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December/January 2011
ADJUSTING FOR
TECHNOLOGY: How technology is playing a pivotal role for the independent adjuster.
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Contents DECEMBER/JANUARY 2011 • VOLUME 4 • NUMBER 6
Cover Feature
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12 Adjusting for Technology With every new advancement in technology comes both positives and negatives. Do the benefits outweigh the drawbacks for independent adjusters? BY LAURA KUPCIS
Spotlight 20 Different Days At BBCG Claim Services Ltd. no two days are ever the same. There’s never a dull moment when handling bond claims. BY LAURA KUPCIS
Education Forum
42
56 Not My Fault Possible defences to product liability claims brought in tort against a product manufacturer for breach of legal duty.
News Features 22 The Appraisal Process
46 Ending Report Frustration
The appraisal feature of a policy provides a mechanism to resolve disputed matters in a cost effective manner.
When it comes to IE reports providing direction can make all the difference.
BY GLENN GIBSON
BY JUDY FARRIMOND and IAN ELLIOTT
34 Meet the President
48 Alberta’s New Rules of Court
Rick Yates has just embarked on his twoyear tenure as president of the CICMA.
On Nov. 1, 2010 Alberta’s new Rules of Court came in to effect.
BY LAURA KUPCIS
BY NANETTE KUFELDT and LOVELY REJZEK
36 Investigating IRBs Adjusters must determine whether income tax is being paid before approving IRBs.
50 Chronic Subjective Injury Claims
BY LAURA KUPCIS
Assessing the severity — or existence — of a CSI.
38 Legal Fees
BY BRAD NICKERSON
Legal costs are a significant part of the P&C product and are only increasing.
54 Subrogation Rights
BY ROCCO NEGLIA
40 Construction Deficiencies The Supreme Court of Canada clarifies coverage controversy for contractors. BY DAVID MACKENZIE
42 Large Loss Adjusting Techniques and procedural know how for adjusters handling large losses. BY GREG MADILL
The Ontario Court of Appeal addresses subrogation under the standard mortgage clause.
48 Departments 4 First Notice 58 On The Scene
Columns
BY MICHAEL S. TEITELBAUM
56 Education Forum
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• first notice FN Written statement should be obtained before interview process A written statement should be requested prior to any interviewing of a subject, as this provides the interviewer with the cleanest version of the events. This is contradictory to the way interviews — with claimants, fraud suspects, witnesses, etc. — are frequently conducted, which is done while the interviewer sits across from the subject. In this situation, the subject is so conscious of the interviewers presence that eventually they will begin to feel guilty for making the interviewer sit there, said Nejolla Korris, CEO of The Sponsorship Group Ltd. “Often times they will try and finish their statement quickly just to try and move on with it,” she said while speaking at the ISB-U Education Series on Oct. 28 in Milton, Ont. “We don’t do anything to the subject but influence them to hurry up and get it finished if we decide to sit across the table and watch them do it,” she added. Korris said it doesn’t matter where the subject writes the statement, because no matter how much a subject believes they can cleanse the writing or be clever about the words used, what will not leave the statement is the particular pattern of writing used. “That’s what we assess,” she said, referring to the pattern of writing. ●
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Ontario arbitrator orders claimant to produce insurer with two years’ worth of medical, prescription records in non-earner benefits case An Ontario arbitrator has ordered a claimant to provide his insurer, Aviva Canada, with two years’ worth of medical and prescription records in a nonearner benefits case. This is one year beyond the standard practice of requiring production of only one year’s worth of medical records in accident benefits arbitrations. Aviva initially asked the claimant to produce medical records dating back to 2000 and prescription records dating back to 1990. Aviva claimed the reason for going back so far was relevant to Ablarde’s claim for non-earner benefits. Entitlement to non-earner benefits is based on a person suffering from a complete inability to carry on a normal life after an injury sustained in an auto collision. To determine entitlement, the person’s activities and life circumstances before the collision must be taken into account. Ablarde was injured in an auto collision in 2007. In a pre-hearing decision in Richard Ablarde and Aviva Canada
Inc., Financial Services Commission of Ontario (FSCO) arbitrator John Wilson wrote: “I do not accept that it is either necessary or appropriate to order production of [Ablarde’s] OHIP summary and prescription records going back to the millennium and beyond.” Nevertheless, Wilson also found the nature of the non-earner benefit made it relevant to go beyond the traditional one-year window allowed in arbitrations. “The non-earner benefit...differs somewhat from many other accident benefits,” Wilson wrote. “Firstly, it is not payable for the first six months. Secondly, rather than looking at a short span of time to determine entitlement, one must examine the activities of daily life for ‘a reasonable period of time’ both before and after a motor vehicle accident. Consequently, the one-year suggested limit on medical productions may not always be appropriate.” ●
ICLR, Swiss Re call for industry discussion about overland flood insurance The Institute for Catastrophic Loss Reduction (ICLR) and Swiss Re are calling on Canadian property insurers to bundle flood insurance into a standard homeowner policy. In a joint report, Making Flood Insurable for Canadian Homeowners, ICLR and Swiss Re advocate a partnership between the insurance industry, government and private homeowners. It explores historical flood damages in Canada, current flood management practices at the national level in Canada and flood management practices for four case study provinces: Ontario, Quebec, British Columbia and Alberta. Currently Canadians are forced to rely on government relief programs after overland flood events, the report observes. But flood insurance has many advantages over such programs, including quicker claims settlement through well-established insurer methods for assessment and payment, as well as risk-based premiums and deductibles
December/January 2011
that provide homeowners with the incentive to take action to reduce flood risk. In the United Kingdom, insurers have bundled flood with fire and theft for more than 50 years, the report notes. This is the best-suited model for Canada, too, says Sharon Ludlow, Swiss Re’s chief agent in Canada. “Canada is the only G8 country where flood insurance is not available to homeowners,” says ICLR executive director Paul Kovacs. “With other forms of water-damage being covered, such as sewer backup and burst pipes, and with commercial entities being able to purchase flood insurance, the coverage void tends to confuse — even anger — homeowners when they discover that they are not covered after a flood event. The provision of flood insurance for Canadian homeowners will put Canada in line with most other industrialized countries, and end any confusion that exists with regard to water-damage claims.” ● www.claimscanada.ca
we are adjusters. we are marine surveyors. we are industry leaders. we are 44 branches across Canada. we are 400 employees. we are here for you.
