Catch Me At Bookapalooza on November 19th

On Saturday I will be signing copies of THE ROAD AHEAD at Bookapalooza in Whitby. It’s a great event with books and crafts for sale, panel discussions, giveaways and a silent auction.  There will also be a draw for free signed copy of my novel, which will make a nice gift with the holidays coming up.

Ontario Auto Insurance Rates Are Heading Back Up

FSCO's latest quarterly rate approval numbers have been released and the news is not good for consumers. Half the savings as a result of statutory accident benefit cuts that became effective on June 1 are already gone.

 FSCO approved 25 private passenger automobile insurance rate filings during the third quarter of 2016. These 25 insurers represent 63.56% of the market based on premium volume. Approved rates increased on average by 1.5% when applied across the total market. This wipes out almost half of the modest 3.07% reduction in approved rate filings in the first quarter of 2016. Depending on rate filings in the last quarter, we could see a net increase in rates for the 2016 calendar year.

 The government has abandoned the the 15% rate reduction promise made in August 2016. However, if you aggregate all the rate changes since the 2013 announcement, the total rate reduction is 8.34% when applied across the total market.

 Product reforms have proven to be an ineffective tool for controlling auto insurance premiums in Ontario. As long as transactional costs within the system remain high, Ontario drivers will continue to pay high rates. A new delivery system is needed to bring Ontario's costs in line with other jurisdictions. For a discussion on how to address the systemic problems in Ontario, see my article entitled Ontario's 25-Year No-Fault Journey.

Early LAT Decisions Suggest Reforms May Be Working

Effective April 1, 2016, the Licence Appeal Tribunal began accepting applications to the new Automobile Accident Benefits Service (AABS) system with an aim to quickly resolve disagreements between individuals and insurance companies about statutory accident benefits.  The guiding principles created for new Tribunal were originally developed by Justice Douglas Cunningham and myself in a report released in 2014. 

 Over the past few month, there have been a handful of decisions from the Tribunal. I decided to review nine decisions to determine whether there were some early trends.

There seven written hearings and two oral hearings. The two oral hearings were conducted by teleconference. This is consistent with the direction provided in the Cunningham report that the majority of hearings should be conducted through written submissions.

Many FSCO decisions dealt with procedural issues rather than benefit entitlement. Often, hearings were held to listen to preliminary issues. Although the sample size is small, it appears only three decision did not deal directly with benefit entitlement. One dealt with a claimant failing to attend insurer examinations, Another dealt with whether a claimant had the ability to elect to receive either the non-earner benefit or income replacement. The last one involved a claimant trying to claim the cost of preparing an application on an issue that was resolved prior to the case conference. These decisions may suggests that the LAT process may also be bogged down with procedural issues. This is not what Cunningham had envisioned.

The average time between the hearing date and the release of a decision was 51.5 days. This is a significant improvement compared to FSCO timelines but we need to remember it's still early. Let's see how this trends in the future. The decisions themselves have been very short. Somewhere between five to ten pages.  

I did not review the quality of the decisions made by Tribunal adjudicators. I leave that for the users to determine. However, so far, the first few decisions have lived up to the reforms objective of a more expeditious process.

Insurance News - Monday, October 17, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, October 17, 2016:

• Passengers in Uber's Pittsburgh self-driving cars are asked to waive the right to sue for injury or death.
• Uber is rushing to get self-driving cars on the road. Their business model is at risk if don't keep up.
• Will you need auto insurance to drive a self-driving car? Will you even need a drivers license?
• California has loosened the rules and will allow test of autonomous cars with no driver behind the wheel.
• Why Uber has to be first to market with self-driving cars.
• As Baby Boomers age, health issues can make it unsafe or physically impossible to drive, but that won't matter if we all have robotic chauffeurs.

Photos From THE ROAD AHEAD Book Launch

More photos can be found at www.williehandler.com

Insurance News - Tuesday, September 27, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, September 27, 2016:

• Motorist in Tesla self-driving vehicle is killed when it smashes into a tree at 100 mph in Holland - but the company insist he had not switched on auto-pilot function.
• Insurance premiums could drop 40 percent by 2050 due to automated vehicles.
• Self-driving cars operated by ride-sharing service Uber hit the public roads in Pittsburgh, as the company launches a pilot program that will pick up actual passengers.
• New Brunswick auto insurance claims have grown $70 million over 3 years and may lead to some large rate hikes.
• Lyft's president says 'majority' of rides will be in self-driving cars by 2021 and car ownership will end by 2025. Overly optimistic?

