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Thank you for visiting my site throughout the year.

Willie Handler

Insurance News - Wednesday, December 30, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 30, 2015:

• City of Toronto won’t block Uber’s new $5 commuter service but it is doing a legal review.
• Another legal battle for Uber as the Seattle city council votes to treat Uber drivers as employees by giving them collective-bargaining rights.
• California sets rules for self-driving cars; must have steering wheel and licensed driver behind the wheel. Google is not happy.
• Google plans to make its self-driving cars unit, which will offer rides for hire to compete with Uber, a stand-alone business under the Alphabet Inc. corporate umbrella in 2016,
• The self-driving car, that cutting-edge creation that’s supposed to lead to a world without accidents, is achieving the exact opposite right now.  Because driverless cars obey the laws, humans don't so much.
• Google and Ford are about to announce they are forming a partnership to build self-driving cars.
• Wawanesa Insurance is asking policy holders if they are driving for Uber. And cancelling policies if the answer is yes.

Insurance News - Sunday, December 27, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, December 27, 2015:

• Studies suggest that insurance customers will walk away if purchasing insurance is slow, complicated and difficult.
• The $75,000 problem for self-driving cars is going away as the cost of LIDAR sensors drop.
• Self-driving cars can lure drivers into false sense of security and even lull them to sleep.
• If you want to know why Uber ignores regulators and not intimidated by law suits?  Because they are worth around $85 billion.
• Uber is testing out food delivery in Toronto.  
• Uber is also trying out commuter service to compete with the TTC.
• In Uber fight, taxi drivers on wrong side of history – and consumerism.

Settlement reached on class action claim against Progressive over PIP deductible

I wrote here about Estrada v. Progressive Direct Ins. Co., 53 F. Supp.3d 484 (D. Mass. 2014), in which 93A claims in a class action suit against Progressive Direct Insurance survived summary judgment.  The plaintiffs asserted that Progressive's website unfairly led consumers to purchase policies with an $8,000 PIP deductible.

Plaintiffs' attorney Ryan Alekman of Alekman DiTusa informs me that a settlement agreement has been reached.  According to the notice of class action settlement, Progressive has agreed to pay $1,875 on valid PIP claims under policies purchased online from it between May 1, 2008 and April 27, 2010 containing an $8,000 PIP deductible.  If you think you may have a claim you can click on this link to submit it. 

Attorney Alekman says this about the settlement:

We are happy to have achieved this result on behalf of all Massachusetts consumers.  Class actions enable a single consumer to make a difference that benefits other people in the same situation.  It is my belief that class actions also play an important part in leveling the playing field between individuals and large corporations, and act as a deterrent against similar behavior in the future. 

I reached out to counsel for Progressive but did not hear back before this article posted. 

Government Posts Proposed Changes to DRS Regulations

The Ministry of Finance has posted proposed changes to Insurance Act regulations to provide for the transition the Automobile Insurance Dispute Resolution System from the Financial Services Commission of Ontario (FSCO) to the Ministry of the Attorney General's Licence Appeal Tribunal (LAT), and the wind down of disputes filed at FSCO. 

Proposed amendments include:

 • The last date for submitting applications for mediation, neutral evaluation, or the appointment of an arbitrator to FSCO will be March 31, 2016. 

 • An application for an appeal to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • As well, an applications for a variation or revocation to the FSCO Director of Arbitrations will only be accepted where the application for the appointment of an arbitrator was received by March 31, 2016. 

 • The Office of the Director of Arbitrations will continue to function until all notices of appeal and all applications for variation or revocation have been finally determined. 

 • Statutory Accident Benefits Schedule (SABS) provisions that apply to the dispute resolution process at FSCO will continue to apply, as they read on March 31, 2016, to all applications that were received by FSCO before the transition date but are not finally determined before that date. The SABS will also be amended, where necessary, to apply to applications filed at the LAT on or after April 1, 2016.

Massachusetts Attorney General complains of homeowner's policy rate hikes by two insurers

According to The Boston Globe, Massachusetts Attorney General Maura Healey is complaining of excessive rate hikes to homeowner's policies by Mapfre (formerly known as Commerce Insurance) and Safety Insurance.  Both insurers raised rates by about $100 on the average state premium of $1,150.  According to Healey's analysis of trends that are traditionally used to calculate rates, Mapfre should have lowered rates, while Safety's increase should not have exceeded 3 percent. 

Competition Bureau Supports Ride-Sharing Services

The emergence of Uber and other ride-sharing services has created increased competition for the Canadian taxi industry.  This has created a source of friction for the industry because of what they see is an "uneven playing field."  Taxi operators are required to follow regulatory rules while ride-sharing services largely operate unregulated.  The Canadian Competition Bureau recently weighed in on the subject.

The Competition Bureau recently released a study, Modernizing Regulation in The Canadian Taxi Industry, which concluded that the competition in the sector has benefited consumers.  However, there needs to be a balance between increased competition and the need for regulation.

The taxi industry has operated largely unchanged for decades.  Regulators have created rules to govern price, vehicle safety and insurance requirements.  But the regulatory rules often restrict entry into the sector by limiting the number of taxi licences.  The number of plates usually does not keep up with demand for services which creates artificial scarcity, but also higher prices, poor service and long wait times.

Ride-sharing companies have changed the landscape by offering consumers lower prices, variable pricing (higher fares when demand is high), shorter wait times, and convenience.  The software application used by ride-sharing companies provides automatic payment and the ability to track the number of vehicles available in the local area.  The software also allows consumers to rate drivers which creates an incentive to provide better service.  Low rated drivers receive fewer ride requests.

The innovations introduced by Uber and other similar service providers have benefited consumers.  There is a need for updated regulatory rules so that traditional taxi operators can respond to the competition.  But the one aspect not addressed by the Competition Bureau study is the insurance issue. 

