www.claimscanada.ca
April/May 2017
Official Journal of the Canadian IndeÊpendent Adjusters’ Association
Strength in Numbers Tech trends influencing claims adjusting in Canada
PM40063170
Forensic Engineering We provide world-class engineering and consulting expertise in: • • • • • •
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Contents April/May 2017 • VOLUME 11 • NUMBER
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Cover Feature 10 Strength in numbers - Data-driven insurance innovations
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Technology is enabling new and creative solutions to improve claims handling and business operations. BY EMILY ATKINS
Spotlight 16 Building a legacy Claimstech helps create future adjusters. BY EMILY ATKINS
News Features 18 Property Loss Update: A review of recent cases, Part 2 BY GLENN GIBSON ICD.D, CIP, FCIAA, FCLA, CFE
22 A collaborative success story: Explosion response
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BY PABLO J. ROBALINO, M.SC., P. ENG, PMP
25 Deductibility of CPP disability benefits in personal injury claims BY CHERYL A. CANNING
27 The financial impact of a product recall BY FRANCIS GAGNÉ
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Departments 4 First Notice 29 On The Scene
Columns 7 President’s Message
• first notice FN Website established to inform about backwater valves The Toronto, Ontario-based Institute for Catastrophic Loss Reduction (ICLR) has launched a backwater valve installation website (http://www.backwatervalveinstallation.com) to provide basic information about sewage backflow prevention devices to assist homeowners in better understanding what they are and how they work, and aid plumbing professionals on the protocols that should be followed to ensure that such devices are installed properly. The website provides information on such topics as: • Getting the right information before starting a backwater valve installation; • Selecting a plumber or contractor; • Conducting plumbing investigations and closed circuit television (CCTV) inspections of sewer laterals, including important things to ask plumbers when they are conducting inspections; • What to consider if a sewer lateral is in poor condition or found to be the cause of sewer backup; • Ensuring that all connections to the sanitary lateral are identified; • Choosing a backwater valve; • How to install a backwater valve and checking to ensure that it is installed properly; and • Maintenance tips for backwater valves.
The site provides a review of the steps involved in the installation of a backwater valve and is relevant to all homes serviced by underground, public sewer systems, typically located in urban areas. According to Dan Sandink, director of research for ICLR and architect of the backwater valve protocol website, “backwater valves are an important component of many basement flood mitigation programs. They aren’t the only consideration, but they are key. However, it is of primary importance that backwater valves be properly installed and the devices be subject to regular inspection and maintenance long after to ensure that they do what they are meant to do — keep unwanted wastewater out of basements.” Sandink said municipal inspectors have shared stories of finding backwater valves installed backwards. “I have seen first-hand backwater valves that have been installed without the required slope, meaning that they are at greater risk of failure over their service life,” he said, adding that ICLR has also been told of “improperly maintained backwater valves that have been found clogged with debris, blocked up with globs of cooking fat or that have their gates stuck in the open position. There are a host of problems out there regarding backwater valves and we are trying to address many of them through this new protocol website.” ●
Larger liability claims expected to become more expensive, complex: AGCS
Manitoba government launches privacy legislation review
There is increasing potential for “larger liability claims to become more expensive, complex and international,” suggests a new global claims review by Allianz Global Corporate & Specialty (AGCS). Industrial, environmental, product liability and financial lines claims in excess of US$1 billion – based on a 2015 Aon study that identified 86 corporate liability losses of that amount – “are more commonplace and are no longer confined to just the U.S. and Europe,” notes Global Claims Review: Liability in Focus – Loss trends and emerging risks for businesses. The report notes some 57 of the 86 losses were in excess of US$2 billion and 13 were more than $10 billion, “mostly from pollution incidents and regulatory actions.” “While we have not necessarily seen an increase in the frequency of large liability claims, those that are filed are typically now more complex and with a higher spend than in the past,” Larry Crotser, head of AGCS chief claims office, North America, points out in the report. “This can be seen in the cost of product liability claims, which have been rising, while we now also see a far bigger impact from environmental liability claims,” Crotser notes. ●
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The Government of Manitoba is reviewing two pieces of privacy legislation: the Personal Health Information Act (PHIA) and the Freedom of Information and Protection of Privacy Act (FIPPA). PHIA came into force in 1997, with major amendments in 2010 and 2011. The legislation provides a right of access for an individual to their personal health information and protects this information by setting rules for the collection, use, disclosure, security and destruction of this information by public bodies and healthcare providers. FIPPA came into force one year after PHIA (in 1998) and was significantly amended in 2011. The legislation provides a right of access to information in records held by public bodies and also protects personal information by setting rules for the collection, use and disclosure by public bodies. Legislation in Manitoba calls for the two regulations to undergo regular reviews. The last review of PHIA and FIPPA was undertaken in 2004. Public consultations began on March 31 and remain open until May 31. To review information about, and possible issues related to, PHIA and to share ideas or concerns, visit www.gov.mb.ca/health/ phia/review.html. For FIPPA, visit www.gov.mb.ca/fippareview. ● www.claimscanada.ca
• first notice FN Industrial computing vulnerable to hacking Two in five computers around the globe related to the technological infrastructure of industrial enterprises faced cyberattacks in the second half of 2016, according to cybersecurity company Kaspersky Lab. The percentage of industrial computers under attack grew from over 17 percent in July 2016 to more than 24 percent in December 2016. Kaspersky says the top three sources of infection were the Internet, removable storage devices, and, malicious email attachments and scripts embedded in emails. The results, published in the report Industrial automation systems threat landscape in the second half of 2016, examined the cyberthreat landscape faced by Internet connection sharing (ICS) systems. Kaspersky experts discovered that during the second half of 2016, security software blocked malware downloads and access to phishing webpages on more than 22 percent of industrial computers. “This means that almost every fifth machine faced the risk of infection or credential compromise via the Internet at least once,” the company said. Other key findings from the report included: • Every fourth targeted attack detected by Kaspersky in 2016 was aimed at industrial targets; • About 20,000 different malware samples belonging to over 2,000 different malware families were seen in industrial automation systems; • Kaspersky revealed 75 vulnerabilities in 2016. Fifty-eight of them were marked as maximum critical vulnerabilities; and • The top three countries experiencing industrial computer at-
tacks were Vietnam (more than 66 percent), Algeria (over 65 percent) and Morocco (60 percent). Kaspersky noted that the desktop computers of engineers and operators working directly with ICS do not usually have direct access to the Internet due to the limitaons of the network in which they are located. However, there are other users with simultaneous access to the Internet and ICS. According to Kaspersky research, these computers — presumably used by system and network administrators, developers and integrators of industrial automation systems, as well as third party contractors who connect to technology networks directly or remotely — can freely connect to the Internet because they are not tied to only one industrial network with its inherent limitations. The danger of infected removable storage devices is another threat spotted by the company’s researchers. During the period of research, 10.9 percent of computers with ICS software installed (or connected to those that have this software) showed traces of malware when a removable device was connected to them. ●
Government of British Columbia invests in tsunami, earthquake warning systems
Ontario mandates licenses for home inspectors
The government of British Columbia has announced $550,000 in funding to increase tsunami warning capacity and the potential to provide earthquake early warnings. British Columbia’s Ministry of Transportation and Infrastructure said the contribution from the BC Disaster Mitigation Program to the Capital Regional District will benefit residents of Port Renfrew and the Pacheedaht First Nation. The funds will replace obsolete tsunami sirens with new warning technology to quickly warn residents in the event a tsunami threatens the region. The tsunami siren upgrades will include voiceover capability and remote activation, expanding the audible warning zone to include the Pacheedaht First Nation community. The proposed system will have the potential to provide early warning before an earthquake occurs. The funding is part of a broader investment of more than $80 million in emergency preparedness and mitigation. The province recently announced $10.5 million in funding for dike and pump upgrades to the Fraser Valley Regional District (FVRD)’s Nicomen Island diking system. Part of this funding will widen the dikes to increase stability, while the rest will be allocated to the existing pumping system infrastructure that supports these dikes. ●
Ontario politicians voted unanimously in favour of a bill that will mandate licensing of home inspectors in the province and will let the government and consumer services minister regulate insurance requirements. Bill 59, an omnibus bill that also introduces new rules for payday loans and door-to-door sales, passed third reading in the legislature. All 86 MPPs present voted in favour of the government bill. Once it is signed into law and takes effect, Bill 59 will create the Home Inspection Act. It has some similarities to Bill 165, a private member’s bill tabled in 2016. That bill proposed a licensing scheme for home inspectors and proposed to let the Ontario government make regulations “prescribing the types of insurance” they must have, such as errors and omissions and commercial general liability. At present anybody in Ontario can practise as a home inspector, as there are no minimum standards or qualifications. The new Home Inspection Act will stipulate that only individuals are allowed to perform home inspections, as defined, and the Act requires them to be licensed as home inspectors. ● continued on page 6...
