Motor Mouth: The cost of cheaper insurance is your privacy

Usage-based insurance could be the slippery slope that leads us all into an Orwellian driving future 

How cheaply do we surrender our freedoms?

The nightmare of Big Brother — at least how I’ve always understood it — has always been one that is forced upon its citizenry. To be sure, the methods are always insidious, the doublespeak always cloaked in soothing palliatives and the promise of a Utopian society, not to mention the occasional financial incentive. But, as much as the process of being constantly surveilled is stealthy and surreptitious, it is always forced upon us. We would not, in a million years, volunteer for an Orwellian future, right?

Oh, if only that were true.

It turns out that, in the last few years, some six million motorists — mostly in the United Kingdom and the United States — have volunteered to have a black box installed in their automobile that monitors their behaviour behind the wheel, with all of the data from every kilometre of their driving fed right back to their insurance companies.

The lure is that, should you drive according to the insurer’s guidelines, you could actually have your monthly insurance premium reduced. Each insurer differs as to what they actually measure and what specific limits they pose, but the premise is always the same: drive in a “normal” manner — i.e. as if you were a little old lady from Pasadena driving a Suzuki Sprint with one spark plug missing — and you will see savings.

Motor Mouth: Surrendering our driving freedom $50 at a time

How significant are these savings? Well, it depends on whom you talk to. Desjardins’ new Ajusto black-boxed insurance program being offered in Ontario and Quebec promises as much as 25% savings if you respect their limits of not accelerating harder than 13 kilometres per hour per second or braking more than 15 km/h/sec. In Quebec — where the RCCAQ (Le Regroupement des cabinets de courtage d’assurances du Québec) is estimating that up to 30% of drivers may opt for such telematics-based insurance by 2017 — the median savings is said to be about 12%. For a little more perspective on that, remember that Quebec automobile insurance is partially subsidized, the average consumer paying about $650 annually for their supplementary property damage insurance. Do the math and the costs savings to the average Ajusto customer in Quebec is about seven bucks a month. Even for someone in Ontario currently paying $2,000 a year, that net savings would translate into but $20 a month, not enough to buy you a 12-pack unless The Beer Store is having a fire sale.

The Ajusto wireless device from Desjardins Insurance is installed into a vehicle’s diagnostic port and measures distance travelled annually, frequency of hard braking and acceleration, as well as time of day the vehicle is driven to determine savings on insurance rates.
Handout, The Canadian Press

A few other companies in Quebec offer greater savings. Industrial Alliance’s Mobiliz, for instance, targets drivers between the ages of 16 and 24, generally acknowledged as those most at risk for traffic accidents. According to the company, the average young adult saves about 25%. Of course, only the most law-abiding of teenagers signs up for the program, especially since Mobiliz is the only black box insurer that will actually raise your rates — by up to 100% if you’ve been particularly naughty — if you speed too dramatically or too often (for instance, every instance of “extreme speed” will result in a premium of $10 being added to your monthly bill). So that the insured can immediately see the result of their driving behaviour, Mobiliz’s premiums are adjusted monthly meaning their premiums could fluctuate dramatically.

Nonetheless, the lure of lower insurance rates is finding traction. According to Towers Watson, a consulting firm in the U.S., about 200,000 Americans a month are signing up to have said black boxes installed in their cars. The organization also says that “nearly 90% express openness to buy a UBI (usage based insurance) policy in the U.S. if there is no risk of premium increasing.” Canadian Business, on the other hand, reports that a Deloitte survey here in the Great White Frozen North revealed that 61% of Canadians would not be interested in such surveillance devices in their cars.

Motor Mouth: Missing jet a sobering reminder of tech’s faults

In this 2006 file photo, Adam Gordon, of Saint Paul, Minnesota, displays the wireless device that his auto insurance provider uses to monitor his driving speed, distance, braking and accelerating, and what time he’s driving. In exchange, Gordon gets a 15% savings on his auto insurance premiums.
Archive photo, Craig Borck/St. Paul Pioneer Press/

That would seem to put us in a more independent mindset than our Yankee friends, usually the last bastion of personal freedoms and privacy. Nonetheless, I would still want to know why a seemingly incredible 39% of Canadians think volunteering for such a program is a good idea? Indeed, forget about the plight of the scofflaw motorist for a moment; why would anyone volunteer to supply evidence of malfeasance of any kind that might be used against them? This is akin to volunteering for a tax audit. Or videotaping your business hotel room for your spouse so that they might witness first-hand the nonsense you get up to when they’re not around. Surely, even those of you smugly sitting in your Toyota Priuses, comfortable in the knowledge that you’ll never speed, understand that opening up every part of your personal life to constant scrutiny — data loggers in your trousers and breathalyzers for everyone! — is never a good idea.

