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?

Insurance News – Friday, October 17, 2014

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

  • Studies show voice activated smartphones, dashboard infotainment systems can distract drivers.
  • No surprise here that OPP statistics indicate that speeding and distracted drivers are the leading causes for road fatalities.
  • An interesting article on how connectivity is enabling a new paradigm for auto mobility.
  • Volvos will soon have a 360 degree accident avoidance systems in its cars that will plot ‘escape routes’ to avoid crashes.
  • A Wall Street Journal article on how driverless cars with change retirement.
  • The Ontario government is behind on its rate reduction commitment but still insists it will deliver.

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.

Ontario Ministry of Finance Has Provided Notice On Intent To Change The Interest Rate On Disputed SABS Claims

The Ministry of Finance is proposing to amend the SABS (O. Reg. 34/10) so that when there is a dispute in respect of an insured person’s entitlement to, or amount of statutory accident benefits, interest on overdue SABS payments is calculated at the prejudgment interest rate described in the Courts of Justice Act that is used for past pecuniary loss, and is payable from the date on which a mediation proceeding is commenced and ends on the date a settlement is reached or a decision is issued that finally disposes of the dispute.

 The Ontario government’s Regulatory Registry is inviting stakeholders and interested parties to provide comments on these proposed regulations (that have yet to be made public). The deadline for comments is November 6, 2014.

 Ontario’s Regulatory Registry provides information on new proposed regulatory initiatives that could affect Ontario businesses and recently approved regulations that affect business. Regulations are approved by the provincial Cabinet.

 Once a regulation is approved, a plain language summary of the regulation is posted on the Registry website, with a link to the regulation posted on the Government of Ontario’s e-Laws website.

