Insurance News - Tuesday, December 17, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, December 17, 2013:

• Auto insurance profits to be rolled back in Nova Scotia as rate of return deemed too high by review board.
• Pennsylvania auto insurance bill would introduce collision coverage with no deductible.  State law currently requires a minimum deductible of $100.
• California has released draft regulations on licensing companies wanting to test self-driving cars.  Though not sure how Google has been legally able to log 500,000 miles on their self-driving cars. 
• In addition, Michigan will soon become the 4th U.S. state to allow and regulate the testing of self-driving cars.
• A Dutch bus company is testing technology that monitors whether a driver is becoming drowsy.

Ontario Auditor General's Update Report on Auto Insurance Regulatory Oversight

The Auditor General of Ontario's 2011 Annual Report reported on FSCO's oversight of the auto insurance system.  The report made 7 recommendations covering SABS costs, fraud, the rate approval process, the dispute resolution system, performance measures, MVAC's unfunded liabilities and health care assessments.  It is the practice of the Auditor General to do a follow up two years after an audit.  The follow up report has now been released.

The Auditor General reports that FSCO has made progress in addressing most of her recommendations, with significant progress made on several.  Although average injury claim costs had declined significantly since 2010, at the time of the follow up average automobile insurance premiums had not. In addition, discussions held to date had not resulted in any increase to the amount recovered from auto insurers for health system costs incurred to care for people injured in motor vehicle accidents. The status of the actions taken is summarized following each recommendation.

Recommendation 1:

FSCO should:

• implement regular interim reviews of the SABS to monitor trends such as unexpected escalating claims costs and premiums between the legislated five-year reviews, in order to take appropriate action earlier, if warranted;
• monitor ongoing compliance with the MIG, expedite the work develop evidence-based treatment protocols for minor injuries, and identify and address any lack of clarity in its definitions of injuries;
• implement its plans as soon as possible to obtain assurance that insurance companies are judiciously administering accident claims in a fair and timely manner; and 
• examine cost-containment strategies and benefit levels in other provinces to determine which could be applied in Ontario to control this province’s relatively high claims costs and premium.

Status

On August 16, 2013, the government proclaimed legislative changes to consolidate multiple auto insurance reviews, including the former five-year review of auto insurance, the three-year review of risk-classification regulations and the two-year review of the SABS. The new consolidated review of the auto insurance system will be initiated at least once every three years, beginning in 2013. 

In July 2012, FSCO retained the consulting services of medical and scientific experts who have been working to develop an evidence-based treatment protocol for the most common injuries from motor vehicle accidents. This is a two-year project. The consultants provide regular updates to the Superintendent and, as directed in the 2013 Budget, FSCO will provide an interim report this year on the progress of the project. The interim MIG will be assessed upon completion of the consultants’ report and will be addressed as part of a future comprehensive statutory reviews.

In summer 2011, FSCO introduced a new annual requirement that each insurance company provide it with a statement from its chief executive officer attesting that it had controls, procedures and processes in place to ensure compliance with legislative requirements for the payment and handling of claims.

In addition, new regulations came into force on January 1, 2013, that provided FSCO with the power to impose administrative fines on insurers for not complying with legislative and approval requirements.

As a result of changes to the SABS in September 2010, the auto insurance industry reports that Ontario’s average injury claim cost has decreased more than 50%, from about $56,000 in 2010 to $27,000 in 2012. The difference between Ontario’s average injury claim costs and those paid by other provinces has narrowed, although Ontario’s costs now stand at approximately three times higher than those of other provinces. However, lower accident benefit claim costs have not yet resulted in corresponding lower average premiums paid in Ontario, where the average premium was $1,551 in 2012, or 8% higher than in 2010, and still the highest in the country.

In August 2013, the government introduced a number of initiatives as part of a strategy to reduce average auto insurance rates by a target of 15%.

Recommendation 2:

To reduce fraud in Ontario’s auto insurance industry FSCO should:

•  help identify potential measures to combat fraud, including those recommended by the IBC and those in effect in other jurisdictions, assess their applicability and relevance to Ontario, and, when appropriate, provide advice and assistance to the government for their timely implementation; and
• ensure development as soon as possible of an overall anti-fraud strategy that spells out the roles and responsibilities of all stakeholder.

Status

In 2011, the government appointed the Ontario Auto Insurance Anti-Fraud Task Force to determine the scope and nature of automobile insurance fraud and make recommendations about ways to reduce it. As part of the Task Force, the Ministry of Finance retained consultants to provide research about how other jurisdictions combat fraud, analysis of the potential range of fraud in Ontario’s auto insurance system and advice on the regulation of health care facilities (provided by Willie Handler).

The Task Force made 38 recommendations that form an integrated anti-fraud strategy focused on prevention, detection, investigation and enforcement, along with enhanced and clearer regulatory roles and responsibilities.

New regulations came into force on June 1, 2013, which, among other things:

• require insurers to provide claimants with all the reasons for which a medical or rehabilitation claim was denied; 
• require insurers to itemize expenses in a bi-monthly statement to claimants of medical- rehabilitation benefits paid out on a claimant’s behalf;
• increase the role of claimants in preventing fraud by requiring them to confirm their receipt of treatment, goods or other services; and 
• make third-party service providers subject to sanctions for overcharging insurers for goods and services, and prohibiting them from asking consumers to sign blank claim forms.

In February 2011, to help streamline the claims-handling process, FSCO made usage of the HCAI system mandatory.

