Queen's Park Update

A surprise majority for the Liberals in the recent election is expected to set a different tone in Queen's Park after almost 3 years of minority government.  A minority government is all about survival, there is no long-term planning. The Liberals could not focus on deficit reduction, job creation, pensions or stabilizing the auto insurance product without the confidence of having the support of the Legislature.

Despite campaigning under an activist agenda, the Liberals are now signalling that they are serious about deficit reduction. Deb Matthews has been appointed President/Chair of Treasury Board/Management Board which traditionally has been a responsibility of the Ministry of Finance. Treasury Board is not well known outside of government but it is a powerful central agency that manages the fiscal plan of the government including all government spending and approving labour agreements.  A very powerful body.

Charles Sousa continues as Minister of Finance and appears to still be responsible for the auto insurance file.  His Deputy, Steve Orsini has been promoted to Secretary of Cabinet which is head of the Ontario Public Service.  His appointment is intended to also signal that the Liberals are serious about deficit reduction.  He replaces Peter Wallace also preceded Orsini as Deputy Minister of Finance.

There has been some restructuring in the Ministry of Finance.  The Insurance and Cooperatives Policy Unit (which includes auto insurance policy) and the Deposit Taking Institutions Unit of the Industrial and Financial Services Branch will be reconstituted as the Financial Institutions Policy Branch. They will continue to be led by Alvaro del Castillo. Tthe Financial Institutions Policy Branch will join the Securities Reform Division (SRD) reporting to Assistant Deputy Minister Frank Allen who replaces Pat Deutscher. To better reflect its broader mandate the SRD will be renamed the Financial Services Policy Division.

Next week, new MPPs will return to Queen's Park to elect a new Speaker of the Legislature (July 2), hear a new Speech from the Throne (July 3), then debate a re-introduced provincial budget on July 14. It is expected that shortly after that the Legislature will recess for the summer.  That might mean that the reintroduction of industry supported bills such as Bills 171 and 189 might have to wait until the fall.

Rate Evasion Is The Latest Type of Fraud To Hit The GTA

Registering and insuring your vehicle using your parent's address in a neighbouring city might seem like a clever way to save money on your auto insurance rates.

Doing so can save hundreds of dollars.  Using an online quoting system, I found that a 30 year old man, driving a 10 year old Toyota with no tickets or accidents would pay $1,998 if he lived in North York. Change the address to one in Barrie and the rate drops to $1,489. That's a $500 difference.

While fibbing on an address may seem harmless enough, it's a practice known as rate evasion, and it's considered a form of insurance fraud.

With rate evasion, people claim to live in another city or that their car is garaged there, in order to pay lower insurance rates.  If you say you live in Barrie but actually live in Toronto, you're posing a risk in Toronto but you're not paying for that risk. Toronto residents whose vehicles are registered in the right location end up covering some of your share of the costs by paying higher auto insurance rates.

Rate evasion occurs in regions with high auto insurance rates.  It's difficult to detect in the GTA since vehicle plates do not reveal where your car is registered.  In some urban areas in the U.S. it is a little more obvious.  In certain areas of New Jersey, especially northern, urban areas, and the southern part of the state bordering Pennsylvania, it's not uncommon to see plenty of cars with out-of-state license plates regularly parked in people's driveways and on residential streets.  Recently I was involved in a minor collision and the other driver provided me with his driver's licence, vehicle registration and insurance card.  Each document had a different address.  It made me just a little suspicious.

Auto insurance is a pooling system where everyone pays premiums and the pool of funds are used by an insurer to pay claims to those who have accidents.  Everyone is rated based on their risk profile which includes where you live.  To certain extent there is always going to be some form of cross-subsidization based on the rules an insurer follows.  For example, an insurer cannot determine premiums based on whether the policyholder has access to collateral benefits from a workplace (e.g., supplementary health benefits). Those with access to collateral benefits are going to claim less than those without yet they may be rated the same, all things being equal.

When consumers try to beat the system by registering their vehicle at a false address, they are being cross-subsidized by other policyholders.  The difference is they are operating outside of the rules and the law. Therefore, it's fraud.  Still, high premiums in the GTA will continue to tempt some drivers.

Insurance News - Friday, June 20, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, June 20, 2014:

• IBC will be lobbying for more auto insurance reforms in in Ontario now that there is a majority government.
• Why it's so easy to steal from insurance companies – and what to do about it.
• Should Canada revisit credit rating for auto underwriting?
• Auto insurance claims drop with Honda collision warning system - a taste of what driverless cars can offer.
• So what happens when two self-driving cars are at an intersection and their clocks tell them both they arrived first?
• FSCO has revised the Standard Benefit Statement that insurers must send to claimants every 2 months beginning Sept 1.

Insurance News - Wednesday, June 18, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, June 18, 2014:

• Ontario Court of Appeal finds insurer must indemnify and and defend woman who let her driver's licence expire.
• The WSIB has been relying more on surveillance to investigate questionable claims.
• Government prepares regulations to enable large-scale testing of self-driving cars on Dutch roads.
• Driverless cars are going to change just about everything.
• Other than Ekos, why did none of the polls pick up on a Liberal majority?

What the Liberal Majority Government Means For Ontario Auto Insurance

The Liberal platform for auto insurance was essentially set out in the 2014 Spring Budget which never proceeded beyond first reading before the election was called.  Now that the Liberals have a majority, it is expected that they will proceed with those commitments.  It also means the NDP will no longer be able to influence government policy.

In the Spring, the Liberals indicates that the rate reduction strategy is on target and average rates will be 8% lower by August 2014 and 15% lower by August 2015. However, the Budget document does not point to any specific initiative that will specifically work towards achieving those targets. Average rates are down 5.6% as of the end of the first quarter of 2014.

