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August/September 2010
NEW BEGINNING Adjusters Walk Through the New Ontario SABS
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Contents AUGUST/SEPTEMBER 2010 • VOLUME 4 • NUMBER 4
Cover Feature
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12 New Beginning Adjusters, as they navigate through the new SABS in Ontario, will once again be able to adjust claims versus simply processing them, as has been the case of late. BY LAURA KUPCIS
Spotlight 20 Focused on Education CIAA incoming president Mary Charman has already set out her goals for the upcoming year. First on the list: Offering accessible educational opportunities to members. BY LAURA KUPCIS
Education Forum
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44 Keeping the Faith How to properly document a claim’s file to prove that the insurance company acted in utmost good faith.
News Features 22 Deflecting Priority Changes to the Regulations in Ontario mean insurers can no longer deflect priority claims. BY LAURA KUPCIS
36 A Field Guide to Insurance Frauds and Fraudsters of North America Common claims among fraudsters, including tips to detecting them early in a file.
24 Interim Funding Agreements
BY ALFRED J. MARRAZZO and STEVEN YOUNG
An interim funding agreement can be effective in reaching an early resolution of underlying D&O actions.
40 Week 104
BY DON MCGARVEY and TARA ARGENT
26 The Global Claims Challenge Effective global claims management systems are essential in an industry where claims operations perform globally. BY PAUL TUHY and NICOLE MICHAELS
30 Subrogating Claims The insurer’s right to subrogate is grounded in the landlord’s right to pursue a tenant. BY SANDRA WEBER and TRISHA GAIN
32 What to Expect on Two Wheels There are significant hazards which are unique to motorcyclists — but experience leads to preparedness. BY CHRIS ATKINS
It is decision time when a client reaches week 104. Compiling information in a file prior to this time is essential to handling the transition effectively. BY FRANK MALITO and ANGELA VERI
43 False Air Bag Deployment Air bags that appear to be deployed might not always be, which can be dangerous for adjusters. BY THE CASIU BOARD OF DIRECTORS
36 Departments 4 First Notice 46 On The Scene
Columns 44 Education Forum
F
first notice
Tornado leaves swath of damage in Midland, Ont. A tornado tore through Midland, Ont. on June 23, the third tornado of the season in Ontario. A severe thunderstorm and funnel cloud ripped through the southern part of Midland, damaging property and forcing the community to declare a state of emergency. Environment Canada confirmed a tornado touched down, but the exact timing, length, width and Fujita scale damage rating are still unknown, the agency reported. The Insurance Bureau of Canada (IBC) has deployed its Community Assistance Mobile Pavilion (CAMP) to help affected residents. A team of trained IBC staff, including Ralph Palumbo, IBC’s vice president of Ontario, were in Midland to answer insurance-related questions for local residents affected by the storm. “Fortunately, early reports indicate there were no serious injuries as a result of the storm,” Palumbo said. “But the property damage to homes, businesses and cars is extensive.” The bulk of residential damage occurred at Smith’s Park, a mobile home development of approximately 323 units, Midland Mayor James Down-
SGI Canada flooded with property claims amidst foul weather SGI Canada has received a total of approximately 4,700 property and auto insurance claims as a result of the foul weather plaguing Saskatchewan over the past few months. All told, since April 2010, there have been 3,000 property claims estimated at over $47 million and close to 1,700 vehicle claims estimated at $10 million as a result of the storms. Of the property claims, 1,500 resulted from wind-related storms across the province, said Tony Playter, manager of media relations at SGI Canada. The balance of the property claims resulted from water and sewer backup due to recent floods in Maple Creek, Regina, Saskatoon and Yorkton. In mid-June, as much as 150 millimetres of rain fell in several regions of the province, causing a giant sinkhole on the Trans-Canada Highway outside of Maple Creek, Sask. ●
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er reported in a release. “Forty of the dwellings sustained substantial damage, some [of] which were turned over.” Downer also reported roof damage to industries and business located in the King Street/Highway 12 area. Aviva Canada sent three adjusters, a large loss adjuster and a specialty appraiser to the scene to handle the 30 to 40 claims the company had received as of press time. Wayne Ross, Aviva Canada’s vice president of national property claims, said at the time that he anticipated more claims would come in as owners went up to their trailers for the weekend. RSA’s emergency response vehicle was deployed to the scene, said Irene Bianchi, RSA’s vice president of claims and corporate services. She added more than 100 houses were damaged during the storm. Crawford & Company (Canada) Inc. deployed members of its CAT team after receiving a number of calls from insurers. The company reports it was mostly property damage, no bodily injury.●
‘Space storms’ could wreak 20-times economic damage as major hurricane Impending ‘solar storms’ may disrupt the earth’s magnetic field and wreak twenty times more economic damage than Hurricane Katrina, NASA scientists warn. A solar wind is a stream of charged particles, mostly electrons and protons, spewed from the sun. Should the streams of particles strike the Earth’s magnetic field, they have the potential to modify the electric currents in the ionosphere, potentially knocking out power grids and disrupting satellite signals, according to Wikipedia. “The sun is waking up from a deep slumber, and in the next few years we expect to see much higher levels of solar activity,” said Richard Fisher, head of NASA’s Heliophysics Division, in a statement on NASA’s web site. “At the same time, our technological society has developed an unprecedented sensitivity to solar storms.” A 2008 report from the National Academy of Sciences, Severe Space
August/September 2010
Weather Events — Societal and Economic Impacts, suggested that smart power grids, GPS navigation, air travel, financial services and emergency radio communications can all be knocked out by intense solar activity. “A century-class solar storm could cause twenty times more economic damage than Hurricane Katrina,” NASA cited the Academy as warning. In March 1989, a severe geomagnetic storm caused the collapse of the Hydro-Quebec power grid, leaving six million people without power for nine hours, according to Wikipedia. Much of the damage can be mitigated if managers know a storm is coming. Putting satellites into ‘safe mode’ and disconnecting transformers can protect these assets from damaging electrical surges, NASA said. The National Oceanic and Atmospheric Administration will collaborate with NASA to better forecast such events, NASA added. ● www.claimscanada.ca
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F first notice Delivery standards for injury medical assessors priority Developing industry-wide delivery standards for third-party medical examinations and standards for training and experience of assessors in auto-related injury claims are among the Financial Services Commission of Ontario (FSCO)’s top priorities for 2010. In its 2010 Statement of Priorities, FSCO says it will be taking the following initiatives, among others, to support automobile insurance reform: • in conjunction with health care providers and the insurance industry, develop industry-wide delivery standards for third-party medical examinations and qualifications for assessors; • appoint a panel of experts to recommend changes to the definition of catastrophic impairment in the Statutory Accident Benefits Schedule (SABS) and develop minimum standards for the training and experience required for assessors of catastrophic impairment.
• conduct a study of closed automobile insurance claims to understand the factors contributing to cost changes and create an up-to-date framework for projecting the impact of auto insurance product design or system changes; and • using the findings published in 2008 by the World Health Organization’s Neck Pain Task Force to expand the Minor Injury Guideline to provide a more comprehensive continuum of care for those injured in auto accidents. In a report on key initiatives of 2009, FSCO also said it had established a protocol for the processing and payment of SABS claims by the Motor Vehicle Accident Claim Fund and subsequent recovery of MVACF costs from the auto insurance industry in the event of an insolvent insurer. “The protocol will help to ensure compensation for people injured in automobile accidents when no automobile insurance exists to respond to the claims,” FSCO said. ●
Estimated $85 million in claims from Leamington, Ont. tornado The Leamington tornado generated 4,750 home, commercial and auto claims totaling an estimated $85 million, a preliminary report finds. The majority of the claims were for homes, the Insurance Bureau of Canada says, based on data from PCS Canada. In the early morning hours of June 6 — around 3 a.m. — an F1 tornado, about onekilometre wide, touched down in Essex County, along the shore of Lake Erie, southwest of Leamington, according to Environment Canada. There was also a one-kilometre wide and fivekilometre long track of straight-line wind damage associated with the same storm, Environment Canada added. Environment Canada continued surveying after the storm, as there was an additional 35-kilometre-long stretch of damage that needed to be investigated. 6
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Of the 80 or so tornadoes reported in Canada in each year, Ontario receives the largest number — on average, about one-third of them, says Glenn McGillivray, the Institute for Catastrophic Loss Reductions’ managing director. That’s about two per 10,000 square kilometres. In and of itself, a tornado in Leamington is not a rarity. But the time at which this one struck was unusual, he observed. “Unfortunately the hour at which the storm struck — which proves wrong the fallacy that tornadic storms can’t strike at night — placed more lives at risk because most would be asleep at 3 a.m..,” McGillivray observed. The storms highlight the need for weather radios, a broadcast service that emits alarms when warnings are issued by Environment Canada, McGillivray said. ●
August/September 2010
Number of Ontario auto claims settlements without a mediator triples: FSCO arbitrator An arbitrator at the Financial Services Commission of Ontario (FSCO) says resolving auto accident benefits claims disputes “on a timely basis” has become “an increasingly critical issue” in the province’s alternate dispute resolution (ADR) system. In his decision in Dominion of Canada General Insurance Company and Jaswinder Singh, FSCO director delegate Lawrence Blackman cited FSCO statistics that show “a fourfold increase from 2007 to 2010 to some 14,000 pending mediation cases, and a tripling of claims in the system settling without a meeting with a mediator.” Based on the increased number of claims settled without a mediator, Blackman questioned what happens if parties settle an auto accident benefits claim, but then can’t agree on the execution of the release of the settlement. Blackman found against the insurer in Dominion and Singh, in which Dominion sought a certification for signature by the claimant’s lawyer that he had fully explained the settlement release to his client (the claimant). The claimant’s lawyer successfully argued that the certification represented a breach of solicitor-client privilege. ●
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F first notice Ontario regulations call for fair pricing among insurer affiliates and distribution channels The Financial Services Commission of Ontario (FSCO) has amended its Unfair or Deceptive Acts or Practices (UDAP) regulation to ensure fair pricing among insurance company affiliates and their distribution channels. The UADP now requires “affiliated insurers and their agents/brokers to provide a consumer with the lowest rate that is available having regard to all of the circumstances, including the means of distribution.” According to FSCO’s bulletin: “Some insurer groups have two or more affiliated insurers that have been used to segment business, commonly into a ‘standard’ market and a ‘preferred’ market. “The distinction between these insurers is not always clear in the insurers’ filed declination rules or risk classification systems.” The new UDAP regulation will require all affiliated insurers and associated agents/brokers to provide a rate on renewal for all of the affiliates for which the consumer qualifies, taking into account all methods of distribution. The new UDAP regulation “does not distinguish between group and non-group busi-
ness,” FSCO’s bulletin says. “Group business and nongroup business are not by themselves considered to be separate means of distribution. “FSCO will not tolerate artificially created or subdivided distribution channels designed to circumvent the new UDAP Regulation.” The complete bulletin is available at: http://www.fsco.gov.on.ca/english/pubs/bulletins/auto bulletins/2010/a-16_10.asp The UDAP regulation was amended to ban the use of credit scoring for the purpose of underwriting auto insurance. To this end, the UDAP contains a definition of credit scoring; prohibits insurers and their agents from requiring consumer consent to collect and use credit information to obtain a quote; and prohibits insurers from using credit information when they respond to requests for quotes or process applications. ●
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Produced by the publishers of Canadian Underwriter magazine.
