Net income more than doubles for EGI Financial

DAILY NEWS Feb 26, 2013 10:54 AM

EGI Financial Holdings Inc., whose subsidiaries provide high-risk auto and other insurance products, has released its financial results for 2012, reporting a significant drop in the combined ratio for auto.

 Last year, Toronto-based EGI recorded net income of $19.36 million on direct written premiums of $220.149 million, compared to net income of $7.52 million on direct written premiums of $174.892 million in 2011. For the fourth quarter of 2012, net income was $4.513 million (up year-over-year from $3.254 million ) on direct written premiums of $52.326 million (up year-over-year from $44.324 million).

The 158% increase in net income for the full year was “attributable mainly to investment income of $34.0 million, of which $20.8 million was generated in the third quarter through realized gains from investments,” EGI stated in a press release.

EGI's subsidiaries include Mississauga, Ont.-based Echelon General Insurance Company, American Colonial Insurance Company and Holte, Denmark-based Qudos Insurance. The firm provides auto insurance to high-risk drivers. It also provides “niche” insurance products including property, liability, legal expense, accident and health.

Its underwriting losses from international operations was $3.136 million last year, but underwriting income from personal lines was $11.898 million, up from $7.046 million in 2011. The firm's performance in personal lines improved year over year, due mainly to the performance of non-standard auto, where the combined ratio dropped from 98.7% in the fourth quarter of 2011 to 74.9% in the fourth quarter of 2012.

“New insurance regulations that were introduced in Ontario in September 2010 seem to be having a positive impact on the development of claims,” the company said in a press release. Two years ago the Ontario government put a $3,500 cap on accident benefit payments for auto-related injuries classified under the minor injury guideline. It also reduced medical, rehabilitation, attendant care and income replacement benefits in the standard auto policy (SAP) for non-catastrophic injuries.

“Management remains cautiously optimistic on the favourable impact of the Ontario reforms to date,” EGI stated in its press release Monday, but added there are five uncertainties. One is from personal injury lawyers seeking “new avenues for awards.” The second is the definition of catastrophic injury, while the third is the combination of physical and psychological impairments in assessing the “whole person impairment.”

Another uncertainty is the potential implementation of the 38 recommendations from the Ontario Anti-Fraud Task Force, which the ruling minority Liberals government is promising to implement. The fifth is the backlog of cases before the Financial Services Commission of Ontario.

“These issues are expected to have the greatest impact in the Greater Toronto Area, which is a territory where EGI is not a significant writer.”

For all lines, EGI's combined ratio was 101.9% for all of 2012, compared to 99.6% in 2011. For the final quarter, the combined ratio for all lines dropped, from 96.6% in 2011 to 96.1% in 2012. Broken down by area, the loss ratio for full-year 2012 was 58.1% for personal lines (down from 65.1% in 2011), 66.5% in niche products (up from 56.6% in 2011), 101.5% for the U.S. (up from 90.3% in 2011) and 71.9% for international operations.

“The International division recorded an underwriting loss of $1.2 million as a result of start-up costs, the seasonality of motorcycle business, the write-off of certain new business expenses and a lack of material earned premium,” EGI stated.”

In addition to Qudos, EGI's international subsidiaries include CIM Reinsurance of Barbados.

Last May, EGI acquired CUISA Managing General Agency Corp. of British Columbia, which provides insurance services to 160 credit union-owned broker offices in B.C. It attributes the 25.9% year-over-year increase in direct written premiums to the CUISA acquisition and the international division.

NDP presses for auto premium reductions in Ontario budget

DAILY NEWS Feb 22, 2013 4:05 PM

 By: Greg Meckbach, Associate Editor


 The Ontario New Democratic Party continued Thursday to press the ruling minority Liberal provincial government to force insurance carriers to reduce personal auto premiums by 15%, while government members are focusing on implementing additional anti-fraud measures and the Insurance Bureau of Canada questions the NDP's math.

“So we're saying a 15% reduction,” Gilles Bisson, NDP Member of Provincial Parliament for Timmins-James Bay, said Thursday in the legislature.

“The government, what are they saying? 'Oh, yeah. Let's do some more for those poor auto insurance companies. They're hurting so bad. Let's help them along. They need another break because they've got to make more money.'”

Bisson was referring to the government's pledge to implement the 38 recommendations of the Auto Insurance Anti-Fraud Task Force, which released its report late last year.

“We're implementing the recommendations of the Auto Insurance Anti-Fraud Task Force,” said Vic Dhillon, parliamentary assistant to consumer services minister Tracy MacCharles and MPP for Brampton West, in the legislature.

“New regulatory amendments being introduced will help prevent auto insurance fraud and protect consumers by requiring insurers to provide claimants with all reasons for denying a claim, giving claimants the right to receive bimonthly detailed statements of benefits paid out on their behalf, increasing the role of claimants in fraud prevention, making providers subject to sanctions for overcharging insurers for goods and services, and banning them from asking consumers to sign blank claim forms.”

But NDP leader Andrea Horwath said in the legislature Thursday that changes so far have resulted in “$2 billion in extra profits” to the insurance industry.