Recommendation 3:

To ensure premiums are fair and consistent, FSCO should:

• update and document its policies and procedures for making rate decisions and for properly assessing rate changes in light of actual financial solvency concerns of insurance companies; 
• review what constitutes a reasonable profit margin for insurance companies when approving rate changes, and periodically revise its current assessment to reflect significant changes; and 
• establish processes for verifying or obtaining assurance that insurers actually charge only the authorized rate.

Status

FSCO updated its policies and procedures for processing and approving rate applications effective May 2012. Rate decisions were based on a defined range that was acceptable when a proposed rate differed from the FSCO actuarial service’s assessments. Staff were required to get written approval from the Superintendent when a proposed rate decision is greater than the acceptable range.

In October 2012, FSCO retained a consultant to review the reasonable profit margin rate that had been established for auto insurance rate filings, including a financial assessment and consultation with the auto insurance industry.  In the final report, the consultant recommended that FSCO should consider moving to either a five-year or 10-year rolling average for a return-on-equity benchmark rate.  In August 2013, FSCO decided that an eight-year rolling average for a return-on-equity benchmark rate would be used going forward.  According to FSCO, the new methodology generated an 11%return-on-equity benchmark for 2013.  In addition, FSCO adopted another benchmark that assesses the insurer’s premium-to-equity ratio that is consistent with federal solvency and capital requirements. FSCO also has begun a review of the feasibility of moving to a return-on-premium approach, which it expects may be relatively more simple and transparent than the return-on-equity benchmark.

Since 2012, FSCO has required that the chief executive officer of an auto insurance company annually attest in writing that it provided auto insurance in Ontario in accordance with approved rates, risk classification systems and underwriting rules.

FSCO implemented a new annual requirement for insurance companies to attest that they had independent audit processes in place to confirm that approved rates were charged by the insurer.

Recommendation 4:

To ensure that FSCO meets its mandate to provide fair, timely, accessible, and cost-effective processes for resolving disputes over statutory accident benefits, it should:

• improve its information-gathering to help explain why almost half of all injury claimants seek mediation, as well as how disputes are resolved, and to identify possible systemic problems with its SABS benefits policies that can be changed or clarified to help prevent disputes; and 
• establish an action plan and timetable for reducing its current and growing backlog to a point where it can provide mediation services in a timely manner in accordance with legislation and established service standards.

Status

The government announced in its 2012 and 2013 Budgets that a review of the auto insurance dispute resolution system would take place.  FSCO also completed an internal examination on closed mediation cases and the corresponding insurers’ claims files to gather information on the reasons for the high number of claimants who were seeking mediation and how these disputes were resolved.

In August 2013, the government announced the appointment of an expert to undertake the review and make recommendations on transforming the current system. An interim report was due in fall 2013 and a final report by the end of February 2014 (Willie Handler is providing support to the review).

To address FSCO’s growing backlog of mediation cases, Treasury Board approved in December 2011 FSCO’s request for an additional $38.2 million over three years to hire a private dispute resolution service provider to supplement FSCO’s own staff.  With this contract help, and with new software that has made mediation scheduling more efficient, all mediation files had been assigned as of August 19, 2013, and the backlog had been eliminated.

Recommendation 5:

In order to provide the public, consumers, stakeholders, and insurers with meaningful information on its auto insurance oversight and regulatory activities, FSCO should report timely information on its performance, including outcome-based measures and targets that more appropriately represent its key regulatory activities and results.

Status

During the 2012/13 fiscal year, FSCO finalized its corporate Performance Management Framework that details for each of its divisions, including auto insurance, a set of performance measures and targets that link to its long-term goals and strategic priorities.  The Performance Management Framework was posted on FSCO’s website.

In addition, in June 2012, FSCO posted on its website new standards for its turnaround time for approving insurers’ filings for private passenger auto insurance rates and risk classification changes. The performance results for 2012/13 were posted on the FSCO website in June 2013.

Recommendation 6:

To ensure that the MVACF is sustainable over the long term and able to meet its future financial obligations, FSCO should establish a strategy and timetable for eliminating the Fund’s growing unfunded liability over a reasonable time period and seek government approval to implement this plan.

Status

No changes had been made to address the unfunded liability of the Fund, but FSCO continues to formally monitor the status of the Fund, and ongoing Ontario automobile insurance reforms have had a positive impact on the Fund’s unfunded liability. Any changes to funding would require amendments to regulations and to the existing MVACF fee on issue or renewal of an Ontario driver’s licence, which are the responsibilities of the Ministry of Finance and the Ministry of Transportation

Recommendation 7:

In view of the fact that it has been five years since the last review of the assessment of health system costs owed by the auto insurance sector despite the significant increase in health care costs related to automobile accidents over the same period, FSCO should work with the Ministry of Finance, the Ministry of Health and Long-Term Care, and the insurance industry to review the adequacy of the current assessment amount.

Status

The Ministry of Finance is undertaking to review the current assessment amount, as noted in the Minister’s August 24, 2013, policy statement.

The Auditor General's 2013 audit update on FSCO can be found here.

Insurance News - Monday, December 9, 2013

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

• CISRO and CCIR have created a website Canadian Insurance Regulators Disciplinary Actions database of regulatory decisions issued by insurance regulators members.
• The UK wants to become a world centre for the development of driverless cars and to do so it will conduct a review next year to ensure that the legislative and regulatory framework is in place for such vehicles to be incorporated on Britain's roads.
• An analysis of the U.S. personal auto insurance market indicates that low investment yields have led to higher rates.
• MADD suggests that bad drivers may receive the biggest savings under Ontario's Insurance Reduction Plan.
• There has been a significant increase pedestrian deaths on Toronto roads.