The Liberals will  have a challenge bringing down rates further without a few significant systemic changes.  More and more it appears costs have been rising over past few quarters so it should be interesting to see the second half data for 2013.  Rising costs can be attributed to a number of factors including:

• a severe winter
• higher claims volumes
• the backlog of decisions awaiting arbitration
• deterioration of reforms as parties begin to discover how to work the system
• claims staff "fatigue"
• residual fraud

Governments are more likely to make unpopular decisions early in a mandate than immediately before an election.  So there is a possibilities that some tougher decisions make be made on the auto insurance file to stabilize costs and ensure consumers will see lower rates.

The Premier has committed to bringing back the Legislature on July 2 to re-introduce the Budget Bill following a Throne Speech. The Budget Bill itself had no auto insurance provisions.

Instead, legislative amendments to the Insurance Act were part of Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 which was introduced in March 2014.  The Bill included legislative amendments for the transformation of the dispute resolution system, and further action to crack down on fraud and abuse, as well as other cost-saving measures. The government was to take further steps on developing a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud. The development of this fraud office would be based on the Auto Insurance Anti-Fraud Task Force’s principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.

There is no timetable for re-introducing Bill 171.  There were some strong objections expressed over several provisions in the Bill - barring access to the courts for accident benefit disputes and reducing the prejudgment interest rate.  It will be interesting to see if there are any changes should the Bill be re-introduced.

The Liberals had also introduced legislation to regulate the towing industry that never passed.  Bill 189, the Roadside Assistance Protection Act would require towing and storage providers to publish their rates, provide an itemized invoices, accept payment by credit card if requested and to disclose to the consumer any interest a towing and storage provider may have in a location or facility to which a vehicle may be towed for repair or storage.  If passed into law, Bill 189 would also stipulate the consumers be given access to towed vehicles in order to remove personal property.

FSCO has been proceeding with the licensing of treatment and assessment facilities on the auto insurance sector.  The licence application process opened up on June 1.  Facilities will have to be licensed on December 1 in order to submit invoices through HCAI.  Application fees were also recently announced.

Perhaps even some outstanding issues, such as the definition of catastrophic impairment and a new minor injury treatment protocol will finally be addressed.

Insurance News - June 12, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, June 12, 2014:

• What do politics have to do with Ontario auto insurance rates anyway?
• The Ontario election is too close to predict but that doesn't stop people from predicting.  Go out and vote.
• Self-driving cars along with car sharing schemes could take up to 80% of traffic off the roads of congested cities.
• A fake city built at the University of Michigan is to be used to test self-driving cars.
• The legal costs to the telematics industry of handling subpoenas and other information requests will quickly rise.
• Auto risk management - how 'telematics' is revolutionizing insurance.

Insurance News - Friday, June 6, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, June 6, 2014:

• A number of experts think that self-driving cars could hold a big promise for public transportation.
• Almost  80% of Canadians are still unfamiliar with usage-based insurance.
• Telematics will become so popular that within 10 years drivers will likely have to opt out.
• Lawyers and expert witnesses are cashing in when auto insurance claims go to court and driving up costs.
• Armed with digital devices, consumers are filling many legacy insurance roles and driving insurers crazy.
• An interesting report by Lloyds on self-driving cars - opportunities and risks for insurers.

FSCO's Licensing Process for Service Providers Has Begun

The licensing process for auto insurance service providers, first recommended by the Auto Insurance Anti-Fraud Task Force in 2012, has officially begun.  

As if June 1, the application process was opened up by FSCO.  Service providers must be licensed by December 1 to continue to use HCAI and bill insurers directly.  As well, FSCO states that an application received after August 31 may not be processed before December 1.

Service providers can apply as a:

• Sole proprietor
• Partnership
• Corporation

The application fees are now available as well.  There is a one-time application fee of $337. Then there is a annual regulatory fee that is tied to the volume of business conducted with auto insurance companies. Service providers will be charged $15 for each claimant in the system in the calendar year plus $128 for each location it operates from.

So a chiropractor that sees 2 auto insurance claimants per month and operates one clinic will pay:

($15 * 24) + $128 = $488.

A larger provider operating from 5 locations with each location accepting 40 new claims a month will pay:

($15 * 2400) + ($128 * 5) = $36,640.

Regulatory fees will be payable on April 1, 2015 and will be prorated from December 1, 2014 (four months). 

For more information check the FSCO website.

Insurance News - Friday, May 30, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, May 30, 2014:

• FSCO has released a revised Attendant Care Hourly Rate Guidelines, which increases the minimum attendant care rate to $11 per hour effective June 1 to match new Ontario minimum wage. The other attendant care hourly rates remain unchanged.
• Telematics are changing driving habits and providing those who do change with discounts.
• Quebec's automobile insurance board says it has fired an employee for allegedly accepting bribes in return for helping 90 prospective drivers cheat on their tests.
• Good2Go®, specialists in offering minimum coverage auto insurance, introduces a cell phone safety discount in Pennsylvania for drivers that install a device that blocks distracting phone functions such as text messaging, email, and Internet browsing.
• Here's an early look at Volvo's self-parking, driverless car, due to hit streets in 2017.

Insurance News - Monday, May 26, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, May 26, 2014:

• A drivers advocacy group is lobbying to have the speed limit on 400-series highways raised to 120-130 km/hour; suggests it would improve safety.
• WSAT declares traumatic stress provisions of Workplace Safety and Insurance Act are unconstitutional because mental stress claims have legal restrictions while physical claims do not.
• California's new self-driving car regulations prohibit falling asleep at the wheel among other things.
• Warren Buffett suggests self-driving cars will be good for society but a real threat to insurers as lower accident rates will reduce premiums and impact on insurers' bottom line.
• B.C. Supreme Court dismissed a claim and accepted the position of the insurer that the claimant burned his own car and claimed it was stolen.