An NDP spokesperson told Canadian Underwriter Friday that figure is the reduction in accident benefit payments due to the insurance reforms introduced in September 2010, including the $3,500 cap on payments for injuries under the minor injury guideline.

Referring to figures from the General Insurance Statistical Agency (GISA), the NDP spokesperson added the loss ratio in Ontario dropped from 89 in 2010 to 65 in 2011. He was referring to GISA's “Earned Incurred Loss Ratio,” which is the ratio of claims and adjustment expenses incurred to earned premiums. In that ratio, GISA includes expenses associated with servicing policyholders' claims but does not include other automobile insurance company operating expenses, such as marketing and general administration.

A spokesperson for IBC said Friday the Ontario auto insurance industry “lost an average of nearly a billion dollars a year between 2008 and 2010 on the auto product,” including a $1.7 billion loss in 2010.

“We really question the NDP's math and we really need to put what they are saying into context,” the spokesperson wrote in an e-mail to Canadian Underwriter. “Of the $233.2 million earned in profits in 2011, there were more than $10.3 billion in written premiums. Most of the money collected is returned back to claimants.”

But Horwath suggested Thursday she wants the Liberal budget for 2013-14 to include measures to reduce premiums. Earlier this month, she had proposed that the Financial Services Commission of Ontario (FSCO) be mandated to reduce auto premiums by 15% by March, 2014.

“The rubber hits the road in a budget, and in that budget I want to see affordability measures, particularly on auto insurance,” Howath said, noting Tuesday’s Speech from the Throne only had “nice words” and nice promises.”

“The day-to-day interests of people across Ontario must be addressed, and your government will strive to protect their privacy and their pocketbooks,” the government said when opening the latest session of the legislature Feb. 19. “It will help this province's nine million drivers by continuing to implement the recommendations of the Auto Insurance Anti-Fraud Task Force, protecting individuals against fraud and working to reduce insurance rates across Ontario.”

On Wednesday, NDP consumer services critic Jasmeet Singh asked Premier Kathleen Wynne whether the government plans “to give safe drivers in Ontario a break by actually ensuring that insurance rates in Ontario are cut.” Wynne referred the question to Finance Minister Charles Sousa, who noted auto insurance claims are more expensive in Ontario than in other provinces.

“We have to get at that root cause,” Sousa said during Question Period. “We can't make this a band-aid solution. We have to get at the issues, and I welcome your input to enable us to get at that resolve.”

Singh, who represents the suburban Toronto riding of Bramalea-Gore-Malton, claimed that auto premiums have gone up, though Sousa said in 2012 they dropped by 0.2%.

“Some of the transformations we've put forward have already resulted in the stabilization of some of those rates, but more needs to be done,” Sousa said.

In addition to the cap on minor injury benefits payments, the 2010 reforms also included a requirement for insurance firms to send benefits statement to claimants. It also reduced medical, rehabilitation and attendant care benefits in the standard auto policy (SAP) for non catastrophic injuries.

Before, standard auto policies were required to cover up to $100,000 in medical and rehab and up to $72,000 for attendant care. The SAP now requires up to $50,000 coverage for medical and rehab and $36,000 for attendant care. The income replacement under the SAP was reduced from 80 to 70% of income, though the maximum stayed at $400 a week. Under the current SAP, policyholders have the option to purchase additional income replacement of up to $1,000 week, and can purchase additional medical coverage.


Last November, the anti-fraud task force released recommendations on additional measures to reduce fraud, including:

-Legislative protection prohibiting reprisal or retribution against individuals who, in good faith, provide information about suspected fraud;

-Requiring the licensing of health clinics that treat and assess auto insurance claimants and give the Financial Services Commission of Ontario the power to regulate their business practices;

-Have FSCO create an” Auto Insurance Fraud Information Hotline” to let people report suspicious activity in the auto insurance;

-Allowing carriers to collect a cancellation fee for claimants who fail to attend a medical examination at the agreed time, without reasonable notice or explanation;

-Addressing the current backlog of mediation cases before FSCO;

-Ensuring that government-wide hiring constraints do not delay or prevent the FSCO from acquiring the necessary staff and expertise it requires to carry additional responsibilities recommended by the task force;

-Requiring claimants to confirm attendance at treatment facilities and receipt of goods and services billed to insurers;

-Requiring insurers to itemize the list of invoices they have received when they provide a benefit statement to a claimant every two months;

-Ensuring early assignment and continuity of crown attorneys in large complex auto insurance fraud prosecutions;

-Giving insurance carriers the power to examine a claimant under oath, where this is necessary to determine which insurer should be responsible for coverage, without prejudice to the right for an examination under oath;

-Treatment protocols for minor injuries that are based on scientific evidence;

-Amending the Statutory Accident Benefits Schedule to make it clear that insurers are required to provide claimants with a full explanation when refusing to pay for treatment, assessment or other benefits;

-An Ontario-wide licensing scheme for the towing industry;

-Having insurers collect information about towing expenses to facilitate analysis of relationships between tow operators, collision repair facilities and health care clinics;

-Have the Ontario government ask the federal government to “move quickly to secure passage of amendments to the Personal Information Protection and Electronic Documents Act that are now before the House of Commons in Bill C-12,” with the goal of removing any undue limitations on the ability of insurers to pool claims information to combat fraud;

-Increase FSCO's powers to investigate and sanction unfair or deceptive acts or practices;

-Requiring the development of protocols for active information sharing about suspicious cases among the investigative divisions of FSCO, the Workplace Safety and Insurance Board and Ontario Health Insurance Plan;

-Develop protocols to permit FSCO investigators to exchange information with investigators from federal organizations such as the Canada Revenue Agency; and

-Clarifying the exemption for lawyers and paralegals in the unfair or deceptive acts or practices regulation so that it applies to lawyers and paralegals only when they are acting in a legal capacity.