Insurance News - Thursday, December 5, 2013

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

• An academic feels self-driving cars may not be such a big deal because it is hard or near impossible for the technology to detect pedestrians.
• Saskatchewan to introduce tougher impaired driving penalties including longer suspensions, vehicle impoundments and mandatory ignition interlock requirements.
• This is a very good update on no-fault auto insurance in the U.S.
• Volvo ramping up its efforts to put self-driving cars on the road with the first autonomous vehicles as early as 2014.  They will run a pilot with 100 self-driving Volvos on public roads.
• Ratio of auto insurance expenditure to income is down in the U.S. but does that mean insurance is affordable?

Scarlett and Belair MIG Decision Overturned in Appeal

In the well known Scarlett and Belair case, the claimant was injured in an accident on September 18, 2010. He took the position that he while he did suffer sprains and strains, he also suffered from pre-existing conditions and subsequent psychological disabilities that took him out of the Minor Injury Guideline. After the accident, he was diagnosed with temporal mandibular joint (TMJ) syndrome.  Later there were additional diagnoses of chronic pain and psychological impairments.

In a preliminary issue hearing, the arbitrator found that the MIG is informational and non-binding that was not altered by its incorporation in the SABS.  He also found that the insurer had the onus of proving that the claimant had sustained a minor and and was subject to the $3,500 minor injury limit. In coming to his conclusion, the arbitrator also relied upon a number of cases, his own arguments, and his own English/French translations – without providing the parties the opportunity to make submissions.

The arbitrator's decision caused considerable angst within the insurance industry and a concern that the introduction of a monetary cap for treating and assessing minor injuries would not hold - a significant change introduced by the government in September 2010. However, the Director’s Delegate has allowed the insurer’s appeal in the Scarlett and Belair decision and more importantly confirms that guidelines incorporated in the SABS are binding.  This is important to establish considering the MIG is not the only guideline incorporated in the SABS.

Some of the key points raised in the Director’s Delegate’s decision:

• The arbitrator failed to address why he found that the claimant’s chronic pain, depressive symptoms and TMJ disorder were separate and distinct from his soft tissue injuries and were not the sequelae thereof.
• The arbitrator never addressed the test in the SABS of whether the claimant’s impairment was “predominantly” a minor injury.  The SABS recognizes that a claimant may have mutiple injuries but that does not automatically bring he or she out of the minor injury category.
• The arbitrator erred in finding that the burden of proof lay on the insurer to show that the claimant was subject to the MIG. The burden of proof always rests on the insured of proving that he or she fits within a scope of coverage.
• The arbitrator was incorrect in implying that $50,000 in medical and rehabilitation expenses was some sort of default coverage.
• The arbitrator erred in finding that “compelling evidence” simply means “credible evidence”, finding that the word “compelling” means more than “credible”.  As well, the discussion of "credible evidence" was not relevant to this case.
• The arbitrator erred in finding that the MIG was not binding because it was only a Guideline. The Director’s Delegate found that the MIG is binding because it was issued pursuant to section 268.3 of the Insurance Act, the definition of “MIG in the SABS refers to section 268.3, and the MIG is then applied in section 18 of the SABS, thereby incorporating the MIG into the SABS by reference.
• The arbitrator should not have been conducting his own research and relying on cases and statutory provisions that he then raised on his own after the hearing, which did not provide the parties the opportunity to respond.

The Director's Delegate remitted the matter to a full hearing before a different arbitrator, on all issues as between the parties.  The new arbitrator may still find that the claimant's impairments fall outside the definition of "minor injury" in the SABS.  It may well be that because of the claimant's other impairments (TMJ syndrome and chronic pain), an arbitrator may find that the claimant's impairment was not predominantly a minor injury.  Should that be the case, hopefully the decision will be based on the policy intent of the 2010 reforms and the SABS.

Insurance New - Friday, November 29, 2013

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

• A great article on the need for provincial regulation of towing in Ontario and the industry's connection to fraud.
• DirectAuto Insurance in the U.S. has rolled out new mobile capabilities, including a pay-by-text feature and an app that evaluates driving habits.
• Renault has developed a low-cost, part-time self-driving car that could go on sale as early as next year - the automated feature will only work at speeds under 19 mph and in areas where no pedestrians or bicycles are allowed. It's a start.
• The first public road test of Nissan's Autonomous Drive technology on a Japanese highway was a success.
• Though motor vehicle deaths have been declining, a recent study found that deaths in pedestrians and cyclists are increasing as a result of distracted driving.
• Electric vehicle charging stations are now available at five GO stations.

Insurance News - Thursday, November 28, 2013

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

• A great article on the need for provincial regulation of towing in Ontario and the industry's connection to fraud.
• Who has the most accidents per km of driving? No it's not teens, it's actually seniors. 
• Insurance telematics have evolved into 4 different models: the silent witness model, the simple measurement model, the behaviour-based model and the context information model. 
• The insurance industry is divided on who will choose telematics - good drivers (to save money over a classic policy) or bad drivers (to improve experience and get back to a classic policy).
• One of the offshoots of Obamacare is that e-billing is spreading to more insurance lines in the U.S.
• Another Google car has been involved in a collision but again Google says the car was being driven manually.