A bi-monthly magazine (6x per year), Claims Canada is published by BIG Magazines LP, a div. of Glacier BIG Holdings Company Ltd. 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. All key claims process stakeholders are reached as part of our readership community – including: both CIAA member and non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management and
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August/September 2010
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 from the President La Plume du Président PATTI KERNAGHAN It has been my privilege and honour to represent the CIAA membership over the past year. This experience has been an immeasurable opportunity for me — one that I will appreciate for years to come. My only regret is that the time has gone so miraculously fast. The question that has resonated for me during my tenure is this: Who will advocate for the independent adjusting profession in Canada, if not independent adjusters themselves? The importance of building, protecting and leading our profession must come from the professionals in the profession. The importance of a powerful association to lead and advocate for its profession is critical. Professional associations have the power to take collective thought and change the interest group they serve. But they also require nurturing and support to be effective. The CIAA creates a community of interest in our chosen profession of independent adjusting. The CIAA advances and supports the interests of our members. As an association, its strength lies in receiving support from the industry through membership and volunteerism to help move the organization forward. Governments are not willing to listen to individual companies, but governments will work with recognized, established, professional bodies: this is important for the independent adjusting community to recognize. During my year as president, for me the most important undertaking was the Creative Strategic Planning session, which included the stakeholder feedback session, plus the survey of stakeholders, members and non-members. From that overall event, we defined our strategic priorities for increased value to members. We identified these priorities as follows: designation strategy — to reflect professional standards and differentiate members; education strategy — to deliver cost effective relevant programs; branding & communication — to raise the profile and awareness of independent adjuster’s in the p&c market and with the public; financial & resource strategy — to generate new sources of revenue; value to members — to provide strong advocacy for such issues as harmonized licensing and recruitment to the industry. We are now working on the creation of a national advisory board to mirror the work we started last December during our strategic planning session with the stakeholders group. We will begin a new era of cooperation and consultation with 10
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August/September 2010
Représenter les membres de l’ACEI au cours de mon mandat a été pour moi un honneur et un privilège. Pendant de nombreuses années, je tirerai profit de cette expérience inestimable. Mon seul regret réside dans le fait que le temps a passé trop vite. Au cours de l’année, une préoccupation m’obsédait: qui s’intéressera à la profession d’experts indépendants au Canada, sinon les experts indépendants eux-mêmes? L’importance de développer, protéger et gérer notre profession incombe aux professionnels qui en sont membres. L’importance d’une association dynamique pour gérer et défendre sa profession est cruciale. Les associations professionnelles ont la capacité de saisir une pensée collective et de modifier le groupe d’intérêt qu’elles représentent. Mais pour être efficaces, elles doivent aussi être encouragées et soutenues. L’ACEI constitue un centre d’intérêt commun pour la profession d’experts indépendants qui est la nôtre. L’ACEI encourage et soutient les intérêts de ses membres. En tant qu’association, sa force réside dans l’appui que lui accorde l’industrie, par le biais de membres et de bénévolat, dans le but de faire progresser l’organisation. Les gouvernements n’entendent pas s’intéresser à des sociétés individuelles, mais ils sont disposés à écouter des entités professionnelles reconnues et établies. Il est important que le milieu des experts indépendants soit conscient de ce fait. Pendant l’année de ma présidence, l’action que je juge la plus importante a été la séance de Planification Stratégique créative, qui portait sur la contre-réaction des parties prenantes ainsi que sur l’enquête auprès des parties prenantes, des membres et des non-membres. De l’ensemble de cet événement, nous avons fixé nos Priorités stratégiques de valorisation de nos membres comme suit: stratégie de désignation — pour déterminer les normes professionnelles et différencier les membres; stratégie de formation — pour établir des programmes pertinents et rentables; image de marque et communication — pour améliorer l’image des experts indépendants et implanter un programme de sensibilisation du marché I.A.R.D. et du public à cette image; stratégie de finances et de ressources — pour créer de nouvelles sources de revenus; valeur pour les membres — pour fournir des arguments solides en réponse aux questions telles que l’harmonisation des permis d’exercer et le recrutement pour l’industrie. Nous sommes maintenant occupés à former un conseil consultatif national qui poursuivra le travail commencé en décembre dernier, lors de la séance de planification stratégique avec le groupe des parties prenantes. Ainsi commencera une nouvelle www.claimscanada.ca
this board. The benefit for CIAA and all participants will be significant. The executive is composed of dedicated professionals who understand what we are striving for in this difficult market. I had the great good fortune to work with terrific people and I met members in Edmonton, Winnipeg, Toronto, Montreal, Fredericton, San Antonio, Palm Springs and back at home in Vancouver. Pierre and I both enjoyed the warm hospitality we received during our travels and are very much looking forward to seeing many of those same members in Victoria for our upcoming convention. Our executive worked very hard this year, and we benefitted greatly from the continuing expertise and dedication of our executive director, Pat Battle. We strategically recognized the need to build a level of accountability to help facilitate the year-over-year changes that can occur when a new executive takes the reins. I look forward to the next year and to my work with the executive as past president. We have a strong association with great opportunities. As a footnote, Theodore Roosevelt’s comment on associations is timeless: “Every man owes a part of his time and money to the business or the industry in which he is engaged. No man has a moral right to withhold his support from an organization that is striving to improve conditions within his sphere.” ■
phase de collaboration et de consultation avec ce conseil. L’ACEI et tous les participants en retireront des avantages importants. Le conseil est composé de professionnels dévoués qui savent ce que nous nous cherchons à obtenir dans ce marché difficile. J’ai eu le grand bonheur de travailler avec des gens formidables et de rencontrer des membres venant d’Edmonton, Winnipeg, Toronto, Montréal, Fredericton, San Antonio, Palm Springs et d’ici, chez moi, à Vancouver. Pierre et moi avons apprécié la cordiale hospitalité que nous avons reçue pendant nos voyages et nous nous réjouissons à la pensée de revoir un grand nombre de ces mêmes membres à Victoria, lors du prochain congrès. Les membres de notre direction ont durement travaillé cette année mais, heureusement, ils ont pu compter sur l’expérience et le dévouement sans bornes de Pat Battle, notre directrice exécutive. Nous avons stratégiquement reconnu qu’il est nécessaire d’établir un niveau de responsabilité facilitant l’intégration des changements associés à la direction élue chaque année. J’ai hâte de travailler avec la nouvelle direction en tant que présidente sortante. Nous avons une association formidable qui jouit d’occasions uniques. Je vous propose pour terminer un commentaire toujours pertinent de Theodore Roosevelt sur les associations : «Chacun doit une partie de son temps et de son argent à l’entreprise ou à l’industrie pour laquelle il travaille. Personne n’a le droit moral de retirer son soutien à l’organisation qui désire améliorer les conditions de son domaine de travail.» ■ Translation provided by Henry Arcache, Themis Translations
NATIONAL EXECUTIVE 2009 – 2010 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 1ST 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 2ND VICE-PRESIDENT Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca
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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 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 PAST-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
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 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 James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca DIRECTOR 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
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NEW BEGINNING BY LAURA KUPCIS
September 1 marks the beginning of the new regime for the Statutory Accident Benefits Schedule in Ontario. Adjusters must be aware of all areas of change to ensure that files are handled properly, leaving no room for doubt as to the ultimate decision on a claim.
djusters will be adjusters again — and not simply claims processors — when the new Statutory Accident Benefits Schedule (SABS) comes in to effect in Ontario. In the new regime — which comes in to effect Sept. 1, 2010 — adjusters have the autonomy to make decisions on a file – somewhat reminiscent of pre-Bill 59 file-handling. This is markedly different from the current system, in which adjusters are primarily process-driven. Now, post-reform, adjusters will be in the driver’s seat, allowing them to do some medical management and the autonomy to make decisions without having to go to an insurers’ examination, Tammie Norn, president of ProFormance Adjusting Solutions Inc., says. “There are a lot of good changes, but I think adjusters who entered the industry 2003 and later are going to have a little bit of a struggle . . . They are not going to be familiar with how to handle a claim in this new environment,” she says. “It’s definitely going to be training issues for them and for adjusters who handled it before, because you’ve got to back. It’s a whole mindset change.” Stereotypically, independent adjusters have more years of experience specializing in accident benefits (AB). Where true, this experience will come in “handy” with the new legislative changes, which are reminiscent of a pre-bill 59 environment, Norn points out. Bill 59 applied to accidents from Nov. 1, 1996 until Sept. 30 2003; this was followed by Bill 198. . “We’ve lived in that type of environment and we know to manage in that environment and progressively move a file forward,” Norn says. “Whereas, it’s going to be quite a bit of a learning curve for the adjusters who have just come on in the last three to five years. So I think that’s where the advantage may be from an independent adjuster perspective.” Adjusters, of course, should be
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well-versed in all areas of the SABS. But certain key areas will be of utmost importance to adjusters. These include changes to timeframes, changes to the basic and optional benefits, changes in claims processes (including medical examinations) and new defined terms (in particular, what constitutes an “incurred expense”). Given all of the changes to the SABS, information documented during the initial interview will prove to be a key cost-saving measure for insurance companies, Lori Ryther, owner of Claridge Insurance Adjusters Inc., says. “The more information obtained during the initial interview — a thorough initial interview and detailed
statement is our best defence — the better able to determine potential exposures, and proceed with a plan of action that works.” To get around the reformed coverage limits of $50,000, adjusters anticipate claimants and their legal representatives to push the envelope and have their injuries classified as ‘catastrophic,’ thus opening up the $1-million coverage limit. Adjusters need to concentrate on collecting the information necessary to determine benefit entitlement, versus fighting the determination of catastrophic impairment.
Change in timeframes Currently, an insurance company has three days to respond to a treatment plan. Under the new regulations, this has been increased to 10
business days. “Three days was not really enough time,” James Cameron, president of Cameron & Associates Insurance Consultants Limited, says. “Very often [insurance companies] didn’t even go to the adjusters: companies approved them because they couldn’t do anything in three days.” Now, in a 10-day period, there is time to investigate whether a treatment plan is valid or not, in addition to whether or not other circumstances surrounding the accident might affect the validity of the claim. It’s still a tight timeframe, however, because the cases need to be investigated and reported back to the insurance company in time for a response to the insured. “For adjusters, I think there would be more work [post-reform] than there is currently, because [now] they have the time to actually challenge certain treatment plans that otherwise would be paid right now [and] approved,” Cameron says. The extended timeframes provide much more time to adjust a claim, thus giving an adjuster the opportunity to adjudicate — and not just process — the claim. Even the number of forms has been reduced: the OCF 18 and OCF 22 have been combined. Under the existing legislation, an adjuster was bombarded with treatment plans, assessments and the timeframes. Adjusters really had to be processors; the forms came in and then needed to be dealt with in a short timeframe in order for the claim to not simply, because of a delay, be deemed approved, Debbie Laxton, client service manager of accident benefits at Crawford & Company (Canada) Inc., says. “Combining the two forms together and having 10 days under the new legislation, allows adjusters more time to really take a look at what is being submitted, assess whether or not it is reasonable and necessary, as per the SABS, and then make the decision.”
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Med rehab limits — now including assessments Having more time to adjudicate a file can also help ensure a claimant remains within the $50,000 medical rehabilitation limit. This post-reform limit is half of the previous $100,000 limit. (Under the reforms, consumers will have an option to buy back up to the $100,000 coverage limit.) The new maximum of $50,000 includes the cost of assessments, which, in some cases, accounted for up to 60 per cent on top of the total paid out by insurers. Over the past five years, assessment costs have skyrocketed, Cameron says. Assessments costs are now being limited to $2,000 — substantially lower than the $15,000 to $20,000 adjusters are often seeing paid out at the request of the claimant, Michelle Baumann, accident benefits adjuster at Crawford & Company (Canada) Inc., says.
Under the new regulations, insurance companies will be required to update claimants continuously on 1) where the money has been spent and 2) the remaining balance up to the $50,000 limit. The claimant is therefore able to have a say in the management of their funds, including whether to spend treatment dollars on further assessments. “If they are kept in the loop a little bit more, they will say: ‘Hey I don’t need this $2,000 orthopedic assessment, I would like my $1,500 worth of treatment’,” Norn says. The feasibility of upholding a $2,000 limit on assessments remains to be seen. It is reasonable in situations where there is just one modality, such as a chiropractic assessment. But it becomes more problematic when there are multiple assessments such as, for example, a chiropractor, a physiotherapist and a general practitioner, plus
an executive summary. “That’s the type of report — when it’s a multidisciplinary assessment — that can easily exceed the $2,000,” Laxton says, adding that certain specialties, such as neuropsychological or paediatric assessments, can far exceed the limits. “Putting the limit on it from a cost perspective is a good thing, but how it’s going to affect 1) the quality of the person you are getting to do the report, and 2) the necessary reports that are required to medically handle the claim [is something] we’re going to have to wait and see what happens.” A lot of claims will either come close to or exceed the $50,000. Insurance companies will have to be careful how they approve the funds. They will have to make sure the claimant knows when their limits are being threatened. “In order to achieve that, they may require more intervention by adjusters actually sitting down with the insured and talking to them about the treatment,” Cameron says. Adjusters will
be required to assist in the explanation of the $50,000 and ensure the treatments provided are reasonable, necessary and the best use of the remaining funds. The reduced limit does not apply if a claimant is found to have suffered from a catastrophic injury, leaving many to believe there will be an increase in applications for catastrophic determinations. If declared catastrophic, the limits increase to $1 million. Unless a claimant obviously fits within the catastrophic criteria — paraplegia and quadriplegia, amputation, loss of vision in both eyes, brain impairment with a score of nine or less on the Glasgow Coma Scale or two or three on the Glasgow Outcome Score — a two-year waiting period comes in to effect. During this period, a claimant cannot bring forth an application for catastrophic determination. During this time, a claim could be adjusted under the premise that the
injured party is entitled to a maximum of $50,000 of med rehab benefits. If the injury is ultimately deemed to be catastrophic, the claimant would be entitled to housekeeping and caregiver benefits (among other benefits) up to $1 million, Franca Reale, Ontario accident benefits manager at Cunningham Lindsey Canada, says. “This just reinforces the fact that we have to adjust and document our claims for worst case scenario,” Reale says.