Economical Insurance reports financial results for Fourth Quarter and Full Year 2012

WATERLOO, ON, Feb. 20, 2013 /CNW/ – Economical Insurance (“Economical”), one of Canada's leading property and casualty insurance companies, today announced consolidated financial results for the three months and full year ended December 31, 2012.

Economical reported consolidated net income of $43.2 million for the fourth quarter of 2012 compared to $37.5 million a year ago, an increase of $5.7 million. Full year net income for 2012 increased significantly by $61.7 million, to $152.7 million. For the fourth quarter, Economical posted a combined ratio of 96.3%, 3.8 percentage points higher than the same quarter a year ago. The full year combined ratio for 2012 is 96.4% compared to 98.1% in 2011.

“Our efforts to strategically reposition our business are reflected in our strong performance for 2012,” said Karen Gavan, president and CEO. “Year over year our net income is up 68%, driven by a near doubling of our underwriting income, aided by moderate levels of profitable growth in gross written premiums. The significant improvement in our combined ratio reflects our focus on underwriting discipline and productivity improvements.”

Commenting on Economical's business transformation program Gavan said, “To sustain this profitability and competitiveness going forward, we will continue to focus on our execution against our strategy to grow profitably and improve our productivity levels and service delivery to our broker partners and customers.  In support of this program, we anticipate making significant investments in 2013 and 2014 which we expect will unlock sustainable benefits in the longer term.”

“At the same time, we are continuing to work toward putting ourselves on a level playing field with our competitors through demutualization. With the access to capital that demutualization will bring, we will be able to participate in industry consolidation and achieve scale – which is key to being a market leader in our industry,” Gavan said. “Although the process of developing the regulations required for demutualization to move forward has taken much longer than anyone had originally expected, the Department of Finance has assured us that it is committed to developing them.”

Economical's total mutual policyholders' equity increased significantly during 2012, by $164.1 million or 12.6%, to stand at $1,464.2 million as of December 31, 2012.

Economical Insurance Consolidated Highlights*


($ in millions, except as otherwise noted)























Gross written premiums







Claims ratio







Combined ratio







Underwriting income







Investment income







Net income














Total mutual

policyholders' equity














*Note: Claims ratio, combined ratio and underwriting income exclude the impact of discounting and are non-GAAP measures which are defined below.

Gross written premiums for the fourth quarter showed growth of $28.9 million, or 6.7%, over the same quarter a year ago.  Economical continues to grow in both personal and commercial lines.  For the full year, gross written premiums have grown 5.6% over 2011. This growth has been driven by both volume and rate increases for personal and commercial property and represents the fifth consecutive quarter of growth for the company.

Underwriting results for the fourth quarter remained profitable although declined $14.4 million over the same quarter in 2011. The fourth quarter of 2011 produced very strong levels of underwriting income, driven by significantly higher than usual levels of favourable development in connection with Ontario personal auto.  Favourable prior year reserve development during 2012 has returned to more historic levels.

The combined ratio for the 2012 full year was 96.4%, a 1.7 percentage point improvement over the prior year. The result is due to strong personal lines results reflective of the improved quality of the underlying book of business, a decline in weather-related catastrophic losses and favourable Ontario personal auto results. The relatively benign weather conditions experienced throughout 2012 resulted in a $40.0 million reduction in catastrophic weather-related losses year on year across all lines of business.

Economical's personal auto business produced a fourth quarter combined ratio of 94.9%.  Ontario personal auto continued to contribute to this improved performance due to the continued impact of the company's underwriting and risk selection, strong claims management processes and, to a lesser extent, the favourable impact of regulatory reforms. Personal property recorded an exceptionally strong combined ratio of 76.9% in the fourth quarter of 2012, an 8.4 percentage point improvement over the prior year. Personal property results continued to benefit from relatively benign weather conditions in the fourth quarter. Overall the personal lines business produced a very strong combined ratio of 90.5% for the full year, a 2.6 percentage point improvement over 2011.

Commercial auto recorded a fourth quarter combined ratio of 103.6% compared to 99.8% in the same quarter of 2011. An increase in severity of losses year-over-year continues to impact the results in this line of business. The commercial property and liability business recorded a combined ratio of 110.2%, 5.3 percentage points higher than the same quarter in 2011. The decline was a result of an increase in the severity of large commercial property losses during the fourth quarter of 2012 compared to 2011. Overall the commercial lines business posted a disappointing combined ratio of 105.8% for the full year 2012, a marginal 0.2 percentage point improvement over the prior year.