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• first notice FN “Pollution exclusion” applies to home-heating fuel oil tank leak The B.C. Supreme Court has upheld a “pollution exclusion” in a residential property damage case, in which an above-ground storage tank for homeheating fuel oil leaked and damaged the insured’s vacation home. In Corbould v. BCAA Insurance Corporation, the insured’s property policy said: “We do not insure . . . (8) loss or damage caused by contamination or pollution, or the release, discharge or dispersal of contaminants or pollutants.” The policy exclusion does not define “pollution,” “contamination,” “contaminants,” “discharge” or “dispersal,” and its definition of “pollutants” does not explicitly include the word “oil.” The plaintiff, Brian Bernard Corbould, argued he is a non-commercial, residential homeowner who was not in the business of generating contaminants. He said the key issue was that he was not involved in any business activities that could lead to the pollu-
tion of the environment. Corbould further submitted the pollution exclusion did not apply to his loss because he had a reasonable expectation that it did not exclude liability for the unintended results of the normal operation of his dwelling’s heating system. In rejecting Corbould’s argument, the court noted the “spill of oil into soil” meets the “common sense” definition of pollution, and the meaning of the exclusion was not ambiguous. In this case, the insurer held a reasonable expectation that the exclusion applied to oil spills, the court found. “The insurer submits that the exclusion must have meaning and asks, if the exclusion is not read to cover a fuel spill or leak of a tank on the insured’s property, what is it intended to cover?” the court found. “That argument has merit.” ●
New Brunswick launches review of the province’s $2,500 auto insurance cap New Brunswick is officially pressing ahead with its promised review of the province’s $2,500 cap on minor auto injuries, with a task force expected to engage in public consultation and then issue a report sometime around May 2011. The working group will carry out its review and conduct consultations in two specific areas: • the adequacy of the $2,500 cap and the impact of an increase to the cap comparable to neighbouring jurisdictions on average premiums; and • the current definition applied to softtissue damage and the effects of any recommended changes that might be made. The provincial government announced on Nov. 4 that it is responding to concerns about the $2,500 cap on awards for accident victims and the legal definition of soft-tissue injury by creating a working group tasked with 6
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ensuring the current legislation is fair and reasonable. The working group is to consult with New Brunswickers, consumer groups, legal professionals, the insurance industry and other stakeholders about the cap and the legal definition of soft tissue injury under the province’s Insurance Act. “We want to ensure that people injured in car accidents are getting the help they need, while safeguarding the stable auto insurance rates New Brunswickers have come to expect,” said Justice and Consumer Affairs Minister Marie-Claude Blais. “Seven years have passed since the current rules were adopted, so we feel it is time to take another look at this issue to make sure the compensation and the legislation are appropriate.” The chair of the working group will be selected by the provincial government and is expected to hand in a final report within six months. ●
December/January 2011
Attendant phone care not the same as custodial care Attendant care provided over the phone is becoming increasingly common, but this is not the same level of care as custodial care, cautions Phillipa Samworth, partner at Dutton Brock. “This is what I call ‘phone sex’ attendant care,” she said, speaking at a seminar hosted by the rehab firm VPI on Nov. 5. “You know how instead of having sex with your spouse, you can get it over the phone — the spouse doesn’t have to be there — and maybe it gets the same result and maybe it doesn’t. Well, this is the same thing; you get attendant care by phone,” she added. Phone attendant care is used in situations in which there might be a safety issue related to leaving someone alone for a long time, but the person could be left alone for short periods of time, Samworth said. The claimant would simply need a safety net — someone to call — in the event they needed advice or direction. Because there is never a guarantee as to when this emergency might pop up, the person providing the care needs to be accessible by phone 24 hours a day, even if they are working at another job for 18 of those, she added. But this phone attendant care is being used in instances in which an individual might require custodial care due to changes in behaviour, but is able to respond on their own in the event of an emergency, Samworth pointed out. Custodial care is intended to be one-on-one access, not access to a phone. “I am trying to raise awareness about this, because I see it as a growing area,” she said. “If we are going to interpret the Form 1 as saying that phone care for 24 hours is custodial care — one on one — for these individuals, I think we have a real problem.” ●
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Knowing a property’s real value is a wise preparedness measure. When it comes to the competitive nature of today’s insurance marketplace, handling claims with speed and efficiency is essential to your success. Start by having the most accurate information on a property’s real value. AIC experts will make sure you have the information you need to react quickly when disaster strikes. Make a real property expert - an AACI or CRA - part of your team today. Visit www.aicanada.ca
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• first notice FN Ontario’s loss transfer rules can apply to accidents, insurers outside Canada: Appeal Court Ontario’s loss transfer rules can apply to an insurer with operations in the United States in relation to a loss that occurred in the United States, Ontario’s Court of Appeal has ruled in a brief endorsement. In Primmum Insurance Company and Allstate Insurance Company, a resident of Ontario was injured in a car accident while driving in North Carolina. Primmum, an Ontario insurer, paid his statutory accident benefits as required under the standard auto insurance policy. The other driver was at fault and was insured by Allstate under a policy issued in North Carolina. Under the Ontario Insurance Act’s rules of loss transfer, Primmum served Allstate with notices to participate in arbitration. Allstate refused to comply with the notices on the ground that it was not an Ontario insurer and the accident did not occur in Ontario. Allstate argued Ontario’s loss transfer scheme did not apply to it. In its decision, the Ontario Court of Appeal cited the Supreme Court of Canada’s 2003 decision in Unifund Insurance Company of Canada v. Insurance Company of British Columbia. In Unifund, the Supreme Court noted: “Section 275(4) of
the Ontario Act provides that disputes about indemnification are to be resolved by arbitration, pursuant to the Ontario Arbitration Act… There is no doubt that if the appellant were an Ontario insurer, it would be required to arbitrate Unifund’s claim.” “Allstate is an Ontario insurer,” the Ontario Court of Appeal ruled. “Accordingly, it must arbitrate Primmum’s claim.” ●
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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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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 MARY CHARMAN As you can see from the cover feature of this issue, the advancement of modern technology is making it increasingly difficult to separate one’s personal life from one’s professional life. The good news is, it is actually not that complicated to have a work/life balance — no matter what the profession. Establishing priorities is key. Many leading organizations recognize that workers who are healthier and more balanced are better for the company’s productivity and long-term success. According to some estimates, work/life imbalance costs Canadian businesses $12 billion every year in health claims, lost productivity and absenteeism. I applaud those members who have found it, and wish all members and industry partners a better work/life balance in 2011 — consider it an investment well worth the effort! Since my last message I had the pleasure of attending the Toronto Insurance Conference’s 55th Annual Black Tie Dinner. Guest speaker, Lorne Rubenstein, award winning golf writer and columnist for The Globe and Mail, very cleverly applied the strategies of a game of golf, to the risk management of the insurance industry. I enjoyed meeting the broker members of this vital organization and congratulate them on hosting an extremely successful event. As part of CIAA’s continued commitment to industry collaboration, the creation of a National Advisory Board comprised of leading claim’s professionals will further build mutual trust and confidence through effective consultation on a regular basis. Strong momentum is growing as this new forum offers significant advantages for both groups and provides the opportunity to promote and differentiate CIAA’s membership with insurers securing a steady supply of competent loss adjusting service for them in the future. CIAA is proud to provide the insurance industry with the latest edition of the CIAA/ACEI National Claims Manual. The quality of information contained within and the ease of reference to CIAA members across the country make this a valuable reference tool. CIAA members demonstrate their commitment to professionalism in their declaration to abide by the association’s strict code of ethics and are well equipped to facilitate those requiring their services in all areas of the country. The positive response and regular requests for additional copies confirms the insurance industry appreciates and values our 10
