- Auto telematics allows insurers to know their clients better and therefore protect against auto insurance fraud.
- People who take everyday doses of painkillers have a 20-to-40-per-cent greater risk of crashing their cars, a Canadian study shows.
- CAA South Central Ontario calls on Toronto to focus on public safety and repair deteriorating Gardiner Expressway.
- Young female drivers in U.K. saw premiums rise 22% after gender-based pricing ruling by European Court of Justice.
- Good news for consumers and insurers, Ontario Ministry of Health increases transparency by giving Regulatory Health colleges go ahead to make cautions public.
- Results of weekend voting: Pupatello 504, Wynne 463, Kennedy 257, Takhar 244, Sousa 198, Hoskins 104, Independent 67. This is not leadership vote but selection of delegates committed to vote for particular candidate in 2 weeks and who join several hundred other eligible voters.
Selasa, 15 Januari 2013
Insurance News - Tuesday, January 15, 2013
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, January 15, 2013:
Minggu, 13 Januari 2013
Privacy Commissioner Supports Use Of Credit Scores, But Has Concerns About Transparency
The use of credit scores has been banned in Ontario personal auto but continues to polarize the industry, politicians and consumers. As a result there is considerable interest in a recent Report of Findings released by the Office of the Privacy Commissioner of Canada.
The complainants are husband and wife, and were joint applicants on a property insurance policy with an Ontario insurer. In 2009, they were surprised when their insurance renewal premium had increased considerably over the previous year’s premium. The company had been their insurer for six years and the complainants were claims free. When the complainants looked into the matter, they learned that the company had requested and received from a credit reporting agency access to their personal credit information. In their view, the company had done so without justification and without their knowledge and consent. They were also concerned about other purposes to which the company would use this information.
The insurer's position was that it had obtained express consent from the couple and its other customers for the collection of credit information at the time they apply for insurance. In the company’s view, the complainants consented when they signed their original application. The company uses the standard Centre for Studies in Insurance Operations (“CSIO”) application form, which includes the following consent provision:
Research on the issue conducted by the Office of the Privacy Commissioner of Canada revealed the following:
It was also acknowledged that assessing risk is a fundamental component of the insurance business model. Therefore, underwriting tools are necessary to analyse and predict risk in order for insurance companies to be able to provide insurance products at the appropriate price. It was also acknowledged that the statistical score is an aggregate number, which may be less intrusive than accessing an individual’s entire credit report.
However the privacy commissioner did express some concerns. The privacy commissioner noted that there is no obvious link between credit information and insurance premiums. While the majority of risk assessment tools that insurance companies use have apparent links to the product being purchased by the consumer (claims history, for example), credit history does not. As well, how credit score is determined is closely guarded and most consumers have no way of knowing whether or how their credit information may factor into their insurance premiums.
The privacy commissioner concluded that the company did obtained the complainants’ consent to use their credit information or the statistical score. The language used in the consent provision on the insurance application form was found to be too general in nature. Further, it is not reasonable to expect a consumer to understand that their credit score will be used to determine the probability of them later filing an insurance claim.
Previously I had written on a report from a working group from the Canadian Council of Insurance Regulators (CCIR) which failed to reach any conclusion on the issue, stating that it was a government issue and to reach any definitive solution would require work beyond its own scope.
The two reports reinforce the use of credit scoring in rating home insurance policies as long as government does not introduce a prohibition similar to the one the exists in auto insurance. However, insurers need to ensure the proper consent is obtained and that their policyholders understand how their credit information will be used. Relying on standard industry forms and consent language may not comply with PIPEDA.
PIPEDA Report of Findings #2012-005
The complainants are husband and wife, and were joint applicants on a property insurance policy with an Ontario insurer. In 2009, they were surprised when their insurance renewal premium had increased considerably over the previous year’s premium. The company had been their insurer for six years and the complainants were claims free. When the complainants looked into the matter, they learned that the company had requested and received from a credit reporting agency access to their personal credit information. In their view, the company had done so without justification and without their knowledge and consent. They were also concerned about other purposes to which the company would use this information.