What the Ontario Party Platforms Say About Auto Insurance

The policy platforms for the major parties in the Ontario provincial elections are out.  Here is what you can expect from each of the parties with respect to auto insurance if they should win the election.

Liberals

The Liberal platform for auto insurance was essentially set out in the 2014 Spring Budget which was failed to pass before the election was called. 

The Liberals indicates that the rate reduction strategy is on target and average rates will be 8% lower by August 2014 and 15% lower by August 2015.  However, the Budget document does not point to any specific initiative that will specifically work towards achieving those targets. Average rates are down 5.6% as of the end of the first quarter of 2014.   In addition, the Liberals point to the recently released “Automobile Insurance Transparency and Accountability Report” which highlighted that, without these reforms, insurance rates would have needed to increase significantly.

In March 2014, the Liberals introduced Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014.  The Bill proposed a number of initiatives to address barriers to rate reductions. The Bill includes legislative amendments for the transformation of the dispute resolution system, and further action to crack down on fraud and abuse, as well as other cost-saving measures. The government is building on the steps it has taken by developing a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud.  The development of this fraud office would be based on the Task Force’s principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.  The Bill was never passed but would be introduced by the Liberals if they formed the next government.

The Liberals introduced legislation to regulate the towing industry but that Bill also did not pass before the election was called . The Liberals also tried to address storage-fee issues by introducing legislative amendments as part of Bill 171 that would provide regulation-making authority for the determination of vehicle storage periods and fair value regarding daily fees.

The Liberals had retained an independent third party to provide annual Automobile Insurance Transparency and Accountability Expert Reports to assess its efforts to reduce auto insurance costs and rates. An interim report was delivered in April 2014, and annual reports will be delivered in August of each year of the Strategy. The reports will also assess the industry’s efforts to lower costs and pass on savings to drivers. The interim report highlights that further action is needed to support the government’s Cost and Rate Reduction Strategy. The report also concludes it is important that insurers continue working to achieve efficiencies and reduce costs in the auto insurance system through initiatives such as better claim management, more sophisticated pricing methods (such as usage-based insurance) and improved fraud-prevention practices. 

The Liberals would encouraging insurance companies to offer consumers usage-based insurance, which uses technology to identify and offer discounts for safe driving habits.

New Democratic Party

The NDP were slow to get their platform out to the public.  The NDP pressured the Liberal government in 2013 to reduce auto insurance premiums by 15%.  Their position since then is that the government is taking too long to lower rates and that most consumers haven't seen any rate decreases.  They have promised to lower rates by 15% within a year of forming a government.

That promise sounds like a big win for consumers but is not really a big change from the status quo. The Liberals two-year commitment to lower rates ends on August 15, 2015.  If the NDP win the election next month, their commitment would end on June 12, 2015. That only shortens the process by 2 months.  Rate reductions would be effective on renewal which is also the status quo.

The other commitments are to make transparent rate-setting permanent and provide consumers with a voice in the rate-setting process. It's not at all clear how these promises would be implemented.  On transparency, the reference could be to the announced 15% average rate reduction.  Perhaps the NDP would set annual average rate change targets that the regulator would have to meet.  As for consumer input on rate-setting, that might involve rate hearings where consumers could express views on proposed rate changes. Or perhaps the NDP have another mechanism in mind to bring consumers into the process.

Progressive Conservatives

The Conservatives have had an auto insurance action plan for some time now.  They too believe that auto insurance premiums are too high.  The PC plan proposes reforms in four key areas: eliminate red tape, fight insurance fraud, make the dispute resolution system more effective and ensure auto insurers are accountable to customers.

There is a reference to the use of private mediators in the dispute resolution system to expedite the process and reduce costs.  Users could opt for a private mediator instead of a government one in order to reduce wait times.  Although the consensus is that the dispute resolution system needs more reforms than what is in the PC plan. In addition, they would establish an independent peer-reviewed medical assessment system by standardizing assessment procedures and requiring multiple assessments be performed by medical professionals of the same specialization.  This does seem to resemble the former DAC system to a certain extent.

The PC plan calls for moving away from the current rate approval process which requires prior approval and moving to a file-and-use system. The PCs claim that prices in the marketplace would be more competitive if red tape were to be eliminated.  Following large rate increases approximately 10 years ago, several Canadian jurisdictions abandoned file-and-use systems.  The PCs would also like to see more discounts available to consumers.

Another PC auto insurance commitment would be to use the Health Claims for Auto Insurance (HCAI) electronic billing system to identify fraud. As well, they would establish a special office of Crown Attorney to prosecute fraudsters.

Finally, they would increase accountability by making senior insurance executives personally and financially liable for the conduct of their company.

Insurance News - Wednesday, May 21, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, May 21, 2014:

• It is likely that self-driving car will provide the solution to distracted driving laws and bans on texting.
• Did you know that Google's self-driving cars have never gotten a ticket? 
• How big is the market for usage-based insurance and what do customers expect?
• Telematics are on the road to widespread adoption among US truck fleets.
• Two New York bills, if passed, will attempt to deter staged accidents by introducing significant jail time for fraud convictions, as well as harsher penalties for leaving the scene of an accident.
• The California Department of Motor Vehicles announced it has created rules governing how self-driving or autonomous cars are tested by manufacturers on California roads.

Actuarial Research on the Effectiveness of Collision Avoidance Systems

A study was recently released by Ron Actuarial Intelligence reviewing he effectiveness of a Forward Collision Warning (FCW) system and a Lane Departure Warning (LDW) system on bodily injury claim costs in Israel. 

