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 – Wednesday, June 18, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, June 18, 2014:

  • Ontario Court of Appeal finds insurer must indemnify and and defend woman who let her driver’s licence expire.
  • The WSIB has been relying more on surveillance to investigate questionable claims.
  • Government prepares regulations to enable large-scale testing of self-driving cars on Dutch roads.
  • Driverless cars are going to change just about everything.
  • Other than Ekos, why did none of the polls pick up on a Liberal majority?

Update On Fraud

It has been nearly two years since Ontario’s Auto Insurance Anti-Fraud Task Force delivered its final report to the Liberal government. The task force’s final report was the result of a 16-month review and contained 38 recommendations dealing with fraud prevention, fraud detection, investigation and enforcement, as well as regulatory responsibilities.

 Following the release of task force report, it seems as if every auto insurance announcement released by the Ontario government has mentioned fraud. This is a strong indication that the government is very aware of the impact of fraud. To its credit, the government and the industry began implementing task force recommendations as soon as the report hit the streets. Despite all the work undertaken to implement the task force recommendations there still remain recommended action that are outstanding.


 The Financial Services Commission of Ontario (FSCO) and the insurance industry have created educational material in different media that instruct consumers at critical moments – such as when they learn to drive, select an insurer, collide with another vehicle or make an insurance claim – on how to avoid, detect and report improper activity. Insurance Bureau of Canada (IBC) and FSCO are active on social media, providing consumers with valuable tips and information.

It is now easier to report suspected fraud. Both IBC and FSCO operate fraud hotlines that consumers can use to provide anonymous tips of suspicious activity.

The government amended Ontario’s Insurance Act in 2013 to enhance FSCO’s powers. The Superintendent is now able to investigate anyone who was previously in the business of insurance; licensed service providers; or anyone else the superintendent considers may be engaged in unfair or deceptive acts or practices. This would include examining records, books and other information held by a licensed service provider.

 A number of regulatory changes also became effective in 2013 specifically to combat fraud. The government has amended the Statutory Accident Benefits Schedule (SABS) so that claimants play a more active role in helping to detect and prevent fraud. As well, the list of unfair or deceptive acts or practices has been expanded.

Insurers now have the ability to examine a claimant under oath, where this is necessary to determine which insurer should be responsible for coverage, without prejudice to the right for an examination under oath with respect to questionable claims.

Finally, the government has broadened the terms of reference for the required review by the superintendent of Part VI of the Insurance Act to reflect the additional powers and responsibilities assigned to FSCO. In addition, the amended Insurance Act provision now requires the review to be conducted at least every three years.


Although there has been considerable progress made in developing tools and mechanisms to combat fraud, there are still outstanding task force recommendations. The previous government’s minority status and the recent election have contributed to delays in implementing a number of recommendations. Now that the Liberals have returned to power with a majority, it is expected that adoption of the remaining task force recommendations will accelerate.

A positive sign was the introduction of Bill 15, Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014 shortly after the spring election.

Should Bill 15 be passed by the legislature – and there is no reason to believe it will not be – it will implement a number of outstanding task force recommendations.

Included are provisions to transform Ontario’s auto insurance dispute resolution system into a more robust system. Responsibility would be transferred to the Licence Appeal Tribunal under the Minister of the Attorney General.

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.

In 2013, the insurance industry established CANATICS, or Canadian National Insurance Crime Services, a not-for-profit organization focused on using state-of-the-art analytical tools to identify potentially suspicious claims in insurance industry pooled data, to facilitate further investigation by individual insurers. CANATICS recently added a 10th insurer as a member and now has access to data from 75% of the market based on direct written premiums in Ontario. CANATICS is expected to begin operations in 2015.

Health Claims for Auto Insurance (HCAI) has developed the Professional Credential Tracker to assist regulated health professionals in preventing their identities from being misused by health care facilities. HCAI continues to look at additional anti-fraud tools.

FSCO is well on its way to licensing health clinics that treat and assess auto insurance claimants and to sanction clinics that are not following FSCO’s business-practice standards. FSCO has a wide range of sanctions at its disposal, including the ability to limit or curtail a facility’s access to HCAI. The licensing system is expected to be operational in December 2014.

There are a number of other ongoing initiatives identified by the task force that the insurance industry is eager to see completed. FSCO continues to lead the work on developing treatment protocols for minor injuries that are based on scientific evidence. Meanwhile, the Ministry of Transportation is still working on its Electronic Collision System project.


Although it is anticipated that Bill 15 will pass, there are still a number of legislative and regulatory changes recommended by the task force that the government has not acted on. There still has been no legislation introduced to protect individuals who report suspected fraud from reprisals and retribution. The government has also not amended the regulation to permit insurers to collect a cancellation fee from claimants who fail to attend a medical examination without a good reason, and to suspend income replacement benefits when there is compelling evidence the claimant has submitted a fraudulent claim for medical or rehabilitation accident benefits.