Optional benefits Prior to Sept. 1, 2010, every claimant was entitled to the same benefits, which included such things as housekeeping and attendant care. These benefits often generated hotbutton issues. For example, is a family member qualified to care for the injured? Should insurance companies be paying a spouse to clean the house? There is a sense within the industry
that people are pushing the envelope to receive these entitlements. Under the new regulations, unless a claimant has paid for optional benefits or is found to have had a catastrophic injury, housekeeping — included with the optional caregiving benefit — is no longer available. Attendant care benefits have been reduced from $72,000 to $36,000 for noncatastrophic claimants (unless the claimant has purchased optional benefits to keep this at $72,000), up to a maximum of $3,000 for 104 weeks. Only a registered nurse or an occupational therapist can complete the Form 1 for attendant care benefits. Because there will be differences between each claimant’s entitlement, adjusters should request more information at the onset of a claim to determine if the individual has purchased certain optional benefits. In order to ensure adjusters are delivering the
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The extended timeframes provide much more time to adjust a claim, thus giving an adjuster the opportunity to adjudicate — and not just process — the claim.
right level of insurance to a person, they should see the deck page and the optional benefits to help determine available coverage. “Definitely the exclusion on housekeeping and caregiving will have a significant impact on loss ratios,” Norn says. “Right now that is a huge portion of claim payment. It’s not as big as the 16
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cost of exams, obviously, but for specified benefits, it is a huge portion of it. And it was pretty much a ‘give me.’ As much as the caregiving [benefit had] a maximum of $250, and housekeeping was to a maximum of $100, very seldom did we ever see anything come in under that.” Norn observes that at mediation and arbitration, a statement from a service provider would accurately document the number of hours of care, and yet the rate would be adjusted to ensure it hit the maximum recoverable, Norn adds. The new SABS, she says, will result in “a huge savings.”
Incurred expenses Compounding the problem for insurers related to optional benefits, the term “incurred costs” in the SABS was frequently interpreted to mean payment for services never received. Now, however, when a claimant is entitled to certain benefits, the definition of incurred expense has been changed. An expense is only deemed incurred if the individual has received the goods and services, paid the
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expense, and the person providing the goods and services did so in the course of employed, and/or has suffered an economic loss, Reale says. “If the expense submitted is not provided by a person that was in their course of employment, occupation or profession in which they normally engaged, but for the accident, or there was no economic loss sustained by the provider, the expense may not be considered incurred,” Laurie Walker, director of Ontario auto accident benefits at McLarens Canada, says. “For example, a family member providing cleaning services may have actually performed the duties, but because this was not their employment, occupation or profession or they did not sustain an economic loss to provide the service, an insurer is within their rights to determine this expense is not payable. In this example, a cleaning company or someone in that profession may be a choice to provide the services in order to get the coverage.” According to Walker, lawyers already realize there are benefits to be www.claimscanada.ca
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claimed if these theoretical stay-athome mothers open up housecleaning services, specializing in snow removal, to get around this clause. “Incurred expenses is one that can be abused and tricky,” Walker says. “That will be an area that will be contested.” The information adjusters collect during the investigation stage of the accident benefit claim is paramount, Reale says. More thorough investigations are required to determine whether or not the expenses are warranted. “When we are taking the initial signed statement from the claimant, we go through any expenses that they have incurred, be they for attendant care or whatever the case may be,” she says. Adjusters must make sure to ask the standard questions: “Have you paid? Who is it that provided the goods and services to you?” In addition, says Reale, they need to go one step further and ask: ”Did the individual do so in the course of their employment? Did they suffer an economic loss?” Ryther agrees that, as a result of the new definition of what constitutes an incurred expense, obtaining information during the initial interview is absolutely crucial. “Obtain all the necessary facts in order to be able to determine whether or not they are eligible for that before [the claim] runs away from us,” she says. She adds independent adjusters can help insurers quantify their exposure related to incurred expenses.
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It is critical to document in an adjuster file why an expense is approved or not, especially in an area that can so easily be abused, Walker says. “Counsel may be able to convince a judge or an arbitrator that this ought to have been paid,” she says. “And if we have been found not to have paid something that ought to have been paid, then we have a direct correlation to the unfair and deceptive practices for which we become at risk. My concern is that it is so easy to say: ‘No, this is not payable.’ My best advice is that the notes should reflect a full decision.” While adjusting and documenting the file, adjusters must bear in mind the possibility that after two years, the claimant’s injury might be deemed to be catastrophic and thus the claimant becomes entitled to additional benefits. “We need to be able to document our file properly and adjust it as a worst case scenario,” Reale says. However, if a person is deemed to be catastrophically injured after two years, and if he or she has been incurring expenses for housekeeping and caregiving out of their own pocket during this time, will those benefits be paid retroactively? “I think most people would say yes, but if a person can’t afford to incur them as expenses, what happens to that person?” Laxton asks.
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Picking up the slack: Tort and bodily injury With certain benefits no longer covered by accident benefits, will there be more activity on the bodily injury (BI) tort side? Norn sees more pressure on tort costs, because in the absence of certain accident benefits, there is going
It is now up to adjusters to determine whether or not they have enough medical documentation on file to decide whether to continue with benefits or to terminate.
to have to be recovery somewhere. “I do think that we are going to see a lot more claims trying to push the threshold or meet the threshold in order to recover these things that they are not getting under the first party now,” she says. “It will be good for the first party [accident benefits] claim; not so good for the third party [tort] claim.” Cameron says he believes there will be more activity on the BI side because the shortfall items that are not covered by the SABS will be going to the BI claim and have to be dealt with by the BI adjusters. He cites the example of a claimant with multiple fractures who is likely going to be off work for six months to a year. It is probable they will require more treatment than the $50,000 will cover. If the claimant has a tort claim, the counsel will ask the BI insurer for an advance to help fund medical treatment. “The current situation is sometimes with BI claims you may get a letter from a lawyer and not hear anything for years,” Cameron says. “But now they are going to be much more active earlier on in the case. BI adjusters are going to be asked to make a decision on funding the shortfall in SABS benefits available for rehabilitation and medical.”
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Insurer Examinations The new SABS provides adjusters with discretion in the use of insurer examinations (IE). Insurer’s examinations are no longer required in order to make a determination related to a treatment plan, the applicability of the minor injury guideline, entitlement income replacement benefits or catastrophic impairment, according to Philippa Samworth, partner at Dutton Brock LLP. It is now up to adjusters to determine whether or not they have enough medical documentation on file to decide whether to continue with benefits or to terminate, Reale says. “It certainly gives the adjuster the added responsibility to be able to substantiate what decision they’ve made,” she says. “It’s even more so that the adjuster needs to be knowledgeable and experienced enough to know when an IE is warranted or not.” If there is any doubt about the medical status of a claimant, adjusters should err on the side of caution and arrange for an IE, Norn says. But it means adjusters are not going to have to run to an IE every time they receive a duplicate or triplicate treatment plan. As Uncle Ben cautions Peter Parker in Spider-Man, “Remember, with great power, comes great responsibility.” Adjusters must continuously document their files, including the receipt of clinical notes, hospital records, and pre-existing medicals. Adjusters must have a solid file to to back up their decisions. “If anybody comes back and questions our decision, we can show them we are acting in good faith and this is why we made the decisions that we have on the file,” Reale says. Independent adjusters should mirror whatever decisions are being made within the insurance company they represent, Laxton says. Some companies say adjusters should not be forced to make that medical decision, so they may choose to proceed with an IE at their expense. Others say if the file warrants it, the claim can be denied without the use of the IE. “Independent adjusters that have been doing this a long time are going to remember the days when we used to seek instruction on just about every procedure,” Walker says. “There was a lot more communication, [with the adjusters] saying: ‘This is the documentation I have in the file. This is what I think we should do — this is the justification of the next step and the decision.’ Whereas the insurer examination processes were so much more stringent that you just had to do things in certain timeframes.” Now, avid note-taking will be crucial. Walker says. Adjusters will constantly be forced to justify their decisions. “Why did we decide to do something? Why did we proceed with this determination? Why did we not ask for something else?” Claims Canada will be taking a look at the new Minor Injury Guideline in the October/November issue.
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ExamWorks Family Companies Newest Member
ExamWorks Enters the Canadian Independent Medical Review Market: Acquires Direct IME. July 1, 2010 – ExamWorks, Inc. announced today the acquisition of Direct IME based in Toronto, Ontario. Direct IME provides a full range of comprehensive independent medical examination and review services to insurance and legal industry clients throughout Canada. The company’s portfolio of services includes: independent medical and functional capacity examinations as well as occupational therapy, mental, vocational and diagnostic assessments. The company has over 500 physicians on its doctor panel and dozens of assessment locations to serve clients. Greg Cumiskey, President of Direct IME, said: “Direct IME is pleased to join the ExamWorks family of companies. We will now offer our clients unparalleled geographical coverage and have access to the largest panel of leading medical experts in the world. Like ExamWorks, we are committed to being the industry leader, providing best-in-class evidence-based independent medical evaluation services. Through this partnership, our clients will come to enjoy greater technological service enhancements and an expanding portfolio of complementary service lines.” “Like ExamWorks, Direct IME provides IME services to a broad range of insurance lines including automotive, workers’ compensation, liability as well as the legal industry,” said Wes Campbell, President of ExamWorks. “Direct IME has demonstrated that they are the perfect partner with whom to address the introduction and adaptation of our services to the Canadian market.” ExamWorks, Inc. is the fastest growing independent medical examination company in the United States, offering a full line of independent medical examination and review services for disability, liability, no-fault and workers’ compensation claims. ExamWorks is building an IME company that is focused on providing carriers with the national presence they need with the local service that have come to expect. To learn more, please visit us at www.examworks.com
August/September 2010
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Focused on
EDUCATION Education, including professional designations, is priority number one for the incoming president of the Canadian Independent Adjusters’ Association, Mary Charman. BY LAURA KUPCIS
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ontinuing the work started by her predecessors is priority number one for the Canadian Independent Adjusters’ Association’s incoming president, Mary Charman. Over the last year, the focus of the association has been on revitalization, with the ultimate goal of raising its influence, stature and authority in representing independent adjusters in Canada. As Charman embarks upon her year of presidency, she has a solid footing on which to continue progression of the creative strategic plan (CSP). Over the last year, the association has been focused on increasing membership, creating a better brand, increasing exposure, increasing educational opportunities, among other important objectives. Charman knows that just as every journey begins with a single step, accomplishing the big picture requires setting and completing smaller tasks. “It’s going to take time,” she says of the on-going strategic planning process. “If we want to do it right, it’s going to take time; and we need to be patient.”
Member accreditations Over the course of the next year, Charman will be gearing much of her focus on increasing professional development opportunities for members of the association. This includes revamping the association’s existing accreditation programs. Currently, CIAA members are able to work towards a chartered loss adjuster (CLA) designation — one which is extremely difficult to earn, but is very demonstrative of a topnotch professional within the industry. Also available to CIAA members is the Fellow of the Canadian Independent Adjusters’ Association (FCIAA). This is awarded in recognition of a member’s continuous professional development, expertise and contribution to the industry. Applications are considered based on either a “thesis” paper or through support of credentials, adjusting history, contributions, achievements and verification letters from professional contacts. It 20
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is extremely important the industry recognizes and values these designations as depicting a highly competent, experienced and skilled independent adjuster. Throughout the next year, Charman will be working with the executive and members of the association to come up with a plan to better brand the designations to the rest of the insurance industry. “Credentialing enhances the prestige of a profession by raising the standards to ensure professional competence,” Charman says. “The key goal of the program is to offer our members the opportunity to raise their professional status as an independent adjuster. The plan is to offer members an additional designation that is more attainable for those adjusters with a certain level of experience that have already met the demanding requirements mandatory in attaining a full independent adjusters’ license.” “We want insurance companies to choose CIAA members — thanks to the respect garnered from the designation — when hiring independents,” Charman adds. For this reason, the association will be limiting the use of the designations to only those members in good standing.
Continuing education Ramping up the availability of continuing education is also important to Charman. Her focus, however, is also on accessible education. As technology progresses, so too does the plethora of opportunities to provide education to members, no matter their location. The association hosted a number of webinars over the past year, to great success, and is looking into hosting more. This allows adjusters to tune in to the educational component, without having to take more time away from adjusting claims due to the travel time normally required. “We have to factor in the restrictions everybody has on being able to get to a seminar,” Charman says. “Especially in the independent world, we have to accommodate their situation by bringing the education to them. www.claimscanada.ca
With this in mind, the association will be looking at increasing the use of the website as an educational tool, in addition to the wide array of available technology to continue to benefit independent adjusters.