The researchers had access to claims data from all insurance companies going back to 1985. They were able to compare the claim costs of vehicles with the FCW and LDW systems and those without to establish the net impact of the systems on claims frequency.  The goal was to develop a model that would allow actuaries to properly price risk premium for vehicles with the systems.

What they found was that vehicles with the systems had 45% fewer claims.  However, the impact on claims severity is unclear.  In addition, the sample size (only 0.082% of vehicles had the systems) and claims frequency were both small so the results are subject to some deviance.

They recommend a 15% discount be offered to drivers with similar systems as more data is collected and analyzed over the coming years.

The complete study can be found here.

Insurance News - Sunday, May 18, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, May 18, 2014:

• Google did a parking-lot test with 100 cyclists driving around a self-driving car. It was able to see all of them and track their movement.
• Originally heralded as the death knell for independent agents and brokers, online auto insurance comparison sites now seem not only to be relatively toothless, but actually on their way out.
• Rhode Island regulators recently issued a bulletin notifying the state’s auto insurers of their filing requirements and deadlines for the Rhode Island Insurance Verification System (RIIVS) to track uninsured motorists.
• Actuaries are adapting to the telematics revolution.  They have also found that telematics more or less affirms the old rating factors.
• Actuaries will also have to adapt to driverless cars.
• A little-noticed amendment to the United Nations Convention on Road Traffic agreed last month would let drivers take their hands off the wheel of self-driving cars. It was pushed by Germany, Italy and France, whose high-end car-makers say they are ready to zoom past American tech pioneers and bring the first "autonomous vehicles" to market.

Insurance News - Friday, May 16, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, May 16, 2014:

• Although the insurance industry purports to embrace online technology for consumers seeking quotes and other interaction, a new secret shopper study shows that only 44% of online quote requests get both a call and email response from the insurer or agent--and 17% received no response at all.
• A telematics device recently exposed a $91,000 auto insurance fraud case. Information stored on the device revealed that a car accident was not as significant as claimed by those involved in the crash.
• Lawyers launches class action suit against WSIB on behalf of Ontario injured workers for reducing awards for pre-existing conditions.
• Have the Liberals kept their auto insurance rates commitment?
• Latest Ontario seat projections have PCs winning 53 seats (current 37), Liberals winning 35 seats (current 49) and NDP with 19 seats (current 21).

Insurance News - Friday, May 9, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, May 9, 2014:

• Licensing of health care facilities by FSCO has been moved back to December 1, 2014. Applications will be accepted starting June 1, 2014.
• Consumer Federation of America claims auto insurance rates in New York went up after the introduction of file-and-use.
• WSIB is attempting to change its policy on pre-existing conditions.
• One in 10 Canadian customers switch auto insurance carriers as there is little brand awareness in the marketplace.
• At least 10 U.S. Insurance Regulators have warned drivers about ride-sharing mobile apps and how it may impact on their auto insurance policies.

2014 Ontario Budget - Auto Insurance Commitments

The 2014 Ontario Budget outlined a number of commitments, however many are initiatives that have been previously been announced.

Auto Insurance Cost and Rate Reduction Strategy

The government indicates that the rate reduction strategy is on target and average rates will be 8% lower by August 2014 and 15% lower by August 2015.  However, the document does not point to any specific initiative that will specifically work towards achieving those targets. Average rates are down 5.6% as of the end of the first quarter of 2014.  In addition, the government points to the recently released “Automobile Insurance Transparency and Accountability Report” which highlighted that, without these reforms, insurance rates would have needed to increase significantly.

Transforming the Dispute Resolution System and Fighting Fraud to Reduce Rates

In March 2014, the government introduced Bill 171, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014. The Bill proposes a number of initiatives to address barriers to rate reductions. The Bill includes legislative amendments for the transformation of the dispute resolution system, and further action to crack down on fraud and abuse, as well as other cost-saving measures. The government is building on the steps it has taken by developing a dedicated investigation and prosecution office on serious fraud, with an initial focus on auto insurance fraud. The development of this fraud office would be based on the Task Force’s principle that fraudsters should be vigorously pursued and prosecuted where evidence warrants.

Addressing Towing, Vehicle Storage and Collision Repair Practices

The government has introduced legislation to regulate the towing industry. The government has taken action to address storage-fee issues by introducing legislative amendments as part of Bill 171 that would provide regulation-making authority for the determination of vehicle storage periods and fair value regarding daily fees. As part of the next phase of this initiative, the Province will continue consulting to address issues of fraud and abuse relating to collision repair practices. There are initiatives that are in progress and are not new initiatives.

Increasing Automobile Insurance Transparency and Accountability

The government has retained an independent third party to provide annual Automobile Insurance Transparency and Accountability Expert Reports to assess its efforts to reduce auto insurance costs and rates. An interim report was delivered to the Minister of Finance in April 2014, and annual reports will be delivered in August of each year of the Strategy. The reports will also assess the industry’s efforts to lower costs and pass on savings to drivers. The interim report highlights that further action is needed to support the government’s Cost and Rate Reduction Strategy. The report also concludes it is important that insurers continue working to achieve efficiencies and reduce costs in the auto insurance system through initiatives such as better claim management, more sophisticated pricing methods (such as usage-based insurance) and improved fraud-prevention practices.

Rewarding Safe Drivers: Usage-Based Insurance 

The government is encouraging insurance companies to offer consumers usage-based insurance, which uses technology to identify and offer discounts for safe driving habits. The Financial Services Commission of Ontario (FSCO) has already communicated key consumer protection requirements to the insurance industry, and many companies have implemented or are planning to implement usage-based insurance.