Insurance News - Tuesday, November 26, 2013

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

• FSCO has revised the OAF 1 – Ontario Application for Automobile Insurance to reflect new data reporting requirements.
• Auto insurance fraud lawsuits continue against Toronto medical assessment centres.
• PEI is considering raising no-fault auto benefit caps including increasing the medical/rehabilitation limit to $50,000, the weekly for income loss limit to $250. They are also considering raising the cap on court awards for pain and suffering for “minor personal injuries” to $7,500.
• The U.S. National Highway Traffic Safety Administration to give green light to self-driving car projects.  Apparently they like what they see in self-driving cars: their potential to operate more safely and fuel-efficiently.
• Meanwhile, U.S. lawmakers are not necessarily on the same page as they expressed a mix of wonderment and concern about driverless cars during congressional hearings.
• Still, 17 states (and Washington D.C.) have considered legislation addressing autonomous vehicles while 4 have already enacted laws.

Insurers Trying To Keep Claimants in the MIG Will Need Medical Reasons Before an IE

Insurers may be in a "Catch 22" situation in efforts to keep claimants within the limits of the Minor Injury Guideline (MIG).  Many insurers have been routinely sending claimants for an insurer examination (IE) to determine if a claimant has a minor injury and should be treated under the MIG. But according to a recent FSCO arbitration, an insurer needs to provide "medical reasons" for denying a benefit and requesting the claimant attend an IE.  The SABS require a benefit denial to trigger an IE needed to determine if the claimant belongs in the MIG but also medical reasons which insurers normally obtain through an IE.

In the decision, Kadian Augustin and Unifund Assurance Company [FSCO A12-000452] the arbitrator considered whether or not Ms. Augustin is allowed to dispute the insurer’s denial of treatment because she failed to attend an IE.  In order to make a determination the arbitrator needed to consider whether or not the IE was compliant with the SABS.

Unifund wanted to send Ms. Augustin to an IE to determine if she was within the MIG after receiving a treatment plan that, if approved, would take her out of the MIG.  Unifund provided the following notice to Ms. Augustin in their Explanation of Benefits: “Based on our review of the medical documentation provided to date, we require an assessment by an independent medical assessor, in order to determine if your impairment is predominantly a minor injury as described in the Minor Injury Guideline. Please see the Notice of Examination for further details.”

The arbitrator found that this explanation did not comply with section 38(8) of the SABS because it did not state that Unifund “believes” the MIG applies, or why.  Nor did it state the “medical reasons and all of the other reasons why the insurer considers any goods or services, or the proposed costs of them, not to be reasonable and necessary.  The arbitrator noted that it provided no reason, medical or otherwise, explaining why it refused to pay the benefit.

Health care providers have been complaining for some time that benefit denials often to not come with proper explanations regarding the reason for a denial.  The government has amended these provisions several times to make it clear that the claimant is entitled to a proper explanation.  Now an arbitrator has ruled on the wording.  The problem is that no one knows what explanation would satisfy an arbitrator.  As well, the arbitrator failed to reconcile that the purpose of the IE is to collect medical information and assist in making entitlement decisions.

The decision can be found here.

Insurance News - Thursday, November 21, 2013

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

• A product that Travelers believes can win back the auto insurance sector from direct writers. 
• Michigan poised to approve self-driving vehicle testing and limiting the liability of auto suppliers and manufacturers of vehicles that are modified for testing. 
• MetroMile in Washington state plans to allow drivers to insure cars by the mile - a new variant of “pay as you drive.”
• CCIR has released its final position paper on e-commerce.
• Here’s how California is to have saved residents $100 billion on auto insurance.
• No surprise, passengers point to their spouses as being “the most annoying drivers” according to a recent survey.

Insurance News - Tuesday, November 19, 2013

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

• The Consumer Federation of America has concluded that California auto insurance regulation and rate prior approval has been a boon to consumers since Proposition 103 and should be adopted by other states. 
• The Progressive CEO believes telematics will help his company adapt to and underwrite driverless cars sooner.
• Florida no-fault may not be dead yet. A ratings agency indicates Florida PIP reforms designed to reduce loss cost volatility and fraud are credit positive as costs begin to fall. 
• A U.S. regulator has offered to relax safety rules if car manufacturers accelerate new safety systems that prevent drivers who are drunk or have unbuckled seatbelts from operating cars.
• According to the UN World Health Organization and the OECD/International Transport Forum, international road safety data reveal death rates falling in high-income countries, rising in low-income countries. 
• Have you seen questionable fees charged by towing companies? How about a $150 cursing fee?

Insurance News - Thursday, November 14, 2013

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

• For those who don't believe auto insurance is turning into just another commodity, a U.S. insurer is setting up a number of transactional insurance kiosks in malls, car dealerships, gas stations and supermarkets.
• York Regional Police have busted a high-end car theft ring that resulted in 14 arrests.
• Proposed bill would expand New Jersey's distracted driving law to include traffic jams, red lights, stop signs.
• A Kanetix survey shows that drivers of high-end vehicles have fewer tickets, accidents and claims.
• Detroit's Mayor-elect is exploring setting up a municipal auto insurance company to sell policies to its residents to combat the high price of auto insurance in the city.

Insurance News - Tuesday, November 12, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, November 12, 2013:

• IBC reports that motorists talking on cellphones or texting are killing more people in Ontario highways than impaired drivers.
• CarSharing Association has released a draft liability insurance guideline for carsharing operators in the U.S.
• Technology is playing a key role in the communication of auto insurance and the growth of direct insurance. 
• Two new initiatives were announced this week, which shows that Canada is becoming fertile ground for telematics.
• Fully autonomous cars could free up ~75 billion driving hours each year or roughly 6-7 hours per week per driver.