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April/May 2017
Claims Canada
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• first notice FN
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Manitoba uses virtual reality to influence young drivers Manitoba Public Insurance (MPI) is launching a new “virtual reality (VR) experience” to tackle three critical road safety issues facing young drivers in Manitoba: distracted driving, impaired driving and speeding. Through the use of VR headsets, simulated vehicles and intricate sensor systems, the DRIVR-X platform allows participants to explore a three-dimensional VR environment with multiple story lines that require them to make important, life-changing decisions about distracted driving, impaired driving and speeding, MPI explained. “There’s no better way to reach young drivers than through the mediums they relate to the most,” Manitoba’s Minister of Crown Services, Ron Schuler, suggested. “The VR experience created by Manitoba Public Insurance is one such technology that will give our young people the power of choice when it comes to making safe driving decisions.” DRIVR-X was introduced to Winnipeg highschool students at MPI’s Physical Damage Centre. The new virtual reality experience immerses users in a virtual environment that mimics realistic experiences and temptations facing new young drivers today. Students were also given a guided tour of the corporation’s vehicle damage compound, where they saw first-
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February/March
hand the real-life consequences of crashes involving speed, distracted and impaired drivers. “This new state-of-the-art technology will be made available in high schools and at community events throughout Manitoba starting immediately,” said Ward Keith, vice president of loss prevention and communications with MPI. “Our hope is that these realistic experiences will bring the dangers and consequences of unsafe driving to life for new young drivers. In doing so, we hope to spark important conversations about the importance of making safe driving decisions that can literally protect them for a lifetime.” Participants in the live interactive experience will also receive portable VR viewers, making it possible to share their experiences with friends and family through mobile devices. Additionally, an online contest will offer people the chance to win their own HTC VIVE VR system. According to MPI, distracted driving is a “leading contributing factor in total collisions in Manitoba,” with nearly 30 people killed on provincial roads each year due to distracted driving. Approximately one in every five fatal collisions in Manitoba is linked to impaired driving, while speed is a contributing factor in nearly 20 per cent of those killed annually. ●
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2017
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HEATHER MATTHEWS
In past messages we have touched on technology, customercentric service and change management. Those are all important factors affecting independent adjusters today. At the time of writing this we are approaching the one-year anniversary of Fort McMurray. When we reflect back on this historic event in Canadian insurance history, it truly comes to light why we do what we do as independent adjusters. Our underlying values of customer service, teamwork, trust, technical skills and a strong compassion for helping people really came to the forefront. The fire had an immense impact on many people’s lives. Thousands experienced it in many different ways. Eighty thousand people fled the city and we all vividly remember those scenes of flames licking at the sides of their vehicles as they pushed through bumper to bumper traffic to flee for their safety. Many just managed to get their loved ones, including the furry ones, and had no time to make a planned and organized evacuation. The hearts of Canadians went out to the people of Fort Mac, and fundraising efforts were immediately undertaken. It was not long before we were on the international stage with news reports and offers of assistance to help with claims and fundraising. It was a different catastrophe in that the mass evacuation of the city gave adjusters and insurers time to prepare. We had time to make accommodation arrangements in the oil camps for our staff, set up store-front locations so that we were readily accessible to the citizens, secure up-to-date client instructions and protocols for the management of the claims and recruit further staff from across Canada and the US to assist in the ever-growing demand from our insurance partners. Some in the industry felt that we should not bring adjusters in from the US and that they were taking jobs of Canadian adjusters. That is interesting in light of the current negotiations with Trump on NAFTA; those open borders in the time of a catastrophe are advantageous to all. We, as independent North American adjusters, addressed the needs of our insurance partners. It should not
Dans les derniers messages, nous avons abordé la technologie, le service axé sur les clients et la gestion du changement. Ce sont des facteurs importants qui touchent actuellement les experts en sinistres indépendants. Au moment de la rédaction de ce message, nous approchons du premier anniversaire de l’incendie à Fort McMurray. En pensant à cet événement historique dans l’histoire de l’assurance au Canada, nous nous rendons compte de l’importance de notre travail en tant qu’experts en sinistres. Nos valeurs sous-jacentes, telles que le service à la clientèle, le travail d’équipe, la confiance, les compétences techniques et notre solide compassion pour aider des gens ont été placées au premier plan. L’incendie a eu une grande incidence sur la vie de beaucoup de gens. Des milliers de personnes ont vécu ce drame de différentes façons. Quatre-vingt mille personnes ont quitté la ville et nous nous souvenons très bien de ces scènes de flammes léchant les côtés de leurs véhicules au moment où, prises dans un embouteillage, elles essayaient de fuir, craignant pour leur sécurité. Bon nombre ont tout juste réussi à amener leurs êtres chers, y compris leurs animaux de compagnie; elles n’avaient pas le temps de planifier ou d’organiser l’évacuation. Les Canadiennes et les Canadiens ont témoigné leur sympathie aux habitants de Fort McMurray et les efforts de collecte de fonds ont été mis en branle immédiatement. Ça a pris peu de temps pour que nous nous retrouvions à l’avant-scène internationale, dans les bulletins de nouvelles et croulant sous les offres d’aide avec les réclamations et les collectes de fonds. C’était une catastrophe différente dans la mesure où l’évacuation de masse de la ville a permis aux experts en sinistres et aux assureurs d’avoir le temps de se préparer. Nous avons eu le temps de prendre les dispositions nécessaires pour l’hébergement de nos employés dans les camps pétroliers, de préparer des endroits connus facilement accessibles aux citoyens, de préparer des instructions à jour pour les clients ainsi que des protocoles pour la gestion des sinistres et le recrutement de personnel supplémentaire au Canada et aux États-Unis, pour faire face à la demande sans cesse croissante de nos partenaires d’assurance. Certaines parties prenantes ont estimé qu’il n’était pas souhaitable de faire appel à des experts en sinistres des États-Unis sous prétexte qu’ils allaient voler l’emploi des experts en sinistres canadiens. Voilà qui est intéressant car à la lumière des négociations actuelles avec Trump sur l’ALENA, l’ouverture des frontières au moment d’une catastrophe est un avantage pour tous. En tant qu’experts en si-
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be viewed as “us versus them”, but rather that we collectively assisted our insurance partners and the citizens of Fort Mac. We saw a different catastrophe from a technology stand point as well. People sitting in evacuation centres in neighbouring cities were able to check Google Earth to see if their house was still standing. On the flip side, others were able to get video through their security system app and watch live as their houses burned to the ground. People took to Facebook to find each other, share resources and supplies, while also sharing their insurance experiences; both good and bad. If you were not providing exceptional customer service, you could quickly find your name, the company name and insurer on social media. We also saw the Insurance Bureau of Canada and the municipality use social media to their advantage to keep everyone informed, educated and manage expectations. Where people resisted technology was in their first notice of loss. Here we saw that they did not want to input their information into a system. They wanted to tell their story, to share their grief, sorrow and stress. They wanted a human to listen with compassion and empathy, and to provide them with direction and assurance. We saw that the handle time of a first notice of loss for Fort Mac was twice the normal average. Although we were away from our families for a long period of time, lived in adverse conditions, and handled very complex losses, we did it to help those families and the city in need. We took care of our clients’ customers when they needed us the most, and should be proud of the work that we did for Fort McMurray and their citizens. ■
nistres indépendants en Amérique du Nord, nous avons tenu compte des besoins de nos partenaires d’assurance. Il ne fallait pas voir la situation comme une opposition entre « nous » et « eux », mais plutôt de mettre l’accent sur l’assistance collective que nous avons fournie à nos partenaires d’assurances et aux citoyens de Fort McMurray. Nous avons aussi connu une catastrophe différente du point de vue technologique. Les gens installés dans les centres d’évacuation des villes avoisinantes pouvaient consulter Google Earth pour voir si leur maison était encore intacte. Cependant, d’autres ont vu en direct leurs maisons réduites en cendres par le biais de leur application de système de sécurité. Les gens se sont retrouvés sur Facebook pour partager leurs ressources et leurs provisions tout en échangeant sur leurs expériences avec leurs courtiers d’assurances, bonnes ou mauvaises. Si vous ne fournissiez pas un service à la clientèle hors pair, vous pouviez rapidement trouver votre nom, le nom de l’entreprise et l’assureur sur les médias sociaux. Nous avons vu également le Bureau d’assurance du Canada et la municipalité exploiter avantageusement les médias sociaux pour informer et sensibiliser les gens et gérer leurs attentes. On a remarqué une certaine résistance des gens à l’égard de la technologie dans leur premier avis de sinistre. Nous y avons constaté qu’ils ne voulaient pas saisir leurs informations dans un système. Ils voulaient raconter leur histoire, partager leur peine, leur chagrin et leur stress. Ils voulaient quelqu’un qui les écoute avec compassion et empathie, qui leur donne des conseils et qui les rassure. Nous avons constaté que le délai de traitement du premier avis de sinistre pour Fort McMurray était de deux fois la moyenne normale. Malgré le fait que nous étions loin des nôtres pour une longue période, nous avons apporté notre soutien à ces familles et à la ville dans le besoin et nous avons traité des sinistres très complexes dans des conditions défavorables. Nous avons pris soin des clients de nos clients au moment où ils avaient le plus besoin de nous; aussi, nous devons être fiers du travail que nous avons effectué au profit de Fort McMurray et de ses citoyens. ■
NATIONAL EXECUTIVE 2016 - 2017 PRESIDENT Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Heather.Matthews@crawco.ca 1ST VICE-PRESIDENT Monica Kuzyk, FCIP, CRM Curo Claims Services 125 Northfield Dr. W., P.O. Box 218 Waterloo, ON N2J 3Z9 Phone: (866) 952-2876 Fax: (519) 888-9704 E-mail: mkuzyk@curocanada.com 2ND VICE-PRESIDENT Lee Powell Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: lpowell@cl-na.com SECRETARY Jeff Edge, CIP, CFEI Leading Edge Claims Services Inc. P.O. Box 1399, 78 Highway 20 West Fonthill, ON L0S 1E0 Phone: (289) 897-8676 Fax: (289) 897-8677 E-mail: jeff@leadingedgecs.ca TREASURER John D. Seyler, CIP
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Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca PAST-PRESIDENT Fred R. Plant, AIIC ClaimsPro 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8507 Fax: (506) 853-8501 E-mail: fred.plant@scm.ca EXECUTIVE DIRECTOR Patricia M. Battle Canadian Independent Adjusters’ Association/L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Avenue West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 E-mail: pbattle@ciaa-adjusters.ca DIRECTOR Paul Féron, FCIP, CRM ClaimsPro 210 – 746 Baseline Rd. East London, ON N6C 5Z2 Phone: (519) 645-6500 Fax: (519) 645-2250 E-mail: paul.feron@scm.ca
April/May 2017
DIRECTOR Lorri Frederick ClaimsPro 120 Adelaide St. W., Suite 2401 Toronto, ON M5H 1T1 Phone: (905) 308-6292 Fax: (416) 360-7335 E-mail: lorri.frederick@scm.ca DIRECTOR James B. Eso, CIP, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca DIRECTOR E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Grant.King@crawco.ca DIRECTOR Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com