Insurance News - Wednesday, April 30, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, April 30, 2014:

• Having mastered 700,000 miles of freeways driving, Google self-driving cars are now driving themselves in congested city streets.
• Colorado passes bill legalizing ride-sharing which will now require insurance coverage, vehicle inspections and driver background checks.
• Wal-Mart now offers price comparison shopping for auto insurance in the U.S.
• Ontario ombudsman warns that driving with medical conditions can be deadly.

FSCO Releases A Draft Statement Of Priorities For 2014

Section 11 of the FSCO Act requires FSCO to deliver to the Minister of Finance and publish in The Ontario Gazette by June 30th of each year, a statement setting out the proposed priorities of the Commission for the fiscal year in connection with the administration of this Act and all other Acts that confer powers on or assign duties to the Commission or the Superintendent.

 FSCO has released a draft Statement of Priorities for 2014 and invites stakeholders to submit comments on the proposed priorities and initiatives by May 30, 2014. The draft is loaded with auto insurance initiatives which reflects the high level of activity on this file by the government over the past few years. Here is a summary of the auto insurance initiatives:

Licensing Business Systems and Business Practices of Service Providers 

In the 2013 Ontario budget, the government committed to take further action to tackle fraud in the auto insurance sector. Among other measures, the government expanded FSCO’s mandate to include the licensing and regulation of the business systems and business practices of healthcare service providers that directly invoice auto insurers for statutory accident benefits. In 2014, FSCO plans to launch a licensing regime to reduce fraudulent billing practices in the sector.

Develop Minor Injury Treatment Protocol 

FSCO has contracted scientists and medical experts to develop an evidence-based protocol to treat auto accident claimants who sustain minor injuries. The protocol will inform the Superintendent when developing a revised Minor Injury Guideline.

Support the Ministry of Finance in the implementation of a Cost and Rate Reduction Strategy for auto insurance 

Work with Ministry of Finance on statutory and system reviews 

In 2013, FSCO commenced a consolidated three year review of Part VI (Auto Insurance) of the Insurance Act, and related regulations. Once the review is complete, FSCO will submit a report to the Minister of Finance in the Fall, 2014.

Design and implement an information technology Enterprise Development Program 

A new web-based information management platform will provide FSCO with the required tools to effectively regulate in an increasingly challenging financial marketplace, while providing stakeholders with centralized access to the services they expect. The first phase will be launched in Spring 2014 to complement licensing of the healthcare service providers sector.

Work with the Ministry of Finance on the Dispute Resolution System Review implementation 

Enhance auto insurance information and analysis 

• Examining factors contributing to cost changes in third-party liability bodily injury, and releasing a final report on the findings in 2014. 
• Reviewing actuarial data to gauge the effect of the automobile insurance reforms, and studying the effect of the reforms on automobile insurance rate levels. 
• Working with the General Insurance Statistical Agency to collect Ontario’s 2013 auto insurance statistical data, and analyzing the data to monitor automobile insurance cost changes and to review the reasonableness of automobile insurance rates. 
• Reviewing the Health Claims for Auto Insurance system to determine reports necessary to provide additional information on statutory accident benefits treatment trends.

Implement fraud awareness stakeholder engagement strategy

Provide information to consumers about fraud prevention 

Review and implement requirements for usage-based auto insurance

Insurance News - Tuesday April 29, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday April 29, 2014:

• Usage-based insurance confers competitive advantages to early users.
• California legislature introduces ride-sharing bill which clarifies service is a commercial activity for insurance purposes.
• Meanwhile, the Arizona Governor vetoes a bill mandating drivers subsidize ride-sharing companies.
• The reality is that Uber and Airbnb cut out the middleman. Why are governments so rattled?
• SGI is seeking input from the public and stakeholders in a comprehensive review of its auto injury program.

Insurance News - Thursday April 24, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday April 24, 2014:

• According to analysis of consumers getting online quotes by Kanetix those using online quoting services are now older and using mobile devices.
• The IBC is making the rounds talking up Bill 171 to MPPs but are they listening?
• Of course MPPs are more focused on a spring election.  Speaking of which the projected outcome will likely satisfy no one. The Liberals would likely win 43 seats with 41 seats going to the Conservatives and 23 setas going to the NDP.
• As data about drivers proliferates, auto insurers look to adjust rates. Opposition to using socio-economic factors heats up in the U.S.

Insurance News - Thursday April 17, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday April 17, 2014:

• FSCO reports that first quarter 2014 rate filings decreased by an average of 5.01% for the 14 rate filings (20.22% of the market) it approved.  This works out to a decrease of 1.01% for the entire Ontario market. According to my calculations, rate approvals have declined 5.57% since Rate Reduction Strategy was announced in August.
• Despite a few inaccuracies, an interesting Globe and Mail article about Ontario's dysfunctional auto insurance system.  The only thing all stakeholders agree on is the system is still broken.
• The province's branding program not working because according to this news report, wrecked vehicles being resold to unsuspecting consumers.
• Here is something to be concerned, 8 out of 10 drivers incorrectly believe hands-free cellphones are safer than hand-held use.
• Insurance industry critics in the U.S. are not happy with the practice of using data mining (referred to as price optimization) to set auto insurance rates.

Insurance New - Wednesday April 16, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday April 16, 2014:

• A group of Quebec brokers come out supporting usage-based auto insurance programs, as long as they are voluntary.
• In the U.S., Dodd-Frank reforms creates new U.S. government office to monitor availability and affordability of auto insurance in minority and low-income communities.
• Fraud continues to be a problem in New York State where an insurance association urges legislature to adopt a zero tolerance policy for fraud at a State Assembly hearing.
• A joint study by researchers at the University of California, San Diego, the University at Buffalo, and the University of Toronto has found that a computer–vision system can distinguish between real or faked expressions of pain more accurately than can humans.
• B.C.'s provincial auto insurer to pay back $39 million in overcharged fees.