Interim Report of the Ontario Automobile Insurance Dispute Resolution System Review

The Interim Report of the Ontario Automobile Insurance Dispute Resolution System Review is now online.  The interim report provides an overview of the history and structure of the Ontario auto insurance DRS, the structure of auto insurance dispute resolution systems across Canada and in other jurisdictions and trends in the current Ontario DRS, including outcomes of recent court and arbitration decisions.  It also makes a few recommendations and sets out a possible framework for a future DRS.

The report recommends that mediation no longer be mandatory in its current form.  It suggests that the government consider introducing a new system that consolidates the strengths of the existing mediation and arbitration processes to facilitate a more efficient model for resolving disputes.

It also recommends that the government consider that FSCO’s DRS adjudicative functions be delivered externally. The final report will address whether the adjudicative functions should be established in an independent public sector tribunal or in the private sector.

The proposed model set out in the report would provide a process that takes no longer than six months from start to finish. Cases would follow a different stream based on the benefits in dispute and the complexity of the issues involved.

The process would begin with a benefit denial.  Every Ontario auto insurance company would have to establish a formal internal review process. A claimant wishing to dispute a benefit denial would first have to meet with their insurer to clarify why they believe the insurer was incorrect and present any new information to support their claim.

If the parties cannot resolve their dispute, the claimant would then be free to file an application with the new ADR body (whether in the private sector or within a tribunal) or perhaps they could access the courts at that stage. Cases using the court option would be subject to the rules and timelines of the court system.

If the claimant chooses ADR, a case manager serving as a gatekeeper to the process would review each application to determine whether the parties are ready to proceed through the system. The case manager would determine whether there are jurisdictional issues to be addressed and whether a proper exchange of documents has taken place. The case manager would have the ability to return the application if there were any outstanding issues.

Once everything is in order, the case would immediately be assigned to an arbitrator, who would arrange a mediation session within 45 days, which would be a hybrid of the current mediation process and pre-arbitration hearing. During this stage, the arbitrator might provide a non-binding opinion on the likely outcome; in other words, the mediation session could potentially be a more evaluative process. Should the mediation fail to produce a settlement, the arbitrator would immediately schedule a hearing for the parties.

The arbitrator would also perform a triage role at this point to determine whether the case should be subject to a paper hearing, an expedited summary in-person hearing or a full in-person hearing. For a paper hearing, the parties would submit their final positions in writing along with all supporting documentation, and the arbitrator making a decision based on a document review.

For an expedited in-person hearing, the parties would submit supporting documentation, including affidavits and expert reports. Although testimony and cross-examination could take place within set time parameters, the use of expert witnesses would not be permitted. Expedited hearings would take no longer than half a day.

More complex cases, such as catastrophic impairment determinations, would be permitted to make use of expert witnesses but still would be limited to a short timeframe.

The paper hearing would take place within 60 days of the mediation, while in-person hearings would take place within 90 days.

There would be rules established, perhaps in regulations, setting out timelines, sanctions for non-compliance and other provisions to ensure the parties follow the principles set out in this report. There should be a prohibition on adjournments in all but the most exceptional cases. The length and content of expert reports would be restricted.  Each case would be decided on the merits of that case alone. Arbitrators would be required to follow the policy intent of the regulations and the Superintendent’s interpretive guidelines.

Arbitrators would have discretion to assign costs to either side when warranted. Fees may differ depending on the type of hearing. Decisions should be issued within 45 days of an in-person hearing. For paper hearings, decisions should be issued within 30 days. The process from application date to the issuing of a decision would be four and a half months for paper arbitrations and six months for in-person arbitrations.

Appeals would be heard by a single judge of the Superior Court.

Auto Insurance Section of the 2013 Ontario Economic Outlook and Fiscal Review

The governments Fall Economic Statement included a section on auto insurance but did not include any new initiatives.   Instead, the government provided an update on current initiatives.

With respect to the government strategy to reduce Ontario auto insurance rates by 15 per cent on average within the next two years, the government gave FSCO the authority to require insurers to re-file new rates for FSCO approval. The government reports that insurers have started to file new rates with FSCO as a result of this new authority. The government also made the Superintendent of FSCO’s guidelines binding to help reduce unexpected costs.

The government expects that the January 2014 report on approved rates from FSCO will provide the first evidence that its strategy to reduce costs and rates is working.

Transforming the auto insurance dispute resolution system is another key element of the government’s cost and rate reduction strategy. The Province appointed former Associate Chief Justice of the Superior Court of Justice, the Honourable J. Douglas Cunningham, to lead a review and make recommendations on how to make this a more efficient and effective system.  Stakeholder consultations on the recommended legislative direction will be held in the coming months in preparation for the final report.

The government also committed to protecting consumers by continuing to ensure that insurer rate filings include rates that reward safe drivers and by helping to ensure that all regions of Ontario benefit fairly from cost savings.

The Ontario government is also continuing to crack down on auto insurance fraud to further benefit consumers. The government has already taken a number of actions to address key recommendations made by the Auto Insurance Anti-Fraud Task Force, such as a framework for licensing health clinics in the auto insurance system, and expanding the regulator’s investigation and enforcement authority.

FSCO has launched an Anti-Fraud Hotline will allow the public to play a greater role in combating fraud. Ontario has also added important information to the Ministry of Transportation’s Driver’s Handbook to help new drivers understand and prevent auto insurance fraud.

