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 - Thursday, November 13, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, November 13, 2014:

• Transcripts for public hearings on Bill 15, Fighting Fraud and Reducing Automobile Insurance Rates Act 2014 are now available online.
• Owning a car is expensive.  So is ridesharing services like Uber cheaper than owning a car?
• Why do so many consumers seek out "cheap" auto insurance given the expense of their new cars or trucks — easily $30,000, $40,000 or even $50,000 or more for high-end models?
• Driverless car researchers develop plans to prevent hacking on the highway.
• Your car may be programmed to kill you and 9 more fun facts about driverless vehicles.

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.

Insurance News - Wednesday, October 29, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, October 29, 2014:

• Quebec is not being as aggressive as Ontario with regard to telematics since the take-up for auto usage-based insurance products has been lackluster to date.
• It's hard to imagine tomorrow’s transportation infrastructure to support driverless cars when haven't gotten around to fixing today’s infrastructure.
• In New York insurers and and trial lawyers agree the state’s no fault insurance law needs reforming but they don't agree on how.  Sounds like Ontario.
• New Jersey has a bill that today is advancing in the Legislature that would establish a program to allow people to obtain endorsements on their driver’s licenses to operate and test driverless vehicles.

Insurance News - Tuesday, October 28, 2014

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, October 28, 2014:

• Japanese insurer is about to launch a smartphone service that warns drivers when their vehicles are approaching locations where traffic accidents frequently occur.
• Companies such as Google and Amazon may pose some of the biggest threats to insurers, as consumers increasingly trust technology behemoths to provide services such as insurance.
• A recent study concluded that Americans wasted $124 billion sitting in traffic in 2013 and traffic cost the average household $1,700 a year.
• Insurance Bureau of Canada warns UberX drivers about insurance coverage  (or lack of it).
• The use of anti-fraud technology by insurers in North America is on the rise however, many companies are still struggling with the deployment of proactive predictive analytics tools because of resource constraints, according to a study.

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. 

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.