THE ROAD AHEAD Is Available

My book, THE ROAD AHEAD, is now available to purchase. Paperback and Kindle versions are available at Amazon.ca and Amazon.com.

A Kobo version is also available at Chapters.ca and Kobobooks.com.

Paperback copies are also available at Ben McNally Books at 366 Bay Street, Toronto.

“Politics has never been this much fun!”

Rick Tompkins, a suburban Toronto insurance broker, never considered a career in politics until a good friend, who happens to be the leader of the Conservative party, asks him to run for office. He accepts the offer, with the understanding that he would probably not win, but can use the opportunity to gain some visibility for himself and his business. Jerry Switzer, a veteran party worker, is sent in to guide Rick through a campaign in a riding that hasn’t elected a Conservative in years. Rick fumbles his way through the election campaign and manages a surprise win but at the expense of saddling his party with an impossible commitment. What makes matters worse, Rick is anything but politically correct. He offends everyone in his path and stumbles from one political scandal to another. Still, Rick has one saving asset: a political party machine that is able to spin scandals to its advantage.

Insurance News - Thursday, September 15, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, September 15, 2016:

• Uber and Lyft have each been in the news recently for their investments in and work with automaker partners in developing self-driving technology. So, what about the drivers?
• Michigan may soon become the first state to allow self-driving cars on the road without a human driver sitting behind the steering wheel.
• The Ontario Provincial Police recently suggested that so far this year, it has investigated 38 road deaths in which a distracted driver was involved.
• What Amazon can teach auto insurance carriers about online retailing and enhancing the consumer experience.
• Vastly different story lines among Canada’s four public auto insurers.
• Self-driving Google cars will soon know when the police are approaching and to pull over to the side of the road.

THE ROAD AHEAD Has Arrived...

Contact me directly if you are interested in my book launch party on September 21st.

Insurance News - Friday, August 26, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, August 26, 2016:

• The Tesla autopilot crash has picked up a lot of attention. U.S. driver interest in self-driving cars dips slightly after Tesla crash.
• Auto insurer might sue Tesla over autopilot-related crash.
• Drivers still liable in accidents, even in near driverless cars, says Canadian law firm Borden Ladner Gervais.
• Telematics is the Betamax of insurance, the real seismic event in the industry will be the autonomous car.
• A Missouri man credited his self-driving Tesla for taking him to the hospital when he suffered a pulmonary embolism behind the wheel.

THE ROAD AHEAD Book Release

Will The New Ontario Fleet Definition Work?

As I reported previously, the Ontario government amended the fleet definition in Regulation 664 in early July.  The amended definition reads as follows:

“fleet” means a group of not fewer than five automobiles that meets the following requirements:

1. At least five of the automobiles in the group are commercial vehicles, public vehicles or vehicles used for business purposes.

2. The automobiles in the group are,

i. under common ownership or management, and any automobiles in the group that are subject to a lease agreement for a period in excess of 30 days are leased to the same insured person, or

ii. available for hire through a common online-enabled application or system for the pre-arrangement of transportation, and insured under a contract of automobile insurance in which the automobile owner or lessee, as the case may be, has coverage as an insured named in the contract

From my perspective, this is not an ideal resolution. However, it does fill in the insurance gap that has existed since Uber began providing its services in Toronto in 2012. One of the most important elements in the fleet definition has always been the requirement that there be common management. Common management is an element that is required in order for a group of vehicles to be considered a fleet, if they are not commonly owned or where they are owned by a leasing company. It refers to the fact that the owner or manager has a measure of control over the vehicles. A fleet is typically a discrete risk exposure whose experience and characteristics can be monitored and rated, and is affected by the actions of the owner or manager. The vehicles in a fleet are not individually rated as this is inconsistent with a key principle in fleet rating to establish a rate specific to the experience of the fleet. Usually, the manager of a fleet will implement rigorous risk management programs to monitor and improve experience and rating.

None of these circumstance remotely exist when it comes to Uber drivers and their vehicles. They are network of drivers connected to customers through an app provided by Uber. Their is no common ownership or management. It suggest that once an Uber driver turns on the app on his phone, he or she becomes part of a fleet. That decision isn't even made by Uber.

Is this such a bad thing? It could be if it leads to further erosion of the fleet definition. The regulator has for years denied fleet policies because they failed to meet the test of common ownership or management. Will they be able to continue to push back against synthetic fleets? It would have been better, if the government had created a provision in the Insurance Act to deal specifically with transportation network companies. I expect it will take some time to determine whether the government and the insurance industry will regret the newly amended fleet definition.