There were also a number of recommendations that dealt with information sharing that have yet to be developed. There is a need for protocols for active information sharing about suspicious cases among the investigative divisions of FSCO, the Workplace Safety and Insurance Board, the Law Society of Upper Canada and the Ontario Health Insurance Plan. In addition, protocols are needed to permit FSCO investigators to exchange information with investigators from relevant federal entities (such as the Canada Revenue Agency). The insurance industry is still waiting for these regulatory bodies and agencies to begin work out these issues.

The task force report contained several recommendations directed at introducing greater transparency with respect to independent assessments that have not been implemented. This includes requiring insurers to disclose publicly how they choose and assess the performance of independent medical examiners they refer consumers to see. Health regulatory colleges are also expected to work together to develop professional standards, guidelines and best practices to improve the quality of independent assessments of auto insurance claimants conducted by their members.

The fight against fraud is far from over but progress has been made. Under prevention, consumer awareness has been enhanced and a new licensing system for service providers will soon be operational. The industry will be in a better position to detect fraud when CANATICS is fully operational next year. FSCO’s powers have been expanded to allow for more effective fraud investigation and enforcement. All this would not have been possible without the co-operation of government, the insurance industry, police services and service providers.

Competition Bureau Supports Ride-Sharing Services

The emergence of Uber and other ride-sharing services has created increased competition for the Canadian taxi industry.  This has created a source of friction for the industry because of what they see is an “uneven playing field.”  Taxi operators are required to follow regulatory rules while ride-sharing services largely operate unregulated.  The Canadian Competition Bureau recently weighed in on the subject.
The Competition Bureau recently released a study, Modernizing Regulation in The Canadian Taxi Industry, which concluded that the competition in the sector has benefited consumers.  However, there needs to be a balance between increased competition and the need for regulation.
The taxi industry has operated largely unchanged for decades.  Regulators have created rules to govern price, vehicle safety and insurance requirements.  But the regulatory rules often restrict entry into the sector by limiting the number of taxi licences.  The number of plates usually does not keep up with demand for services which creates artificial scarcity, but also higher prices, poor service and long wait times.
Ride-sharing companies have changed the landscape by offering consumers lower prices, variable pricing (higher fares when demand is high), shorter wait times, and convenience.  The software application used by ride-sharing companies provides automatic payment and the ability to track the number of vehicles available in the local area.  The software also allows consumers to rate drivers which creates an incentive to provide better service.  Low rated drivers receive fewer ride requests.
The innovations introduced by Uber and other similar service providers have benefited consumers.  There is a need for updated regulatory rules so that traditional taxi operators can respond to the competition.  But the one aspect not addressed by the Competition Bureau study is the insurance issue. 
In September 2015, Intact Financial announced plans to work with Uber to create products tailored for the ride-hailing service, after concerns emerged that person auto insurance policies may not cover drivers using their personal vehicles for commercial gain.   In the meantime, Uber claims it has adequateinsurance coverage and that every ride on the UberX platform is backed by $5 million of commercial auto insurance, which covers both bodily injuries and property damage stemming from a crash.  However, Alberta government said in July that it had determined the policies do not meet the requirements of the province’s Insurance Act.  It’s all very confusing.  

Ride-sharing services are here to stay.  Consumers will benefit but only if the regulatory rules and updated and the insurance issues are addressed.

Insurance News – Monday, July 27, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, July 27, 2015:

  • Google self-driving car accidents show why humans don’t belong behind the wheel.
  • Why the difference between self-driving and autonomous vehicles really matters.
  • New towing rules in the Town of Richmond Hill are working.
  • It’s almost August and the Ontario’s rate reduction promise will not be met.
  • City revenues may fall drastically when driverless cars provide fewer fines.
  • How Uber is ending the dirty dealings behind Toronto’s cab business.

FSCO Mandate Review Undecided on Auto Rate Regulation

The preliminary report by Panel reviewing the mandate of the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO) has been made public by the Ministry of Finance.  Panel members are George Cooke, Lawrence Ritchie and James Daw.

The report is virtually silent on how auto insurance rates should be regulated in the province.

The report recommends the creation of a regulatory body – the Financial Services Regulatory Authority (FSRA).  The FSRA would be self-funded and arm’s-length from the government.  There would be three distinct functions – pension regulation, prudential regulation and market conduct regulation.  Under market conduct regulation, there would also be product regulation which might include auto insurance responsibility.

The FSRA would have a board of directors and reporting to the board would be a CEO.  Each regulatory function would be headed by a Superintendent.   The FSRA would have rule making authority.