In September 2015, Intact Financial announced plans to work with Uber to create products tailored for the ride-hailing service, after concerns emerged that person auto insurance policies may not cover drivers using their personal vehicles for commercial gain.   In the meantime, Uber claims it has adequateinsurance coverage and that every ride on the UberX platform is backed by $5 million of commercial auto insurance, which covers both bodily injuries and property damage stemming from a crash.  However, Alberta government said in July that it had determined the policies do not meet the requirements of the province’s Insurance Act.  It's all very confusing.  

Ride-sharing services are here to stay.  Consumers will benefit but only if the regulatory rules and updated and the insurance issues are addressed.

Limitation Periods in Actions Against Police

The Court of Appeal recently upheld a motions court judge's decision granting summary judgment in an action against police based on an expired limitation period .

In Cassidy v. Belleville, 2015 ONCA 794, the plaintiff alleged she was stopped by police in August 2009, who informed her she was driving a stolen vehicle and confiscated the car, forcing her to walk home.  She alleged she was pregnant at the time and the incident caused medical complications. She wrote to a lawyer six days after the incident asking whether she should commence a civil action but did not pursue a lawsuit at that time.  Approximately one month later (September 2009), she made a complaint to the Belleville Police and received a reply in June 2011. The complaint was partially upheld in November 2012.  The plaintiff waited until October 2013 before commencing her action, four years after the incident.  She argued she did not discover her claim until after the complaint was upheld as she was unaware of the standard of care until that time.

The motions judge disagreed, as did the Court of Appeal.  Section 5(2) of the Limitations Act provides a presumption that the limitation period begins to run the date of the incident unless the contrary is proven and there was nothing to rebut the presumption.  Expert evidence was not needed to discover the claim; the plaintiff was aware of the offending conduct, the identity of the offender and the nature of her injuries from the time of the incident.  The results of the complaint investigation may have provided additional information but were not necessary to trigger the limitation period.

Cassidy is of assistance in police actions, but may also extend to other circumstances where plaintiffs have attempted to extend limitation periods by waiting on administrative decisions.

Insurance News - Wednesday, December 2, 2015

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, December 2, 2015:

• There is a substantive risk associated with relying on insurer examination reports to deny serious claims which can be compounded by taking a matter to arbitration without having sufficient evidence to support a position.
• Why auto insurance rates are so high in the Greater Toronto Area.
• There is a down side to low gas prices - more vehicle traffic and more accidents.
• LAT releases update on transfer of auto insurance disputes from FSCO. LAT still planning on accepting disputes beginning April 1st.
• Consumers big winners in new law regulating towing operators.
• Ontario’s auto insurance overhaul needs to put consumers first according to a former New Jersey regulator.

First Circuit holds that parent corporation with risk management department responsible for subsidiaries is not an insurer

Mass. Gen. Laws ch. 176D requires insurers to act in good faith in adjusting claims.  When the insured is a consumer (rather than a business) a violation of ch. 176D is automatically a violation of ch. 93A §9.


In Bingham v. Supervalu, Inc., __ F.3d __ , 2015 WL 7076938 (1st Cir.), the United States Court of Appeals for the First Circuit held that a parent corporation that provides risk management services and pays claims against its subsidiaries is not an insurer.


Marion Bingham was injured when she was struck by a motorized cart while shopping at a Shaw's Supermarket.  She sued Shaw's.  After her death, her nephew, Warren Bingham, the administrator of the estate, was substituted as the plaintiff.


Shaw's was a subsidiary of Supervalu.  Pursuant to the manner in which Supervalu structured its relationship with its subsidiaries, it had authority to negotiate and settle claims on behalf of Shaw's. 


Supervalu owned 228 subsidiaries.  It maintained a centralized risk management system whereby it negotiated and resolved claims made against its subsidiaries that were not otherwise covered by insurance.  It employed claims adjusters to perform those functions and would pay claims from a central account. 


Apparently the claims adjusters weren't very good, because judgment entered in the Massachusetts Superior Court against Shaw's in Bingham's case under Massachusetts Rule of Civil Procedure 33(a).  That is a default judgment that enters after a party fails to answer interrogatories, and then ignores an application that requires it to answer the interrogatories.  A year later the court assessed damages against Shaw's.


Supervalu appealed, and the Massachusetts Appeals Court affirmed the damages award.  Supervalu threatened to seek further appellate reviews.  Bingham's estate accepted a settlement offer.


The Estate later sent a 93A demand letter to Shaw's and Supervalu, asserting that Supervalu had acted as Shaw's insurer and had violated chs. 176D and 93A by failing to promptly and fairly resolve the claim as required of insurers by ch. 176D.  It contended that Supervalu's decisions to appeal and then to threaten a further appeal were undertaken contrary to the advice of counsel that the appeals were unlikely to succeed.  It argued that Supervalu's sole motive was to protract litigation in order to receive a reduced settlement.  The 93A/176D case ended up in federal court. 


The Appeals Court held that Supervalu is a self-insurer not subject to ch. 176D,  not an insurer.  It also held that Supervalu is not a captive insurer because it does not come within the definition of "an insurance company owned by another organization whose exclusive purpose is to insure risks of the parent organization and affiliated companies." 


The court also held that Supervalu was not a risk manager subject to ch. 176D.  It was not "interposed between the insurer and the Estate;" it was self-insured.  Nor did it purport to act on behalf of an insurer that had a contractual obligation to pay claims.  It was under no duty to settle claims made against Shaw's or its other subsidiaries. 


Finally, the court held that ownership of a subsidiary that was an insurance agency did not make Supervalu itself subject to all laws that apply to insurers.