So far, the push for the installation of these black boxes have been rather modest campaigns by private insurance companies, all — at least in Ontario — assuring that the information won’t be used for nefarious purposes (i.e. raising your rates). Imagine, however, if the political class gets involved. The Wynne government is already desperately looking for ways to fulfill their promise to lower Ontario’s insurance rates. And, what if politicians in B.C., Manitoba and Saskatchewan — provinces where the entire insurance programs are government run — get behind this constant monitoring of motorists? How long do you think it will be before such schemes become mandatory and a cash cow for beleaguered governments?

All this for as little as seven bucks a month. If we do end up in some brackish Orwellian dystopia, we will have no one else to blame but ourselves.

Could our driving data fall into to the wrong hands?

So far, the discussions regarding the privacy of the information culled from owners’ black boxes has focused on who owns the data. To their credit, virtually everyone in the insurance industry seems to agree that the information must remain the property of the owner (Quebec’s RCCAQ has asked for guidelines to be established that all information collected remains the property of the insured and such policies are already in place in Ontario). That said, the big insurance companies aren’t the ones actually collecting the data; that generally rests with third party data collection firms. And, depending on which company is doing the information gathering, your particulars could be housed in Canada, the United States, or even Italy. With the porosity of data security now being top-of-the-fold headline material these days, do we really need more Heartbleed leaks to understand that data mining is the playground of the modern scoundrel?

Source:  http://driving.ca/auto-news/news/motor-mouth-bowing-down-to-big-brother-for-cheap-insurance By David Booth Originally published: April 25, 2014

Legal decisions changing Bodily Injury claims processes

 April 29, 2014 - by Granite Global Solutions

Toronto, April 29, 2014:  Adjusters and insurers are urged to be very specific in outlining to the insured person all the reasons why Insurer Examinations are reasonably required, or there may be serious consequences, warns Laurie Walker of Granite Claims Solutions and Jason Frost of Hughes Amys LLP.

Speaking at a symposium for the legal profession hosted by MDAC (Multi Disciplinary Assessment Centre),  they used as an example the recently released Financial Services Commission of Ontario decision -  Augustin v. Unifund (FSCO A12-000452, November 13, 2013) where the arbitrator provided penalties against the insurer as a result of a lack of reasons to substantiate the insurer’s position.

Walker also provided sample wordings to indicate appropriate reasons to assist the insurer participants.

"This is just one of the issues that is currently being clarified by case law," said Frost as he introduced a number of cases that are setting precedents in the application of Bodily Injury and MIG cases. "The insurance industry needs to improve its training and processes in handling these claims so that they conform to the legal developments".

Source:  http://www.canadianunderwriter.ca/inspress/productDetail.aspx?id=13275&er=NA

Automobile Insurance Transparency and Accountability Expert Report - Interim Report

DOWNLOAD PDF

 

Final Release: April 14, 2014
KPMG
Insurance Industry Practice
Property & Casualty Actuarial Services

Source:  www.fin.gov.on.ca/en/autoinsurance/kpmg-expert-report.htmlAC

Driver that struck teen suing dead boy's family

Family reeling after driver that struck teen suing dead boy

ALCONA, ONT. - Still in the throes of agony from losing their son in a vehicle crash, the parents of young Brandon Majewski are now reeling after they learned the woman who struck and killed him is suing their dead child.

“I feel like someone kicked me in the stomach — I’m over the edge,” the dead boy’s father, Derek Majewski, said. “Sometimes, it makes my blood boil.”

As he sits in his immaculate Alcona home, near the shores of Lake Simcoe and roughly 90 km north of Toronto, sifting through piles of photographs of his son, the heartache shows on his face and he can hardly contain his tears as he speaks.

Just down the road, on the side of a quiet country stretch of Innisfil Beach Rd., is a memorial complete with a bicycle, flowers and photographs of his son, Brandon.

The spunky, handsome, 17-year-old bike enthusiast was out with his two buddies on Oct. 28, 2012 when they hopped on their bicycles to go for hot dogs on a drizzly, dark night around 1:30 a.m.

“I know they should not have been out there that late,” his father said. “But they are good kids.”

Brandon was struck from behind by an SUV and killed while his friend Richard McLean, 16, was seriously injured with a broken pelvis and other bones. His other pal Jake Roberts, 16, was knocked off his bike but sustained only scratches.

Now the driver of the SUV, Sharlene Simon, 42, a mother of three, formerly from Innisfil, is suing the dead boy for the emotional trauma she says she has suffered. She’s also suing the two other boys, as well as the dead boy’s parents, and even his brother, who has since died. She’s also suing the County of Simcoe for failing to maintain the road.

Even the family’s lawyer is in shock.

“In all of my years as a lawyer, I have never seen anyone ever sue a child that they killed,” Barrie lawyer Brian Cameron said. “It’s beyond the pale. I just couldn’t bring myself to tell them on the phone.”

