Claims Canada February/March 2009

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February/March 2009

Containment Strategies Communication key to curbing escalating property claims costs

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Contents FEBRUARY/MARCH 2009 • VOLUME 3 • NUMBER 1

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Cover Feature 12 Containment Strategies What at first appears to be a small, routine loss, quickly turns into a large or a total loss. A lack of control and communication is often at the root of these escalating property claims.

BY LAURA KUPCIS

Spotlight 18 A Good Tailor Prompt professional and efficient claims service styled especially for insurers is a prime focus at Marsh Adjustment Bureau Ltd.

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BY LAURA KUPCIS

Education Forum 40 Employee Dishonesty Quick action on the part of an adjuster can help mitigate further loss, preserve evidence and enhance recovery opportunities in an employee dishonesty claim.

News Features 20 The Arbitration Process The arbitration process is a cost-effective means of settling disputes between insurers in cases up to $50,000.

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BY DIANE PRENDERGAST

22 Property Loss Lessons to be learned from recent Canadian decisions that impact an adjuster — including the need to think about subrogation from the first moment on scene.

BY GLENN GIBSON

28 Top 10 Insurance Coverage Decisions An overview of the Top 10 decisions that came out of the Canadian courts in 2008.

BY CHRISTOPHER DUNN

32 Hanis v. Teevan The Ontario Court of Appeal weighs in on an insurer’s obligation to pay defence costs when dealing with covered and uncovered claims.

BY MICHAEL TEITELBAUM

36 Escalating Damages in Serious Brain Injury Multimillion dollar awards of damages were handed down in three recent court decisions bringing to the forefront the issue of continued expansion of range and scope of future care costs.

BY IAN MAIR

Departments 4 First Notice 42 On The Scene

Columns 40 Education Forum

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HCAI roll-out anticipated for 2010 Health Claims for Auto Insurance (HCAI), an electronic claims system funded by insurers to the tune of $20 million, is expected to be rolled out in 2010, the Insurance Bureau of Canada (IBC) has announced.

HCAI was designed to be a significant upgrade over the standardized, paper-based, medical-rehab insurance system implemented in Ontario in 2001.

Currently, the HCAI system is in the shop for repairs. At the request of the IBC, Ontario’s auto insurance regulator suspended use of HCAI in April 2008. Many insurers had reported serious disruptions in their claims adjustment process arising from the technical problems encountered by HCAI. The problems are now being “remediated,” the IBC has announced.

“Once remediation is complete, professional testers at IBC will carry out a series of acceptance tests on the system,” the IBC said.

“As part of the remediation process, and to ensure that HCAI is re-introduced under the highest standards of quality control, thirdparty reviews will be performed at several points between now and relaunch of the system.

“Furthermore, HCAI will undergo stringent testing prior to re-launch in order to ensure that it will perform efficiently even with the highest possible volume of transactions.”

Testing will occur during the summer of 2009.

“Upon successful completion of the test phase, HCAI will be re-introduced as a pilot,” IBC says.

“Depending on the performance of the system in pilot, full roll-out is anticipated to occur sometime in 2010.”

Regular HCAI updates will be provided at www.hcaiinfo.ca . ●

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Court dismisses claim for delay Nearly fifteen years after a fire damaged an insured’s home, the Court of Queen’s Bench of Manitoba has dismissed the claim for delay.

In Martin et al v. The Portage La Prairie Mutual Insurance Company, Wayne and Diane Martin owned a home insured by Portage La Prairie that contained a “large quantity of personal property.” A fire in the Martin’s garage in October 1995 resulted in fire and smoke damage to the home and its contents. The insurer deemed the house fit for occupancy in December 1995, but the Martins refused to live in it, citing a high level of volatile organic compounds (VOCs) in the air as a result of the fire and the construction and remediation work done to restore the home. The house has not been lived in since.

A proof of loss was filed in September 1997 for $412,829. The insurer rejected the claim on the basis it was overstated. In June 1998, a statement of claim was filed, alleging the insurer was negligent and failed its duty of care to ensure any repair of the property be carried out with reasonable care and that the repairs were done negligently.

The insurer’s statement of defence noted the claim was absolutely barred under either the insurance policy (having a one-year limitation period commencing from the date the loss occurred) or under the Insurance Act (having a two-year limitation period).

“Then there was a six-year gap between the filing of the plaintiff’s notice of intention to act in person in January 2001 and the filing of this motion in February 2007,” Justice Cooper wrote.

“Then there is another ‘lost year’ between the filing of the motion and the plaintiffs finally filing material in response in Feb. 2008.”

The plaintiff’s explanation for the delay is health and financial problems.

Cooper determined that too much time had passed to rely on witness recounts, and that the evidence to determine whether or not the home had been restored to an inhabitable state has since deteriorated.

“Balancing all relevant considerations, and notwithstanding the sympathy I may feel for the Martins who are having difficult times, I have concluded that essential justice require that this claim be dismissed.” ●

Court allows insurer to reject claim without obligation to void or cancel policy The Ontario Court of Appeal has confirmed that if an insured fails to disclose a material change in a risk to a commercial insurance policy, the insurance company may reject the claim without being obligated to void or cancel the policy instead.

In Patriquin v. Great Lakes Forest Products, the Great Lakes Forest Products company had an automobile fleet insurance policy with the Dominion of Canada General Insurance Company. The decision notes that Great Lakes failed to disclose a material change in the risk, “namely, that they had employed and would have as one of their drivers an individual with a record for impaired driving.”

The driver was involved in a serious accident and Dominion denied coverage.

Great Lakes argued if the basis for denial of coverage is a failure to disclose a material change in the risk, the insurer cannot deny coverage but is required to void or cancel the policy instead.

“We are unable to find any support for that proposition in principle, the wording of the policy, in the applicable legislation or in the jurisprudence,” the Appeal Court wrote in its decision. “We agree with the trial judge that the matter is covered by Standard OAP1 Policy.”

Section 1.4 of that policy says: “If you fail to meet your responsibilities, claims under this policy, with the exception of certain Accident Benefits, may be denied.”

The policy also states the policyholder agrees “to notify us promptly in writing of any significant change of which you are aware in your status as a driver, owner or lessee of a described automobile. You also agree to let us know of any change that might increase the risk of an incident of affect our willingness to insure you at current rates.”

The Appeal Court awarded costs against Great Lakes in the amount of $18,000. ●

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F first notice Plans to appeal Nova Scotia cap decision announced One day after the Supreme Court of Nova Scotia upheld the province’s $2,500 cap for minor auto injuries, the Nova Scotia Coalition Against No-Fault Insurance held a press conference announcing it intends to appeal the decision.

The coalition is an advocacy group supporting the plaintiffs in the case Hartling v. Nova Scotia, in which the court held that the province’s minor injury cap was not discriminatory under the Charter on the basis of sex or disability.

As reported in The Chronicle Herald, at the press conference, coalition chairwoman Susan Hanrahan said the Supreme Court of Canada and the Court of the Queen’s Bench in Alberta have both ruled that chronic pain sufferers are the targets of discrimination. “[Supreme Court of Nova Scotia] Justice [Walter] Goodfellow has totally ignored those courts’ rulings in rendering his decision,” she said.

In Alberta, Court of the Queen’s Bench Justice Neil Wittmann found that Alberta’s $4,000 minor injury auto cap did infringe the Charter because it discriminated against victims of “soft tissue injuries,” language contained in the Alberta legislation.

“The legislative scheme being attacked [in Nova Scotia,] specifically s. 113B(1)(a) of the Insurance Act, is, as noted, broader than the Alberta provision held by [Justice] Wittmann to be unconstitutional,” Goodfellow wrote. “The cap [in Nova

Scotia] applies to all minor injuries and not restricted solely to ‘soft tissue injuries.’”

David Brannen, a personal injury lawyer with the Cantini Law Group, commented on the decision in his online blog Injurylawblog.com.

“You should seek your own legal advice, but as a general rule, it is usually prudent for people to wait for the final outcome of the appeals regarding the $2,500 cap,” Brannen wrote. “If you settle for $2,500, you cannot revisit your case later if it turns out one of the higher courts later over-rules the cap.”

Brannen further noted the outcome of the appeal “is at best several months away, and at worst, well over a year away.”

Meanwhile, Aviva Canada, which says it played “a key role in defending the legislation,” called the court’s decision “an important step in maintaining an affordable and sustainable provincial auto insurance system.”

“The Court’s decision is great news for auto insurance customers in Nova Scotia and across Canada, and sends a clear message that minor injury capping is a fair and sensible way to manage the affordability of auto insurance in the province” remarked Robin Spencer, president and CEO of Aviva Canada. “It’s encouraging that Nova Scotians will continue to benefit from premium reductions achieved as a result of legislation passed five years ago.” ●

Ambiguity requires trial to determine status of unnamed insured The phrase "companies under management control" is too vague to determine whether an unnamed insured — a roofing company hired by Atomic Energy Canada Ltd. (AECL) — is entitled to the AECL’s property policy coverage without the need for a trial first, an Ontario Court has determined.

AECL hired Ron Robinson Roofing Inc. to do roofing repairs at Building 250 of its research and energy facility at Chalk River, Ontario. A fire broke out on the roof at the north end of Building 250 in November 1997, causing more than $1.3 million worth of damages — including damage related to the spread of radioactive contaminants throughout the Chalk River building and adjoining lands.

AECL’s property insurer brought a subrogation claim for about $1.3 million against Ron Robinson and Axa. Ron Robinson had a commercial general liability (CGL) policy with Axa Insurance, which had exclusions for standard pollution and nuclear liability. Axa relied on the CGL exclusions to deny Ron Robinson’s claim. (Ron Robinson did not advise Axa that he was doing work at the Chalk River facility.)

Both Axa and Ron Robinson asked the Ontario Superior Court of Justice for a motion of summary judgment, claiming

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that Ron Robinson was in fact an unnamed insured under AECL’s policy. The parties argued that since AECL hired Ron Robinson as a contractor, the roofer was one of the “companies under management control,” as stated in AECL’s policy.

AECL said the phrase referred only to companies it had either formed or acquired, and not to companies it had hired.

“Clearly a range of possibilities of management control exist, from the extreme of merely hiring and paying the contractor with no involvement at any point to the other extreme of micromanaging every detail of the contractor’s work and providing constant supervision and feedback,” Ontario Superior Court Justice Stanley Kershman wrote. “It is not immediately clear from the phrase ‘companies under control’ how much control is needed before a company will fall under the definition.

“It is not obvious, as [Axa and Ron Robinson] suggest, that the intention of the parties was to cover the entire range of control possibilities.”

The court thus decided a trial would be required to establish the precise meaning of the word “control,” and thereby define whether or not Ron Robinson was included within AECL’s insurance policy. ●

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Depression, psychoses based on physical brain injury not “too remote for recovery”: Ontario Superior Court Psychoses caused by right-hemisphere brain damage arising from a car collision are not “too remote to allow for recovery,” the Ontario Superior Court of Justice has found, distinguishing the case from the facts found in the Supreme Court of Canada’s decision in Mustapha.

In Chinsang v. Bridson, the Ontario court denied a motion by the defendant, Christopher Bridson, to find injuries sustained by Michael Chinsang in a car collision “too remote to allow recovery.”

Chinsang suffered neck, chest, arm, leg, back and head injuries when involved in a motor vehicle accident on Apr. 2, 2001. The jury found that Chinsang also suffered from memory loss, elevated anxiety and increased depression.

Doctors testified at trial that depression and psychosis are possible results of mild brain injuries.

A jury awarded Chinsang almost $1 million in damages — including $150,000 in general damages for pain and suffering, lost income of $43,000 and special damages for future loss of earning capacity of $800,000.

Bridson asked the judge to overturn the jury verdict on the basis that the psychoses suffered by Chinsang were symptomatic of depression or schizophrenia and therefore were not related to the effects of the collision. In doing so, Bridson relied on the Supreme Court of Canada decision in Mustapha, in which the court overturned a jury award of $341,000 because it ruled that the psychological trauma Waddah (Martin) Mustapha suffered upon seeing dead flies in his bottled drinking water were too remote from the actual injury sustained to warrant recovery.

Ontario Superior Court Justice Peter H.Howden distinguished Chinsang from Mustapha, however, saying that, unlike in Mustapha, there was a “real risk” that the psychoses suffered by Chinsang were the outcome of a physical brain injury suffered in the collision.

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“The case before me has no resemblance to a unique reaction based on a highly individual constellation of psychological attributes such as that of Mustapha, where no physical injury occurred at all,” the judge wrote. ●

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F first notice Civil justice reforms in Ontario New civil justice reforms in Ontario are designed to make it less expensive to access justice and easier to use the courts to quickly resolve disputes, according to the Ministry of the Attorney General.

A regulation filed in late 2008 amended 25 civil court rules. The amendments include: • The monetary limit of the Small Claims Court will increase to $25,000 from $10,000 effective Jan. 1, 2010.

• Simplified Procedure limits have been raised to $100,000 from $50,000.

• Up two hours of oral discovery is now allowed for Simplified Procedure cases.

• In a summary judgment motion, the judge hearing the motion has the discretion to impose costs where appropriate. Previously, if the party who brought the summary judgment motion lost the motion, they were required to pay the other party costs for responding, creating a disincentive to bring a case forward.

• Mini trials, including oral evidence, will now be allowed for summary judgment motion, saving time and expense of a full trial if possible.

• If a summary judgment matter goes to trial, the court has

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A bi-monthly magazine (6x per year), Claims Canada is published by Business Information Group, a division of BIG Magazines LP, a leading Canadian information company.

Business Information Group is located at: 12 Concorde Place Suite 800, Toronto, ON, M3C 4J2.

Claims Canada magazine is the Official Publication of the Canadian Independent Adjusters’ Association [CIAA] and through its editorial content and circulation brings together the ‘entire property & casualty insurance claims market nationally’ with information and insight into the profession, business and people of insurance claims and loss adjusting.

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authority to create directions on matters including timeline, examinations and a discovery plan, ensuring a matter proceeds to trial in a timely and efficient manner.

• In a civil litigation case, pre-trial Examination for Discovery will be limited to seven hours per party unless the parties or the court determine more time is required.

• Expert witnesses are required to certify in writing their duty to be fair, objective and non-partisan.

• Expert reports must be served earlier and contain certain specific details.

• Timelines for mandatory mediation sessions will be extended.

• Pre-trial conferences, in which all parties and their lawyers are present, are now mandatory to encourage settlement and help identify or narrow issues for trial.

• Detailed conference briefs must be filed by both parties.

• Earlier deadlines will be implemented for serving and filing motions and application materials to allow parties more time to prepare. ●

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non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management and claims adjusting personnel; corporate risk managers and loss control professionals; insurance brokers; insurance law firms; forensic engineers and accountants; appraisal, restoration, rehabilitation and collision repair professionals; Insurance Institute chapters; insurance associations, regulators and related claims market recipients.

The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent.

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MESSAGE

LA PLUME

From the President

Du Président RENO DAIGLE

The collective efforts in organizing the tremendous events held in Toronto in early February benefited all who were in attendance and the organizations responsible are to be commended.

The many volunteers who so selflessly give of their time, exemplify the spirit of service and recognize there is nothing so rewarding as “giving back.” Any organization’s success depends on this sense of duty and we are fortunate to have the willingness of many providing for a brighter future for our industry.

The week kicked off with CIAA/ACEI’S Mid-Year Meeting on Feb. 2, which was well attended and discussions were meaningful. It was a highlight having two esteemed members join the ranks of “elite adjuster” by being honoured with their CLA accreditation. Following the loss of a big portion of our membership in September, it is encouraging to note that with the acquisition of several new member firms and an increased number of adjusters with our current member firms, CIAA’s representation has virtually returned to where we were at this time last year. Reports from our AESIQ affiliate indicate the same trend. Following a 40 per cent loss in membership their numbers have been gradually increasing back to where they were through conscientious recruitment efforts. We remain optimistic and are constantly committed to growing our membership.

