Insurance News - Thursday, May 28, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, May 28, 2015:

• Google's price comparison site in the US and UK is shaking up the insurance industry.
• Autonomous cars will destroy millions of jobs and reshape the US economy by 2025.
• A new survey suggests Canadian drivers acknowledge distracted driving is a problem on our roads – but they’re not willing to take the blame.
• Taxi drivers protests against Uber is a futile attempt to resist technology.  Uber is here to stay, and that’s a good thing.
• Ontario is pledging $1 million to support projects through the Connected Vehicle/Autonomous Vehicle Program.
• With Uber making deeper in-roads into the taxi business, Toronto cab companies are fighting back with apps of their own, which offer many of Uber’s features including credit card payments and GPS tracking.

Insurance News - Tuesday, May 19, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, May 19, 2015:

• Uber has applied for a taxi brokerage licence but Toronto city is proceeding with its court case.  Meanwhile John Tory urges the parties to negotiate.
• Google which has been testing driverless cars on California’s roads and highways reports theri cars were involved in 11 minor accidents over the past six years.  They claim their cars did not cause any of the accidents.
• Minnesota becomes the 38th state to allow electronic proof of insurance.  Still no Canadian jurisdictions have introduced electronic pink slips.
• The first self-driving vehicles may have 18 wheels and they are currently being tested on American highways.
• Parents will like self-driving cars because they will be able to control speed, curfews and number of passengers for teens.
• Why Ontario’s auto insurance system is a car wreck.

Ministry of Finance Is Consulting on SABS Changes - Updated

The Ministry of Finance is consulting on SABS changes previously announced in the 2015 Ontario Budget.  The changes listed below are listed in the government's Regulatory Registry.  The consultation period ends on June 29, 2015.

The changes to the catastrophic impairment definition have now been described.  Many of the recommendations made by the former Superintendent are to be implemented.  Two significant changes are noted.  Psychiatric impairment based on the GAF scale has not been mentioned.  However, mental and behavioural impairments will have a revise definition which includes updated detailed criteria and new diagnostic tools.  They might be similar to the Superintendent's recommendations but it is unclear from the description provided.  Also combining physical impairments with mental and behavioural impairments will be set out in the SABS.  The 6th edition of the AMA Guides is to be used for quantifying mental and behavioural impairments for the purposes of combining. [NOTE: I have been able to clarify that GAF will in fact be included in the new definition for mental and behavioural impairments as well as a number of the other Superintendent's recommendations] 

• Change the standard benefit level for medical and rehabilitation benefits to $65,000 (from $50,000) and include attendant care services under this benefit limit. An option will be provided for consumers to increase this coverage to up to $1 million; 
• Reduce the standard duration of medical and rehabilitation benefits from 10 years to five years for all claimants except children and those with catastrophic impairments; 
• Include attendant care services with the $1 million medical and rehabilitation benefit for catastrophic impairments, and provide the option for additional coverage of $1 million, for $2 million in total coverage; 
• Eliminate the six month waiting period for non-earner benefits and limit the duration of non-earner benefits to two years after the accident; 
• Require goods and services not explicitly listed in the SABS to be "essential" and agreed upon by the insurer; and 
• Update the definition of catastrophic impairment (CAT) to reflect the most up to date medical information and knowledge. Amendments will be proposed based on the Superintendent's Report on the Definition of Catastrophic Impairment in the Statutory Accident Benefits Schedule, subject to modifications. Proposed updates include: 

1. Paraplegia or quadriplegia: Revise the definition with updated detailed criteria and new diagnostic tools; 
2. Total and permanent loss of use of an arm or leg: Revise the definition with detailed criteria and new diagnostic tools dealing with impairment of ambulatory mobility; - Total blindness: Update the definition by adding reference to 20/200 visual acuity threshold (legal blindness); 
3. Traumatic brain injury: For adults, eliminate Glasgow Coma Scale (GCS) and adopt the Extended Glasgow Outcome Scale (GOS-E) as the clinical assessment tool; for children under age 18 adopt use of King's Outcome Scale for Childhood Head Injury (KOSHI) as the clinical assessment tool; 
4. Allow for automatic CAT designation of children in certain cases; 
5. For mental and behavioural impairments, revise the definition to include updated detailed criteria and new diagnostic tools; and 
6. Combination of impairments: For other physical impairments not listed retain current definition and adopt new diagnostic tool (6th Edition of AMA Guides to the Evaluation of Permanent Impairment) for quantifying mental and behavioural impairments for the purposes of combining.