Other goals While revamping designations and offering more continuing education are undoubtedly impressive and important goals, Charman is not one to shy away from hard work and doing what’s required to better an association she believes in and supports wholeheartedly. She will be working to ensure that branding of the association continues, be it through attendance at various industry events across the country, through the association’s magazine, Claims Canada, through the CIAA Claims Manual and through the website. The association, over the course of the next year, will also continue to work diligently towards licensing harmonization — an aspect that is important to 83 per cent of the members surveyed during the initial stages of the CSP process. This task has rested on the shoulders of past-president Miles Barber, who continues to work tireless to achieve this goal. Charman will help Barber over the course of the next year, and beyond, wherever she can. She’s also focused on retention. While much of the industry, CIAA included, is focused on recruiting — a definite requirement, no doubt — Charman’s biggest success in her career has been retention of her staff. “That is how I measure how I am doing as a manager,” she says. “I think as independents, we need to provide an environment where we’re retaining our staff; we don’t want to train them and lose them. Train and retain.” Over the course of the next year, Charman will be tapping into the secrets of her successes in retaining staff and applying it to CIAA’s membership. Ultimately, Charman wants to show members the value in being a part of the association, and hopefully attract new members along the way. Being in charge While Charman certainly has a clear focus and goal for the upcoming year, it’s not enough to relieve her nerves. But the nerves don’t curb her excitement in the slightest. “It’s a huge challenge,” Charman says of being president. “Right now I feel lucky to come in as president, because we have a set path we want to take, we have goals, there’s a lot happening right now. I am extremely excited because I know I will accomplish things for the association.” Over the course of her 15 years as a member of the CIAA, Charman has consistently been involved to better the association, including sitting as Ontario region president for two years. “I look at any profession and I truly think that people need to band together for continuity, for regulation, and for the betterment of their own profession,” she says. “People need to take more ownership of being part of an association.” August/September 2010
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Deflecting Priority
Under the new regulations effective Sept. 1, 2010, insurance companies will no longer be able to deflect priority payments. If they have been found to do so, they could be required to pay adjuster fees. BY LAURA KUPCIS
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ntario’s auto insurance adjusters will have to change the way they handle priority payment claims based on the province’s new auto insurance regulations, which no longer allow insurers — or adjusters — to deflect priority claims to other insurers. Ontario’s auto reforms are due to be implemented on Sept. 1, 2010. As of press time, prior to the reforms, a claims adjuster typically interviews vehicle passengers to receive a statement. During this time, the adjuster asks questions to determine whether or not passengers have insurance of their own, whether they are covered under a spouse’s policy, etc. These questions help determine whether or not there is a higher-priority insurer. If there is, the adjuster explains how priority works to the passenger(s), so that any claims are sent to the correct insurance company. In this sense, the adjuster was ‘deflecting’ claims to the appropriate insurers, based on a priority sequence outlined in the province’s auto insurance legislation. Regulations introduced as part of the reforms will eliminate the deflection of claims. In the simplified scenario above, at the accident scene, the independent adjuster would simply open the accident benefits claim for each and every passenger who reports an injury; there would be no discussion of ‘priority’ insurer with the 22
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insureds. Basically, the insurers will work it out later among themselves.
Reimbursement of fees Under the new reforms, if an insurer disputes a priority in arbitration or in court — if, for example, the company says its policy should not cover the claim — and the company disputing priority loses its case, the company losing the dispute could be required to reimburse a number of fees, including the adjuster’s fees. The changes were based on the government’s belief that insurance companies were trying to deflect claims by telling insured persons that their accident benefits claims were the responsibility of another insurer. New priority rules require the insurer who first receives the application to commence the benefits the claimant is entitled to receive. After that point, the insurer has 90 days to put another insurer on notice, according to Laurie Walker, director of Ontario auto accident benefits at McLarens Canada. “Regardless of how wrong or right it is that the person applied there, if [the insurance company has] the application, they have to commence benefits,” she says. “Then [the insurer] can seek recovery from another insurer if they feel that the other insurer is responsible for paying the primary accident benefits.” If an insurance company does not pay accident benefits as the result of
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an initial deflection, that company will be subject to additional costs, including adjuster fees and legal expenses. “The changes to Disputes Between Insurers have been calcified to ensure deflection of claims are prohibited and penalties are outlined,” Walker says.
Higher number of priority claims expected When dealing with an injured passenger, an adjuster is now required to send out an application package with all the information about the insurance company they represent. The adjuster is then responsible for managing the claim and subsequently initiating the priority dispute with the other insurance company. “In terms of workload, I would suspect we are going to see a much higher volume in priority dispute claims and a higher volume of claims in general,” says Michelle Baumann, accident benefits adjuster at Crawford & Company (Canada) Inc. “If you have a vehicle with four teenagers in it, rather than getting claim for just one teenager who is actually on your policy, you are more than likely going to get all four.” The incidence of people either borrowing cars or being passengers in them is quite high; this means priority dispute claims will become a more common issue for adjusters, since they are no longer allowed to direct claimants in the right direction. www.claimscanada.ca
“For the everyday adjuster who has 80 to 100 files on his or her desk, suddenly he or she has to do all of this additional investigation: setting up statements, trying to find drivers’ licenses, trying to find insurance companies, trying to find the phone number and the fax number, filling out paperwork to start the dispute, and then trying to convince the other insurance company to take the file,” Baumann observes. “That’s a lot of work.”
Hiring independents If insurance companies see this change in priority disputes as a concern, both in terms of workflow and management of staffing levels, referring these claims to independent adjusters to do the legwork, handle the statements, determine the priority concern and complete the disputes can alleviate some of the worry, Baumann says. “It’s good incentive to get an independent out right away to get all the information,” Deborah Neilson, a
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lawyer with Carroll Heyd Chown, agrees. “So, if there is a priority dispute, you can get it dealt with right away. The faster you get it dealt with, the faster the file is out of the office.” Also, if an independent adjuster is working on the file, he or she can determine whether or not there is an issue with the Workplace Safety and Insurance Board, or if there is a loss transfer claim, Neilson says. “It’s all something that would be done at the same time,” Neilson says, adding an adjuster would obtain information from the insured and the broker, along with the motor vehicle accident report. “All of that would just come in at the same time,” she says. “I just can’t see an adjuster going out and asking questions or doing an investigation only for priority — it makes no sense. You do all three at the same time.” Additionally, because of the potential to recoup adjuster fees associated with priority disputes, having a bill from an independent adjuster would
facilitate this recovery. In-house adjusters, because they are salaried, would not be able to produce a bill for recovery of time allocated to a particular file as easily as an independent adjuster. “How do you quantify the cost of adjusting the claim for an inhouse adjuster?” Neilson asks. “If you have an independent adjuster who does the preliminary steps on a matter, then you would be able to quantify those costs much easier.” Not to mention, it’s going to take insurance companies a while to recognize that they have to start paying and are no longer able to deflect — old habits die hard — and it’s going to take very little to prove that there was deflection, Neilson says. “I am quite confident in saying it’s a good idea for insurance companies to retain independent adjusters right off the bat, because for the first little while I think it’s going to be very hard for . . . an insurer to claim that they never deflected a claim, just because of old practices.”
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Interim Funding Agreements Enabling Resolution in the Face of Coverage Issues BY DON MCGARVEY AND TARA ARGENT
Alternatives to lawsuit juggling When faced with an underlying action, many directors and officers are loath to then sue their insurance carriers and make public the coverage issues that may be at play. There are alternatives, however, to juggling two lawsuits in these circumstances. One avenue is the use of a interim funding agreement (IFA). An IFA is a separate agreement between the insureds and the insurer. The parties can agree that defence costs and/or indemnity payments can be advanced by the insurer allowing the coverage issues to be determined at a later date. Both the insurer and the insureds reserve their rights as to the coverage issues. An IFA can facilitate efficient and cost effective resolution of the underlying claim. An IFA enables the parties to reach a 24
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resolution of the underlying claim at an earlier stage. It may also serve to eliminate the need for costly litigation with respect to determining the allocation of costs or settlement funds in respect of losses covered and uncovered. Often, when the underlying claim has been settled, the insurer and the insureds will have a better mutual understanding of the circumstances. This allows for an easier resolution of the coverage issues than might otherwise have been the case. Once settlement of the underlying action has been reached, the insurer and the insureds can, under the terms of the IFA, proceed to determine the covered issues through mediation or arbitration, rather than through the court system.
Jurisprudence in Canada There is a paucity of Canadian jurisprudence with respect to allocation of settlement funds and contribution to settlements of the underlying action. However, the issue was addressed in Coronation Insurance Co. v. Clearly Canadian Beverage Corp. In Clearly Canadian, the insurer and the insured agreed to contribute to the settlement of the underlying action without prejudice to their ability to have allocation issues determined by the courts at a later date. The insurer then brought an action for allocation of the settlement funds. It argued that its portion of the settlement funds should be reduced to account for the fact that it should not have to pay for the corporation’s share of the settlement. This is because, according to the insurer, the policy only provided coverage to the insured directors and officers. The Court considered two schools of the thought from the American jurisprudence: (1) the larger settlement rule and (2) the “Knepper and Bailey” factors. Under the larger settlement rule, an insurer must pay the entire settlement costs concerning claims against the directors and officers and the corporation if the settlement was not made larger by the corporation’s involvement. The “Knepper and Bailey” factors were put forth in an American text on director and officer liability. They suggest that settlement costs should be allocated based on a number of factors, such as the identity of each individual, the risks and hazards to each beneficiary of settlement and the burden of litigation on each party, to www.claimscanada.ca
Illustration by Glenn McEvoy
Actions against directors and officers usually involve complex, high stakes claims, which result in protracted and expensive litigation. It is also common for coverage issues to arise in such circumstances. For example, if there is no applicable entity coverage, problems can arise where the underlying action is against the directors and officers and the corporation and policy does not provide for an allocation provision in respect of covered and uncovered claims. Furthermore, the underlying claim may be settled early on in the proceedings as a business decision in order to avoid the possibility of an even larger trial verdict. This is notwithstanding coverage issues that may be present. These circumstances can create friction between the insurer and the directors and officers, not to mention defence counsel. Whether an insurer must advance defence costs in the face of a coverage dispute prior to the resolution of the underlying action can be a contentious issue. Some jurisprudence supports the notion that payment of defence costs under a D&O policy is only required upon resolution of the underlying action. Other jurisprudence suggests that defence costs are payable even prior to resolution of the underlying action, notwithstanding the coverage dispute.
name only a few. Ultimately, the Court in Clearly Canadian concluded in the absence of specific policy wording, the large settlement rule applied.
Allocation of defence costs As with allocation of settlement funds, similar allocation issues arise with defence costs. Some parts of a claim may be covered by a D&O policy while others may be excluded. Allocation of defence costs can become a significant issue as there is only a duty to reimburse covered defence costs. The leading Canadian case on this issue is Continental Insurance Co. v. Dia Met Minerals Ltd., wherein only some of the claims against the directors and officers were covered under the D&O policy. The directors retained their own defence counsel and the claim was ultimately settled. At issue was whether the insurer was responsible to pay for the defence costs related to the uncovered, as well as covered, claims. The Court concluded that defence costs should be allocated based on the evidence at the end of the underlying case (whether through judgment or settlement): In my view, the Court’s suggestion that unlike the duty to defend, the obligation to indemnify in respect of defence costs should be “assessed retrospectively” offers the solution to the almost insurmountable difficulty of apportioning defence costs, on the basis of pleadings alone, before or even after trial. No reason in principle has been offered to us as to why the pleadings alone should govern and in my view there are
strong reasons why they should not. It seems both illogical and inequitable to require an insurer who has not sought to shirk its obligations, to bear the entire cost of defending a mixed claim in the face of clear terms that require it to pay the cost of defending only claims relating to the insureds’ offices as directors and officers of Dia Met, and that exclude losses arising from dishonest acts or the making of personal profits. If the Court were to require ENCON to pay the entire defence costs of the insured, it would provide them with a windfall merely because one or more allegations that were covered by the Policy were advanced among several that are not covered. The only cases cited to us that would support such a result were cases in which insurers refused to honour their obligation to defend and were held liable for the full costs of defending as a measure of damages for their breach of contract. Clearly this is not such a case. Ultimately, an IFA can be effective in reaching an earlier resolution of the underlying action as well as deterring further costly litigation between directors and officers and their insurers. An IFA can be customized to suit the parties desires, whether it be to agree on payment of defence costs and/or settlement funds. Agreeing to fund now (under the appropriate reservation of rights), usually saves a lot later. Don McGarvey is a partner and Tara Argent an associate with the firm of McLennan Ross LLP. McLennan Ross LLP is a proud member of The ARC Group Canada.
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August/September 2010
Claims Canada
25
The Global Claims
Challenge BY PAUL TUHY AND NICOLE MICHAELS
As insurance companies and their clients conduct more business globally, it is essential that claims operations be ready to perform on a global basis, as well. Claims managers must be able to deal with language and jurisdictional issues. This is in addition to having the tools available to manage international claims quickly and uniformly, no matter when or where they occur. For many insurers, that may be easier said than done. Given today’s market realities, demanding business reporting requirements and high customer expectations for quality data immediately, there is more impetus than ever to invest time, money and energy to tackle the global claims management system challenge. Effective global claims management systems are much more of a necessity than a novelty. Especially in a prolonged ‘soft’ market, an insurer’s effective and efficient management of claims has a tremendous effect on its own profitability and expense management efforts. After all, claims losses and claims handling expenses form the largest share of P&C company expenditures, with some 70 per cent of an insurance company’s expense base in the form of claims payments and the cost of processing claims. 26
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Facing challenges Using state-of-the-art technology would seem to be a “no brainer” to help insurers contain costs, make the most of their staff resources, track claims on a global basis and improve internal efficiencies to improve customer service. Yet, putting a truly global claims system into place is admittedly a daunting task. For one, developing a global platform is a substantial investment. Especially in a weak economy, such expenditures would be tougher to swallow. But, realizing the benefits may significantly justify the cost. Ironically, with insurers’ mandates to manage expenses wisely and operate more efficiently, there is even more reason to replace legacy systems with newer more effective systems that may enable greater end-to-end claims management. Obviously, legacy systems are the single greatest impediment to improved claims handling. Claims management was one of the first insurance processes to be computerized, yet many early claims handling systems
August/September 2010
are still in operation. As insurers grew organically or through mergers and acquisitions, the tally of legacy claims management systems grew in tandem. One insurer can easily have six or more different claims systems operating at once. Knowing what challenges lie ahead will make it possible to move to a new system with minimal difficulty and disruption. Among the other hurdles that hinder an insurer’s moves to one global platform are: • Company structure: While there may be less visible borders in a global marketplace, insurers must contend with their own borders. Organized by product lines and further defined by geography, insurers’ claims management functions often fall into silos supporting each individual product line that may provide individual input on claims management issues. As a result, with a lot of input and thoughts from various parts of the organization, implementation of new systems may often fall victim to significant scope creep, where progress is impeded and costs climb. www.claimscanada.ca
Every file is different
From city to city, shore to shore – no two insurance claims and litigation files are ever the same. In addition to natural case differences, regional rules and nuances often come to bear and shape outcomes. ARC Group Canada is a national network of independent law firms providing legal and risk-related services to Canada’s insurance and risk management communities. Each member firm within ARC Group intimately understands and is connected with its local market – providing you with national expertise at a regional level.