After a face-to-face meeting Tuesday, the parents and step-parents left his office almost staggering in disbelief.

“I’m devastated, I’m in shock,” said Brandon’s mother, Venetta Mylnczyk, a dental assistant who is drowning in sorrow. “She killed my child and now she wants to profit from it? She says she’s in pain? Tell her to look inside my head and she will see pain, she will see panic, she will see nightmares.”

Her voice shaking with emotion, the mother recalls her last words with her son.

“I said I love you … he said, ‘I love you, too, mom,’ and off he went with his friends,” Mylnczyk said. “At least I have that … but for this woman to be so selfish, to claim she is the one suffering but we are the ones living the nightmare … her children are still living.”

“It blows my mind,” Brandon’s step-mom, Lisa Tessier, said. “We are all devastated. This is so cruel.”

In a statement of claim filed with the court, Simon is claiming $1.35 million in damages due to her psychological suffering, including depression, anxiety, irritability and post-traumatic stress. She blames the boys for negligence.

“They did not apply their brakes properly,” the claim states. “They were incompetent bicyclists.”

Simon’s lawyer did not respond to a request for comment from the Toronto Sun Friday.

Brandon’s father shakes his head.

“They’re kids!” he gasps. “And they have a right to make mistakes ... it was a wet, dark road — what about slowing down?”

He insists the reflectors on the bikes would have been visible.

A South Simcoe Police report shows Simon admitted that she was driving at 90 km/h in an 80 km/h zone on the two-lane road. She claims she didn’t see the boys or any of the orange-red pedal reflectors. The impact of the collision cracked the windshield of her SUV, dented the bumper, a headlight was busted, the roof where Brandon hit was dented and scratched and a side mirror dangled by its wires.

The report also states: “No breathalyzer was performed. Although police say no alcohol was suspected and no charges were laid.

Simon’s husband, Jules Simon, a York Regional Police officer, was driving behind his wife that night, but little is mentioned about him as a witness in the police report. He pulled over when Brandon was struck and shortly after drove his wife home in his vehicle.

Two hours later, after Brandon lay dead in hospital from multiple traumatic injuries, police knocked on the door of the Majewski’s home.

The dogs began to bark. It was late.

“I knew,” says his father, and his voice breaks again. “I had a gut feeling.”

Therapy, medication, even booze, doesn’t dull the pain.

And then, six months after the funeral, he awoke to find his second son Devon, 23, who had just graduated as a paralegal, laying in his bed, blue and dead, after popping too many pills and drinking too many shots. Not an intended suicide, they are certain — he was just trying to stifle his grief.

“This has ripped our family apart,” says Majewski. “And now this woman has the gall to try to profit from our dead child she killed? Profit from another boy who was almost crippled?”

He flips again through the family photographs. Happy times of fishing, dirt biking, swimming, eating birthday cake, laughing. He chuckles for a moment when he remembers all the bikes his son rebuilt — sometimes he would sneak the parts right into his bedroom, and shine them till they gleamed. All another world away.

“This thing haunts us,” he says. “It will never stop haunting us.”

Cameron has launched a routine lawsuit against the driver, mainly for medical and funeral costs on behalf of the boys and their families. He alleges Simon was speeding and may have been intoxicated and talking on her cellphone.

“Sharlene Simon failed to take reasonable care to avoid a collision which she saw or should have seen was likely to occur,” his claim states. “She operated the motor vehicle while she was intoxicated.”

None of the allegations have been tested in court.

Source: By Tracy McLaughlin ,Special to QMI Agency

First posted: Friday, April 25, 2014 09:50 AM EDT | Updated: Friday, April 25, 2014 07:54 PM EDT 

 http://www.torontosun.com/2014/04/25/driver-that-struck-teen-suing-dead-boys-family

SGI seeks input on auto injury program

SGI is asking the public and stakeholders for feedback over the next several months as part of a review of its auto injury program.


“We want to ensure the injury program is still effectively meeting the needs of Saskatchewan residents,” SGI president and CEO Andrew Cartmell said in a press release Friday.
“The last full review was done over a decade ago, so the program is due for a thorough checkup.”

For the first stage of the review, SGI is contacting customers with a current or former auto injury claim, healthcare and other service providers, the legal community, and other stakeholders for input.

The recommendations made by the Motorcycle Review Committee pertaining to injury coverage options will also be incorporated into this stage of the review, SGI said.

SGI is also planning to create a review panel representing customers and key stakeholders, who will consider input and evaluate all aspects of injury coverage, including benefit levels, the appeal process and whether any additional benefits should be offered.

In the second stage of the review, planned to begin  in late summer, a list of options will be developed and put forward to the public for feedback, SGI said. Once all feedback is gathered, a report will be prepared by the end of the year.