Insurance News - Sunday, July 31, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, July 31, 2016:

• Tesla and Google are taking different approaches to developing self-driving cars.
• Uber drivers in Ontario are now automotically insured,
• Auto insurance rates still rising, despite province's pledge to lower them.
• Uber plans to collect street-view photos in Mexico to further lays the groundwork for a fleet of autonomous vehicles.
• Canada tops the list of wealthy countries in the percentage of road fatalities related to alcohol impairment.
• Customers sour on insurers' UBI discount model.

Insurance News - Friday, July 22, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, July 22, 2016:

• A prominent Toronto lawyer who pursued a frivolous action on behalf of a client was found personally liable Tuesday for the legal costs.
• What will your car have to do for the police to pull you over when you’re in an autonomous car?
• In the U.S., being on the lower end of the wage scale can mean paying much more for auto insurance, even for good drivers.
• As self-driving cars change transportation, how will infrastructure adapt?
• Details on the first self-driving car death involving Tesla S using autopilot.
• Ontario’s program to allow testing of self-driving cars on public roads has not received any applications since it launched January 1,

Ontario Auto Insurance Rates Remain Chronically High

FSCO's latest quarterly rate approval numbers have been released and suggest that consumers will see very few savings the statutory accident benefit cuts that became effective on June 1.

FSCO approved 14 private passenger automobile insurance rate filings during the second quarter of 2016. These 14 insurers represent 30.06% of the market based on premium volume. Approved rates increased on average by 0.33% when applied across the total market. This follows the modest 3.07% reduction in approved rate filings in the first quarter of 2016.

The end of lower rate filing approvals indicate that the any savings derived from the recent reform package are small. A portion of the savings could be wiped out before the end of the calendar year if companies continue to file for increases. The government has abandoned the the 15% rate reduction promise made in August 2016. However, if you aggregate all the rate changes since the 2013 announcement, the total rate reduction is 9.84% when applied across the total market.

Product reforms have proven to be an ineffective tool for controling auto insurance premiums in Ontario. As long as transactional costs within the system remain high, Ontario drivers will continue to pay high rates. A new delivery system is needed to bring Ontario's costs in line with other jurisdictions. For a discussion on how to address the systemic problems in Ontario, see my article entitled Ontario's 25-Year No-Fault Journey.

New Ontario Towing and Storage Regulations Are Now In Effect

New regulations are now in effect if you repair, tow or store vehicles in Ontario. The new regulations under the Repair and Storage Liens Act took effect on July 1, 2016. Further regulations will come into force starting January 1, 2017.

 The following new rules come into effect on July 1, 2016:

• If a vehicle being stored is subject to a lien and is received from someone other than its owner or a person having the owner's authority, then the storer must give notice to the owner and other interested parties of the lien in writing (e.g. secured parties who have registered their interest, such as lease and finance companies). 
• For vehicles registered in Ontario, the notice period is reduced from 60 days to 15 days after the day after the vehicle is received. If notice is not provided within 15 days, a storer's lien is limited to the unpaid amount owing for that period. The 60-day notice period remains unchanged for out-of-province vehicles. 
• If no amount has been agreed upon for repair and storage costs, fair value may be determined by a court. There is a new list of discretionary factors a judge will be required to consider (such as fixed costs, variable costs, direct costs, indirect costs, profit and any other relevant factors).

Ontario Regulation 427/15 can be found here.

Ontario Changes Fleet Definition To Accommodate Ride-Sharing

This week, the Ontario amended Regulation 664 to expand the definition of a fleet to accommodate ride-sharing services. The change opens the door for insurers to offer policies to drivers of vehicles for hire using an online app such as Uber.

The regulation amendment expands the fleet definition to include vehicles available for hire through a common online-enabled application or system for  pre-arranged transportation. The vehicle owner or lessee is to be a named insured under an auto insurance contract. The regulation change will make it easier for Ontario businesses to insure a group of privately owned vehicles under one insurance policy as a “fleet” when they are available for hire using an online app.

FSCO has already approved a fleet policy proposed by Intact Insurance Company. The Intact policy provides blanket fleet coverage under a standard automobile owner’s policy (OAP 1) for private passenger automobiles used in the transportation of paying passengers who utilize Uber. The Intact fleet policy only provides coverage when the driver is logged onto the Uber online app. In other situations, coverage under the personal owner’s policy for the automobile is applicable.