Ontario Moves Forward on Regulating the Towing Industry

This week the Ontario government introduced Bill 189, the Roadside Assistance Protection Act, which, if passed, will finally introduce a regulatory scheme to the towing industry. This will be welcome news to consumers, insurance companies and honest towing companies.

The bill amends the Consumer Protection Act, 2002 and brings towing under the responsibility of the Minister of Consumer Services.  It comes following the establishment of stakeholder advisory groups and a public consultation process. The bill does not follow the recommendations of the Automobile Insurance Anti-Fraud Task Force, in that it does not create a new self-regulating body for the towing industry.  In the end, it was determined that the Task Force's recommendation was not feasible.  Instead, the towing industry will fall under the responsibility of the Commercial Vehicle Operator's Registration (CVOR) system.  The CVOR currently is responsible for large trucks and buses.  Technically the Registrar of Motor Vehicles becomes the regulator since the Registrar will have the authority to cancel a CVOR certificate.

The bill amends the Consumer Protection Act, 2002 to regulate consumer transactions involving tow and storage services. As examples, rules are provided for respecting:

1. Disclosure of information to consumers. 
2. Requirements that tow and storage services provided to consumers be authorized. 
3. Deviating from estimated payment amounts. 
4. The provision of itemized invoices.
5. Insurance requirements.  
6. Publication of rates. 
7. A Tow and Storage Consumers Bill of Rights. 
8. Requirements that consumers be allowed to remove personal property from towed or stored vehicles. 
9. The establishment of qualifications for tow and storage providers. 

The Act is also amended to provide for the appointment of inspectors and inspection powers, and to permit the Director to establish policies regarding the interpretation, administration and enforcement of the Act. The Repair and Storage Liens Act is amended to reflect the amendments to the Consumer Protection Act, 2002.

The Highway Traffic Act is amended in two main areas: the regulation of commercial motor vehicles and tow trucks and enforcement of the Act generally by the addition of administrative penalties. In respect of commercial motor vehicles, the Act is amended as follows:

1. To repeal the definition of “commercial motor vehicle” in subsection 16 (1) of the Act and replace it with the authority to define the term by regulation. 
2. To move other definitions related to “commercial motor vehicle” (“compensation”, “CVOR certificate”, “goods” and “safety record”) from subsection 16 (1) to subsection 1 (1), so that they apply to the whole Act and not only to sections 16 to 23.1, as currently provided. 
3. To provide for additional regulation of commercial motor vehicles. Provisions and regulation-making powers are added: prescribing requirements, qualifications and standards for commercial motor vehicles and for owners, operators and drivers of commercial motor vehicles; respecting documents and information to be carried by drivers and to be filed with the Ministry; adding grounds to refuse to issue, replace or renew a CVOR certificate; and requiring specified classes of owners and operators of commercial motor vehicles to install in their vehicles devices that are capable of recording and transmitting data about vehicle operation and driver conduct. 
4. To allow the Registrar of Motor Vehicles to order the immediate suspension or cancellation of a CVOR certificate where the Registrar has reason to believe that the certificate holder’s safety record or failure to comply with any Act demonstrates a significant risk to road safety and that it is in the public interest that the operator immediately cease operating all commercial motor vehicles. 
5. To prohibit drivers and other persons in charge of tow trucks from engaging in activities prescribed by regulation. In respect of general enforcement, the Act is amended to provide for the imposition of administrative penalties for the contravention of prescribed provisions of the Act and regulations. The amount of the penalties may not exceed $20,000.

Insurance News - Thursday, April 10, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, April 10, 2014:

• Telematics is the first major change to the auto insurance industry since direct lines were introduced in 1986.
• California Insurance Commissioner wants ride-sharing companies to bear more of the insurance burden when they encourage drivers to use their personal vehicles to transport passengers for a profit so it looks like this battle continues.
• This is significant, a van driver in the U.K. was convicted thanks to telematics device in his vehicle.  So it seems police will likely be able to access telematics data.
• Self-Driving Cars: It's Unacceptable for Machines to Kill Humans.
• Here is the latest in Ontario provincial polling: 33% Liberals, 33% PC, 26% NDP.  But based on the Quebec election results, don't read too much into the numbers.

Insurance News - Tuesday, April 8, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, April 8, 2014:

• A New York consumer group says state auto insurers are charging higher premiums to drivers with less education and low-paying jobs.
• Alberta's Automobile Insurance Rate Board supports telematics as 'voluntary discount' program.
• Enhanced claim functions on auto insurers' free mobile apps can condense that process into a matter of hours.
• Liberty Mutual has succeeded in having 3 of 7 Progressive patents on UBI cancelled by the Patent Trial and Appeal Board.  The decision may open the door for smaller insurers to begin selling UBI policies.
• Tesla drivers are using their in-dash 17" screen and web browser to keep up with the news. Good news the car only costs $80,000.

Insurance News - Thursday, April 3, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, April 3, 2014:

• Insurers promise discounts to drivers who allow in-car monitoring and many Canadians are eager to sign up based on response to UBI entrants.
• In addition, a Towers Watson consumer survey shows Canadian market is ready for widespread user-based insurance adoption.  94% are open to a UBI policy and 50% of those would change their driving habits to save money.
• Government safety agency missed trends that could have led to quicker recall of GM cars.  News like this makes me a little apprehensive about self-driving cars.
• For ride-sharing vehicles when does commercial insurance start and personal auto insurance stop?
• Bar suggests they are surprised at province’s moves on Cunningham's DRS report. They shouldn't be because the 2013 Budget indicated legislation was to be introduced in the fall of 2013.
• Bodily injury severity is rising while car safety continues to improve. How can insurers address the trends?

