Insurance News - Sunday, July 31, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Sunday, July 31, 2016:

• Tesla and Google are taking different approaches to developing self-driving cars.
• Uber drivers in Ontario are now automotically insured,
• Auto insurance rates still rising, despite province's pledge to lower them.
• Uber plans to collect street-view photos in Mexico to further lays the groundwork for a fleet of autonomous vehicles.
• Canada tops the list of wealthy countries in the percentage of road fatalities related to alcohol impairment.
• Customers sour on insurers' UBI discount model.

Car Insurance Rates Shoot Up Because of Pokemon Go Popularity

Pokémon Go is a free-mium location-based mobile game developed by Niantic for iOS and Android devices, it contains some but not all aspects of an augmented reality game. It uses the  GPS and the camera of compatible devices. Players can capture, battle, and train virtual creatures, called Pokémon, who appear on device screens as though in the real world and that's where the problem lies this can harm the player specially if they are on the road or driving.

People who are too engage in the game while they are walking or driving can cause serious accident. A lot of people fear that car insurance rates will go up because of Pokemon go popularity. Let’s look at this issue more closely.

The National Highway Institute is one of the many organizations that have released warning about the dangers of driving they have also warn that by not paying attention to the road it dramatically increases the chance of an accident. 

We all know the dangers of being distracted while driving is and Pokémon Go can be worst than texting-while-driving it is a distraction that can cause serious accidents.  In fact, in the short time since its release, there have been reported accidents in every place where it has been released. 

In playing Pokemon Go using your device (smartphone, tablet etc.) the place around you will be filled with Pokémon monster that you can capture, battle, and train. You will need to look in your device to see them, and you need to go to places to capture this Pokemon or hatch an egg which can be dangerous specially if the players main focus is the game and not what going on around the player since the game requires that the player go out into the world around you to collect Pokémon. A crucial part of the game is finding these Pokémon hiding in the real world and catching them.  This is the reason why car insurance rates shoot up with Pokemon go release.  Not paying attention to the road will of course dramatically increase the risk of accidents and injury.  Similar to talking on the phone or texting, Pokémon Go takes your attention away from being a responsible driver or pedestrian.

Insurance News - Friday, July 22, 2016

Here are the leading auto insurance headlines from ONTARIO AUTO INSURANCE TOPICS ON TWITTER for Friday, July 22, 2016:

• A prominent Toronto lawyer who pursued a frivolous action on behalf of a client was found personally liable Tuesday for the legal costs.
• What will your car have to do for the police to pull you over when you’re in an autonomous car?
• In the U.S., being on the lower end of the wage scale can mean paying much more for auto insurance, even for good drivers.
• As self-driving cars change transportation, how will infrastructure adapt?
• Details on the first self-driving car death involving Tesla S using autopilot.
• Ontario’s program to allow testing of self-driving cars on public roads has not received any applications since it launched January 1,

Ontario Auto Insurance Rates Remain Chronically High

FSCO's latest quarterly rate approval numbers have been released and suggest that consumers will see very few savings the statutory accident benefit cuts that became effective on June 1.

FSCO approved 14 private passenger automobile insurance rate filings during the second quarter of 2016. These 14 insurers represent 30.06% of the market based on premium volume. Approved rates increased on average by 0.33% when applied across the total market. This follows the modest 3.07% reduction in approved rate filings in the first quarter of 2016.

The end of lower rate filing approvals indicate that the any savings derived from the recent reform package are small. A portion of the savings could be wiped out before the end of the calendar year if companies continue to file for increases. The government has abandoned the the 15% rate reduction promise made in August 2016. However, if you aggregate all the rate changes since the 2013 announcement, the total rate reduction is 9.84% when applied across the total market.

Product reforms have proven to be an ineffective tool for controling auto insurance premiums in Ontario. As long as transactional costs within the system remain high, Ontario drivers will continue to pay high rates. A new delivery system is needed to bring Ontario's costs in line with other jurisdictions. For a discussion on how to address the systemic problems in Ontario, see my article entitled Ontario's 25-Year No-Fault Journey.

Hillary Clinton's Plan Against Ballooning Student Debt with $16 a month

Hillary Clinton's "debt-free college plan" include the imposition of a 3 months moratorium on federal student loan payments through executive action.

"With dedicated assistance from the Department of Education during this moratorium, borrowers will be able to consolidate their loans, sign up quickly and easily for income-based repayment plans, and take direct advantage of opportunities to reduce monthly interest payments and fees," she said.

Implied though not plainly expressed in those "opportunities" are other elements of her college plan, that will cover the ability for borrowers to refinance their student loans at current rates and interest-free loan deferrals for aspiring entrepreneurs. Borrowers who are behind on debt would also get help during the hiatus to rehabilitate their loans.

Financial planner Evelyn Zohlen president of Inspired Financial in Huntington Beach, California said that the 3-month moratorium has a better possibility of coming into fruition than the "tuition-free education at in-state public colleges for families earning as much as $125,000 or less" because it does not need the cooperation of Congress or a major funding initiative.

"It's allowing people to take advantage of programs already in place. The only people quote, unquote hurt are lenders, who may not see as much profit if people refinance to lower rates."

People who are unable to pay their student loan are growing more than 33% of the borrowers have been late on a payment at least once in the past year, and 25% were late more than once based on the report of the Financial Industry Regulatory Authority Investor Education Foundation's 2015 Financial Capability in the United States.