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In dealing with these obstacles, insurers with flatter management structures or more centralized claims team often have a stronger advantage and are able to implement system changes more effectively and manage scope creep. • Changing behavior: Implementing a new way to do things always requires not only staff support but also an understanding that change takes time and hard work to achieve. To achieve this, a commitment to recognize even small achievements in the process and continue to build enthusiasm throughout the implementation process is helpful and effective in keeping morale up and project momentum moving forward. Most employees and even managers may be reluctant to leave a familiar business process even if the new way is deemed more efficient. Therefore, gaining and sustaining support requires pinpointing clearly communicating realized savings throughout the organization, the benefits of a new system, such as anticipated cost savings in storage expenses and reduced travel costs. Leadership buy-in and support is important here as well. • Inter-departmental cooperation: Many departments within an insurance company are affected by claims management changes. For one, the IT department plays an integral role in streamlining many legacy claims systems into one seamless system. The claims department and IT must coordinate claims management changes together. Likewise, accounting must adapt to new payment processing or other changes affecting the claims payments or the exchange of funds. Keeping other departments that often do businesses with claims make it necessary to change some of their behavior and processes in various departments. Additionally, implementing a global claims system lends itself to changes in what data is captured. Therefore, it is important that actuarial and underwriting understand the value of this additional data because it may impact they way they view and evaluate risk. 28
Claims Canada
The investment of time, money and energy into implementing one global claims platform as opposed to multiple systems does have its benefits.
What are we striving for? Clearly, insurers are looking to achieve more robust claims systems that can offer them better control over claims costs, handling expenses and improve customer service. New systems also allow claims management to re-evaluate existing workflows to ensure they are maximizing efficiencies and service level expectations.
When claims data is received from third party administrators and included in one single, global system it allows monitoring of all losses, which have the potential to penetrate client retentions. Another result of achieving one global claims platform is more timely and accurate information. Today, business information is at everyone’s fingertips. The ability to obtain accurate information immediately is expected from customers who want to know exactly where they stand. Consider the benefits to a global manufacture who has a master policy, in addition to local policies in various countries. A global system allows for better coordination of loss information between the technical staff, as well as more timely loss information to the insured.
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Improved claims technologies allow claims managers, as well as their clients, to access real-time information which helps insurers track indemnity and expense trends to aid in decision-making and cost containment efforts. Additionally, businesses today must be prepared to meet more complex and critical reporting and data requirements and regulations. Changes and new regulatory requirements, such as those imposed by Sarbanes Oxley or requirements specific to insurers like Europe’s Solvency II, necessitate tighter and verifiable financial controls. Access to this information aids insurer’s own risk management efforts, allowing insurers to evaluate its aggregate risk on any one company or in any given geographic region. These capabilities can put insurers on strong ground to rapidly adapt to cyclical market cycles changes or changing business needs or risk appetite. For instance, when claims data is received from third party administrators and included in one single, global system, it allows monitoring of all losses, which have the potential to penetrate client retentions.
Conclusion Thriving in today’s business environment requires organizations to change and make best use of new technologies, even if making the switch requires investment and heavy work. That is very much the case for insurance companies, especially for their claims departments, which heavily rely on technology to manage clients’ claims. All insurers are looking to manage expenses wisely and operate more efficiently. Therefore, there is even more reason to replace legacy systems with newer more effective systems that may enable greater end-to-end claims management. These can offer them better control over claims costs and expenses and improve customer service. Paul Tuhy is head of global claims for XL Insurance. Nicole Michaels is a senior executive in charge of Accenture’s claims technology initiatives in North America. www.claimscanada.ca
Subrogating
CLAIMS
in Landlord—Tenant Situations BY SANDRA WEBER AND TRISHA GAIN
An insured tenant might question, I paid for the insurance: can my landlord sue me? Or, the landlord’s insurer might ask whether they can pursue the tenant by way of subrogation. Either way, a trilogy of cases decided over 30 years ago by the Supreme Court of Canada — Cummer-Yonge Investments Ltd. v. Agnew – Surpass Shoe Stores Ltd., Pyrotech Products Ltd. v. Ross Southward Tire Ltd, Smith v. T. Eaton Co. — determined the answer comes from the terms of the lease, not the insurance policy. Although there was a basis in law for the landlord to sue the tenant in each case, the Supreme Court did not allow the subrogated claims. The insurer’s right of subrogation is grounded in the landlord’s right to pursue its tenant. If the lease establishes the landlord has agreed to forego that right and assume the risk of damage, the insurer will have no right of subrogation. In both Agnew-Surpass and T. Eaton, the leases included a covenant by the landlord to obtain fire insurance. In Pyrotech, the lease required the tenant to pay the fire insurance premiums. There was no specific covenant requiring the landlord to insure. However, the Court found that when the landlord presented the insurance bill to the tenant, the risk of loss passed to the landlord. 30
Claims Canada
The trilogy established that if the tenant pays for insurance and there is an obligation on the landlord (expressed or otherwise) to place the insurance, the landlord’s insurer cannot pursue the tenant, unless there is a contrary intention in the lease. Despite the trilogy, the issue has continued to be litigated over the years, often with cases going to the appeal level and some seeking leave to the Supreme Court. Time and time again, the courts decide against the landlord (i.e. the landlord’s insurers). While some cases have been allowed — for example, LeeMar Developments Limited v. Monto Industries Ltd. and Union canadienne (L’), compagnie d’assurances c. Quintal — those are few and far between. What is the rationale driving these decisions? From a commercial or contractual standpoint, one can understand the basis for the decisions. As stated by the Ontario Court of Appeal in Madison Developments Ltd. v. Plan Electric Co., “The rationale for this conclusion is that the covenant to insure is a contractual benefit accorded to the tenant, which, on its face, covers fires with or without negligence by any person. There would be no benefit to the tenant from the covenant if it did not apply to a fire caused by the tenant’s negligence.” Not surprisingly, any doubt in the lease will be decided in the tenant’s favour. In Northwestern Metal & Salvage Ltd. v. Alltar Roofing Ltd., the Alberta Court of Appeal considered two apparently competing clauses. The first was that the tenant would con-
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tribute to the fire insurance premiums and the second was that any damage to the property was the tenant’s responsibility. Justice Cote concluded that, “. . . the best way to reconcile the two clauses is to say that the clause about insurance deals with those losses that are or can reasonably be covered by insurance such as fire insurance. The sentence about damages should be read as speaking about those losses not covered or readily coverable by fire insurance.” Even if a tenant is required to have its own insurance, that will not necessarily allow for a subrogated claim. In Alberta Importers and Distributors (1993) Inc. v. Phoenix Marble Ltd., although there was no express covenant, the Court of Appeal found the wording of the lease had the same effect as an express covenant by the landlord to insure for fire. The tenant was required to have a comprehensive general liability policy. Noting the distinction between fire insurance and liability insurance, the Court found the obligation to obtain liability insurance did not detract from the landlord’s obligation to acquire property insurance and did not shift the liability for fire from the landlord to the tenant. If the landlord takes the position that the lease shows a contrary intention, it must be absolutely clear. In North Newton Warehouses Ltd. v. Alliance Woodcraft Manufacturing Inc., the Court considered a clause that stated the tenant was responsible for all damage caused by its negligence. The Court did not accept the landlord’s position that this showed an intention www.claimscanada.ca
that the tenant would not be protected. Noting the tenant had paid the insurance premiums, the Court stated that, “. . . a tenant who has paid for an expected advantage as between itself and its landlord should benefit from those payments, and loss issues thereafter are between the landlord and its insurer. In such circumstances, to allow the insurer of North Newton to pursue its subrogated action against Alliance would render nugatory benefits accruing to the tenant under the covenant of the landlord to insure. . . . it makes little business sense for a landlord to covenant to insure and for a tenant to pay the premiums if the tenant is not to derive some benefit from the insurance. One might properly say that there is something approaching a presumption in favour of a tenant benefiting from a landlord’s covenant to insure. . . . If a different result is to obtain, it seems to me that quite clear language would be requisite in a lease to achieve such a result. In my opinion, the instant Lease does not contain such language.” In 2009, the Ontario Court of Appeal once again had the opportunity to consider the issue in 1044589 Ontario Inc. (c.o.b. Nantucket Business Centre) v. AB Autorama Ltd. Autorama was a tenant in a strip mall owned by Nantucket. The relationship was governed by an Offer to Lease. There was no covenant by the landlord to obtain fire insurance. However, the Court had no difficulty finding that as the tenant was required to pay for insurance, the tenant was to receive the benefit of that insurance. The Court found there was nothing contrary in the offer to allow the subrogated claim. Even though the tenant had a responsibility to keep his leased unit in good repair, the risk of loss by fire had passed to the landlord. The Court distinguished the facts from its earlier decision in Lee-Mar. It is important for tenants to fully understand the terms of the lease and what benefits there may be. While it appears in most cases they will not be found liable, they are well advised to ensure from the outset that they are, in fact, protected. Insurers of tenants may well want to review the lease to ensure any coverage does sufficiently protect the tenant’s interest. www.claimscanada.ca
On the flip side, if the landlord has property insurance, it is the insurer who will have the interest, as it will be the insurer who may seek to recover payments made. The difficulty for insurers is they essentially have no control over whether they will ultimately be successful in a subrogated action against an at-fault tenant, as the insurer generally has no input into the lease. The insurer provides coverage and it is only after a loss they may be faced with the wording of the lease
preventing them from pursuing the tenant. Given this, if insurers want to attempt to “preserve” their rights of subrogation, perhaps they should consider whether they have the ability to be more proactive in seeking input into the wording of their insureds’ leases. Sandra Weber is a partner and Trisha Gain is an associate with McLennan Ross LLP. McLennan Ross is a member firm of The ARC Group Canada.
August/September 2010
Claims Canada
31
What to Expect on Two Wheels Common factors involved in motorcycle claims BY CHRIS ATKINS
There is absolutely nothing more exhilarating than an open road on a bright summer morning, right hand settled on the throttle and no timelines to meet. What’s the destination? It doesn’t really matter when you’re on a motorcycle. The ride is the destination. Exciting and relaxing at the same time, there is a temptation to simply lay back and take in the scenery. However, when you’re on two wheels things can go very wrong, very quickly. There are a significant number of hazards unique to motorcyclists. These are ever-present dangers discussed in rider courses, but ultimately it is experience (and inevitable close-calls) that creates rider preparedness. Challenges while riding are presented in changing road conditions, driver behaviours and vehicle interactions. Further, the suitability of a motorcyclist’s reaction to these situations is controlled by the individual’s overall handling of the bike itself.
Road conditions Unexpected changes in road conditions can put a rider down. Inadequate traction and unexpected handling or response of the motorcycle can create a hazardous situation. For example, an unexpected impact from riding over a pothole can jar a rider’s hands from the handlebars. Depending on the depth and severity of the pothole, combined with the speed of the motorcycle, a pothole impact could have an effect on the weight distribution of the rider. Roadway cracking and tar strip repairs, particularly those that run parallel to the direction of travel, tend to lead the front wheel of a motorcycle away from the intended path. Similarly, initial surface preparation for asphalt on highways involves grooving the roadway. This can continue for several kilometers 32
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August/September 2010
and presents a challenge for riders at highway speeds. The front wheel tends to wander the roadway and constant correction is required. Road surface sand and gravel make cornering quite hazardous. Sand and gravel acts as an intermediate layer between the motorcycle’s tires and the roadway. This can induce slippage and loss of traction. Gravel tends to roll while cornering on it and even a few unseen pieces can cause either the rear or front tire to slide out. Ideally, every motorcycle trip is 25 degrees with not a cloud in the sky. However, drivers ride in all sorts of weather and motorcycle tires are very sensitive to temperature. Taking a simple right hand corner at typical operating speeds just after the motorcycle has been warmed up in 10 degree weather can put a bike down. The coefficient of friction needs to be at a critical rate to support the traction required to complete a given maneuver. This coefficient changes (increases) with higher temperatures. At lower temperatures tires may not possess the necessary coefficient of friction to brake and turn as the rider requires. As the bike is ridden, frictional forces induced by the roadway-totire interaction increase the tire temperature and coefficient of friction. Similar to low temperature, wet weather can drastically reduce available traction. This is most common during the first few minutes of a downpour when the moisture washes any present oil, coolant, etc. onto the roadway creating a particularly slippery condition. Painted lane markers, sewer grates and train tracks are also areas that can provide virtually no traction when wet.
