The Office of the Superintendent of Financial Institutions (OSFI) has released updated instructions for insurers in filing Unpaid Claims and Loss Ratio Analysis Exhibit data through the automated data transfer system.
The only change from prior years is a revision in the file names, OSFI said in a letter. Both insurers and reinsurers are now asked to use the same naming convention.
For insurers using the PricewaterhouseCoopers software, files with the correct names will be automatically created.
Instructions published by the Autorité des marches financiers should be consulted for guidance on filing the Unpaid Claims and Loss Ratio Analysis Exhibit data with the Autorité.
Friday, February 17, 2012
Online surveillance legislation latest development in ever-evolving cyber liability risks
Recent legislation tabled in the House of Commons on Feb. 14, would allow law enforcement to monitor consumers’ telecommunications and Internet usage and reminds underwriters that the area of cyber liability is constantly evolving and far reaching, said Lynn Oldfield, president and CEO of Chartis Insurance Canada.
Oldfield offered the keynote address during the Property Casualty Underwriters Club luncheon in Toronto on Feb. 15.
“There is a raging debate in this country right now about new legislation [Bill C-30, ‘The Protecting Children from Internet Predators Act’] that has just been introduced on the [House of Commons] floor that would give police in this country more access to your cell phone records and your telecommunications lines, so that they can adequately protect our children against Internet pornographers and child predators,” she said.
The privacy commissioner has weighed in, claiming that the powers granted under the proposed legislation are far too intrusive under Canada’s robust privacy laws.
“So folks, this is an evolving area — literally, with major developments this week. And we don’t know where Canada is going to land with this new legislation, but it behoves us as risk underwriters to understand the issues, educate ourselves and stay current.”
Oldfield offered the keynote address during the Property Casualty Underwriters Club luncheon in Toronto on Feb. 15.
“There is a raging debate in this country right now about new legislation [Bill C-30, ‘The Protecting Children from Internet Predators Act’] that has just been introduced on the [House of Commons] floor that would give police in this country more access to your cell phone records and your telecommunications lines, so that they can adequately protect our children against Internet pornographers and child predators,” she said.
The privacy commissioner has weighed in, claiming that the powers granted under the proposed legislation are far too intrusive under Canada’s robust privacy laws.
“So folks, this is an evolving area — literally, with major developments this week. And we don’t know where Canada is going to land with this new legislation, but it behoves us as risk underwriters to understand the issues, educate ourselves and stay current.”
Toronto, Niagara police lay 500 charges in connection with investigation of alleged chop shop operation
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2012-02-16
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Toronto and Niagara Regional Police have laid more than 500 charges against five men in connection with an investigation of an alleged chop shop operation.
The charges follow a joint forces investigation first launched in 2009 involving the Toronto Police Service, Ontario Provincial Police, Niagara Regional Police Service and the Ministry of Transportation of Ontario Enforcement Unit.
The project targeted the alleged fraudulent issuance of structural certificates for rebuilt vehicles and the selling of those salvaged vehicles. The charges have not been proven in court.
Police say the owners of two Toronto body shops, Downtown Collision and Car Care Centre, applied to the Ministry of Transportation to become Structural Inspection
Stations and were granted certification. Both owners entered into an agreement with an insurance appraiser, who provided them with structural certificates.
Police say the appraiser attended various locations and conducted improper structural inspections of vehicles, even though he was not qualified to conduct such inspections. The appraiser would then have the shop owners sign papers saying the inspections were conducted.
According to police, some of the inspected vehicles were stolen and assigned new Vehicle Identification Numbers (VINs). Some of the vehicles were re−inspected and found not to have met safety requirements.
Police say the shop owners split the financial profits from the re-sale of the inspected vehicles.
Charged are John Keen, 51, of Toronto; Giovanni Bellisario, 53, of Toronto; Osvaldo Savia, 57, of Toronto; David De Oliveira, 33, of Toronto; and Gabor Toth, 39, of Toronto.
2012-02-16
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Toronto and Niagara Regional Police have laid more than 500 charges against five men in connection with an investigation of an alleged chop shop operation.