Source:  DAILY NEWS Apr 25, 2014 2:43 PM
 http://www.canadianunderwriter.ca/news/sgi-seeks-input-on-auto-injury-program/1003031189/s7vw03Wsv64srM2vx/?ref=enews_CU&utm_source=CU&utm_medium=email&utm_campaign=CU-EN04282014

'Poor experience' - not just price - top reason consumers look to switch insurers

A poor experience, not just premium increases, is a top reason for policyholders to search for a new auto insurer, according to a new U.S. study from J.D. Power.

According to its 2014 study, which looks at customer experience based on price, distribution channel and policy offerings, 30% of auto customers shopped for a new insurer in 2013, and among those, 36% did switch providers.
Overall, new-buyer satisfaction with the auto insurance purchase experience averages 821 (on a 1,000-point scale), down from 828 in the previous year’s study, the firm said.
That decline in satisfaction is driven by a 17-point drop in the price factor, which has the greatest impact on satisfaction, it said.
However, price isn’t always the top driver for shopping around for a new insurer. Those who experience a premium increase shop at a rate of 13%, while those who report a poor experience shop at a rate of 28%, J.D. Power said.
Still, 80% of customers do select the lowest-priced insurer, and rate increases of more than $200 were more likely to cause policyholders to switch providers, J.D. Power suggests.
“The insurance industry spends billions of dollars each year on advertising, and over the last seven years many of those ads have tried to entice customers with big savings,” Jeremy Bowler, senior director of the insurance practice at J.D. Power said in a statement.
“While switching to a new insurer usually results in savings, the ads make promises of savings that a growing number of new customers don't believe they've received.”
The firm’s 2014 U.S. Insurance Shopping Study was based on responses from more than 16,900 shoppers who requested an auto insurance price quote from at least one competitive insurer in the past nine months and included more than 50,000 unique customer evaluations of insurers. The study was fielded in July 2013, October 2013 and January 2014.

Source:  DAILY NEWS Apr 24, 2014 2:59 PM 
 http://www.canadianunderwriter.ca/news/poor-experience-not-just-price-top-reason-consumers-look-to-switch-insurers/1003029265/

Canada: Insurer Can't Sue "Your And You"

The Ontario Superior Court has released a subrogation decision dealing with two interesting issues: Assessing a defendant's negligence and the ability of an insurer to subrogate against its own unnamed insured.

In Rochon v. Rochon, the defendant was the plaintiffs' son. He owned a 2009 Chevrolet Cobalt motor vehicle. Economical Insurance issued an Ontario Automobile Policy of insurance to the defendant in accordance with the statutory requirements in return for a premium.

On March 28, 2010, the defendant drove his vehicle into the detached garage on the plaintiff's property in order to install new auxiliary lights underneath the headlights on the front of his vehicle. He connected the vehicle's battery to a battery charger with jumper cables to provide a source of power and turned the car engine off. He worked on the repairs and left the garage. While he was away, the vehicle caught on fire. The fire spread to the structure of the garage causing significant property damage.

Grenville insured the plaintiffs under a home policy. It paid out the property damage loss to the plaintiffs in the amount of $148,581.65. Grenville then sought to recover from Economical in a subrogated claim, the sum of $148,581.65, alleging that the fire was as a result of the defendant's negligent use and operation of a motor vehicle. In addition, the plaintiffs sought judgment for their uninsured loss of $8,000.00 for a total judgment claimed by the plaintiffs as against the defendant of $156,581.65.

The defendant raised two issues: Firstly, he denied negligence for causing the accident. Secondly, he claimed that he was an insured person under the plaintiffs' policy, which precluded Grenville from suing him.

Negligence

On the negligence issue, the judge found that the plaintiffs established on a balance of probabilities that the defendant was negligent and that the defendant's negligence caused the fire and damage. Of note, the plaintiffs urged the judge to find that the mere fact that the defendant's vehicle caught on fire was prima facie evidence of negligence. This is because vehicles do not, in the ordinary course of things, catch on fire in the absence of negligence. It followed that the very fact that the defendant's vehicle caught on fire was evidence of the defendant's negligence.

The judge rejected that argument in part, noting that what the plaintiff's were asking was for her to apply the outdated doctrine of res ipsa loquitur ("the thing speaks for itself"). The Supreme Court of Canada has rejected the doctrine as an appropriate use to determine negligence. However, the judge held that there was still some merit to the plaintiffs' argument, only that she had to be careful in affording it much weight.

On the facts of the case, the judge agreed that vehicles do not ordinarily catch fire in the absence of some negligence, but that was only one piece of evidence. She found that the defendant did not lead any evidence to negate the evidence of the plaintiffs as to the origin or cause of the fire. Conversely, the plaintiffs' expert testified that the origin of the fire was at the positive terminal post of the battery where the most extensive fire damage was found. The cause of the fire was electrical arching caused by a poor connection on the battery post. The judge accepted his evidence as being credible and reliable and that it went to the origin and cause of this fire. She found, among other things, that the defendant did not take reasonable care to ensure that his battery connections were secure.