Market yields rose during the fourth quarter positively impacting the discounted combined ratio by 1.1 percentage points, or $4.8 million. The effect of discounting on claims liabilities was offset by recognized investment losses of $3.7 million on the matched bond portfolio during the quarter. For the full year 2012 discounting positively affected the discounted combined ratio by 0.6 percentage points or $9.3 million. This impact was offset by recognized investment losses of $3.8 million on the matched bond portfolio during the year.

Investment income increased $5.1 million over the fourth quarter of 2011 due primarily to higher recognized gains on the non-matched investment portfolio driven by a lower level of impairments in the fourth quarter of 2012. Total investment income for the year has declined $21.1 million compared to 2011 largely as a result of unrealized losses on the matched portfolio and a decline in interest income. Market yields rose marginally during 2012, compared to the large decline experienced a year ago. This has resulted in $3.8 million of recognized losses on the matched portfolio in 2012, compared to recognized gains of $63.5 million in 2011. Offsetting the small recognized losses in 2012 are higher realized gains on Economical's non-matched portfolio of $34.8 million, compared to gains of $11.4 million for 2011. The company expects the current low interest rate environment to persist into 2013, which will continue to restrict interest income. Overall investment quality remains strong with over 76% of total investments held in high quality government and corporate bonds, with the balance primarily held in common and preferred shares.

Included in the fourth quarter results are expenses of $13.0 million related to Economical's business transformation program. This is offset by one-time net savings of $16.5 million in connection with reduced obligations arising from changes to eligibility of current employees to the company's other post-employment benefits plan.

Economical's capital position continues to strengthen and total mutual policyholders' equity has increased significantly by 12.6% or $164.1 million during 2012.  Economical's minimum capital test ratio remains very strong at 295% as of December 31, 2012.

Forward looking statements
Certain of the statements in this press release regarding our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements, or any other future events or developments constitute forward-looking statements. The words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely” or “potential” or the negative or other variations of these words or other similar or comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements are based on estimates and assumptions made by management based on management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Many factors could cause Economical's actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: Economical's ability to implement its strategy or operate its business as management currently expects; its ability to accurately assess the risks associated with the insurance policies that it writes; unfavourable capital market developments or other factors which may affect Economical's investments and funding obligations under its pension plans; the cyclical nature of the P&C industry; management's ability to accurately predict future claims frequency or severity; government regulations; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense competition; Economical's reliance on information technology and telecommunications systems; Economical's dependence on key employees; and general economic, financial and political conditions.

All of the forward-looking statements included in this press release are qualified by these cautionary statements. These factors are not intended to represent a complete list of the factors that could impact Economical, however, these factors should be considered carefully, and readers should not place undue reliance on forward-looking statements we make. We are under no obligation and have no intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.




Included in this press release are a number of measures which do not have any standardized meaning prescribed by generally accepted accounting principles (“GAAP”).  These non-GAAP measures may not be comparable to any similar measures presented by other companies.

Claims ratio



Claims and adjustment expenses (excluding the impact of discounting) during a defined period expressed as a percentage of net premiums earned for the same period.





Combined ratio



Claims and adjustment expenses (excluding the impact of discounting), commissions, operating expenses and premium taxes during a defined period expressed as a percentage of net premiums earned for the same period.





Underwriting income



Net premiums earned for a defined period less the sum of claims and adjustment expenses (excluding the impact of discounting), commissions, operating expenses and premium taxes during the same period.








To reflect the time value of money, claim liabilities are discounted using the market yield rate of the investments used to support those liabilities (matched investments). Provisions for adverse deviation are also included when determining the discounted value.





Minimum capital test



A regulatory formula, defined by The Office of the Superintendent of Financial Institutions, that is a risk-based test of capital available relative to capital required.





Matched Portfolio



State Farm sues Toronto medical assessment centre over auto claims


State Farm Mutual Automobile Insurance Company is suing a Toronto-based assessment centre and four individuals for more than $11 million, alleging that false and fraudulent documentation was submitted in the name of Assessment Direct Inc.


In a statement of claim filed Feb. 12 in the Ontario Superior Court of Justice, State Farm alleged treatment plans for motor vehicle accident claimants were filled out by Assessment Direct, and/or the individuals also named in the lawsuit, “in the name of health professionals who either never worked at Assessment Direct, were not employed by Assessment Direct at the time the treatment plan was assigned, did not have the qualifications represented on the treatment plan, and/or who never recommended the services and/or assistive devices allegedly that recommended therein.”

The allegations have not been proven in court.

State Farm claims to have approved many of the requests, “paying approximately $1.4 million known to date, for services and assistive devices which were not recommended and/or provided by the health professional who allegedly signed the documentation.”

Assessment Direct is located on Bathurst St. south of Lawrence St. in Toronto. According the corporate website, the firm's offerings include independent medical examinations, treatment programs and assistive devices, plus multi-functional evaluations for patients injured in auto accidents.

In its lawsuit, State Farm is seeking, among other things, $3 million in damages for fraud, fraudulent misrepresentation and/or unjust enrichment, $3 million in damages for conspiracy and $5 million in aggravated and/or punitive damages.