Driver behaviour No matter how competent the rider or how much experience he or she possesses there is always the presence of uncontrollable variables in other drivers. Drivers making a left hand turn in front of a motorcyclist present a particular challenge. A driver’s perception of how far the motorcycle is and at what rate it is travelling can be difficult. A driver’s perception of another vehicle’s speed is based on the typical width of a vehicle and how that vehicle width is changing www.claimscanada.ca
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— increasing in size as it approaches. However, this leaves room for error, as a motorcycle’s width is much smaller than that of a typical vehicle, which can affect the left-hand turning driver’s perception. This is further exacerbated by the fact that motorcycles represent only a small fraction of vehicles on the roadway and tend to be present seasonally. Therefore drivers have not acquired the same skills for judging closing speeds with motorcycles as they have with other types of vehicles. Motorcycle conspicuity is also an issue to consider. Factors such as road-related hardware (stop signs, utility poles,
has to coordinate both a front caliper (right hand lever) and rear caliper (right foot lever) while applying the suitable ratio of force to each. In a panic situation, the average car driver would likely respond by pressing the brake pedal suddenly and as hard as they could. Depending on the speed and traction available locking the front brakes of a motorcycle can ‘lowside’ the motorcycle almost instantly, or propel the rider forward off of the bike. Motorcycle ABS systems are relatively new, and only a select few models are becoming available. Counter steering and leaning into a turn are other skills
Depending on the speed and traction available locking the front brakes of a motorcycle can ‘lowside’ the motorcycle almost instantly, or propel the rider forward off of the bike.
etc.) other vehicles in the traffic stream, weather conditions, time of day and blind spots can have a significant effect on how well a motorcyclist is seen by drivers on the roadway. In the city, taxicabs are also very hazardous because a taxi parked at the curb can suddenly merge into the lane or make a u-turn in front of the motorcyclist. Due to the small size of a motorcycle it is difficult, at times, to protect space. Drivers tend to follow too closely and often times intrude into the motorcyclist’s lane. To protect their lane, riders need to position themselves in the tire track adjacent to the traffic beside them. In addition to protecting his or her lane and space, a rider in this position can avoid motor oil and surface undulations, which are more likely in the middle of each lane.
Motorcyclist experience With all the hazards present on the road, limited experience with a motorcycle can be the most hazardous. According to the Hurt Report1 “motorcycle rider error, such as slide outs and falls due to over braking or running wide on a curve due to excess speed or under-cornering account for two-thirds of the single vehicle accident cases.” A driver stomping on the pedal of a vehicle with ABS braking requires much less skill than a motorcyclist who 34
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unique to motorcycle riders. Counter steering involves turning the motorcycle’s handlebars in the opposite direction of the actual turn. This maneuver is confusing especially for newer riders because the amount of counter steering required to get the bike to lean is quite minimal. Experience provides a database in a rider’s mind for situations that may be present around each corner. Even for the most experienced riders, new unexpected challenges still exist. Understanding the various elements involved in motorcycling is a critical factor in understanding motorcycle claims. See you on the road, and keep the shiny side up and the rubber on the ground. Chris Atkins of Walters Forensic Engineering Inc. can be seen cruising on his Ducati Sport Classic GT1000 north of Toronto’s busy streets and commuting within the city. 1. Dr. Hugh H. Hurt, PhD. (January 1981 (Final Report), Motorcycle Accident Cause Factors and Identification of Countermeasures, Volume 1: Technical report, Hurt, H.H., Ouellet, J.V. and Thom, D.R., Traffic Safety Center, University of Southern California, Los Angeles, California 90007, contract No. DOT HS-5-01160, U.S. Department of Transportation, NHTSA, http://www.ct.gov/dot/LIB/dot/Documents/dhighwaysafety/CTDOT_Hurt.pdf www.claimscanada.ca
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A Field Guide to Insurance Frauds and Fraudsters of North America BY ALFRED J. MARRAZZO AND STEVEN YOUNG
“Forewarned is forearmed” may be a clichéd aphorism, but it’s a useful one for claims adjusters to keep in mind. The most pressing forewarning is that, insurance fraud, already a huge drain, is likely to increase in Canada as it has in the United States, due to the present economic climate. The Insurance Bureau of Canada estimates the annual cost of insurance fraud at $500 million, for home, car and business claims containing elements of fraud. In the United States, the Coalition Against Insurance Fraud notes nearly $80 billion is lost to fraud annually in all lines: health, property, casualty, life and disability. Spokesperson, James Quiggle, says, “Several kinds of fraud have spiked considerably during the worst years of the recession. People’s finances have become pinched and, desperate for a way out, they resort to insurance fraud as an economic bailout.” 36
Claims Canada
Slip, trip, fall, collect Perhaps the personal injury claim that adjusters see most often is the infamous “slip & fall.” A close second is its cousin, the “trip & fall,” which typically involves elevator doors failing to line up with the floor they opened on, causing claimants to either “fall in” or “fall out.” These accidents do happen and can be caused by negligent retailers, office building and condo management firms and grocery and convenience stores, among others. We don’t dispute that. But slip & fall and trip & fall incidents are a favourite among fraudsters, because they’re so easy to stage. If an incident that no one witnessed allegedly occurred in a ladies’ or men’s room because of water on the floor, it’s very hard to disprove. The only recourse is knowledge of the red flags signaling the claim is most likely not legitimate. These include: a long delay in report-
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ing the incident; greatly exaggerated injuries; treatment provided by facilities and/or medical practitioners with a history of suspect claims; a claimant with a history of similar, if not identical, claims; and a claimant who avoids meeting for an in-person interview. To protect themselves from fraudsters — and organized insurance fraud rings — businesses large and not-solarge have installed surveillance cameras in incident-prone places. But since cameras can’t be installed in ladies’ and men’s rooms, many at-risk companies have employees regularly check for water or towels on the floor, and keep meticulous logs of what they found and how they removed it. Adjusters may find that informing claimants about the existence of surveillance video and maintenance (sweep) logs encourages them to drop a suspect claim, or settle for a lesser amount. www.claimscanada.ca
THIS IS MORE THAN A HURRICANE. To business owners who have tirelessly committed themselves, it’s the loss of their dreams and livelihood. To insurance professionals, it’s the challenge to fairly and accurately quantify what their loss is worth. When disaster strikes, trust the firm that provides expert, objective opinions and quality resources. BDO. More than you think. Business interruption | Irb calculations | Personal injury claims | Forensic investigations Inventory losses | Fidelity & surety bonds VANCOUVER | CALGARY | EDMONTON | WINNIPEG | TORONTO | MONTREAL | HALIFAX ASSURANCE | ACCOUNTING | TAXATION | ADVISORY SERVICES Greg Hocking ghocking@bdo.ca 905 946 6800
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What’s in my peanut butter? The next most common claim attractive to entrepreneurial fraudsters is the product liability claim. Contaminated and defective products do exist. And because they do, claims for products that result in a “gross out” moment, food poisoning, or physical injury are also relatively easy to stage. But fraudsters are getting bolder, too. Some immediately demand $50,000 or $500,000, in exchange for “not going to the media” with their complaint about an alleged foreign object in the peanut butter, or the product that exploded when they plugged it in. They know no store wants negative publicity any more than a food manufacturer does. For the adjuster, these claims can put him or her in a very difficult position. Careful investigation — getting to know the claimant thoroughly, and knowing exactly what the client wants to achieve — can save the day. ‘Bye ‘bye, car payments The National Insurance Crime Bureau in the United States saw a rise in suspected vehicle “give-ups” between 2004 and 2007. Owners who lost their job and can’t afford car payments on a big SUV that no one else wants to buy, may decide to destroy it in order to escape financial responsibility. One popular method is to park an unwanted car in the path of a hurricane — out on a pier, in a parking lot near the ocean, or even in the middle of a beach (even though these bizarre parking spots are all too obvious to investigators). Another method is arson, and there have been incidents in which investigators knocked on the door of an insured while his car was still smoldering, before he had time to concoct a plausible story. Some common red flags that occur when a vehicle was deliberately destroyed include: no ignition or steering lock damage; the insured doesn’t have the keys; no evidence in the car of a break-in; the vehicle was recovered before the insured reported it stolen; and the insured is having significant financial problems. 38
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Mortgage payments no more A similar quick-disposal scheme can be seen with home owners who realize they owe more on their house than it’s currently worth, but no one is buying, or they lost their job some time ago and haven’t found another. It’s the kind of situation that leads
A similar quick-disposal scheme can be seen with home owners who realize they owe more on their house than it’s currently worth, but no one is buying, or they lost their job some time ago and haven’t found another. some to take desperate measures that involve insurance fraud. Yet it rarely works out in the fraudster’s favor. Ron Arnold, a Canadian private investigator, says that arson is fairly easy to prove when working with a fire marshal, and there are always telltale
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signs, such as: suspiciously clean wall areas where family photos were removed; pets that were taken to a safe place prior to the fire; and owners who make small mistakes when telling their story to the adjuster, the fire department and the private investigator. Apart from that, when the investigator has the insured’s phone records, financial records and employment information in-hand, that often frightens the would-be fraudster into hiring a criminal lawyer — a common telltale sign.
Swoop & squat staged collisions The most dangerous form of insurance fraud — a type typically practiced by fraud rings — is a staged rear-end collision, known as a “swoop & squat.” The fraudster, often driving a rental vehicle and accompanied by several passengers, changes lanes suddenly, pulls ahead of the car in front and jams on the brakes, causing the car now behind him to crash. All of the three or more fraudsters in the rear-ended car then file bodily injury claims, using fake medical reports from providers who are part of their scheme, as well. But, if a witness at the scene of the accident casts doubt on the fraudsters’ story, that they didn’t stop and it was all the fault of the car behind them – resulting in their claims being denied – they will simply file suit through an attorney who is another member of their fraud ring. In cases like these, the people involved are usually well-known to law enforcement officials. In the United States, they often appear in the files of the National Insurance Crime Bureau, as well as the state department of insurance fraud bureau, for the state in which the fraud occurred. Just knowing what to look for, in common cases of insurance fraud like these, is often, as they say, “half the battle.” Alfred J. Marrazzo is the SIU manager of ESIS Inc.’s anti-fraud program. Steve Young is assistant vice president responsible for ESIS Canada’s operations. www.claimscanada.ca
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DECISION TIME
104
WEEK
When it comes to week 104, the most important thing an independent adjuster can do is to be prepared. BY FRANK MALITO AND ANGELA VERI
When a client reaches the week 104 mark, it is decision time — about functional status and what further action to take. Information gathering before a client reaches week 104 is the most effective approach, as it provides an independent adjuster with the kind of up-todate, accurate, and objective information required to make critical decisions. Preparation leads to peace of mind in the 104-week decision making process.