DIRECTOR Lee Powell Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: lpowell@cl-na.com DIRECTOR Marie C. Gallagher, FCIP, CRM Kernaghan Adjusters Limited 602 – 1 St. Paul Street St. Catharines, ON L2R 7L3 Phone: (289) 786-1074 Fax: (289) 723-1979 E-mail: mgallagher@kernaghan.com DIRECTOR Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 2001 Sheppard Ave. East, Suite 810 Toronto, ON M2J 4Z8 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com DIRECTOR Gary Ellis, BBA, FCIP, RF, FCLA, FCIAA, FIFAA AMG Claims Inc. P.O. Box 20102 Sherwood Charlottetown, PE C1A 9E3 Phone: (902) 628-9091 Fax: (902) 628-9093 E-mail: gary.ellis@amgclaims.ca
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CIAA REGIONAL PRESIDENTS 2016 – 2017 NEWFOUNDLAND & LABRADOR Gejapathy Gopal, CRM ClaimsPro 27 Duffy Place, P.O. Box 8686, Station A St. John’s, NL A1B 3T1 Phone: (866) 726-7815 Fax: (709) 726-6106 E-mail: gejapathy.gopal@scm.ca NOVA SCOTIA Michael Connolly, BA, CFEI, CIP ClaimsPro 238 Brownlow Avenue, Suite 300 Dartmouth, NS B3B 1Y2 Phone: (877) 514-6269 Fax: (902) 425-9918 E-mail: michael.connolly@scm.ca NEW BRUNSWICK & PRINCE EDWARD ISLAND Greg Potten, BPE, CIP, CFEI AMG Claims Inc. 212 Queen Street, Unit 308 Fredericton, NB E3B 1A8 Phone: (506) 458-9000 Fax: (506) 458-9595 E-mail: greg.potten@amgclaims.ca QUEBEC/AESIQ Michel Lacelle, PAA/CIP ClaimsPro 255 Crémazie Est, 2e étage Montréal, QC H2M 1M2 Phone: (514) 340-8959 Fax: (514) 342-5474 E-mail: michel.lacelle@scm.ca ONTARIO Maria Joshua, FCIP Sedgwick CMS Canada Inc. 5915 Airport Road, Suite 201 Mississauga, ON L4V 1T1 Phone: (905) 671-7805 Fax: (905) 671-7819 E-mail: maria.joshua@sedgwickcms.ca MANITOBA Craig Shanks, BA, CIP Wheat City Claims Services Ltd. 64 Regent Cres. Brandon, MB R7B 2W9 Phone: (204) 725-7436 Fax: (204) 725-7437 E-mail: craig.shanks@mymts.net SASKATCHEWAN Justin Braaten, FCIP, CRM, XAT Capital Claims Adjusters Limited 3500 – 13th Avenue Regina, SK S4T 1P9 Phone: 1 866 550-0516 Fax: 1 866 725-4794 E-mail: justin@capitalclaims.ca WESTERN Jody Schmidt, B. Comm., CIP Crawford & Company (Canada) Inc. 600, 10709 Jasper Ave. Edmonton, AB T5J 3N3 Phone: (780) 486-8024 Fax: (780) 486-9001 E-mail: Jody.Schmidt@crawco.ca PACIFIC Stacy Phillips, B.Comm., CRM, FCIP ClaimsPro 600, 1111 Melville Street Vancouver, BC V6E 3V6 Phone: (888) 681-6331 Fax: (604) 681-6388 E-mail: stacy.phillips@scm.ca
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National Standing Committees 2016-2017 ADVISORY Monica Kuzyk, FCIP, CRM Curo Claims Services 125 Northfield Dr. W., P.O. Box 218 Waterloo, ON N2J 3Z9 Phone: (866) 952-2876 Fax: (519) 888-9704 E-mail: mkuzyk@curocanada.com Lee Powell Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: lpowell@cl-na.com Fred R. Plant, AIIC ClaimsPro 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8507 Fax: (506) 853-8501 E-mail: fred.plant@scm.ca Paul Féron, FCIP, CRM ClaimsPro 210 – 746 Baseline Rd. East London, ON N6C 5Z2 Phone: (519) 645-6500 Fax: (519) 645-2250 E-mail: paul.feron@scm.ca Lorri Frederick ClaimsPro 120 Adelaide St. W., Suite 2401 Toronto, ON M5H 1T1 Phone: (905) 308-6292 Fax: (416) 360-7335 E-mail: lorri.frederick@scm.ca James B. Eso, CIP, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Grant.King@crawco.ca Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com Marie C. Gallagher, FCIP, CRM Kernaghan Adjusters Limited 602 – 1 St. Paul Street St. Catharines, ON L2R 7L3 Phone: (289) 786-1074 Fax: (289) 723-1979 E-mail: mgallagher@kernaghan.com Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 2001 Sheppard Ave. East, Suite 810 Toronto, ON M2J 4Z8 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com CIAA NATIONAL INSURANCE INDUSTRY ADVISORY BOARD Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 - 1445 West Georgia Street Vancouver, BC V6G 2T3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Heather.Matthews@crawco.ca Monica Kuzyk, FCIP, CRM Curo Claims Services 125 Northfield Dr. W., P.O. Box 218 Waterloo, ON N2J 3Z9 Phone: (866) 952-2876 Fax: (519) 888-9704 E-mail: mkuzyk@curocanada.com
Fred R. Plant, AIIC ClaimsPro 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8507 Fax: (506) 853-8501 E-mail: fred.plant@scm.ca Patricia M. Battle Canadian Independent Adjusters’ Association/L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Ave. West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 E-mail: pbattle@ciaa-adjusters.ca Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com Marie C. Gallagher, FCIP, CRM Kernaghan Adjusters Limited 602 – 1 St. Paul Street St. Catharines, ON L2R 7L3 Phone: (289) 786-1074 Fax: (289) 723-1979 E-mail: mgallagher@kernaghan.com Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 2001 Sheppard Ave. East, Suite 810 Toronto, ON M2J 4Z8 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com
FINANCE John D. Seyler, CIP Integrated Insurance Resources CAREER RECRUITMENT PLANNING 5080 Timberlea Blvd., Suite 214 Richard Swierczynski, BA, CIP Mississauga, ON L4W 4M2 AZ Claims Services Inc. Phone: (905) 238-4985 1500 Upper Middle Rd., Unit #3, Fax: (905) 238-2735 P.O. Box 76041 E-mail: jseyler@integrated-ins.ca Oakville, ON L6M 3G3 Phone: (905) 825-0027 Heather Matthews, CIP, CRM, CIOP Fax: (905) 825-5543 Crawford & Company (Canada) Inc. 539 Riverbend Dr. E-mail: richard@azclaims.ca Kitchener, ON N2K 3S3 COMMUNICATIONS Phone: (519) 578-5540 Richard Swierczynski, BA, CIP Fax: (519) 578-2868 AZ Claims Services Inc. E-mail: Heather.Matthews@crawco.ca 1500 Upper Middle Rd., Unit #3, Fred R. Plant, AIIC — ClaimsPro P.O. Box 76041 85 Englehart Street Oakville, ON L6M 3G3 Dieppe, NB E1A 8K2 Phone: (905) 825-0027 Phone: (506) 853-8507 Fax: (905) 825-5543 Fax: (506) 853-8501 E-mail: richard@azclaims.ca E-mail: fred.plant@scm.ca John D. Seyler, CIP IBC: LIAISON, LEGISLATIVE & FORMS Integrated Insurance Resources Paul Hancock, B.Sc., CIP 5080 Timberlea Blvd., Suite 214 Crawford & Company (Canada) Inc. Mississauga, ON L4W 4M2 300 – 123 Front Street West Phone: (905) 238-4985 Toronto, ON M5J 2M2 Fax: (905) 238-2735 Phone: (416) 867-1188 E-mail: jseyler@integrated-ins.ca Fax: (416) 867-1925 E-mail: Paul.Hancock@crawco.ca Fred R. Plant, AIIC
Phone: 1-877-464-9675 E-mail: tina.gardiner@york.ca
ClaimsPro 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8507 Fax: (506) 853-8501 E-mail: fred.plant@scm.ca
CONSTITUTION & RULES Paul Féron, FCIP, CRM ClaimsPro 210 – 746 Baseline Rd. East London, ON N6C 5Z2 Phone: (519) 645-6500 Ian Frost, FCIP Wawanesa Mutual Insurance Company Fax: (519) 645-2250 E-mail: paul.feron@scm.ca 191 Broadway Winnipeg, MB R3C 3P1 CONVENTION Phone: (204) 985-3886 Paul Hancock, B.Sc., CIP Fax: (204) 942-7724 Crawford & Company (Canada) Inc. E-mail: ifrost@wawanesa.com 300 – 123 Front Street West Toronto, ON M5J 2M2 Tim Guernsey Phone: (416) 867-1188 RSA Canada Fax: (416) 867-1925 18 York Street, Suite 800 E-mail: Paul.Hancock@crawco.ca Toronto, ON M5J 2T8 Phone: (416) 366-7511 DESIGNATION/EDUCATION Fax: (416) 367-9869 Gary Ellis, BBA, FCIP, RF, FCLA, E-mail: tim.guernsey@rsagroup.ca FCIAA, FIFAA Peter Hohman AMG Claims Inc. Insurance Institute of Canada P.O. Box 20102 Sherwood 18 King Street East, 6th Floor Charlottetown, PE C1A 9E3 Toronto, ON M5C 1C4 Phone: (902) 628-9091 Phone: (416) 362-8586 Fax: (902) 628-9093 Fax: (416) 362-1126 E-mail: gary.ellis@amgclaims.ca E-mail: phohman@insuranceinstitute.ca Robert V. Pearson, CLA, FCIAA Glen Hopkinson CIAA Honorary Life Member XL Insurance Company SE c/o CIAA National Office 100 Yonge Street, Suite 1200 5401 Eglinton Ave. W., Suite 100 Toronto, ON M5C 2W1 Etobicoke, ON M9C 5K6 Phone: (647) 277-8650 Phone: (416) 621-6222 E-mail:glen.hopkinson@xlcatlin.com Fax: (416) 621-7776 E-mail: info@ciaa-adjusters.ca Dan Langer CICMA Ontario Chapter President Lorne Montgomery CIP, FCIAA, FCLA c/o CIAA Crawford & Company (Canada) Inc. 5401 Eglinton Ave. W., Suite 100 300-123 Front St. W. Etobicoke, ON M9C 5K6 Toronto, ON M5J 2M2 Phone : (416) 621-6222 Telephone: 416-867-1188 Fax : (416) 621-7776 Fax: 416-867-1925 E-mail: danlanger@sympatico.ca E-Mail: lorne.montgomery@crawco.ca Justin MacGregor Governor, IBAC 151 Rose Glen Rd. Port Hope, ON L1A 3V6 Phone: (905) 885-1551 E-mail: 2justinmacgregor@gmail.com Penny McCune SGI Canada 2260 11th Avenue Regina, SK S4P 0J9 Phone : 844 855-2744 E-mail : pmccune@sgicanada.ca
EDITORIAL Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Dr. Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca John M. Sharoun, FCIP, FCIAA, CRM Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: John.Sharoun@crawco.ca
Alex Walker, CIP Aviva Canada 2206 Eglinton Ave. E. EMERGENCY MEASURES Toronto, ON M1L 4S8 Richard Van Horne Phone: (866) 692-8482 E-mail: alex_walker@avivacanada.com Action Investigations Inc. 2 Catelina Court Dartmouth, NS B2X 3G9 Tina Gardiner, B.Sc.,CRM, CIP Phone: (902) 462-1222 The Regional Municipality of York Fax: (902) 462-3688 17250 Yonge Street E-mail:richardvanhorne@actioninvestigations.ca Newmarket, ON L3Y 6Z1
LICENSING J. Miles O. Barber, B.Comm. (Hons.), FCIP, CRM, RF Network Adjusters Ltd. 67 Folkestone Blvd. Winnipeg, MB R3P 0B4 Phone: (204) 897-5793 Fax: (204) 897-5797 E-mail: mbarber@mts.net MEMBERSHIP & QUALIFICATIONS Marie C. Gallagher, FCIP, CRM Kernaghan Adjusters Limited 602 – 1 St. Paul Street St. Catharines, ON L2R 7L3 Phone: (289) 786-1074 Fax: (289) 723-1979 E-mail: mgallagher@kernaghan.com NOMINATING Fred R. Plant, AIIC — ClaimsPro 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8507 Fax: (506) 853-8501 E-mail: fred.plant@scm.ca Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Heather.Matthews@crawco.ca Lorri Frederick — ClaimsPro 120 Adelaide St. W., Suite 2401 Toronto, ON M5H 1T1 Phone: (905) 308-6292 Fax: (416) 360-7335 E-mail: lorri.frederick@scm.ca James B. Eso, CIP, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Ph: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 2001 Sheppard Ave. East, Suite 810 Toronto, ON M2J 4Z8 Ph: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com PRIVACY James B. Eso, CIP, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Ph: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca Keith P. Edwards, FCILA, CLA, FUEDIELAE — ClaimsPro 120 Adelaide St. W., Suite 2401 Toronto, ON M5H 1T1 Ph: (416) 777-4479 Fax: (416) 360-7335 E-mail: keith.edwards@scm.ca PROFESSIONAL PRACTICES Fred R. Plant, AIIC — ClaimsPro 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8507 Fax: (506) 853-8501 E-mail: fred.plant@scm.ca
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Strength in Numbers Tech trends influencing claims adjusting in Canada By Emily Atkins
I
Insurtech, AI, drones, autonomous vehicles, the gig economy, the Internet of things, big data—this giant, swirling cloud of tech concepts can either be a vicious tornado bearing down on you or a friendly rain cloud about to soak the seeds of imagination to sprout the latest innovation. Commonly called disruption, it’s really just the new business landscape that every industry is grappling with in 2017. Consulting firm PwC recently cautioned in an advisory on InsurTech that “now is the time for executives to think forward, put innovation at the heart of their strategies.” Changing consumer habits, along with dramatically increasing technical capabilities are together forcing insurers and those downstream in the claims arena to figure out how—not if—they will integrate new technologies into their business. There’s no shortage of opinion and information on the vast opportunity awaiting the brave. “Insurance is the original data-driven business,” said Andy Breen, Senior VP of Digital at Argo Group in a recent web conference. “The challenge now is how to use the vast resources available around computing technology to take the friction out.” According to Breen, the opportunity before the industry is “leveraging data to improve the customer experience”. “Data is something we’re all talking about, but not doing,” said Donna Peeples, Chief Customer Officer at Pypestream in the webinar. “We are at the beginning of a watershed moment” with respect to the use of data in insurance.” But it has to have an intentional purpose, she said, “not tech for tech’s sake. A recent study by Insurance Nexus revealed that 73 percent of Canadian insurers are planning for digitization, 50 percent are looking at incorporating analytics, and 34 percent are looking at better data integration, while 20 percent
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think the Internet of things is important. Clearly it’s on executives’ minds, so we decided to take a look at how some companies here have decided to handle the opportunities and challenges presented by new technology. In two very different examples, technology is being leveraged to make operations more efficient, improve the customer experience and drive the bottom line. For Crawford & Company, which has just invested in a sharing economy app to facilitate inspections, the objective is streamlined operations. This is a primary objective in tech adoption, according to Jamie Yoder, PwC’s Insurance Advisory Practice Leader, who said at the insurance innovation webinar: “Digitization can radically alter the cost structure of a business.” Crawford hopes to put a network of gig-based ‘lookers’ to work to reduce the cost of claims. For a group of small independent firms across Canada, technology is being used to create the illusion of size. Working together as the Omnia cooperative, they are able to seamlessly operate on one, thanks to the ingenuity of their founder’s data sharing system.
