Government Posts Proposed Changes to DRS Regulations

The Ministry of Finance has posted proposed changes to Insurance Act regulations to provide for the transition the Automobile Insurance Dispute Resolution System from the Financial Services Commission of Ontario (FSCO) to the Ministry of the Attorney General’s Licence Appeal Tribunal (LAT), and the wind down of disputes filed at FSCO. 

Proposed amendments include:

 • The last date for submitting applications for mediation, neutral evaluation, or the appointment of an arbitrator to FSCO will be March 31, 2016. 

 • An application for an appeal to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • As well, an applications for a variation or revocation to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • The Office of the Director of Arbitrations will continue to function until all notices of appeal and all applications for variation or revocation have been finally determined. 

 • Statutory Accident Benefits Schedule (SABS) provisions that apply to the dispute resolution process at FSCO will continue to apply, as they read on March 31, 2016, to all applications that were received by FSCO before the transition date but are not finally determined before that date. The SABS will also be amended, where necessary, to apply to applications filed at the LAT on or after April 1, 2016.

Ontario’s Rate Reduction Strategy Likely To Fall Short

This week FSCO released rate filings approved for third quarter of 2014.  Nine insurers, representing 26.65% of the market based on premium volume, had rates approved in the third quarter of 2014. Approved rates decreased on average by 0.11% when applied across the total market.

In the backdrop is the Ontario government’s commitment to reduce rates in the province by 15% before August 15, 2015.  The chart below breaks down the quarterly rate approval changes following the announcement of the rate reduction strategy last year. The third quarter of 2013 has been included although many of the rate approvals for that quarter may have been filed well before the strategy was announced. 

Quarter
Rate Change
2013 – 3Q
-0.68%
2013 – 4Q
-3.98%
2014 – 1Q
-1.01%
2014 – 2Q
+0.22%
2014 – 3Q
-0.11%

The accumulative rate reductions approved by FSCO during this period have been under 6%. With just 10 months remaining, the government is considerably short of its target with no real strategy to bring down rates another 9-10%.


Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 will likely be passed by the legislature within the next 10 months.  The Bill contains provisions to transform Ontario’s auto insurance dispute resolution system into a more robust system. Other provisions would regulate the towing and vehicle storage industries through measures that tackle questionable practices. The bill would amend provisions in the Repair and Storage Liens Act and give the province authority to change the current 60-day period that a vehicle can be stored after an accident, accruing charges, without notice to the owner. The government has also served notice through the Regulatory Register that it will reduce the rate of interest on overdue SABS payments.

However, all of these initiatives as well as the proposed legislation to regulate the towing industry and the expected introduction of a new minor injury protocol could not possible bring down rates a further 9% in less that a year. 

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.



No New Auto Insurance Commitments in 2014 Ontario Fall Economic Statement

The auto insurance focus of this year’s Ontario Economic Statement is consumer protection although not everyone is going to agree that these measures are strictly to protect consumers. The statement provides a summary of government activity that is ongoing.

The government claims it is taking steps to keep auto insurance affordable.  As a result of the government’s Auto Insurance Cost and Rate Reduction Strategy, FSCO rate approvals fell by than six per cent on average from August 2013 to August 2014. Although it is not always clear what impact that will have on the paying public.  However, the commitment was for an eight per cent reduction during that time period.

The government has taken action to address over half of the recommendations made by the Auto Insurance Anti‐Fraud Task Force, including key proposals to enhance the Financial Services Commission of Ontario’s (FSCO) investigation and enforcement authority and make it easier for individuals to report suspected auto insurance fraud.

Licensing of health service providers in the auto insurance system, a key Task Force proposal, will become fully effective on December 1, 2014.

The government is also committed to establishing a Serious Fraud Unit, whose initial mandate would include addressing auto insurance fraud. Establishing such a dedicated investigation and prosecution unit would be consistent with the Task Force’s conclusion that cases of suspected auto insurance fraud should be vigorously pursued and prosecuted where evidence warrants.

Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, is working its way through the legislative process and has recently had second reading and undergone a very brief review by a legislative standing committee.  If passed, Bill 15 would:

  • Transfer Ontario’s auto insurance dispute resolution system to the Licence Appeal Tribunal and make significant changes to help injured drivers settle disputed claims faster; 
  • Regulate the towing and vehicle storage industries through measures that tackle questionable practices; and
  • Give the government authority to change the current 60‐day period that a vehicle can be stored after an accident, accruing charges, without notice to the owner. 

Rates are directly linked to claims costs.  So in addition to reducing fraudulent activity and abuse, Bill 15 also will reduce costs in the system.  That is where some of the controversy lies.  The government plans to align prejudgment interest rates on pecuniary and non-pecuniary damages (pain and suffering) to what are typical rates in today’s market. That will reduce the rate to 1.3% (from 5%) on pecuniary damages.

