Insurance companies take cautious approach to driverless cars

Insurance companies take cautious approach to driverless cars

Excerpted article was written By Jenny Yuen, TORONTO SUN

TORONTO – Driverless cars may be the future, but insurance companies still need to assess their risk.

According to predictions from American insurance broker Aon Plc — recently quoted in the Washington Post — U.S. auto insurance premiums will drop more than 40% once society fully adopts the use of automated vehicles by 2050. In theory, roads will become safer when computers do the driving.

But in Canada, insurance companies are taking a more cautious approach.

“When it comes to driverless cars, insurers will need to assess the risks and determine products and pricing based on those risks,” said Andrew McGrath, spokesman for the Insurance Bureau of Canada.

“Our industry is becoming increasingly information-based, technologically connected and even more globalized. A competitive market sparks innovative products and solutions.”

At the beginning of the year, Ontario became the first province in the country to allow testing of autonomous vehicles. The City of Stratford hopes to be the first live testing ground.

“While testing is underway in Canada, a functional and available driverless car is a ways out on the horizon,” McGrath said. “That being said, the insurance industry is always there to identify new risks and provide the needed coverage. But for now, car manufacturers are racing to improve safety.

“Emerging technologies could lead to ‘zero fatality’ roads,” he added. “We already see high-end vehicles that warn you (when you) drive too close, alert you to vehicles in your blind spot, and even park themselves.”

Released earlier this year, the Insurance Institute of Canada’s report, Automated Vehicles — Implications for the Insurance Industry in Canada, found that over the next decade and into the future, vehicle automation will shift responsibility for collisions to a mix of driver error and vehicle failure.

“The issues emerging as a result of vehicle automation will present many challenges for the insurance industry, regulators, and other stakeholders, largely due to the expected speed of change. Much preparation needs to be completed in a short period of time,” the report states.

Recommendations from the report include informing drivers and other stakeholders about the importance of insurance protection for all vehicles — including driverless cars — and the correlation between the price of insurance coverage and the cost of claims paid.

Uber: Task force will look at pros and cons

By Bob Bruton, Barrie Examiner

Barrie’s sharing economy, including Uber, is getting a closer look.

City council gave final approval Monday to establish a sharing economy task force and have staff draft regulations relating to Uber, and the ride-sharing business, as part of the on-going Transportation Business Licensing Bylaw review.

“The city is definitely getting ready for Uber and others, and there is no time to waste as these companies are already here and operating,” said Coun. Michael Prowse, chairman of the city’s finance and corporate services committee.

A sharing economy has emerged, and continues emerging, where owners rent out something they’re not using – a car, bike, house or room.

“I would expect Uber will be addressed, but we know it is broader than just Uber; the disruptive technology companies are in every segment of the economy,” Prowse said.

“Disruptive technologies is a term used broadly to identify companies that are, in fact, disrupting the standard business model or status quo of a market – while possibly introducing a whole new market.”

Prowse listed Airbnb, a website to list, find and rent lodging, versus hotels and motels, or Uber vs. the taxi industry, as examples.

Uber is a ride-sharing business which generally offers lower prices than licensed taxis, in part because it does not have the same level of regulation.

The task force would include both city staff and three-to-five knowledgeable local technology leaders. It’s being asked to report to Barrie councillors by the spring of 2017.

The report is to include information on potential economic benefits, improved service or convenience, along with any risks to safety and consumer protection.

It’s to contain options and recommendations on whether the city has a future role in the administration and enforcement of the sharing economy, and what that might look like.

The task force is also to consult with industry stakeholders – local hotel and motel officials, for example – and the insurance industry.

Last February, the Insurance Bureau of Canada approved coverage for drivers using ride-hailing services like Uber, for those carrying paying passengers in their own vehicles.

Municipalities have taken different approaches to Uber.

Mississauga, for example, originally banned Uber. All ride-sharing firms there were to halt operations unless they obtain a taxi brokerage licence, and ran their business like a traditional cab company.

