Ontario Changes Fleet Definition To Accommodate Ride-Sharing

This week, the Ontario amended Regulation 664 to expand the definition of a fleet to accommodate ride-sharing services. The change opens the door for insurers to offer policies to drivers of vehicles for hire using an online app such as Uber.

The regulation amendment expands the fleet definition to include vehicles available for hire through a common online-enabled application or system for  pre-arranged transportation. The vehicle owner or lessee is to be a named insured under an auto insurance contract. The regulation change will make it easier for Ontario businesses to insure a group of privately owned vehicles under one insurance policy as a “fleet” when they are available for hire using an online app.

FSCO has already approved a fleet policy proposed by Intact Insurance Company. The Intact policy provides blanket fleet coverage under a standard automobile owner’s policy (OAP 1) for private passenger automobiles used in the transportation of paying passengers who utilize Uber. The Intact fleet policy only provides coverage when the driver is logged onto the Uber online app. In other situations, coverage under the personal owner’s policy for the automobile is applicable.

FSCO has also approved the use of an electronic insurance card for use in connection with ride-sharing. The electronic insurance card will permit ride-sharing drivers, who are covered under the Intact policy the option, to provide evidence of insurance electronically using an online-enabled app (e.g., to law enforcement officials).

Insurance News - Thursday, June 30, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Thursday, June 30, 2016:

• The Ontario government is being urged to make a $65 million investment in the development of driverless car technology to help the province’s auto industry compete on a global scale.
• Ten different strategies shaping the transition to the self-driving car.
• Global sales of autonomous vehicles will reach nearly 21 million vehicles by 2035, a substantial increase from previous estimates.
• The US-based National Highway Traffic Safety Administration will implement federal regulations, but will have no say when it comes to the regulations made by the individual states.
• The self-driving car generation gap: older people see driving as representing personal freedom younger people do not.
• Study asks people if self-driving cars should make moral choices.

First Circuit certifies to SJC question of whether insurer must pay attorney's fees for insured's counterclaim

This case may signal a significant development in insurance coverage law -- so significant that it almost overshadows the overwhelming chutzpah of the underlying plaintiff.  (But, as they say, innocent until etc.)  (The traditional definition of chutzpah:  A man kills his parents, then throws himself on the mercy of the court because he is an orphan.) 

In Mount Vernon Fire Ins. Co. v. VisionAid, Inc., __ F.3d __, 2016 WL 3202961 (1st Cir.), the United States Court of Appeals for the First Circuit certified to the Supreme Judicial Court of Massachusetts the question of whether an insurer is required to litigate a counterclaim on behalf of an insured. 

Gary Sullivan sued his former employer, VisionAid, alleging that his termination was the product of illegal age discrimination. VisionAid's insurer, Mt. Vernon Fire Insurance Company, is defending VisionAid.

VisionAid asserts as a defense that it fired Sullivan because he misappropriated several hundred thousand dollars of corporate funds.  No real reason to italicize that, except:  He stole several hundred thousand dollars of corporate funds and then sued his employer for discrimination.  

Sullivan filed his age discrimination claim with the Massachusetts Commission Against Discrimination.  He initially demanded $400,000 to settle his claim.  He repeatedly reduced his demand until he was asking $5,000, before he eventually offered to walk away with no money at all if VisionAid would agree to sign a mutual release.  VisionAid refused to consent to a mutual release as it wanted to go after Sullivan for the allegedly stolen money. 

Sullivan voluntarily dismissed his MCAD claim.  A few months later he filed his claim for age discrimination and other causes of action in Massachusetts state court.  Mt. Vernon agreed to defend VisionAid "unless and until such time that it is determined that there is no coverage under the policy." 

VisionAid responded that it would exercise its right to choose its own attorney.  (When an insurer defends under a reservation of its right to later deny coverage, the insured can choose its own attorney.  That attorney is paid by the insurer.)  Mt. Vernon withdrew its reservation of rights and , because of this, indicated that the counsel it appointed would remain VisionAid's defense counsel.  It stated that it was not required to pay for the prosecution of VisionAid's counterclaim against Sullivan.  Mt. Vernon told VisionAid to hire (and pay for) its own lawyer if it wished to pursue the counterclaim.

Mt. Vernon then filed a suit for declaratory judgment seeking a decision on whether it was required to pay for the prosecution of VisionAid's proposed misappropriation counterclaim.  VisionAid counterclaimed that Mt. Vernon's duty to defend against Sullivan's lawsuit included the duty to prosecute the misappropriation counterclaim, and that VisionAid had the right to be represented by independent counsel for the entire Sullivan action at Mt. Vernon's expense.  VisionAid's theory was that the interests of it and Mt. Vernon were no longer aligned because Mt. Vernon had an interest in diminishing the value of the counterclaim or eliminating it because it was an impediment to settlement. 

The First Circuit certified to the SJC the following questions:

1.   Whether, and under what circumstances, an insurer may owe a duty to its insured to prosecute through insurance defense counsel the insured's counterclaims for damages where the insurance policy provides that the insurer has a "duty to defend any claim," i.e. "any proceeding initiated against the insured."