The charges follow a joint forces investigation first launched in 2009 involving the Toronto Police Service, Ontario Provincial Police, Niagara Regional Police Service and the Ministry of Transportation of Ontario Enforcement Unit.
The project targeted the alleged fraudulent issuance of structural certificates for rebuilt vehicles and the selling of those salvaged vehicles. The charges have not been proven in court.
Police say the owners of two Toronto body shops, Downtown Collision and Car Care Centre, applied to the Ministry of Transportation to become Structural Inspection
Stations and were granted certification. Both owners entered into an agreement with an insurance appraiser, who provided them with structural certificates.
Police say the appraiser attended various locations and conducted improper structural inspections of vehicles, even though he was not qualified to conduct such inspections. The appraiser would then have the shop owners sign papers saying the inspections were conducted.
According to police, some of the inspected vehicles were stolen and assigned new Vehicle Identification Numbers (VINs). Some of the vehicles were re−inspected and found not to have met safety requirements.
Police say the shop owners split the financial profits from the re-sale of the inspected vehicles.
Charged are John Keen, 51, of Toronto; Giovanni Bellisario, 53, of Toronto; Osvaldo Savia, 57, of Toronto; David De Oliveira, 33, of Toronto; and Gabor Toth, 39, of Toronto.
Thursday, February 9, 2012
Direct writers likely to be first to use social platform for selling insurance: Celent
The first U.S. property and casualty insurer to use a social networking site as a platform for its business will likely be a direct writer that offers personal auto, motorcycle or dwelling insurance and not necessarily one of the biggest insurers in the market, Mike Fitzgerald, a senior analyst at Celent, wrote on his Feb. 3 blog.
In his blog post, Which U.S. P&C insurance company will be the first to use a social network as a platform to transact insurance?, Fitzgerald listed key characteristics he believed the first P&C insurer to use a social network site for selling insurance would possess.
Facebook's initial public offering on Feb. 1 prompted the blog post. The vision of Mark Zuckerberg, the founder of Facebook, is reportedly to establish the site as a platform on which people can actually complete their commercial transactions.
According to Fitzgerald, key characteristics would include:
• A commoditized product like personal auto, motorcycle or home insurance, where price and service separate the offerings.
• Companies that are targeting consumers currently most comfortable using social networking platforms. Such consumers are typically irritated by traditional insurance distribution and not as concerned about personal privacy.
• Insurers with intermediated distribution will pass on using the platform. "Upsetting their existing agents with a direct social network approach will be too much to bear," Fitzgerald wrote.
• Insurers that have a reputation for being innovative will be more likely to reach acceptable terms with the platform provider.
• Although the first insurer to use a social network may not be the largest, it will still need to meet the network provider's "steep rent."
• "The most likely insurer, in my view, is one that has a good reputation with the regulators and a decent reputation at addressing their concerns in past market conduct reviews and inquiries," Fitzgerald wrote. "As the response of regulation to this new way of doing business is such an unknown, the company willing to take this step will be confident in its ability to respond to its overseers
In his blog post, Which U.S. P&C insurance company will be the first to use a social network as a platform to transact insurance?, Fitzgerald listed key characteristics he believed the first P&C insurer to use a social network site for selling insurance would possess.
Facebook's initial public offering on Feb. 1 prompted the blog post. The vision of Mark Zuckerberg, the founder of Facebook, is reportedly to establish the site as a platform on which people can actually complete their commercial transactions.
According to Fitzgerald, key characteristics would include:
• A commoditized product like personal auto, motorcycle or home insurance, where price and service separate the offerings.
• Companies that are targeting consumers currently most comfortable using social networking platforms. Such consumers are typically irritated by traditional insurance distribution and not as concerned about personal privacy.
• Insurers with intermediated distribution will pass on using the platform. "Upsetting their existing agents with a direct social network approach will be too much to bear," Fitzgerald wrote.
• Insurers that have a reputation for being innovative will be more likely to reach acceptable terms with the platform provider.
• Although the first insurer to use a social network may not be the largest, it will still need to meet the network provider's "steep rent."