CICMA/CIAA Ontario Chapters’ Annual Joint Conference on Feb. 3 provided an informative and inspirational seminar and networking opportunity. The two organizations are to be commended for consistently putting on a top-notch program for the p&c community. Six students from three local schools were very appreciative for the opportunity to attend as guests of the CIAA and CICMA. I look forward to attending similar conferences in the Pacific, Western and Atlantic Regions later this year. I congratulate all Joint Conference Regional Executive members for continuing to keep this vital rapport between the two groups dynamic.

On Wednesday morning, the Canadian Defence Lawyers hosted an engaging breakfast meeting with members of CIAA and CICMA in attendance. The OIAA Claims 2009 Conference provided an array of professional development opportunities as well as over 150 exhibitors on the tradeshow floor. CIAA’s booth manned by Pat Battle and Mina Cerulli, as well as members of the executive, on and off throughout the day was busy with some

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Les efforts collectifs déployés pour organiser les très importantes réunions tenues à Toronto début février, ont profité à toutes les personnes présentes. Les responsables doivent en être félicités. Les nombreux volontaires qui consacrent du temps d’une manière aussi désintéressée servent d’exemple à l’esprit de service et reconnaissent que rien n’est aussi gratifiant que le fait de ‘payer de retour’. Le succès de toute organisation repose sur ce sens du devoir et nous avons la chance de pouvoir compter sur la bonne volonté de plusieurs, ce qui augure bien pour l’avenir de notre industrie.

La semaine a commencé par la réunion biannuelle de l’ACEI/CIAA qui a eu lieu le 2 février. L’assistance était nombreuse et les discussions intéressantes. Le point culminant a été la promotion de deux membres considérés au rang ‘d’expertélite’ et du fait de leur accréditation comme ESA. Après la perte d’une grande partie de nos membres en septembre, il est encourageant de noter que suite à l’acquisition de plusieurs nouvelles sociétés-membres et à l’augmentation du nombre d’experts au sein des sociétés déjà membres, l’ACEI a maintenant presque autant d’adhérents qu’elle en avait à cette même époque l’an dernier. On trouve la même tendance chez notre affiliée l’AESIQ. Après que cette dernière eût perdu 40 pour cent de ses effectifs, la tendance s’est graduellement renversée jusqu’à effacer cette perte grâce à un recrutement intensif. Nous demeurons optimistes et cherchons constamment à accroître le nombre de nos adhérents.

La conférence annuelle conjointe de l’ACDSA/ACEI des régions de l’Ontario, qui s’est tenue le 3 février, fut l’occasion d’une rencontre instructive, inspiratrice et de prises de contact.

Ces deux organismes ont le mérite de toujours présenter un programme de haut niveau pour le secteur IARD. Les six étudiants, appartenant à trois écoles locales, invités par l’ACEI et l’ACDSA, ont beaucoup apprécié cette initiative. J’envisage avec plaisir la perspective de participer aux conférences semblables qui se tiendront plus tard cette année dans les régions du Pacifique, de l’Ouest, et de l’Atlantique. Je félicite tous les membres de l’exécutif des conférences régionales conjointes qui continuent d’entretenir ce contact vital entre ces deux groupes dynamiques.

Le mercredi matin, les avocats de la Défense du Canada ont été les hôtes d’un intéressant petit déjeuner d’affaires réunissant les membres de l’ACEI et de l’ACDSA. La conférence Claims 2009 de l’OIAA a offert un éventail d’occasions de développement professionnel et plus de 150 exposants avaient des stands dans la

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good general interest in CIAA. The much sought after CIAA Claims Manual was a hot item, again demonstrating the recognition and value of this resource.

CIAA’s 2008/2009 Regional Executive and National Committee members continue advancing the goals of the Association and are working diligently in achieving successful outcomes. Promotion of the independent adjusting profession to brokers and insurers through participation at industry events, establishment of harmonized licensing levels and comparable continuing education requirements for more seamless licensing of independents, development of creative career recruitment initiatives and establishment of guidelines for handling Emergency Measures Organization’s style claims for those regions not currently in a working relationship with their provincial EMO are examples of the valuable work being done.

Membership and participation is the heart and soul of an association and I sincerely thank all of our members for their dedication and professionalism, who through their support “lead by example” for the benefit of all in the adjusting fraternity. ■

salle d’exposition. Le stand de l’ACEI, tenu par Pat Battle et Mina Cerulli et aussi par des membres de l’exécutif qui se relayaient pendant la journée, a suscité l’intérêt général envers notre organisme. Le très recherché Claims Manual de l’ACEI fut un article très populaire, une autre preuve de la valeur de cette ressource.

Les membres du comité exécutif régional et du comité national 2008/2009 de l’ACEI ne perdent pas de vue les buts de l’association et travaillent diligemment pour les atteindre. Voici quelques exemples du travail remarquable accompli: promotion de la profession d’experts en sinistres indépendants auprès des courtiers et des assureurs lors d’activités de l’industrie; instauration de niveaux de permis harmonisés et d’exigences en matière de formation permanente comparables pour faciliter l’acquisition des permis pour les indépendants; création de moyens imaginatifs de recrutement concernant la carrière; établissement de lignes directrices pour traiter les sinistres conformément à l’Organisation des mesures d’urgences dans les régions où il n’existe pas de relations de travail avec cet organisme provincial.

Le cœur et l’âme même d’une association reposent sur ses membres et sur leur participation. Je remercie sincèrement tous nos membres pour leur dévouement et leur professionnalisme.

Leur appui sert d’exemple à tous ceux qui appartiennent à la fraternité des experts en sinistres. ■ Tranlsation provided by Henry Arache, Themis Translations, Montreal, Que.

NATIONAL EXECUTIVE 2008 – 2009 PRESIDENT Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 Email: Reno.Daigle@crawco.ca

SECRETARY Marie C. Gallagher, FCIP, CRM McLarens Canada 71 King Street, Suite 204 St. Catharines, ON L2R 3H7 Phone: (905) 984-8282 Fax: (905) 984-8290 Email: marie.gallagher@mclarens.ca

1ST VICE-PRESIDENT Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300-1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 Email:pkernaghan@kernaghan.com

TREASURER Randy P. LaBrash, CIP, CFE, CFEI Crawford & Company (Canada) Inc. 300 – 191 Lombard Avenue Winnipeg, MB R3B 0X1 Phone: (204) 947-2340 Fax: (204) 943-9168 Email: Randy.Labrash@crawco.ca

2ND VICE-PRESIDENT Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 Email: Mary.Charman@crawco.ca

PAST-PRESIDENT Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 Email: fplant@planthope.com

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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 Email: pbattle@ciaa-adjusters.ca DIRECTOR John R. Smith Crawford & Company (Canada) Inc. 166 Charing Cross Street Brantford, ON N3R 2J4 Phone: (519) 759-5760 Fax: (519) 759-5691 Email: John.Smith@crawco.ca

DIRECTOR John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 Email: john.jones@mclarens.ca DIRECTOR Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 Email:cmesservey@marshadj.com

DIRECTOR Wendy Fralick, CIP Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com

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Containment Strategies Communication key to curbing escalating property claims costs

BY LAURA KUPCIS

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n adjuster walks onto a site. At first glance, it appears to be a relatively minor and routine loss.

But all is not as it appears. In the blink of an eye this small loss has escalated into a large loss. Litigation looms, reserves skyrocket, policyholders are unhappy and crucial evidence has either been lost or spoiled. The root cause is still unknown and nobody involved in the claim is speaking to each other.

The transition of small losses into large losses can happen for a plethora of reasons. The number one way to help prevent these situations is communication — communication between the adjuster, the contractor, the experts, the insurance company and the insured.

Reasons for escalating costs Lack of communication Lack of communication or control on a file can have a significant impact on the handling of claims. This is never more obvious than during an emergency situation. Often an adjuster is not immediately involved in the loss and only has access to the scene after much of the emergency work has already been completed. By this point, it’s often too late for the adjuster to assert control over the claim, according to James Giffen, manager of Crawford & Company (Canada) Inc.’s Global Technical Services branch in Toronto.

When adjusters are not present, claims costs can increase during an emergency situation, either because the contractor has done more work than required, or the work has not been done to an adequate level (leading to further expenses in order to complete the work properly).

Adjusters need to get to the emergency scene as soon as possible and keep the lines of communication open.

They need to remain actively involved in the claim so as to control the process www.claimscanada.ca

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and the scope of the repairs. “In other words, we need to make sure that the cart is not driving the horse, and that the adjuster is controlling the process and not the contractor,” Giffen says. “It really should be a joint effort, a joint venture between the adjuster and the contractor.”

It is easy to blame the contractor when things go wrong, but that is not always fair, Giffen notes. He observes that contractors sometimes receive very little guidance from adjusters. When left on their own, contractors will work on the “better safe than sorry” premise and do more work than is required rather than risk not doing enough.

An adjuster who does not communicate adequately, lacks experience or understanding of what is required, or who fails to thoroughly review the cost and estimates with the contractors or the insureds can push the cost of the claim higher.

“You can run into a situation quite easily where if you don’t have control, you may think a contractor is in and out of there, clearing for just a few days, and then you return to the file a few weeks later and find out that they are still there,” Giffen warns. “Now your $20,000 job may be a $200,000 job.”

In some instances, the contractor might spend an extraordinary amount of man-hours and dollars to clean and restore items that an adjuster or policyholder intended on discarding. This kind of situation happens when there is a breakdown in communication between the adjuster and the contractor.

“If you don’t give direction and you don’t have control, you can’t be surprised if somewhere down the road, the cost of a claim is far more significant than you thought,” Giffen warns. “The contractor is trying to do the best job he can and the most thorough job that he can. Getting very little direction can be quite scary for all parties.”

A lack of direction or communication can nullify the potential to subro-

gate a claim if there is evidence spoliation.

The opportunity to recover an underwriter’s subrogated interest can be lost if evidence is not preserved, including the continuity of evidence and the origin and cause of the loss left unidentified, John Hall, Toronto branch manager at Kernaghan Adjusters, notes. Insurers would want to subrogate a claim to the party responsible for a loss, so the costs don’t fall on their shoulders.

“The classic [mistake], I suppose, is when you unwittingly overlook or ruin a subrogation opportunity,” Mark Bailey, senior engineer and director at MEA Forensic Engineers & Scientists Ltd. agrees. “A great example of that would be: Maybe there’s water escape and the ‘smoking gun,’ which is the broken pipe . . . , either gets tossed by mistake or somebody seizes the evidence or doesn’t get enough of it.”

Bailey recalls the instance of a restaurant fire, in which all signs pointed to a problem with a washing machine. The restoration firm put the washer outside; due to a communication error, somebody ended up putting the washer out to the trash. Even though a team tried to recover from the mistake by searching the local dump, the water was not recovered. The opportunity for subrogation was lost.

“Fairly innocent thing, though,” Bailey says. “People just trying to do their jobs and evidence gets thrown in the trash.”

Sometimes the miscommunication is between the adjuster and the policyholder. Phil Moore, vice president of national accounts at Disaster Kleenup Canada Ltd., remembers a situation in which a contractor received a call from a property manager of a condominium about water coming into one unit. The contractor told the manager to shut off the water from the standpipes. But by the time the contractor arrived a short time later, water had infiltrated 36 units. The property manager had not been told where to find the shut off February/March 2009

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valve, thus increasing the loss exponentially.

Hiring the wrong expert Hiring the wrong expert, or an unqualified expert, can also increase costs or negate the ability to subrogate a claim, Chris Giffin, president of Giffin Koerth, notes.

He recalls a situation in which a fire damaged a house located on the former boundary line between two recentlyamalgamated municipalities. A fire department was dispatched, but when they were a minute away from reaching the fire, the dispatcher called in to say the house fell within another fire department’s territory. The truck turned around and another fire department was dispatched. The second fire truck did not arrive until several minutes later. With a view to subrogating the claim against the fire department, the insurance company hired a fire investigator to determine the impact of the fire department’s delay. The investigator determined that the fire started outside the home and propagated into the home.

A second expert was retained to model the fire and determine how the fire spread. The insurer intended to use this evidence to prove that the damage might have been reduced had the fire department arrived at the original time.

The second expert should have comprehensively reviewed the first expert’s conclusions. Instead, the second expert simply took the conclusions of the first expert at face value. Also, the second expert misapplied fire modeling software that was not meant to be used for outdoor fires (it is designed for contained spaces such as inside a building).

The second expert concluded, therefore, that it did not matter when the fire department responded to the fire, because the house would have been destroyed regardless. Due to the lost opportunity for a subrogation, the original loss, which was comparatively small, suddenly blew up into a total loss.

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inside the building and b) the delay of the fire department’s arrival had a significant impact on the damages to the house.

Delays in hiring the right expert Sometimes it’s not about who an insurer hires, but rather who they don’t hire that matters.

Giffen recalls a claim a number of years ago where a homeowner, who was a doctor, came home and accidentally dropped her medical bag onto the floor. Her thermometer broke and 10mg of mercury spilled onto the hardwood floor in her older home.

The insurance company hired an adjuster who went to survey the damage. At first, this was thought to be a small loss; a small amount of mercury had seeped into the floor, and all that would be required was to lift off some of the flooring, clean up the mercury and re-lay that particular piece. As time went on, this seemingly minor loss escalated into a total loss. It took two years and the hiring of the appropriate experts to determine that mercury travels into the air, into soft furniture and into the wood. They eventually determined that the entire house would have to be torn down and all the contents replaced. What was originally thought to be a $5,000 loss turned into a $450,000 loss. In this instance, it took a fair amount of time to realize the necessity of hiring an expert who had some knowledge of how mercury travels. By then, it was too late.

Preventive measures All is not lost, literally, when various strategies are used to contain property damage claims costs. A quick response and on-site inspection by a qualified adjuster can help to limit exposure, Hall notes. “In my opinion, nothing substitutes for an independent assessment allowing for identification of potential pitfalls.”

Open communication It is critical to keep the lines of communication open between adjusters, insurance companies, contractors, experts and the insured. Each of these

parties has a substantial impact on the claim and can help contain costs if they are kept in the loop.

“The human [element] and managing the human component of a claim [is] more important than the actual rebuilding process, because everybody has to have an understanding of what that process is going to be so that they can feel satisfied at the end of the day,” Winmar president John White says.

The adjuster must be the first point of communication. It is up to the adjuster to make sure everybody is aware of what is being done and what needs to be done. The adjuster needs to spend an appropriate amount of time on-site developing a clear understanding of the work that is being done, why it is being done and the costs associated with the claim. Conveying this information to others involved from the outset can held to curb bigger issues further down the road.

“Lack of communication is something that costs us all throughout any kind of process, and that is something . . . a lot of insurers recognized,” Irene Bianchi, vice president of claims at RSA, notes. “We have some fairly strict protocols in place, in terms of how communication happens, when it happens and through whom it happens.”

It is really about being clear and trusting that both parties are going to do the right thing and ensuring that questions are asked if things are not clear, she says. “I think that oftentimes when miscommunication occurs, it’s because people have assumed things that are not necessarily correct. It’s all about asking questions and being open and honest with each other. That way, we can work through any issues and resolve things.”

Immediate instruction to the insured or contractor to preserve evidence or suspected cause of loss is critical, Hall cautions. Continuity of evidence must be preserved in writing.

“The door to recovery can be quickly closed when crucial evidence disappears,” Hall says.

Giffen adds it’s all about developing a plan. “Know where you’re going and how you’re going to get there, and work with the partners on how to accomplish www.claimscanada.ca

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that,” he cautions. “You’re going to be far better off and serve everyone more efficiently than if you run at something with blinders on.”

