Marketplace

REGULATION 

Regulators working on rules for online insurance sales

Many of Canada’s insurance regulations pre-date electronic commerce, so the Canadian Council of Insurance Regulators (CCIR) is inviting stakeholder recommendations to help bring those rules into the 21st century.

Regulators published the recommendations for online insurance sales in May as part of the position paper, Electronic Commerce in Insurance Products. CCIR is seeking feedback by July 26.

Among other things, the council’s electronic commerce committee (ECC) recommends that “comparison shopping” websites be prohibited from providing advice or posting insurance applications unless they are operated by properly licensed companies. Websites that compare “available coverage options” should be held “to the same obligations” as other insurance entities.

Other recommendations in the paper include that online insurance providers be required to provide a link to the website of their corresponding regulator; and that, if implemented, online insurance providers be required to “draw to the consumer’s attention” seven categories of information in “clear and simple language.” These include the type of consumer for whom the product is intended; the product’s main characteristics; options and coverage; exclusions and limitations; total premium and other charges, such as taxes; the consumer’s right to cancel, as well as the duration of the cancellation period and the procedure for cancellation; and any time limit on the validity of the information provided.

Comments will be reviewed by the ECC, with final recommendations submitted to CCIR. “Each jurisdiction will consider the recommendations and evaluate the circumstances in its own jurisdiction to determine what changes, if any, are necessary to implement them.”

Ontario regulatory changes now in force

Amendments to Ontario auto insurance requirements came into force June 1, including changes to the Unfair or Deceptive Practices Regulation and the Statutory Accident Benefits Schedule.

Ontario Regulation 7/00, under the Unfair or Deceptive Practices Act, makes it illegal to request, require or permit an insurance claimant to sign an incomplete claim form. The change is one of a number published in the February 9 issue of the Ontario Gazette.

Changes to Ontario Regulation 34/10, which relates to the Statutory Accident Benefits Schedule, mean that carriers must now send a notice within 10 days of receiving a treatment and assessment plan. Until now, when denying claims, carriers had to include in their notices to claimants, “the medical and any other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable or necessary.”

The word “any” has been changed to “all” as of June 1, 2013. As such, carriers denying claims must now tell claimants the medical reasons and “all of the other reasons why the insurer considers any goods, services, assessments and examinations, or the proposed costs of them, not to be reasonable and necessary.”

Also among the changes, insurance carriers have the right to request confirmation in writing that goods or services were provided to the insured person, and to ask for a statutory declaration as to the circumstances that gave rise to the invoice.

Two demerits for drivers using hand-held devices 

Come August 1, demerits will be assessed to drivers caught using their hand-held electronic devices, says justice minister Andrew Swan, minister responsible for Manitoba Public Insurance (MPI).

“A distracted driver is a serious danger to public safety. Applying demerits for texting or using a cellphone while driving is one more tool to keep our roads safe,” Swan says in a statement.

Currently, eight other Canadian jurisdictions apply demerits for associated convictions. Drivers in Manitoba caught using a hand-held device now receive a $200 fine, but the new demerits will impact a driver’s position on MPI’s driver safety rating (DSR). Demerits will trigger downward movement on the DSR scale and affect the insurance premiums payable on the driver’s licence, in addition to premium discounts on registered vehicles.

CANADIAN MARKET

Need for insurance industry to grow cyber liability market together

Insurance companies and their clients should focus on cyber liability risk, executives suggested during the Canadian Commercial Insurance Summit (CCIS) in Muskoka Lakes, Ontario in June, produced by MSA Research Inc.”This is a market that we collectively have to grow,” Andrew Hollenberg, president of ACE Canada, said during a panel discussion. Clients are “going to get in trouble” if they do not buy cyber liability insurance, Hollenberg noted.

“We’ve got to pay attention to cyber risk,” agreed co-panelist Lynn Oldfield, president and CEO of American International Group Inc.’s Canadian subsidiary. “This is about prevention. This is about putting some loss control around it. This is also about putting the entire IT team in to walk them through what some of the latest and greatest technology innovations are,” Oldfield pointed out.