2.  Whether, and under what circumstances, an insurer may owe a duty to its insured to fund through insurance defense counsel the prosecution of the insured's counterclaims for damages, where the insurance contract requires the insurer to cover "defense costs" or the "reasonable and necessary legal fees and expenses incurred by [the insurer], or by any attorney designated by [the insurer] to defend [the insured], resulting from the investigation, adjustment, defense and appeal of a claim."

3.  Assuming the existence of a duty to prosecute the insured's counterclaims, in the event it is determined that an insurer has an interest in devaluing or otherwise impairing such counterclaim, does a conflict of interest arise that entitles the insured to control and/or appoint independent counsel to control the entire proceeding, including both the defense of any covered claims and the prosecution of the subject counterclaims?

FSCO Mandate Review Recommends Changes to Auto Insurance Regulation

The Ontario government should establish a new organization that would perform the functions currently performed by the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO), an expert advisory panel said in a report released Monday.

The panel recommends that a new Financial Services Regulatory Authority (FSRA) be established, and it should exercise both prudential and market conduct functions.  The panel – comprised of George Cooke, James Daw and Lawrence Ritchie – made its recommendation to create FSRA in an interim report released in November, 2015. The final report, dated March 31, was made public Monday and contains 44 recommendations.

The mandate review was partly made necessary with the transfer of responsibility for operating an auto insurance dispute resolution system from FSCO to Ministry of the Attorney General’s Licence Appeal Tribunal on April 1, 2016.

Governance

The report suggests that FSRA should consolidate functions, but it should have separate divisions for the regulation of market conduct; prudential oversight; and pension administration. These divisions of the regulator should operate in a coordinated manner, but each division should be insulated from the routine regulatory activities, pressures and resource demands of other divisions.

FSRA should be a self-funded corporation without share capital, operationally independent of government, yet accountable to the Legislature through the Minister of Finance. The FSRA should be outside of the Ontario Public Service and be empowered to hire its personnel from outside of the Ontario Public Service’s collective agreements, compensation restraints, and other hiring restraints to support its ability to recruit professionals and industry expertise as it deems necessary.

FSRA should have a skills-based Board of Directors appointed by the Lieutenant Governor in Council. The Board would oversee FSRA’s operations and the Board should have the authority to appoint a Chief Executive Officer (CEO). The Board Chair should report directly to the Minister of Finance.

FSRA’s Board should be given authority to make rules that would be enforceable pursuant to the statute, having a similar authority as Cabinet Regulations.

Auto Insurance Rate Regulation

The panel did not make any recommendations with respect to the prior approval of auto insurance. However, it did recommend that FSRA’s Board should be obliged and empowered to decide how auto insurance rates are to be regulated and make use of its rule-making authority to scope out a rate approval process.

The view of the panel is that when it comes to the regulation of automobile insurance rates, FSCO is not ultimately protecting the public interest or enhancing confidence in the sector.


Motor Vehicle Accident Claims Fund

The panel recommends that responsibility for operating the Motor Vehicle Accident Claims Fund (MVACF) be transferred to the Facility Association (FA), a non-profit organization funded by automobile insurers in the provinces and territories that operate private insurance systems. This responsibility would fit well with the FA’s original purpose, which is to act as the ‘insurer of last resort’ for high-risk drivers. The FA already operates uninsured motorist funds similar to the MVACF in the Atlantic Provinces.

Fraud Prevention

The panel indicated that the new mandate should require FSRA to utilize its statutory authorities to adequately, firmly and consistently discourage fraudulent activities or behaviours that mislead or harm consumers and pension plan beneficiaries.

FSRA should be directed to identify and seek to eliminate gaps in protection for consumers who might be defrauded by licensed sales agents, brokers and corporations. FSRA should also  have the authority to establish a fraud compensation fund such as exists in Quebec if or where enhancements to mandatory insurance coverage would not fully close current gaps.

There is no word from the government on implementing the panel's recommendations.

Insurance News - Saturday, June 18, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Saturday, June 18, 2016:

• A recent FSCO survey revealed that 90% Ontarians do not know much about their auto insurance coverage.
• New York legislators want to make self-driving cars accessible, but must first fix a 1971 law that requires at least one hand on steering wheel.
• Three threats to incumbent car companies are converging into a tidal wave of disruption.
• Almost half of marijuana-smoking Canadian drivers say that they can safely operate a vehicle while stoned.
• How data analytics will change the insurance sector as never before.

Insurance News - Wednesday, June 8, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Wednesday, June 8, 2016:

• Ontario consumers satisfied with auto insurance despite government failures to reduce rates according to a J.D. Power survey.
• A CCIR paper confirms that no legislative changes are needed to introduce electronic pink slips.  See my recent post on electronic insurance cards.
• Florida officials are calling for a $125,000 study to consider dropping state’s system of no-fault Personal Injury Protection auto insurance.
• Google has registered a patent for a glue would stick pedestrian to a self-driving car after a collision in order to reduce injuries.
• Will the convenience and accessibility provided by self-driving cars increase auto usage, and congestion?
• With reduced SABs coverage, brokers who fail to offer their customers sound advice run the risk of an E&O lawsuit.

Captive insurers

The American Bar Association has published a fascinating article on captive insurers and how some of them are used as vehicles for tax abuse.