Joe Turcotte, claims manager at FM Global, says adjusters need to do their homework, which is essential to being prepared and having a plan. “Have a plan, identify the dispute potentials and then sit down and methodically work through it, but at the same time always be that active listener.”

Communication and active listening confirm that you understand what has been said and conveyed, Turcotte says.

“The best adjusters are the ones that can come in and change what they do and adapt and see that the client wants something different,” he notes. “The insured needs something different, [and so] I [need] to change what I do.”

tor knows what documentation will be required to quantify the bill. This could mean the contractor will be audited by an accounting firm to document payroll and materials used. An adjuster needs to confirm this point from the get-go, Giffen says, because some contractors are not prepared for that type of scrutiny.

One way to reduce costs submitted by a contractor is to hire a clerk or a consultant to sit at the job site and monitor how many people were on site, for how long the crew worked, how much they accomplished and what equipment they used. This helps to avoid a scenario in which a contractor claims that 20 people worked on site for eight hours a day, when in fact four people worked at the site for six hours a day. Hiring a clerk can also ensure someone is supervising the daily progress of the crew, Giffen notes.

Keeping track of costs An adjuster needs to keep the file on track. This involves reviewing costing and estimates with the contractor and the insured upfront and continuously throughout the process. It always involves firming up the logistics of the case early in the process.

For example, try to ensure straightaway that the claims costs — both the hourly labour rates and the cost of equipment rental — are reasonable and that the required equipment is obtained to do the job. An adjuster needs to make sure the rate paid for an equipment rental over the course of a job does not exceed the outright purchase price of the equipment, Giffen notes.

Also, in discussions with the contractor, an adjuster must immediately determine: • whether the costs are reasonable; • what are the posted rates for labour, equipment and material; • what is required to do the job, what the contractor can supply and an estimate of what all of this will cost; • whether the costs are in line with general industry practices; • items excluded from claims payments, such as standard equipment for the contractor (i.e. ladders, extension cords, etc.).

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tor (how will these groups charge for expenses?); and • whether the contractor is prepared for an audit and full disclosure.

“Make sure that when you are talking to contractors about auditability that they understand what it is,” Giffen notes. An insurer’s audit is not just about signing off on time sheets and a list of consumable items: it means reviewing source documents indicating the true costs associated with the job.

Adequate documentation is also essential in an emergency situation, when there is no time for contractors to bid on a job. An emergency situation typically involves the available contractor working on a job based on time required and materials used. Often the cost is not known up-front, leading to imprecise ballpark estimates. An adjuster should ensure that a contrac-

Adjusters need to make sure qualified experts are brought on board as soon as possible. This includes hiring a contractor with the appropriate qualifications, licensing and insurance to complete a job. Adjusters should ask the contractor questions to confirm they are the right company to use for a particular job. When working with the contractor, implement a standard procedure for documentation and enforce this with the contractors hired, Moore notes. The documentation should have standard wording designed to avoid litigation. It should also improve the decision-making process at a period when time is of the essence.

Experts are helpful — sometimes crucial — in determining the root cause and origin of the damage. Some typical root causes of damage include the following: • poor design; • poor manufacturing; • poor materials; • poor maintenance; and • operator error.

Giffin says adjusters need to ask themselves if one or more of the root causes listed above are responsible.

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restoration versus replacement can also help to control costs, Roy Atkinson, assistant branch manager in Toronto at Kernaghan Adjusters, says.

If an adjuster doesn’t know the type of expert required for a particular case, Bailey recommends they call the expert to ask a few questions. Doing this is cost-free, and might save costs in the long run. An expert can let an adjuster know what to look for, whether something should be saved for evidence or whether an expert needs to come out to the site straightaway.

If an expert is required, make sure the right expert is appointed for the job.

Every expert has a specialty, and although one expert might be best to cover one aspect of the file, a different expert may be more qualified for another part of the job. Ask questions to ensure the right expert is appointed.

Using the right equipment A plethora of new technologies is available that can help contain costs.

Soft and hard contents are often tossed

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and replaced, for example, even though the right equipment can disinfect the contents so that they can be returned to the policyholder. The use of such equipment is not only more cost-effective, but it reduces the downstream environmental effect, Moore notes.

Over the past year, new technologies for cleaning soft goods has saved the industry nearly $6 million. As a result of these technologies, nearly 56 dump trucks’ worth of soft goods, retrieved in more than 1,200 claims, did not end up in a landfill.

When working on a water damage claim, consider dry heat as an alternative option, Moore notes. Dry heat works faster and costs less money than other methods of drying out water damage. Not to mention, the contents can usually remain in the room, which means there is no cost to remove them all from the premise. Consider infrared cameras to see where water might be, saving the time and cost associated with cutting out drywall in various places in the home.

In addition, biotechnology might provide a cheaper and faster way to remove spills such as home heating oil and sewage. They include engineered bugs created to eat sewage, oil or whatever other substance requires cleaning — and then each other.

“There are a whole bunch of new technologies out there that will directly impact your bottom line,” Moore notes. “Claims will be closed faster and much more cost effectively than they have in the past if you embrace them.”

Moore recommends that adjuster learn about new technologies and options available to them, but at the same time, he is looking to increase trust between adjusters and contractors.

“I don’t want the adjuster to be as knowledgeable as the contractor, that’s not real,” Moore says. “They’ve got a big enough job to do as it is. I want to end up where you trust me, because I’m the one who is supposed to know all this stuff. I’m the one who’s supposed to understand it.”

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S spotlight A Good Tailor Prompt professional and efficient claims service styled especially for insurers is a prime focus at Marsh Adjustment Bureau Ltd.

BY LAURA KUPCIS

he happiness of the customer is the number one priority for Nova Scotia-based Marsh Adjustment Bureau Ltd. While customers change and the needs and demands of the customers might change, remaining first-in-class for providing customer service is paramount for this independent adjusting firm.

“We aim to please,” Brian Gough, president of Marsh Adjustment Bureau, says. “That’s not a difficult thing to do, but one of the unique points to this business is that when you have multiple customers, [it means] staying on top of the unique way Company A wants something done with Company B wanting it done totally differently.”

But, just like a good tailor that can make any suit fit, Marsh Adjustment Bureau can create the perfect service for any customer.

Harry Marsh founded the company in 1956, and since that time, the company has seen its fair share of changes.

Through acquisitions and hirings, the company has gone from being a one-

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office firm, to a multi-branched provincial adjusting firm. The company operates under the Marsh Group of Companies (MGC) banner, which also includes Fastfair Claims Services, GE Morgan Adjusters Limited and Maritime Investigation Services, Inc. The organizations under the MGC banner all remain individual companies.

Things are changing “Change is about the only constant in this business,” Gough muses. “We’ve seen everything from legislative changes, licensing changes, technological changes, customer changes, market contractions, [changes in the] independent adjusting fraternity and through mergers and/or acquisitions, the number if adjusting firms generally is down.”

There has been some challenges over the years, including market contractions where you can lose a customer literally overnight due to a merger or an acquisition.

One key to sustainability is to remain proactive. For Marsh Adjustment Bureau, this meant implementing a claims management system. The com-

pany now has a solid automated system which is very user-friendly.

“Our clients can access our claims management system 24/7 and are able to see the disposition of the file, statements, documents and photographs in a secure and protected system. We’ve had compliments on the ease of access and the use of the system,” Gough says.

The claims management system is a main way the company is able to cater to the varying needs of its customers.

Furthermore, the company is a 24/7/365 operation, which means there is always somebody ready and willing to assist a client.

“We are able to do work for various insurers and we feel very fortunate that we are getting our fair share of business,” Gough says. “We like to think the reason our customers keep using us is because they are happy with the product.”

Adding adjusters As Gough looks to the future, the continuation of the company is a top priority at Marsh Adjustment Bureau.

In order to achieve that, new blood is needed. www.claimscanada.ca

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“We can send people from Adequately staffing a compaHalifax to Sydney if need be and ny can be a difficult task due to vice versa and it does work.” business fluctuations — a task Gough explains. not made any easier by a shortWhile the business itself is age of independent adjusters in small, it is a larger firm in respect the Maritimes. to structure and number of “As everybody should underadjusters and support staff. stand, there is always some degree of pain associated with Captain of the sea growth,” Gough points out.

“We’re the masters of our But Marsh Adjustment ship,” Gough says without any Bureau is a well-established comdetriment to the national firms. pany that is tried, tested and true “We have the ability to run our in many ways. The company’s business, to control it as best as solid reputation and good conwe can.

We have the ability to nection throughout the industry treat our staff in a way that we are things that will serve them feel they deserve to be treated as well when recruiting new talent Head Office and Metro Branch adjusting and support staff. people and as compatriots.” and when soldiering through the Though they hold the title of Front row (l-r): Susan Gillespie, Cathy Christo. rough times.

Middle row (l-r): Judy Stratton, being the largest adjusting firm In recent past, this indepenBarb MacKenzie, Kelly Young and Lorraine King. in Nova Scotia, the company dent adjusting firm has been sucBack row (l-r): Krista Bayart, Paul Addicott, remains a truly independent cessful in attracting several new Sean MacDonald, Andrew Helpard and Larry Hay. privately-owned business. The and very keen individuals, Missing: Heidi Davis. company has working relationGough notes. ships with other similar-sized “We’ve had the good fortune firms in Prince Edward Island work in a community, but live in them of bringing on some new younger and New Brunswick, in addition to as well.

This often means an adjuster is members who are still in the learning being part of the Canadian Indepenaware of a claim before the broker or curve, but they are all licensed,” he dent Adjusters’ Association (CIAA) the insurance company.

Marsh adds. “At some point, you never know, and the Canadian Adjuster Network Adjustment Bureau has the ability, in they could end up being one of the normal weather conditions, to have an (CAN), which provides the company owners of the company.”

Marsh Adjustment Bureau is look- adjuster on the site of a claim any- access to unique claims ability and siging to ensure a viable operation for the where in the province within two nificant resources.

The company has been a member years ahead and is certainly not plan- hours.

“Our people are known quite well of the CIAA since day one, producing ning to rest on its laurels. to the brokers and we think our service, three national presidents. “There’s no Respect for staff because of the spread of our offices and question the benefits of being a mem“Without our staff we’d be dead in our abilities as a multi-branch opera- ber of CIAA are very visible to the the water” Gough points out. “We tion, is a bit unique,” Gough says. “The membership,” Gough says. value and very much appreciate our one thing that sets us apart is the numBeing a member provides access to staff. We think, as employers, we treat ber of offices and the people who work education, resources, input into legthem well, we respect them, we have in those offices; we do know our com- islative matters and licensing reciprocrealistic expectations of our staff and munities very well.” ity and a hoped for move towards selfthey of management as well.”

Furthermore, weather has become regulation.

This mutual respect and under- such a large part of the business for “CIAA is a very well-run organizastanding is likely the reason that a every independent adjuster, and some- tion and one of the many nice things tenure of 25 years at Marsh Adjust- thing nobody can control. However, about it, is that while it comprises a ment Bureau is not uncommon for because Marsh Adjustment Bureau has bunch of competitors — nationals many staff. The company currently has multiple branches and a fairly signifi- down to one-person shops — the execeight branches and a head office in cant number of adjusters, the compa- utive is changing yearly and it’s reflecBedford, NS, within the Halifax ny has the ability to adapt and put tive of a good mix of our fraternity,” Regional Municipality. Between the adjusters into an area, which may Gough says. “That’s one of the things nine locations, there are 46 staff, sustain a significant number of prop- that I like about it — even the little including 22 licensed adjusters. The erty damage claims due to inclement guys have a voice in our professional company has adjusters who not only weather. association.” www.claimscanada.ca

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The Arbitration Process A cost effective means of settling disputes between insurers.

BY DIANE PRENDERGAST

he Canadian Insurance Claims Managers Association (CICMA) aims to promote the Inter-Company Arbitration Agreement (ICAA) process as the most cost effective method of settling disputes. Membership in the ICAA is available to all property and casualty insurers licensed to do business in Canada. Upon signing the agreement, the insurer must submit to any dispute involving physical damage subrogation claims, including business interruption, up to $50,000. Exceptions are those claims for which a lawsuit has been initiating, if a company asserts a defense based on lack of coverage, or specialized coverages including boiler and machinery, aviation, and ocean marine. Only insurance companies are entitled to arbitrate, whether signatory or non-signatory.

The CICMA is the body responsible for making rules, regulations, prescribing territorial jurisdictions, controlling financing, approving applications for membership and terminating membership for failure to comply to rules and making changes to regulations of the Agreement. Each chapter of CICMA appoints an arbitration chairman to administer the agreement and to appoint panels to arbitrate matters in dispute within their jurisdiction.

Arbitration panels consist of a chairman and two other members. If the amount in dispute is less than $1,000 the chairman can act as sole arbitrator.

Panel members are selected on the basis of their experience and qualifications, and they serve without compensation.

Panelists cannot arbitrate cases in which their own companies are directly or indirectly involved. The chairperson is responsible for inform claims managers of respective companies when

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Diane Prendergast

pre-arbitration has not taken place, since that is a requirement of arbitration. The chair also compiles arbitration statistics and distributes the results accordingly.

Files sent to arbitration will be sent back if not noted who, when and what the result of pre-arbitration was. The pre-arbitration and arbitration persons should not be the same person. Cases should take place by the chapter in the province where the accident or other insured event took place, except where there is agreement to do otherwise.

Fees to file as the applicant company are $200. The respondent fees are $200 as long as there is a counter claim.

In order to commence the arbitration process, the applicant and respondent must both take part in pre-arbitration discussions. Pre-arbitration as defined is a discussion between senior claims staff of controverter companies, and it must be duly noted. The applicant is the company that imitates the proceedings. They file a request for arbitration by filling out seven copies of the Inter Company Arbitration Statement (ICAS )and distribute as follows: one is retained by the applicant company, five are forwarded to the senior claims official of the respondent insurer and one copy is sent to the arbitration

chair with the filing fee and four copies of the relevant file documents. Statements filed by the applicant must include the following information: name of applicant and respondent company together with names and addresses of local representatives having supervision over the case in controversy; the names of the respective insured’s of both applicant and respondent; claim file numbers of applicant and respondent; kinds of coverage involved under applicant’s insurance policy, and also respondent’s insurance policy if known; date and place of alleged accident, loss or other insured event; amount of company’s claim payment and amount of any applicable deductible interest of its insured; a statement describing any pending litigation and its proposed disposition; a certification that settlement efforts have been unsuccessful and that the respondent company has agreed to arbitrate; brief statement of allegations solely as to the issue of controversy; signature of the applicant’s representative and date signed; and a diagram showed how the accident occurred, if applicable.

The respondent is the company or companies against which such proceedings are asserted. The respondent will be required to retain one copy of his own submission, forward one copy to the senior claims official of the applicant company, forward three copies to the arbitration chair along with four copies of the relevant file material, as well as the fee if a counter claim is being presented. Answers filed by respondents shall set forth the following information: supplement if and as necessary the information furnished by applicant as the to the respondent company’s name and address, name of senior www.claimscanada.ca

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claims representative, name of insured, file number and kind of policy coverage; state whether coverage and liability as alleged by applicant is admitted; amount of applicant’s alleged damages conceded by the respondent; amount of respondent insured’s interest in the case, such as deductible property damage coverage, if any; description of any pending litigation and its proposed disposition; whether there is an objection to arbitration. If so, the grounds on which the objection is based should be fully stated; brief statement of allegations as to the issue in controversy; signature of respondent’s representative and date signed; and a diagram showing how the accident occurred, if applicable.

This procedure is also applicable to counter claims. The ICAS should clearly indicate it is submitted as a counterclaim and the original arbitration case to which it pertains shall be identified.