The government is also actively working to develop a province-wide system to oversee the towing industry. In the winter of 2014, the government will work closely with the sector, the Association of Municipalities of Ontario, the City of Toronto and other key stakeholders on the development of a proposed model. As part of this work, the government will also look at the issues of vehicle storage and collision repair practices.

In addition, the insurance industry is working to fight fraud. It recently announced the creation of Canadian National Insurance Crime Services (CANATICS), a new not-for-profit organization that will use data analytics to identify suspicious claims. The Task Force supported the use of data analytics to combat auto insurance fraud and recommended the creation of such an organization in its final report.

Insurance News - Thursday, November 7, 2013

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

• Alberta bill if passed will regulate premiums for optional auto insurance coverage.
• Intact and Belairdirect plan to launch telematics-based solution in Quebec with up to 25% auto insurance premium savings based on driving behaviours.
• Stakeholder submissions to the Ontario Automobile Insurance Dispute Resolution System Review are now available online.
• Teenage drivers are getting in fewer accidents in Massachusetts after the state increased young driver training requirements.
• Future Google cars will likely come with other Google product lines - gmail, gchat, Google maps and YouTube - afterall you need something to do while not driving your car.

Insurance News - Wednesday, November 6, 2013

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

• At the IBC Regulatory Affairs Symposium, a Cornell professor suggests there is too much moral hazard in Ontario's auto insurance system.
• Ontario appears to seriously looking at demerit points for distracted drivers.
• Lawmakers try again to clean up auto insurance fraud in Florida by repealing no-fault and replacing it with a tort-based system.
• MIT researcher claims traffic woes could be cut by an advanced cruise control system and without self-driving cars.
• A British town is replacing its buses with 100 driverless pods that run on a track.

Insurance News - Tuesday, November 5, 2013

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

• Cornell professor suggests that there is too much moral hazard in Ontario's auto insurance system.
• Young drivers in Ontario may soon be able to save money on auto insurance when new telematics programs are introduced.
• New York bans 12 doctors and 6 therapists from billing no-fault insurance program because of fraud.
• New York has also approved auto insurance discounts for drivers who complete an approved defensive driving course. 
• Canadian ownership in the property and casualty insurance sector just dropped with the purchase of Dominion Insurance by Travelers.

Insurance News - Wednesday, October 30, 2013

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

• Referral fees in personal injury cases have become the norm rather than the exception.
• More and more auto insurance is all about price and the direct writer model wins.
• By 2017, 60% of the world's vehicles will be connected monitoring the safety and security of vehicles and drivers. 
• There is a spike in auto insurance vandalism and theft claims each year on Halloween. 
• New York continues to crackdown on fraud by baning 12 doctors and 6 therapists from billing the state's no-fault insurance program.

Insurance News - Monday, October 28, 2013

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

• FSCO's third quarter rate approvals are posted and they show a decline of 0.68% for the entire market.  However, CAA rates are dropping by 7.15%, as the insurer appears to be the first company to aggressively accept the government rate reduction strategy.
• Ontario auto insurers are moving closer to widespread deployment of usage-based insurance programs.
• Florida appeals court finally lifts temporary ban on part of auto insurance law clearing the way for enforcement on anti-fraud reforms.
• Meanwhile, a Florida crack down on insurance fraud has led to 1,571 arrests for the first half of this year.
• Self-driving cars projected to reduce injuries by 90 percent and save $450 billion annually in the U.S.  What impact will that have on premiums?
• Not only that, but data shows that self-driving cars are smoother, safer drivers than humans.

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

• Canadian Centre for Study of Insurance Operations to release telematics data standards in January 2014.
• According to a Towers Watson survey the P&C market in Canada and the U.S. is hardening. So what additional impact will the Ontario legislated 15% rate reduction have? 
• The U.K. plans to introduce independent medical panels to validate whiplash claims and surprisingly the proposal is supported by defense and plaintiff bar. 
• Google's Director of Safety reports that even the best automotive safety technology can't possibly save every life. The limit to the effectiveness of safety technology is the way people use it (or don't use it).
• Looking into the future when self-driven cars cause crashes who will pay the auto insurer or product liability insurer? 
• Watch a self-driving Nissan Leaf avoid a pedestrian on the road:

Insurance News - Tuesday, October 22, 2013

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

• Is personal lines auto worth fighting from an independent broker perspective? 
• Growing trend in kickback schemes and staged accidents in Minnesota to take advantage of the state’s no-fault laws.
• If you need any proof of the problem there,  a federal lawsuit filed October 14 accuses a diagnostic imaging company and 46 chiropractors of engaging in an elaborate kickback scheme aimed at defrauding Minnesota’s no-fault insurance system.
• Aging baby boomers expected to drive demand for self-driving cars as accident rates for seniors rise.
• To capitalize on a burgeoning market, the University of Michigan has approved a $6.5 million track for testing self-driving vehicles.
•  Kathleen Wynne to launch ‘open government’ push but is the problem really lack of government transparency or is it Cabinet decision-making is clouded in secrecy?

Insurance News - Saturday, October 19, 2013

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

• Ontario drivers paying up to 90 per cent of road costs (approximately $7.5 billion) yet the province is looking at making car owners pay more.
• New York State Senator will be introducing a bill to allow drivers to carry electronic proof of insurance and vehicle registration.
• A Florida clinic owner who was involved in more than 26 staged accidents and treated 60 individuals could get 75 years in PIP fraud case. 
• Use of telematics in British auto insurance policies have increased seven-fold in the last two years.
• Do self-driving cars need speed limits?
• Smarter cars are on the way (not smarter drivers).