The insurer's position was that it had obtained express consent from the couple and its other customers for the collection of credit information at the time they apply for insurance. In the company’s view, the complainants consented when they signed their original application. The company uses the standard Centre for Studies in Insurance Operations (“CSIO”) application form, which includes the following consent provision:
The Applicants agree that reports containing personal, credit, factual record, premium payment or claims history information may be sought or exchanged in connection with this application for insurance or renewal, extension, variation or cancellation thereof.In addition, the company also pointed to its website privacy statement which advises individuals that the company may collect their personal information from third parties for the purpose of administering insurance policies, as well as for other purposes. Since 2003, the company has sent to all its Ontario policyholders a two-page notice on its policy on the collection and use of personal information at the time of their first policy renewal. It includes an explanation that it may use the statistical score (an underwriting tool that rank-orders risk for underwriting and predicts the likelihood of delinquency over 12 months) from the consumer's credit file as one of many rating factors to determine eligibility for personal property insurance and premiums.
Research on the issue conducted by the Office of the Privacy Commissioner of Canada revealed the following:
- There are studies supporting the claim that credit-based insurance scoring information is a valid predictor of risk of a future loss.
- Despite the finding of industry studies, not all insurance companies in Canada are using credit scores for risk assessment.
- Many Ontario consumers were not aware that their credit scores were being used to determine how much they pay for their home insurance premiums.
It was also acknowledged that assessing risk is a fundamental component of the insurance business model. Therefore, underwriting tools are necessary to analyse and predict risk in order for insurance companies to be able to provide insurance products at the appropriate price. It was also acknowledged that the statistical score is an aggregate number, which may be less intrusive than accessing an individual’s entire credit report.
However the privacy commissioner did express some concerns. The privacy commissioner noted that there is no obvious link between credit information and insurance premiums. While the majority of risk assessment tools that insurance companies use have apparent links to the product being purchased by the consumer (claims history, for example), credit history does not. As well, how credit score is determined is closely guarded and most consumers have no way of knowing whether or how their credit information may factor into their insurance premiums.
The privacy commissioner concluded that the company did obtained the complainants’ consent to use their credit information or the statistical score. The language used in the consent provision on the insurance application form was found to be too general in nature. Further, it is not reasonable to expect a consumer to understand that their credit score will be used to determine the probability of them later filing an insurance claim.
Previously I had written on a report from a working group from the Canadian Council of Insurance Regulators (CCIR) which failed to reach any conclusion on the issue, stating that it was a government issue and to reach any definitive solution would require work beyond its own scope.
The two reports reinforce the use of credit scoring in rating home insurance policies as long as government does not introduce a prohibition similar to the one the exists in auto insurance. However, insurers need to ensure the proper consent is obtained and that their policyholders understand how their credit information will be used. Relying on standard industry forms and consent language may not comply with PIPEDA.
PIPEDA Report of Findings #2012-005
Jumat, 11 Januari 2013
Insurance News - Friday, January 11, 2013
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, January 11, 2013:
- West Virgina University is getting a federal grant to study effect of US cellphone laws on driver safety and accident rates.
- A proposal to issue driver’s licenses to illegal immigrants has received committee approval in the Illinois House.
- Car manufacturers are copying smartphones by commissioning software application developers to create apps for future vehicles.
- A response to "doomsday predictions" about drops in auto insurance premium as a result of new technologies.
- Privacy commissioner supports the collection and use of credit information for rating purposes but is concerned about transparency.
Rabu, 09 Januari 2013
Insurance News - Wednesday, January 9, 2013
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, January 9, 2013:
- Toronto Police Chief Bill Blair calls for return to photo radar: road safety measure or cash grab?
- 2012 will be 4th consecutive year for billion-dollar, weather-related losses for Canadian P&C insurers.
- Director’s Delegate agrees FSCO’s Settlement Disclosuree Notices is deficient.