Insurance News - Monday, May 4, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, May 4, 2015:

• What would happen if Uber drivers became owners instead of independent contractors or employees? These Denver cabbies are making it happen.
• Will Google Auto Insurance Comparison change the auto insurance industry?
• Auto insurance reforms once again trying to work their way through the Michigan state legislature.  The State Senate has passed a bill but whether it makes it through the House is not clear.
• An Uber executive recently touted the potential for self-driving cars and Uber cars with no drivers.
• The Montreal taxi bureau has seized 40 UberX vehicles.
• J.D. Power reports that auto insurers continue to miss the mark to improve the customer experience in Canada.

How Much Have Ontario No-Fault Accident Benefits Been Eroding?

The recently announced auto insurance reforms included in the 2015 Ontario Budget will again reduce accident benefits as part of the government's efforts to reduce premiums in Ontario.  The government insists that benefits available are still generous.  I decided to compare the accident benefits available prior to the OMPP (Schedule C) under tort and the OMPP accident benefits with the new proposed limits announced in the Budget.  I used the Bank of Canada inflation calculator to convert past benefits into 2015 dollars.

The Schedule C accident benefits existed under the tort system prior to the introduction of no-fault.  Compensation was quite limited.  Income replacement benefits were available for 104 weeks, caregiver benefits for 12 weeks and medical benefits for 4 years.  The benefits aren't quite analogous but when converted into 2015 dollars, it tells an interesting story. Keep in mind there was no second tier of benefits under Schedule C for catastrophic injuries.  Those not at-fault would need to start an action to access additional compensation.

The table below shows that the Schedule C benefits are not that far off from the benefit levels announced in the Budget.  Not only are benefits being cut but inflation has also eroded them.

	pre-OMPP	pre-OMPP	2015 Budget
	(1989 $)	(2015 $)
IRB	$140.00/week	$240.24/week	$400.00/week
caregivers	$70.00/week	$120.12/week	N/A*
non-earners	N/A	N/A	$185.00/week
medical/rehab	$25,000.00	$42,900.82	$65,000.00
medical/rehab (cat)	$25,000.00	$42,990.82	$1,000,000.00
attendant care	N/A	N/A	N/A**
* caregiver benefit currently only available for catastrophic injuries
** attendant care included in medical/rehabilitation cap

The indexed OMPP numbers are also revealing.  The table below shows that the accident benefits proposed in the recent provincial budget are, in some cases, less generous than the OMPP accident benefits even before adjusting for inflation.  Even those with catastrophic injuries are likely better off under the OMPP even though there was no higher tier of accident benefits available.  The OMPP provided all claimants with up to $1 million in combined medical, rehabilitation and attendant care benefits.  In 2015 dollars that works out to approximately $1.6 million in benefits.

	OMPP	OMPP	2015 Budget
	(1990 $)	(2015 $)
IRB	$600.00/week	$977.81/week	$400.00/week
caregivers	$250.00/week	$407.42/week	N/A*
non-earners	$185.00/week	$301.49/week	$185.00/week
medical/rehab	$500,000.00	$814,838.71	$65,000.00
med/rehab (cat)	$500,000.00	$814,838.71	$1,000,000.00
attendant care	$500,000.00	$814,838.71	N/A**
* caregiver benefit currently only available for catastrophic injuries
** attendant care included in medical/rehabilitation cap

More Benefit Cuts Coming for Ontario Auto Insurance Consumers

It seems the road to more affordable auto insurance once again winds its way through further benefit cuts.  Those aren't the only changes proposed in the 2015 Ontario Budget but it remains an ongoing piece of controlling the cost of Ontario premiums.  Many of the changes announced by Finance Minister Charles Sousa on April 23rd lack any details so how they would be applied or implemented is very much in the air.

Mandatory medical, rehabilitation and attendant care benefit coverage has again been lowered.  The combined coverage will be $65,000.  The combined mandatory coverage had been $172,000 since 1996.  In 2010 it was reduced to $86,000.  For catastrophic injuries, the combined coverage has been $2 million since 1996.  The coverage will now be $1,000,000.  With exception of children and catastrophic injuries, medical and rehabilitation benefits will only be able to be claims for a period of five years instead of ten.  Optional coverage will continue to be available but few consumers purchase and many brokers and insurers discourage consumers from purchasing them.

