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.

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 – Tuesday, June 30, 2015

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

  • New KPMG report warns insurers unprepared for self-driving cars.
  • Smart cars and accident benefit cuts could decimate the personal injury bar.
  • The long history of the fight against Uber – the Luddites have returned.
  • California reveals details of self-driving car accidents.
  • Bill Gates thinks Uber has the best shot at self-driving cars.

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.

FSCO Prepared to Introduce New Minor Injury Protocols

Why is FSCO releasing new treatment protocols?
In the Superintendent’s report on the Five Year Review released in 2009, a recommendation was made to develop a treatment protocol for minor injuries that reflects current scientific and medical literature.  This recommendation was accepted by the government and confirmed in the 2012 Ontario Budget, which acknowledged that newer scientific and evidence-based approaches can be applied to the treatment of minor injuries resulting from automobile accidents.
How were the new treatment protocols developed?
In 2012, Dr. Pierre Côté, Associate Professor, Faculty of Health Sciences, University of Ontario Institute of Technology, was awarded a consulting contract to develop the Minor Injury Treatment Protocol (MITP) after an open competitive Request For Proposal process.
The Ontario Protocolfor Traffic Injury Management Collaboration includes a multidisciplinary team of expert clinicians (from medical, dental, physiotherapy, chiropractic, psychological, occupational therapy and nursing disciplines), academics and scientists (epidemiologists, clinical epidemiologists and health economists), a patient liaison, a consumer advocate, a retired judge and automobile insurance industry experts.  I played a small role on the project team.
Over the 2-year course of the project, the project team drew upon three sources of information concerning traffic injury rehabilitation.
1.    The team critically reviewed the contents and evidentiary basis of published clinical practice guidelines for the management of traffic injuries.
2.    They carried out an exhaustive search followed by a rigorous methodological evaluation of the current scientific literature concerning the management of traffic injuries published in peer-reviewed journals in the English language. They screened 234,995 abstracts and conducted in depth reviews of 597 scientific papers. This effort was summarized in 43 new systematic reviews of the literature.
3.    They also conducted a new study in which they gathered and carefully considered the narratives of Ontarians who have sustained injuries in traffic collisions and received health care.
The Final Report of the Minor Injury Treatment Protocol Project, titled “Enabling Recovery from Common Traffic Injuries: A Focus on the InjuredPerson” (Final Report) was delivered to FSCO at the end of December 2014
What does the Final Report recommend?
The Final Report recommends a new classification of traffic injuries. The natural history of the initial injury is the basis for classification. A Type I injury is likely to recover within days to a few months of the collision; but during the period of recovery the patient may benefit from education, advice, reassurance and time-limited evidence-based clinical care. Type I injuries are the focus of this report. A Type II injury is not likely to undergo spontaneous recovery, and the injured person may require medical, surgical and/or psychiatric/psychological care. Type III injuries are a subset of Type II injuries, that involve permanent catastrophic impairment or disability. The care for Type II and Type III injuries is not covered in this report.
Persons with Type I injuries should be educated and reassured from the outset that their own inherent healing capacities are likely to lead to a substantial recovery. They should also be informed that only a discrete set of treatments show evidence of any benefit; and that the same evidence shows that benefit is largely on the basis of pain alleviation. Healthcare professionals need to listen to the patient’s concerns and emphasize measures to assist them to cope, recognize and avoid complications.
The MITP includes clinical prediction rules to screen for patients who may be at higher risk for developing chronic pain and disability. In addition, it focuses on treatment outcomes, and provides health care providers with numerous milestones to measure progress.
Interventions for Type I injuries should only be provided in accordance with published evidence for effectiveness, including parameters of dosage, duration, and frequency; and within the most appropriate phase. The emphasis during the early phase (0-3 months) should be on education, advice, reassurance, activity and encouragement. Health care professionals should be reassured and encouraged to consider watchful waiting and clinical monitoring as evidence-based therapeutic options during the acute phase. For injured persons requiring therapy, time-limited and evidence-based intervention(s) should be implemented on a shared decision-making basis, an approach that equally applies to patients in the persistent phase (4-6 months).
Sixteen care pathways have been developed to cover the clinical management of:
·         Neck pain and associated disorders
·         Soft tissue disorders of the upper extremities
·         Temporomandibular disorders
·         Mild traumatic brain injuries
·         Low back pain
What’s next?
FSCO had been conducting a consultation process with stakeholders.  Before any final guidelines can be implemented, the government will need to make changes to the Statutory Accident Benefits Schedule. 

The complexity of the proposed changes will require a substantial educational initiative.  Clinicians and insurance company claims staff will need to be educated and trained on the recommended care pathways.  In some cases there may be resistance.  In addition, it is advisable that a public education campaign be undertaken to educate the general public on the proper management of soft tissue injuries.  It is not clear who would fund such a significant education campaign.