Electronic Proof

One would think that the standard auto insurance card seems like a throwback in this increasingly paperless age, but that it is not the case in Canada.

Despite smartphones, tablets and other technological gadgets now being part of everyday life, providing proof of auto insurance coverage is like a nostalgic trip back to the days of our parents or grandparents. In Canada, insurance companies and brokerages mail, fax and e-mail copies of the standard pink insurance slips to policyholders upon renewal or policy changes. 

In March 2013, Industrial Alliance Insurance and Financial Services provides its group health customers in Quebec with the option of an electronic version of their plastic insurance card. However, there is currently no movement to do the same for auto insurance policyholders.

In Ontario, the Compulsory Automobile Insurance Act(CAIA) states that drivers must “have in the motor vehicle at all times, (a) an insurance card for the motor vehicle; or (b) an insurance card evidencing that the operator is insured under a contract of automobile insurance, and the operator shall surrender the insurance card for reasonable inspection upon the demand of a police officer.”

Despite confirming existence of a card, fake or invalid insurance cards can be easily acquired. Obviously, an invalid card is going to look legitimate if an unscrupulous driver cancels the policy immediately after getting the card.
 

The Uninsured Vehicle Project, an initiative led by Ontario’s Ministry of Transportation, provides an electronic means of determining whether or not a vehicle carries mandatory insurance coverage when licence plates are being renewed by checking with the insurance industry’s online database. The wrinkle is that police officers do not have access to the database and accept as valid any insurance card that appears to not have expired.

CHANGING TIMES

In Ontario, the five-year review report of the superintendent of financial services at the Financial Services Commission of Ontario (FSCO) raised the issue of electronic commerce back in 2009. The superintendent noted he had received feedback from insurers that they would like to see legislation and regulations updated so that transactions regarding applications, policies, endorsements and renewals could be conducted electronically. 

The submission of the Canadian Association of Direct Response Insurers stated, “Of concern also is the requirement to provide a paper copy of the liability card. Companies should be able to provide the liability card along with all the other documentation in electronic form if the customer approves.”

The regulator indicated its primary concern regarding electronic commerce is the production of fraudulent liability cards. However, FSCO also acknowledged that fraudulent paper insurance cards currently exist and technological solutions may exist to address these concerns.

Based on the submissions received, FSCO noted it appeared that not all industry stakeholders were aware that Ontario’s Electronic Commerce Act, 2000 already enables auto insurers and others doing business in the province to implement electronic document delivery and electronic counterparts to traditional written documents and written signatures, provided certain functional equivalency rules are followed.

The five-year review signalled to the insurance industry that electronic documents, including the insurance card, was acceptable under existing Ontario law yet no insurer has introduced electronic proof on insurance over the past four years.

Steve Whitelaw, senior vice president of business solutions at The Dominion of Canada General Insurance Company, says that guidance is required from regulators in all jurisdictions with respect to security and auditability requirements. In addition, there are other logistical issues that need to be addressed by The Dominion that are relevant to its distribution of insurance through brokers, Whitelaw reports.

The capability to issue electronic policy documentation, including liability slips, is on The Dominion’s roadmap. “There are competing priorities,” he says, pointing out that “this topic does not appear to be a priority for consumers, and from our perspective, The Dominion’s focus remains on the replacement of our legacy systems.”

Ontario law is silent about whether or not an electronic version of the insurance slip counts as valid proof of insurance, but it is uncertain if police officers would accept an electronic version.

Consider such an incident: a driver in a recent minor accident could not locate his pink insurance slip. He contacted his broker from the scene of the accident who e-mailed him his pink slip as a PDF file. The police officer responding to the accident informed the driver that he bought himself one hour to produce a paper copy.

Bob Percy, deputy chief of the Halton Regional Police Service, says he sees an electronic insurance card being accepted by police “as long as there was comprehensive awareness of the process, and assurances that the material could in no way, shape or form be manipulated to create false, but legitimate-looking insurance slips.”

But how many people would be comfortable handing their personal devices to an officer who requires the information to complete the accident report?

Percy suggested the ideal approach would be to have an insurance database that officers could access, similar to the Canadian Police Information Centre (CPIC) database. This concept would be an up-to-date information repository that confirms insurance particulars with no reliance on the driver.

SERVICE ADJUSTMENT

Last year, J.D. Power and Associations issued results of a survey of the insurance industry in the United States, entitled, 2012 U.S. Auto Insurance Study Management Discussion.

“As customer preferences and interaction behaviours continue to evolve, insurers must be prepared to adjust their service strategies to keep pace with those changing preferences,” the report notes. “All insurers face the reality that customer expectations are being reshaped by market forces beyond their control — whether through the emergence of devices, such as the iPhone or iPad and platforms such as Twitter or Facebook, or through changing servicing dynamics being introduced in other industries. Every insurer must recognize that adapting to the changing service — channel preferences is a decision of necessity that will need to be made in the not-too-distant future. Ultimately, it all comes down to customer choice — today that choice is rapidly expanding to include a variety of new self-service tools and interfaces.”

The Property Casualty Insurers Association of America (PCIAA) reports that 11 U.S. states — Alabama, Arizona, Arkansas, California, Idaho, Kentucky, Louisiana, Minnesota, Mississippi, Virginia and Wyoming — now have laws or regulations on the books that allow for electronic insurance cards to be used for both vehicle registration and when being pulled over by the police.

In Colorado, drivers can use the e-cards for registration, but will not for police traffic stops. However, the he state is considering legislation that would extent electronic proof to traffic stops as well.

PCIAA reports that the governors of Kansas and Indiana are expected to sign legislation in their states, while several other states — Florida, Georgia, Hawaii, Indiana, Iowa, Maine, Michigan, Missouri, Ohio, Oregon, Rhode Island, South Carolina, Texas, Utah, Washington and Wisconsin — have pending legislation on the matter.

For drivers in states that allow for electronic insurance cards, it would be wise to still have a paper copy handy when driving outside of home jurisdiction.

PRIVACY MATTERS

There are some valid concerns about e-cards. For example, what privacy rights, if any, are being handed over when someone — let alone a police officer — is allowed to look at a driver’s phone to view his or her insurance card? While some states have put limits on what can be viewed — Arizona, for example, specifies that showing an e-card does not imply consent to view other items on a wireless device — many have no such language.

It appears inevitable that electronic proof of insurance will come to Canada. The technology exists and both government regulators and police forces appear open to the change. It just seems that no insurer particularly wants to be the first to make the move.