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.

Insurance News - Wednesday, February 26, 201

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

• Distracted driving fines in Ontario increase to $255 on March 18 - the highest in Canada.
• Potholes are eating away at municipal budgets just about everywhere.
• If your car is damaged from driving over a pothole in the City of Toronto, this is how to make a claim.
• Yet another attempt by Michigan at auto reforms. A new proposal would pair a mandatory two-year, 10 percent rate reduction with a cap on personal injury protection coverage.
• Older driver accident rates going down not up because cars are safer and seniors are healthier.
• Can the driver of an automatic car be charged with a DUI?

Insurance News - Saturday, February 22, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, February 22, 2014:

• Ontario's 15% rate rollback has started strong insurer interest in telematics as a mechanism to control claim costs and expenses.
• Louisiana is considering auto insurance reforms to address the "soft tissue industry" in New Orleans.  Sounds familiar.
• The most expensive U.S. cities for auto insurance are in states with no-fault car insurance laws.
• This is a good way to kill telematics: UK Insurers sending their own speeding tickets to policy holders with telematics.
• It appears that in the future my office will likely move to my car once it's able to drive itself so I can answer all those emails. 
• Another article on how vehicle-to-vehicle communication could revolutionize auto insurance.

Are Insurers Having Difficulty Keeping Claimants in the MIG?

I previously reported that based on HCAI data that it appears the minor injury definition was holding up.  However, that doesn't mean claimants are remaining in the Minor Injury Guideline (MIG).  I would like to continue to examine data related to minor injuries.

Again the information is based on first set of standard HCAI reports which were published by the IBC in December 2013.  The standard reports are published on an “accident half year” basis. In accident half year statistics, the experience of all claims with accident dates in the same accident half year is grouped together. The accident half years are defined as calendar half years, with January to June being the first half and July to December being the second half for each of the stated years.

The chart below provides some insight into what might be happening to MIG claims over time.  Although as many as 75% of claims are classified as strains and sprain and should fall under the minor injury definition, only a fraction of those claims receive MIG treatment only.  A majority of those claims actually receive treatment within the MIG and additional treatment outside the MIG.  One might conclude that the situation has been improving over time since each accident half year, fewer claims are receiving both MIG and non-MIG treatment.  However, the newer claims are likely still open and many of those in the MIG only category could move over time into the MIG and non-MIG category.

This doesn't necessarily mean that insurers are having a serious problem keeping claimants categorized as having minor injuries.  The MIG provides up to $2,200 in treatment but the SABS caps medical and rehabilitation expenses for minor injuries at $3,500.  So many of the claimants receiving both MIG and non-MIG treatment may topping up to the $3,500 cap.  In fact, the average amount paid per claimant in each accident half year never exceeds $3,500 for those receiving both MIG and non-MIG treatment.  You will have to make your own conclusion whether claimants are escaping the minor injury cap.  I would suggest that it might not be a problem.

Cunningham Report Recommends a New Tribunal to Deal With SABS Disputes

I assisted Justice Douglas Cunningham carry out his review of the Ontario auto insurance dispute resolution system (DRS).  His report was recently submitted to the government and included 28 recommendations which if implemented would remove the system from Financial Services Commission of Ontario (FSCO) and create a new government administrative tribunal.

A New Tribunal

Arbitrators would no longer be Ontario public servants but government appointees, similar to adjudicators on a number of other government tribunals.  The Insurance Bureau of Canada and a number of member companies proposed that the entire system be privatized.  Cunningham’s report did recommend some private sector involvement. He proposed that the tribunal establish tendered contracts with one or more private-sector dispute resolution service providers to address any future backlog.

A More Streamlined Process

Cunningham’s report envisions a radically streamlined and quick process.  The report recommends that an insured who submits an application to the proposed tribunal would have an arbitrator’s decision within 6 months if the dispute proceeds to arbitration.  The tribunal would have a registrar who would deal with jurisdictional issues at the time the application is received without a hearing. 