We’ve Been Down This Road Before

Once again, Ontario has announced another package of auto insurance reforms.
With a provincial election just months away, the Ontario government recently announced yet another plan to make auto insurance affordable for Ontario drivers. The plan is focused on addressing fraud and providing better access to care.
The announcement by Charles Sousa, Ontario’s minister of finance, along with attorney general Yasir Nasqvi, follows several months of consultation with a broad range of stakeholders regarding David Marshall’s report, Fair Benefits Fairly Delivered: A Review of the Auto Insurance System in Ontario, released in April 2017. Marshall’s report contained 35 recommendations to reform the auto insurance system.
I reviewed David Marshall’s report and the province’s subsequent announcement in December 2017 with interest. I spent more than 20 years of my professional life designing similar reform packages and have a good sense of how the Ontario system will respond to Marshall’s proposed reforms.
Although the government’s plan announced in December 2017 purports to flow from David Marshall’s report from last spring, only the creation of a new network of independent evaluation centres [IECs] originated from Marshall’s report. Programs of care and contingency fees, announced in December and mentioned in Marshall’s report, are work already underway by the government. Marshall, an advisor to Ontario’s finance minister on auto insurance and pensions, never dealt with fraud.
For me, Ontario’s plan is an admission that the Marshall report does not provide much in the way of workable solutions for the government. It would be a stretch to suggest that there will be savings derived from the proposed IECs. The system will not cease to be adversarial with the introduction of the IECs just as the Designated Assessment Centres (DACs) had no impact. Lawyers and insurers will continue to access their own medical opinions.
With an election on the horizon, there is little time for the government to implement their plan. What will happen to this plan following the election is unknown at this time. Other than providing more resources to combat fraud, there is little here to provide premium relief for consumers. Considering how long it takes to prosecute a fraud case, those savings are years away.
What’s in Ontario’s Plan
The government will be establishing a panel to guide the enactment of proposed reforms, which include:
·         Standard treatment plans (programs of care) for common collision injuries (soft tissue injuries) and changing the emphasis from cash payouts to ensuring appropriate care.
·         Reducing disputes by instituting independent examination centres.
·         Launching a Serious Fraud Office in spring 2018.
·         Directing the Financial Services Commission of Ontario (FSCO) to review territorial rating factors used by insurers.
·         Ensuring that lawyers’ contingency fees are fair, reasonable and more transparent.  
Programs of care
I initiated the Programs of Care project before I left FSCO in 2011 and agree with its introduction. Led by Dr. Pierre Côté, the work on developing programs of care was completed in three years. Long overdue, this aspect of the Marshall recommendations and subsequent government announcement has been in development for six years.
Programs of care were first developed by the Workplace Safety and Insurance Board (WSIB) to deal with low back pain. The initial whiplash associated disorder guidelines were created in 2003 based on the WSIB low back pain program of care. FSCO had undertaken to develop programs of care for a range of soft tissue injuries. An interim solution was the introduction of the minor injury definition and minor injury guideline in 2010. The expectation is that programs of care will simplify access to treatment and reduce disputes in the system. If that does occur, it will potentially reduce some of the transactional costs in the system.
Will statutory accident benefits (SABS) be simplified when the programs of care are introduced? Will the number of disputes drop? That did not occur with the introduction of the minor injury guideline. It can’t be assumed that programs of care will significantly change the landscape. The WSIB experience will not necessarily be duplicated in the Ontario auto insurance system because the structures of the two systems will continue to be fundamentally different.
The government would like to move away from cash settlements. Prior to the introduction of the Ontario Motorist Protection Plan (OMPP) in 1990, it was standard procedure to settle minor lawsuits. The introduction of the OMPP was intended to address the needs of accident victims with minor injuries so that they could access wage loss and rehabilitation without the need to sue. Cash settlements undermine the principles of no-fault.
In his 2014 report, Ontario Automobile Insurance Dispute Resolution System Review, Douglas Cunningham, now an arbitrator and a former associate chief justice of the Ontario Superior Court of Justice, acknowledged that cash settlements could be counter-productive. But he compromised in the end by recommending that settlements be prohibited in the first two years of a claim. A settlement prohibition is more feasible in a pure no-fault system such as the WSIB. However, Ontario’s auto insurance system provides access to tort. If there is a tort claim, the lawyers often push for a cash settlement with the first-party payer because the third-party payer is only responsible for damages in excess of the SABS.
Independent Examination Centres (IECs)
The government continues to support Marshall’s recommendation that a network of IECs be created to provide neutral assessments of auto collision injuries. Fortunately, the government has backed away from locating IECs in public hospitals.
However, IECs are a bad idea. It sounds like a great concept, but it’s been tried before and failed. I had the policy lead when the former DACs were introduced in 1994. The language we used back then was identical to what appeared in the recent government plan. IECs reflect Marshall’s lack of institutional memory and understanding of the auto insurance industry.
I learned a few things through the DAC experience. When you are conducting over 100,000 assessments each year, you need a lot of physicians and other allied health professionals. That means you will have to rely on the same professionals who provided assessments to legal representatives and insurers. No matter what measures you take through standard guidelines and protocols, fee schedules, accreditation, no one will consider these assessors to suddenly become neutral. The criticisms directed at the current assessors will follow them when they join IECs.
IECs will require substantive oversight just like the DACs did. This will not only require a government bureaucracy to support IECs, but will likely increase administrative requirements for the assessment providers. Currently, the average insurer examination costs under $1,400 based on HCAI data. The last DAC fee schedule (dated February 2004) contained much higher fees: assessing treatment, $2,000; assessing disability, $3,900; assessing attendant care needs, $2,600; and no cap on catastrophic impairment assessments. I predict assessment costs will rise under the IECs. 
Marshall uses New Jersey’s dispute resolution mechanism as an example of where a neutral medical review is successfully being used. Marshall has misinterpreted the New Jersey system. I spoke to officials from New Jersey on behalf of Justice Cunningham as part of his review of the auto insurance dispute resolutions system. The New Jersey medical reviews are peer reviews; they do not involve an examination of the claimant. They are not automatically conducted — one of the parties needs to request a review. The claimant and insurer still conduct their own medical assessments, upon which the neutral medical reviewer comments. As well, the arbitrator does not always follow the opinion of the medical reviewer. As is the case in New Jersey, establishing IECs will not eliminate the need for provider- and insurer-initiated assessments.
Despite the insurance industry’s strong support of the creation of IECs, I do not believe insurers will be willing to give up insurer exams. They are an important component in any private disability system. Instead, IECs have the potential to add another layer of assessments and costs, similar to the experience with the DACs.
Serious Fraud Office
For the third time in the past five years, the government has announced their intent to create a Fraud Office to deal with auto insurance fraud. Fraud was not mentioned by Marshall but raised by stakeholders during consultations. It would be nice if it happens this time.
Territorial Rating
This aspect of the plan has me puzzled. Directing the regulator to look at territorial rating can only go two ways: 1) the status quo, or 2) adjusting some rates up and others down. Ultimately, the review will not reduce rates overall and I sense the government knows this. Reducing rates in the GTA will only increase rates in other regions of the province.
Contingency Fees
The Law Society of Upper Canada has been working on new rules for lawyers regarding contingency fees for more than a year. They’ve asked the government to approve new regulations to provide the legal regulator with the ability to enforce the new rules. This overlaps with a recommendation made by David Marshall and was included in the government auto insurance plan. Cracking down on contingency fee abuses will put more money in the pockets of claimants but will not reduce auto insurance rates.