State Farm alleged in its lawsuit that it received insurance claims purportedly signed by two doctors who never worked for Assessment Direct and who allegedly did not give Assessment Direct permission to include their signature on claims. Two directors and two office managers were also named as defendants.

Better solutions needed for keeping auto insurance rates low

Feb 19, 2013

Re: Auto insurance: When the bills are too high, Star editorial, Feb. 14.

NDP leader Andrea Horwath’s push to lower automobile insurance rates by 15 per cent is a modest proposal designed to provide some relief to Ontario’s beleaguered drivers. In response, the Insurance Bureau of Canada spokesperson whined out tired clichés about New Democrats.

Let me suggest what really worries the IBC. Now that New Democrats are, at last, again stepping into the fray on auto insurance, lobbyists are haunted by fears that a 15 per cent rate cut is a down payment to voters on creating an Ontario public auto insurance plan.

Ms. Horwath has made no such assertion. Yet, there is no better solution to keeping auto insurance rates low and limiting opportunity for fraud than a non-profit, driver-owned, publicly administered plan.

Canadians have had public auto insurance longer than we have had our treasured national health plan. Tommy Douglas brought the first plan to Saskatchewan in 1945.

Now, roughly half the population of our nation has public auto coverage. Manitoba, British Columbia and Quebec have, with variations designed to fit their own provincial economies, also instituted public auto insurance. These plans have survived many elections, served governments of various political stripes and operate in both official languages.

If an Ontario legislative committee were to make an unbiased review of the other provinces’ plans via testimony and close study of annual and other reports, legislators would see these are practical number and individual risk-based models of insurance.

The non-profit companies operate with one major difference: any surplus is returned to the province for use in ways the province sees fit. The money stays in Canada, in the province, and invests in communities.

Here, an auto insurance plan offers a tantalizing prospect beyond much-needed low rates. What better way to draw on our knowledge of the auto industry and our excellent college and university than to seek to have an Ontario public auto insurance plan instituted and then headquartered here?

Perhaps more persons could then afford the total cost of car ownership and better yet, our young people could find good jobs at home.


Injured still waiting


 Ralph Palumbo, VP of the Insurance Bureau of Canada continues to ply the party line about fraud and “vexacious” claimants. In his response to Alan Shanoff’s Jan. 20 column on catastrophic impairment under Ontario’s no fault auto insurance scheme, Palumbo says it is “vital that all ideas and concerns are shared, to ensure insurance reforms meet Ontarians’ needs, and that includes a clear, understandable definition of catastrophic impairment based on the most current medical science.” I couldn’t agree more. But if he read any part of my submission to the Standing Committee on Finance and Economic Affairs in July 2012, in which I attempted to share “ideas and concerns to ensure insurance reforms meet Ontarians’ needs,“ he hasn’t yet acknowledged it. At that time I noted, “The recommendations of the Expert Panel, particularly regarding mental and behavioural impairment, are seriously flawed and demonstrate a clear bias against brain injury as well as accident-related mental illness in seriously injured claimants. The Expert Panel has failed to consider the extensive experience we in the field have had in the understanding of catastrophic impairment and have failed to acknowledge the rulings of Ontario’s highest court in the inclusive interpretation of the catastrophic definition.” Notwithstanding the standard platitudes we continue to read from the insurance industry, these are important concerns that need to be addressed. I and the seriously injured patients I see are still waiting.

Harold Becker, MD

Shanoff: Overhaul of auto insurance long overdue in Ontario

By Alan Shanoff, Toronto Sun

Friday, February 15

Ontario’s NDP is clamouring for a 15% rate reduction in car insurance premiums, citing lower payouts by insurers since the gutting of no fault accident benefits in 2010. They cite figures showing accident benefit payments falling by almost $2 billion and the cost of insuring a vehicle falling 22% since the “reforms” came into effect, yet premiums have increased.

The Insurance Bureau of Canada, the same people who contributed $25,000 to the leadership campaign of now Liberal Party leader and Premier Kathleen Wynne, object claiming the NDP’s figures are misleading and refer to the fraud problem facing the industry. Wynne objects to a forced premium cut, claiming premiums will fall once fraud is curtailed. Of course, the insurance industry has been complaining about an estimated $1.3 billion of fraud — now it’s estimated at anywhere from $768 million to $1.56 billion — each year for as long as I can remember so odds of a premium decrease flowing from a reduction in fraud seem remote.

I wouldn’t mind a premium cut. Who wouldn’t? But in all of this political wrangling we lose sight of the reality that car insurance is failing many accident victims. Too often car insurance isn’t providing the coverage promised.

Do I have the numbers to back this up?

Only the insurance industry knows the true extent of its practices. But I have court cases, arbitration decisions, submissions made at public hearings on auto insurance held last year by Ontario’s Standing Committee on Finance and Economic Affairs, and enough anecdotal reports from victims to know the system needs fixing.