Right to Subrogate

An insurer cannot subrogate against its own insured.

In the Grenville policy of insurance, there was no definition of who was an "Insured". The policy defined "You" and "Your": This definition applied to all four sections of the Grenville policy. It was admitted that the defendant was an unnamed insured on the plaintiffs' residential insurance policy with Grenville and that he was subject to the term and conditions of the policy. It was admitted that the work done by the defendant on the vehicle and the subsequent fire were within the definition of being related to the 'use and operation of a motor vehicle'.

The judge held that as the defendant son was an unnamed insured on the policy, by the definition of "You" and "Your" in the policy, the defendant son's rights were the equivalent of his parents throughout the policy.

Among other reasons, the judge noted that contractual conditions in the Grenville policy required the insured (the defendant), to take reasonable steps to recover lost property, transfer his right against others to the insurer Grenville and to submit to an examination under oath and produce all documentation in his possession at Grenville's request. The defendant was also required to speak to Grenville's adjuster and provide a statement, which he did, to assist Grenville in recovering the loss. The judge held that this requirement was contrary to the defendant's interest if he could now be sued under the same policy by Grenville, his own insurer. The only way these contractual requirements made sense was that these conditions relate to the conditions required of the insurer's own insured on the policy to recover losses from third persons, but not their own insured.

Accordingly, the judge despite finding that the defendant was negligent, the judge dismissed the insurer's subrogation claim against him. That said, the judge allowed the parents' claim for the uninsured losses totalling $8,000 (makes sense, since the parents could maintain a common law tort action against the defendant for their uninsured losses).

See Rochon v. Rochon, 2014 ONSC 2337 (CanLII)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Source:  Last Updated: April 24 2014Article by Daniel Strigberger

Miller Thomson LLP

 http://www.mondaq.com/canada/x/309088/Insurance/Insurer+Cant+Sue+Your+And+You

What to do after a car accident: The do’s and don’ts

For many people, spring and summer are synonymous with road trips. You may go to your cottage for a long weekend or drive somewhere delightful on a week-long road trip. But as more vacationers take to the road this spring and summer, the potential for an accident also increases.

The sad truth, according to statistics, is that most drivers will be involved in a vehicle crash at least twice during their driving lifetimes. Hopefully, in your case, the accidents will be minor fender-benders; regardless, it is important to keep in mind what to do when a collision happens so you can make sure you’re not taken advantage of.

It might be hard to think clearly after a car accident so you should plan what to do and learn what questions may need answered before the collision occurs. Knowing what to do at the scene of a collision will help you stay calm and ensure that your rights are respected.

Here are some do’s and don’ts to remember when you find yourself involved in a collision:
Do:

• Stay calm. Check with each passenger in your vehicle to see if anyone is injured or requires medical attention.

• If you’re able, and it is safe to exit your vehicle, check with the passengers of any other vehicle(s) involved to ensure that they too are all right. If you can’t get out of your car, turn on your hazard lights.

• Call emergency services. In Ontario, you are required to call the police if there are any injuries or if there is more than $1,000 in damage as a result of the accident. You are also required to call the police if you suspect that another driver involved in the accident has broken the law in some way (such as driving under the influence of drugs or alcohol).

• If the vehicles are not severely damaged, move them off the travelled portion of the road to facilitate traffic flow.

• Exchange information with the other drivers involved. Get their names, addresses, phone numbers, licence information, insurance company name and policy number.

• Obtain the contact information of any witnesses who are at the scene.

• Take photographs of the accident, including the damage to the car and road conditions.

Don’t:

• Move anyone who is injured – wait for medical help to arrive.

• Stand on the road to assess damage to the vehicles. This puts you in immediate danger of being struck by passing vehicles.

• Accept a direct offer of payment of damage from the other driver.

• Argue with other drivers and passengers.

• Voluntarily assume liability or take responsibility, sign statements regarding fault, or promise to pay for damage at the scene of the accident.

On its website, the Financial Services Commission of Ontario has provided an accident worksheet to help you remember what information you should record at the scene of the collision. Consider keeping a printout of this document in your glove compartment.
Safe travels this spring!

Contributed by Erin Ellis, an OTLA member and a lawyer practising with Jellinek Law Office in Toronto, Ont.

 Source: http://otlablog.com/what-to-do-after-a-car-accident-the-dos-and-donts/

Why Ontario drivers pay the highest insurance premiums in Canada

The Fraser Institute’s landmark 2011 study on public-versus-private delivery of auto insurance in Canada concluded that Ontario’s private-sector insurance regimen enjoyed the questionable distinction of being the most expensive in the country – a conclusion even more damning because the report’s major takeaway was the overall superiority of the private system in other parts of Canada.