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Comme vous pouvez le constater dans l’article principal de ce numéro, les progrès de la technologie moderne rendent de plus en plus difficile la nécessité de séparer notre vie privée de notre vie professionnelle. La bonne nouvelle est, qu’en fait, ce n’est vraiment pas compliqué de créer un équilibre entre ces deux aspects de notre vie, quelle que soit notre profession. L’essentiel, est d’établir des priorités. De nombreux organismes de premier plan admettent que des employés en meilleure santé et mieux équilibrés sont un atout pour la productivité et le succès à long terme de leur entreprise. Selon certaines estimations, le déséquilibre entre la vie professionnelle et la vie privée, fait que les entreprises canadiennes subissent chaque année des pertes de douze milliards de dollars par les problèmes de santé, la baisse de la productivité et l’absentéisme. Je félicite les membres qui ont trouvé cet équilibre et je souhaite à la totalité de nos adhérents et partenaires de l’industrie d’y parvenir en 2011. C’est un investissement qui en vaut la peine! Depuis mon dernier message, j’ai eu le plaisir d’assister au 55e banquet annuel de la Toronto Insurance Conference. Le conférencier invité, Lorne Rubenstein, auteur primé et chroniqueur de golf du Globe and Mail, a intelligemment appliqué les stratégies d’une partie de golf à la gestion de risques de l’industrie de l’assurance. J’ai aussi rencontré les courtiers de cette organisation indispensable et les ai félicités pour la bonne organisation de ce remarquable événement. L’engagement de l’ACEI de collaborer avec l’industrie a permis de former un Conseil consultatif national, composé de professionnels importants du secteur des sinistres. Ces consultations efficaces et régulières permettront d’accroître la confiance mutuelle. L’évolution de nos relations prend de l’ampleur parce que ce nouveau forum offre d’immenses avantages aux deux groupes et fournit l’occasion de promouvoir et de différencier les membres de l’ACEI auprès des assureurs qui peuvent ainsi compter sur un apport constant de services de règlement de sinistres pour l’avenir. L’ACEI est fière d’offrir à l’industrie de l’assurance un nouveau numéro du CIAA/ACEI National Claims Manual. La qualité de l’information et les liens facilement accessibles avec les membres de l’ACEI de tout le pays qu’il contient, en font un précieux outil de référence. Les membres de l’ACEI témoignent de leur engagement professionnel en s’engageant à respecter le stricte code d’éthique de l’association et sont à même de simplifier la tâche de ceux qui ont besoin de leurs services partout www.claimscanada.ca
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publication. All claim’s personnel will benefit by having a copy of the 2011 CIAA National Claims Manual close at hand. This year marks the 44th anniversary for CICMA/CIAA Ontario Chapters’ Annual Joint Conference. Similar meetings occur throughout the year in several regions across the country and have fittingly gained industry-wide recognition as highly regarded events, reinforcing the importance of “united and committed leadership through education, professionalism and communication.” I look forward to attending all of the joint conferences during my term as president and sincerely thank the CIAA and CICMA members for their dedication, commitment and shared efforts in providing this forum to address and educate us on current and timely issues affecting our industry. CIAA’s members are dedicated to the preservation and advancement of the independent loss adjusting profession and it is through their membership the association continues to be in the forefront of our industry. All the very best for a collective, healthy and prosperous 2011! ■
au pays. L’accueil favorable et les demandes d’exemplaires supplémentaires qui nous sont régulièrement adressées prouvent que l’industrie de l’assurance aime et apprécie notre publication. Toutes les personnes qui travaillent dans le domaine des sinistres tireront profit du fait qu’ils peuvent toujours avoir un exemplaire du 2011 CIAA National Claims Manual sous la main. Cette année marquera le 44e anniversaire de la conférence conjointe annuelle ACDSA/ACEI du chapitre de l’Ontario. De réunions semblables se tiennent au cours de l’année dans plusieurs régions du pays et sont considérées, à juste titre, comme d’importants événements par l’ensemble de l’industrie. Elles soulignent l’importance ‘d’un leadership uni et engagé par la formation, le professionnalisme et la communication.’ Je me propose d’assister à toutes les conférences conjointes au cours de mon mandat présidentiel et remercie sincèrement les membres de l’ACEI et de l’ACDSA pour leur dévouement, leur engagement et leurs efforts conjoints qui ont permis de créer ce forum qui nous informe sur les questions courantes et pertinentes touchant notre industrie. Les membres de l’ACEI se dévouent pour le maintien et l’avancement de la profession d’experts en sinistres indépendants et c’est grâce à eux que l’association continue d’être à l’avant-garde de notre industrie. Tous mes meilleurs vœux pour une année 2011 solidaire, vigoureuse et prospère! ■ Translation provided by Henry Arcache, Themis Translations
NATIONAL EXECUTIVE 2010 – 2011 PRESIDENT 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
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 E-mail: marie.gallagher@mclarens.ca
1ST 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
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 E-mail: Randy.Labrash@crawco.ca
2ND VICE-PRESIDENT Delores Thorbourne, BA, FCIP McLarens Canada Suite 103 Greystone VII 4208 - 97 Street Edmonton, AB T6E 5Z9 Phone: (780) 442-3077 Fax: (780) 466-0325 E-mail: delores.thorbourne@mclarens.ca
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PAST-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 E-mail: pkernaghan@kernaghan.com
EXECUTIVE DIRECTOR Patricia M. Battle Canadian Independent Adjusters’ Association/ L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Avenue West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 E-mail: pbattle@ciaa-adjusters.ca
DIRECTOR David Porter, LL.B., FCIP, CRM Advance Claims Service Ltd. 206 - 2323 Boundary Road Vancouver, BC V5M 4V8 Phone: (604) 642-0660 Fax: 1-888-452-5246 E-mail: davidp@advanceclaims.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 E-mail: john.jones@mclarens.ca
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• cover story CS
ADJUSTING FOR
TECHNOLOGY BY LAURA KUPCIS
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With every new advancement in technology comes both positives and negatives. Do the benefits outweigh the drawbacks for independent adjusters?
C
onstantly changing technology is intended to speed up processes, allow for mobile workflow and improve communication. Sometimes, however, changing technology is simply more trouble than it’s worth. As independent adjusters constantly strive to increase their productivity, technology can play a pivotal role in offering a high level of customer service. Adjusters are now able, for example, to head out on the road while maintaining a continuous connection to the home office, the client and the claimant. Laptops, smart phones, mobile internet sticks and digital cameras have created a claims environment in which adjusters are able to receive a claim, head out to visit the claimant, gather all the required information, upload and send it off to both the adjuster’s head office and to the client — all without having to go back to head office. Some might bemoan the fact that technology keeps them tied to the office 24-7. But many concede it allows them to be more productive in the long run. So while there are downsides — frequently being online, always being reachable and perpetually learning new software — there are also positives, such as being able to get work done from various corners of the country. This is a definite advantage to independent adjusters — a business that is frequently commission-based, says Evan Morgan, director of information technology at McLarens Canada. There have been certain advances in technology that, while they aren’t automatically a hindrance, don’t necessarily add value or provide much (if any) return on investment. Sometimes they can contribute to addition-
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al costs for an independent adjustment firm, especially when client insurers request adjusting firms to use various different technologies while handling claims on their behalf. The firms will agree, since the various technologies benefit their insurer clients in one way or another, but it’s an additional expense for the adjusting firm’s to have to maintain multiple technology solutions.