Reforms to Ontario’s Dispute Resolution System Are Long Overdue

Full disclosure here. I worked with Justice Douglas Cunningham on his review of Ontario's Dispute Resolution System (DRS) and fully support his recommendations. In the process of coming up with his recommendations, Justice Cunningham listened to a lot of users of the system, ADR experts and other interest parties. He spent considerable time analyzing what he heard before making his conclusions and recommendations. Obviously, not everyone is going to agree with all the recommendations.

 The current system is definitely broken despite some suggesting to the contrary. The system is too slow, which adds unnecessary costs and hardship. The culture within the system contributes to the problems. Justice Cunningham's report proposes a culture change starting with pulling the DRS out of FSCO and significantly speeding up the process. Should all his recommendations be adopted, we will have a much more responsive and efficient system. In 1990, the government created the DRS specifically to provide accident victims with a cost effective and timely alternative to the courts. The proposed reforms are intended to return the system to those first principles.

A number of stakeholders have come out against Bill 171 which is unfortunate. Some have suggested that Justice Cunningham's report requires more consultation. I've been working in this system a long time and that is just a stall tactic to provide more time to lobby to protect your interests. Trial lawyers are opposed to Justice Cunningham's recommendation to end accident victims' ability to choose to go to court or arbitration to resolve a dispute. However, Justice Cunningham was of the view that a simpler and quicker DRS would provide appropriate access to justice and therefore, the court option would no longer be necessary.

Accident victim groups are understandably disappointed that Justice Cunningham did not address their long-term complaints regarding the independent assessment industry. They believe that unless independent assessment providers are regulated, all other reforms are pointless. I disagree. Many accident victims will benefit from the reforms. Settlements or the restoration of benefits will occur sooner. Justice Cunningham indicated that the type of regulatory system proposed by stakeholders was clearly outside the scope of his review. As such it will have to wait for another day.

The Opposition parties have been critical of Bill 171 but they have shown a willingness to allow the bill to pass at second reading and go to a Standing Committee for review. I believe beyond the rhetoric the Legislature recognizes changes are needed.

Insurance News - Friday, March 28, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, March 28, 2014:

• The Ontario government is reconsidering the privatization of winter road maintenance in the province after questions are raised about road safety.
• Toronto Police are dressing up as panhandlers to catch people texting while driving.
• We all know distracted driving is wrong. So why don’t we stop? Well because these devices are addictive.
• This is an interesting prediction, self-driving cars will reduce the need to own cars and park them downtown. That frees up space downtown currently being used to park cars.
• In light of all those Toyota and GM recalls, how safe will self-driving cars really be?

Insurance News - Monday, March 24, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 24, 2014:

• Foreshadowing a clash between auto makers and a prominent auto insurance company, a bill is being debated in California aimed at loosening car manufacturers' grip on data generated by vehicles.
• To ensure safety and reliability self-driving cars are going to have to consume and process enormous amounts of information.
• If cars could drive themselves, how many would we actually need? Will self-driving cars revolutionize car ownership?
• Drivers for ride-sharing services are being accused of fraud.  Following an accident some are claiming their car was being used for personal use.
• About 3,400 people die each year in frontal crashes with no airbag deployment in their vehicle according to U.S. data.

Insurance News - Tuesday, March 18, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, March 18, 2014:

• The Ontario Court of Appeal has ruled against insurer over limitation period in OPCF 44R. The insurer is likely to appeal to the Supreme Court of Canada.
• 80% of Canadians support a ban on texting while driving but then how many will actually comply with such a law?
• Uber, the popular U.S. ride-sharing service, has arranged for insurance to cover the gap exposed late last year when a 6-year-old girl was killed by an Uber driver.
• This Long Island con artist staging accidents may be an all-time low for insurance fraud.
• A U.S. insurer has introduced a smartphone app to allow an insurance rep to carry out a video appraisal using a client's smartphone's camera to assess damage remotely.
• This is certainly a privacy concern, auto insurance plug-ins may soon track motorists' locations, not just driving habits.

Insurance News - Monday, March 17, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 17, 2014:

• The government introduced a road safety bill (Bill 173) that if passed will toughen up distracted driving penalties by increasing fines to a maximum of $1,000 along with 3 demerit points.  Penalties for "dooring" a cyclist increase and drivers will need to stay at least a meter away from cyclists.
• FSCO has approved The Co-operators’ usage-based car insurance plan which will be launched this April.
• The Toronto Star believes the Ontario government is doing the right thing by testing self-driving cars.
• Driverless technology and the issue of liability: Who’s responsible?
• Parents invent device to track teenage son's driving and now they are marketing the device.
• B.C. woman could lose her auto insurance coverage after racking up over $5,000 in unpaid bridge tolls.

Insurance News - Thursday, March 13, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, March 13, 2014:

• Is the demand for regulation of insurer examinations gaining any traction?  And who should be responsible the Ministry of Health or the Ministry of Finance?
• However, usage-based insurance and telematics are definitely getting more traction in Ontario.
• Telematics technology plays a key role in thwarting a fraudulent auto insurance claim.
• This ride-sharing smart minivan may be the future of self-driving cars.
• California pushes to finish rules for driverless cars by the end of this year to stay ahead of the rapidly developing technology.

