Insurance News - Thursday, July 31, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, July 31, 2014:

• It took a while but a Toronto-based staged collision ring has been slapped with more than $800,000 in fines and restitution for false insurance claims that contributed to more than $4 million in fraudulent claims.
• Auto insurance and ridesharing: When personal and business uses of a vehicle converge, coverage confusion arises.
• Men and women can both be terrible drivers but in different ways.
• A look at the public v. private auto insurance debate - which works better?
• Is it true that low highway speed limits mainly benefit auto insurance companies in the form of higher premiums?
• A published study suggests that enforced laws banning texting produced 3% reduction in traffic fatalities for all ages.

Insurance News - Wednesday, July 23, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, July 23, 2014:

• Car crash scams are becoming increasingly sophisticated with the latest wrinkle involving organized groups gaining access to medical clinics to cash in on lucrative payouts for phony insurance treatments.
• Auto insurance fraud is more frequent and sophisticated, with organized groups replacing individual fraudsters.
• Ontario's efforts to reform the insurance sector and clamp down on fraud in the Toronto area have not slowed the problem of staged car accidents.
• There seems to be a debate going on as to whether self-driving cars will mean less traffic or in fact more congestion.
• Google may be ready to launch self-drivering cars in the near future but they may be more than 10 years away because we're just ready for them.

Insurance News - Wednesday, July 16, 2014

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

• Ontario Liberals have re-introduced and combined Bills 171 and 189 as Bill 15.  The legislation contains some of the controversial changes introduced in Bill 171 including a reduction in prejudgment interest and restrictions on the ability to resolve SABS disputes in court.
• FSCO has released the second quarter 2014 rate approvals.  Only five  rate filings were approved representing only 14.5% of the market.  The filings reflect an average increase of 0.22% when applied across the total market. Although this represent a small portion of the market, it seems to suggest that the government's rate reduction strategy is stalled.
• A U.S. company will soon begin selling a kit that lets you turn your existing car into a self-driving vehicle. The system is being billed as the world's first "highway autopilot" and will cost about $10,000.

Anxiety and Depression Does Not Necessarily Exclude One From The Minor Injury Definition

A recent FSCO arbitration case (by an ADR Chambers arbitrator), Lo-Papa and Certas Direct, determined that the existence of anxiety and depression following an accident does not necessarily exclude one from the minor injury definition or the $3,500 treatment cap.

In Lo-Papa and Certas Direct, the claimant was involved in a MVA on October 20, 2010 and at the time of the accident complained of pain in her spine and head.  At the arbitration hearing she stated she suffered from headaches, lower back pain, leg pain. anxiety and depression.  Her physician confirmed that she suffered from anxiety and depression, but did not address the question of whether her anxiety and depression were the predominant impairments or whether her symptoms were not clinically associated sequelae and therefore, exclude her from the minor injury definition.

The arbitrator noted that, as confirmed in the Scarlett v. Belair appeal decision, the burden of proof rests with the claimant to show that her injuries fall outside the minor injury definition.  This decision confirms that a claimant can sustain psychological impairment in an accident and still fall under minor injury definition.  However, if the psychological impairment is predominant then it will likely be outside the minor injury definition and the $3,500 cap.

Insurance News - Monday July 14, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, July 14, 2014:

• Why Ontario pay the highest car insurance rates in Canada - crowded roads, fraud, private delivery, take your pick.
• An alarming proportion of Ontario teenagers admit that they have texted while behind the wheel of a vehicle, says a survey of Grade 7 to 12 students in the province conducted for the Centre for Addiction and Mental Health.
• Editorial: Steps should be taken to curb dangerous texting by teen drivers.
• Premier Wynne says Ontario will bring back bill to toughen penalties for distracted driving.
• Will insurance companies be the greatest contributors to the success of self-driving cars?
• The tipping point for telematics is going from an installed device in the insured's vehicle to a downloaded app on their phone.

Insurance News - Thursday, July 3, 2014

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

• Finance Minister Charles Sousa says Ontario Liberal government is still committed to lowering auto insurance rates by 15% by August 2015.
• Google and Detroit on a collision course regarding self-driving cars and car ownership. The auto makers are focused on accident avoidance systems while Google is talking about moving from an ownership model to a service model.
• Should the blind, drunk and elderly be allowed to operate driverless cars? The road rules may need to change.
• According to a recent survey of women in the insurance industry. leadership roles in the industry still lack gender diversity.
• Carfax has expanded Damage Reports for Canada auto dealers.

Insurance News - Wednesday, July 2, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, July 2, 2014:

• Car-sharing companies and insurers are in a state-by-state battle over their business model.
• How Google might put taxi drivers out of business.
• Meet Ray, the self-driving forklift that is parking cars at a German airport.
• The OPP suggesting distracted driving could be the cause of over 50% of accident (I think there is under-reporting).
• A great article about seniors driving. The numbers are growing despite declining physical abilities.

Ontario Auto Insurance Reforms

It appears Ontario's never ending auto insurance reforms are gearing up again.  I thought it would be fun to look at a Monty Python sketch on insurance.

Happy Canada Day!

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.