If a respondent company fails to submit its answer within 30 days after receipt of the applicant’s contentions, the arbitration chair will follow up and request reasons for the delay. If the company fails to submit its answer, after being requested to do so, the chair shall refer the pertinent fact to the CICMA. The head office of the signatory company will then be informed of its representative’s failure to conform to the prescribed arbitration procedure.

The hearing date shall be determined by the arbitration chair and representatives of the controverting companies shall be notified at least one week in advance of the hearing date, when personal representation at such hearing has been requested.

All signatory companies are bound by the same limits as litigation with respect to the statute of limitations, but cases that have passed over this time limit can be ruled on as long as all controverting companies agree to have it heard. In the event of disagreement, the chairperson ruling is final. Arbitration panels are authorized to make their findings on the law of the locality in which the accident, insured event or loss occurred. A finding as to the amount of damages in issue is based upon the facts presented to the arbitrators. The decision of the majority of the panel shall be final and binding without the right to rehearing or appeal. If the applicant wishes to withdraw because the file settled, that company must notiwww.claimscanada.ca

fy the chairperson. The fee is nonrefundable.

The decision of an arbitration panel shall include the following: date and place of hearing; names of arbitration panel members; brief statement for the basis of the findings, such as lack of proof, degree of negligence of the respective parties, other controlling principles of law at the discretion of the arbitration panel; and signature of the panel chairman.

The arbitration process has proved to be very beneficial. The process pro-

vides a quick resolution of disputes between insurers and long court delays are eliminated. Policyholders, drivers and witnesses do not have to appear before the panel to bring evidence, therefore the insuring public is not inconvenienced. It is a cost effective, proven method of resolving disputes between companies.

Diane Prendergast is the National Representative for the Canadian Insurance Claims Managers Association, Northern Alberta.

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Property Loss Update

BY GLENN GIBSON

ontinuous change is simply a way of life for modern-day, professional loss adjusters. It hits from many different directions and the ability to adapt can be impacted by the daily challenges of dealing with customers who have been traumatized by a significant loss. But, our adjusting profession does a marvelous job of being able to integrate all of this while fulfilling our core purpose: We help people!

Many organizations are seeking to build an internal culture that will drive the execution of their strategic plans.

This is all with a long-term game plan in mind. Building a culture or changing one is not easy, but there is something our industry leaders need to be mindful in doing so: It is not about what people do, it’s about how people feel about what they do! Think about that in the context of our core purpose: Adjusters make choices daily on how much of themselves they are willing to give to their job. Their choice will depend on how they feel. And, winning the hearts, minds and spirit of our workforce has to be part of the way forward. Food for thought as a new year begins.

With constant change in mind, here are some interesting decisions that are worthy of further thought.

C

C.S. Bachly Builders Ltd. v.

Lajlo, Ontario Superior Court, J. Hill, Oct. 28, 2008 On Jan. 24, 2003 an accidental fire caused significant damage to an occupied residence. When the wood22

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Glenn Gibson

framed, brick-clad residence was originally built in 1984, Donna Lajlo, the homeowner, had acted as a general contractor. She resided in the home with her mother and her two adult sons.

The insurer appointed an independent adjuster to handle the claim on their behalf. The adjuster arranged for some preliminary clean-up of the site to be done and orchestrated the removal of content items for storage and/or cleaning.

Two general fire contractors, who were on the insurer’s preferred contractor list, were brought in to provide a scope of work and repair estimates on damage to the building. During early site visits the homeowner and her adult sons formed a poor “impression” of the contractors. One son, in court, said the family had “suspicions of collusion.”

This came after the contractors were presented with the insured’s own scope of building damage, which the homeowner wanted included in the pricing.

The contractors refused.

The family rejected the proposals from the original restoration firms and retained C.SA. Bachly Builders Ltd. to

provide a repair estimate. This company had been in the insurance restoration field since 1977 and had repaired thousands of fire-damaged homes. The estimate totalled nearly $153,000 to repair the building and was submitted almost three months post fire.

When the insurer received the original third estimate, the company did not immediately agree to the price or scope of damage. The insurer acted prudently, however, by engaging a structural engineer to inspect the fire-damaged home. Input from this engineer led to the contractor reducing the estimate to just over $145,000. The insured eventually signed an authorization to have C.S. Bachly Builders do the repair work.

However, the repair work did not begin immediately as the homeowner was requesting a further price from the contractor for non-claim related work.

Additionally, there were still ongoing issues between the insured and adjuster on the scope of the fire damage reparation. Understandably, the contractor wanted all issues related to scope and price resolved before any work was started. By mid-July 2003 the contractor was ready to walk unless the company received a commitment. On Jul. 24, 2003 the homeowner authorized the repair work to be started based upon the revised scope of damage, but with the understanding she still had issues relating to the repair scope she was going to continue discussing with her adjuster.

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contractor was projecting it would have all of the repair work completed by the end of November.

On Oct. 7, 2003 the homeowner and her sons met with a public adjuster. A retainer agreement was signed. The evidence at trial was that the insured had decided to go in “another direction” and now wanted to explore a “cash out” from the insurer.

The insured and one of her sons, the contractors and the insurance adjuster held a meeting on Oct. 10, 2003. It did not go well. There was a continuum of “friction” relating to the scope of the damage between the adjuster and insureds. The contractor’s viewpoint was that any issues relating to the scope of damage was between the insured and the adjuster — the contractor did not view himself as being involved in the dispute.

On Oct. 27, 2003 the contractor was discharged from doing further work on the dwelling. The insured had done a further site inspection and was not happy with the roof repairs. In an email to the contractor, the insured’s son noted a public adjuster had been hired to “work out a cash settlement.”

The contractor acknowledged deficiencies relating to the roof repairs. On Nov. 14, 2003 the contractor formally offered to return to the site and correct the problems. The public adjuster’s representative refused the contractor the opportunity to return and do the work.

The evidence at trial was that the cost to fix the problems would have totalled $1,500.

In early December 2003, the public adjuster retained a structural engineer to inspect the building damage. In particular, he was to look at roof repairs already completed. The engineer identified deficiencies with the roof work and suggested in his report that to remedy the problem it might be more economical to demolish the existing work and redo it completely.

The contractor had invoiced the insured for the work completed on the dwelling and when the company was not paid, it executed a contractor lien in court in January 2004.

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ther negotiations took place between the public adjuster and the insurer. This eventually led to a cash settlement for building, contents and additional living expenses that totalled $497,900 in addition to fees to the public adjuster of $33,100. This settlement was reached in early July 2004. The dwelling was ready for occupancy in late 2004.

There was still the matter of a lien action filed by the contractor in January 2004. Additionally, the insured had issued a Statement of Claim against the insurer in November 2003. That action was dismissed when the insured agreed to their settlement in July 2004. The contractor issued their own Statement of Claim against the policyholder in February 2004. A Statement of Defence was filed in late August 2004 when efforts to negotiate a settlement with the contractor failed.

This all resulted in a four-day trial before Justice J. Hill. The judge reserved his decision for 10 months before releasing a 39-page judgment.

According to the judge, as of Oct. 27, 2003 the defendant had been the beneficiary of months of work by Bachly.

Subsequent to the Oct. 10 meeting, Lajlo decided to pursue the alternative of having a professional agent (NFA) negotiate with the insurer and obtaining a cash-out. “She became a party to two contracts. These were effectively competing agreements – one with the plaintiff for the fire remediation and extra work agreed to, and, a second with NFA to pursue the cash-out option,” the judge wrote.

This set up an interesting set of circumstances. There was remedial work needed to fix the roof problem, which could constitute a “breach of contract” between the insured and contractor.

However, was this sufficient enough to mean there was a “repudiation of contract”? In the trial judge’s opinion the deficient work was not so defective as to go to the “root” of the contract. At no time was the contractor indicating he would not honour the original contract. The company was prepared to remedy the problem with the roof but were refused entry to do so. The judge stated: “For the defendant, the roof repair

deficiencies became a convenient coincidence with her plan to pursue a cash settlement through the vehicle of NFA permitting, in her view, her act of taking the work out of the hands of the contractor.”

The judge ruled the plaintiff is entitled to a recovery of damages in the amount of $39,297.75 plus GST and pre-judgment interest.

Summary These kinds of situations evolve from time to time on fire losses. The initial building scope of damage is very important to the overall ability of the adjuster to try and control the outcome on the loss.

At trial, an incredible amount of weight is given by the trial judge to the credibility of the witnesses. The paper trail and being able to provide good recollection on key details obviously made the contractor an impressive witness.

This was a costly end to a long road for the homeowner denying payments to the contractor.

McDougall v. Black & Decker Canada Inc., Alberta Court of Appeal, Feb. 5, 2008 This was an appeal from a decision of a chambers judge on Mar. 8, 2007.

The case involved a “spoliation” argument arising from a Jan. 4, 2004 house fire. This was a substantial fire that started in an attached garage and spread quickly to the rest of the house.

The cause of the fire was investigated by both the local fire department and by a private origin & cause expert hired by the insurer of the house.

• The fire department concluded the cause was either from an un-extinguished cigar or by an overheated drill that was manufactured by Black & Decker. A number of events unfolded: • The insurer’s expert gathered up the remnants of the drill — in addition to some other physical evidence — which he took away for further inspection by an engineer.

• The house was demolished after the fire investigators had completed their investigations.

• In June 2004, the appellants, Gordon February/March 2009

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and Lolita McDougall, notified Black & Decker of its potential liability for fire.

• Eighteen months later a Statement of Claim was issued against the drill manufacturer.

As events unfolded, Black & Decker argued its investigation into the cause of the fire had been prejudiced because: 1. The company had been denied an opportunity to inspect damage to the house. By the time they were put on notice the house had been demolished.

2. The fire department had come up with two possible causes for the fire, including an lit cigar in a garbage can.

3. The garbage can was not seized or preserved for inspection.

4. A representative appointed by the manufacturer was given the drill by the insurance company’s expert in January 2006, at which time parts of the drill were missing.

The manufacturer made a motion to strike out the action based primarily on these facts. The chambers judge agreed

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indicating this was a “…perfect example of spoliation…”. This judge struck down the original Statement of Claim.

The Alberta Court of Appeal noted that the problem of lost or destroyed evidence is not new to litigation. In Rome, business men were required to keep a written record of their affairs for a specified time period, and if those documents were not produced when required, the maxim omnia praesumuntur contra spoliatorem (all things are presumed against the wrongdoer) was applied and a claimant could be denied a claim or found to have committed fraud. Over time, the maxim’s strict application has moderated.

“Thus, in a country like England, it now takes the form of a presumption that if the evidence relevant to the litigation has been intentionally destroyed a strong presumption arises that the evidence would not assist the party responsible for its loss or destruction (spoliator) (The Ophelia: 1916- 2 A.C. 206, 32 T.L.R. 502, (P.C.).”

In Canadian cases on this topic a few themes begin to emerge:

1. Spoliation in law doesn’t occur just because evidence is destroyed. It occurs when a party has intentionally destroyed evidence that is relevant to the litigation at hand. Spoliation should not be confused with the unintentional destruction of evidence.

2. There are many different ways, in law, to remedy spoliation. This can be found in the “court’s rules of procedure and its inherent ability to prevent abuse of process, and remedies may include such relief as the exclusion of expert reports and the denial of costs.”

3. Whatever the remedy might be it is for a trial judge to determine where they can consider all the facts and fashion the right outcome.

In this case, the Court of Appeal overturned the decision of the chamber judge to strike the cause of action. It did, however, order that the manufacturer was entitled to “examine” the insurer fire expert in accordance with specific directions that they outlined in their judgment.

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Summary This will be an interesting case to follow to see the eventual outcome.

Clearly, the best course of action is to notify any potential third party of the intention to subrogate as soon as practical.

Filek v. Nute and McDonald v. Nute, Supreme Court of B.C., Master Hyslop, Jun. 2, 2008 In the early morning hours of Apr. 4, 2004 a fire started on the patio of David Paul Nute and Remi Nute’s home. According to an inspector with the Kamloops Fire Department, the fire started on the patio area of the home and a gas line at the residence ruptured. The defendants’ home was destroyed by the fire. The fire spread, burning the home and contents of the plaintiffs, the Fileks, and damaging the plaintiffs’, the McDonalds’, home.

Two-years post-fire subrogation actions were commenced against the homeowner where the fire originated.

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Allegations of negligence were made, based in part on a fire department inspector’s views that careless smoking may have been the initiating cause of the fire.

At issue was what documents should the Nutes’ lawyer be required to release to the plaintiff’s in this action?

Immediately following the fire, the insurer of the Nute home appointed an independent adjuster. Within 24-hours of assignment the adjuster provided a verbal report to the claim’s examiner the fire department thought the fire was the result of the negligence of the Nute family. The claim’s examiner stated in an affidavit she formed an opinion based on the conversation with the adjuster that this matter was headed for “litigation.” Two months later the same claims examiner hired outside legal counsel to represent her on this matter.

There were 37 reports generated by the independent adjuster for the insurer on the Nute file. These began with a report dated two days after the fire and extended onward 17 months. The

plaintiffs in this case tried to argue “privilege” on the reports should begin from the date upon which the litigation was commenced (24 months post-fire).

That suggestion was flatly rejected by Master Hyslop.

The plaintiffs then argued they had not had the ability to access “scientific data or measurement of the initiating cause of the fire. This information rests with the Defendants and they deny liability.” Hyslop did not accept this because there was no evidence that access to the fire scene had been denied to the other insurers. They had to have had the same information about the allegation of careless smoking and would have known early on the prospect of litigation was looming.

On the other hand, the defendants’ insurers knew early on they may be the target of subrogation actions so they went out and obtained “certain reports” which were for the purposes of defending any claims.

The Master found there was a reasonable prospect of litigation two days post fire when a report on the loss from

When you’re not FirstOnSite, who is?

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the adjuster was received. The subsequent reports were therefore deemed to be generated in contemplation of litigation therefore “privileged” and not subject to disclosure.

Summary In this case, the plaintiffs tried to argue that while they seemed to have access to the scene following the fire they did not have access to “scientific data or measurement.” That implies they were fishing to review any fire investigation reports that might be on the Nute insurer file that might be helpful to their subrogation actions.

Sobeys Land Holdings Limited v. Harvey & Company Limited and CRA Trailers, Inc. Supreme Court of Newfoundland and Labrador, D. Orsborn, September 2008 This trial resulted from a fire that happened on May 15, 1993. The matter took 15-years to bring to a final conclusion, and 103-page judgment.

A massive fire destroyed a warehouse, which was a central storage and distribution facility for Sobeys. The plaintiff asserted the fire started in a trailer due to the negligence in the trailer’s design and manufacture by CRA Trailers (Great Dane).

Prior to the trial, Sobeys had reached 26

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a settlement with Harvey & Company, who was contracted to do the maintenance and repair of the trailer’s electrical system. Sobeys lawyers assumed carriage of Harvey’s defense of the third party claim by CRA Trailers.

CRA took the position at trial the fire started in the warehouse and did not start in the circuitry of the trailer as alleged by the plaintiff.

The case involved circumstantial evidence. There were numerous eyewitnesses to the fire and a host of experts engaged by both sides.

One of the initial fire experts hired

by Sobeys suddenly died in 1997 and a

second expert was hired. This expert relied upon the first fire expert’s material to carry on with the investigation.

The second expert gave evidence during a seven day Examination for Discovery, relying on over 20 binders of investigative material and research to render an opinion that a defect in a ceiling light fixture in the trailer caused the fire. Unfortunately, this second expert died prior to the trial. With consultation from the lawyers involved, the trial judge did allow into evidence the written material of these two fire experts.

During the trial, the judge referred to these opinions in great detail, but said he was not impressed with the findings of these experts. He said he did

not feel they gave a clearly articulated expression of the fire cause. In reviewing the written evidence, the trial judge provided several clear examples of the problems he had with the reports. He acknowledged, however, that had the experts been able to give evidence at the trial this would have allowed an opportunity to gain clarity from their work.