FSRA would be given authority over any self-regulatory body operating within the financial services sector in Ontario not otherwise overseen by another statutory body. All relevant participants in the Ontario financial sector, such as payday lenders and loan brokers, consumer credit reporting agencies, debt and credit counsellors, and guarantee and warranty insurers would also fall under the FSRA. Regulatory oversight of the Cooperatives sector would be transferred to an agency or entity other than the FSRA. The administration and funding of the Motor Vehicle Accident Claims Fund should be transferred to the industry operated Facility Association.

The Financial Services Tribunal would operate separately from FSRA, with its own budget, subject to normal government process. 

The Panel made no recommendation with respect to the prior approval of auto insurance rates. It appears a preference would be to move away from the rate setting approach currently used in Ontario.  The Panel has reservations about continuing this approach within FSRA as it might unnecessarily dominate the agenda of FSRA to the detriment of other sectors.

At least three options were presented to the Panel during the consultations: continue rate approval within FSRA as practiced today; remove this function from FSRA and transfer it to a formal rate-setting board, or; give FSRA authority/responsibility for rate regulation, the approach to which to be determined through its rule-making authority.

Feedback on the preliminary report is being solicited by the government.  The deadline is December 14, 2015.  A final report will submitted to the government in the winter

Ontario’s Failed Rate Reduction Strategy

The promise to reduce auto insurance premiums by 15% is a failure.  

In August 2013 the Ontario government announced a two-year rate reduction strategy. What has ensued since that announcement has been a series of reforms to bring down the cost of insurance. Many of those reforms include no-fault accident benefit reductions.  

So how successful has the strategy been?  Last week FSCO posted the fourth quarter rate approvals for 2015. The FSCO post indicates that rates fell a minuscule 0.15% in the quarter. For the entire year, rates fell by just 1.0%.  Since August 2013, rates have only come down by 7.1%.  That’s not even half of what the government has been trying to achieve.

Premier Kathleen Wynne now calls the 15% rate reduction strategy a “stretch goal”.  That’s as close as you’re going to get a government to admit to failure.  

Another round of no-fault accident benefit cuts are to be introduced on June 1 of this year but don’t expect them to bring down rates by a significant amount. The accident benefits portion of the Ontario in 2014 was only 33.5% of claim costs (see the chart below).  That would mean for a further 8% reduction in premiums, accident benefit costs would have to go down by about 24%.  Meanwhile, some of the accident benefit cuts will drift over to third party liability costs since not at-fault accident victims will be able to sue for benefits no longer available through no-fault.

It’s time the government undertake a comprehensive review of the auto insurance system and resolve the systemic problems plaguing the system.  Half measures lead to “stretch goals” and chronically high insurance premiums.

% of Claim Costs by Coverage for Accidents in 2014

Implementing the 2015 Ontario Budget

The Ontario government continues to implement auto insurance announced in the 2015 Ontario Budget.  More regulatory changes are expected in the fall.

Ontario Regulation 664

 Regulation 664 has been amended to require that all insurers offer a discount to policyholders for the use of winter tires. The winter tire discount must be made available for contracts issued or renewed on or after January 1, 2016. Insurers are encouraged to implement the discount before January 1, 2016, where feasible.

 Insurance companies that do not currently offer a winter tire discount must file an application for approval with FSCO no later than August 28, 2015.

Ontario Regulation 461/96 

Regulation 461/96 has been amended to ensure that the deductible amounts for damages for non-pecuniary loss (pain and suffering) reflect the effects of inflation since 2003. The regulation amendments include the following: 

  • The $30,000 deductible amount prescribed in the case of damages for non-pecuniary loss is adjusted to $36,540 from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this amount will be revised by adjusting the amount by the indexation percentage published under Insurance Act subsection 268.1 (1) for that year. 
  • The $15,000 deductible amount prescribed in the case of damages for non-pecuniary loss under clause 61 (2) (e) of the Family Law Act, is adjusted to $18,270 from August 1, 2015 until December 31, 2015. On January 1, 2016 and every subsequent year, this amount will be revised by adjusting the amount by the indexation percentage published under Insurance Act subsection 268.1 (1) for that year. 

Regulation 664 can be found here.

    Regulation 461/96 can be found here.

    Insurance News – Wednesday, September 23, 2015

    Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, September 23, 2015:

    • B.C. auto insurance rates are going up due to higher bodily injury claims and fraud.
    • Allstate insurance files patent for “Traffic-based Driving Analysis”tool to spy on car owners/drivers.
    • Should police have the capability to take control of driverless cars?
    • Intact working with Uber on new products for ridesharing but will the regulator approve them?
    • Competition from Uber motivates Beck Taxi to start a petition to lower taxi fares in Toronto.
    • Toronto’s most expensive car insurance is found in areas of Downsview in North York.

    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.