to see legislation and regulations updated so that transactions
regarding applications, policies, endorsements and renewals could be conducted
electronically.
The submission of the Canadian
Association of Direct Response Insurers stated, “Of concern also is the requirement
to provide a paper copy of the liability card. Companies should be able to
provide the liability card along with all the other documentation in electronic
form if the customer approves.”
The regulator indicated its primary
concern regarding electronic commerce is the production of fraudulent liability
cards. However, FSCO also acknowledged that fraudulent paper insurance cards
currently exist and technological solutions may exist to address these
concerns.
Based on the submissions received, FSCO
noted it appeared that not all industry stakeholders were aware that Ontario’s Electronic
Commerce Act, 2000 already enables auto insurers and others doing
business in the province to implement electronic document delivery and
electronic counterparts to traditional written documents and written
signatures, provided certain functional equivalency rules are followed.
The five-year review signalled to the
insurance industry that electronic documents, including the insurance card, was
acceptable under existing Ontario law yet no insurer has introduced electronic
proof on insurance over the past four years.
Steve Whitelaw, senior vice president
of business solutions at The Dominion of Canada General Insurance Company, says
that guidance is required from regulators in all jurisdictions with respect to
security and auditability requirements. In addition, there are other logistical
issues that need to be addressed by The Dominion that are relevant
to its distribution of insurance through brokers, Whitelaw
reports.
The capability
to issue electronic policy documentation, including liability slips, is on The
Dominion’s roadmap. “There are competing priorities,” he says, pointing out
that “this topic does not appear to be a priority for consumers, and from our
perspective, The Dominion’s focus remains on the replacement of our
legacy systems.”
Ontario law is silent
about whether or not an electronic version of the insurance slip counts as
valid proof of insurance, but it is uncertain if police officers would accept
an electronic version.
Consider such
an incident: a driver in a recent minor accident could not locate his pink
insurance slip. He contacted his broker from the scene of the accident who
e-mailed him his pink slip as a PDF file. The police officer responding to the
accident informed the driver that he bought himself one hour to produce a paper
copy.
Bob Percy, deputy chief of the Halton
Regional Police Service, says he sees an electronic insurance card being
accepted by police “as long as there was comprehensive awareness of the
process, and assurances that the material could in no way, shape or form be
manipulated to create false, but legitimate-looking insurance slips.”
But how many
people would be comfortable handing their personal devices to an officer who
requires the information to complete the accident report?
Percy suggested the ideal approach
would be to have an insurance database that officers could access, similar to
the Canadian Police Information Centre (CPIC) database. This concept would be
an up-to-date information repository that confirms insurance particulars with
no reliance on the driver.
SERVICE ADJUSTMENT
Last year, J.D. Power and Associations
issued results of a survey of the insurance industry in the United States,
entitled, 2012
U.S. Auto
Insurance Study Management Discussion.
“As customer preferences and
interaction behaviours continue to evolve, insurers must be prepared to adjust
their service strategies to keep pace with those changing preferences,” the
report notes. “All insurers face the reality that customer expectations are
being reshaped by market forces beyond their control — whether through the
emergence of devices, such as the iPhone or iPad and platforms such as Twitter
or Facebook, or through changing servicing dynamics being introduced in other
industries. Every insurer must recognize that adapting to the changing
service — channel preferences is a decision of necessity that will need to be
made in the not-too-distant future. Ultimately, it all comes down to customer
choice — today that choice is rapidly expanding to include a variety of new
self-service tools and interfaces.”
The Property Casualty Insurers
Association of America (PCIAA) reports that 11 U.S. states — Alabama, Arizona,
Arkansas, California, Idaho, Kentucky, Louisiana, Minnesota, Mississippi,
Virginia and Wyoming — now have laws or regulations on the books that allow for
electronic insurance cards to be used for both vehicle registration and when
being pulled over by the police.
In Colorado, drivers can use the e-cards for
registration, but will not for police traffic stops. However, the he state is
considering legislation that would extent electronic proof to traffic stops as
well.
PCIAA reports that the governors of
Kansas and Indiana are expected to sign legislation in their states, while
several other states — Florida, Georgia, Hawaii, Indiana, Iowa, Maine,
Michigan, Missouri, Ohio, Oregon, Rhode Island, South Carolina, Texas, Utah,
Washington and Wisconsin — have pending legislation on the matter.
For drivers in states that allow for
electronic insurance cards, it would be wise to still have a paper copy handy
when driving outside of home jurisdiction.
PRIVACY
MATTERS
There are some valid concerns about
e-cards. For example, what privacy rights, if any, are being handed over when
someone — let alone a police officer — is allowed to look at a driver’s phone
to view his or her insurance card? While some states have put limits on what
can be viewed — Arizona, for example, specifies that showing an e-card does not
imply consent to view other items on a wireless device — many have no such
language.
It appears inevitable that electronic
proof of insurance will come to Canada.
The technology exists and both government regulators and police forces appear
open to the change. It just seems that no insurer particularly wants to be the
first to make the move.