• "The most likely insurer, in my view, is one that has a good reputation with the regulators and a decent reputation at addressing their concerns in past market conduct reviews and inquiries," Fitzgerald wrote. "As the response of regulation to this new way of doing business is such an unknown, the company willing to take this step will be confident in its ability to respond to its overseers
Saturday, January 28, 2012
Ontario Court of Appeal recognizes invasion of privacy as a common law tort
The Ontario Court of Appeal has recognized the invasion of a person's privacy as a common law tort, and not just an infraction under the Personal Information Protection and Electronic Documents Act (PIPEDA)
In Jones v. Tsige, the appellant, Sandra Jones, discovered that the respondent, Winnie Tsige, had been looking at her banking records without her knowledge or permission. Tsige and Jones did not know one another, but they both worked for the same bank and Tsige had formed a common-law relationship with Jones' ex-husband.
Tsige had argued that it is not open to the court to adapt the common law to deal with the invasion of privacy on the ground that privacy is already the subject of the PIPEDA legislation. "It is submitted that expanding the reach of the common law in this area would interfere with these carefully crafted regimes and that any expansion of the law relating to the protection of privacy should be left to parliament and the legislature," wrote Justice Robert J. Sharpe in the decision.
Sharpe noted PIPEDA is federal legislation dealing with ‘organizations' that are subject to federal jurisdiction. While the bank that employed both Jones and Tsige is subject to PIPEDA, Sharpe listed three reasons why Jones should not be restricted to the remedy of a PIPEDA complaint against the bank.
They included:
• Jones would be forced to lodge a complaint against her own employer, rather than against Tsige, the wrongdoer.
• Tsige acted as a rogue employee of the bank, contrary to the banks' policy, and that may provide the bank with a complete answer to Jones.
• The remedies available under PIPEDA do not include damages, and thus it is difficult to see what Jones would gain from such a complaint.
"In my view, it is appropriate for this court to confirm the existence of a right of action for intrusion upon seclusion," Sharpe wrote. "Recognition of such a cause of action would amount to an incremental step that is consistent with the role of this court to develop the common law in a manner consistent with the changing needs of society."
Sharpe awarded ‘moral' damages in the amount of $10,000.
In Jones v. Tsige, the appellant, Sandra Jones, discovered that the respondent, Winnie Tsige, had been looking at her banking records without her knowledge or permission. Tsige and Jones did not know one another, but they both worked for the same bank and Tsige had formed a common-law relationship with Jones' ex-husband.
Tsige had argued that it is not open to the court to adapt the common law to deal with the invasion of privacy on the ground that privacy is already the subject of the PIPEDA legislation. "It is submitted that expanding the reach of the common law in this area would interfere with these carefully crafted regimes and that any expansion of the law relating to the protection of privacy should be left to parliament and the legislature," wrote Justice Robert J. Sharpe in the decision.
Sharpe noted PIPEDA is federal legislation dealing with ‘organizations' that are subject to federal jurisdiction. While the bank that employed both Jones and Tsige is subject to PIPEDA, Sharpe listed three reasons why Jones should not be restricted to the remedy of a PIPEDA complaint against the bank.
They included:
• Jones would be forced to lodge a complaint against her own employer, rather than against Tsige, the wrongdoer.
• Tsige acted as a rogue employee of the bank, contrary to the banks' policy, and that may provide the bank with a complete answer to Jones.
• The remedies available under PIPEDA do not include damages, and thus it is difficult to see what Jones would gain from such a complaint.
"In my view, it is appropriate for this court to confirm the existence of a right of action for intrusion upon seclusion," Sharpe wrote. "Recognition of such a cause of action would amount to an incremental step that is consistent with the role of this court to develop the common law in a manner consistent with the changing needs of society."
Sharpe awarded ‘moral' damages in the amount of $10,000.
Raising rate and lowering profit targets not the answer to Ontario auto issues
Raising Ontario's auto insurance rates or getting insurers to lower profit targets will not solve the fundamental issues in Ontario's auto insurance system - a fraud-riddled system that has consumers paying the highest rates in Canada, wrote Barb Addie, president of Baron Insurance Services, in the MSA/Baron Outlook Report: 2011 Q3.