- Toronto Police marine unit finds two cars in Lake Ontario, at least one stolen. So how many more cars are down there?
Selasa, 08 Januari 2013
Insurance News - Tuesday, January 8, 2013
Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Tuesday, January 8, 2013:
- Event data recorders, aka vehicle "black boxes," are at a tipping point for the technology.
- Court denies "trip and fall" claimant Statutory Accident Benefits after injury tripping over curb as the vehicle was not being operated or used it was parked.
- Teen jailed after posting on Facebook: "Drivin drunk ... classic ;) but to whoever's vehicle i hit i am sorry. :P." People just love to share their lives on Facebook.
- Gerrard Kennedy says he would consider public auto insurance if he were to become premier.
Administrative Monetary Penalties Are Introduced In The Insurance Sector
In the 2012 Ontario Budget, the government announced that it would implement Administrative Monetary Penalties (AMPs) in the insurance sector. AMPs will allow the FSCO to address contraventions of the law more efficiently and promote compliance. AMP’s are civil fines that a regulator, instead of a court, imposes on someone that has committed unlawful activity. Once they are implemented, AMP’s will encourage regulatory compliance within the insurance industry and provide FSCO with a quick enforcement tool that is flexible and targeted.
The government introduced AMPs into the insurance sector by passing changes to the following Acts:
These changes and new regulations (408/12, 409/12 and 410/12) came into force January 1, 2013.
AMPs can be imposed for contraventions of provisions of these Acts listed in the regulations that occur on or after January 1, 2013, as well as breaches of orders, undertakings and licence conditions. The maximum penalty for an individual for a contravention of the Insurance Act and Compulsory Automobile Insurance Act is $50,000 and $100,000 for an organization or company. The maximum penalty for a contravention of the Automobile Insurance Stability Rate Act, 2003 by an insurer is $200,000.
The contraventions to which an AMP can apply include listed Unfair or Deceptive Acts or Practices by any person or entity including insurers, agents, brokers, adjusters and those involved in the provision of goods or services to insurance claimants.
The use of AMPs have been strongly supported by the insurance industry as a tool to finding fraud and was endorsed by the Ontario Automobile Anti-Fraud Task Force.
The government introduced AMPs into the insurance sector by passing changes to the following Acts:
These changes and new regulations (408/12, 409/12 and 410/12) came into force January 1, 2013.
AMPs can be imposed for contraventions of provisions of these Acts listed in the regulations that occur on or after January 1, 2013, as well as breaches of orders, undertakings and licence conditions. The maximum penalty for an individual for a contravention of the Insurance Act and Compulsory Automobile Insurance Act is $50,000 and $100,000 for an organization or company. The maximum penalty for a contravention of the Automobile Insurance Stability Rate Act, 2003 by an insurer is $200,000.
The contraventions to which an AMP can apply include listed Unfair or Deceptive Acts or Practices by any person or entity including insurers, agents, brokers, adjusters and those involved in the provision of goods or services to insurance claimants.
AMPs are not new to FSCO. The Superintendent of FSCO already has the power to impose AMP’s on two types of financial services institutions – mortgage brokers and credit unions. AMP’s are also used by other regulators in Ontario and other jurisdictions.
The use of AMPs have been strongly supported by the insurance industry as a tool to finding fraud and was endorsed by the Ontario Automobile Anti-Fraud Task Force.
Senin, 07 Januari 2013
Insurance News - Monday, January 7, 2013
Back from the holidays. Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Monday, January 7 2013:
- Canadian Underwriter has an article on how car sharing is growing (there are 40,000 Ontario members) - now Avis/Budget plans on buying Zipcar for $500 million.
- Consumers posting negative reviews could face legal problems, so much for free speech.
- How scary is this? A Florida man was arrested for allegedly using Play-Doh to fix damaged car.
- Forensic investigators reveal top words used by fraudsters in your company - beware of employees that use phrases like "nobody will find out" in emails.
- New auto insurance PIP regulations in effect in New Jersey after Superior Court denies medical group's stay request.
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