Insurance News – Tuesday, November 11, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, November 11, 2014:

  • Bill 15, Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 passes second reading and has just one day of public hearings.
  • Toronto man charged with selling fake auto insurance some drivers on the road without coverage
  • Will we need a learner’s permit for self-driving cars?
  • Utilities, taxis, construction and mining, government and public sectors, emergency services, public transportation and local delivery services will all likely have telematics installed on their vehicles.
  • Fatal California accident will test Lyft’s $1 million auto insurance policy.
  • B.C. Transportation Minister says plainclothes transit agents posing as potential customers will be deployed to ensure taxis and their drivers are operating by B.C.’s rules, which are enforced to ensure passenger safety.

Ontario Auto Rates Steady In 2016 But Only After Benefit Cuts

FSCO’s latest quarterly rate approval numbers have been released and at least rates are holding steady for now. However, considering the statutory accident benefit cuts that became effective on June 1, 2016, consumers are getting less coverage but paying about the same money.

 FSCO approved 10 private passenger automobile insurance rate filings during the fourth quarter of 2016. These 10 insurers represent 24.17% of the market based on premium volume. Approved rates decreased on average by 0.14% when applied across the total market. Overall, approved rates decreased on average by 1.38% when applied across the total market for the 2016 calendar year.

 The high cost of auto insurance creates a strong disincentive to purchase coverage that was taken away by product reforms. This is the case even when coverage can be purchased for about the same cost as a tank of gas. Sitting on my desk is my own auto insurance renewal. The cost of buying $1 miillion in medical/rehabilitation/attendant care coverage is $50 for on my two vehicles. I also purchased an additional $1 million in catastrophic coverage for just $19.

Product reforms have created an environment where consumers are inadequately covered for more serious injuries. Rather than make coverage for minor injuries optional, consumers are allowed to opt out of purchasing adequate coverage for more serious injuries. That would be analogous to making physical damage coverage mandatory with no deductible for minor collisions but not covering total loss claims.

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.

Insurance News – Thursday, November 12, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, November 12, 2015:

  • Ontarians pay more than double in car insurance than in some provinces.
  • Trial lawyers have updated their report on profitability in the Ontario auto insurance market.
  • Self-driving cars will be tested on Canadian roads in 2016.
  • Car companies intend to accept full liability for self-driving car accidents.
  • Tesla just beat Google to make the self-driving car.
  • Could Google be auto-piloting itself into the insurance business?

Insurance News – Monday, June 22, 2015

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

  • State Farm in the U.S. is considering a plan that would charge customers on a per-trip basis could factor in elements not considered in traditional insurance policies, including the identity of the driver, driving behaviour, number of passengers, weather and time of day.
  • New California ride service Shuddle allows parents to book trips around town for their children – Uber for kids.
  • Ontario auto insurers and lawyers blame each other as reason for high premiums The truth is, they’re both responsible.
  • The battle between Uber, Lyft and taxis has moved to airports.
  • When does auto insurance cover ride-hailed drivers’ cars?
  • How ruling that drivers are employees upends Uber’s business model.

Insurance News – Tuesday, November 17, 2015:

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

  • Ontario Conservatives seek to regulate Uber, AirBnB and the sharing economy province-wide.
  • Insurer cancelling policies of UberX drivers: “considered commercial use and is unacceptable for personal vehicles”.
  • Uber says it needs self-driving cars to avoid ending up like the taxi industry.
  • A decline in accident frequency due to safer vehicles and the adoption of autonomous vehicles could shrink the U.S. personal auto insurance sector by 60 percent within 25 years,
  • Ready or not, Tesla Autopilot means self-driving cars are already on Canadian roads.
  • Public consultation on Ontario tow truck regulations coming to a close.

Insurance News – Wednesday, January 27, 2016

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

  • Kathleen Wynne says pledge to cut auto insurance 15 per cent was a ‘stretch goal’ – classic govt speak!
  • Ontario’s finance minister is hard-pressed to explain why he continued to declare publicly that the government would meet an election pledge to cut auto insurance rates despite being aware that keeping the promise would be challenging.
  • Canadians are wary of self-driving cars.  They would rather see technology make driving safer.
  • Google’s monthly report for its self-driving car project is in, and according to data recorded by onboard computers, the car’s human drivers intervened 13 times between September 2014 and November 2015 to avoid an accident.
  • Is State Farm preparing for the end of auto insurance?
  • The biggest roadblock facing driverless cars is not government regulation but lawyers.
  • Windsor wants to become test site for self-driving vehicles.