As well, doing away with many of the preliminary hearings that currently take place, Cunningham recommends that pre-arbitration meetings, neutral evaluation meetings (a step that hasn’t been used since 2008) and appeals to the Director’s delegate be eliminated. 

An End to Mediation

A significant change found in the report is the elimination of mandatory mediation as the first step in the dispute resolution process.  Instead, a settlement meeting would be scheduled with an arbitrator rather than a mediator.  This step would have elements of mediation as well as the current pre-arbitration meeting. 

The report also recommends doing away with telephone mediations.  Instead settlement meetings would have to take place in person or through video conferencing.

During a settlement meeting, the arbitrator might provide one or both parties with an opinion regarding the likely outcome of a future arbitration if the parties fail to reach a settlement.

Three Arbitration Streams

Justice Cunningham has called for three arbitration streams: paper reviews, expedited in-person hearings and full in-person hearings.  The determination would be made by an arbitrator and not be subject to appeal.  A paper review would take place cases where there are $10,000 or less of medical and rehabilitation benefits in dispute, or where the dispute involves a determination as to whether the claimant’s injuries meet the minor injury definition.  The tribunal would be expected to restrict the length of expert reports and briefs. 

Arbitration hearings would be conducted as an expedited in-person hearing in cases that do not qualify as either a paper review or full in-person hearing.  An expedited in-person hearing would last no longer than one day and the arbitrator would let parties know how much time would be allocated for them to present their cases.

Arbitration hearings would be conducted as full in-person hearings for disputes involving catastrophic impairment determinations, whether the claimant qualifies for 24-hour attendant care or income replacement benefit claims beyond 104 weeks.  The length of a full in-person hearing would be determined by the arbitrator. 

The arbitrator’s report should be no longer than five pages for an expedited hearing and ten pages for a full hearing.

Appeals of arbitration decisions should be heard by a single judge of the Ontario Superior Court of Justice on a question of law. 

New Penalties for Those Not Meeting Timelines

The report recommends a number of timelines that would be incorporated in legislation along with penalties for those that do not comply.  Parties who cannot commit to appear for settlement meetings or arbitrations within the timelines set out would not be eligible to claim their costs at arbitration.  If the tribunal is unable to schedule an arbitration within those same timelines, the tribunal would be expected to reduce the arbitration fees it collects from the parties.  Parties would also get financial relief if arbitration decisions are late being issued.

A Shift in Culture

Justice Cunningham made it clear he would like to see a change in culture within the DRS.  A number of recommendations are expected to accomplish that cultural change.

Every insurer would have to establish an internal company review process and be required to inform an insured how to access the process following a benefit denial.  However, insureds would not be required to use the internal company review process before submitting an application to the new tribunal.  Companies would be free to determine how their internal review process would to be structured, but must provide an insured with a written response within 30 days.

Justice Cunningham recommends that the settlement of future medical and rehabilitation benefits should be prohibited until two years after the date of the accident which is one year longer than the current prohibition. 

The government would be expected to create a sliding scale of fees.  Justice Cunningham proposes that incentives be introduced to encourage parties to settle early. 

Experts would be required to certify their duty to the tribunal and to provide fair, objective and non-partisan evidence.  Arbitrators would be expected to ignore evidence that was not fair, objective or non-partisan and, in those circumstances, the expert would not receive compensation for appearing as a witness.

What Happens Next

In January 2014, the government indicated that it will propose legislative amendments in the spring session based on recommendations of the Dispute Resolution System Review.  However, the legislation may not pass if a spring election takes place.  Once legislation finally passes, it will take some time to establish a new tribunal which means DRS users may be waiting some time before they benefit from possible changes.