The trial judge pointed out the burden of proof as to the origin of the fire rests with the plaintiff. When considering the weight to be given to the evidence it was interesting to see his comment that: “There was no factual imbalance in favour of Great Dane. The facts of the fire, its circumstances and progress, the ensuing gathering of the evidence, the post-fire custody of the trailer — and the working and maintenance history of the trailer — were all under the control of Sobeys. Great Dane was not notified of the fire until August, some three months after the fire and did not receive actual formal notification until November. Litigation, with its opportunities for discovery and inspection, was commenced only in 1998, five years after the fire.

“These circumstances do not support a relaxed approach to the assessment of evidence for the purpose of drawing factual inferences in favour of Sobeys.”

The judge also highlighted a report of a fire investigator who was initially called to examine the fire scene by Sobeys. This report was produced after a long fight where Sobeys tried to fight disclosure of the report by claiming “litigation privilege.” Eventually, another court determined the report had to be produced. The trial judge duly noted this fire investigator’s first report pointed away from the trailer in question as being the origin area of the fire. When this fire investigator’s report was produced, the investigator was told to “stop investigating.” The judge noted that, in effect, he was “fired” from this job. It seemed to the trial judge the intention from early on was to “build a case against Great Dane”.

The trial judge went to great lengths in his decision to review the evidence of the individual experts. He commented on Cal White’s evidence as follows: “Overall, I found White’s evidence to www.claimscanada.ca

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be clear and persuasive. I am satisfied from observing him and listening to him that he retained throughout the objectivity and independence necessary of an expert witness. That he was not crossexamined on significant aspects of his evidence — particularly his testing — gives me some additional comfort in considering his opinions.”

It was interesting to see the trial judge was noting not only the direct evidence of the expert, but also, that the person was not cross-examined on while in the witness box. The judge felt on some key points White’s evidence was “un-contradicted”.

Other experts gave testimony at the trial. A number of these experts had specific areas of expertise and the judgment covers off the judge’s view of the opinions expressed. At the end of the day, the judge said he did not feel the plaintiff had proved the fire had started in this trailer. In fact, he said he felt the evidence he heard pointed away from the trailer as being the origin of the fire.

The evidence he heard did “not move the scale from speculative to probable.”

On that basis he made no finding of negligence against Great Dane.

Summary The rubber hits the road when you get into the witness box. How you present your evidence is critical. This is especially true of an “expert” witness who is supposed to be a “friend of the court.” If the trial judge feels that the expert is showing bias and is an advocate for one side or another then they will ‘mark down’ the weight they give to that witnesses testimony.

When’s the last time you went to court to listen to an “expert” give evidence?

Conclusions The first case in this article illustrates how difficult the loss adjusters’ job can be at times. The adjuster and the contractor in that case were both challenged in many different ways to maintain their professionalism. At the end of the day, the trial judge was very clear as to how he viewed the credibility of the parties involved in the action.

The other cases all have an element www.claimscanada.ca

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of the emerging law on “spoliation” in Canada. We would be foolish to ignore some of the lessons learned in these cases as we will see more of them on the road ahead. It is important to ensure you are thinking about subrogation potential from the first moment you arrive on a fire scene. This is not just about hiring your own fire expert to prove your case, it’s also about making sure the parties you may wish to subrogate against have access to the scene as a means to creating a level

playing field. You may have to sort out issues such as who is gathering up the physical evidence and to what extent future co-testing might be done. The point is: you need to be thinking about these things!

Glenn Gibson has 35-years experience as a loss adjuster. In addition to being an executive general adjuster he is the global chief strategy officer with Crawford & Company Inc.

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Insurance Coverage Decisions The Cases You Should Know About From 2008

BY CHRISTOPHER R. DUNN

fect knowledge.” While a machine may be hile 2008 was somewhat less “busy” designed to meet all foreseeable risks, it may in the Supreme Court of Canada nonetheless fail due to some unanticipated for insurers than 2007, it was actuoperating condition or external force. Such a ally a very productive year at the provincial design is not “faulty.” The court cited the Appellate level, particularly in Ontario, where DeHavilland Comet and the Tacoma Nara number of major decisions dealing with rows Bridge as examples of designs that were, issues ranging from the duty to defend to at the time, “state of the art.” No engineer proximate cause under all-risk property poliwould have found fault with either design in cies were release. While this made 2008 a diffiadvance of their failures. Both designs cult year to select a clear Top 10 hopefully, the Christopher R. Dunn nonetheless failed when confronted with following cases cover a reasonable range of decisions based on both geography and policy type. While all unknown or unexpected conditions during use. The Lovat are not necessarily revolutionary in their overall approach or TBM’s design met the “state of the art,” a determination supresult, each decision nonetheless represents a significant ported by the substantial peer review and approval during the design phase to which the design was subjected. statement in its specific area of coverage.

W

1. Canadian National Railway Co. v.

Royal and Sun Alliance Insurance Co. of Canada [2008] S.C.C. 66 (Supreme Court of Canada) Type of Coverage: All-risks property Issue: Faulty Design Exclusion The underlying loss arose out of damage to a Lovat TBM (tunnel boring machine) being used by C.N. to tunnel under the St. Clair River. The TBM was the largest ever built by Lovat, and had a complex sealing system to protect the main bearing. After two months of operation, extensive damage to the sealing system was discovered. Experts concluded the loss was caused by deflection of the cutterhead, known as “differential deflection.” C.N’s claim was rejected by the property insurers, who relied on the “faulty design” exclusion.

C.N. sued for coverage and was initially successful at trial. The trial judge held that while the TBM’s designer had to accommodate all “foreseeable” risks of damage, the expert evidence was that the risk of excess differential deflection was not foreseeable. Though the TBM failed, it was not faultily designed.

The property insurers successfully appealed. The Ontario Court of Appeal noted the designer of the TBM conceded at trial he had anticipated differential deflection and had done calculations to try and accommodate for it. Therefore, as the TBM had failed as a result of differential deflection, its design was necessarily “faulty.” The policy was not intended to be a warranty of entrepreneurial design risk.

The Supreme Court of Canada allowed C.N.’s appeal by a narrow majority (4 to 3) and found in favour of coverage.

The court’s decision hinged on the innovative nature of the TBM’s design. The standard is “state of the art” and not “per28

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2. Boliden Ltd. v. Liberty Mutual Insurance Co. [2008] O.J. No. 1438, Ontario Court of Appeal Type of Coverage: Director’s and Officers Issue: Pollution exclusion Liberty issued a directors’ and officers’ liability policy to Boliden Ltd. Boliden sought coverage for defence costs incurred in defending an action against its directors by shareholders alleging prospectus misrepresentation respecting certain events involving an environmental disaster at a Boliden zinc mine. Liberty denied coverage, relying on the D&O policy’s pollution exclusion.

Both the motion’s judge and the Court of Appeal found in favour of coverage for many of the pollution-related claims. As there were both covered and uncovered claims in the action, Liberty was required to pay 80 per cent of the defence costs pursuant to the policy’s allocation endorsement. The court held that for the pollution exclusion to apply, the loss had to be attributable directly to the pollution. The court cited a number of misrepresentations by the directors which did not relate to the collapse of the pond and subsequent pollution event. The exclusion only applied to pollution-related “losses”, and not all pollution-related “claims.”

3. Gibbens v. Co-operators Life Insurance Co. [2008] B.C.J. No. 625, British Columbia Court of Appeal Type of Coverage: Group Life and Disability Issue: Independent external cause of illness Gibbens was a beneficiary under a group disability policy issued by Co-operators. In early 2003, he had unprotected sex with three women and became infected with type 2 www.claimscanada.ca

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herpes simplex virus (HSV-2). This in turn caused inflammation of the spinal cord, paralyzing Gibbens from the midabdomen down. Gibbens made a claim under the group policy. Co-operators denied coverage, arguing the loss did not result “directly and independently of all other causes” nor “solely through external, violent and accidental means.”

Gibbens sued, and both the trial judge and subsequently, the Court of Appeal, found in favour of coverage. Gibbens’ paralysis did not arise naturally, but instead arose from the external introduction of the HSV-2 virus into his body by a sexual partner. This was sufficient to qualify as “accidental” based on the ordinary meaning of that term. The Supreme Court of Canada has granted Co-operators’ leave to appeal, and its decision will be eagerly anticipated in 2009.

ature” and “mechanical or electrical breakdown or derangement.”

Both the motion’s judge and the Court of Appeal disagreed with Lombard.

“Breakdown” and “derangement” referred to internal problems or defects in a machine, and not failure due to an interruption in the power supply. If Lombard had intended to exclude blackouts from the policy, it would have been a simple matter to do so. The court also rejected Lombard’s reliance on “changes of temperature.” The power outage was the proximate cause of the loss and not a change of temperature.

4. York Region Condominium Corp. No. 772 v.

Lombard Canada Ltd. [2008] O.J. No. 1377, Ontario Court of Appeal

6. Boland v. Allianz Insurance Co. of Canada [2008] O.J. No. 3000, Ontario Court of Appeal

Type of Coverage: Commercial General Liability Issue: “Own work” exclusion Bradsil constructed the plaintiffs’ condominium. Bradsil damaged an aquifer during construction, then negligently repaired it. This caused the garage of the condominium to sink. The building was evacuated to repair the foundation.

The condo corporation sued Bradsil, and it tendered to the action to its CGL carrier Lombard. Lombard denied coverage on the basis the CGL policy did not cover Bradsil’s own negligent work. The condominium owners obtained a judgment against Bradsil and pursued Lombard for indemnity.

Both the trial judge and the Court of Appeal found in favour of coverage. The damage caused by Bradsil’s negligence was not to the actual foundation of the building, but to the “natural foundation,” the land beneath the building. This was part of the owner’s property and not Bradsil’s “work.” Lombard also argued there was no occurrence as the damage was not accidental. The court disagreed. The destruction of the natural foundation of the building was an “unlooked for mishap” from Bradsil’s perspective.

5. Caneast Foods Ltd. v. Lombard General Insurance Co. of Canada [2008] O.J. No. 1811, Ontario Court of Appeal Type of Coverage: All-risks property Issue: Proximate cause Lombard provided all-risks property coverage to Caneast, a pickle manufacturer. On Aug.14, 2003, during the infamous blackout, the supply of electricity to Caneast’s refrigeration equipment was cut for 27 hours, spoiling a large quantity of pickles and cucumbers. Lombard denied coverage for the loss, relying on policy exclusions for “changes of temperwww.claimscanada.ca

Type of Coverage: Directors and officers Issue: Knowledge of circumstances which might give rise to a claim Boland, a director of a condominium corporation, was sued by a condominium purchaser for allegedly knowing, prior to the sale, that the seller had illegally enlarged his unit.

Allianz had provided director’s and officer’s liability coverage to the condominium corporation since 1994 on a claimsmade basis. Boland reported the claim to Allianz under the Apr. 30, 2005 to Apr. 30, 2006 policy term. The policy only covered claims where the directors had no knowledge, prior to the “effective date” of the policy, of the circumstances which resulted in the claim. The evidence demonstrated that Boland was aware of the problem as of 1998.

While the application judge held there was no coverage for Boland given his prior knowledge of the underlying circumstances, the Ontario Court of Appeal disagreed. The court held the “effective date” of a series of claims-made E&O or D&O policies is actually the date the first policy in the series was issued by the insurer. In the case of the condominium corporation, that would have been 1994. As there was no evidence that Boland had the requisite knowledge as of 1994, there was coverage for the loss.

7. AXA Insurance (Canada) v. Ani-Wall Concrete Forming Inc. [2008] O.J. No. 2843, Ontario Court of Appeal Type of Coverage: Commercial General Liability Issue: “Own work” and “own product” exclusions Ani-Wall constructed foundations for a builder using concrete purchased from Dominion Concrete. The concrete was defective, and the builder had to replace the foundations.

Ani-Wall was sued and it tendered the claim to AXA for coverage. AXA denied on the basis of the CGL’s “your product,” “your work” and rip and tear exclusions. AniWall argued Dominion was a “sub-contractor,” thus bringing the loss within an excepFebruary/March 2009

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tion to the “your work” exclusion.

The Court of Appeal found in favour of coverage. The term “subcontractor” was to be construed broadly. It could reasonably be said that Ani-Wall subcontracted its obligation to supply concrete to Dominion.

8. Hanis v. Teevan [2008] O.J. No. 3909, Ontario Court of Appeal Type of Coverage: Commercial General Liability Issue: Apportionment of defence costs between insurer and insured Hanis was a professor hired by the University of Western Ontario in 1972. He was fired in 1987. He sued for wrongful dismissal, malicious prosecution and defamation. UWO tendered the action to its CGL carrier, Guardian. Guardian denied coverage for all claims.

The trial judge, and subsequently, the Ontario Court of Appeal, disagreed with Guardian’s position. Guardian owed a duty to defend the defamation claims even though the wrongful dismissal claims fell outside of coverage. Guardian also appealed the trial judge’s determination it had to pay 95 per cent of the substantial defence costs incurred by the University.

The trial judge’s apportionment of costs was upheld by the Ontario Court of Appeal, which concluded that the language of the policy governed, and not principles of equity.

The policy provided that Guardian would defend all covered claims, regardless of whether the defence of such claims would also assist in the defence of uncovered claims. There was nothing in the language of the policy that qualified Guardian’s defence obligation or suggested that it did not apply to so-called “mixed claims.” Defence costs will only be apportioned where it can be proven by the insurer that the defence of the uninsured claims would not overlap with the defence of the covered claims.

9. Trisura Guarantee Insurance Co. v. Belmont Financial Group Inc. [2008] N.S.J. No. 436, Nova Scotia Court of Appeal Type of Coverage: Professional Liability Issue: Material misrepresentation Belmont Financial was the administrator for a union pension plan. A union member, Richardson, requested the transfer of the commuted value of his pension to an RRSP. Belmont refused, and Richardson retained counsel. In May, 2006 Richardson’s counsel wrote to Belmont alleging a breach of its duty to Richardson, and advised he had instructions to commence action against Belmont without www.claimscanada.ca

further notice. Five months later, Belmont applied to Trisura for professional liability coverage. When asked whether it had knowledge of any facts or circumstances which could give rise to a claim, Belmont answered “no.” Belmont was subsequently sued

by Richardson and tendered the claim to Trisura. Trisura denied coverage, taking the position that the May 2006 letter constituted a “claim” made prior to the policy period.

While the trial judge sided with the insured, the Court of Appeal disagreed, and upheld Trisura’s denial. The May 2006 letter alleging a breach of duty along with a threat to commence an action against Belmont constituted a “claim.”

The insured’s argument that the action arose out of negligent misrepresentation, which was different than the allegations contained in the demand letter, was rejected. A reasonable insured would have concluded from the May 2006 letter that Richardson might pursue a claim for negligent misrepresentation.

10. ING Insurance Co. of Canada v. Harder Estate [2008] A.J. No. 579, Alberta Court of Appeal Type of Coverage: Auto Issue: Use or operation of a motor vehicle Harder shot and killed his son in the cab of his truck.

The boy’s mother sued Harder for the resulting psychological injuries she suffered. Harder tendered the action with his auto insurer, ING, alleging the loss arose from the “ownership, use or operation” of the truck.

The motions’ judge, prior to the release of the Supreme Court of Canada’s decisions in Vytlingham and Herbison, found for the insured. ING successfully appealed. The Court of Appeal indicated the question was whether Harder’s actions were fairly within the risk created by his use or operation of the truck, or whether the use of the truck merely created an opportunity in time and space for the loss. Applying this test, the Court felt the elements of the loss did not meet the requirements for causation, as they did not show an unbroken causal chain connecting the operation of the truck to the shooting of the boy. The use of the vehicle was legally “interrupted” in order to commit the crime.