The Ontario government’s 2010 reforms to private insurance were supposed to address the system’s problems – high premiums, fraud, over-regulation, a punitive cost structure – but have they? As it stands “post-reform,” the insurance industry and many of its major stakeholders are in a state of undeclared war. And the government is caught in the middle, dodging volleys of angry rhetoric from opposing sides.

Ontario’s private auto insurance industry is a train wreck. “When we concluded our study, Ontario had the most expensive system in the country due to regulatory severity and massive fraud,” says Emrul Hasan, an economics instructor at Vancouver’s Simon Fraser University and one of the author’s of the Fraser study.

Another out-of-province expert is even more frank. “Insurance company margins have increased incredibly over the last decade,” says British Columbia-based Bruce Cran, president of the Consumers’ Association of Canada. “The companies are making a lot of money and people are getting less benefits … to be perfectly honest, I don’t know how you’re going to fix Ontario.”

The battle lines are clearly drawn between The Industry and The Stakeholders, but who is manning the barricades? Leading the charge for the insurance industry is the Insurance Bureau of Canada (IBC), one of the savviest and best-financed lobby groups in the country. On the other side are the Ontario Trial Lawyers Association (OTLA), representing lawyers who negotiate and litigate for accident victims, and the Fair Associations for Victims of Accident Insurance Reform (FAIR), the victims’ lobby group.

This standoff was borne out of the 2010 reforms that generated billions of savings for the industry – and the targeted 15-per-cent reduction in premiums that the NDP secured from a minority Liberal government in the 2013 budget as part of the price for its ongoing legislative support. The industry loved the former and is less enthusiastic about the latter; vice versa for accident victims and trial lawyers. The 2013 reductions were meant to address issues pinpointed by reports such as Fraser’s, notably excessively expensive premiums. To date, rates have gone down just 4.66 per cent.

But the story doesn’t end there. Insurers demanded, and received, a pound of flesh for their lost revenue. Benefits for minor injuries were slashed from $30,000 to $3,500, deductibles were ratcheted up to $30,000 to deter litigating contested claims. And here’s the nut of the problem: 80 per cent of accident claims are deemed to fall within the minor injury guidelines, with its small cap. Unsurprisingly, accident victims pushed back.

There was a backlog of more than 30,000 accident claims in mediation until eight months ago, when the government hired an outside consultant to abet the process, but 16,000 cases remain in non-compulsory arbitration with 1,000 new cases entering dispute resolution monthly. Even the IBC admits the status quo is a mess.

“What is clear is that the system we have today, and what the government is trying to fix, is a system that is broken,” says Ralph Palumbo, the insurance lobby’s Ontario vice-president. How to fix it is tricky because the industry and some of its key stakeholders are at loggerheads.

Victims believe the insurance industry is making out like proverbial bandits. “They made over $2-billion after the 2010 cuts,” says OTLA president Charles Gluckstein. But Palumbo says it’s impossible to ask for a massive reduction in rates (insurance company revenue) without looking at the cost side of the equation. “Otherwise it’s not sustainable,” he says.

To critics who argue the industry made billions in the wake of the 2010 reforms, Palumbo says poppycock. “If you say it long enough, people start to believe it,” he says. He cites two commissioned actuarial studies that claim auto insurers’ return on equity hovers between 3.9 and 4.9 per cent. “Compared to the banks in the high-teens – say, around 17 per cent – that’s pretty modest, though some observers claim it’s as high as 25 per cent, which is ridiculous. All our critics ever talk about is the benefit side, never the cost side. And it’s a little tiring, and tiresome, coming from guys who are enriching themselves from the system.”
Palumbo is referring to the trial lawyers, and it should come as no surprise that they don’t buy the argument about the industry’s relative penury.
“The government is at the mercy of the industry and their view of their profits,” says Gluckstein. “That’s why the transparency aspect of the 2010 reforms is so vital because independent auditors will investigate the profits of the insurance industry.”

As part of its reform package, Ontario agreed to commission an annual Automobile Insurance Transparency and Accountability Expert Report. The first, from KPMG, is pending.

From the OTLA’s perspective, the industry camouflages its robust financial health with accounting chicanery. “All sorts of tax manoeuvring, underwriting adjustments, carried forward losses et cetera,” says Gluckstein. “The industry’s view is that if you want reduced premiums, you have to cut costs. So what happened to all the saving they earned on the backs of victims who had to give up all their coverage?”

Gluckstein says that comedian Rick Mercer brilliantly captured the present stalemate in one of his epic CBC rants: “We are your insurance company, we will take your premiums but if you have a claim, we will give you nothing – that’s how it works.”

Caught in the middle are accident victims. Part of the problem, says FAIR’s Rhona DesRoches, is the public’s relative disengagement and passivity on the issue. Maybe that’s not surprising: Ontario has nine million drivers but only 60,000 accident victims.