FSCO has also approved the use of an electronic insurance card for use in connection with ride-sharing. The electronic insurance card will permit ride-sharing drivers, who are covered under the Intact policy the option, to provide evidence of insurance electronically using an online-enabled app (e.g., to law enforcement officials).

Insurance News - Thursday, June 30, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, June 30, 2016:

• The Ontario government is being urged to make a $65 million investment in the development of driverless car technology to help the province’s auto industry compete on a global scale.
• Ten different strategies shaping the transition to the self-driving car.
• Global sales of autonomous vehicles will reach nearly 21 million vehicles by 2035, a substantial increase from previous estimates.
• The US-based National Highway Traffic Safety Administration will implement federal regulations, but will have no say when it comes to the regulations made by the individual states.
• The self-driving car generation gap: older people see driving as representing personal freedom younger people do not.
• Study asks people if self-driving cars should make moral choices.

FSCO Mandate Review Recommends Changes to Auto Insurance Regulation

The Ontario government should establish a new organization that would perform the functions currently performed by the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO), an expert advisory panel said in a report released Monday.

The panel recommends that a new Financial Services Regulatory Authority (FSRA) be established, and it should exercise both prudential and market conduct functions.  The panel – comprised of George Cooke, James Daw and Lawrence Ritchie – made its recommendation to create FSRA in an interim report released in November, 2015. The final report, dated March 31, was made public Monday and contains 44 recommendations.

The mandate review was partly made necessary with the transfer of responsibility for operating an auto insurance dispute resolution system from FSCO to Ministry of the Attorney General’s Licence Appeal Tribunal on April 1, 2016.

Governance

The report suggests that FSRA should consolidate functions, but it should have separate divisions for the regulation of market conduct; prudential oversight; and pension administration. These divisions of the regulator should operate in a coordinated manner, but each division should be insulated from the routine regulatory activities, pressures and resource demands of other divisions.

FSRA should be a self-funded corporation without share capital, operationally independent of government, yet accountable to the Legislature through the Minister of Finance. The FSRA should be outside of the Ontario Public Service and be empowered to hire its personnel from outside of the Ontario Public Service’s collective agreements, compensation restraints, and other hiring restraints to support its ability to recruit professionals and industry expertise as it deems necessary.

FSRA should have a skills-based Board of Directors appointed by the Lieutenant Governor in Council. The Board would oversee FSRA’s operations and the Board should have the authority to appoint a Chief Executive Officer (CEO). The Board Chair should report directly to the Minister of Finance.

FSRA’s Board should be given authority to make rules that would be enforceable pursuant to the statute, having a similar authority as Cabinet Regulations.

Auto Insurance Rate Regulation

The panel did not make any recommendations with respect to the prior approval of auto insurance. However, it did recommend that FSRA’s Board should be obliged and empowered to decide how auto insurance rates are to be regulated and make use of its rule-making authority to scope out a rate approval process.

The view of the panel is that when it comes to the regulation of automobile insurance rates, FSCO is not ultimately protecting the public interest or enhancing confidence in the sector.


Motor Vehicle Accident Claims Fund

The panel recommends that responsibility for operating the Motor Vehicle Accident Claims Fund (MVACF) be transferred to the Facility Association (FA), a non-profit organization funded by automobile insurers in the provinces and territories that operate private insurance systems. This responsibility would fit well with the FA’s original purpose, which is to act as the ‘insurer of last resort’ for high-risk drivers. The FA already operates uninsured motorist funds similar to the MVACF in the Atlantic Provinces.

Fraud Prevention

The panel indicated that the new mandate should require FSRA to utilize its statutory authorities to adequately, firmly and consistently discourage fraudulent activities or behaviours that mislead or harm consumers and pension plan beneficiaries.

FSRA should be directed to identify and seek to eliminate gaps in protection for consumers who might be defrauded by licensed sales agents, brokers and corporations. FSRA should also  have the authority to establish a fraud compensation fund such as exists in Quebec if or where enhancements to mandatory insurance coverage would not fully close current gaps.

There is no word from the government on implementing the panel's recommendations.

Insurance News - Saturday, June 18, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, June 18, 2016:

• A recent FSCO survey revealed that 90% Ontarians do not know much about their auto insurance coverage.
• New York legislators want to make self-driving cars accessible, but must first fix a 1971 law that requires at least one hand on steering wheel.
• Three threats to incumbent car companies are converging into a tidal wave of disruption.
• Almost half of marijuana-smoking Canadian drivers say that they can safely operate a vehicle while stoned.
• How data analytics will change the insurance sector as never before.