In its December 2011 annual report, Ontario's auditor general suggested that FSCO should reconsider its benchmark of a 12% return on equity (ROE) when reviewing insurers' rate applications. The auditor general noted that the benchmark has not been adjusted downward since it was set in 1996, even though the long-term bond rate has been about 3% for the past few years.
IBC, in response, pointed out that FSCO does not guarantee a 12% ROE when approving rates, and the industry has in fact lost $2.8 billion over the past three years in Ontario auto.
"Raising rates much further will not be politically tenable and there is pressure from both FSCO in their Statement of Priorities and the Ontario Auditor General's annual report to reduce the 12% ROE cap because of the low interest rate environment (an ROE cap that has been largely theoretical in recent years)," Addie wrote.
"Such a decrease in the cap will compel insurers to include a lower profit expectation in their rate applications and thereby cause the gap between premiums and costs to widen."
Addie recommends instead that the government:
• Fix the definition of catastrophic impairments, especially given the Court of Appeal's recent ruling that overturned Kusnierz v. Economical Mutual Insurance Company. "Combining the two injury types will cause more claimants to qualify for the much higher benefits that accrue when the CAT threshold is exceeded.
• Remedy the unwieldly mediation/arbitration system.
• Come down hard on fraud and abuse.
"A trend towards higher claims costs absent significant further cost containment reforms will likely precipitate another crisis; a crisis that both the industry and the government desperately want to avoid."
In its December 2011 annual report, Ontario's auditor general suggested that FSCO should reconsider its benchmark of a 12% return on equity (ROE) when reviewing insurers' rate applications. The auditor general noted that the benchmark has not been adjusted downward since it was set in 1996, even though the long-term bond rate has been about 3% for the past few years.
IBC, in response, pointed out that FSCO does not guarantee a 12% ROE when approving rates, and the industry has in fact lost $2.8 billion over the past three years in Ontario auto.
"Raising rates much further will not be politically tenable and there is pressure from both FSCO in their Statement of Priorities and the Ontario Auditor General's annual report to reduce the 12% ROE cap because of the low interest rate environment (an ROE cap that has been largely theoretical in recent years)," Addie wrote.
"Such a decrease in the cap will compel insurers to include a lower profit expectation in their rate applications and thereby cause the gap between premiums and costs to widen."
Addie recommends instead that the government:
• Fix the definition of catastrophic impairments, especially given the Court of Appeal's recent ruling that overturned Kusnierz v. Economical Mutual Insurance Company. "Combining the two injury types will cause more claimants to qualify for the much higher benefits that accrue when the CAT threshold is exceeded.
• Remedy the unwieldly mediation/arbitration system.
• Come down hard on fraud and abuse.
"A trend towards higher claims costs absent significant further cost containment reforms will likely precipitate another crisis; a crisis that both the industry and the government desperately want to avoid."
First insurer in priority dispute cannot claim an application for benefits is not "completed" if its search for missing information is not diligent: court TEXT SIZE
The Ontario Court of Appeal has found that in a priority dispute between insurers, the first insurer to receive a claim for accident benefits cannot claim it did not receive a "completed application" if it was not diligent in investigating the missing information.
In Ontario (Finance) v. Pilot Insurance Company, an unidentified motorist hit an uninsured cyclist. Since no insurer could be identified, the injured cyclist filed a claim for accident benefits with the Motor Vehicle Accident Claims Fund. Administered by Ontario's Finance Ministry, the Fund provides compensation to people injured in motor vehicle accidents when no insurance exists to respond to their claim.
If, after receiving a claim, the Fund discovers that another insurer may be liable, it can dispute its obligation to pay benefits. But the Fund cannot dispute its obligation to pay benefits unless it gives written notice to the insurer it believes responsible for paying the benefits within 90 days of receipt of a "completed" application for benefits.
In this case, the court had to consider when the Fund received a "completed" application for the purpose of triggering the 90-day notice period.
The injured cyclist did not include a police report of the accident along with his application. This may have indicated the name of the driver and the driver's insurer. Instead, based on a discussion with the cyclist, the Fund sought to obtain the records of a 911 call the cyclist said the unidentified motorist had made to the police.