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Time is of the essence
The ‘gig economy’ and claims handling have intersected in Canada with Crawford & Company’s majority acquisition of tech start-up WeGo Look, a mobile collaborative economy platform offering on-demand inspection services. Oklahoma-based WeGoLook provides ‘lookers’, people who are registered with the app, to go and record photos or videos of property and perform an inspection. It’s been around since it was launched out of beta testing in 2010 after a year of development. The company’s CEO and co-founder, Robin Smith, says the app started out with the individual consumer in mind,
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as a service for people who were buying goods online from remote buyers. Think of buying a car on eBay, for example. You could use the app to post a request for a looker to go take photos or inspect the vehicle you are interested in on the other side of the country. The request goes out immediately, and a locally based looker is usually on the way in minutes. They arrive at the inspection site, take the pictures, verify that they were there, send the images and report, and the prospective buyer has confirmation of the vehicle’s condition in minutes. Payments are all taken care of online as well.
Adding to the field staff The shift from consumer to B-to-B and into claims handling came as a result of some work WeGoLook did when they were asked to do inspections for a property developer post-hurricane Sandy in 2012. “We actually had a FEMA certified looker that was able to go in on his bi-
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cycle and perform those property inspections,” Smith says. After that it was a natural evolution into providing corporate field services, boosted when one of the largest US insurers reached out to the company for help to augment their field force. “So you’ve got the old way of doing things on the claims side,” Smith says. “There’s a real opportunity for us to come in and really help augment this type of labour force with our lookers that are much more cost effective. They can actually go out and perform these low-complex tasks and also what I would call low-complex inspections, and leave the more complex jobs and tasks to those who are qualified for them.”
How to become a looker While anyone can sign up to be a looker using the app, WeGoLook carefully vets people before they are able to take any jobs. As Smith says, “there are really amazing people out there with dif-
ferent types of skills, but the onboarding process is rigorous, so you have to really want to be a looker to complete it.” This includes a “very robust” background check. The company also uses pro-level lookers who are invited to take a more senior role based on their skill set and prior experience with WeGoLook. These include notaries, licensed diesel mechanics, heavy equipment operators, and independent adjusters, among others. Pro-level lookers require an additional background check; work history and copies of all their licenses and certifications are kept on file. Smith notes that clients can chose to have a pro go out when there is policy-holder contact, or when specific expertise is required. At the moment, approximately 30,000 lookers are registered with the app in the United States and just under 400 in Canada. Smith says that in an average month 6,500 to 8,000 of them are getting gigs. As with Uber, and other gig apps, the
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lookers are dispatched on a first-response basis. And the jobs are geofenced, so that those closest to the site get the notification first. A job is pinged to the mobile map every 90 seconds until it is claimed. Reports are geotagged and timestamped and pass through a quality control process that checks the quality of the photos and ensures that data entries are accurate before they are sent to the client. Individual lookers get paid 40 percent of the total cost of the job, and they are usually on site for 15 to 20 minutes per inspection.
What’s in it for adjusters? While WeGoLook is heavily invested in performing field claims handling services in the insurance industry—insurance is about 80 percent of the company’s volume at present, serving about 38 carriers—there’s a reason an independent adjusting firm like Crawford has taken an 85 percent stake. We can “actually help the IA’s be able to produce more, because we can go out very quickly, capture the photos or the measurements or whatever kind of type of data they want,” Smith says. Plus, WeGoLook schedules the appointment with the policy holder, so the adjuster doesn’t have to handle that task. She says the value in this is it frees up the adjuster’s time to handle more files, rather than travelling around to various sites to capture data. “I think it’s an opportunity for IAs to not have to mess with logistics piece and just perform the piece that requires their knowledge and skill,” Smith adds. For Crawford the acquisition is intended to “revolutionize, automate and expedite the claim handling process by using a large mobile workforce for automotive and property inspections.” CEO Harsha Agadi sees the opportunity as transformative for Crawford’s business. Its “groundbreaking technology and streamlined processes open up endless possibilities,” he said. To that end, WeGoLook is the first majority acquisition of Crawford Innovative Ventures, an entity created to invest in strategic acquisitions and partnerships with an eye to providing better customer service.
Speed of service Indeed, according to Smith, leveraging the WeGoLook technology can dramatically reduce the amount of time spent just dispatching someone to go www.claimscanada.ca
look at a claim. Anecdotally she reported a difference of 12 minutes for an inhouse dispatch versus four minutes for a looker. “We’re always constantly striving to improve the process by seconds,” she says. Likewise, the mobile tech that the app uses means that new schemas for handling a specific type of call can be created and propagated to all users on the platform, literally overnight. Everyone with the app can capture the data in exactly the same way for the client.
The cost reduction in claims handling that this engenders means insurers can lower the threshold at which claims are investigated, Smith says, reducing the exposure to fraud risk. For the adjusters working in a small firm, or one of the many who are on the cusp of retiring, there’s an additional potential upside, Smith says. The company is trying to grow its network of lookers in Canada, offering IAs the potential to leverage their expertise and join the gig economy through WeGoLook.
MKA Canada Opens Office in Edmonton
We are excited to announce that we have expanded our operations in Canada with the opening of our Edmonton Office. Since 2008, MKA Canada has offered creative solutions to the Construction, Legal and Insurance industries. Our Service Solutions: • Property Loss and Course of Construction Claims • Liability Claims • Construction Contract Disputes • Construction Scheduling and Delay Claims • Project Cost Reporting, Monitoring & Clerk of the Works Suite 102, 1603 - 91st Street SW Edmonton, AB T6X 0W8 Tel: 780.628.6625 Edmonton Office Contacts: Rakesh Bandaru - rbandaru@mkainc.com Barry Milliner - bmilliner@mkainc.com
WWW.MKAINC.CA
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A new business model: Making it big
This next innovation addresses the challenges faced by small independents trying to compete with larger firms. Procurement practices increasingly make it difficult for the smaller firms to get on the contractor list with larger insurers. “The reality was as a small firm, wherever I knocked on doors—even doors that I thought would be open to me for potential business—the doors just were not open,” says Pieter Heydenreich, partner in EECM in Halifax, Nova Scotia and founding CEO of Omnia Adjusters Cooperative. “For the most part, the only logical reason that I could find for it was that I’m just not on the list.” Heydenreich figured that “the only way to get on the list is to be big, and I’m not big...So I wanted to be big.” How does a small firm get bigger without adding adjusters, offices and overhead? It partners with other small adjusters, and this is what Heydenreich is leveraging with the new not-for-profit cooperative, Omnia Adjusters.
Everybody’s equal Incorporated in August 2016, Omnia is 100 percent Canadian-owned and has 20 member companies with 36 offices spread across the country. Membership is open to adjusting firms (with the exception of public adjusters) that are licensed to operate in their jurisdiction, and, Heydenreich says, “You have to not be a crook.” Companies buy a single share in the co-op for a nominal fee. After that there are contributions for expenses, but the co-op is trying to make membership as painless as possible, and Heydenreich hopes they’ll be able to eliminate the expenses once it starts generating some work. “It’s designed to make money for its members.” The single share per member model is one of Omnia’s unique innovations, Heydenreich says. Everybody is equal this way and it’s “more comfortable to collaborate... No single member’s got more influence or power than another, so members maintain 14 Claims Canada
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their complete autonomy, but they get ac- orative team of experts for small and large cess to the structure that essentially gives projects that they would not otherwise them access to national, international mar- have access to. Without access to mobile kets,” he notes. technology that allows in-the-field data Once he decided to give the co-op gathering and instant communication, this idea a try, Heydenreich began marketing collaboration would not be possible. the idea to various independent adjust“That makes life easier for the clients. ing firms. Once he had sufficient inter- So the clients have started noticing and est, he recruited four board mem“Our survival for the past fifty years bers, Karen Brugger has significantly and dramatically de(Dawson), CIP, of Matrix Loss Adjust- pended on our ability to offer a better, ers Inc. in Ontario; faster, more experienced service.” Phil Gibbs, CIP, of Priddle Gibbs Adjusters in Alberta; Balu Naidu, FCIP, that seems to be where the most significant CRM, of Claimstech in Ontario (see expression of interest lies at this point.” page 16 for this issue’s CIAA member This is designed to fit with the large inSpotlight on Balu and Claimstech); and, surers’ procurement strategies that require Torgny Vigerstad, PhD, Heyden- a large presence and the correct skill set. reich’s partner at EECM Ltd. “We’re a group of small firms joining forces They are all dedicated volun- together into a single company. That’s the teers, Heydenreich points out, because “none of us has actually gotten any remuneration out of this at this point.”
A single, virtual entity Now that the co-op is incorporated, the operational infrastructure has been put in place. Heydenreich put a lot of personal effort into designing and programming the file management system that allows companies from across the country to operate as a virtual single entity. “It makes it possible for us to combine, for example, all the files that a particular client has into one client-access portal, no matter which member firm it’s situated with, while keeping complete privacy. So no one member can see another member’s file.” For example, if a member in Nova Scotia needs someone to take a statement or photos in Vancouver, the Vancouver member can be set up as an ‘assist’ in the system so they have access to and can work on the file, but at the end of the day the file is consolidated, and the client will see it as if they are dealing with one big company. And when it comes time for payment, the fees are simply split across the members who worked on a file according to their level of contribution. By using this system to create a larger virtual entity, Omnia aims to offer clients access to a seamlessly integrated collab-
Insurtech Trends
PwC’s DeNovo team of over 50 strategists, equity analysts, engineers and technologists provides insight into the latest in startups, technologies, trends and new market entrants related to FinTech and the Insurtech subset. The following is their interpretation of the most important trends shaping the Insurtech landscape. 1. Ride-sharing solutions Ride and car-sharing and other sharing economy services demand new insurance solutions regarding liability and personal injury. 2. Usage-based insurance (pay-as-you-go) Newly enabled data-capture methods enable usage-and behaviour-based models in auto coverage. 3. New models of holistic advice (robo-advice) Artificial intelligence is making it possible for insurance and investment advice to be doled out by machines – automated advisors. 4. Self-directed services Self-serve tools are reducing the cost of serving customers and increasing transparency and speed of fulfilment.
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sales pitch,” Heydenreich says. “The challenge associated with that is our challenge as small firms because our survival for the past fifty years has significantly and dramatically depended on our ability to offer a better, faster, more experienced service. And that doesn’t seem to be that significant a metric anymore,” he adds.