Subsections 15 (h) and 16 (l) of the SABS are basket clauses to cover medical and rehabilitation goods and services not specifically listed in the schedule.  The government proposes to change the entitlement test for these to clauses from "reasonable and necessary" to "essential". Yet a new term and complexity is to be introduced to the SABS and be subject to years of disputes.

The Superintendent of Financial Services recommended changes to the SABS definition of catastrophic impairment in a report back in 2010.  The recommended changes have been a contentious issue and the government has indicated an intention to make changes in the past few budgets.  This commitment has again been announced as part of the 2015 Ontario Budget.

Finally, the non-earner benefit is to be restricted.  The benefit was introduced in 1990 with the OMPP, the first no-fault system in Ontario.  Since that time, entitlement has been gradually been restricted.  The proposed change will limit entitlement to two years.

Some of the cost savings introduced by reducing standard SABS coverage will shift to the tort just as it did following the 2010 reforms.  However, the government is also looking to introduce cost savings on the tort side.  Changes will be made to the compensation available through a court action. The non-pecuniary deductible (for pain and suffering) was increased in 2003 and has not been changed since then.  It will be increased to reflect inflation since 2003 and indexed in the future.  Also adjusted will be the monetary thresholds beyond which the tort deductible does not apply (e.g., the $100,000 threshold at which the deductible no longer applies).   Finally, judges will be able to take int account the effect of the tort deductible when determining a party's entitlement to costs in an action.

Insurers will be expected to provide some additional cost savings for consumers.  The maximum interest rate that can be charged on premiums paid on a monthly basis is to be reduced from three percent to 1.3 percent.  All insurers will be required to offer a discount for the use of winter tires.  The budget announcement does not stipulate the amount of the discount but some insurers already offer such a discount and it is typically in the three to five percent range.

The most appealing change for consumers is a commitment to prohibit premium increases for minor at-fault accidents that meet certain criteria.  Those criteria have not been identified but I would expect the circumstance to be quite limited.  For example, it would not included any accidents where an injury was reported.  The question to be asked is where will those costs migrate to?  If insurers cannot increase premiums to drivers with minor accidents, will those costs shift to drivers with more serious accidents or all drivers which would include those with no accidents?

Finally, the standard deductible for comprehensive coverage will increase from $300 to $500.  A meaningless change based on past experience.  A number of years ago the government increased the standard deductible for direct compensation property damage (DCPD) coverage from $0 to $300.  However, brokers and agents continued to recommend the $0 deductible to consumers.  The opportunity to reduce premiums by accepting a higher deductible has always existed but many consumers do not take advantage of it.

There is a small obscure reference on page 103 to support regulatory and tax environment can help innovation thrive. This partly is aimed at transportation network companies such as Uber.  To help emerging sectors thrive, the government commits to working with firms and industries to help them comply with existing obligations and to consulting on an ongoing basis to ensure those obligations reflect a changing economy.

The government continues to tinker with the Ontario auto insurance product, which has been the order of the day since the OMPP was introduced on June 22, 1990.  In the May 2015 issue of Canadian Underwriter, I will look back at the past 25 years and discuss what has gone wrong. Please look out for it.

Ridesharing Bill Proceeds Through Ontario Legislature

Bill 53, Protecting Passenger Safety Act, 2015 received second reading this past week and has been referred to the Standing Committee on Social Policy.

The bill was introduced to address transportation network companies such as Uber and Lyft which have been operating in Toronto since 2012.  The bill was introduced by Liberal John Fraser and considered a private member's bill which rarely get passed.  However, there is broad support for the bill and the Conservatives introduced a similar private bill (Bill 51) in December.

Bill 53 if passed would amends the Highway Traffic Act with respect to the offences related to picking up a passenger for the purpose of transporting him or her for compensation without a required licence, permit or authorization in section 39.1 of the Act.  The licence or permit may fall under the Public Vehicles Act, an airport authority, the Department of Transport Act (Canada) or a municipal by-law.  The bill does not address insurance requirements.

The fine for these offences is increased to a maximum of $30,000. A person who picks up a passenger for the purpose of transporting him or her for compensation without a required licence, permit or authorization also receives three demerit points. 

If a police officer believes on reasonable and probable grounds that a person has committed this offence after having been convicted of the same offence within the preceding five years, the officer shall suspend the driver’s licence and impound his or her motor vehicle for 30 days.

