Push and Pull

A strange, paradoxical trend is evolving in Ontario auto.

The province’s insurance regulator, the Financial Services Commission of Ontario (FSCO), is laudably cracking down on fraud, taking some serious and immediate measures to curb abuse.

Alas, at the very same time, FSCO’s arbitrators are continuing to expand the definition of what constitutes an auto “accident,” thereby increasing opportunities for insureds to collect auto insurance benefits.

The property and casualty insurance industry is duly and justifiably impressed with FSCO’s recent crackdown on fraudulent auto insurance claims. These measures include new regulations allowing insurers to withhold benefits from claimants who have not provided requested documentation. Also, industry scuttlebutt suggests we can look forward to a new system of administrative penalties sometime in the near future, perhaps before the October election.

Definitely, FSCO’s actions on auto insurance reform and the government’s actions towards tackling fraudulent auto claims has signaled an interest by the public authorities in reducing the number of expensive and problematic auto insurance claims for insurers. The only additional comment to be added here is: Keep up the good work.

But in light of this commitment, it is jarring to see arbitration decisions emanating from FSCO that continue to expand the definition of “arising from use and operation” of a motor vehicle. This trend effectively exposes the Ontario auto product to claims that are more appropriately classified as bodily injury tort claims.

In Daphna Webb and Wawanesa Mutual Insurance Company, FSCO effectively expanded the meaning of the “use and operation” of a motor vehicle to include a slip and fall around the perimeter of a vehicle. This is an especially perplexing decision.

On its face, the decision stands for the proposition that the auto insurance product should answer if a person cannot get out of his or her car safely. Fair enough. But if a person, as in this case, turns off her car, gets out of her car, walks around to the front of her car, avoids a snow bank by placing a foot on a shoveled – albeit icy – access point to a sidewalk, it’s difficult to see how this could be a “car accident.”

In this instance, the claimant should be suing under the homeowner policy of the person who failed to clear the walk properly, or under a municipality’s liability insurance policy. Either way, insurance coverage would protect against slip and fall incidents such as this.

The whole question of getting out of a car, getting off the bus, etc., really should be better defined in legislation. Are you really “using or operating a vehicle” after you have walked several steps away from it? If a person has two feet on the ground and has taken a few steps beyond a vehicle, it seems strange to think that if he or she gets hurt, the insured was involved in some kind of “motor vehicle accident” engaging accident benefits.

It is well known these kinds of decisions are in keeping with a regulatory mandate to make sure insurance companies treat people fairly. But erring on the side of the consumer, as FSCO did in Webb, opens the door to more decisions that expand the public’s access to accident benefits – a trend that runs counter to what the regulators and politicians are attempting to accomplish by eliminating fraud.

Rules around the “use and operation” of a vehicle should be tightened and clarified so that the interpretations are more in line with the overall goal that the regulator and politicians seek – a stable, predictable, affordable auto insurance product.