“No one ever thinks they’ll be in an accident, that it will happen to them,” DesRoches said. “Until they are and it does.”

An earlier online version of this story and the original newspaper version incorrectly stated that there is a backlog of more than 30,000 accident claims in mediation in Ontario. This online version has been corrected.

Province	Average Annual Premium
Quebec	$642
P.E.I.	$695
New Brunswick	$728
Nova Scotia	$736
Newfoundland and Labrador	$749
Alberta	$1,004
Manitoba	$1,027
Saskatchewan	$1,049
British Columbia	$1,113
Ontario	$1,281

Source: ROBERT COLLISON Special to The Globe and Mail

Published Wednesday, Apr. 16 2014, 5:00 AM EDT
Last updated Wednesday, Apr. 16 2014, 5:53 PM EDT

 http://www.theglobeandmail.com/globe-drive/new-cars/auto-news/the-problem-how-to-fix-ontarios-broken-insurance-system/article18024824/

IBC’s Palumbo to Ontario MPPs: Are you listening?

Ralph Palumbo has been knocking on MPPs doors at Queen’s Park for days, hoping to convince politicians of every stripe to pass Bill 171. And it hasn’t been easy.

“I’ve been trying to get the MPPs to understand that we need Bill 171 to pass,” Palumbo told Insurance Business, sharing his frustration as Ontario vice-president of the Insurance Bureau of Canada, trying to make those in power face facts as to the realities of auto insurance. “The trial lawyers don’t want to see the Bill passed; the
NDP doesn’t want to see the Bill passed – but there has to be a dose of realism here.”

Palumbo’s one man crusade inside the seat of provincial power comes amid the first-quarter figures released from the Financial Services Commission of Ontario, which show approved rates for private passenger auto insurance have declined on average by 5.01 per cent.

Encouraging numbers, but when averaged out, they still show a large mountain yet to be climbed, Palumbo points out.

“When you break it down, that figure is for 14 insurers’ rate filing that were approved during the first three months of the year,” says Palumbo, “and those are relatively small insurers, accounting for something like 20 per cent of the market, based on premium volume. When averaged out, that accounts for a little over 1 per cent.”

That one per cent, added to the fourth quarter average for 2013 of about 4 per cent, adds up to a total of 5.67 per cent, says Palumbo.

“It is encouraging, but it isn’t going to get us to that 8 per cent target set for this August,” he says. “That is why we need Bill 171 passed, so we can tackle pre-judgment interest on tort claims.” (continued.)

 It is that interest rate – set at 5 per cent – that should be reduced to the Bank of Canada rate of 1.3 per cent, argues Palumbo.

“That would make for a huge savings, and get us to where we need to be,” he says. “But trying to get the MPPs to understand this isn’t easy. But both they and the trial lawyers have to understand there is a cost to be paid.”

Although a provincial election seems all but inevitable for Ontario, negating the immediate passage of Bill 171, the passing of the Bill would be the first step to fixing an auto insurance system that Palumbo describes as “not sustainable.”

“The next step would be to have real bodily injury reform in place by January,” he says, “that is if we are to be realistic about the 15 per cent target. The system currently isn’t sustainable – there is a responsibility for companies to charge what is being paid out. But it’s been a tough message.”

Comments

• TammyK on 23/04/2014 3:31:29 PM
  I have been watching the benefits of legitimate survivors benefits being slashed over and over to help the insurers profit margins. Mr. Palumbo, how do you and the IBC sleep at night? God forbid, you or yours are very seriously injured in a MVA and ASSUME the benefits are available. For the amount of money being spent by the insurers to paint a survivor as a fraudster in a claim, with the IBC lining the pockets of the people willing to accept the your word without actual PROOF, also the insane amounts being spent on advertising to get the public to buy into the fraud, thousands of victims could be making maximum in their recoveries with the funds and resources that the IBC and INSURERS squander! Help others, don't Hurt them even more. 
  
  
• Friendly Reader on 24/04/2014 4:43:25 PM
  This bill will not help the insured at all. It will only encourage them to have to resort to the fraud to be able to get the needed money. The insurance industry is it's own enemy as it forces the insured to go to court to get the money due, which in turn results in higher payments since the judge will rule in favour of the vicitim resulting in them also getting pain and suffering. Not bright. This is coming from someone who lives in Ontario which has some of the highest and most generous coverage limits. 
  