Insurance News - Tuesday, April 21, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, April 21, 2015:

• Ontario's finance minister says auto insurance rates in Ontario have declined seven per cent since 2013 -- less than halfway to meeting a Liberal government promise in four months.
• Progressive Insurance U.S. survey says nearly 80 percent of consumers think bad drivers based on telematics should pay more for auto insurance.
• Like life insurance, the Canadian market for property & casualty insurance - for personal and small commercial lines - will eventually be "dominated" by two or three major firms according to the head of Desjardins General Insurance Group Inc.
• The IBC would like to see referral fee and contingency fee arrangements from personal injury lawyers filed with the FSCO Superintendent of Insurance.
• A National Post article on how Canadian insurance companies are trying to crack down on fake claims.

Ontario Rates Continue to Decrease Slowly

Just in advance of the Ontario Budget announcements which are expected to include new auto insurance changes, FSCO has released the rate filing approvals for the first quarter of 2015.

A total of 39 insurers submitted filings which represents 73.48 percent f the market based on premium volume. Approved rates decreased on average by 0.95 percent when applied across the total market. 

In the fourth quarter of 2014, approved rates decreased by 0.54 percent on average.  Rate changes since 2013 now total 7.05 percent.  The government rate reduction strategy calls for a 15 percent reduction by August of this year.

Insurance News - Monday, April 13, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, April 13, 2015:

• The Ajusto smartphone app By Desjardins Insurance is a significant step forward and is capable of tracking more of a driver's habits.
• Uber looks to beef up staff for self-driving car project at its newly created Advanced Technologies Center in Pittsburgh.
• A new study finds 12% of people will likely experience severe nausea while riding in a fully autonomous vehicle.
• While Uber is locked in an ongoing dispute with the City of Toronto over its right to operate, Toronto Police have cracked down on the ride-share service in their own way. In March, officers charged at least 11 UberX drivers with violations of the Highway Traffic Act.
• U.S. insurance regulators issue guidelines for ridesharing coverage gap.
• Every industry has a doomsday scenario. Usually it involves technology. For auto insurers, it's the driverless car.

Who Is Profiting Most From Ontario Auto Insurance?

If you are involved in the auto insurance sector, yesterday was an interesting day.  The Ontario Trial Lawyers Association released a study conducted on their behalf by two York University professors suggested that insurance companies make too much money.  The Insurance Bureau of Canada countered with accusations that trial lawyers make too much money.  Who do you believe?

A lot of people have profited from Ontario's auto insurance system over the past 25 years.  Few insurance companies have exited the Ontario market in that period of time so profits must be good.  In addition, there is no shortage of lawyers working in the system both on the accident benefits side and in tort.  There are rehabilitation clinics dying for more referrals.  Tow trucks drive around our highways ready to pounce on someone after a collision.  Yet everyone complains.  Drivers in this province continue to pay high premiums. They are the true victims in the system.

On June 22, 2015 it will be 25 years since the introduction of the Ontario Motorist Protection Plan or OMPP, the first no-fault auto insurance plan in Ontario.  It has been a rocky road.  In the May 2015 issue of Canadian Underwriter, I will look back at those 25 years and discuss what has gone wrong.  Please look out for it. 

Insurance News - Friday, April 10, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, April 10, 2015:

• Report funded by Privacy Commissioner raises serious concerns about telematics and what cars know about drivers.
• Hackers looking to breach insurance carriers according to New York Department of Financial Services report.
• Michigan police can check whether you have car insurance by running your plate.
• Uber is the subject of new auto insurance regulations that may go into effect in the U.S., of which it is opposed to.
• Progressive Insurance in the U.S. announces that for the first time it is increasing rates for some bad drivers based on telematics data.
• Legislation in Georgia increases auto insurance requirements for ride-share firms.

Insurance News - Monday, March 30, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, March 30, 2015:

• Ontario may increase mandatory reporting limit for collisions with no injuries to $2,000, from the $1,000 level set in 1998.  Five provinces have already increased their limits.
• Toronto Uber provides drivers with little information about insurance, including the name of their insurer.  Consumers should be aware that drivers' insurance policy may not provide them with coverage.
• New York’s top financial watchdog warned insurers this week about charging higher prices to customers least likely to shop around, the latest state to raise questions about how the industry uses data when setting rates.
• Alberta road safety bill has been passed by Legislature and will introduce demerit points for drivers convicted of distracted driving.
• Google explains why they created the driverless car.

Uber Drivers, Consumers at Risk

I'm featured in the news report below on Uber and insurance.

Mon, Mar 23: Customers who used ride-sharing services like UberX may be at risk if the driver is involved in an accident. As Sean O’Shea reports insurance experts say drivers are violating insurance rules and may be putting themselves and their fares in jeopardy.