Calls get returned With 36 offices and 20 membercompanies, Omnia has already got the critical mass to get phone calls returned, now, Heydenreich says. He points out that some of the adjusters onboard have 30, 40 or 50 years of experience and a depth of expertise that’s impossible to replicate. There’s no limit on the number of adjusting firms that can join, and they is still actively recruiting new members. There are a few gaps in the countrywide coverage. Ottawa, Northern On-
5. Connected health and medical advances Developments from wearables to genomics are enabling P4 Medicine: Predictive, Preventive, Personalized and Participatory. 6. Connected/Smart Car Connected and autonomous vehicles are changing the landscape for auto insurance. Claims severity and frequency is going to change dramatically when these come to fruition. 7. Remote access and data capture Non-traditional data capture techniques, including remote devices are improving risk and loss assessments. 8. Shift from probabilistic to deterministic model Real-time data capture and monitoring technology allow insurers to shift from a probabilistic to a deterministic claims model. 9. Granular risk and/or loss quantification Advancement in technology and data capture is helping to quantify risk and/ or loss at a granular level. 10. Robotics and automation in core insurance Capabilities such as robotics and AI are allowing for the automation of core insurance functions. 11. Blockchain This technology will improve payments, clearing and settlement, audit or data A National Network of Independent Law Firms management of assets.
tario, and Atlantic Canada, are underrepresented “because so many small firms have been squeezed out”. Omnia is not operating in Quebec, because of the language and differences in the legal system. “I’d have to duplicate every infrastructure that I have right now to operate in one province, Heydenreich notes. “It’s resource driven and will change in time.” But for the time being the company’s motto “In Omnia Bene Parati—For all things we are well prepared” seems apt. Heydenreich recounts receiving a call for
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The ARC Legal Reporter Winter Issue – Article #1 A National Network of Independent Law Firms
When is a medical examination considered a second examination under Rule 36 of the New Brunswick Rules of Court?
The ARC Legal Reporter v. Crowther and Kelly Case: Winter IssueReported – Article #1 Blyth 2009 NBCA 80 Citation: At Issue:
When is a medical examination considered a second examination 36 of the New Brunswick Rules of The Court? Court:
www.claimscanada.ca under Rule
ARC_Fleet ad_1/2 page.indd 1
Reported Case: Citation: At Issue:
adjusters to attend Fort McMurray last May—while he was in the process of recruiting members to the Omnia project. He put the request to the group, and had “30 adjusters ready to hit Fort McMurray in less than 30 minutes after I sent the email.” “We are ridiculously nimble and very dynamic. We can change in a moment’s notice,” Heydenreich says. “Right now we’re just a group of guys trying to make a living; we’re just applying a slightly different strategy to it.” •
Judgment Rendered: Factual Summary:
When both the plaintiff’s physical and mental condition are in issue in an action, and the plaintiff undergoes a physical examination, will a subsequent application for a psychiatric examination be considered an application for a second medica examination?
Should medical examinations that are ordered as part of the discovery process be characterized as ‘independent’ examinations? April/May 2017 medical Claims Canada 15 Court of Appeal of New Brunswick October 13, 2009 (Reasons delivered November 2015-02-14 26, 2009) 1:05 PM The plaintiff suffered injuries in a motor vehicle accident and commenced an action seeking damages. Both the plaintiff’s physical state and mental state were in issue in the action. The plaintiff submitted to a physical examination by the defendant’s expert but subsequently refused to submit to a psychiatric examination.
Blyth v. Crowther and Kelly 2009 NBCA 80 When both the plaintiff’s physical and mental condition are in issue in an action, and
• spotlight S
Building a legacy Claimstech helps create future adjusters BY EMILY ATKINS
B
alu Naidu and his partner, Raj Mody, have a unique business model for Claimstech, their independent adjusting firm. The boutique firm, based in Mississauga, Ontario, offers a wide array of claims services, from personal and commercial property and liability, to injury and accident, transportation and catastrophe adjusting, as well as support for litigation, mediation, and arbitration. That’s a wide array of expertise, but where they really stand out from the crowd is in their commitment to training the next generation of adjusters. The partners have developed a three-month training program for new recruits to the claims business designed to help mitigate the growing shortage of adjuster expertise.
Origins Claimstech has been on the independent adjusting scene for four years now. Balu and Raj started the business in 2013. At present they have three adjusters working with them. A year ago they set up a satellite office in Calgary, intending to be able to respond to catastrophes when required. Both partners and the business itself are licensed to operate in Alberta. Further expansion, with a dedicated team in Calgary and possibly also Fort McMurray is in the works. Claimstech has set its sights on the Alberta cat market, and with more than 3,000 cat claims under his belt, Balu has seen almost everything Mother Nature can serve up. He points out that Alberta, with its extreme weather, is a good place to offer these services. Balu has significant experience in the province, having worked in Calgary with Crawford before returning 16 Claims Canada
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to Ontario to start Claimstech. His past experience also led to the creation of the adjuster-training side of the business. While he started his career in Kenya teaching finance, he’s been in Canada since 1990 and has been teaching CIP courses for 15 years. Raj also teaches, with 10 years experience as an instructor.
A professional development focus With Crawford, Balu was extensively involved in creating and teaching courses for the company’s adjusters. “I trained adjusters from coast to coast,” he says, and that’s what helped him identify training as the industry’s greatest need. “There’s a lack of specialized skills and knowledge and also specialized training for new people coming into claims adjusting,” he notes. The industry as a whole is facing the challenges of the retirement of the baby-boomer generation, coupled with merger and acquisition activity that is causing layoffs and reducing the number of employers. “Layoffs mean further loss of [adjusting] expertise, which is where the independent adjusters really provide the depth of experience to the insurers, and also fill in the gaps due to lack of resources—our manpower is available,” Balu says. Claimstech’s response is to bring new people aboard and give them a broad exposure to the claims adjusting business. The company is reaching out to millennials—recent grads who may not know where they want their career to go—to gauge their skill sets and aptitudes for the insurance industry. As
experienced adjusters know, it takes a person with an interest in learning something new every day to become good at the job. Before taking on a candidate Claimstech checks for people skills, problem solving and interest in continual learning. And this suits the millennial generation well, Balu says. It’s normal for them to change jobs every couple of years, he asserts, so the adjusting profession is good for them, “it’s not boring, not doing the same thing over and over”. Still, he notes that there is quite a bit of persuasion required. “You need to sell our profession to young people coming in, as to what is in it for them. That’s what it’s coming down to.” “We tell them: ‘If your interest is to be learning on a daily basis then this career is for you,’” he says. Once selected for the program, the recruits learn every aspect of claims so they have a broad exposure that will guide them into selecting possibly a specialty later on. “You need to get a grasp on each and every area of the claims process, then you are focused and you find you’re longing for more,” Balu says. “That’s pretty much what happens to the millennials because otherwise they get bored.” The company has had a 70 percent placement rate for its trainees so far. “We have fulfilled our goal of providing manpower to the insurance industry,” he adds.
A modern approach to competition One of the biggest challenges for Claimstech, along with other small IA firms, Balu says, is competing with the big firms for files. The partners have taken a two-pronged approach to busiwww.claimscanada.ca
Balu Naidu and Raj Mody of Claimstech
ness in this competitive environment. First, they focused on their own business processes, which they have established as completely paperless. “We are providing the best possible services at a lower cost,” he says. “And that created a strength for us.” The idea came about when he worked at Crawford. By going paperless there, he was able to “downsize filing storage space from about 500 square feet to probably 200 square feet.” So when the Claimstech partnership came about Raj and Balu readily agreed that they needed to have this economical, modern and IT-oriented philosophy informing their business practices. “When you visit our office, you’ll see our desks and the phone,” Balu says. “There are no filing cabinets, nothing at all.” The company keeps all its data in the cloud, relying on Microsoft Office Pro, tablets and smartphones. Balu emphasizes the importance of strong security and good practices, noting backups and frequent password changes. He believes in this tech-forward approach, which enables staff to quickly capture and share images of claims, as www.claimscanada.ca
well as making it possible for the insurers they work with to also have immediate access and securely download materials from the cloud. “This is where we’d like to be different from other independent insurance adjusters,” he concludes.
Looking to the future Business is good, Balu says, and the company is meeting the objectives the partners set on startup. But that’s not stopping them from planning for the future. The second part of their two-pronged strategy to overcome competitive pressures has seen Claimstech sign on as a member of the newly established Omnia Co-op. Omnia is a group of likeminded, small independent firms working together to gain access to contracts that would otherwise be out of reach for smaller companies. Balu says their membership in the Omnia Co-op is intended to help meet bottom-line objectives. The company set a goal of $1 million annual revenue, and after four years of growth he says they are close to meeting it. “We expect to achieve the goal within the next two years.”
A must for adjusters Claimstech’s membership in the CIAA dovetails with Balu’s view of the challenge of competing for business with the large national firms. “It should be a must for any kind of independent adjusting company,” he says. “Whether it’s a boutique firm or a medium-size or large firm, you need to be a member so that we can work together to spread the word about the professionalism of the independent adjuster.” He underlines the value the association offers in developing talent through seminars and other events. As well, he feels the association’s elected board ensures representation across the country from firms of all sizes. “They do represent the needs of a small independent and boutique firms all across Canada.” For Balu and Raj at Claimstech, their CIAA membership supports their carefully crafted strategy to compete in the changing claims industry, while at the same time supporting it by creating training opportunities for new adjusters. •
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Property Loss Update: A review of recent cases, Part 2 This is Part 2 of the property loss review that began in the Feb-Mar issue of Claims Canada.
BY GLENN GIBSON ICD.D, CIP, FCIAA, FCLA, CFE
Carter et al V. Intact Insurance Company, Ontario Court of Appeal, December 6, 2016 On March 16, 2011 a fire caused significant damage to an income property in Ottawa. There were originally three structures on the property, which were blended together over time. Several of the buildings were 1950-vintage with the most current structure going up in 1990. The tallest building was two storeys. The complex provided a mix of use combining residential apartments with some commercial/retail space. In total, the building has usable square footage of 36,730 sq. ft. There was neither underground parking nor any elevators. This income property was owned by three owners for 24 years. The building complex was insured for $7,614,750. There was a replace18 Claims Canada
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ment cost endorsement (RCE) on the policy and there was additional coverage for building code upgrades. After the loss the policyholder made the decision that they were going to rebuild on the same site. But, their new structure was going to be an eight-and-a-half storey condominium complex. This was going to cost $30 million. The total square footage of the new complex was about 194,000 sq. ft., which included a two-level underground parking garage and elevators. As the adjustment of the loss unfolded there was a dispute as to the “amount of loss”. An election was made to take the matter to “Appraisal” under Section 128 of the Insurance Act. This resulted in a tribunal decision that: 1. The building replacement cost was $5.73 million. 2. The actual cash value of the loss was agreed at $3.9 million. 3. The process also reached an agreement on Building Code upgrade costs of about $511,000. The insurer paid the ACV sum to the policyholder after the tribunal was concluded. They took the position that
the insured had not complied with the terms of the RCE to rebuild with “like kind and quality”. They also felt there was no obligation to contribute the building code upgrade costs. On June 23, 2015, Justice Kevin Phillips in Ottawa heard evidence for a Rule 21 Motion for summary judgment. The policyholder wanted a ruling that their insurer would be compelled to pay out their policy limit and the building code allowance as a contribution towards the overall cost they were going to expend to put up their new complex. Justice Phillips had a number of key issues to decide including: 1. Was there ambiguity in the language of this particular insurance policy when looking to determine what exactly “replacement cost” meant? 2. At the inception of the policy, what was the true intent of both parties if this type of loss situation presented itself? 3. In coming to a decision, he was mindful of the fact…“An interpretation which will result in either a windfall to the insurer or an unanticipated recovery for the insured is to be avoidwww.claimscanada.