Even though they are struggling to pay, a lot of millennials don't care about their loan management options. Based on a survey released by Citizens Bank, millennials do not have an idea on what they owe on their student loans, the interest rate they are paying, when will they be able pay it or whether college was worth it. On average, graduates owed about $41,000 in student loans.  A shocking 60% millennials of the surveyed said they have no idea when their loans will be paid off and more than a third don't even know the interest rate they are paying, the report said.

Mark Kantrowitz, vice president of strategy for Cappex.com said that "You don't need Clinton's 3 months moratorium to switch repayment plans into income-based repayment. It takes just a few minutes."

Troubled borrowers may be entitled for one or more of the 7 alternative repayment options:

1. Standard Repayment Plan - it requires that you make fixed monthly payments of at least $50 for up to 10 years.
2. Graduated Repayment Plan - Your payments start low, and increase every two years. It will still be paid off within 10 years.
3. Extended Repayment Plan - repayment window for this plan is up to 25 years. You have the option of setting fixed monthly payments, like with the Standard Plan, or increasing them over time.
4. Income-Based Repayment (IBR) - Monthly payments are capped at 15% of your discretionary income, and readjusted each year based on your income and family size for up to 25 years.
5. Pay As You Earn Repayment (PAYE) -      Monthly payments are capped at 10% of your discretionary income, and readjusted each year based on your income and family size.
6. Income-Contingent Repayment Plan - Payments, made for up to 25 years, are based on your adjusted gross income, family size and the amount of your loans. Your payments change as your income changes.
7. Income-Sensitive Repayment Plan - Your monthly payments are based on your annual income.
  
Each of the plan has pros and cons. Just remember a longer repayment term not only lengthens your payment commitment, it also means you'll pay more overall. If you refinance your federal student loans into a new, private loan. I will come at the price of losing federal protections to postpone payments in times of financial hardship.

Also if you cut your loan rate it may not lessen your monthly payment that much. In Clinton's proposal, for instance, estimates that borrowers refinancing into new loans at current rates would save the typical borrower $2,000 over the life of their loan.

"Divided by 120 payments, and that's $16 a month," Kantrowitz said. So She's proposing puny "A free pizza a month."

New Ontario Towing and Storage Regulations Are Now In Effect

New regulations are now in effect if you repair, tow or store vehicles in Ontario. The new regulations under the Repair and Storage Liens Act took effect on July 1, 2016. Further regulations will come into force starting January 1, 2017.

 The following new rules come into effect on July 1, 2016:

• If a vehicle being stored is subject to a lien and is received from someone other than its owner or a person having the owner's authority, then the storer must give notice to the owner and other interested parties of the lien in writing (e.g. secured parties who have registered their interest, such as lease and finance companies). 
• For vehicles registered in Ontario, the notice period is reduced from 60 days to 15 days after the day after the vehicle is received. If notice is not provided within 15 days, a storer's lien is limited to the unpaid amount owing for that period. The 60-day notice period remains unchanged for out-of-province vehicles. 
• If no amount has been agreed upon for repair and storage costs, fair value may be determined by a court. There is a new list of discretionary factors a judge will be required to consider (such as fixed costs, variable costs, direct costs, indirect costs, profit and any other relevant factors).

Ontario Regulation 427/15 can be found here.

Consider your options when you lose your employer-sponsored insurance

Finding out you are being laid off is stressful, and in addition to that, you have to make important decisions about health insurance that can save you—or cost you—thousands of dollars at a critical time. It’s important to consider all your options when deciding between COBRA or buying your own plan.

What is COBRA? COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which is a federal law that allows you and any of your immediate family members to stay on your employer’s health plan under certain circumstances :

• You lose or quit your job 
• You get a divorce 
• The employee dies 
• You are no longer covered as a dependent due to your age

Only employers with 20 or more workers in the previous year are required to offer COBRA coverage. State and local governments fall under COBRA, but the federal government and certain religious organizations do not.

COBRA can be expensive. People who choose COBRA coverage must pay the entire premium, including the portion previously paid by the employer, plus a 2 percent administrative fee. Be warned, if you enroll in COBRA and later on want to switch to a health plan directly to an insurance company or through the Washington Healthplanfinder, you will have to wait until the next open enrollment period if you don’t qualify for a special enrollment.

Options other than COBRA
Before you decide to go with COBRA, find out if you can buy a health plan through the Washington Healthplanfinder and receive a subsidy to help pay your insurance premiums. You can also purchase coverage directly from an insurance company, broker or agent if you don’t qualify for any subsidies.

If you choose a health insurance plan, you likely will be responsible for a full yearly deductible. Generally, health insurance deductibles are not prorated for partial-year enrollees, no matter how few months are left in the plan year. Individual or family qualified health plans operate on a calendar year, from January through December. There is no way to transfer the money you spent toward another plan’s deductible when you switch plans mid-year.

Read more about losing your health insurance on our website. Questions? Contact our consumer advocates online or at 1-800-562-6900.

For COBRA- specific laws and questions, contact:

U.S. Dept. of Labor, Employee Benefits Security Administration

Seattle District Office

300 Fifth Ave., Ste. 1110

Seattle, WA 98104

206-757-6781

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).