But its council backtracked to allow Uber and other ride sharing companies to operate under a pilot program.

Toronto took the opposite approach, with its council allowing Uber but passing a long list of rules to regulate ride-sharing services.

Earlier this year the city’s two largest cab companies – Barrie Taxi and Deluxe Taxi – said Uber needs the same regulation.

Insurance is a prime concern; every taxi needs to have an endorsement on its insurance policy, a special add-on so passengers can be carried for compensation.

A taxi also needs to have safety inspections and the driver needs to have a criminal check, plus pay for insurance.

Car Dealer Terminology Explained–Part 1: Buying a New Vehicle


Car dealers sometimes use words and phrases that the average consumer does not understand, which often puts new-vehicle shoppers at a disadvantage during the car-buying process. To help educate consumers about the car-buying process and related words, phrases, and concepts, this article explains common car dealer terminology and how it impacts negotiation for the new vehicle and the financial transaction. The words and phrases are listed below, in alphabetical order, and are specific to the process of buying or financing a new vehicle.

Dealer Addendum Sticker
A dealer addendum sticker details any dealer-installed accessories, and their prices, that may have been added to a vehicle after its arrival at the dealership. In cases when a model is brand new and in high demand, a dealer addendum sticker may list nothing but additional markup over the Manufacturer’s Suggested Retail Price (MSRP). Keep in mind, however, that the price of dealer add-ons can be negotiated.

Dealer Prep Charge
When a new vehicle arrives at a dealership from the factory, dealership personnel must prepare the vehicle for sale. Often, the dealership passes that cost to the consumer through a dealer preparation charge. Sometimes dealer prep charges are reasonable. Sometimes they are not. This, too, is something that can be negotiated.

Doc Fees
Documentation fees are designed to pay for the costs incurred by the car dealer in association with processing paperwork related to a lease or purchase. Similar to dealer prep charges, sometimes these fees are reasonable and sometimes they are not. If you feel the fees are excessive, try to negotiate an amount that is more reasonable.

Extended Warranty
An extended warranty gives a consumer additional warranty protection after a vehicle’s original factory warranty expires. Car dealers typically attempt to sell customers an extended warranty at the time a new vehicle is purchased, but consumers often have up to one year after the purchase to decide if they want to take advantage of an extended warranty plan. This, too, is a negotiable price.

This abbreviation stands for finance and insurance. When buying a new vehicle, consumers are sent to the F&I office to finalize the details of the deal while the dealership prepares the new vehicle for customer delivery. In the F&I office, additional products and services may be offered to the consumer, such as dealer financing, extended warranties, service contracts, insurance, and more. At the end of this process, the purchase contract is finalized and signed, and then the customer drives home in his or her new vehicle.

Gap Insurance
A new vehicle depreciates the minute a consumer signs a contract and drives off the car dealer’s lot. That’s because it is now a used vehicle rather than a new vehicle. In the first weeks, months, and sometimes years that a consumer is in possession of the vehicle, it may be worth less than what the consumer owes on the car loan, especially if the new vehicle was purchased with no down payment or a small down payment.

If the car is stolen, or damaged beyond repair in an accident, during the period of time that the consumer owes more than the car is worth, there is a gap between what the car insurance company will pay for the vehicle and what the consumer must pay to satisfy the terms of the car loan. Gap insurance is designed to protect the consumer against this difference between actual vehicle value and the balance owed on the loan.

Car dealers stock inventory, just like any retail store. Because vehicles are expensive, car dealers must finance inventory through the auto manufacturer using a process known as floorplanning. Car dealers must also advertise their inventory. These activities cost the car dealer money.

Because auto manufacturers rely on car dealers to keep assembly lines running and profits flowing, certain car companies may offer car dealers a “holdback,”–a percentage of either the invoice price or MSRP of a new vehicle that is repaid to the dealer by the manufacturer–each time a new vehicle is sold. The holdback is designed to offset expenses associated with floorplanning and advertising, and is generally not offered to the consumer. If a car dealer turns inventory rapidly, holdback money can help boost profit. If a car dealer turns inventory slowly, holdback simply helps to reduce losses.