ed”. (Brissette Estate V. Westbury Life Insurance Company, 1992 CanLII 32 (SCC), [1992] 3 S.C.R. 87) The decision of Justice Phillips contains an excellent review of case law relating to the process one should go through to examine and interpret insurance policy language. In this instance, was there ambiguous language at play? The Phillip’s decision also provides historical context to replacement cost endorsement and how it was designed to essentially allow for the insured to buy up their “depreciation” by paying a higher premium. This was a departure from pure indemnity policies, which were designed to put the insured in the exact position they were in just prior to the loss occurring. But it was noted in a number of the cases reviewed how the potential to recover depreciation increased the moral hazard of the risk. Justice Phillips concluded his decision with this comment: “Ultimately, it is a judgment call. I conclude that in this matter, the redevelopment of the property by constructing a significant condominium development of the size, utility and design proposed is not sufficiently similar in the characteristics of the property, which was insured and existed prior to the fire. The changes are more than changes necessitated by developments in building practices and styles over time. There are considerable differences in the size of structures as well as the utility, as demonstrated by the significant increase in value and revenue producing capability of the condominium development compared to the property at the time of the fire. The proposed redevelopment does not meet the definition of replacement through construction with property of “like kind and quality” as provided for in this policy.” (Emphasis added) Having made a decision that the policyholder was not entitled to receive the benefits of the replacement cost endorsement the trial judge did not rule on whether or not the Building Code requirements were to be awarded. He www.claimscanada.ca
stayed silent on that point. It was against this backdrop that the matter went to the Ontario Court of Appeal. Justice John I. Laskin wrote the unanimous decision for the three-member group from the Court of Appeal. Justice Laskin noted that the insurance industry does sell policies that indemnify the insured on an ‘actual cash value’ basis. These policies provide pure indemnity insurance. They are designed to put the insured back into their exact shoes just prior to the loss. The insured does not profit from these policies. However, insurers also sell policies that include ‘replacement cost’ coverage. The insured is entitled to the full cost of repairs or replacement without the deduction of depreciation. Justice Laskin follows the logic expressed by Justice Phillips in the lower court by noting that when replacement cost is invoked there is the potential for a moral hazard increasing. An insured might commit an intentional act or be overly careless because a loss might provide an enhancement to them. On this point, Justice Laskin said: “In my view, the principal method by which moral hazard in this context is minimized is the expectation by both parties that lost property would be rebuilt with new property of like kind and quality. Since the underlying principle of insurance is indemnity, replacement cost coverage should be construed in a fashion that is consistent with that concept. Betterment is to be avoided to the extent possible. I find this rationale for a requirement that the replacement building to be constructed with new property of like kind and quality. This restriction is an appropriate brake on the moral hazard risk.” (Emphasis added) He goes on to say that the appeal really turned on interpreting their policy definitions of what is “replacement” and “replacement cost” in the policy. Justice Laskin goes through a detailed analysis of these issues. He concluded: “A “replacement” is needed to trigger entitlement to “replacement cost”. And the plain and or-
dinary meaning of the definition of “replacement” in the policy is that to be entitled to “replacement cost”, the replacement, no matter how it is affected, must be of like kind and quality. Of interest is that he goes on to say that his reading and interpretation of the wording means that: “…. the word “includes” in the definition of “replacement” means that the replacement can be effected by a method other than repair, construction or reconstruction, for example, by purchasing an existing building to replace one that is lost. But, whatever the method of replacement, whether enumerated or not, the actual replacement must be of like kind and quality. That phrase, “like kind and quality” modifies or anchors all methods of replacement.” (Emphasis added) Justice Laskin gave credit to Justice Phillips in his interpretation of the replacement cost endorsement as it… “better reflects the indemnity principle, which typically underlies insurance contracts.” He goes on to say: “But allowing replacement cost only where the replacement is of like kind and quality to the damaged or destroyed property better reflects the indemnity principle. Replacement cost would then give insureds enough money to rebuild something equivalent to the property that was damaged or destroyed.” The final point Justice Laskin covered was the cost of over $500,000 for reconstruction of the old building to current standards. His view was that you must first determine coverage for the replacement cost endorsement. In this instance he felt the new condominium was not the same height, floor area, style or occupancy therefore the insured was not only not entitled to replacement cost but also not entitled to receive the by-law upgrade costs
Summary This is a very significant case for many reasons: 1. There is a historical context provided to the replacement cost endorsement. 2. The introduction of the “moral APRIL/MAY 2017
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hazard” notion to justify the restrictions put on the replacement cost endorsement is an interesting point. 3. The significant emphasis being put on “material of like kind and quality” should not be lost on anyone. 4. As always, in cases like this, arguments arise over the policy definitions. Is the wording clear? Is there ambiguity? What was the intention of the insurer in writing this language? What did the insured think he was buying / what was he covered for? What reasonable expectations might be applied to the wording? There was a clear gap between building a $30 million new structure versus spending $5.7 million to rebuild a fire-damaged structure. But one has to wonder what might be the case if the differences were not so dramatic? The original replacement cost endorsements were added to provide an extra layer of coverage in return for an increased premium. One wonders
if the results of this Court of Appeal decision won’t open the door for underwriters to look at the design of their product and perhaps design a replacement cost endorsement that might provide policy limit payments in this same situation—of course, for an increased premium.
Nejim et al V. Intact Insurance Company, Superior Court of Justice- Ontario- J. George, September 20, 2016 On January 7, 2014 a pipe burst causing significant water damage in a rental property owned by the insured. There were two issues at play: 1. Was the loss covered, as the premises were vacant at the time of the loss? 2. Did the insurer create an estoppel when they stepped in after the loss to effect emergency repairs?
This matter was decided upon without a trial. There were a number of documents and affidavits submitted to the judge. The insureds represented themselves in this matter. This particular house had been owned by the insureds. They decided to buy another home and after renovating it they moved out in the fall of 2013. The evidence showed they were attending the house on a regular basis. They also had a neighbor who was regularly inspecting the home. But, they had moved out virtually all of their furniture. There was no doubt no one was living in the home at least 30 days prior to the loss. They had a tenant lined up to move in January 1st, 2014 but that deal fell through. It was only two hours after a neighbor had inspected the premises on January 7, 2014 that a water line broke in the house. The insureds admitted that they had no intention to move back into the insured property.
The trial judge approached the coverage situation in logical steps. 1. Did the policy of insurance cover the loss? 2. But, does the exclusion clause apply? There was no question there was coverage for this water escape. The fact the insured was inspecting the home on a regular basis “… did not amount to occupancy.” There was no reason to look at the language of the policy exclusion to see if the contra preferentum principle needed to be applied. The language was clear. The facts were clear. There was no coverage for this loss. (Progressive Homes Ltd. v. Lombard General Insurance Canada, 2010 S.C.C. 33 (CanLII).) There was an additional issue raised in this trial. The insurer had dispatched a contracting company to effect emergency repairs after the loss had been reported. The insured argued: 1. The insurer had created an estoppel by responding and acting to mitigate the loss.
2. The contractor had caused further damage in the manner in which they executed their repairs. The judge ruled: 1. The insurer had acted in good faith in mitigating some of the damage while they investigated the loss. 2. There was no estoppel (Scotsburn Co-operative Services Ltd. v. W.T. Goodwin Ltd., 1985 CanLII 57 (SCC), [1985] 1 S.C.R. 54) and Williams v. Paul Revere Life Insurance Co., 1997 CanLII 1418 (ON CA), 1997 CarswellOnt 2450 (CA)) 3. He disagreed with the argument about the contractor’s work and felt that “perhaps” the insured might have a cause of action against the contracting firm but NOT against the insurer.
Case Summary The approach taken by the parties to submit affidavit evidence and deal with the case in this manner certainly would have been an efficient, cost-effective way to deal with the coverage
issue on this loss. You will note the “process” the judge followed to determine the application of the exclusion clause. You will note how it follows the same pathway as the Ledcor Construction Ltd. V.Northbridge Insurance et al, Supreme Court of Canada, September 15, 2016 that we covered in the previous issue of Claims Canada.
Conclusion The insurance industry does an excellent job of responding to the vast majority of their property claims. But there are always claims where there is a legitimate difference of opinion on the “amount of loss”. It is puzzling that the “Appraisal” process built into the provincial Insurance Acts is not utilized more proactively to affect a cost effective, speedy solution. • Glenn Gibson, ICD.D, CIP, FCIAA, FCLA, CFE is President & CEO of The GTG Group.