I also have the word of many personal injury lawyers whose clients have suffered as a result of the current Byzantine system. One of the province’s leading PI lawyers, Darcy Merkur, says the current accident benefit dispute process “makes no sense.” Adjusters have been given the power to make medical determinations. Seriously injured accident victims, who require significant medical rehabilitation services, are stymied by reports prepared by so-called independent medical examiners. Many of these examiners, Merkur says, specialize in insurer independent medical examinations rather than in actually treating patients. Too often these medical reports are sloppy and contain errors, aside from the obvious conflict of interest of having being prepared by physicians who derive a substantial portion of their income from insurance companies.

Maryland Circuit Court Judge Thomas P. Smith states the following about independent medical examinations: “Of all the oxymorons in the world, an Independent Medical Examination occupies first place by thousands of leagues. There is nothing independent about the process; it is hardly undertaken for any medical purpose and all too often resembles an inquisition rather than an examination.”

Contesting the findings of these independent medical reports is expensive and time consuming. The backlog for mediation and arbitration at Financial Services Commission of Ontario can exceed two years. In the meantime accident victims may be shunted off to numerous insurance assessments with vital rehabilitation treatment delayed. Is that how the system is supposed to work? That’s not the bargain we entered into some 23 years ago when the government curtailed the right of most accident victims to sue for tort damages and forced car owners to buy no fault accident benefits coverage.

I don’t expect the insurance industry to modify its practices. It benefits from deny and delay tactics. As law professor Jay Feinman points out in his book Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It: “an insurance company’s greatest expense is what it pays out in claims. If it pays out less in claims, it keeps more in profits.” Even delaying the payment of claims is a lucrative business practice as “the company keeps the premiums paid longer and gets to invest those premiums and keep the investment earnings.”

More than a decrease in premiums, we need an overhaul of the system to ensure fair treatment for accident victims. Pity, no one in power appears to care.


Home-care guarantee, drop in auto insurance rates and corporate ‘loopholes’ priorities for NDP: Forster

By Jeff Blay, Thorold Niagara News

Thursday, February 14, 2013

The NDP is hoping to spark some conversation on several key issues heading into spring, says Welland MPP Cindy Forster.

Ontario NDP Leader Andrea Horwath recently announced her party’s list of “priorities” for the new spring session of Kathleen Wynne's minority Liberal government.

The NDP is pursuing a 'home-care guarantee' for seniors, a drop in auto insurance rates throughout the province, and ending corporate tax 'loopholes'.

Forster says the party is looking for a big push this year since it was left out of the last budget talks. After a series of roundtable consultations the NDP hosted across the province, Forster and her fellow MPPs helped identify the three major priorities for Ontario moving forward.

“We had no input whatsoever into the last budget, so this time, there’s an opportunity for us to put forward what we think are some of the priorities of typical families and people that live in Ontario,” Forster said. “You’re trying to figure out ways to get some of the things we believe people in Ontario want and need.”

The home-care guarantee would make it a requirement that seniors get the services within five days.

“In some places in this province, some people are waiting up to 260 days to get that service,” Forster said. “It’s something that people could really rely on if they had a guarantee.”

The NDP is also asking that the Financial Services Commission be mandated to bring down auto insurance rates by 15%.

They say that would bring down the average premium to $1,279 from $1,505, which would allow an average Ontario driver to keep an extra $226.

According to Forster, the Insurance Bureau of Ontario cut healthcare benefits pertaining to auto accidents in 2010. Unless you have a catastrophic injury, which the bureau determines at its discretion, you won’t get the same benefits as you would have in the past, but your still paying the same premium.

“Even though the benefits got cut and the insurance companies paid out millions and millions of dollars less in benefits, they didn’t reduce their premiums,” Forster said. “In fact, Ontario has one of the highest insurance rates in the country, if not the highest.

“We think this (reduction) would certainly make life more affordable for many people living in this province.”

Forster says another key priority of the party is rejuvenating the young workforce and balancing the provincial books – $11.9 billion overdrawn this year – which should be done in a way that doesn't impact public services.

“We know healthcare and jobs in the economy are very important and the budget needs to be balanced, but we want to do that in a thoughtful way that actually supports people,” she said.

Ending corporate tax “loopholes” for expenses such as entertaining and an end to a payroll tax exemption for large businesses would free up some funds to invest in other important areas, Forster says.

“We’re suggesting creating a tax incentive for employers to hire people between the ages of 17 and 26 with the hopes of keeping them on beyond that six month period,” she explained. “The way we would fund that is by closing corporate tax loopholes.

“Businesses actually get to write things off like your luxury box at the Sky Dome (Rogers Centre) or a thousand dollar dinner for taking your clients out. They get to write all those things off but the average person doesn’t.

“We’re saying close those loopholes and business can do without them.”

Premier-designate Wynne is looking for support from the opposition benches, and NDP leader Horwath is likely her best option to strike a budget deal and keep her minority government alive, though Wynne has yet to comment on whether she would consider adopting the NDP proposals.

Are GTA auto premiums set to fall?

By: James Daw Monday Makeover, Published on Sun Dec 16 2012


A major insurer has cut the annual cost of car insurance by an average of $200 per car in the Toronto area, but whether the good news will spread is unknown for now.

Co-operators Group of Guelph has reacted in a bold fashion to a dramatic decline in accident injury claims during 2011, by giving drivers in some Toronto neighbourhoods reductions as high as 34 per cent.