Not all car companies offer a holdback to car dealers, preferring to employ other methods to assist their retailers in offsetting certain costs of doing business. Among car companies that do offer a holdback to car dealers, the amounts and programs vary between auto manufacturers, and frequently change. It is very difficult for consumers to determine whether or not a car company offers its dealers holdback money, or, in cases where a holdback program exists, if a particular vehicle is eligible for any holdback money.

An incentive is an amount of money that is paid to the car dealer by the car company upon completion of a sale to a consumer. The car dealer may or may not elect to pass all or a portion of the savings on to the customer in order to lower the vehicle’s price or payment.

Interest Rate
The interest rate is the amount of interest a consumer pays on a new vehicle loan, expressed as an Annual Percentage Rate (APR). The lower the APR, the better the interest rate. Interest rates are negotiable, so be sure to get the best rate possible when financing a new-car purchase.

Invoice Price
Invoice price refers to the amount of money the car dealer pays the car company for the new vehicle. Generally, the invoice price is higher than what the car dealer actually pays the factory for the new vehicle, after accounting for any incentives, holdback money, or spiffs (defined below).

The Manufacturer’s Suggested Retail Price (MSRP) is also referred to as the sticker price. Subtract the invoice price from the MSRP to determine the minimum amount of negotiating room the car dealer has with regard to the selling price for the new vehicle. Vehicles in low supply and high demand are likely to command full sticker price, or higher. Other vehicles are expected to sell for a price closer to invoice.

No Haggle Price
In an effort to simplify and bring transparency to the process of buying a new vehicle, some car dealers offer no-haggle pricing, which sets a firm price for a new vehicle in advance. No-haggle prices are designed to give customers discounts while giving car dealers a fair profit and can make buying a new vehicle easier, faster, and less stressful.

A rebate is an amount of money paid to a consumer by the car company upon completion of a new-vehicle purchase. Consumers can accept the rebate in cash, or can apply the amount of the rebate to the down payment made on the vehicle by signing the rebate over to the dealership. Remember, consumers must pay taxes on the rebate, which is considered income, regardless of whether he or she accepts the rebate as cash or signs the rebate over to the dealer in lieu of additional cash for the down payment.

Service Contract
Consumers are likely to be offered a service contract when completing paperwork in the F&I office. A service contract is a pre-paid plan to have your new vehicle serviced at the dealership and typically offers a discount compared to the price the consumer might pay for dealer service without a service contract. Many new vehicles come with free scheduled service and maintenance, such as BMW models and Toyota models.

A “spiff” is a temporary incentive that is paid to the car dealer or a car salesperson by the car company. For example, in order to inspire improved sales performance during a weekend sales event, the car company might offer the car dealer an extra $200 for every new vehicle sold, or the car salesperson an extra $100 for every new vehicle sold. Spiffs can sometimes give the car dealer extra wiggle room on price, but the amounts are typically too small to make a large difference in terms of the price or monthly payment the consumer will pay.

Trade-in Value
Trade-in value is the amount of money a car dealer is willing to pay a consumer for the consumer’s old car. This amount of money is typically less than what a consumer can obtain for the old car by selling it herself or himself via private party. The reason the trade-in value is lower is because the car dealer is taking on any financial risk associated with the old car, including the costs associated with reconditioning the vehicle and preparing it for sale, or transporting the old car to an auction if the car dealer determines it is not right for the dealer’s used car lot.

Upside Down
When a consumer is “upside down” on a car loan, he or she owes more money on the vehicle than the vehicle is worth. To avoid becoming upside down on a car loan, consumers should make a larger down payment and choose a model that holds more of its original value over time.


Be warned: Tricky insurance for ride-share drivers

By Evelyn Harford | Ottawa Metro

Uber will be legal in Ottawa at the end of the month, but personal injury lawyers warn that some insurance available for the ride-sharing drivers is tricky.