A collaborative success story:
Explosion
BY PABLO J. ROBALINO, M.SC., P. ENG, PMP
response
Forensic investigators are both scientists and detectives, fueled by the commitment to pursue knowledge and the drive to successfully solve each case. Though a forensic investigator may specialize in areas as diverse as Building Science, Fire Investigation and Materials Failure, they all share the common goal of uncovering the true cause of an incident and making our world a safer place by sharing this information and empowering people to make informed decisions based in science. Work fulfillment is gained by confronting a challenging problem and finding a solution. It’s this problem solving in service of a greater good that drives a forensic investigator in his or her work. But many losses are complex, and a single investigator, regardless of skill and commitment, cannot always reach a conclusion alone. Losses often involve multiple factors and require the expertise of more than one investigator to uncover origin and cause and develop practical solutions. In such cases, it is ideal to work within a team of specialists, with each investigator focusing their efforts in the area where they have deep understanding of the science involved, and the team combining their shared knowledge and experience to uncover the complete picture. It is this approach that will lead to conclusions on challenging cases and allow the forensic investigator to deliver useful solutions to clients. One such case involved an explosion in an industrial building. The explosion occurred on the third floor of a four-storey structure, and caused severe damage to one side of the building (Photograph 1). It was determined that the structural integrity and safety 22 Claims Canada
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View of explosion damage and temporary shoring of the building had been compromised and immediate action was required to ensure safety in the areas at risk of structural collapse. An emergency response was necessary. A team of civil/structural engineers and engineering technologists quickly developed an emergency response strategy, which involved an initial structural assessment, 3D scanning of the damaged structure to establish a baseline condition for continuous monitoring, design and installation of temporary shoring to support the damaged building, and the use of a 90ton mobile crane to temporarily support the top portion of the building while workers accessed the severely damaged area (Photograph 2). An ‘Emergency Response Proposal’ was developed, which included a scope of work detailing the design of the emergency shoring and support system as well as installation and safety procedures to be adhered to throughout the emergency response. The plan evolved
as required throughout the process and was implemented in cooperation with the restoration contractor, with members of the emergency response team present throughout the installation to monitor progress and provide assistance when necessary. The completed shoring system rendered the building temporarily safe for thorough inspection by the Office of the Ontario Fire Marshal. At the same time, fire and electrical experts were permitted to complete an investigation of the explosion and were able to provide conclusions regarding origin and cause. During the development and implementation of the emergency response, additional assessments of various environmental and cleaning requirements were also identified and undertaken within the damaged building. The explosion had caused significant particulate accumulation as well as some minor smoke and soot damage. An environmental health and safety team was able to provide a cleaning plan to www.claimscanada.ca
View of 90-ton crane operation and set-up
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remediate the identified environmental factors. In addition, an electrical investigations team became involved in the case when asked to assess damage to the building’s electrical room and power distribution system and provide recommendations for remediation. At this point, a diverse team of experts was onsite and working together to support the successful remediation of
the damaged building. Following completion of the origin and cause investigations, the emergency response team was asked to return to the site to thoroughly investigate the explosion-related damage and provide recommendations for restoring the building to its pre-loss condition. Following the investigation, a detailed assessment of the explosion-related damage, accompanied by a detailed scope
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of work and drawings to facilitate the remediation process was competed and the building permit to allow remediation efforts to commence was secured. Damaged structural elements of the building were selectively removed and replaced, restoring the structural integrity of the building, and new siding, roofing and additional finishes were installed. The cleaning measures proposed by the environmental team were implemented and the building’s electrical system was repaired. Following completion of the remediation work, the affected structure had been reinstated to its pre-loss condition, and the owner of the building was able to resume operations with the confidence that the structure was safe for its intended occupants and uses. Ultimately, it was the quick initial response and the innovative solutions for temporary shoring that prevented the necessity of a full demolition, and allowed for the completion of the origin and cause investigations and repair of the damaged structure. Repairing the damage to the building was done at a fraction of the cost of rebuilding, as construction of a new building would have required the removal and replacement of the entire structure, including all the mechanical and electrical equipment, and would have involved a significantly greater business interruption. Through saving the damaged structure and eliminating the necessity for a costly demolition and rebuilding process, this case was closed knowing that the building was safe and the most practical and cost-effective solutions was implemented. Success in a case such as this can be attributed to a tightly coordinated effort utilizing specialists across a number of disciplines. No one expert could have achieved this success alone. This case demonstrates the power of deploying a multidisciplinary team in the face of a complex loss scenario, and fuels the curiosity to discover what greater innovations and successes are possible when experts combine forces. • Pablo J. Robalino is a Senior Associate serving the Civil/Structural discipline at -30- Forensic Engineering. www.claimscanada.ca
Deductibility of CPP disability benefits in personal injury claims
BY CHERYL A. CANNING
In personal injury claims involving lost income, it is very common for plaintiffs to have received income from various sources while unable to work, including Canada Pension Plan Disability Benefits (“CPP”). The question of whether the tortfeasor or insurer may deduct the CPP benefits received by the plaintiff from the lost income claim has been answered differently depending on the province, the legislation in force at the time, and in some cases, the particular judge answering the question. Historically, the collateral benefits rule guided the deductibility of various income sources from income loss claims. The underlying principle of the collateral benefits rule was to put the plaintiff in the position he or she would have been in had the tort not been committed. Such a principle would not allow for double recovery. For the insurers and tortfeasors, this meant they could deduct income received from the claim for income lost. Courts did however, carve out some exceptions relating to income derived from a source for which the plaintiff has given some form of consideration. The most obvious example of this is private disability insurance that the plaintiff had paid for. Because the plaintiff had to give something up to have the benefit of receiving income replacement, the plaintiff was allowed a certain degree of double recovery. Under the collateral
benefits rule, CPP benefits were not to be deducted from a plaintiff’s claim because they were considered to be analogous to the private insurance exception. In the early 2000s, faced with rising insurance costs, many provinces were undergoing insurance reforms to institute a cap on minor injury damages or a deductible to be paid for injuries within a certain threshold. Along with this thinking, the collateral benefits rule was scrutinized in an attempt to reconsider the extent to which double recovery should be allowed. In Nova Scotia, the Insurance Act was amended in 2003 to specify that “…the damages to which a plaintiff is entitled for income loss and loss of earning capacity shall be reduced by all payments in respect of the incident that the plaintiff has received or that were available before the trial of the action for income loss or loss of earning capacity under the laws of any jurisdiction or under an incomecontinuation benefit plan if, under the law or the plan, the provider of the benefit retains no right of subrogation.” (s. 113A). And thus began a long quest to answer the question: Are CPP benefits received “in respect of the incident” and therefore deductible from the claim? Fourteen years later in Nova Scotia we still don’t know the answer. We currently have conflicting decisions from the same court. In Tibbetts v. Murphy, 2015 NSSC 280, Justice MacAdam of the Nova Scotia Supreme Court said that
both past CPP benefits received by the plaintiff and future CPP benefits payable to the plaintiff are deductible. In Hollett v.Yeager, 2014 NSSC 207, Justice Coady, also of the Nova Scotia Supreme Court said they are not deductible. Tibbetts is currently under appeal. In Tibbetts, Justice MacAdam chose to follow the reasoning of the earlier Nova Scotia decision in McKeogh v. Miller, 2009 NSSC 394, which in turn, had followed the Ontario Superior Court of Justice decision in Meloche v. McKenzie (2005), 27 CCLI (4th) 134. In Hollett on the other hand, Justice Coady followed the reasoning of the Ontario Court of Appeal in Demers v. B.R. Davidson Mining and Development Ltd., 2012, ONCA 384. The inconsistency is not limited to Nova Scotia. Over the past 20 years there have also been a number of cases decided in the specific context of SEF 44 claims. The New Brunswick Court of Appeal (Co-operators General Insurance Co. v. Melanson (1998), 192 NBR (2d) 273), the Nova Scotia Supreme Court (Doran v. Commercial Union Assurance Co of Canada (2000), 182 NSR (2d) 329), the New Brunswick Court of Appeal again (Economical Mutual Insurance Co. v. Lapalme, 2010 NBCA 87) and the Nova Scotia Court of Appeal (Portage La Prairie Mutual Insurance Co., 2015 NSCA 53) addressed the deductibility of CPP benefits from SEF 44 claims. Numerous other cases along that timeframe addressed the deductibility of other sources of income, leading to much confusion and some inconsistency. By the time the Sabean case was decided by the Nova Scotia Court of Appeal in 2015, the Nova Scotia and New Brunswick Courts would have answered the question of deductibility of future CPP benefits from SEF 44 claims differently (yes and no, respectively) despite interpreting identical wording. At the end of January 2017 the Supreme Court of Canada released its decision in the case of Sabean v Portage La Prairie Mutual Insurance Co, 2017 SCC 7. The question the SCC was asked to answer was: Are future CPP disability benefits deductible by the insurer under the SEF 44 Endorsement as a “policy of insurance providing disability benefits”? continued on page 26..
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...continued from page 25
The SCC’s answer, interpreting a Nova Scotia SEF 44 Family Protection Endorsement, was “no”. Nova Scotia’s SEF 44 is, like other “Special” or “Family Protection” endorsements in other provinces, an optional excess insurance policy. When an insured person is injured in a motor vehicle accident and their damages exceed the limits of the tortfeasor’s coverage, the SEF 44 is meant to cover the shortfall up to the SEF 44’s limits. As an excess “last resort” policy, it attempts to avoid double
recovery by the plaintiff that sometimes results from the exceptions to the collateral benefits rule. In Clause 4(b)(vii), the endorsement contains a set list of income sources that will be deducted from the amount the SEF 44 insurer is required to pay. One of these deductions is: “future benefits from a policy of insurance providing disability benefits”. The inconsistent interpretation of this clause has resulted from the attempt to identify what is a “policy of insurance providing disability benefits”. In answer-
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ing this question on behalf of the SCC, Justice Karakatsanis applied the principles of contract interpretation set out in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2015 ABCA 121, and specifically, that where the language of a disputed clause is ambiguous, effect should be given to the clear meaning of the words of the clause. She focused on the ordinary meaning of the words “policy of insurance” and said that an average person would understand policy of insurance to refer to a private policy that a consumer can purchase, as opposed to a statutory scheme like the Canada Pension Plan to which all working Canadians have to contribute. She therefore decided that future CPP disability benefits are not paid pursuant to a true policy of insurance, and are not to be deducted from the SEF 44 claim under clause 4(b)(vii). Harkening back to Ledcor and so many other decisions before it on insurance contract interpretation, the SCC pointed out that if an insurer wants to be able to make a deduction, it should state specifically what the deduction is. While this clarity is welcome, its application is limited to the SEF 44 context. The question of whether CPP benefits are deductible from a Section A claim in the tort context is still very much alive. While the SCC in Sabean interpreted an insurance policy, the courts in Tibbetts and Hollett interpreted legislation (specifically, s.113A of the Insurance Act, referenced above). The release of the Sabean decision at the same time the Nova Scotia Court of Appeal deliberates in Tibbetts poses an interesting dilemma. If the Court of Appeal is inclined to agree with Justice MacAdam and interpret the legislation so as to allow for the deduction of future CPP benefits, the result will be that the tortfeasor’s first-in-line insurer will get the benefit of a deduction that the last resort excess insurer will not. From an insurance perspective, this will be an absurd result created by wording crafted by politicians as opposed to underwriters. Will this absurdity weigh into the Court of Appeal’s deliberations? Should it? We hope to find out soon. • By Cheryl A. Canning is a Partner at Burchells LLP in Halifax, Nova Scotia. Burchells is an affiliate of The ARC Group Canada.
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The financial impact of a product recall BY FRANCIS GAGNÉ
Whether it is as a result of the risk of e-coli, listeria or salmonella in food products, a choking hazard in children’s toy, a safety issue on a vehicle or a yoga pant stretching and becoming see-through; the list of issues that might trigger a product recall is endless. In the first six months of 2016 alone, there were over 700 recalls in Canada. Recently, IKEA voluntarily recalled 29 million dressers and chests due to the tip-over hazard they posed, following six deaths and dozens of injuries. Aside from the refunds, which will apply to all affected dressers and chests manufactured from January 2002 to June 2016, the company may also suffer from profit loss as a result of decreased sales following the recall. We’ve come a long way in health and safety regulations since the Ford Pinto fiasco of the 1970s. Stricter regulations have been implemented and more frequent inspections are performed, resulting in increased numbers of product recalls. Companies are also being pro-active to test and investigate potential issues arising from complaints before government agencies intervene, in order to limit their financial exposure from reputational losses and litigation. So let's look at what happens when the Food and Drug Administration, the Canadian Food Inspection Agency or the Food Standards Agency has notified an insured that a product has been recalled. The recall goes out to media, to customers, to distributors and retailers notifying them that the product will need to be removed, repaired or changed—this is the first
step in controlling the product and the potential risks associated with the product. But how much of a financial risk is the recall to a company?
The cost of a product recall Product recalls have the potential to cost companies millions of dollars. According to an October 2011 survey of Grocery Manufacturer’s Association members performed by Ernst and Young1, over 81 percent of respondents described the financial consequences of a recall as either “significant or catastrophic”. Alarmingly, 58 percent of respondents reported that their companies had been subject to a recall in the last five years. The role of product recall insurance In this same EY Study, the survey respondents identified four major financial exposures related to product recall: business interruption, recall execution costs, liability risk and reputational damage. The two largest costs identified were related to recall execution costs, such as product disposal, storing, transporting and destroying the product, and business interruption due to shutting down production for inspection, cleaning and sanitization. Product recall insurance is intended to cover financial losses as a result of a product recall, such as the cost to remove the product from the supply chain, the cost of disposal, cost of repairs or remediation action and the resultant loss of profit.
The product recall claim Now that the recall is underway and defective product is under control, and customers are notified, the company will start to receive claims for costs incurred and for loss of profits as a result of the recall. Product recall insurance will cover some of these costs, and having an experienced forensic accountant to assist in the claims process comes in handy to organize, evaluate, document and quantify the losses covered by the policy. Forensic accountants are often involved in quantifying the insured losses stemming from a product recall, reviewing the supporting documentation assembled by the insured. This can include reviewing invoices provided by the insured for costs such as removing and disposing of the affected product, and repair or remediation costs. Where these costs are supported by invoices from a third party, these aspects of the claim tend to be “straightforward” from a forensic accounting perspective. However, the quantification issues often become complex when an insured has utilized its own workforce on aspects of the recall response, or where a loss of profit is claimed. In respect of the claim for internal labour, one of the common issues we identify is the extent to which the costs claimed are incremental. Insureds often present claims for the total time spent by their employees to deal with the affected product. However, the insurance policy will typically consider the economic loss to the customer; meaning only incremental costs are considered. In order to determine the incremental cost of internal labour, we have to consider factors such as: continued on page 28...