But other insurers are being more cautious. They are awaiting the outcome of a massive backlog of disputes about bills and benefits for mainly minor injuries, a new definition of catastrophic injuries, and the impact of new recommendations for fighting fraud.

“I don’t think there is any dispute that the frequency and cost of injury claims has gone down,” says veteran actuary James Christie. “But insurers will be wondering: Is this the new norm, or a one-time aberration?”

“Rate changes in Ontario are awkward to do. It takes six to nine months (to get approval from regulators). So companies are reluctant to drop rates if they might have to raise them again soon.”

Insurers were blind-sided in 2009 and 2010 when the number of injuries reported in and around Toronto rose wildly out of line with both the number of collisions and the rest of the province.

Now they are reserving judgment on a report by the General Insurance Statistical Agency that injury claims fell by 11,925, or 28 per cent, in 2011. The agency estimated there were would be savings of nearly $1.6 billion or $842 per private vehicle.


Nothing like this was seen in the rest the province. There, the total cost of injury benefits has been relatively stable. By GISA estimates, costs there were about $200 less per car outside of the Toronto area during 2011.

This year the average cost of insurance fell across the province by only 0.28 per cent, according to the Financial Services Commission of Ontario. But FSCO does not report separate results for the Toronto region.

“There is no question we are seeing a decrease (in the frequency of claims) from 2010 to 2012,” says Brian Kirkconnell, national claims director for Co-operators.

“We have taken a total of four (premium) decreases across 2012,” adds his colleague Mark Feeney, a regional vice-president, noting reductions were larger in the Toronto area.

Holding the line on premiums is State Farm Mutual Automobile Insurance Co. The earlier bulge in injury claims stung State Farm the worst. It is the only insurer dedicated exclusively to auto insurance. It lost $1.83 billion from 2009 to 2011 before finally turning profitable this year.

Industry leader Intact Financial, which is expanding by buying smaller insurers, predicts rising premiums in 2013.

Chief executive Charles Brindamour told stock analysts recently that his company’s earnings are healthy, but “a number of industry players continue to be in a loss position.”

“Political changes in Ontario and the prorogation of the legislature creates uncertainty as to the timing of upcoming changes such as that of the definition of catastrophic impairment and other proposed measures from the (Ontario Auto Insurance) Anti-Fraud Task Force,” he added.

“Given the uncertainty around these changes and the improvement in the industry’s results, we can expect industry premiums in Ontario to be up in the low single-digit range in 2013.”

The price changes at Co-operators were not uniform across Ontario, or within the Toronto area. The average decline was $150 a car in Toronto, and $200 in nearby municipalities, the company told the Star.

Premiums were cut by only 2 per cent in certain low-income suburbs, but as much as 34 per cent in richer neighbourhoods, where more families have two cars, additional insurance benefits, and fewer minor injury claims.

Industry-wide figures for 2011 reveal that residents of Toronto, Mississauga, Brampton, Vaughan, Richmond Hill and Markham paid an average premium of $2,001 to insure a personal vehicle.

In other districts, residents were already paying much lower premiums: $1,523 per car in the Halton to Hamilton area, $1,476 in and around London, $1,374 from Brantford to Waterloo, $1,142 around Ottawa and $1,093 from Peterborough to Kingston.



Related: Car insurance: 10 things you need to know

Car insurance: 10 things you need to know


Most people see car insurance as a necessary evil and who can blame them? The good news is that with a little bit of research you can make sense of car insurance and save money.


By: By Andrew Wicken Published on Thu Oct 18 2012


Here are ten things you need to know.

1. Keep a good driving record

The single best way to keep your premium low is to build a good driving history. Accidents and convictions stay on your driving record for years. It’s the number one thing insurance companies use to determine your rate.

2. Shop around

Many people think all insurance companies charge about the same for the same coverage and driving profile. Not so. Rates vary significantly.

This is primarily because insurance companies assess risk independently. They all consider such things as where you live, the type of car you drive, how long you have been licensed and your driving record to build a risk profile. But each company has different claims and loss experience and so rates can vary significantly from one company to the next for the same car and driver for the same level of coverage.

3. How brokers work

You may also think that your broker is able to shop the entire market for the lowest rate available, but he or she isn’t. He or she is limited to providing quotes from the limited number of insurance companies he or she represents, typically no more than four or five. An insurance company agent can’t shop the market at all and is only able to provide you with the rate available from the single insurance company he or she represents.

Since there are more than 30 companies selling car insurance in Ontario alone, the only way to be sure you are getting the best rate is to get competitive quotes from as broad a sample as possible. There are a number of online sources that can help including ours,

4. Consider increasing your deductible

A deductible is the amount you must pay before your insurance company will cover any expenses related to a claim. Generally, higher deductibles translate to lower premiums. This means increasing your deductible can be an effective way to lower your rate. However, it’s important to realize you must be comfortable paying the higher out-of-pocket cost if something happens to your car and you need to make a claim.

5. Review your coverage

Depending on the value of your vehicle, you may want to speak to your broker or agent about the type of coverage you require. For example, if you drive an older model, you may want to consider removing or opting out of collision and comprehensive coverage which typically represents a significant portion of your premium.