Chris Dunn is a partner with Dutton Brock, LLP and his practice involves representing and providing insurance coverage advice to those in the insurance industry.

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Hanis v.

Teevan

The Ontario Court of Appeal Addresses the Apportionment of Defence Costs

BY MICHAEL TEITELBAUM

declaration that the insurer had to defend. he Ontario Court of Appeal has clariThe action was held in abeyance pending the fied an insurer’s obligation to pay outcome of the main action. Western defenddefence costs by dealing with the issue ed the main action using counsel it appointof whether the costs of defending covered and ed. uncovered claims should be apportioned Hanis was found entitled to damages for between the insurer and insured, in Hanis v. wrongful dismissal in the main action. WestTeevan, 2008 ONCA 678,1 a long-anticipated ern then proceeded with its third party claim, decision released on Oct. 8, 2008. The Court and Justice Power found Guardian had a duty found this question is governed by the lanto defend some of the claims under Guardian guage of the policy. Where there is an unqualMichael Teitelbaum Policy II.2 Power held that Guardian should ified obligation to defend, the insurer is required to pay all reasonable costs associated with the have defended Western with respect to all of the claims, covdefence of those claims even if those costs further the defence ered or not, subject to a reservation of rights for any apporof the uncovered claims. There is no obligation to pay for the tionment of the defence costs. A trial was then held on costs solely related to the defence of uncovered claims.

Guardian’s entitlement to allocation.

Following the trial, Power held that Guardian was obliged Facts to pay all defence costs related to the defence of claims covDr. Edward Hanis was hired by the University of Western ered by the policy even if those same costs furthered the Ontario as director of the university’s Social Science Com- defence of uncovered claims. However, Guardian was not puting Laboratory (SSCL). After being fired, he was charged required to pay defence costs solely related to the defence of with a criminal offence arising out of his alleged misuse of uncovered claims. The trial judge determined that five per the computing system at the SSCL. Western had initiated the cent of the defence costs related exclusively to uncovered police investigation. Hanis sued Western and later added claims. Guardian was held liable for 95 per cent of the costs, individual university employees to the suit. His statement of quantified at slightly more than two million dollars. claim advanced numerous allegations against Western and Guardian argued on appeal it should only be liable for 20 per the individual defendants, including an allegation of mali- cent of the defence costs. cious prosecution arising out of the criminal charge, in Parties’ positions respect of which Hanis was acquitted.

Western had comprehensive general liability insurance Justice Doherty, on behalf of a three member panel that policies with the appellant, Guardian Insurance Company of included Justice Sharpe and Justice Gillese, noted Guardian’s Canada in place, both when Hanis was fired in October 1986 position on appeal was, because only the malicious prosecu(Guardian Policy I) and in March of 1987 when he was tion claim was covered under its policy, it should not be charged with the criminal offence (Guardian Policy II). responsible for any costs not connected to the covered claim.

Under the policies, Guardian undertook to defend actions It also argued costs associated with both covered and uncovbrought against Western if the claims were covered by the ered claims (mixed claims) should be allocated between policy. Guardian denied coverage under either policy. West- Western and Guardian on a “fair and equitable” basis. In ern initiated a third party claim against Guardian seeking a response, Western submitted its defence costs could not be

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In my view this approach construes the language of attributed to one claim as opposed to another, given the manner in which the multiple claims were advanced and the policy in a manner consistent with the usual rules prosecuted by Hanis. Western contended that all defence of construction rather than according to some inferred costs had to be paid unless Guardian could demonstrate that “expectations” not apparent on a fair reading of the some part of those costs could be attributed exclusively to an document; and it provides insureds with the full beneuncovered claim. fit of their policy. It requires an insurer to state explicDoherty noted that Guardian framed the allocation issue itly the basis, if any, on which coverage may be limited, as turning on a set of principles originating, for the most part, and it avoids lengthy hearings designed to explore in American case law. His Honour continued: “metaphysical” underpinnings of why a corporation or “The objective of these principles is to divide the costs its directors and officers might have acted as they did. associated with the defence of ‘mixed claims’ in a man[Citation omitted.] ner that is fair and equitable. A fair and equitable diviDoherty noted there is no unfairness in this approach as the sion of costs is determined by considering a variety of facinsurer’s liability exposure for defence costs is not increased tors, such as the proportion and just because it also assists the insured in significance of the covered and the defence of an uncovered claim. uncovered claims, the benefit derived His Honour also considered the two by the insurer and insured in Ontario Court of Appeal decisions that advancing the defence, the extent to previously addressed the allocation of which the work of the defence defence costs where only some of the appears to be reasonably related to claims are covered by the policy,4 and covered or uncovered claims, and the stated: extent to which the defence effort “I recognize that these cases would reasonably have been necesaccept that it may be appropriate to sary if the only claims advanced were allocate defence costs between the the covered claims.” insurer and insured where only On the other hand, Western characsome of the claims are covered by The relationship terized the allocation issue as one of conthe policy. I do not understand between an insured tractual interpretation, contending any counsel for Western to suggest othright to allocation must be found in the erwise. However, in the context of and an insurer is policy language. The key provision defending covered and uncovered contractual and describes Guardian’s duty to defend and claims in the same suit, a distincits obligation to pay defence costs assocition must be drawn between cases must be governed where defence costs are related ated with that duty, and contains an primarily by the exclusively to the defence of either unqualified promise by Guardian to pay covered or uncovered claims, and defence costs for claims covered by the terms of the cases where the same costs are policy. Western submitted that defence relevant policy of incurred in the defence of both costs relating to covered claims are not covered and uncovered claims. In taken out of the coverage simply because insurance. the former circumstance, an allocathey also assist in the defence of uncovtion of costs would be required, barered claims. ring a policy which provided for payment of defence costs Court of Appeal’s analysis relating to uncovered claims. In the latter case, allocation Doherty considered various cases, including a New would not be necessary unless the policy provided for alloZealand decision appealed to the Privy Council,3 and found cation where the costs related to both covered and uncovin favour of the contractual analysis, stating: ered claims. Neither St. Paul Fire & Marine Insurance Co. “The relationship between an insured and an insurer is nor Daher refer to the allocation of costs where those costs contractual and must be governed primarily by the terms of have been found to have been directed to both covered and the relevant policy of insurance. The insurer’s obligations uncovered claims. That is the allocation issue raised on are found first and foremost in the policy. Those obligations this appeal and that is the issue specifically addressed in may include the obligation to pay all or some of the costs New Zealand Forrest Products Ltd.” [emphasis added] associated with the defence of covered claims. It makes emiThe Court also addressed decisions at first instance, (e.g., nent sense that any inquiry as to the nature and scope of Sommerfield v. Lombard Insurance Group (2005), 74 O.R. (3d) the insurer’s duty to pay those costs should start with the 571 (S.C.J)), where allocation was ordered, apparently on the language of the policy. I agree with the observations of Newbasis that the covered and uncovered claims were based on bury J.A. in Coronation Insurance [Co. v. Clearly Canadidifferent factual allegations, and observed: an Beverage Corp. (1999), 168 D.L.R. (4th) 366] at para.

“These cases can reasonably be read as broadly as coun42 where, in the course of approving the contractual analysel for Guardian would read them. If read that way I do sis approach, she stated: not agree with them. The cases do not look to the language 34

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of the policy as the primary consideration when assessing an allocation claim. Instead, these cases assume that allocation is necessary where there are both covered and uncovered claims and impose what the court regards as a “fair” allocation. For example, in Sommerfield, after determining that the primary cause of action asserted against the insured was not covered by the policy, the court noted at para. 42 that “[t]o require the insurer to pay for the entire defence in these unique circumstances would be unfair.”

Turning to the policy, the Court found the defence clause made Guardian responsible for all costs associated with the defence of the malicious prosecution claim, and there is nothing in the policy language that qualifies that obligation or suggests it does not apply to mixed claims (para. 32 of the Court’s reasons).

In the result, the Court held that what part of the defence costs related to the defence of the malicious prosecution claim was a factual one to which the standard of appellate deference applies, and upheld Power’s decision.

Comment

Based on its reasons, it is our view the Court of Appeal has reinforced or established the following principles in respect of the duty to defend and allocation as between covered and uncovered claims: If there is one covered allegation, the entire action must be defended, as long as the defence clause requires this.

It is not a matter of whether the mixed claims are so intermingled or intertwined that creates the defence obligation; rather, it is the obligation to defend the covered claims that also encompasses the uncovered claims, unless it can be shown the defence costs relate exclusively to uncovered claims.

At the outset of the action, when a defence is sought, allocation is only possible if it can be shown defence costs will be incurred exclusively for uncovered claims. As this seems unlikely if the facts overlap, the Court appears to be saying allocation must be addressed at the end of the underlying action, so it can be based on evidence as to how the defence was conducted, and what portion of the defence related solely to uncovered The Court had three additional observations: claims.

If there is one If insurers wish to attempt allocation 1. The contractual interpretation at the end of the day, then they must approach requires the rejection of the covered allegation, reserve their right to do so, and to seek position taken in some cases that if the the entire action reimbursement for the defence costs insurer wrongfully refuses to defend a paid. Given the Court’s comment on the covered claim, the defence costs for must be defended, onus of proof, it will be the insurers both covered and uncovered claims as long as the which will be in the position of proving must be paid. However, there are conentitlement to allocation and reimbursesequences for failing to defend because defence clause ment, and not the insured as was the the insurer may later find it difficult to requires this. case in Hanis. Insurers will also wish to refute the insured’s position on allocainstruct defence counsel to keep track of tion by arguing the case should have what their work relates to for the purbeen defended differently, or that cerposes of future proof. tain costs incurred were unnecessary.

While Hanis brings some clarity to 2. It is potentially misleading to the defence obligation, depending on indicate as Power did that the insurer must pay the defence costs where there is no practical means how it is interpreted, it also creates new obligations and conof distinguishing between costs referable to the covered and siderations for insurers when dealing with covered and uncovered claims. Doherty noted what this is in reference uncovered claims. As always, this will make for interesting to is costs incurred for both covered and uncovered claims, times. and stated: “It is preferable to express the finding in that Michael Teitelbaum practices insurance litigation at Hughes way, as it makes more obvious the insurer’s obligation to Amys in Toronto, Ontario. Hughes Amys is a member firm of pay those defence costs, assuming the policy requires paythe ARC Group of Canada Inc. ment of all costs related to the defence of a covered claim.”

3. Doherty questioned whether there was any reason to depart from the general rule that the onus of proof as to what portion of the defence costs related exclusively to uncovered 1 At first instance, the decision was reported under the name Hanis v. University of Western Ontario, 32 C.C.L.I. (4th) 255 (S.C.J. 2005). claims rests with the party making the claim, noting the trial 2 Hanis v. University of Western Ontario, 67 O.R. (3d) 539 (S.C.J. 2003). judge appeared to place the burden on Guardian to demonstrate what portion of the defence costs related exclusively to 3 New Zealand Forest Products Ltd. v. New Zealand Insurance Co. Ltd., [1996] 2 N.Z.L.R. 20 (C.A.), rev’d 3 N.Z.L.R. 1 (P.C.). uncovered claims. However, on the findings of fact, the Court 4 St. Paul Fire & Marine Insurance Co. v. Durabla Canada Ltd. (1996), 29 was satisfied Western clearly established only a small fraction O.R. (3d) 737 and Daher v. Economical Mutual Insurance Co. (1996), 31 of the defence costs related exclusively to uncovered claims.

O.R. 93d) 472. www.claimscanada.ca

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Escalating Damages in Serious Brain Injury Cases

BY IAN A. MAIR

hree recent, well-publicized court decisions produced multimillion dollar awards of damages in cases involving brain injury. The injuries were catastrophic. But the damages awarded were unprecedented.

In Marcoccia v. Gill, the plaintiff, Robert Marcoccia, was a twenty-something male who injured the frontal and temporal lobes of his brain in a car accident, and was left with a left-sided hemi-paresis. The brain injury affected his behaviour, social functioning and emotional response, his ability to initiate and plan, and his ability to anticipate the consequences of his actions. He was unable to manage his emotions, and inappropriate behaviour in social situations eliminated any prospect of returning to work. He would only be able to live in his own apartment with support. He would require 24-hour supervision, seven days a week. The jury assessed damages at $16.9 million.

In Sandhu v. Wellington Place Apartments, as a direct result from a fall from a fifth story window, the plaintiff, a two-year-old boy, sustained a serious frontal lobe brain injury. As a result of the brain injury, the boy would not appreciate that he was disabled. He would not understand why he could not work or drive a car. Behavioural problems could develop. Expert evidence was led at trial to show that the boy would grow into his disability. In other words, it would become more apparent as the boy grew older. There

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Ian A. Mair

was a risk that he would become too outgoing, too trusting or too friendly.

He might lack judgment and behave inappropriately in social situations.

The jury awarded damages in excess of $12.9 million.

In Gordon v. Greig, three young men were on their way up north for a cottage weekend. Ryan Morrison and Derek Gordon were passengers in a pick-up truck driven by Corey Greig.

Greig had been drinking. Travelling at high speed, the pick-up entered a sharp turn and Greig lost control. The pickup left the road, rolled, and both Morrison and Gordon were thrown into the ditch. Morrison sustained a spinal injury which left him a paraplegic.

Gordon sustained a catastrophic brain injury. His bladder and bowel control, senses of smell, taste, hunger, temperature and his sexual function were all affected. Because his frontal lobes were damaged, his emotional control was also affected. Justice Glass held that Gordon would never be able to work again, and awarded damages of $11.3 million dollars.

It would be wrong to attribute these high awards to runaway juries. For one thing, although Sandhu and Marcoccia were jury decisions, Gordon was a judge-alone decision. Moreover, the Sandhu decision has now been upheld in the Court of Appeal.

So, why were these awards so high?

True, in each case, the plaintiff sustained a serious brain injury, and so received the maximum award for general damages. And, in each case, the plaintiff had no residual earning capacity, and so received damages for lifetime loss of earnings. However, general damages represent small portions of the overall totals. In Sandhu, the maximum award for general damages was $311,000. In Gordon, it was $310,000, and in Marcoccia, it was $312,200.

Today, the maximum is approximately $315,000. Similarly, the loss of earnings awards — $1.8 million in Gordon, $1.38 million in Marcoccia, and $1.4 million in Sandhu — also represent small fractions of the totals.

What made up the lion’s share of damages in each case was the cost of future care — in Sandhu, $10.9 million; in Gordon, $8.6 million; and in Marcoccia, $13.9 million.

Within the future care awards were allowances for therapies and services such as speech language therapy, tutoring, occupational therapy, and psychotherapy. In Marcoccia, the plaintiff suffered a hemi-paresis, so there was also an award for physiotherapy. Howwww.claimscanada.ca

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ever, in each case, therapy and services amounted to only a few hundred thousand dollars — a small portion of the future care awards.

The bulk of the future care awards related to the cost of round the clock supervision. But there were also new types of future care damages that contributed significantly to the totals, which flow from the seemingly lower standard of proof for future damages.

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The plaintiff is entitled to be placed in the position he was in before the accident in as much as money can accomplish that. His damages are what it would cost him to go into the market to purchase the supervision he needs.

In all three cases, supervision was required during the day to help cue and prompt the plaintiff through his daily activities. In Sandhu, because of the infant plaintiff’s frontal lobe brain

injury, the infant plaintiff would not be able to initiate tasks. He would not have the judgment necessary to conduct himself properly in social situations and, because of a desire to be accepted, he might be easily led astray by unscrupulous individuals seeking to take advantage of him. The boy would require a “prosthetic frontal lobe” to cue him and prompt him to initiate tasks and to exercise judgment. A com-

Proof of future care costs The burden of proof is on the plaintiff to prove damages for future care costs. However, the plaintiff does not have to prove these damages on a balance of probabilities. Although damages are not recoverable for things which are merely speculative or fanciful possibilities, to succeed, the plaintiff need only show there is a “real and substantial risk” the loss will be incurred.