Bill review software Bill review software does not necessarily detract from the adjuster’s ability to do his or her job, but it does add to the overhead at the independent adjuster’s back office, Morgan says. Larger insurance carriers are looking for ways to outsource business that is not part of its core underwriting. Instead of having staff on site to review invoices from vendors, such as lawyers and independent adjusters, they are using bill review software. Instead of having staff in-house to go through invoices from independent adjusters to ensure everything is above-board, as well as handling the negotiation of charges, some insurance companies have chosen to automate the entire process. This means that, when dealing with certain insurance companies, independent adjusters now submit their invoice in electronic form to a third-party bill review provider, where the bills are reviewed and potentially flagged for follow-up. The intent is to save the insurance company both time and resources. Unfortunately, this doesn’t translate to the same benefit to independents. Some adjusting companies have had to revamp their entire internal processes with respect to how invoices are processed due to the implemen-
tation of a third party bill review system. This results in added costs to support the technology. By most definitions, technology should be allowing companies to reduce costs, but unfortunately, this isn’t always the case. Plant Hope Adjusters paid a software developer to come in and integrate Allegiant — a third party bill review system — into their existing billing system to ensure a seamless transition. It was not simply a matter of replacing the existing system with a new one, because not all insurance companies are using Allegiant. “All the information still goes into the system the same way,” says Fred Plant, president of Plant Hope Adjusters. “But the software we developed weeds it out and separates it from one customer to another or for one type of billing system — Allegiant — to the other type of billing system, which is everybody else. In addition [to developing a new internal system], every time we process an invoice on the Allegiant system, it takes us upwards of a half hour to revise and ensure — in spite of all the money we spent on this system up front — that it meets that insurer’s criteria so that Allegiant will accept it. And that’s a very costly thing for us.” Adding complexity to the problem, the software was originally created for lawyers, not independent adjusters. In the adjusting area, there are no universal standards for invoicing, data components and structure. Part of the premise of the third party bill review system is to provide a centralized process in addition to clear and measurable standards and service agreements with clients. The system is intended to make it easier to invoice clients in the way in which
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they expect, and with the level of detail they seek, which can reduce a lot of issues on the back end. One of the biggest advantage for some adjusting companies is the reduction in time spent chasing accounts receivables for customers who process invoices through a third party bill review system.
Estimating software Independent adjusters are also being asked to use construction estimating software when working on a property claim. Adopting a single inhouse solution can be tricky: a few different packages are available, and different insurers are using different products. This means independent adjusters must purchase and become proficient in multiple estimating software programs. Although these programs perform substantially the same functions, they are different products, with different training requirements, Morgan says. “Independents need to be able to interact with and use any system your
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[insurer] clients are using,” says Pat Van Bakel, senior vice president operations with Crawford & Company (Canada) Inc. “There’s no industry standard for the systems to support claims. That’s probably the biggest challenge, being a master of all the different applications and technologies.” Because there are licensing costs for each program — and subsequently for each computer and user — independent adjusting companies must determine whether to equip some of their staff with one of the programs and others with another program. Or alternatively, is every adjuster equipped with all of the different available softwares? “The [estimating software] requires individual licenses for each computer no matter how much you use it,” Plant says. “To get all of the training necessary to use that program, and then to buy all the licenses when you’re working — particularly if you are working on an all-inclusive hourly rate — there’s no way to recover all of that expense,” Plant says. “These things are very expensive.”
In a way, there may not be that much of a choice for independent adjusters. Construction estimating software has made its way into the daily function of a lot of insurance companies with respect to property claims. Thus, in order for independent adjusters to handle the claims (recognizing that contractors are using the software to prepare their estimates), independent adjusters must also have and be trained on these programs. “No insurer came to us and said, ‘You have to buy this program and if you don’t buy it, we’re not giving you any more claims’,” Plant says. “It’s just because it’s become so common to communicate and evaluate property losses in this way, we needed to go get it (estimating software). Really, we didn’t have a choice.” The tools are valuable and they allow an adjuster to increase productivity, Morgan says. “But, if we must roll out multiple competing technologies, the advantages can quickly diminish.” That said, if the kinks can be worked out, Morgan is confident esti-
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mating software is of benefit to independent adjusters. There doesn’t appear to be any consensus as to whether these new technologies help or hinder independent adjusters. Those who embrace the new technology say it helps, both in terms of creating a more professional product and meeting the needs and expectations of the client. “The software allows them to really function as a seamless extension of the client, because in reality, that’s what the clients are asking independents to do — to be virtually an extension of their claims department,” Van Bakel says. For others, embracing new technology is tough. This is because learning new software processes does not come easy. “That’s probably the biggest impact from an adjuster perspective,” Van Bakel says. “If you are adept at learning and embracing new technologies, then you’re enjoying all of this and find it very stimulating. If you are not, and you don’t embrace new technologies very well, then this
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can be all very frustrating and discouraging to some who feel that they can’t keep up. This is consistent with society in general” Bea Boutcher, manager of Horizon Adjusters Ltd., says she’s at a point where her office could really use estimating software, even though the company hasn’t received any external requests to start using it. For her, the value comes not only as a means to do estimating, but also because she has heard the program includes accurate content valuation (ACV). “I thought it would be great if I have a program that I can plug in my contents and it’s going to apply the average depreciation for its age,” Boutcher said. “That would be fantastic to have.” Another advantage arises when two contractors are competing for business on the same loss. If they are both using the same construction estimating software, the information obtained is in the same language, which is beneficial to making a decision, Plant says.
But for all of its potential advantages, the estimating software — like any software, really — is only as good as the user, says Greg Merrithew, owner of Arctic West Adjusters. “The challenge that I have with [estimating software] is the way it is set up,” he says. “Individuals can use it by basically inserting information and then accepting the results that come out the other end, without any human common sense factor attached to it. [Estimating software] may not be a bad tool, but it seems (sometimes) to be inappropriately applied by individuals that don’t have the knowledge and expertise in that field.” The tools are easy to learn, he adds. It’s easy for a user to input some data and achieve some results. The challenge comes when someone who is not well-versed in construction or renovation techniques walks onto a site, inputs the requested data into the software system and out pops a dollar value for renovation, repair or retrofitting. Based on that number alone, “they can’t tell . . . whether items can
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be effectively cleaned, repaired, dehumidified and brought back to original condition, short of removal and replacement,” Merrithew says. This challenge is more pronounced in situations in which there is a large loss, such as a large flood area or significant sewer backup. “Individual firms can run around and use these programs to come up with results very quickly, with no thought as to the individual or the individual situation,” Merrithew says. “They can punch stuff in and come out with a result and do a neighbourhood very quickly.” But it takes much more effort to look at the individual items, ensuring the work is completed at a price substantially lower than it would be for removal and replacement. Also, there is a potential price discrepancy between what the software calculates and the actual cost of labour and materials in smaller communities or outer lying or remote areas. Sometimes additional costs due to travel, weather or unexpected repairs are not
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factored into the estimating software, but these are things independent adjusters and contractors know to take into consideration. “Garbage in means garbage out,” Plant says. “Our job as independent adjusters is to verify verify and verify. If you take away the verification aspect of what we do, then you’re not really left with us adding much value to a file, which is unfortunate.”