Insurance News - Sunday, March 22, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, March 22, 2015:

• The Court of Appeal for Ontario has ruled in favour of the insurer on a dispute regarding the two-year limitation period and bad faith in Blake v. The Dominion.
• Lying about where you garage your car to save on auto insurance is about to become a crime in New Jersey.
• Ohio becomes 38th state to approve the use of electronic proof of insurance.  Still no Canadian jurisdiction has introduced an electronic insurance card.
• Half of young Britons who drive for work fear being replaced by driverless cars before retirement.
• Another possible impact of driverless cars: Police forces may shrink as there will be no need for traffic enforcement.

Insurance News - Friday, March 20, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, March 20, 2015:

• Driveless cars may drive down your insurance costs.
• Not surprising, some insurance companies have suggested that driverless cars  may be a possible financial threat.
• Google has announced the introduction of a United States version of its Google Compare auto insurance shopping site, which has been operating in Britain for two years.
• Who is going to own and control the automotive market when driverless cars are introduced? Car manufacturers or technology companies?
• Uber and Lyft fail to convince judges their drivers are merely 'contractors'.
• Uber's "low-cost" UberPop service has been banned in Germany after a court decided it violated transport laws.

Government Begins FSCO Mandate Review

The Ontario government has launched a review of the mandates of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO).

The mandate reviews were announced as part of the 2014 Ontario Fall Economic Statement.  A panel of experts has not been established to take the lead on the mandate reviews:

• George Cooke - former president and CEO of The Dominion of Canada General Insurance Company, and current chair of the board of directors of OMERS Administration Corp. 
• James Daw - former Toronto Star personal finance columnist who has written extensively about all facets of Ontario's financial system.
•  Larry Ritchie - Osler, Hoskin & Harcourt LLP partner and former vice-chair of the Ontario Securities Commission.

The FSCO mandate review is timely given a number of government actions.  In the fall, the government passed Bill 15 which includes provisions that when enacted will remove the auto insurance dispute resolution system from FSCO and create a new system at the Licence Appeal Tribunal.  In addition, the 2014 Auditor General report  proposed assigning the regulation of a number of entities (e.g., agents, adjusters and mortgage brokers) to industry associations. 

 The review will include broad consultations with the financial services sectors regulated by FSCO including the insurance sector and pension plans. As well, a consultation paper will be posted online and the public will be invited to comment on the issues being examined. The government will consider any necessary legislative changes based on the outcomes of the review. The government expects the review to be completed by early next winter.

Insurance News - Tuesday, March 3, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, March 3, 2015:

• IBC CEO Don Forgeron is suggesting that Ontario look at Nova Scotia on how to do auto insurance reforms.
• If 90% of auto accidents are due to human error, then who becomes liable when there are driverless cars on the road?
• In fact a University of Michigan study suggests that driverless cars will not be a panacea for road deaths, and could even worsen road safety for other drivers during the long transition period.
• Apple is being sued for poaching engineers to work on driverless car technology.
• A U.S. senator is urging the Justice Department to investigate insurance companies and auto repairs done at their 'preferred' repair shops across the country, because of safety concerns.

Insurance News - Saturday, February 28, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, February 28, 2015:

• The average auto insurance premium in Brampton is $2.393, the highest for Ontario cities, likely the highest in Canada.
• Lower gas prices will likely lead to more kilometers driven, more accidents and higher auto insurance rates.
• The U.K. is positioning itself to be the best jurisdictions for testing driverless cars with no geographic limits to test, no additional insurance requirements and no special licenses. Meanwhile Ontario has been taking over a year to decide what the rules should be.
• Old case but it show you how sophisticated staged accident rings can be. Peel police officer convicted of producing fake accident reports.
• It was only a matter of time, Geico is launching an insurance product for Uber and Lyft drivers in Virginia.
• Technology companies such as Google and Apple are unlikely to become mass car manufacturers, even if they have the potential to disrupt an industry increasingly focused on software and automated driving.

Insurance News - Tuesday, February 17, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, February 17, 2015:

• The OPP report that high-risk driving and fatal collisions on the rise in Ontario.
• Recent news shows Google and Uber  might by aiming at driverless cabs.
• Uber wants to replace its drivers with robots. So much for that “new economy” it was building.
• IBC raises concerns about extent of Uber auto insurance coverage (do they have any?)
• Intact is preparing for major technology companies (e.g. Google) to shake up the way Canadians buy insurance.