Insurance News - Tuesday, March 11, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, March 11, 2014:

• Not everyone is convinced that dispute resolution reforms will make a difference if no culture change takes place.
• Opinion: The Liberals are hijacking the NDP's auto insurance strategy.
• The myth about being good at multi-tasking is creating a serious road safety problem in the form of distracted driving.
• In the U.S., auto injury medical costs continue to rise faster than inflation despite a decrease in injury severity.
• Some time in the future insurers will be using drones to do the job of a mobile adjuster.

Insurance News - Monday, March 10, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 10, 2014:

• A lot of media coverage on how the Ontario government has introduced Bill 171 to address fraud and high auto insurance premiums.
• Meanwhile, it is reported that Florida auto insurance reforms are working though the Hillsborough clinic licensing ordinance has run into numerous legal problems.
• South Carolina and Rhode Island will be the 31st and 32nd U.S. states to allow electronic proof of auto insurance. Still not available in Canada.
• Traffic congestion is growing three times as fast as US economy, with situation worst in Los Angeles. My guess is that the problem is just as bad in Toronto.
• To coincide with Fraud Prevention Month, a Toronto-area rehab clinic that pleaded guilty to UDAP charges in November has now been fined $75,000.
• Drivers have hit family members in three separate incidents at the same intersection in North York.  It also happens to be where FSCO is located.

Will the February 1st SABS Changes Reduces Claim Costs?

On February 1st, three amendment to the SABS became effective. These changes were met with criticism by some stakeholders because the Ontario government chose not to consult on the amendments before introducing them.  The reaction of stakeholders was predictable with respect to these particular changes, which may have been a factor in moving ahead without consulting.  The other contributing factor is the government's rate reduction strategy.  Following an initial round of rate filings, FSCO was able to only squeeze an average of about 5% rate reductions.  The next 10% are likely to be much more difficult to find.

The February 1st, SABS amendments are:

• those seeking an exemption from the $3,500 minor injury cap based on a pre-existing condition must provide medical documentation that precedes the accident;
• those providing attendant care services can only be paid up to any income loss incurred; and
• the section 35 election can only be used once by a claimant.

These amendments are part of a strategy to tighten up the system so that perhaps some savings trickle down and contribute to the promised 15% rate reduction.

Will there be any savings and, if there are, will they be significant enough to have an impact?

In a previous post, I had noted that the minor injury cap appears to be holding.  Those claims attempting to escape the cap either have a psychological component or pre-existing condition.  In the absence of arbitration decisions regarding the scope of the minor injury definition, there is still cost uncertainty regarding the current product.  Because of the number minor injury claims, the cost impact of a decision regarding the definition could be significant one way or the other.  Therefore, this amendment could lead to insurers re-evaluating their claim costs over time and lower premiums.

The attendant care amendment may not produce any real savings.  Let's say a claimant is eligible to claim  a monthly attendant care benefit of $2,000.  A family member has quit their job to provide the care and has been submitting invoices totaling $2,000.  If that family member was only earning $250 per week at their job, that person would only be able to invoice up to $1,000 per month under the SABS amendment.  The family is still eligible for another $1,000 per month and will more than likely use it purchase care either from a company or another family member or friend.  I suspect this change will produce no savings.

As for the third amendment, I don't have access to data that would indicate how many elections take place after an initial election is made.  Prior to 2010, there were claimants who would elect to receive the caregiver benefit and later elect to receive income replacement benefit or non-earner benefit when they no longer qualified as a caregiver.  However, since the caregiver benefit is now optional coverage except for those with catastrophic injuries, this scenario is likely quite rare.  The savings would have to be negligible.

Ontario Government Introduces Legislation to Begin Implementing the Cunningham Report

On March 4, 2014, the Ontario government introduced Bill 171 for first reading, which, if passed, would begin the process of implementing the recommendations made by Justice Cunningham in his review of the auto insurance dispute resolution system.

The Bill would amend the Insurance Act to change how disputes relating to statutory accident benefits will be resolved. Currently these disputes are dealt with by the director of arbitrations appointed under section 6 and arbitrators and mediators provided for under sections 8 and 9. Those sections are to be repealed and regulations will deal with proceedings going to the Tribunal [Cunningham Recommendations #4, 13, 24].   Regulation making authority would be added to the Insurance Act to cover the introductions of time limits and limitation periods. [Recommendation #6]

New section 280 provides that disputes will be dealt with by the Licence Appeal Tribunal under the Licence Appeal Tribunal Act, 1999. [Recommendation #1]  The new section 280 also prohibits taking SABS disputes to the courts except for appeals of arbitration decisions. [Recommendations #9, 28]

 The protection of benefits after a dispute is resolved, currently in section 287, is continued under the new section 281. 

 Under the new section 282, the Lieutenant Governor in Council will be able to assess insurers for the costs of the Licence Appeal Tribunal relating to these disputes. That power is similar to the assessment power under section 25 of the Financial Services Commission of Ontario Act, 1997. 

The new section 283 authorizes regulations for various transitional matters, ie, disputes that arise before the transition date.  Regulations may provide for the continuation of director of arbitrations and existing arbitrators and mediators during transition. 

The Bill only sets out a framework for a new dispute resolution system with nuts and bolts to be set out in regulations.

Insurance News - Saturday, March 1, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, March 1, 2014:

• Who owns all that data your car generates?
• New York "creates" highway texting zones at existing rest stops and service areas but will that stop drivers from texting?  After all, drivers who need to use their phone should already be stopping at these locations.
• Now a California court has ruled that hand-held cell phone law are only meant to apply to drivers making a call.  So it's fine to hold phone to use map.
• It's not just insurers who will be hurt by the introduction of self-driving cars. Everyone who makes money off of car accidents is going to feel it.
• Insurers are denying claims and cancelling policies of vehicle owners that are using their vehicles as part of a ridesharing service.