Web-based management systems Independent adjusters have sought out other software advances, such as web-based management systems, in a move to advance internal operations. For example, the Canadian Independent Adjusters’ Association set up a partnership with KLJ Solutions to offer Venue to member firms (see Claims Canada October/November issue for more information). Merrithew’s firm served as the test base for the CIAA model of the software. After using the program for a few years and
modifying the program to serve the needs of independent adjusters, the software was rolled out this past summer. “I have found the web-based management system has been just absolutely wonderful to use in the presentation of my claims data to my clients, number one,” Merrithew says. “Number two is the ability of my staff to actively manage on an electronic platform all information we acquire in the course of handling a claim. It’s absolutely first class.” The software allows the user to input any information obtained during the handling of a claim into an electronic format on one platform. Since Venue is web-based, adjusters can still access the system and all the data associated with their claims while on the road — an essential component at Merrithew’s firm, where the adjusters cover three million square kilometers of territory. This has significantly boosted efficiency internally. Additionally, clients are able to access their claims on the system. They are able to view data; they can even use it as a research tool, exploring such things as losses for the past year, five years, etc. Allowing clients to view their files online was a key reason why Boutcher decided to switch her claims system over to Venue. She also enjoys the option of being able to go online and manage claims while she and other adjusters in her office are on the road. “A web-based management system is a significant asset to any independent adjusters office of my size, because realistically (larger national firms) have their own proprietary web-based management systems,” Merrithew said. “But now it’s available to the little guy through KLJ.”
Internal technologies Insurance companies are upgrading their own internal technologies, with new claims systems and/or analytic systems allowing for more accurate writing of policies. New software systems available to the insurance industry are continuously looking for and requiring more information from 16
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users. This includes data elements that need to be inputted into a computer model. These data elements cannot be embedded in an adjuster’s report, but must be entered in a format that is recognized by the system. “We’re seeing more of that, where the adjuster, as part of his or her investigation, is being asked to code specific data elements and it varies by client,” Morgan says. Adjusters are rolling with the punches, changing their internal models to follow suit. Once an adjuster needed simply to file a report or a file update; now, insurers are requesting additional data and tasks — all of which must be done within a certain time frame. Little thought has been given to how independents should be charging for the increase in workload or for the additional costs associated with investing in required software. Increased reliance on third-party software and the short time frame allotted for turning around a claim means independent adjusters should continuously improve their own internal technologies. Independent firms need to ensure their systems are capable of handling the needs of the clients. This requires a substantial amount of flexibility, since each client’s needs are different. Mobility is without a doubt the current wave, Morgan says. “Anything we can do to get an adjuster productive from anywhere is going to make their lives a little easier.” This includes ‘next generation’ tablet devices such as the iPad, the Galaxy or the PlayBook. The key to the success of this next generation of tablets will be software, both the availability of software created specifically for the tablet and the device’s ability to handle third-party software. One national independent adjusting firm, Crawford & Company (Canada) Inc., has been using tablets for a few years now. These are laptop computers where the screen can be turned around and folded down so it’s similar to a notepad. Adjusters can then make notes with a pen tool, fill out forms, obtain customer signa18
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tures, etc. The device can also be used as a regular laptop. By having multiple ways of capturing data, adjusters are able to reduce time spent on site and eliminate replication of data. Information obtained during the initial call to the insurance company is attainable on the tablet. So when adjusters arrive on site, instead of reviewing and obtaining all of the information already supplied to the insurance
There is a significant cost associated with the continuous upgrading of technology. The bill can add up quickly when each insurer client requires a different software platform or piece of hardware, in addition to the evolving governance requirements for items like disaster recovery and business continuity now seen in most contracts. company, they are able to deal with the key elements that require onsite attention, discussion or review. The tables are completely mobile, both in terms of portability and access to the Internet. This means information can
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automatically be uploaded and a report created and sent to a client, Van Bakel says. The company intends to use the current laptop-style tablets until the end of their lifecycle. Afterwards, the company will replace them with the next generation of tablets, which will most likely be even more lightweight, portable, efficient and demonstrate increased functionality, Van Bakel adds. Crucial to portability is device consolidation. New devices are beneficial and often lead to increased productivity and ease of workflow. But there is no advantage to new technology if an adjuster is thereby forced to haul around a suitcase filled to the brim with electronic gear. Already, smart phones have an application for dictation, reducing the need for a digital dictation machine on site. Ideally, a future device would be available that can take high-resolution pictures, record statements, send email, allow for scoping of damages and note-taking, etc., reducing the amount of luggage an adjuster needs to bring to the scene, Morgan says. New tablet devices have the potential to deliver this consolidated functionality. Furthermore, as the cost of mobile service — mobile Internet, email and calling — becomes increasingly more affordable, it becomes more feasible for companies to keep adjusters on the road. “The key is to ensure that anything we roll out internally to increase our productivity ties in as closely as possible with what the client is asking us to do,” Morgan says. “We need to be careful that any new software tool we implement is flexible enough that we can use it across our lines of business.” Morgan said productivity software is currently in vogue. “Our major 2011 initiative is to provide our adjusters with a new piece of claims software that will enable them to increase productivity,” he says. “From an I.T. standpoint, my goal is to provide staff with flexible information tools — making sure they can easily manage their claim files and deliver www.claimscanada.ca
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measurable performance— so that at the end of the day, we are delivering the high standards of quality our clients are seeking.” Technology is continuously changing, so it can be tough to determine which new piece is essential to improve business functionality and which one is simply a jazzed-up piece of existing technology. It is common to get caught up in thinking one must have the latest piece of technology. However, not only is this an expensive proposition, it means taking more time to learn how to use the new device, which means time taken away from adjusting claims, says Richard Swierczynski, owner of AZ Claims. New technology also comes with location issues, Plant says. Tablets and mobile internet sticks are valuable in certain areas, but they don’t work as well in remote locations, where there is no wireless Internet or cell tower signal for the rocket stick. That said, adjusters must stay on top of technology trends. “We’re in
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the business of moving information, and it’s very important for independent adjusters to have the latest technology available to them,” Plant says. “It’s a requirement to move information in the way that the customer wants it.”
Challenges and costs There is a significant cost associated with the continuous upgrading of technology. The bill can add up quickly when each insurer client requires a different software platform or piece of hardware, in addition to the evolving governance requirements for items like disaster recovery and business continuity now seen in most contracts. “Each year we spend literally millions of dollars in technology infrastructure, services and software to enable us to stay competitive in the marketplace,” Van Bakel says. “These expenditures have simply become the costs of doing business, and we have likely only seen the thin edge of the wedge on this issue
as new and innovative technologies continue to emerge at unprecedented rates. We used to talk about technology cycles in terms of generations, and then decades, but we are now talking rapid changes in one or two year cycles.” For the adjuster, Van Bakel adds, the affordability or return on investment of technology is based on whether it improves quality and customer service, improves operational efficiency and effectiveness and satisfies the stringent requirements of our clients. The whole purpose for insurers to outsource these processes to independent adjusters is because adjusters can supposedly do the job better with superior technology, Morgan says. “So the challenge for the independent is that we’re at the mercy of 200 different clients,” he says. “All of these technologies present opportunities for us to enhance efficiency, but we’re a bit at the mercy of what our clients are choosing and they are not always the same.”