Supervision There are two key factors which drive the big numbers for supervision: the number of hours and the level of care.

In the three cases, the trial courts held the brain-injured plaintiffs needed to be supervised 24 hours a day. But why? For the most part, they exhibited no physical problems; they appeared normal; they could do many things for themselves; they slept through the night; they did not require physical care in the way that a person suffering from paraplegia or quadriplegia does. However, in each case, doctors testified the plaintiff might not be safe if left alone.

Or rather, there was a substantial risk he might not be safe. For example, in an emergency such as a fire, the plaintiff might become confused and unable to react. Or, left unsupervised, he might wander off in the middle of the night and get into trouble.

What if the brain-injured plaintiff lives with his family? Why should the defendant have to bear the cost of overnight supervision, while the plaintiff is sleeping? After all, family members are just down the hall. That’s not how it works. The defendant cannot conscript family members into service.

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panion would be needed, someone to modify and modulate his behaviour, someone to look out for him — at all times.

Level of care The second factor that drives the large awards for supervision is the level of care. There are a number of options available, and hourly rates vary widely depending on the level of expertise of the caregiver. In some cases, the required level of care may vary depending on the time of day and the activities in which the plaintiff is involved.

In Marcoccia, plaintiff’s counsel led evidence that the plaintiff would require supervision by a rehabilitation support worker (RSW) at the rate of $54 per hour during the productive hours of the day. An RSW is an individual with college-level training on how to manage a person with a brain injury.

People with brain injuries can sometimes be overly aggressive, or overly friendly, exhibit socially inappropriate behaviour and a lack of judgment. The RSW is trained to recognize signs of problem behaviour and intervene before problems escalate. Evidence was led in Marcoccia that if RSW support was not provided, situations could arise which could become dangerous to the plaintiff or others in the community.

In Sandhu, evidence was led that different levels of care would be required at different times of the day. Take, for example, a typical school day during the infant plaintiff’s school years. In the morning, the infant plaintiff would require supervision while getting his breakfast, cleaning his teeth and getting ready for school. During this time, supervision at the level of a Personal Support Worker (PSW) would be adequate. The agency rate for a PSW is $22 per hour.

At school, between 8:30 a.m. and 4 p.m., the plaintiff would require an educational assistant (EA). There was evidence this should be provided at the level of an RSW, at $54 per hour. After school, there would be a couple of hours to unwind, maybe to play video games or watch television, or have a snack. Supervision at the PSW level would suffice during this time. In the evening, between 6 p.m. and 8 p.m., as 38

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the demands of cueing and prompting the plaintiff through homework assignments would be more advanced, so he would again need supervision at the more expensive RSW level.

At bedtime, between 8 p.m. and 10 p.m., the PSW level of supervision would suffice. The infant plaintiff would be getting into his pyjamas and getting ready for bed.

Overnight, before the age of 16, the infant plaintiff would have been supervised by his parents if uninjured. So there would be no extraordinary cost for overnight care during these years.

However, after age 16, there would be no legal responsibility for parents to supervise, so overnight supervision

It is likely that the range and scope of future care cost claims will continue to expand so long as there are defendants who are capable of paying. becomes an extraordinary cost. Plaintiff’s counsel sought damages for overnight supervision at a babysitter’s rate of $10 per hour.

All told, the cost to supervise the infant plaintiff round the clock, on a typical school day, exceeded $700 a day.

Different scenarios were presented for each phase of the infant plaintiff’s life, with similar daily cost figures.

New heads of damages The seemingly lower burden of proof for future claims permits arguments in support of an increasingly broad range

of claims. For example, in both Marcoccia and Sandhu, the plaintiff led evidence to show that because such large awards had been made for future care costs, there was a real and substantial risk the plaintiff would require guardians to manage all the money. In both cases, there was a substantial risk both a corporate guardian, likely a trust company, and a non-corporate guardian would be appointed. In Sandhu, the judge awarded guardianship costs totalling $1,127,000 and non-corporate guardian costs of $268,800. In Marcoccia, corporate guardian costs of $715,557 and non-corporate guardian costs of $161,250 were awarded.

As well, damages were assessed for future legal expenses, which might be incurred by the estate — in Sandhu, $400,000 and in Marcoccia, $389,009.

Of these amounts, substantial sums were attributed to “contingent litigation expenses.” It was argued that due to problem behaviours related to brain injury, there was a substantial risk the plaintiffs could become involved in family law disputes or the criminal justice system. As a result, there was a substantial risk legal fees would be incurred at some point in the future.

Conclusion Both Marcoccia and Gordon were car accident cases brought against automobile leasing companies with unlimited exposure. Since the accidents, which gave rise to these cases, changes in automobile insurance legislation have been made to protect automobile leasing companies. These changes may have restricted the number of cases which could give rise to multi-million dollar damages awards.

But does this mean the high damages awards in Marcoccia, Sandhu and Gordon were anomalies? Blips on the radar screen? Clearly not. It is likely that the range and scope of future care cost claims will continue to expand so long as there are defendants who are capable of paying.

Ian Mair is a partner with Moodie Mair Harley & Walker LLP. He practices civil litigation with an emphasis on matters involving serious personal injury and insurance coverage. www.claimscanada.ca

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National Standing Committees 2008 – 2009 CONSTITUTION & RULES John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca

Robert V. Pearson, CLA, FCIAA HBA Adjusters Ltd. Suite 201 – 1217 Centre Street NW Calgary, AB T2E 2R3 Phone: (403) 245-4599 Fax: (403) 287-1775 E-mail: rpearson@hbaadj.com

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CONVENTION Jean-Marc Laurin, FPAA, CRM, FCIAA Cunningham Lindsey Canada Limited 1250 Guy Street, Suite 1000 Montreal, PQ H3H 2T4 Phone: (514) 938-2124 Fax: (514) 938-5445 E-mail: jmlaurin@cl-na.com

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DISCIPLINE Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com

John R. Smith Crawford & Company (Canada) Inc. 166 Charing Cross Street Brantford, ON N3R 2J4 Phone: (519) 759-5760 Fax: (519) 759-5691 E-mail: John.Smith@crawco.ca

EDITORIAL John M. Sharoun, FIIC, CFE, FCIAA 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

FINANCIAL Randy P. LaBrash, CIP, CFE, CFEI Crawford & Company (Canada) Inc. 300 – 191 Lombard Avenue Winnipeg, MB R3B 0X1 Phone: (204) 947-2340 Fax: (204) 943-9168 E-mail: Randy.Labrash@crawco.ca

ADVISORY Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1 800 387-5677 Fax: 1 800 387-5644 E-mail: pkernaghan@kernaghan.com

Wendy S. Fralick, AIIC Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com CAREER RECRUITMENT PLANNING Heather Matthews Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Heather.Matthews@crawco.ca Wendy S. Fralick, AIIC Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com Christina Welton, FIIC McLarens Canada 743 Fortye Drive Peterborough, ON K9K 2G4 Phone: (705) 740-0023 Fax: (705) 740-2296 E-mail: christina.welton@mclarens.ca

www.claimscanada.ca

Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca EDUCATION Gary A. Ellis, BBA, FCIP, RF, FCIAA, CLA, FIFAA Crawford & Company (Canada) Inc. 18 Great George Street Charlottetown, PE C1A 4J6 Phone: (902) 566-1011 Fax: (902) 894-3044 E-mail: Gary.Ellis@crawco.ca W.E. (Ted) Baker, BA, CFE, FCIAA Baker, Bertrand, Chassé & Goguen Claim Services Limited 3660 Hurontario St., 6th Floor Mississauga, ON L5B 3C4 Phone: (905) 279-8880 Fax: (905) 279-5338 E-mail: webaker@bbcg.ca EMERGENCY MEASURES Roger S. Bickers, CIP, FCIAA McLarens Canada 600 Alden Road, Suite 600 Markham, ON L3R 0E7 Phone: (905) 946-9995 Fax: (905) 946-0171 E-mail: roger.bickers@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com FCIAA E. Brian Gough, FCIP, CLA, FCIAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: ebgough@marshadj.com

Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com FORMS Tammie Norn, CIP ProFormance Adjusting Solutions Inc. 32 Bayern Drive Whitby, ON L1M 0A3 Phone: (905) 431-8774 E-mail: tnorn@proadjusting.ca INDUSTRY LIAISON & PROMOTION Craig J. Walker, CIP, FIFAA, FCIAA Maltman Group International 1049 McNicoll Avenue Toronto, ON M1W 3W6 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Avenue Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca LEGISLATIVE Russell E. Malkoske, BA, FIIC, CLA QA Adjusting Company 279 Provencher Blvd.

Winnipeg, MB R2H 0G6 Phone: (204) 233-8844 Fax: (204) 233-7793 E-mail: qa-russ@shaw.ca LICENSING J. Miles O. Barber, B.Comm.

(Hons.), FCIP, CRM 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 Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1 800 387-5677 Fax: 1 800 387-5644 E-mail: pkernaghan@kernaghan.com

John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com PRIVACY James B. Eso, BA, CIP Crawford & Company (Canada) Inc. #280, 2985 Virtual Way Vancouver, BC V5M 4X7 Phone: (604) 574-6275 Fax: (604) 739-3817 E-mail: Jim.Eso@crawco.ca Wendy S. Fralick, AIIC Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com Keith P. Edwards, FCILA, CLA, FUEDI-ELAE CIAA Honorary Life Member c/o CIAA National Office 5401 Eglinton Ave. W., Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Fax: (416) 621-7776 E-mail: info@ciaa-adjusters.ca WAYS & MEANS Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1 800 387-5677 Fax: 1 800 387-5644 E-mail: pkernaghan@kernaghan.com

CIAA REGIONAL PRESIDENTS 2008 – 2009 NEWFOUNDLAND & LABRADOR Neil F. Lacey, CIP, FCIAA Crawford & Company (Canada) Inc. 44 Torbay Road, Suite 300 St. John’s, NL A1A 2G4 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Neil.Lacey@crawco.ca NOVA SCOTIA Jane Richardson, BBA, FCIP Crawford & Company (Canada) Inc. 237 Brownlow Avenue, Suite 120 Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Jane.Richardson@crawco.ca NEW BRUNSWICK & PRINCE EDWARD ISLAND Luc Aucoin, BBA, FCIP Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: laucoin@planthope.com QUEBEC/AESIQ Charles A. Berthiaume Réclamations C. Berthiaume 44, Chemin d’Oka Saint-Eustache, PQ J7R 1K5 Phone: (450) 491-6165 Fax: (450) 491-6230 E-mail: rcb@reclamationscberthiaume.ca ONTARIO John D. Seyler, AIIC Cunningham Lindsey Canada Limited Oxford Centre, 205 Oxford St. E., Suite 206 London, ON N6A 5G6 Phone: (519) 432-8335 Fax: (519) 432-0054 E-mail: jseyler@cl-na.com MANITOBA Cory R. Malkoske, B.Sc., CIP QA Adjusting Company 279 Provencher Blvd.

Winnipeg, MB R2H 0G6 Phone: (204) 233-8844 Fax: (204) 233-7793 E-mail: qa-cory@shaw.ca SASKATCHEWAN Rob Johnston Midwest Claims Services 320 Gardiner Park Court Regina, SK S4V 1R9 Phone: (306) 522-1656 Fax: (306) 569-1256 E-mail: rob@midwestclaims.ca WESTERN Bea Boutcher, CIP Horizon Adjusters Ltd. #207, 9814 – 97 Street Grande Prairie, AB T8V 8H5 Phone: (780) 402-8383 Fax: (780) 402-7888 E-mail: bea.boutcher@horizonadjusters.com PACIFIC James B. Eso, BA, CIP Crawford & Company (Canada) Inc. #280, 2985 Virtual Way Vancouver, BC V5M 4X7 Phone: (604) 739-3816 Fax: (604) 739-3817 E-mail: Jim.Eso@crawco.ca

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education forum

A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA

Employee Dishonesty Claims and Recovery n the last issue of Claims Canada, Education Forum reviewed the parameters of employee dishonesty coverage through the 3-D policy (Dishonesty, Disappearance, and Destruction) and fidelity bonds. This article follows up with an overview of the claims process in cases of employee dishonesty.

I

Quick off the mark In a dishonesty claim, quick action by the loss adjuster can prevent further loss, help preserve evidence and enhance recovery opportunities. The adjuster should meet with the insured immediately following the report of a potential employee dishonesty loss.

Dealing with the insured: proof of loss The insured must complete and submit to the insurer a proof of loss form setting out the particulars of the claim.

The insured does not have to use the insurer’s own forms (usually supplied by the adjuster), but many insureds will choose to do so in order to cover all the right questions. Furnishing blank proof of loss forms is not an admission of liability.

The adjuster should tell the insured the proof of loss will be shown to the alleged defaulter. The insured, thus forewarned, will likely be very careful in documenting the claim.

Until a satisfactory proof of loss has been submitted, no claim is payable by the insurer. A fidelity bond usually provides that the proof of loss must be submitted within a specific period of time.

Although it will not affect coverage unless the insurer is prejudiced by the delay, failure to meet the deadline is a technical breach of the policy. An 40

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insured may choose to comply by filing an interim proof of loss.

The contract requires that the insured maintain adequate books and records, which must properly document and establish the claim. Poor records may give the insurer a defence to the claim, so it’s important that the adjuster examine these materials.

Interviewing the employee: When and where Although time is of the essence, loss adjusters often wait until at least an interim proof of loss has been filed before interviewing the employee.. Confronting an employee accused of theft is a serious undertaking, and the loss adjuster should be prepared with the factual details outlined in the proof.

Arranging an interview earlier could be detrimental to the insurer’s interests: without knowing the details of the loss, an adjuster is not fully prepared to interview the alleged defaulter effectively.

As a precaution, the adjuster should meet with the employee in a safe environment. Interviewing an employee on his or her home ground could potentially be dangerous if, for example, the employee reacts strongly to the accusation and becomes violent.

Content of the conversation At the beginning of the interview, the loss adjuster should provide a warning that all comments and statements could be used as evidence against the employee. (They could also be used as evidence against the insurer.) The adjuster should explain he or she is representing the interests of an insurer who may have to pay a claim based on the sworn proof of loss submitted by the insured.

With the permission of the insured, the loss adjuster usually allows the employee to read through the proof of loss and any documentation. The employee can then acknowledge or refute any wrongdoing, the amount of loss or the nature of the loss. As a matter of practice, however, copies of the proof of loss and documentation are not provided to the employee.

It is the insured who alleges the accused took the money, and it is the insured who must prove the loss (often with the help of the police) — it is not up to the adjuster to interrogate a suspected defaulter. But if the employee wishes to confess to the loss during the interview, the adjuster can take a written statement, noting in the preamble that anything written in the statement can be used as evidence against the employee.

The statement should include a history of the dishonest activity and should outline potential recovery prospects. The statement should be witnessed, preferably by a third party or by the adjuster, and the employee should initial all corrections and sign the bottom of each page. A copy of the statement can be left with the employee.

Pros of prosecution The insured may or may not be required to press criminal charges against the defaulter in order to be eligible for coverage. Either way, the insured will usually benefit from police involvement and a full criminal investigation.

This is particularly true where the insured’s evidence establishing the loss is weak. The police have the authority to request documents, such as banking records, that can help in proving a loss.

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consequences of criminal activity to the insured’s other employees: the public disgrace of the criminal and his or her failure to achieve any gain provide a deterrent to others. A third potential benefit of prosecution is that, in some instances, sentencing in the criminal proceedings may include restitution orders.

