eSlips... Soon a Reality? The Paperless Future of Auto Insurance

Michael Spiar, Broker Relations & Communications Specialist | The Alberta Broker, October-November 2016

Smartphone displaying electronic proof of auto insurance

If you asked 1,000 Canadians to name industries related to the term “cutting-edge technology,” odds are that not even one of them would say “government” or “insurance” in response. And yet, quietly and understatedly, the possibility of such an association has become more likely than the average Canadian might think.

That’s because eSlips, or electronic proof of auto insurance in place of a paper pink slip, could soon become a regulatory reality. eSlips would benefit the broker channel and consumers alike, allowing the former to cut down on the costs associated with printing and mailing paper, and the latter to store and display proof of auto insurance on their mobile devices. So where do things stand on eSlips?

Appetite for eSlips

Industry and consumer demand for eSlips has grown in recent years — to the tune of 31% of Canadians who are interested in using their mobile devices to store and display digital ID or proof of auto insurance  (Forrester). In fact, some brokers are going so far as to design mobile apps that allow customers to do just that, whether regulators approve or not.

“The number one, most-used feature of our app is digital pink slips,” says Sherif Gemayel, president of Sharp Insurance in Calgary. “So the clients will actually use their app to show proof of auto insurance. As it’s not legal yet in Canada, we have a disclaimer on the app that says clients still have to carry their paper pink card in their car, but they’ve never had an issue with it.” Many Sharp customers report that police have readily accepted eSlips displayed on their mobile phone during traffic stops, suggesting that Canadian consumers and police officers alike are open to an update to existing regulations.

In February 2016, CSIO released its eSlips advisory report to educate the broker channel on the legal landscape surrounding eSlips and to advocate for regulatory acceptance. During the same period, the Canadian Council of Insurance Regulators (CCIR) announced a major step forward in its initiative to study the issue, releasing its issues paper and conducting a public consultation in May.

CCIR identified issues for further study including:

  • Consistency of regulations between jurisdictions.
  • Liability for damage and protection of privacy when mobile devices are handled by law enforcement (e.g., what happens if an officer drops the customer’s phone, damaging it?)
  • Liability for telecommunications carriers where the electronic device is unable to download and display the eSlip.
  • Safeguards against fraud.

When envisioning just what eSlips could look like in Canada, it is worth taking some time to study our neighbours to the south.

eSlips in America

Since 2011, the number of states accepting eSlips in one form or another has risen from 0 to 43, which accounts for 86% of all jurisdictions. Unlike the CCIR’s unified approach, laws can vary from state to state. While this variation may lead to confusion for drivers crossing state lines, it provides many opportunities to see how various approaches to regulation work in practice.

For instance, North Carolina allows insurers to send an insurance card electronically, but still requires drivers to carry a paper copy for traffic stops. To address privacy concerns, New Jersey legislation states that the use of an electronic device to display proof of insurance “does not constitute consent for a police officer or judge to access any other contents on the device.” Many states differ widely when it comes to liability for damage to a mobile device when handled by law enforcement, ranging from full immunity (Illinois) to immunity only where officers have exercised due care (Ohio) to no position whatsoever (Maine).

Next Steps

With the CCIR’s efforts well underway, it seems that a regulatory environment where the cost and effort of printing, mailing, storing and displaying paper are no longer a mandatory part of auto insurance is closer than ever. CSIO remains committed to supporting regulators in making eSlips a reality, leveraging its role as our industry’s national body for technology and data standards.

Government, the P&C insurance industry and cutting-edge technology… maybe they can go together, after all.