Insurance News - Tuesday, October 15, 2013

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

• A KPMG study suggests that consumers would prefer to buy a self-driving car from Google over U.S. automakers. 
• A Michigan study suggests that auto insurance rates can be reduced without changes to the unlimited medical benefits.
• Around three-quarters of all child car seats are installed incorrectly so many strapped-in children still at risk.
• California Governor Jerry Brown has vetoed a bill that would have created a teen driving curfew after 10 pm and extending the wait time from 6 months to 9 month for young drivers before that can get a full license.
• Move to scrap no-fault auto insurance coming to Florida Senate, as 2012 anti-fraud measures tied up in court.
• Toyota has combined cruise control and lane-keeping technologies to form a new feature, Automated Highway Driving Assist.

Ontario Government Consulting On Proposed Service Provider Regulations

The 2013 Ontario Budget included a commitment to introduce legislative amendments that would, if passed, "Give the Financial Services Commission of Ontario (FSCO) authority to license and oversee business practices of health clinics and practitioners who invoice auto insurers". This authority was included in The Prosperous and Fair Ontario Act (Budget Measures), 2013, which received Royal Assent on June 13, 2013. 

The legislation provides regulation-making authority consistent with recommendations made by the Automobile Insurance Anti-Fraud Task Force in 2012. 


The proposed regulations would prescribe:
- Licensing eligibility including grounds for unsuitability
- Designated principal representative eligibility requirements and duties
- Public registry information
Future proposed regulations would be expected to prescribe:
- Business/billing standards of practice
- Listed expenses (e.g. expenses covered by licensing)
- Expenses not covered by licensing
- Licence applicability
- Revocation/Suspension criteria and expedited process
- Licence surrender criteria
- Unfair or deceptive acts or practices
- Administrative monetary penalties
- Consequential amendments to the Statutory Accident Benefits Schedule (SABS) 

The Ontario government's Regulatory Registry is inviting stakeholders and interested parties to provide comments on these proposed regulations (that have yet to be made public).

The deadline for comments is November 24, 2013.

Insurance News - Sunday, October 13, 2013

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

• New Brunswick government satisfied that provincial auto insurance rates are the 3rd lowest in Canada, despite report from its own expert that drivers are paying too much.
• Yet another attempt is being made to ditch 'no-fault' auto insurance in Florida.
• Michigan introduces bill aimed at "runners" which would set 30-day waiting period for contacting accident victims but bill has major loopholes.
• The Nevada Division of Insurance will be reviewing how insurers apply surcharges to drivers who’ve been caught texting or talking on a phone while driving.  Insurers will be asked to submit data justifying the use of this factor.
• The Great Canadian personal data grab - why do businesses want so much data?

Insurance News - Friday, October 11, 2013

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

• Oliver Wyman actuaries report that New Brunswick drivers overpaid millions for auto insurance and shouldn't have to pay any extra for a higher minor injury cap.
• New Brunswick report recommends increasing $2,500 auto insurance cap for minor injuries.
• A Globe and Mail opinion piece asks the question, will politicians in Ontario ever be able to deliver lower auto insurance premiums?
• British Police arrested 27 people over scams involving the sale of fake auto insurance policies over the Internet.
• Ford may not have a self-driving car yet but it has developed a self-parking system.

Insurance News - Monday, October 7, 2013

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

• Toronto Star article suggests that perhaps usage-based insurance will be able deliver enough savings for Ontario auto insurers to allow them to cut rates by 15%? - nonsense.
• FSCO has released a usage-based insurance bulletin with guidance on what to include in a filing with the regulator.
• Traffic fatalities in Toronto are at 3-year high - this has got to be related to distracted driving. 
• Self-driving cars offer the latest example of how society is not always prepared to deal with new technologies when they become available.
• California Bill would require DMV to issue drivers' licenses to undocumented immigrants who pass driving tests and buy insurance coverage. This follows similar moves by Illinois, Oregon, Maryland, Nevada, New Mexico, Washington and Utah.

FSCO Releases Usage-Based Insurance Guidelines

On October 3, 2013, FSCO released a Bulletin providing some guidance to auto insurers on the type of information that should be filed when seeking approval for a Usage-Based Insurance Pricing (UBIP) program.  For full details regarding FSCO requirement, refer to the UBIP Bulletin. 

Personal Information and Privacy Requirements

Although telematics devices do not currently have the capability to identify who is driving a vehicle at any particular time, in many circumstances (for example where a vehicle has only one listed driver), the data collected by the device may reasonably be assumed to be about that individual, with the result that the data is personal information as defined in PIPEDA.   However, FSCO has taken the position that telematics data should be treated as personal information even if it is not about the driving behaviour of any one identifiable individual. 

Personal Telematics Data: Insurer Transparency and Consumer Consent

UBIP programs must be voluntary and enrollment must include the express, informed consent of the policyholder to the collection, use and disclosure of personal information by the insurer or third party provider.  Any personal information collected through a UBIP program, or its accompanying devices or software, should not be disclosed to any other party unless expressly consented to by the person or as required by law.

 Drivers should be able to enroll in a UBIP program without being required to share their personal information for non-UBIP purposes (e.g., marketing, offering of additional services such as vehicle location services or assistance in emergency situations).

Insurers should, where possible, facilitate drivers using their personal UBIP data for the purposes of entering into a contract with another insurer including enrolling in another insurer’s UBIP program.  
 