Ottawa city councillors voted to legalize Uber under a new licensing category in April. The new category will require drivers, among other things, to have minimum insurance coverage – a minimum of $5 million commercial liability and $2 million general liability insurance.

And as long as a ride-sharing driver complies with the insurance the city is asking for, as well as other requirements such as background check, they can legally drive for Uber once the bylaw comes into effect on Sept. 30, said Anthony Di Monte, the city’s general manager of emergency and protective services.

But he said it’s up to individual drivers, and Uber, to ensure that they’re properly covered for ride-sharing activities in the event of an accident.

“Understand your policy,” said Jaime Wilson, a personal injury lawyer at McNally Gervan Lawyers. “If there is an accident and you’re not properly insured there can be ramifications that can affect you.”

Personal injury lawyers warn that being properly insured can be tricky business for any ride-sharing driver.

Only two insurance companies have been approved by the (FSCO) Financial Services Commission of Ontario to offer insurance policies specifically for ride-sharing drivers.

One policy, offered through Aviva Canada, is added to a driver’s existing car insurance policy but limits them to 20 hours of ride-share driving per week; FSCO said this policy was intended for part-time drivers.

The second, approved by the FSCO this July, is offered through Intact through a partnership with Uber and will cover the driver from the moment their app is turned on until the moment the passengers exits the vehicle, with no limitation on hours of driving. Intact said Uber drivers are automatically covered when operating the apps and the first of it’s kind in Canada.

However, FSCO warns that drivers who engage in ride sharing need to inform their insurance brokers or personal car insurance company that they’re carrying passengers for the purpose of ride-sharing because they said, “insurers are not required to (ensure) ridesharing activities and may cancel or not agree to renew a policy whether or not they’re informed.”

You may think you’re covered until you’re not.

Coun. Scott Moffatt said would-be drivers need to be aware of what coverage they have, because like anybody who gets in an accident without proper coverage, “You’ll be screwed.”

Before stepping into the driver’s seat and carting passengers around as ride-share driver, lawyers and insurance brokers alike say would-be drivers need to do their homework to avoid legal headaches in the event of an accident.

Study: Social Media Usage during New-Vehicle Shopping Process Increases

Study: Social Media Usage during New-Vehicle Shopping Process Increases

The just-published J.D. Power 2016 New Autoshopper StudySM finds that consumers who use the internet during their new-vehicle shopping process are increasingly turning to social media websites as a source of information. Among automotive internet shoppers, 22% use a social media site as a source while shopping for their new vehicle—up from 16% in 2015. The most popular social media sites used by auto internet shoppers during the shopping process are YouTube (13%), DealerRater (7%), and Facebook (5%).

The 2016 New Autoshopper Study analyzes how buyers of new vehicles use digital devices—i.e., tablets, smartphones, and computers—to gather information prior to purchase, as well as which websites and apps they use during the shopping process. The study also examines the various types of content new-vehicle buyers access during their shopping process and identifies the content they find most useful.

“Social media plays a large role in many consumers’ lives, so it’s not surprising that it’s one of the tools they’re using during the vehicle-shopping process,” said Mike Battaglia, vice president, automotive retail at J.D. Power. “While we would not expect social media sites to compete head-on with designated auto shopping sites like and Kelley Blue Book, it’s easy to understand the role and relevance social plays in the automotive shopping process.”

Among automotive internet shoppers who use social media, only 13% indicate that the information posted on social media sites influenced their purchase decision, and only 2% say a social site was the “most useful site” they visited.

“Social media platforms aren’t as useful as automotive shopping websites for automotive information, but they do serve the needs of consumers for unbiased dealer reviews, affirmations from other vehicle owners, accessing automotive-related videos, and exchanging ideas and opinions with friends and family members,” said Battaglia.

However, according to the study, 34% of new-vehicle buyers who use social media for automotive information post a picture of their new vehicle on a social site. Facebook is by far the most popular site for posting vehicle photos—it gets 88% of the posts. Instagram runs a distant second, garnering 21% of vehicle photo posts. (Some consumers post to multiple sites.)