Subrogation Once the insured’s claim has been adjusted and paid, the insurer is subrogated to the position of the insured with respect to all rights of recovery. The insured is obligated to cooperate with the insurer in its attempt to recover the amount paid from the offender. The insurer enforces its subrogation rights in the name of the insured against any party from which recovery may be available.

When a claim is accepted, the loss adjuster may ask the insured to execute a receipt and discharge form confirming the terms of the settlement and further acknowledging the insurer’s subrogation rights.

Recovery options For claims settled within the bond limit, the insurer has first right of recovery. Any deductible amount the insured was required to absorb is the very last item to be reimbursed.

Where the loss exceeds the policy limit, most bonds provide that the insured has the first right of recovery against any culpable persons and their assets. Normally the costs of obtaining the recovery are deducted from the recovery before it is paid out.

Specific recovery options include the following: • As a credit against the loss, the employer can withhold moneys owing to a defaulter in the form of salary or expenses. However, vacation pay and pension benefits owing under statutory obligations cannot be withheld— they must be paid to the defaulter or beneficiary, although the defaulter may voluntarily turn them over to the credit of the claim.

• Specific assets acquired by the defaulter using the stolen money can be recovered by the insurer in priority to other creditor claims. The insured must be able to show how the flow of funds took place.

• The defaulter may be persuaded to sign a promissory note: an unconditional www.claimscanada.ca

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written promise to pay a specified sum at a fixed time or on demand. The wording of the note should make it clear that the debt is the result of fraud and therefore cannot be discharged in a bankruptcy. The adjuster should seek an additional guarantor to the note, such as the defaulter’s spouse—but should warn the person to obtain independent legal advice before making this commitment.

• Finally, recovery is not necessarily limited to pursuing the defaulter. Depend-

ing on the circumstances of the claim, recovery may be available against the insured’s external auditors, the insured’s bank, or anyone else whose negligence may have contributed to the loss.

This article is based on excerpts from the study material in the Claims Professional Series of applied courses – a core of the CIP Program that helps adjusters learn the functional knowledge and skills required of their profession.

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O on the scene

Tim Ponton

Trevor Black

Tim Ponton has been appointed regional vice president (Western) and brings with him a wealth of experience and passion to his new role with Winmar Franchise Corp.

Ponton’s management, administration and adjuster experience over the past 28 years with Major Independent claims management organizations will help increase our ability to service our clients with the understanding of expectation to provide quality customer service. ●

Trevor Black has been promoted to branch manager in St. Catharines for Cunningham Lindsey Canada Claims Services Ltd (CLC).

“Trevor has a number of exciting plans for our St. Catharines office, namely quality measurement, training and education,” Lorri Frederick, CLC’s senior vice president of the central region, said in a release.

“He’s a highly motivated person and works hard for both CLC and our customers.” ●

Crawford & Company (Canada) Inc. donated $50,000 to Women in Insurance Cancer Crusade (WICC) on behalf of its employees.

The latest donation, provided during a celebration breakfast at the Fairmont Royal York Hotel on Feb. 10, brings Crawford’s five-year total to $250,000.

“Five years ago, when we first launched our charitable initiative, Crawford Cares, and began our journey with WICC, we never dreamed that we would reach a quarter of a million dollars so quickly,” John Sharoun, CEO of Crawford & Company (Canada) Inc., said. “We had hoped to raise five or ten thousand dollars a year. Instead, our employees jumped in wholeheartedly and we have consistently come together to raise both community awareness and $50,000 annually through various fundraisers, payroll deductions and donations. I couldn’t be more proud of our staff and all of the efforts they consistently make for their communities and this wonderful cause.” ● 42

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Joe Restoule was inaugurated as the president of the Risk and Insurance Management Society (RIMS) on Jan. 8 at a reception at the Harvard Club in New York City.

Restoule discarded his hidden, prepared notes and gave a heartfelt thanks to fellow RIMS board members, especially immediate past-president Janice Ochenkowski.

“She has been a mentor, a coach and a wonderful friend over the past year,” he said. “She rallied the team around her, showed unwavering dedication to the elevation of the society and has been a true leader.”

Restoule noted Ochenkowski’s achievements over her term, including the development of a risk management maturity model, several professional development initiatives, the launch of a virtual conference and her work to reach out to and work with international risk management associations.

Commenting on the coming year, Restoule noted the economic turmoil and the challenges it will create, but remained optimistic.

“We as risk managers are a community that is not afraid of change and innovation,” he said. “I have utmost faith that 2009 will end with a resounding economic recovery.” ● Vale Training Solutions is now offering a Green Building Estimating course to meet the growing demand for certified “green” claims adjusters.

The two-and-half day Certified Green Building Estimating course focuses on certification requirements for sustainable material, determination of certification protocols for new and retrofitted buildings, construction, estimation of “green” building construction and products, Energy Star and Zero Energy buildings, calculation of Leadership in Energy and Environmental Design (LEED) criteria and standards, and insurance policy conditions for coverage consistent with new or retrofitted construction.

Enrollment information for the Certified Green Building Estimating course is available on the Vale Training Solutions website (www.valenational.com) with the first offering scheduled for this month. ●

HKMB HUB International Insurance Brokers is hosting the 4th annual Hockey Challenge for Charity On March 11.

The event will be held at the Air Canada Centre from 3 p.m. to 6 p.m.

The annual Claims vs. Underwriting game, will feature players from sponsoring firms.

The winning team will be awarded the Challenge Cup. All are welcome with proceeds going to United Way and Women in Insurance Cancer Crusade.

For more information, contact Mike Moyer at HKMB HUB International at 416-597-4625. ● www.claimscanada.ca

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Members of the CIAA attended a Special Olympics dinner and auction on Jan. 28 at the Cunard Centre, Pier 23 in Halifax, where the Blue Goose purchased a table.

The Blue Goose sponsored a table at the event. Over $80,000 was raised for the Special Olympics. ●

Archie Gillis, Supervisor of the Flock, Past Most Loyal Gander; Patty Gillis; Darcel Lewis; Gary Lewis, Gander.

Don Messervey, Most Loyal Gander; Carol Messervey, past president of the CIAA; Archie Gillis, Patty Gillis.

David K. Marshall, manager of Crawford’s Sault Ste. Marie branch, is the inaugural winner of the Gerry Anderson Memorial Award.

This award was established in memory of Gerry Anderson, a longtime Crawford and industry claims leader who passed away in 2007.

Every year, this honour will be given to active Crawford claims professionals with more than five years of David R. Marshall branch service who consistently exceed quality expectations in investigation, evaluation, reporting, and customer service. In addition, they must demonstrate leadership, professionalism, and teamwork as a representative of both Crawford and the industry.

Marshall has consistently demonstrated all of these characteristics over his 16 years with Crawford. His technical expertise and dedication to customer service is well known to peers and customers, as is his work ethic and willingness to cover a wide geographic region. For the last two years, Marshall has received the most complimentary client notes of any Crawford employee in Canada.

He is also heavily involved in his community, dedicating his time as the director of CIAA Northern Region, and past president and current assistant secretary of the Sault Ste. Marie Rotary Club. ●

The KRG Children’s Charitable Foundation has donated more than $1.3 million to The Hospital for Sick Children.

“KRG is in the insurance business and The Hospital for Sick Children represents a giant insurance policy for children and their families,” says Steven Wise, chairman and CEO of KRG Insurance Group and chairman of KRG Children’s Charitable Foundation.

The donation will be divided between the start-up of an in-house Autism Network, Operation Art (a ceramic painting workshop at Sick Kids Hospital) and various other projects. ● The Women in Insurance Cancer Crusade (WICC) is holding its 13th annual WICC Gala dinner on Apr. 8, 2009.

The event will be held at The Westin Harbour Castle Conference Centre — Metropolitan Grand Ballroom. Prereserved rooms are available for $189/night.

To register for the event, log on to www.wicc.ca or contact execdirector.wicc@sympatico.ca.

Drink tickets can be purchased online, as well.

To date, WICC Ontario has raised more than $3,000,000 in support of cancer research. ● www.claimscanada.ca

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O on the scene Sylvie Tremblay, Silvana Facciolo, Steven DelGreco and Anthony Tuson have joined Crawford & Company (Canada) Inc. Tremblay has been named director of operations. She has more than 30 years of experience in the insurance industry and will be concentrating primarSylvie Tremblay Silvana Facciolo Steven DelGreco Anthony Tuson ily on several special projects with Crawford’s regional claims centres in Mississauga to West branch. With more than 22 years of experience, DelGreco will manage a group of multi-line adjusters and support and Montreal.

Facciolo, who has 25 years of experience, has joined Craw- staff in one of Crawford’s largest branches.

Tuson, national account executive, has moved to Crawford as director of business development in the firm’s sales and marketing division. She will oversee several account ford’s Toronto location from Vancouver.

He will continue to be responsible for commercial property management projects in addition to sales and marketing and casualty accounts across Canada, in addition to enhancinitiatives.

DelGreco has been appointed manager of Crawford’s Toron- ing Crawford’s initiatives with several of its key accounts. ● Having successfully completed the extremely challenging Chartered Loss Adjuster (CLA) examination program, two worthy members were honoured at the CIAA Mid-year Meeting, Feb. 2. The CLA designation recognizes competency, knowledge, skills, and experience distinct from the already demanding requirements in attaining a full independent adjusters’ license. It is a certification distinguishing the best and most qualified independent loss adjusters in Canada.

Teresa Mitchell, FCIP, CRM, CLA, with Crawford & Company (Canada) Inc., has been a member of CIAA since she began her adjusting career in 1985. Mitchell, the first woman to attain the designation since the development of the examinations, has been actively involved in several industry associations, including past-president OIAA Georgian Bay, past-chair IIO Ontario Georgian Bay, and is currently CIAA Ontario Region’s 2nd vice-president.

Stephen Scullion, B.Sc., FCIP, CRM, Dip.Ad.Ed., CLA, also began his insurance career in 1985 becoming an independent adjuster and member of CIAA with Crawford & Company (Canada) Inc. in 1989. He has been an Insurance Institute course instructor since 1990 and is a cited contributor to the three

ServiceMaster Clean Disaster Restoration locations across the country initiated a fundraiser to support the Canadian Red Cross.

“When investigating a charity to partner with us, it was important to us to work with an organization that represents our corporate objectives, provided a core synergy to our industry and worked directly with the local communities” Stephan Roy, business leader for Disaster Restoration with ServiceMaster of Canada, said. “It was evident early on our business owners embraced the Canadian Red Cross as 44

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claims stream core courses that are now mandatory for the CIP designation.

Sincere congratulations to Teri and Steve on a most significant accomplishment! ●

Teresa (Teri) Mitchell with Reno Daigle

our charity of choice.”

Local franchises and ServiceMaster of Canada have committed to providing annual contributions to a fund. During Fire Prevention Week all participating locations are providing a monetary contribution to the fund with every new claim assignment they receive.

“We are grateful to Service Master for their generous contribution of $15,000 and this will be a direct benefit to people affected by local disasters” Tim Hoswitschka, director of national corporate relations at the Canadian Red Cross, said. ●

Stephen Scullion with Reno Daigle

From Left to Right: Stephan Roy (ServiceMaster), Patricia Stransky (Red Cross) & MaryAnn Anderson (ServiceMaster) www.claimscanada.ca

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Crawford & Company (Canada) Inc. has made organizational changes within its senior management that are intended to enhance the company’s strategic growth initiative and customer focus.

Pat Van Bakel has been promoted to senior vice president of claims operations. He will focus on uniting all of Crawford’s National Claims Services’ branches under one umbrella. In addition, he will work with regional teams to enhance both service and work product.

Gary Gardner has been promoted to the position of senior vice president of sales and marketing. He will assume a global sales position, working with other sales teams to leverage crossborder and overseas opportunities.

In addition, he will focus on key account management strategy and continue to enhance sales and marketing initiatives.

Jaqueline Roy has been named vice president of administration. She will assume responsibility for Crawford’s internal service lines, such as Human Resources, Training, Project Management, and Compliance, Quality and Pat Van Bakel Best Practices.

Jaqueline Roy

Sheri Martinello

Heather Matthews has been promoted to the position of vice president of Healthcare Management Services. She will continue to develop Healthcare’s strategies and business portfolio.

Sheri Martinello, assistant vice president of Risk Management Services (RMS), will now lead Crawford’s Risk Management Services division across Canada, in addition to being the prime contact in Canada for the Global Markets division.

Jennifer Virley has been promoted to the position of assistant vice president of project management. She will lead a reorganization and restructuring of the project management office to align it with global project management and strategy teams.

Ken Lloyd will assume additional duties as assistant vice president of compliance, quality and best practices.

Mike Tolan has accepted additional responsibilities as director of quality and professional standards.

He will be responsible for audits, professional standards reviews (PSR) Gary Gardner and quality. ●

Jennifer Virley

Ken Lloyd

Mike Tolan

Law firm Hughes Amys held a pre-holiday season party at Six Steps Restaurant and Lounge in Toronto on Nov. 19. Staff and insurance industry clients and friends braved an evening snowfall to spend quality time together as a warm-up to the coming festive season. ●

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O on the scene Blue Goose Ontario Pond hosted the annual Christmas Galabration on Nov. 26 at Brassii Bistro Lounge in Toronto.

Approximately 100 Ganders and guests attended an elegant evening of fellowship, dining and dancing in the true spirit of the Christmas season. PLMG/WGQ Max Brugger was presented with a 1971 commemorative edition botlle of Jim Beam Kentucky Bourbon upon receiving the ‘Gander of the Decade’ award. After dinner, the Flock enjoyed the amazing sounds of Terri Oliver and her band Sugga. ●

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Matson Driscoll & Damico held their MD&D American Thanksgiving Open House on Nov. 27 in Toronto at Montana’s The “M” Lounge. Hundreds of claims professionals and industry friends gathered for the annual event. ●

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p48 on the scene

2/25/09

1:40 PM

Page 48

O on the scene At the Ontario Insurance Adjusters’ Association (OIAA) Holiday Celebration on Dec. 10, more than 1,000 claims professionals and industry supporters ascended to the top of the CN Tower for a 360-degree view of Toronto. OIAA president Laurie Walker welcomed all those who rose to new heights to attend the event. They sampled food from around the world, and a portion of the proceeds from ticket sales were donated to the Big Brothers and Big Sisters agencies. �

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Claims Canada

February/March 2009

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2/25/09

10:20 AM

Page 1

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p50 on the scene

2/26/09

9:44 AM

Page 50

O on the scene Approximately 300 delegates from across the insurance, bodyshop, collision repair, service industry, among others, attended the Canadian Collision Industry Forum (CCIF) meeting on Jan. 24, 2009 in Toronto. The speaker line-up included: Tony Canadé, CCIF chairman; Mary DiCaro of Mary Dicaro Management Consulting Services; John Edelen and Robby Robbs, both of I-Car International; Rick Turri, Audatex; Krista Friesen, of the Clean Air Foundation; Cindy MacDonald, editor of Bodyshop Magazine; and Ken Boulton of The Dominion. ●

CIAA New Members — December 2008 CORPORATE MEMBERSHIP Pinnacle Adjusters Group Inc. – Toronto, ON Upright Claims Services LTD – Ottawa, ON

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INDIVIDUAL MEMBERSHIP Crawford & Company (Canada) Inc Julie George Vancouver, BC Kelly Vincent Fred, NB

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Pinnacle Adjusters Group Inc. Scott Clements, CIP, CFEI Toronto, ON Marc Newburgh, BA Toronto, ON

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Upright Claims Services Ltd. David Friesen Ottawa, ON

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Claims Canada

February/March 2009

www.claimscanada.ca

CLC/CLC Manual

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Winmar-CC_CU-Feb2009:Winmar-Truck-Directory

2/6/2009

11:10 AM

Page 1

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SASKATCHEWAN Saskatoon

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For more information visit www.winmar.ca