Forward thinking in three steps As week 104 approaches, if a client was employed at the time of the accident and is an Income Replacement Benefit (IRB) recipient, follow these steps to ensure preparedness for the 104 week mark: Step 1: Develop a profile of your client As the IRB client approaches week 104, look for the following signs that it is time to take action: • Age • High income/low education • Lives in a remote area • Performing physically demanding job • Lack of English language skills • Limited mobility/driving • Low motivation 40
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• • • •
Lack of transferable skills Pre-existing medical conditions Financial incentive exists Unsuitable accommodations for restrictions • Lack of support from family/friends
Step 2: Check the client’s medical status and return to work status If the IRB client shows any of the signs described in Step 1, check whether: • medical condition has stabilized, and/or • client cannot return to regular employment Step 3: Arrange for the appropriate functional and/or vocational assessments Based on steps 1 and 2, arrange for the appropriate functional and/or vocational assessments. Taking a proactive approach in coordinating the assessments assists claim resolution in many ways, including establishing realistic goals and minimizing — or even eliminating — the amount of benefits payable at the 104-week mark. In addition, being proactive can help address motivational issues and facilitate skill enhancement, such as worksite training, computer skills upgrading and English language development. There are a variety of functional and vocational services that provide a thorough assessment of the types of employment a client is physically able to perform while taking into consideration educa-
August/September 2010
tion, interests, and experience. Services that are effective for assessing IRB clients include: Job site analysis / work site evaluation: An objective evaluation of the physical, environmental, cognitive and ergonomic factors related to a specific job. It assesses the client’s abilities and limitations in performing the job so an effective return to work program can be developed addressing these issues. This assessment should be done early in the claim. Waiting can result in its own set of problems, for example, whether the employer is still in business, or are the essential tasks of the client’s position the same as they were prior to the MVA. Physical demands analysis: Used when the goal is to assess a client’s existing job. It is the process of examining the client’s job by breaking it down into specific tasks and then measuring the client’s ability to successfully complete the tasks. It should include the job’s physical, environmental and organizational components, as well as its cognitive demands. It should include: • Physical components (e.g., standing, walking, sitting, lifting, pushing, pulling, carrying, fingering, gripping, pinching, twisting, kneeling, bending, reaching, climbing, crawling, crouching) • Environmental components (e.g., dust, vapour, moving objects, hazardous machines, electricity, sharp tools, protective equipment, congestion) www.claimscanada.ca
• Organizational components (e.g., shift length, breaks, pace of work, position title, when the job was previously assessed, how the job is set up, pay structure, etc.) • Organizational demands (e.g., vision, perception, feeling, reading, writing, hearing, speech) Functional abilities evaluation: Used when the goal is to assess the client’s ability to perform tasks that could be related to a range of different jobs. It is the process of measuring, recording and analyzing the client’s ability to safely perform a number of job-related functions, such as lifting, lowering, pushing, pulling, and carrying weights, stair climbing, sitting, standing, bending, stooping, crouching, kneeling, crawling and fine motor manipulation. It can be facility-based or home-based. If facility-based, it specifically tests the job-related functions the client must perform to provide “baseline” functional information for all parties (i.e. insurer, employer, treating practitioner, and rehabilitation facility). Whereas, if it is home-based, it assesses the client’s functional abilities in his/her home to make recommendations about whether he/she can complete daily activities. Transferable skills analysis: Identifies transferable skills for clients who need to find a new vocation and provides recommendations of suitable alternative jobs/occupations. It takes into consideration the client’s educational background, work history and special skills. It does not include psychometric tests so information about aptitude and interests is not included. Computerized formats are available and, depending on the situation, an inperson meeting with the client may or may not be necessary. Vocational assessment: Necessary when the client needs to investigate alternative employment options either through directly entering a new type of work or via formal re-training. It identifies suitable jobs or occupations by identifying the client’s personal vocational characteristics through evaluation of learning ability, academic achievements, vocational aptitudes and employment history. It also incorpowww.claimscanada.ca
rates medical, social and, at times, psychological information. All of this information is taken into consideration while assessing the suitability of different types of jobs/occupations. This process also helps the client better understand his/her skills and to take a more realistic approach to potential employment opportunities. Referral for a vocational assessment should be made: • once the client has met his/her maximum medical recovery
• if it has been medically determined that the client is no longer able to perform his/her job due to ongoing functional limitations • if there are no transferable skills that can be applied to another physicallysuitable job Psychometric tests: Used as part of the vocational assessment, to assess the client’s general intelligence, achievements, aptitudes, vocational interests, personality traits and dexterity to help assess vocational
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options. Types of psychometric tests include: • Intelligence tests: measure learning potential and reasoning in verbal and non-verbal areas through individual and group tests. • Achievement tests: measure level of acquisition of various skills and reading, spelling and arithmetic abilities. • Aptitude tests: measure characteristics that indicate the ability to gain skills related to a particular job/occupation. • Interest tests: determine high, moderate and low interest areas and assist in linking areas of interest with appropriate vocations. • Personality tests: measure emotional state, attitudes, values and motivations. • Dexterity tests: measure manual and motor co-ordination responses when manipulating various materials. Psychological vocational assessment: Should be considered when there is a diagnosed or suspected diagnosable psychological condition that may interfere with the client’s return to work program because its purpose is to determine the presence and severity of psychological issues that may be influencing the return to work plan. Although a client may have the skills to perform a specific job (or is training for a wellsuited position), there may still be difficulties in returning to work. To help establish realistic vocational goals, the psychological vocational assessment specifically focuses on not only determining whether a psychological impairment exists, but also whether it is affecting the client’s ability to return to work. The assessment may identify a range of psychological impairments such as depression, adjustment disorder and post traumatic stress disorder that could inhibit job performance. For example, certain psychological conditions like depression and anxiety are known to affect motivation, memory and the ability to concentrate. It includes a standardized cognitive assessment, psychometric testing, aptitude and ability testing, academic achievement testing and a vocational interest survey including a Transferable Skills Analysis (TSA). A TSA identifies transferable skills and provides recom42
Claims Canada
mendations of suitable alternative jobs/occupations. It takes into consideration educational background, work history and special skills, but does not include psychometric tests (i.e., aptitudes and interests are not included). Computerized formats are available and an in-person meeting with the client is sometimes necessary. Neuropsychological vocational assessment: Combines neuropsychological and psychological vocational evaluations to address both diagnostic issues and vocational questions in the context of a confirmed or suspected traumatic brain injury or other neurocognitive pathology. It identifies the client’s personal and vocational characteristics by assessing general learning ability (intelligence), academic achievement levels (reading, spelling, arithmetic), emotional status, personality
Being proactive ensures the most accurate and defensible information possible about a client’s functional and vocational status.
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characteristics and vocation-related aptitude/interests. Current vocational aptitude is compared to prior occupational history to determine the most appropriate basis for the transferable skills. Labour market survey: Involves surveying potential employers specific to the client’s identified job/occupation. This outreach is combined with additional research via databases, the internet and employment periodicals about potential employers, job availability in desired geographic region(s) and salary information to provide a comprehensive overview of the job market specific to the client’s identified job/occupation. Job search training programs: Teach the necessary skills to secure employment, such as developing a resume and networking list, as well as contacting potential employers and
August/September 2010
interview skills. The goal is to provide the client with the skills and confidence to be marketable. Individual and group instruction is implemented as appropriate, depending on the client’s specific issues/needs. Job placement services: Provide direct recruitment to potential employers to help the client secure and maintain employment. Job placement specialists are in continuous contact with potential employers to obtain up-todate information about job opportunities, market trends and salary ranges. Upon successful job placement, the job placement specialist conducts followup calls to both the client and employer to monitor progress and enhance job success. In-home/ Activities of daily living assessment: Determines the client’s ability to care for him or herself, as well as conduct activities of daily living such as dishes, laundry, etc. It includes a client interview, history, observation of self-care and homemaking tasks, as well as a physical assessment of strength and range of motion. Caregiver assessment: Determines the client’s ability to look after dependents (e.g. children, seniors) in the client’s home. It includes a client interview, observation of tasks involved in caring for self and dependents, as well as assessment of the level of care needed for the children/senior(s).
Three steps forward, leaps and bounds ahead The 104-week mark is critical — preparation is the most effective strategy. Being proactive ensures the most accurate and defensible information possible about a client’s functional and vocational status. In turn, it ensures the most accurate and defensible information to make critical decisions that will affect a client’s future and file outcome. In addition, having a complete and accurate medical evaluation enables an adjuster to appropriately reserve a claim file. Frank Malito is national director of government services and Angela Veri is national director of customer relations at Sibley and Associates. www.claimscanada.ca
False Air Bag Deployment A Danger to Insurance Personnel BY THE BOARD OF DIRECTORS OF CASIU
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ecently there has been a huge increase in staged collisions and resultant accident benefit claims. Handin-hand with the outright staging of collisions is the enhancing of damages to vehicles that may have been involved in legitimate crashes. One area of enhanced damage that scares all adjusters is air bag tampering. Over the last few months, several vehicles have been examined in which the air bags appear to have deployed. When the ignition is cycled on the vehicle, the air bag warning lights flash, which gives the impression the air bag deployed during the collision. When an expert examines the vehicle it quickly becomes apparent the air bags did not deploy as a result of the collision. Instead, the air bag covers have been cut and pulled the bags out by hand to provide the illusion of deployment. The electrical system is then short-circuited, causing the sensor to flash, giving the illusion the air bags have deployed. Damage to the vehicle is, falsely, enhanced, with the end goal having the insurer pay more for the collision damage to the vehicle. It also provides the illusion that the severities of the injuries claimed are legitimate. It makes it easier to slip the injury claims through. This scam presents what could be very serious consequences for anyone who happens to enter one of these vehicles. Because the air bags have been manually pulled out, and the indicator light is only short-circuited, the explosive charge that deploys the air bag is still intact. A stray electrical charge or even a bump of the vehicle in the right direction could trigger the explosive charge. However, now there is no air bag between the charge and anyone who might be in the vehicle. This is a huge safety issue for appraisers, claims adjusters, special investigators or body shop personnel who may be working around these vehicles. When entering a vehicle which appears to have deployed air bags, tread carefully. If investigating a suspicious loss, and perhaps in doubt about the air bag deployment, best to
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err on the side of safety and hire someone qualified to conduct a thorough examination of the air bags. The Canadian Association of Special Investigation Units (CASIU) is a low-profile association whose members come from the claims side of the P&C industry. If you have any questions about false air bag deployment, contact the CASIU board through www.casiu.ca or contact Wayne Somers at 416-774-3760.
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E
education forum
A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA
Keeping the Faith: Documenting Claims Dealing
T
he law requires parties to an insurance contract to act with utmost good faith. When a loss adjuster or insurer is sued for bad faith dealing, plaintiff’s counsel may try to portray the insurer as having victimized or betrayed a vulnerable insured. In this article, we look at how a claim file should be documented to show that the insurer acted in the utmost good faith.
Documenting the deeds To guard against a potential bad faith claim, the claim file must be documented to show how the loss adjuster handled the claim. A claim file should clearly reflect what the insurer’s concerns were and what was done in relation to the investigation to allow the insurer to make a decision on coverage or on the amount of the claim. The claim documentation should be approached with care, especially in a large loss when it looks like the claim will not qualify for coverage. Here are eight tips to keep in mind. 1. Remember that the file is producible All correspondence, including any emails with reinsurers, may be considered part of the claim file. Any notes the loss adjuster has used or developed in evaluating the claim are also part of the file and might have to be produced in 44
Claims Canada
court. Loss adjusters may be called upon to discuss any part of a claim file with the insured. 2. Note the substance of all conversations A loss adjuster should not rely on memory alone. The claim file must include a log of all telephone calls and other activities, documenting the substance of any conversation and the parties to it. This should include conversations about negotiation attempts. The insured’s failure to act on requests must be documented, as must follow-up requests by the loss adjuster. 3. Document coverage issue analysis Insurers must effectively investigate each claim and must be allowed to contest suspect claims or claims that are not covered. Denial of a claim does not automatically indicate bad faith dealing, but the insurer must have credible evidence that supports its position. When a question of coverage arises, the loss adjuster should be clear on the issues. Any difficulty the adjuster experiences in applying the policy language might be construed as an indication that the language was ambiguous or that the adjuster did not understand it. The adjuster must explain clearly how coverage was decided and how any
August/September 2010
areas of concern that would affect coverage were dealt with. If a loss adjuster interprets a policy as meaning that a loss was not covered, but the insured disagrees and presents an argument in favour of coverage, the adjuster may choose to refer the file to legal counsel for a higher-level review of the language. The decision to refer a case to counsel for an opinion on coverage should be worded carefully to ensure that the loss adjuster has approached it in an appropriate way. Any outstanding questions that the insured has been unable to answer should be documented, especially if they are crucial to the issue of coverage. 4. Don’t rely on the financial situation of the insured Information on the insured’s financial situation should not form the basis for a decision to lower a settlement offer. If an adjuster recognizes that an insured is in dire financial straits and offers the insured less than the full value of the claim for this reason, the adjuster would probably be guilty of bad faith dealing. The insured’s financial position might be of legitimate interest as proof of a motive to commit insurance fraud, but unsubstantiated rumours should not be documented in a claim file unless there is good reason to do so. www.claimscanada.ca
5. Deal with internal criticisms separately A supervisor’s notes criticizing the loss adjuster’s handling of a claim should not form any part of a claim file. If an insured sues the insurer and is successful in having the claim file produced, such notes appearing in the file might suggest the adjuster acted incompetently. And if the supervisor did not take appropriate action to correct any improper handling, this inaction would compound the alleged mishandling of the file. 6. Leave humour out of the file Humour is not appropriate for a claim file, especially when the humour might demean the insured. Any humour recorded in a claim file is likely to be misconstrued. A loss adjuster who is thorough in a claims investigation, shows that he or she is sympathetic to the insured’s interests, and shows respect for the insured’s rights will not likely be sued for bad faith. 7. Avoid cover-ups Any attempt to cover up evidence of
bad faith dealing is likely to be punished by the courts. If it were shown that evidence was concealed, it might increase any punitive damages or at least justify an award. If a temporary lapse of good conduct has been identified, the best approach is to make amends and continue in good faith.
8. Ensure procedural manuals are in order In a lawsuit, the insurer may be asked by the insured’s counsel to produce its claims manual. Any remote suggestion of questionable claims practices can come under intense scrutiny, and any hint of a conspiracy not to pay claims would fuel a lawsuit.