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• spotlight S
Different Days At BBCG Claim Services Ltd. no two days are ever the same. BY LAURA KUPCIS
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hen the staff at BBCG Claim Services Ltd. arrive at work every morning, they have no idea what they are going to be building or where they will be building it. Handling bond claims means that no two days — or two projects — are the same. BBCG specializes in both fidelity and construction bonds. The two have basically the same premise — to guarantee performance. A fidelity bond guarantees the performance of an employee to an employer. If there is employee theft or fraud, the employer is able to make a claim under the bond. BBCG is retained in this instance to investigate and validate the claim and subsequently make recoveries from the employee or others involved. A construction bond can be split into two categories: performance and labour material payment. The former
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guarantees that the contractor who is bonded will finish the contract, while the latter guarantees the contractor’s contract creditors will be paid. In the event of a default the adjusters at BBCG will have to find a contractor to finish building the project — which could be anything from a high rise to a golf course to a sewage plant, and anywhere in the world.
Been around the world When a contractor fails, he usually has a number of jobs on the go. In one instance, BBCG handled a case where when the contractor defaulted he had 104 construction projects in four countries: Canada, the United States, Iceland and Egypt. A total of 60 of these needed to be completed — and every one of them had come to a complete stop. With only eight adjusters, the goal of completion should seem daunting — but for the adjusters at BBCG this
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challenge proved motivational. For six months, the staff worked seven days a week, 15 hours a day to ensure that all 60 projects were completed and the losses kept to a minimum. “This is the strength of the company here — the teamwork,” says Ted Baker, cofounder of BBCG. “In our company’s history, we’ve had projects in every province and every territory,” Baker says. “We’ve built things from fishing boats to submarines, radar installations in the Arctic to high schools. You name it, we’ve built it.” With respect to fidelity claims, the company averages a new claim every single day of the year, somewhere in Canada. The average loss has risen exponentially to roughly half a million dollars — in all types of industries. There are the one-offs, of course, the big shock losses than can reach $500 million. Baker surmises that BBCG
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adjusts the majority of the fidelity and surety claims farmed out to adjusters in Canada.
The founding fathers This niche market is something the four founders of the firm — Baker, Luc Bertrand, Edouard Chassé and Arthur Goguen — are extremely proud of. Together for 25 years as co-workers — “longer than most marriages,” Baker jokes — and running a firm together for the last 13 years, the adjusters still love working with each other. The company was launched in 1997 by the four founding partners. Since that time, the “old farts” as Baker calls them, have been joined by some younger adjusters as a means to pass on the legacy. “We have some excellent younger people who have developed the same skill sets and are learning from us old guys,” Baker says. “This puts our company in a great position going forward, because we’ve got the strength of the people that have built it, followed by a much younger group.” In fact, the bond is so strong that there is no turnover. “Once you’re in here doing this work, you can’t get out,” Baker says. “They don’t want to go, because it’s fun. It allows for a great deal of ingenuity and original thought.” BBCG has three offices: the head office in Mississauga, Ont. and two satellite offices in Burnaby, B.C. and Laval, Que. The four founding partners are based out of Mississauga, along with Trevor Grzybowski, adjuster, the company’s forensic and general accountant, Bill Foster, and support staff, Rosemary Cordina and Anna Pietrantonio. In Laval, Michel Prud’homme and Luc-André Girard are both adjusters, with Maria Stott serving as support staff. In Burnaby, Jamie O’Connor is a chartered accountant and adjuster and Sonya Polowy is the office’s support staff. This office could use a second adjuster, Baker says. Training and tracking The reason that clients continue to
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hire BBCG is because the adjusters have handled so many claims — they have the experience and the know-how to work through a claim and problem solve through the issues. “We work together as a team on a lot of our files,” Baker says. “We are able to pass the work among us and the client can expect the same level of expertise at a consistent level.” And in order to keep up their level of expertise, the adjusters at BBCG are
“This puts our company in a great position going forward, because we’ve got the strength of the people that have built it, followed by a much younger group.” routinely travelling to other countries to take courses, which are tailored to the business of bond claims. “It’s expensive, but education for us is key,” Baker says. Unfortunately, there are no available courses closer to home. In an effort to fill this void, Baker and the other adjusters provide seminars to others within the insurance industry. To further benefit the industry, BBCG, because they have access to the information, keep, on an anonymous basis, statistics on fidelity claims and the various types of claims being filed. Information including what type of industry is seeing a loss, how long the fraud was going on before being discovered, how much was lost, how the loss was discovered, and so forth. Through this data, BBCG has noticed a trend: More than 20 per cent of all the insureds reporting a claim are underinsured — a trend of utmost importance to insurance buyers and brokers.
Other avenues Another area of practice is BBCG’S trade credit group who have been han-
dling buyer defaults from around the world since BBCG was formed. Although a trade credit policy is very different from a surety or fidelity bond, the required adjusting skill sets are similar and complimentary. This group has experienced a spike in business following the 2008 financial meltdown. As expected both domestic and foreign insolvency claims went through the roof. In addition to the regular volume of trade credit claims BBCG has been helping clients deal with their significant overflow of claims normally handled in-house. Baker notes “the industry appreciates the available expertise we can apply at a moment’s notice”. Also applying the same skill set, BBCG investigates and adjusts a variety of E&O and D&O claims across the country. BBCG is also anticipating an increase in the volume of construction claims as the government infrastructure money comes to an end. Businesses that did not have to compete for work before will have to going forward, resulting in a higher incident of claims. “When the surety industry experiences this type of recession, it’s all or nothing,” Baker says. “It affects everybody the same, so we can expect an increase in volume.”
Going forward But as long as the adjusters at BBCG can find time to communicate with one another — the biggest challenge in a company where a workday can be 15 hours — they can get through anything. Most of them have a stake in the success of the company as they are shareholders — each one of them a partner in the company. “It makes us a happier clan,” Baker says. “It is also very useful for making us pay attention to the bottom line. When you have a stake in your business, you perform. A sense of ownership equates to a sense of pride in your business. “We are all hard workers and we are all very proud of our work and that’s what sells us to the client.”
