Michael Ford (post until Oct. 31/19)
Personal Injury

Safeguards needed in move to electronic insurance info

Recent recommendations that call for increased automation in the way insurers and clients exchange information are not concerning, as long as proper procedures are in place, Toronto personal injury lawyer David Derfel tells Law Times.

As the article notes, the Insurance Bureau of Canada (IBC) recently lobbied for technological advances in insurer-client relationships via the Ontario government’s Red Tape Challenge, which aims to reshape Ontario’s economy to reflect “rapid changes in technology and globalization” and to “leverage Ontario’s highly skilled workforce to compete through innovation.”

Law Times says IBC participated in the consultation period last winter for the financial services sector, and the final report will be released July 31. The IBC submission contains seven recommendations, which it says can be implemented without additional risk for consumers.

The IBC’s proposals include electronic communication, digital service of applications, forms and termination notices and electronic proof of insurance, as well as smartphone apps, usage-based insurance pricing and customer loyalty programs, says the article.

The first recommendation calls for an amendment to the Insurance Act to state explicitly that all insurance transactions can be completed electronically if the consumer consents.

The second asks the Financial Services Commission of Ontario (FSCO) to amend its forms to include data collection and consents so consumers can enter into contracts and deliver or receive information electronically, says the article.

Derfel, principal of Derfel Injury Lawyers, says he has no concern about the exchange of information by electronic means. 

“That’s the nature of commerce today,” he says. “It’s becoming paperless and cloudless. We live in a digital world.

“Registered mail is a fairly antiquated means of serving documents and people don’t necessarily get them. If I’m going to contact someone directly, contacting them electronically is a very expeditious way of doing it,” says Derfel.

At the same time, Derfel tells Law Times there should be some safeguards in place if these changes are made.

“If insurance companies are going to serve their customers electronically, they need a mechanism to confirm receipt.” 

When it comes to the cancellation of policies, however, Derfel says he remains “old school.” 

“It is crucial to be properly served,” he says.

“The insurance industry needs to go above and beyond.”

One IBC recommendation causing some concern is a proposal to use apps to purchase insurance online, Law Times reports.

“One problem with online [communications] is whether people are being fully informed of all the coverages,” says Derfel.

“They may not read the fine print or be fully aware of what’s available. There need to be measures to ensure they really know what they’re getting and what they might be giving up.”

As Derfel says, “insurance is a very, very important thing.” 

“People are trying to protect their home, their life or their family,” he adds. “God forbid something happens and they find out they clicked on the wrong thing or didn’t answer questions properly.”

Derfel prefers that people call their broker and have all the options explained. 

“Live human interaction has its advantages,” he says. “An individual will want to answer questions properly and the broker will want the person to be fully informed.” 

Derfel also tells Law Times he has security concerns regarding the recommendation to allow electronic signatures.

“I’m not comfortable as far as e-signatures go,” says Derfel. “In my practice, every signature is in person.” 

Derfel also calls the proposal for FSCO to allow the use of electronic proof of auto insurance “absolutely wonderful.” 

“Electronic proof of insurance is a great idea,” he says.

“Our phones are becoming our wallets. It will stop those awkward times when you’re charged with failure to produce proof of insurance even though you have insurance. What’s the one thing nobody leaves home without? Their phone.”

Other recommendations involve changing regulations to allow usage-based pricing models, regulations to allow loyalty programs and the encouragement of risk-mitigation strategies, says Law Times, and the IBC is also requesting the ability to make marginal changes in prices.

“Insurance is sold by private corporations, but it exists for the public good,” says Derfel.

“If the government implements these changes, it must be for the public interest. It can be done carefully so long as the public is looked after, not taken advantage of.”

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