Privilege and proof If the insurer is sued, the insurer’s counsel will usually seek to avoid producing the claim file. Lawyer–client privilege and work-product privilege provide some protection to the insurer. On the other hand, an insurer that believes the file documentation shows that it was operating in good faith may
wish to waive any privilege. Once documents have been shared with the insured or an outsider, they are no longer considered privileged and have to be produced. Punitive damages can be assessed against an insurer or an insured when either is found to have acted in bad faith. In Canada, courts have been conservative in awarding punitive damages against insurers. Only in exceptional cases, where proof of very bad behaviour on the part of the insurer is confirmed, have punitive damages been awarded. For a finding of bad faith dealing, the insurer’s conduct in investigating, assessing, or responding to the claim must be very poor. Documenting the appropriate progress of a claim can help to prevent such a finding. 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
Derek Ballard
Derek Ballard joined Blouin, Dunn LLP as of Jun.15, 2010. Ballard obtained his law degree at the University of Manitoba in 2002 and was called to the Ontario Bar in 2003. Since his call, he has practiced in many areas of insurance litigation, including personal injury, medical malpractice, product liability, disability insurance and class action disputes. ●
Paul Hancock has joined Crawford & Company (Canada) Inc. as national director of Global Technical Services (GTS) Canada. Hancock has a Chartered Insurance Professional (CIP) designation with more than 25 years of experience in the claims industry. “Paul’s dedication to quality, excellence and customer service, along with his extensive experience Paul Hancock in both claims investigation and claims management, have earned him a strong reputation within the industry,” said Pat Van Bakel, senior vice president of claims operations. ● The 10th Annual Toronto Fraud Forum, a one-day insurance fraud conference hosted by CASIU and ACFE, will be held Sept. 29, 2010. For registration and details visit www.casiu.ca or www.acfetoronto.ca; contact Penny Hill by phone 416-480-9475 or email at acfe.toronto@sympatico.ca. If any unusual registration problems, contact Tom Eby at 416423-1957 or ebyt@idirect.com. ●
Gene Poulsen and Mike Greek
The Nova Scotia Pond of the Honourable Order of Blue Goose held its annual Blue Goose Honker Classic Golf Tournament on Jun. 4, 2010 at the Chester Golf & Country Club. Gander Gene Poulsen of Economical Mutual Group presented a $5,000 to Mike Greek, president of the Nova Scotia Special Olympics. ●
The Canadian Independent Adjusters’ Association attended the Insurance Brokers Association of Alberta Convention 2010 in Edmonton May 16 to 19. Left to right: Russ Fitzgerald, David Riddell, Patti Kernaghan, Greg Merrithew. ● Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction, has been chosen as a lead author of an Intergovernmental Panel on Climate Change (IPCC) report. Specifically, Kovacs will serve as lead author of Chapter 26, North America, of the Working Group II contribution to the IPCC’s Fifth Assessment Report (AR5). The appointment is the first step in a four-year draftPaul Kovacs ing process, scheduled for completion in 2014. More than 1,200 people were nominated for the 311 available coordinating lead author, lead author and review editor positions. Candidates underwent a thorough review; input from observer organization representatives and senior leaders in climate science helped determine the final selections. Kovacs has been involved with the IPCC for a number of years, and served as a lead author of Chapter 14 of the Fourth Assessment Report, published in 2007. The work done by the IPCC also earned the group a Nobel Peace Prize — along with former U.S. vice president Al Gore — in 2007. ●
Claims Canada Wants You! Claims Canada magazine wants you to send us your company news, appointments and event photos for possible inclusion within our ‘On the Scene’ department. Please help us share your items with the claims industry across the country. For more information, please email: laura@claimscanada.ca
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John McAlister
SPECS Limited, a provider of independent property damage valuations and cost control services, appointed John McAlister as Prairie regional manager. McAlister will execute SPECS’s business development strategies for the region, drive sales support and marketing activities, as well as build, maintain and strengthen client relationships. Prior to this new role, he served as the branch manager of SPECS’s Calgary branch. ● www.claimscanada.ca
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O on the scene The Canadian Independent Adjusters’ Association and the Canadian Insurance Claims Managers’ Association held its Atlantic Provinces Joint Meeting in Fredericton, NB June 23 to 25. ● A left to right: Sandi Wentzell; Lynn Prescott; Luc Aucoin; Rick Cicin; Stephen Robb, Rick Embleton; Brian McLean and Mike Nickerson. B left to right: Grant King; Luc Aucoin; Karen DeCoste; Rick Embleton and Patti Kernaghan C left to right: Dave Neal and Fred Plant.
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The Canadian Independent Adjusters’ Association’ Ontario
Region Convention was held at Hockley Valley Resort in Orangeville, Ont., June 10 to 12. The program included the Annual General Meeting, golf on the beautiful Hockley Valley course (nongolfers were treated to the spa) and a president’s reception and dinner. Sincere thanks to the sponsors of the event: Paling Industries, VPI Inc., ServiceMaster (Barrie), Strone Construction, Custom Rehabilitation & Assessments, ServiceMaster Restore, Burke’s Restoration, Insurance Search Bureau, Higgins Proteam, Foley Restorations, First General Services. ●
The Ontario Region Executive Back row (L - R) - Mary Charman, Edgar Lethbridge, Steve DelGreco, Chad Hancock, Dorothy Lowry, John Seyler. Front row (L - R) - Patti Kernaghan, CIAA national president; Richard Swierczynski, CIAA Ontario Region president; Teri Mitchell, CIAA Ontario Region first vice president.
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August/September 2010
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National Standing Committees 2009 – 2010 ADVISORY 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 Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca 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 James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca 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 TBA COMMUNICATIONS 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 Jane Richardson, BBA, FCIP Crawford Adjusters (Canada) Inc. 237 Brownlow Ave., Suite 120 Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Jane.Richardson@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 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 CONVENTION Allan B. Hart, BBA, CIP, CRM Coast Claims Service Ltd. 2727 Quadra Street, Suite 6 Victoria, BC V8T 4E5 Phone: (250) 386-3111 Fax: (250) 386-1473 E-mail: ahart@coastclaims.com
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Claims Canada
DISCIPLINE 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 EDITORIAL Fred Silvestri, BA (Hons), B Ed, CIP NCRS 121 King Street West, Suite 1810 Toronto, ON M5H 3T9 Phone: (416) 306-5885 Fax: (416) 733-0510 E-mail: fred.silvestri@srsconnect.com 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 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., Suite 601 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 Robert V. Pearson, CLA, FCIAA AAL Alberta Ltd. 600 – 2424 4th Street S.W. Calgary, AB T2S 2T4 Phone: (403) 452 2195 Fax: (403) 452 3568 E-mail: rvp@aaladjusters.com
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 Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia St. Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.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 IBC LIAISON & FORMS TBA LEGISLATIVE Russell E. Malkoske, BA, FCIP, 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 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 NOMINATING 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 Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia St. 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. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca
August/September 2010
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
CIAA REGIONAL PRESIDENTS 2009 – 2010 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 E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Grant.King@crawco.ca 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 Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3, P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail: richard@azclaims.ca MANITOBA Timothy W. Bromley J.P. Hamilton Adjusters Ltd. 125 Enfield Crescent Winnipeg, MB R2H 1A8 Phone: (204) 944-1057 Fax: (204) 944-1606 E-mail: tbromley@mts.net SASKATCHEWAN Lee Dixon Crawford & Company (Canada) Inc. 210 – 227 Primrose Drive Saskatoon, SK S7K 5E4 Phone: (306) 931-1999 Fax: (306) 931-2212 E-mail: Lee.Dixon@crawco.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 TBA
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O on the scene The National Association of Independent Adjusters Annual Conference was held at the Renaissance Esmeralda Hotel in Indian Wells, California, May 24 to 27. ●
Patti Kernaghan and Brent Demnar, president, International Institute of Loss Adjusters, Kenmore, Australia
Monica & Fred Plant and Patti Kernaghan & Pierre Coupey.
John Kidder, NAIIA president 2009/2010, Patti Kernaghan, CIAA president, Johnny Michalek, NAIIA president 2010/2011. Patti Michalek, Johnny Michalek, Patti Kernaghan.
Marty Brown winner of CIAA’s Tradeshow Prize, Pat Battle and Patti Kernaghan.
Patti Kernaghan, John Kidder and Dave Mehren, NAIIA executive vice president.
Pat Battle, Graham Cave, CILA executive director, Patti Kernaghan
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August/September 2010
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O on the scene More than 165 insurance professionals participated in the 12th Annual McCague Borlack LLP Golf Tournament on June 30. The tournament was held at Club at Bond Head in Bond Head, Ont. Attendees supported the DareArts Foundation Inc. for Children, a Canadian notfor-profit organization that uses arts education to empower children to become leaders. Raffle tickets were purchased for merchandize donated by Rochon Engineering, GARDA, Canadian Litigation Counsel, National IME Centres, McCague Borlack LLP and Ironshore Insurance Company. â—?
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www.rsabroker.ca
darwin wrote one of the greatest scientific books ever.
you could say that we underwrote it.
Charles Darwin was already well known in Victorian society when he began writing On the Origin of Species. Following publication of the journals he wrote aboard HMS Beagle, he had become, in today’s parlance, a star. Yet even as his theories emerged in his study, he was plagued by a certain anxiety. Society was more conservative then. The suggestion that humans share ancestors with apes would, he feared, be branded as heresy. With so much on his mind, it is remarkable that he was able to write anything at all. But write he did, thanks in part to the wonderful seclusion he achieved at Down House in Kent. And thanks also, we believe (though, admittedly in much smaller part) to the protection he received from us. From 1844 onwards, the buildings at Down House and all their contents were insured by the Sun Fire Office. His many books, his journals and
even his paper and pens – all were underwritten by the company that would become RSA. Ours was not a significant contribution to the biggest idea in the science of life. Of that we are in no doubt. But in the year that we celebrate our 300th bir thday, we hope we deserve this small liber ty. As for the eventual reaction to his work, Darwin need not have worried. On the day it was published in 1859, On the Origin of Species sold out. Controversial though it was, his book was acknowledged immediately as an outstanding contribution to the canon of scientific thought. Which leads us to conclude that in business, as in life, it is those best equipped who will prosper. From the epic to the everyday, we continue to help the world’s people and businesses move forward. To learn more, visit www.rsabroker.ca
Underwriting progress since 1710
O on the scene The Canadian Insurance Claims Managers Association held its annual golf tournament at the Cardinal Golf Course in Newmarket, Ont. on June 25. This year, 292 golfers participated in the event, while 310 people attended the dinner. Funds raised from the tournament were donated in part to Camp Oochigeas and to purchase a custom wheelchair for a member of the industry, Michael Yang. A cheque for $26,000 was presented to the Camp during dinner. We will continue to support Camp Oochigeas, which the Ontario chapter of the CICMA has been supporting for the past 15 years, but also look to assist where we can for other worthy causes, Rick Yates, vice president and treasurer of the Ontario chapter, said. â—?
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August/September 2010
Claims Canada
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O on the scene The Ontario Risk and Insurance Management Society (ORIMS) celebrated five decades with a 50th Jubilee Gala on May 27. Guests arriving at the Liberty Grand on the grounds of the Canadian National Exhibition (CNE) in Toronto were transported back in time by the sounds of the Swing Shift Big Band and an ORIMS exhibition and midway — complete with candy apples and cotton candy. A video presentation during dinner included past presidents of the association offering their memories and thoughts of the risk management profession over the past five decades. �
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August/September 2010
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The Ontario Risk and Insurance Management Society held its annual golf tournament on June 22 at the Deer Creek Golf Club in Ajax, Ont. The day started with a barbeque lunch followed by a shotgun start. While the rain may have ruined the golf for the almost 320 golfers, it certainly didn’t dampen spirits. Once again. McLarens Canada hosted a raffle, which raised $3,710 for the McGannon Foundation. ●
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Claims Canada
O on the scene The insurance industry came out in droves for The Canadian Cancer Society’s Relay For Life in June. The relay is a celebration of survival and a tribute to the lives of loved ones who have been touched by cancer. More than 500 friends and members of the insurance industry formed teams under the Team WICC banner in over 20 different locations across the country. WICC Ontario presented a cheque for $200,000 to the Canadian Cancer Society at the North York Relay. ●
Assured Automotive has partnered with the Women Certified Network. Women Certified is designed to teach professionals how to communicate effectively with and listen to women — not teach them how to sell their products or services better. Hazel McCallion, mayor of Mississauga, Ont., cut the ribbon at a celebration commencing the new partnership on June 14. ●
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Claims Canada
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TAKING A RISK DOESN’T MEAN BEING AT RISK. In today’s business environment, the risks and opportunities are constantly changing. RSA’s Global Risk Solutions team can provide the technical expertise to meet the needs of Canadian companies with national and international operations. RSA is an established A rated insurer with a proven track record of delivering customized coverages and flexible terms to companies across different commercial sectors around the world. We consistently offer innovative products and brilliant service to Risk Management professionals with large, complex or multinational risks. We have over 300 years of experience in finding insurance solutions for our business partners. Speak to RSA today or visit www.rsagroup.ca for more information.
©2010. RSA is a registered trade name of Royal & Sun Alliance Insurance Company of Canada. “RSA” and the RSA logo are trademarks used under license from RSA Insurance Group plc.