The police informed the Fund that it could only obtain the 911 call information in one of two ways: a Freedom of Information (FOI) request or a court order.
The cyclist applied to the Fund for benefits on Mar. 7, 2007. The Fund twice tried to obtain the 911 call details through FOI requests. Its second and final request was denied on Jan. 17, 2008.
Subsequently, on Sept. 4, 2008, the Fund obtained an unopposed court order to provide particulars of the 911 call. Four days later, using the 911 records, the Fund determined the identity of the driver and that Pilot Insurance Company was the driver's insurer.
The Fund argued before the court that it had a "completed application" only after it had received the 911 records in September 2008. Only at that point did the Fund have enough information to determine Pilot was the insurer, thus triggering the 90-days notice period.
But the Ontario Appeal Court restored the decision of the original arbitrator, finding that the Fund should have applied for the court order for the 911 records in February 2008 at the latest, just after the second denial of its FOI request.
Had the Fund not delayed in this step until September, the 90-day notice period would have been triggered in February instead, the Appeal Court found. At that point, the Fund would have had enough information to notify Pilot, since at that time the Fund would have received a "functionally adequate" (i.e. completed) application.
"The arbitrator indicated that he was relying on [R. v. Lombard Insurance Company of Canada] for the principle that the first insurer should be treated as receiving a completed application when it does not act diligently in attempting to obtain missing information," the Court of Appeal wrote, in restoring the arbitrator's initial decision.
The full case can be found at:
http://www.ontariocourts.on.ca/decisions/2012/2012ONCA0033.htm
In Ontario (Finance) v. Pilot Insurance Company, an unidentified motorist hit an uninsured cyclist. Since no insurer could be identified, the injured cyclist filed a claim for accident benefits with the Motor Vehicle Accident Claims Fund. Administered by Ontario's Finance Ministry, the Fund provides compensation to people injured in motor vehicle accidents when no insurance exists to respond to their claim.
If, after receiving a claim, the Fund discovers that another insurer may be liable, it can dispute its obligation to pay benefits. But the Fund cannot dispute its obligation to pay benefits unless it gives written notice to the insurer it believes responsible for paying the benefits within 90 days of receipt of a "completed" application for benefits.
In this case, the court had to consider when the Fund received a "completed" application for the purpose of triggering the 90-day notice period.
The injured cyclist did not include a police report of the accident along with his application. This may have indicated the name of the driver and the driver's insurer. Instead, based on a discussion with the cyclist, the Fund sought to obtain the records of a 911 call the cyclist said the unidentified motorist had made to the police.
The police informed the Fund that it could only obtain the 911 call information in one of two ways: a Freedom of Information (FOI) request or a court order.
The cyclist applied to the Fund for benefits on Mar. 7, 2007. The Fund twice tried to obtain the 911 call details through FOI requests. Its second and final request was denied on Jan. 17, 2008.
Subsequently, on Sept. 4, 2008, the Fund obtained an unopposed court order to provide particulars of the 911 call. Four days later, using the 911 records, the Fund determined the identity of the driver and that Pilot Insurance Company was the driver's insurer.
The Fund argued before the court that it had a "completed application" only after it had received the 911 records in September 2008. Only at that point did the Fund have enough information to determine Pilot was the insurer, thus triggering the 90-days notice period.
But the Ontario Appeal Court restored the decision of the original arbitrator, finding that the Fund should have applied for the court order for the 911 records in February 2008 at the latest, just after the second denial of its FOI request.
Had the Fund not delayed in this step until September, the 90-day notice period would have been triggered in February instead, the Appeal Court found. At that point, the Fund would have had enough information to notify Pilot, since at that time the Fund would have received a "functionally adequate" (i.e. completed) application.
"The arbitrator indicated that he was relying on [R. v. Lombard Insurance Company of Canada] for the principle that the first insurer should be treated as receiving a completed application when it does not act diligently in attempting to obtain missing information," the Court of Appeal wrote, in restoring the arbitrator's initial decision.
The full case can be found at:
http://www.ontariocourts.on.ca/decisions/2012/2012ONCA0033.htm
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