Car insurance looks to ditch pink slips, but it's not as easy as it sounds

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Are car insurance pink slips finally on the way out?

They are if consumers have anything to say about it. Like rotary phones and letters in the mail, the inconvenient tiny documents are often misplaced, expired or forgotten after their annual glovebox shuffle. A new survey from the Insurance Bureau of Canada (IBC) asked Ontarians what they’d like to see insurance companies institute in the future.

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The report, aptly named an “Innovation Agenda” captures where the insurance industry needs to head, and more importantly, where government needs to let them go. At this time, Nova Scotia is the only Canadian province that gives its drivers the choice of receiving their proof of insurance electronically. There are currently 46 American states that do so.

According to the study, 74 per cent of Ontarians want that option. No doubt because 37 per cent have discovered they were driving with expired slips, and 21 per cent have discovered this only when pulled over by police. The laws on the books state that insurance documents, including those pink slips, have to be updated annually and have to be mailed, couriered, or picked up in person and are only valid in paper form. As we increasingly graduate to carrying out more and more of our transactions online, and carry more of our information on smart phones, it makes sense to overhaul the insurance industry standards to reflect what consumers want.

At least 88 per cent of Ontarians already receive at least one of their bank, utility, phone or credit card statements online; 90 per cent find this to be a convenient way to access their information and 79 per cent believe receiving their insurance documents this way is just as safe as paper.

The Innovation study seeks to require the government to go, in essence, where the consumer already is.

It sets out four main recommendations:

1. “Allowing all insurance communications and transactions to be completed and delivered electronically if the consumer provides the necessary consent

2. Allowing insurers to provide consumers with the option of selecting usage-based insurance (UBI) to help determine the cost of their auto insurance

3. Integrating the sharing economy – specifically, technology-enabled ride- and vehicle-sharing services – into the auto insurance system so that insurers can offer new products to cover the risks that individuals face while using sharing economy platforms

4. Granting both incumbent insurers and new market entrants access to the regulatory super sandbox to encourage new innovations that will benefit consumers”

The “super sandbox”, according to Steve Kee of IBC, is “a means of relaxing regulator rules to test new innovative products and services.”

Why is the insurance industry so far behind utility companies, the banks and phone companies? Part of the problem is the choreography required with several governing bodies behind the scenes. Though the provincial government committed to giving consumers more choice online when it came to insurance in its 2017 budget, it’s been crickets as far as any actual changes.

It’s Ontario’s Insurance Act that requires paper proof, despite the Electronic Commerce Act of 2000 that essentially freed up other entities to keep pace with technology. The latter does not cancel the former, outlining the first line of hurdles. Next up? The Compulsory Automobile Insurance Act authorizes the Financial Services Commission of Ontario (FSCO) to determine what format proof of auto insurance will take. You guessed it: FSCO likes pink slips.

FSCO does have the authority to move online for proof of insurance, but here comes the next hurdle: “Ontario’s Privacy Commissioner advises that without additional privacy protections, an individual who gives his or her electronic device to a law enforcement officer to show proof of auto insurance could be vulnerable to that officer searching other content on the device.”

Those tiny slips of paper need the Insurance Act, the Compulsory Automobile Insurance Act, FSCO and the provincial Privacy Commissioner to all be on the same page. Before we can all just have our proof of insurance sent to our phone to be produced at a roadside stop, there has to be a law in place that the officer can’t snoop beyond that one item.

We’ve given up so much of our privacy in the name of innovation it’s almost like the frog taking a slow boil in the pot. Caution is good, yet it’s almost laughable how prehistoric this particular industry – auto insurance – is in relation to all the other business we now conduct online. California and Georgia have specific wordings in place that cover off notices of cancellation as well as wordings and proof of insurance. IBC recommends Ontario consider putting similar constructs in place.

The study is a broad attempt to push the insurance industry ahead, and in a direction that will find consumers receptive. Notable too is the push for better protection in the ride-share category, an entity that is changing almost as fast as it is growing. UBI – usage-based insurance – is increasingly seen as a way to more accurately assess not just risk, but to right-quote those who are willing to offer up their in-car privacy to a black box that reports back driving habits. So far it can only be used for rate reduction and not to set behavior-based higher rates, but I will forever be skeptical of where that will ultimately end up.

So save 31 million pieces of paper, say 80 per cent of Ontarians. Those same Ontarians are, for the most part, driving around in vehicles that are hardly environmentally friendly; but change starts somewhere, and the Insurance Bureau of Canada would like Canadians to have these long-overdue options.