  
• FAIR on 25/04/2014 9:37:46 AM
  There is no way that Mr. Palumbo is anywhere near as frustrated as Ontario’s accident victims are. These are legitimately injured accident victims who aren’t getting assistance but they are getting the run-around. Insurers who properly adjust a claim don’t have to pay these pre-judgement interest costs often – but the insurers whose claims adjusting is incompetent or who have denied legitimate claims based on bogus or unqualified medical examinations and who then have to pay up later, are.
  Got one thing right – this system is not sustainable, consumers are fed up with lousy coverage and abuse at the hands of their insurer. Insurers need to acknowledge that many companies do not have best practices in place to protect their customers and the overuse of assessment mills and poor quality medical opinions has a cost.
  Good news for the citizens of Ontario that some MPPs are not signing on to the abuse of some very vulnerable people when Mr Palumbo knocks. Bill 171 does make things worse for accident victims and we applaud those MPPs who are doing their job to look out for Ontario’s interests.
  MVA victims know that Ontario’s insurers and the IBC definition of ‘savings’ means slashing benefits to make even bigger profits every year. The product is flawed, consumers are not happy when they have to use it and many MVA victims can tell you that making a claim in Ontario can be a harmful experience. Bill 171 will make it harder to access justice and it is an incentive to further delay and deny claims by way of a reduction of interest payments to claimants who have been wrongfully denied.
  The tough message here is for Mr. Palumbo – it is that the responsibility lies with Ontario’s insurers to clean up their act and provide a profitable product that works in the best interests of Ontarians. A business model that relies on delaying payments and abusing your own customers can’t succeed. Tens of thousands of injured Ontario accident victims waiting for hearings tells us this product gets a fail mark.
  
  
• Casual Observer on 28/04/2014 9:51:58 PM
  I suspect the comments I have just read are not indicative of most consumers. Because to believe what is being spewed makes it sound as if insurers are not paying claims. Given the data available it appears that the majority of premiums go back out to pay for injuries or to fix vehicles.
  
  Always take things with a grain of salt! 
  
  
• Castrated by insurance on 29/04/2014 8:53:21 PM
  Insurers are not paying claims and the majority of premiums go back out to pay for doctors, lawyers, wordhirelings to deny legitimate accident victims. Open up the books IBC. Oh, thats right there secret, sssshhhhh not so loud.
  
  
• Greg Smith on 23/04/2014 10:47:52 AM
  I am very tired of reading Mr. Palumbo comments on the need for bill 171.
  As a former abused and harassed accident victim. I like to say say a hope Ralph has an accident and try's to get his benefits.
  I bought the extra million dollar policy and for 8 years I fought with my insurance company to spend my benefits to be treated! They actually spent more money sending me to their insurance company friendly doctor for IE's.
  One if their doctor denied my treatment plan without laying a hand on me. He "tried" something on me that he wasn't fully trained to do, and he caused me to have a sickening headache for 10 days. I returned to his office and demanded he see me, and do a true examination of me. After completing the examination, he said I don't know how I can rewrite the report in my favour, after already submitting his report. I told him I wouldn't leave his office until I had a copy of his report, and when my lawyer called him, things were done!
  The injured "HAVE NO RIGHTS AT PRESENT" and you want bill 171 to go through! It must be stopped now!
  I spoke last June in the Ontario special committee on insurance, and rates were to decrease which has to happen!
  EVERYONE THAT DRIVES NEEDS TO CONTACT THEIR MPP, and keep bugging them to stop this bill.
  Accident victims need more rights. As we have zero now.
  Insurance companies have more money to spend on advertising illustrating that accident victims as snakes, shame on the IBC and Mr. Palumbo.
  When we pay our premiums We should be able to use the benefits! 
  
  
• Devils Trumpet on 23/04/2014 11:04:02 AM
  Perhaps Ralph's problem is that Bill 171 is an atrocious document that has nothing to do with reducing fraud and lowering unreasonably high rates paid by the consumer for less and less coverage. Maybe Mr. Palumbo should acknowledge that his dog-and-pony show has nothing to do with fraud but everything to do with increased profits at the expense of accident victims.
  Ralph's dishonesty is so stunningly transparent,no wonder the public and MPPs are not buying it. 
  
  
• Charles Ball on 24/04/2014 9:31:09 AM
  Paying $700 for a $3,500 AB policy has produced billions of profits not passed on to consumers. They have a threshold and a deductible of $30,000. Now they want to eliminate pre-judgment interest. Why not just eliminate tort claims all together? Oh, I know; that would eliminate the pretext for them getting any money at all. Same on any MPP who votes for the Bill. 
  
  
• Rick on 29/04/2014 2:42:14 PM
  What about bill 59 and then the 2003 changes to coverage? What about the fact that we only have $3,500 coverage less the cost of a insurance medical assessment since the 2010 reforms? Where does it end? High premiums, virtually no coverage and an abusive system that requires a lawyer to even figure out. It's fake coverage with big business just siphoning off their profits - no money left for accident victims. What a scam. With the removal of the punitive value of pre-judgement it's an open season on victims. Just take our money and run when there's no reason to stand behind the policy thanks to our government's mishandling of this file. 
  
  
  Source:  by Donald Horne | 21 Apr 2014 
  http://www.insurancebusiness.ca/news/ibcs-palumbo-to-ontario-mpps-are-you-listening-177434.aspx