Other key findings of the study include:

  • Auto shopping websites still run well ahead of social media in terms of the traffic they get from vehicle shoppers. The study finds that more than 90% of automotive internet shoppers visit at least one automaker’s site during the shopping process, while 84% visit a dealer site and 79% visit a third-party site. On average, internet shoppers visit 10 automotive websites in their shopping process: four automotive manufacturer websites, three third-party websites, and three dealership websites.
  • On automotive shopping websites, the data most frequently viewed are model information (89%), vehicle pricing (88%), and photo galleries (81%). Automotive internet shoppers say that automotive brand websites are most useful for obtaining model information, vehicle configurators, and photo galleries, but they indicate that dealer websites are most useful for inventory searches and vehicle pricing. Third-party sites, according to the study, are most useful for vehicle ratings/reviews and vehicle comparisons.
  • More than half (53%) of automotive internet shoppers use a mobile device to seek automotive information. For 2016, smartphone usage surpasses tablet usage (37% vs. 33%, respectively). The use of desktop or laptop computers remains most common at 92%, but has been steadily decreasing from 99% in 2012. The proportion of time spent shopping on mobile devices continues to increase, with 33% of total shopping time now conducted on a mobile device.
  • The three most frequently visited third-party sites (in alphabetical order) are Consumer Reports,, and Kelley Blue Book. These three have ranked at the top consistently since 2012. Among the 37 third-party websites measured in the study, TrueCar, for the second consecutive year, shows the largest increase in site visitation.

Consumer Tips
Based on the study, J.D. Power offers the following consumer tips:

  • Use social media to collect anecdotes and advice about various vehicle types, but use automaker sites to get the most accurate data.
  • Third-party sites often provide unbiased comparisons of various models. However, many of their assessments are matters of opinion. Be sure to also reference verified owner ratings while conducting your research.
  • Personal experience is the only true test. Use websites and social media as part of your pre-shopping process, but visit several dealers, test the products yourselves, and keep an open mind.

About the Study
The 2016 New Autoshopper Study is based on responses from 17,349 purchasers and lessees of new 2014 to 2016 model-year vehicles who used information gathered digitally during the shopping process. The study was fielded from February through June 2016.

Insurance industry advocates for tougher distracted driving laws

Global News

The federal government said it has no plans to step into the distracted driving debate, even with Canada’s insurance industry calling for tougher laws to be enacted.

Justice minister Jody Wilson-Raybould said toughening the laws isn’t on their radar, now or in the future, despite the government saying earlier this month that it’s an issue they needed to look at.
“In the criminal code provisions are there for distracted driving that could manifest itself for texting and driving,” she says. “But the provinces have taken a leadership role on this issue.”

Responding to a question from Global News on Sept. 9, Wilson-Raybould said she would have discussions with her provincial counterparts when they meet next month.

In a recent interview, Allstate Canada CEO Ryan Michel said distracted driving accidents are on the rise despite programs to reward good drivers.

“We’ve seen in our own experience a lot more rear-end collisions,” said Michel. “Where is that coming from, right?”

Currently, distracted driving is treated differently in every province with fines ranging from $100 to over a thousand dollars and three to five demerit points. And apart from raising rates and refusing to insure, there’s little the insurance industry can do apart from asking the federal government to amend the laws.

“We here at Allstate would definitely support tougher actions that make people safer on the roads, absolutely, in countering distracted driving,” said Michel. “We know there are fines that are out there, but it doesn’t seem to be fully taking hold, otherwise we’d see some of these things change.”

READ MORE: Quebec’s Couillard calls on Ottawa to criminalize distracted driving

Pete Karageorgos of the Insurance Bureau of Canada added the real change is going to have to come from those in power.

“We now have every province with bans from using handheld devices while driving, so the question is are they tough enough? Are they getting the message across? It’s the government that has to measure that and take the lead because they are the ones who have the authority.”


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