Insurance News - Monday, February 17, 2014

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

• Colorado ride-sharing bill is raising concerns that it will lead to higher auto insurance rates.
• Toyota issues recall for 1.9 million Prius cars over software glitch - so what are the implications for self-driving cars?
• It seems that Canadians are some of the most loyal insurance customer. 
• Co-operators is reporting that 2013 net income is down over the previous year because of Alberta and Ontario storms and the state of Ontario auto insurance.
• The Ontario legislature is backing in session on Monday but for how long? Get ready for a possible Ontario spring election as politicians return from long Christmas break.

HCAI Data Confirms Ontario's Minor Injury Definition is Holding Up

In December 2013, the IBC published the first set of standard HCAI reports. The document provides over 60 pages of aggregate data collected by HCAI going back to 2011 up to the first half of 2013.  HCAI was made mandatory on February 1, 2011. 

The standard reports are published on an “accident half year” basis. In accident half year statistics, the experience of all claims with accident dates in the same accident half year is grouped together. The accident half years are defined as calendar half years, with January to June being the first half and July to December being the second half for each of the stated years. 

The chart below breaks down the percentage of claimants receiving treatment per injury group. The data is further broken down by accident half year and the percentages are based on claims transactions between the accident date and June 30, 2013.

The data suggests that there doesn't appear to be any erosion of the minor injury definition.  For accidents during the first half of 2013, 75.4% of claimants receiving treatment have strains and sprains which fall under the minor injury definition.  The data suggests that the percentages have not varied greatly from one period to the next with the exception of strains and sprains and peripheral nerve injuries (many are likely WAD III).    

Insurance News - Tuesday, February 11, 2014

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

• The Toronto Police Service are using a hearse as part of a distracted driving campaign.
• The Ontario Superior Court reduces contingency fee from 40% to 30% in medical malpractice case.
• After the California regulator pointed out that there may be holes in coverage, ride-sharing company starts offering new optional collision and uninsured or underinsured driver coverage.
• Nearly one-quarter of consumers would consider purchasing insurance from Google or Amazon.
• A Colorado state representative wants insurance fraud to be a felony.

Insurance News - Monday, February 10, 2014

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

• Hearse being used in Toronto Police distracted driving campaign.
• Recent SABS changes criticized in Toronto Sun opinion piece - but how do you think the government will deliver its 15% rate reduction commitment?
• One year after Florida PIP reforms, regulator estimates auto insurance rates to fall an average of 13.2% due to a reduction in fraudulent claims.
• Insurance claims departments are probably two decades behind all the analytics that have been done on the pricing and underwriting side.
• User-based auto insurance to become one of the most common types of policy in the near future.

Insurance News - Saturday, February 8, 2014

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

• Will the Ontario government's 15% rate reduction strategy speed up the growth of user-based auto insurance in Canada?
• One in six parents are committing auto insurance fraud by claiming to be the primary driver of a vehicle used mainly by their student daughter or son. 
• California regulator warns about gaps in ride-sharing insurance after a deadly accident shows the murky legal terrain in which these ride-sharing services operate.
• U.S. Senator presses technology firms and automakers to develop distracted driving solutions.
• Forget self-driving cars, Renault wants to put a flying drone on the roofs of cars to warn about traffic jams and other problems on the road ahead.

Insurance News - Wednesday, February 5, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, February 5, 2014:

• The technology going into a self-driving car is about $320,000.  Will I ever be able to afford one? Or will I be still driving when they become affordable?
• The Ontario Ministry of Transportation is introducing new tests for drivers who are 80 and over including cognitive tests effective April 21.
• WARNING: The Driver Ahead Of You Is Awful (This Message Brought To You By The U.S. Government).  The U.S. plans to propose standards for talking cars as technology companies are vying to build architecture for the "Internet of Cars."
•  If you think auto insurance is expensive in the GTA, average rate in Detroit is $10,732.  Some other U.S. cities are also higher than the GTA.
• Clients have a say in resolving insurance disputes at The Co-operators through Service Review Panels.  Do other insurers also have unique dispute resolution processes?