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The Appraisal Process BY GLENN GIBSON
The vast majority of policyholders are satisfied with the settlement of their property claims. But some claims get derailed for a variety of reasons. The appraisal feature of the policy provides a terrific mechanism to resolve disputed matters with a quick, cost-effective solution. It was a cold and miserable night when a small electrical fire broke out at 2 a.m. within a large hotel complex in a rural Ontario town. The fire department was still pouring water on the building when the media began airing news of the fire. Within minutes of the news getting out, public adjusting firms from the United States and Canada were on the phone trying to establish contact with the building owner. All this activity was underway before the building owner had even initiated a phone call to his insurance company to report a claim. By 11 a.m., sales representatives from the public adjusting firms arrived on the site. They quickly found the owner, who was speaking to the fire chief. They took turns speaking privately with the owner, explained their roles in a polished, professional fashion. They presented brochures that included testimonials from happy, satisfied clients who felt they had made the right choice in hiring a public adjuster to 22
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represent to their best interests with the insurance company loss adjuster. They also provided copies of newspaper clippings highlighting some situations where people had been treated badly by insurers. At noon, the independent adjuster hired by the owner’s insurance company arrived on scene. He found the owner to be anxious, upset and confused. Within minutes the owner asked the adjuster when he could expect an advance payment. The adjuster tried to explain that he had just arrived and he needed to orchestrate a site investigation to determine the cause of the fire. He tried to explain the process he would follow to begin handling the claim, but the owner seemed to be getting more upset by each comment he was making. Eventually, the hotel owner excused himself and phoned his lawyer, who had no experience handling a fire claim. The owner decided he needed to protect his investment in the hotel and made the decision to call one of the public adjusting firms. This initial phone call led to a meeting later that afternoon, where the hotel
December/January 2011
owner negotiated his deal with the public adjuster. He agreed to pay five per cent of the gross amount paid on the building loss; 10 per cent of the contents claim and 15 per cent of the business interruption loss. The agreement signed by the insured gave a direction to have his insurer add the public adjusting firm as a “loss payee” on all settlement cheques issued. As soon as the engagement contract was signed, the public adjuster emailed a letter to the insurance company and the independent adjuster. A demand was made for blank proof of loss forms and an immediate advance payment. References were made by the public adjuster on the insurer’s obligation to act in good faith. Within 24-hours of being engaged, the public adjuster brought in a construction estimator — a full-time employee of their firm. This estimator pegged the building repairs at $900,000. A second employee of the public adjusting company worked on a parallel path to catalogue the damaged contents of the hotel. This estimator concluded that everything was destroyed. A contents www.claimscanada.ca
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claim of $500,000 was determined. The last damage item was the business interruption claim. These were early days so the public adjuster advanced his best estimate on this part of the loss. This early work of the public adjuster led to the filing of a proof of loss with the insurer that totalled more than $1.7 million. The insurer’s loss adjuster was also taking steps to determine the amount of loss. He engaged a structural engineer, chemist and several experienced general contractors to work up with him in determining a scope of damage and arrange for competitive pricing. The hotel owner and his public adjuster were invited to be part of this process, but they refused to participate. The insurer’s process led to estimated building repairs of $600,000 and $100,000 for the contents loss. Without even considering the business interruption loss, both sides were already $700,000 apart on the direct property damage claim. As documents were exchanged by both sides it was obvious there were huge gaps between both sides and firm positions were now taking place. No steps had been taken to initiate repairs. The insurance company was aware of its obligation to act in good faith. They worked through the building and content claims and used their own numbers to determine what they felt was an appropriate actual cash value. The company immediately issued a cheque and sent the funds to the hotel owner with a lengthy letter that spelled out the terms of the Replacement Cost Endorsement on this policy, and waited for the policyholder’s next step. The insurer did not have to wait too long. A letter arrived from the public adjuster announcing that the hotel owner had elected to resolve the damage issues by invoking the Insurance Act of Ontario, R.S.O. 1990, c. 1.8, s. 128, and going to appraisal. This aligns with Statutory Condition #11 of an Ontario property policy. What happens now?
Section 128, The Insurance Act of Ontario, R.S.O. 1990 Under the Statutory Conditions of every property policy issued, both the insured and the insurance company 24
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have the right to elect appraisal when there is a disagreement as to: • The value of the property insured. • The value of the property saved. • The amount of the loss. To trigger the process, a proof of loss must have already been filed. A letter (notice) by either the policyholder or the insurer is all that is required to start the appraisal process. In this letter, the party making the demand would formally identify who will be acting as the appraiser in this process. The other party then has seven clear working days to appoint its chosen appraiser. Once both appraisers are appointed, the Act requires that within an addi-
?
Does the appraiser have strong advocacy skills? A subject matter expert in a certain discipline, such as a contractor or engineer, does not necessarily make them the best choice if he or she cannot argue a position well before an umpire. tional 15 days both sides must agree on a choice of an umpire. A judge can appoint an appraiser or an umpire, as the case may be. In a situation in which an insurer triggers this mechanism and the policyholder refuses to participate in the process, the insurer can petition the court to appoint an appraiser.
The selection process: Choosing an appraiser The insured can choose whomever he or she wishes to act as appraiser. Some policyholders have acted on their own behalf. Others have elected to use a relative, contractor, public adjuster or lawyer. The insurer can also choose anyone it desires as an appraiser. When choosing an appraiser, an insurer should consider:
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• Whether the appraiser has the knowledge, experience and skill to deal with the issues in dispute. How many cases has the appraiser handled and what issues has he or she dealt with? Does the appraiser have any references? What umpires have heard his or her cases in the past? Has the appraiser ever acted as an umpire or instructor? Has he or she taken any training courses, including classes on mediation or arbitration? • Does the appraiser have strong advocacy skills? A subject matter expert in a certain discipline, such as a contractor or engineer, does not necessarily make them the best choice if he or she cannot argue a position well before an umpire. • The issues that need to be resolved. An example is an argument relating to the actual cash value (ACV) of a building loss. The insurer might believe that a market value approach would be best and may consider hiring a real estate appraiser to argue that point of view. But can this appraiser articulate the case law relating to this approach? Where might other arguments come into play relating to policy endorsements or exclusions? • The appraiser for the policyholder. Determining his or her competencies will allow the insurer to match strength with strength. The insurer does not want to be outmatched on this front. • Which side triggered the appraisal process? Has the other side elected this process to remove or maneuver the insurer’s adjuster off the file? If this is the case, perhaps a new face in the process will resolve matters without going to the umpire. Never discount the potential impact a personality dispute might have in determining the amount of the loss. • Your appraiser’s knowledge of other issues that can come up during the appraisal session. Those issues include: • statutory conditions • proofs of loss • pre-judgment interest • G.S.T. / H.S.T • sales tax www.claimscanada.ca
Confidence.
Choose your repair partner with confidence. Enjoy complete peace-of-mind every time you recommend a CSN facility to your policyholders, knowing they will have a reliable and hassle-free repair experience. Have confidence that our highly qualified collision repair specialists, and our reputable facilities, will always deliver on the promise. It is a promise to provide an honest, quality repair that is built on confidence, trust and integrity. Your policyholders reap the benefit of a National Lifetime Warranty on all repairs thanks to our CSN network of leading collision repair facilities across the country.
Confidence. Trust. Integrity. www.csninc.ca
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• actual cash value • prescription periods • current case law When you consider the number of contractual and legal issues that can arise in the appraisal session, it makes sense to utilize an appraiser who has extensive knowledge of as many of the points listed above as possible. If the other appraiser is a lawyer or public adjuster, keep in mind his or her abilities to argue on all these points. The wrong choice of appraiser can obviously impact the outcome of the process. For example, in situations in which a general contractor was selected as appraiser for the insurer, the contractor did a fine job arguing scope and pricing. However, when the debate turned to issues of replacement cost and ACV, the contractor was not able to effectively argue the point of view of the insurer. Bear in mind that once either party elects appraisal, they lose the right to opt out and must comply with the process. If they fail to do so, then a judge will appoint an appraiser and, if necessary, an umpire.