A consumer’s enrollment in a UBIP program involves the agreement by the consumer and insurer to additional legal rights and obligations outside of those in the standard auto insurance policy.  In Ontario the mechanism for amending the standard auto policy is by way of an endorsement form which must be approved by the Superintendent. 

 Insurers may also be required to provide the Superintendent with any advertising or promotional material proposed for use in relation to their UBIP programs to ensure that it is clear, fair and not misleading.

Complaints, Inquiries and Customer Support

Insurers must be sure to provide adequate customer service support  and outline appropriate mechanisms, enquiry management, and resolution systems to respond to customer questions, concerns and disputes.

Driver Education and Transparency in Rating and Risk Classification Systems

To encourage safe driving and ensure transparency, it is important that the rating model for a UBIP program be clearly communicated to the consumer at all times, beginning prior to enrollment and continuing through to each policy renewal. The impact that a consumer’s driving data has on the premium must be clearly articulated including a clear explanation of how to qualify for a discount, the period being measured to calculate the discount, the maximum or minimum of that discount, and regular feedback on driving habits to the consumer.

Changes in Rating

Consistent with the existing policy renewal process in Ontario, any change in rating on a policy must be done in accordance with s. 236 of the Insurance Act.

Limitations on Collection and Use of UBIP Data for Insurance Purposes

UBIP programs, including program-provided devices and applications, should collect and use UBIP data solely for discount-setting purposes, and not to decline, cancel or refuse to renew risks or to confirm rating criteria currently used.

General Rate-Filing Information
 

Any UBIP program must be filed and approved by the Superintendent. It is recognized that there may be no Ontario-specific data to provide in a filing.  However, FSCO is supportive of innovation and, as with other rating factors new to the market, is willing to review data and the amount of the discount charged in other jurisdictions.UBIP-related rates and risk classification system elements must be just and reasonable and otherwise satisfy the statutory standards applicable to all rates and risk classification systems.

UBIP Program Costs and the Impact on Insurer Expenses

To encourage drivers to participate, insurers should cover all costs of enrolling in a UBIP program including the cost of any device installation and any ongoing costs of operation or maintenance. Insurers must clearly demonstrate the up-front or start-up costs associated with developing and introducing a UBIP program, as well as all ongoing maintenance and other expenses associated with offering the program, including but not limited to all costs associated with the UBIP device, data transfer and analysis, marketing and any third party provider contracts.

Reasonability of UBIP assumptions and the provision of adequate support   

Proposed UBIP models may first be reviewed and approved by FSCO in principle, following which an insurer would make a formal filing for Superintendent’s approval. Approval of the filing could be made conditional on further filings being required at scheduled intervals to provide the necessary continued support for the UBIP rating system.

General Data Considerations: accuracy, security, storage, at termination 

Before any UBIP data is used for rating purposes, reasonable efforts must be made to ensure that the data is accurate.

Insurers must also ensure that the data capture, transmission and analysis are all done within a secure environment.

Insurers and third parties should delete or anonymize personal information once there is no clear business need to retain the data.  

Insurers must ensure that no further data is received or accessed after a consumer terminates participation in a UBIP program or terminates the policy.

Roles and Responsibilities: Insurers and Third Party Providers 

FSCO expects that insurers will have written contracts with each third party provider to confirm:

• the provider’s ability and commitment to ensure a level of personal information protection equal to or greater than that expected of the insurer, and to comply with all applicable laws and regulations,
• that the service provider has the required service capability, and
• that succession issues are addressed to ensure a smooth transition when ending or varying an agreement with a provider.

Insurance News - Sunday, October 6, 2013

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

• Man lobbying government to have convicted distracted Ontario drivers receive demerit points.
• A study by Liberty Mutual in the U.S. finds that adult children avoid discussing concerns with senior parents’ driving.
• The insurance industry officially announces CANATICS -- Canadian National Insurance Crime Services with the appointment of a CEO.  The organization is to use sophisticated analytics to support the identification of fraudulent activity.
• Not what you would expect but a new study indicates that Toronto countdown crosswalks have led to increase in pedestrian collisions.
• Woman charged with selling over 300 fake auto insurance policies to people in the Detroit area.

Insurance News - Friday, October 4, 2013

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

• Toronto woman accused of bilking fellow Filipinos of over $500,000 in a phony chiropractic clinic scam, pleads guilty to 16 counts of fraud.
• The Ontario government continues to consider an overhaul of its definition of “catastrophic impairment."
• First privacy breach under Obamacare has already occurred: In Minnesota confidential information accidentally sent to broker.
• In case you were wondering, the U.S. government shutdown may impact on the P&C insurance industry.
• Highway to become Britain's first Internet-connected road and could pave the way for self-driving cars.

Insurance News - Thursday, October 3, 2013

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, October 3, 2013:

• U.S. survey indicates most insurance policyholders would prefer to have a simple explanation of their insurance policy in terms they can understand and have policy details explained in a brief, one-page summary.
• By investing in telematics and setting up the Independent Broker Resources Inc (IBRI), brokers are signalling that they are prepared to compete with direct writers who currently dominate UBI.
• On January 1st California will become the 8th state to allow policyholders to get their policy renewals delivered electronically.  I understand FSCO's view is that there is no legislative barrier to electronic policy renewals in Ontario.
• The good news is the number of deer-auto crashes has dropped off in the U.S. The bad news is more deer are dying from disease. 
• Thomson Reuters has a new white paper explores the growing presence of organized crime in insurance fraud and it's free to download.