6. The Porsche factor

The type of car you drive is another important factor used to set your rate. Generally speaking, new cars cost more to insure than older cars, sports cars more than family sedans and insurance companies look at statistics on theft, safety ratings, and claims history of each when setting their rates.

Visit the Insurance Bureau of Canada to see the difference in the frequency of theft and claims for various cars and to better understand how your choice will affect the amount you pay for car insurance.

7. Ask for discounts

The worst thing that can happen is the insurance company can say no. Some of the more common discounts are for bringing all your insurance needs to the same insurer, maintaining a clean driving record and installing an anti-theft device.

8. Accident forgiveness coverage

Accident forgiveness coverage protects your driving record and rate increases in the event of an “at-fault” loss. Costs for this coverage can vary from one company to the next, but it could save you hundreds of dollars on your next renewal.

Check if this coverage is offered by your insurance company and consider the additional cost as a way of buying “insurance” on your driving record. Some companies may even provide it free of charge.

9. Loyalty can be costly

Some insurance companies may offer discounts if you’ve been with them for a long time and there are benefits to not moving too frequently. But a loyalty discount can give you a false sense of security and may distract you from finding a better rate. In some cases, the savings associated with switching can outweigh any loyalty discount. The only way to know for sure is to shop around.

10. Drivers training

New drivers should take an accredited driver training course. It not only prepares you to become a better driver, but usually qualifies you for a significant discount with many insurance companies.

This article wsa prepared for Moneyville's launch. Andrew Wicken was  the general manager of , a free online insurance rate comparison service.


Related:101 ways to save on insurance

Karin Ots, senior vice-president for regulatory and government affairs at Aviva Canada, says insurers face uncertainty due to a mix of government action and inaction.

Ontario introduced new rules, definitions, and language in relation to benefits for minor injuries in September, 2010. It limited payments for supplementary treatment and assessment of minor injuries at $3,5000. It let motorists buy less coverage for more serious injuries, and drop coverage for help around the home. Most have done so. Regulators also encouraged insurers to reject unreasonable claims.

Before and after these changes, thousands of claimants — or the clinics they visited — applied to the Financial Services Commission of Ontario for mediation to resolve disputes with insurers.

At one point, the backlog of disputes reached 36,000, compared with about 67,500 injury claims in all of Ontario last year. There are still more than 20,000 disputes unresolved, consultant and former FSCO employee Willie Handler has learned.

“I think it has really been a case of more disputes than the system can handle,” said Ots. “FSCO was not nimble at adding resources, and there were a number of underlying issues (such as an increase in fraud and questionable billing practices of clinics) that caused the number of disputes to go up,” she added.

The Ontario Court of Appeal ruled late in November that anyone whose dispute is not mediated within 60 days may choose a more costly forum: arbitration before the Financial Services Commission of Ontario or the courts. “This decision has the potential to add significant costs,” said Ots.

FSCO has warned that the wait time for arbitration is already six to eight months, while the pace of mediations is speeding up. An external firm, ADR Chambers, is handling 2,000 additional mediations per month.

Ots said there is also uncertainty about future costs after two court rulings awarded million-dollar benefits to a man and a woman who each reported psychological consequences after leg injuries that were severe, but not regarded previously as being eligible for catastrophic injury benefits.

Ots said she was encouraged, however, that the Ontario Auto Insurance Anti-Fraud Task Force urged the government to regulate the entire auto insurance marketplace, including the business practices of rehabilitation clinics, assessment providers, and tow truck operators.

In addition, FSCO is to undertake a two-year study into limiting the treatment of injuries to techniques supported by scientific evidence

An open letter to the Insurance Bureau of Canada from Ontario New Democrats

TORONTO, Feb. 10, 2013 /CNW/ – Yesterday, the Insurance Bureau of Canada purchased advertising space to run an open letter from their Vice-President Ralph Palumbo to NDP Leader Andrea Horwath. Below is a response from NDP MPP and Consumer Critic Jagmeet Singh:

Dear Mr. Ralph Palumbo,

Andrea Horwath wanted me to thank you for your letter and asked that I reply on behalf of New Democrats.

I don't have to tell you that tough economic times are hitting family budgets hard. Households are squeezed more than ever and the bill for auto insurance is one people hate opening the most. So I'm happy to hear that you share our goal of making auto insurance more affordable.

But we need to see changes in the coming year. Drivers need to see real rate reductions and we're committed to delivering results for them. Changes to auto insurance since 2010 have reduced benefits for drivers, and increased profits to the industry. Yet premiums have increased. That's not acceptable.

We're ready to work with everyone who has a stake in the industry to make a sustainable affordable product. We're not willing to sit by while drivers are forced to pay more and more for auto insurance that provides less and less coverage.

We know the industry has to offer in finding solutions to these complex issues. We also understand that you have a job to do. You represent the interests of the insurance industry. We have a different role: to be a voice for Ontario drivers paying the highest premiums in Canada.

We're ready to work together to deliver on real savings for drivers starting this year.

Jagmeet Singh
NDP Critic for Consumer Services

SOURCE: NDP Caucus Services

For further information:


Media Contact: Marion Nader 416-325-2601