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 – 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.

Insurance News – Saturday, January 31, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, January 31, 2015:

  • To the list of jobs threatened by the Internet, you can now add independent insurance agents and brokers.
  • It appears that Google cars drive on snow and ice like every Torontonian – like it was the first time seeing the stuff.
  • Here are five pieces of technology your car may already have which are expected to evolve towards driverless cars.
  • It is estimated that driverless cars could save Canadians $65 billion a year through fewer accidents, fuel savings, less congestion and reduced time on the road.
  • Uber has suspended some drivers in California who registered cars for commercial use. But the DMV says that only cars with commercial registrations may carry passengers for hire in the state.
  • Uber Toronto GM alleges 26 licensed Toronto taxi drivers failed to meet Uber standards thereby suggesting Uber has higher standards.

Insurance News – Thursday, February 11, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, February 11, 2016:

  • Developers of driverless cars promise fewer deaths and injuries from car accidents.That could also mean fewer cases for lawyers who handle auto injury litigation, but opinions differ on how much of a threat driverless cars pose to lawyers’ livelihoods.
  • The guy who solved Uber’s insurance problem has no insurance background.
  • Google is disappointed to learn that driverless cars will need a driver in CaliforniaThe state’s Department of Motor Vehicles wants someone behind the wheel in case something goes wrong.
  • Meanwhile, the National Highway Transportation and Safety Administration told Google that the artificial intelligence system that controls its self-driving car can be considered a driver under federal law.
  • Edmonton will become the first Canadian city to allow ride-sharing companies like Uber to legally operate after city council approves a ride-sharing bylaw.

Insurance News – Sunday, June 7, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, June 7, 2015:

  • California has a new insurance product to help close the gap in coverage for drivers driving for ride sharing companies.
  • As Michigan struggles to control costs, a State Senator proposes making auto insurance a second payer to health insurance.
  • $1,000 tickets for distracted driving, $500 for biking without a light and other laws to hit Ontario streets.  Twelve things you need to know about Bill 31.
  • Allstate says its Ride for Hire policy will cost $15 to $20 a year on average and will provide coverage for drivers using apps like Uber who get into accidents while they are on the way to pick up new fares. It said it can also help them deal with gaps in coverage between their own auto insurance and policies offered by the ride-sharing companies.
  • Hundreds rally at Queens Park against cuts to auto insurance benefits on the same day Bill 91 passes.