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.

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 - Wednesday, December 2, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 2, 2015:

• There is a substantive risk associated with relying on insurer examination reports to deny serious claims which can be compounded by taking a matter to arbitration without having sufficient evidence to support a position.
• Why auto insurance rates are so high in the Greater Toronto Area.
• There is a down side to low gas prices - more vehicle traffic and more accidents.
• LAT releases update on transfer of auto insurance disputes from FSCO. LAT still planning on accepting disputes beginning April 1st.
• Consumers big winners in new law regulating towing operators.
• Ontario’s auto insurance overhaul needs to put consumers first according to a former New Jersey regulator.

Insurance News - Friday, November 20, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, November 20, 2015:

• Uber operations in Toronto spark possibility of strike in taxi industry.
• Ontario highway incident management the "missing piece" of auto insurance fraud reform.
• A fascinating article on how Uber manages the marketplace and why taxis are doomed.
• Evolution of transportation may change the auto insurance industry.
• The Florida Insurance Commissioner thinks it may be time to eliminate no-fault.
• Toronto Star reports there is a lot of confusion regarding the snow tire discount that becomes mandatory beginning January 1.

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 - 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?

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