Canadians not checking to ensure they are properly insured

More than half of Canadians are not taking the time to make sure they are properly insured by asking questions about their policies, note results from a TD Insurance survey released in June.

While 55% of those surveyed reported they review their insurance policies at least once a year, 52% said they would not ask their insurance provider to clarify details that they did not understand in their policy, notes a statement from TD, which commissioned Environics Research Group to conduct the survey.

Of those who would not ask for clarification, 31% said they think it is too complicated and another 31% said they do not have time. Almost a quarter of respondents, 23%, said they are too embarrassed by their lack of knowledge, while 19% said they simply are not interested.

TECHNOLOGY

Meeting consumer demand online blurs broker, insurer roles

The line between insurers and independent brokers may be unintentionally blurred in the online world as the property and casualty insurance industry works to keep pace with consumer demands, Brenda Rose, a vice president of FCA Insurance Brokers in Toronto, suggested during an industry event in June.

“We are, in fact, on opposite sides of the same ravine,” Rose said of brokers and insurers during an event held by the Property and Casualty Underwriters Club. “We have different – not incompatible – objectives,” Rose said.

But as consumer behaviour changes and the demand for more information at a faster pace increases, even well-intentioned insurers may be crossing that ravine into broker territory. “There’s an alarming increase in the number of broker distribution insurers seeking to communicate directly with clients online.”

When insurers reach out directly to clients, they are blurring what Rose called a “previously clear delineation of customer, broker and insurer roles.”

That said, “brokers have to step up to the challenge,” she told attendees. “We have to ensure that when a consumer wants to obtain information or communicate in an electronic form, that we deliver on the ability.”

Almost half of states allow electronic proof of auto insurance 

There are now 24 states that allow some form of electronic proof of coverage at traffic stops, the Property Casualty Insurance Association of America (PCIAA) noted in June.

Seventeen states have passed laws this year, as of June 6, allowing drivers to show proof of auto coverage using a smartphone.

“In just two years, policymakers in nearly half the country have changed their laws to enable consumers to use their smartphone to show they have insurance instead

of keeping that l ittle piece of paper in the glove compartment,” says Alex Hageli, PCIAA director of personal lines policy. “It makes good sense to allow consumers and insurers to use increasingly ubiquitous technology to comply with the law.”

In Canada, insurers are still reluctant to “make the first move” on electronic proof of coverage, although it still seems “inevitable” that it will become the norm in Canadian insurance, consultant Willie Handler suggested in an article in the May 2013 issue of Canadian Underwriter.

RISK 

Better flood risk information needed 

Insurance executives recently called on governments to provide better information to the Canadian industry in the wake of the devastating flooding in Alberta.

“This is going to be very catastrophic,” Patrick Lundy, president and CEO of Zurich Canada, said during a panel discussion at CCIS in Muskoka Lakes, Ontario in June. “When you evacuate 100,000 people from a city, you are going to have business interruption, you’re going to have flood” claims, Lundy said.

“We have to be thinking more about flood resilience, climate change, more than ever,” he told conference attendees. “There’s got to be government involvement – not in insuring – but in better research and development and also better information,” Lundy emphasized.

Published reports quoted Alberta Premier Alison Redford as saying losses could be worse than the 2011 fires in Slave Lake, which caused approximately $700 million in insured losses.

REINSURANCE

Pipeline companies must have $1 billion for damage response

The federal government has announced new requirements for companies operating major crude oil pipelines, including having a $1 billion capability to respond to spills or other damage.

Companies must also appoint an “accountable senior officer whose duty is to ensure their management system and programs are in compliance” with the environmental laws, natural resources minister Joe Oliver announced in late June.

Other measures include new fines, ranging from $25,000 to a maximum of $100,000, that will “soon come into force”; ensuring companies’ emergency and environmental plans are transparent and easily available to the public; and enshrining the “polluter pays” principle explicitly in law.