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• Did the employees work any additional hours beyond their regular shifts? • Did the employees work overtime? Do they normally work overtime? • Were additional employees called in to assist? The loss of profit component of the claim can also present quantification issues. In the case of an insured that only sells one product line, it can be easier to identify the impact of the incident on the sales of the business. However, more often the insured manufactures multiple product lines, only some of which may be affected by the recall. In these situations, one of the issues we need to consider is the extent to which the loss of profit has been mitigated. In doing so, we need to consider the impact on other areas of the business, including: • Was the insured able to offer a substitute product while the recall was in place? • Was the customer able to use anoth-
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er supplier to produce their product? • Was the insured able to claw back any of the lost sales once the recall was lifted and sales of the affected product resumed? These are all possible mitigation efforts for the loss of profit, but our work doesn’t stop there. Mitigation efforts may only decrease the potential loss of profit, they don’t necessarily prevent them completely. A substitute product can have a lower margin than the product it is replacing or the substitute product may cost more than the original product.
Resolving the claim Given the significant cost of a product recall, resolving the claim is in the interest of all parties, particularly the insured. From a forensic accountant’s perspective, insureds can assist in resolving the claim as expeditiously as possible by: • Concurrently capturing and quar-
antining the costs of the recall for the purpose of submitting the claim once a recall is underway; • Ensuring that amounts paid to third parties are supported by invoices; • Ensuring the claim considers the “normal” labour cost of the insured In the event of a claim for internal labour; and • Ensuring the claim considers mitigation via the sale of substitute products and via “claw back” for loss of profit claims. As forensic accountants, we can assist in this process by meeting with the Insured as soon as possible after a recall, discussing with them their loss mitigation strategy, and formulating how best to support their claim. • “Capturing Recall Costs – Measuring and Recovering the Losses”, October 2011. Francis Gagné, CPA, CMA, CFF, located in Montreal, QC joined the FAS Global team in December 2015. 1
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• on the scene OTS Toronto City Council has authorized staff to enter into a three-year agreement with ClaimsPro LLP to provide adjusting services to the city. ClaimsPro, owned by SCM Insurance Services Inc, was one of four adjusting firms to respond in November to a request for proposals for adjusting services for public liability, automobile and property damage insurance claims. The other three were Cunningham Lindsey, Crawford Canada and Sedgwick Canada. A staff report noted the agreement, starting April 1, 2017 was “for an estimated total cost of $10.9 million net of all taxes and charges, based on the terms and conditions set out in the Request for Proposal and in a form satisfactory to the City Solicitor.” Council also authorized an extension to an existing agreement for ClaimsPro to provide adjusting services for claims “received prior to and not yet settled by March 31, 2017, at an estimated cost of $7.1 million.” ●
Aaron Deines
Kevin McNeill
William Elliott
FirstOnSite Restoration has strengthened its leadership team in Alberta. Aaron Deines has been named branch manager – Edmonton, Kevin McNeill has taken on the role of branch manager – Grande Prairie, and William Elliott is branch manager – Calgary. Aaron brings more than 13 years of restoration experience to his new role. Kevin’s experience stretches from hands-on construction and restoration work in both residential and commercial properties, through to successful business ownership and franchise growth. He has been with FirstOnSite since 2012. William has a comprehensive understanding of residential and commercial claims processes, extensive expertise in project management and branch management, and has been a key asset to FirstOnSite since 2015. ●
Accident Support Services International Ltd. (ASSI) appointed Lynn Hemingway to the position of vice president, operations, with responsibility for the company’s collision reporting centres. Before working with ASSI, Lynn held managerial positions in the retail sector and was responsible for hiring and training staff for new branch openings across Ontario. Lynn Hemingway Since joining ASSI in August of 2003, Lynn has managed the Brantford, North York and London Collision Reporting Centers (CRC). She also served as South Western Ontario district manager, responsible for 14 CRCs. Lynn will work with Bob Gutwein during his transition to retirement. ●
Blue Schindler has been appointed senior vice president of SCM International Programs Group LP (IPG), an SCM Insurance Services company. Since IPG’s inception in 2009, Blue’s energy and enthusiasm has contributed to significant top line growth. IPG has grown to over 70 staff and is now the largest Lloyd’s Third Party Administrator Blue Schindler (TPA) in Canada. In her new role, Blue will continue to oversee IPG’s operations and take on the additional duties of supporting future integration activities in the US TPA space as SCM builds its presence outside of Canada. Before joining SCM, Blue owned and operated a successful claims, training and mediation services company, specializing in public sector claims management. ● Construction consulting firm, MKA Inc has opened an Edmonton office and appointed Rakesh Bandaru, as regional manager. Rakesh’s broad work experience was gained in the heavy civil industry, spanning across design, management and construction of transportation infrastructure and oil and gas projects. His work experience started on a multistorey concrete building for a university. After graduating with a Master’s degree in Civil Engineering, Rakesh worked as a field engineer for a general contractor on various bridge projects across the US and Canada. ●
Cunningham Lindsey Canada Claims Services Limited has appointed Fred Nzivo as the new senior multi-line adjuster in Calgary. He will report to Coralee Harder, Western Region district manager. Fred previously worked as an independent adjuster and staff adjuster with national adjusting firms and insurers, and has over 14 years of experience. He Fred Nzivo specializes in residential and commercial property, personal and commercial liability and auto property. He holds a Chartered Insurance Professional (CIP) designation and he graduated from the Kenyatta University, Kenya, with a BA in Sociology. ● Tracy Krunic, vice president, commercial lines (Ontario and Atlantic), Intact Insurance, has been appointed to the Centre for Study of Insurance Operations (CSIO) Board of Directors. Tracy began her career in 1994 at Guardian Insurance, joining Intact via acquisition in 1998. She brings over 22 years of industry experience, including various management roles in the Toronto and Mississauga regions, and is presently responsible for the corporate underwriting and loss prevention functions of commercial lines in the Ontario and Atlantic divisions. She holds a BBA (Hons) degree from Wilfrid Laurier University and is a Fellow of the Insurance Institute of Canada. ● continued on page 31...
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ENCON Group Inc, a managing general agent (MGA) in Canada, appointed Stefanie McKay as chief underwriting officer (CUO). McKay will be responsible for leading and developing underwriting strategy across all lines of business within ENCON’s Underwriting Management division. She will continue to be based in the company’s Ottawa headquarters and Stefanie McKay will report to David Cook, president of ENCON. Most recently, McKay served as senior vice-president of ENCON’s errors and omissions (E&O) underwriting department where she was responsible for overseeing the company’s architects and engineers, E&O and technology product lines. ●
Lisa Bodemann has been named business relationship manager in Sedgwick’s Mississauga office. Lisa is licensed in all lines with 34 years of experience in the insurance industry. Her specialties are multi-line liability claims, accident benefits, property and casualty Canada-wide. Her experience includes mediation, discoveries, pre-arbitration, arbitraLisa Bodemann tion, pre-trials and trials. She has also managed national accounts including risk management accounts with self-insured retentions. Lisa holds the CIP and CRM designations and is working towards her FCIP. She is a member of the Ontario Insurance Adjusters Association and the Canadian Independent Adjusters Association. ●
Grant Rerie with Patti Kerhaghan and staff Kernaghan Adjusters recognized a milestone anniversary for senior management team member Grant Rerie. Grant celebrated his 20th anniversary with KA earlier this year. Grant and his wife, Valerie Rerie, enjoyed a dinner with Kernaghan Adjusters’ president and CEO Patti Kernaghan and her husband, Pierre Coupey. “The one thing that hasn’t changed in 20 years is Grant’s commitment, loyalty and ability to bring his team together,” Patti said. “Kernaghan Adjusters’s success is built by people like Grant who understand the strength of a collaborative team that works together, builds the vision and makes it happen.” ● www.claimscanada.ca
Alberta-based Full Circle Insurance Ltd. and Ontario brokerages Fairview Insurance Brokers Inc. and Steven Kaluski Insurance Brokers Ltd. will join BrokerLink, one of the largest Canadian property and casualty insurance brokerages. Terms of the transactions, effective April 3, were not disclosed. Brokerages that join BrokerLink gain access to a network of professionals. Peter Weightman, president of BrokerLink, noted that they have more than 1,400 employees across Alberta, Atlantic Canada and Ontario and this network allows employees to learn from one another and share best practices. “It also allows us to stay connected with the needs of communities we serve,” he said. ● Greig Boyle has been appointed director of sales and marketing at SPECS Limited. Greig joined the company in April of 2015 as director of operations, bringing with him more than 25 years of experience. With Greig moving into his new position, Jarett Finney will assume the director of operations role. Jarett started at SPECS in April 2016 and was appointed Calgary branch manager. His 15 years of management experience served him well as the CAT coordinator for the company’s Fort McMurray response. ●
CIAA New Members — February 2017 INDIVIDUAL MEMBERSHIP
Cunningham Lindsey Heather Bouzane John Crutchfield Ashlinn Kavanagh, CIP Stephen Kauk Shane Maharaj, CIP, CRM Patricia Washuta, CIP
St. John’s, NL Calgary, AB Calgary, AB Guelph, ON Edmonton, AB St. Catharines, ON
Level 1 Level 2 Level 1 Level 1 Level 3 Level 3
Sedgewick CMS Ashley Barich Mississauga, ON Lisa Bodemann, CIP, CRM Mississauga, ON Linda J. Heggarty, CIP, CRM Mississauga, ON Elaine Obcena, CIP Mississauga, ON Valerie Watson, CIP Mississauga, ON
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Vericlaim Canada William Bryan Coleshill Mississauga, ON Don Giles Mississauga, ON Robert Ginn Mississauga, ON Karen Heaslip Mississauga, ON Ross Macdonald Mississauga, ON Michele Quirk Mississauga, ON Deborah Sherren Mississauga, ON Terrence Soltys Mississauga, ON
Level 3 Level 1 Level 3 Level 2 Level 3 Level 1 Level 3 Level 3
CIAA New Members — March 2017 INDIVIDUAL MEMBERSHIP
Cunningham Lindsey Rose Adams, CIP Edmonton, AB
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Claims Canada 31
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• on the scene OTS Cocktails started and a 123-proof Aberlour A’bunadh Batch 58 whisky finished the Scotch Nosing dinner of the Honourable Order of the Blue Goose, International, Ontario Pond at the Ritz-Carlton Toronto on March 23. Single-malt master Edward Patrick also guided the 150-plus guests through the tasting of a Tullibardine 500 Sherry Finish, a morangie Quinta Ruban, and a Glenlivet Nadurra finished in Oloroso Sherry casks. The annual fundraiser took in close to $5,000 for Cam’s Kids, a charity in support of children and youth who suffer from extreme anxiety. ●
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• on the scene OTS It might have come a day early, but that did not put a damper on the 8th annual St. Patrick’s Day Charity Social hosted by SCM Insurance Services on March 16 at Toronto pub Grace O’Malley’s. Local Irish folk duo Lennan Delaney and Jim Maxwell played an appropriate soundtrack for the evening’s festivities, which raised $6,000 for the Juvenile Diabetes Foundation and PeaceBuilders. ●
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• on the scene OTS Disco Glam was the theme of this year’s Women in Insurance Cancer Crusade (WICC) Gala in Toronto. Canadian Underwriter co-sponsored the April 12 dinner, dance and silent auction, which featured performances by ABBA and Bee Gees tribute bands and raised $150,000 for the Canadian Cancer Society. ●
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