Choosing an umpire If both appraisers reach an impasse in their efforts to resolve issues in dispute, they need to agree on a choice of an umpire. Generally, each side proposes several names and eventually they agree on one. If they fail to agree on anyone, then the matter is referred to a motion court judge, who hears evidence from each party and makes a decision on appointing an umpire. Choosing the right umpire to orchestrate a resolution is critical. Points to consider include: • The umpire should have experience in handling the appraisal process. • The umpire should be someone who has knowledge, skill and experience with respect to the issues for resolution. • The individual should be impartial and unbiased. If the umpire has any potential conflicts of interest, they should be declared up front. Both appraisers should be making an informed decision on their choice of umpire. • The umpire should be up-to-date 26
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with respect to current case law. • The umpire must be very clear on his or her role. The umpire is not conducting an arbitration nor hearing evidence in the fashion of a courtroom setting. The umpire must stay clear of orchestrating decisions that are more properly decided in a court of law. The umpire is present to bring his own experience and knowledge to bear on the issues in dispute. • At the end of the process, the umpire should strive to ensure that both sides felt they were treated fairly in the process and had appropriate opportunity to present their cases and argue their points of view. If the selection of an umpire goes to a motion court judge, both sides make
$
Once the appraisal mechanism is triggered, the policyholder and insurer are required to pay 100 per cent of their own appraisers’ costs. In addition, each side is required to pay 50 per cent of the umpire’s costs.
written submissions to the court. The judge hears arguments and then makes a decision. An example of this type of decision can be found in Trudeau vs. Royal Insurance Company . “The applicant’s concern is to avoid an umpire whose apparent affiliation or relationships to the other side would raise an apprehension of bias. Yet, it proposes 2 candidates who, it would appear from reading between the lines of the correspondence, could not be said to have acted for one of the parties. The failure to agree on what, by experience, appear to be capable candidates because of the fear or reasonable apprehension of bias leaves the Court with the option of appointing Mr. Gibson, whom, according to the evidence as being an umpire on many occa-
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sions involving appraisal issues. Mr. Gibson will therefore be named umpire … costs to the respondent’s payable forthwith all fixed at $500.” Further guidance on the selection of an umpire can also be found in McPeak v. Herald Insurance Co., Commercial Street Ltd. v. ING Insurance Co. et al, Matti v. Wawanesa Mutual Insurance Company. Several themes sound in these decisions: • Is there the potential for bias on the part of the umpire? Some umpires have worked in the insurance industry for years. The test is whether a reasonable apprehension of bias or partiality exists. Much like the process in qualifying an expert in court, each individual stands on his or her own merits in this regard. • Does the umpire have the right level of experience to deal with the specific issues at hand?
Costs Once the appraisal mechanism is triggered, the policyholder and insurer are required to pay 100 per cent of their own appraisers’ costs. In addition, each side is required to pay 50 per cent of the umpire’s costs. It is important that everyone understands early in the process the requirements for contributing to costs. Lawyers should also note that once this mechanism is triggered and they continue to act as appraisers for their clients, their costs to do so are borne by their clients. How the appraisal process works Appraisal starts with a request from either side to embark in the process. A simple letter triggers it. The letter usually includes the identity of one appraiser along with a demand to have the other side’s appraiser identified within seven days. A proof of loss form must be filed before an appraisal process can be triggered. There have been arguments from insurers that a valid proof of loss must exist before the process begins. The viewpoint is that all of the requirements of Statutory Condition #6 (Requirements of an Insured Following a Loss) must be met before a proof of loss can www.claimscanada.ca
Trust.
Quality workmanship, promised and guaranteed. The definition of trust is, a firm reliance on integrity, ability, or character. Trust us, we care. CSN Members offer service and quality workmanship that can be trusted. Our national reach starts with a local focus that cares about delivering a repair that is second to none. Trust a CSN repair facility to deliver on the promise to provide an honest, quality repair that is built on confidence, trust and integrity. Your policyholders reap the benefit of a National Lifetime Warranty on all repairs thanks to our CSN network of leading collision repair facilities across the country.
Confidence. Trust. Integrity. www.csninc.ca
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be deemed valid. When faced with what they feel might be non-compliance, an insurer might consider formally voicing their reservations and reserving their rights to move forward into appraisal. Then, they can involve the umpire to resolve issues regarding compliance with statutory conditions including the production of documents. Once appraisers have been elected, they move forward with the full authority of the respective principals to agree on the amount of loss in accordance with the terms of the Insurance Act. In the first meeting of both appraisers they identify issues in dispute. An effort should be made by the appraisers to try to resolve these issues. Each appraiser brings the authority to bind their principals to a settlement. There can be a degree of negotiating during this phase of the process. Some discussions may be held without prejudice so that if issues are not resolved, the appraisers can go back to square one in front of the umpire. If the two appraisers cannot come to full agreement on some issues, then the next step is involving an umpire. At this point, the umpire would ensure there has been an appropriate exchange of information and, if not, establish timelines for that to happen. Each umpire tends to have his or her own style in dealing with an appraisal meeting. No formal rules of conduct exist, but legal cases have supplied some guidelines. Many umpires will begin the process by requesting that each appraiser submit a document brief that could include: • a narrative setting out the issues in dispute and the appraiser’s opinions • insurance policy details; underwriting file if applicable • repair estimates, drawings or opinions • analytical charts comparing pricing • proofs of loss / payment list • photographs / videotape • engineering reports, if applicable • key correspondence, if applicable • any expert reports or opinions to support a point of view • relevant case law, articles or other material that might support a point of view. 28
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The appraisers should make an effort to agree beforehand on the submission of common documents to avoid duplications that might lead to an increase in costs. Some briefs are quite extensive, so the appraisers should make their submission easy to read and understand. The submissions should be made in duplicate to the umpire. To even the playing field, the umpire will ensure each side gets the other’s brief. In addition, any requests of the umpire should be made in writing, with a copy sent to the opposing side. No one should communicate one-on-one with the umpire; to eliminate surprises, both appraisers and the umpire should be dealing with the same information flow.
After opening remarks, many umpires take a mediation approach to resolving the issues. Both sides are given appropriate, uninterrupted time to present their arguments.
Disputes over the amount of loss might require the umpire to consider requests that one might not see in other ADR mechanisms, including completing a site inspection or attending a storage warehouse to inspect equipment, fixtures or other building contents. In advance of the appraisal session, appraisers should consider whether or not they wish to bring witnesses to the session. By consent of the umpire, others can be allowed into the session to provide information not evidence. This has included: • a contractor to discuss his scope of damage or clarify pricing issues • an engineer to elaborate on a report or to clarify a specific point
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• the original loss adjuster, who might assist the insurer’s appraiser in presenting a myriad of documents • lawyer representing the policyholder who wishes to be present to assist in the choice of appraiser • the policyholder to provide information on the claim that has been submitted. On these occasions, the policyholder has been allowed to speak and the umpire addressed questions on specific points, but the policyholder has not been subject to crossexamination. Allowing the policyholder to have his or her ”day in court” can help manage a successful outcome for this process. The umpire must strictly control who is allowed into the session and what input they have into the process. The only people with official status in this process are the two appraisers and the umpire. Each appraiser should feel comfortable the process is being handled in a fair and even-handed fashion. At the start of a session, the umpire will usually review how the session will be conducted. These opening remarks set out the ground rules for others that might be present as witnesses. After opening remarks, many umpires take a mediation approach to resolving the issues. Both sides are given appropriate, uninterrupted time to present their arguments. The umpire will then control a debate between both appraisers. For those familiar with mediation procedures, this is an interest-based approach. As the discussion unwinds, most umpires will then gradually move to a rights-based approach, in which the umpire will provide an opinion on the issues. The umpire’s opinions may stimulate further discussion to see if some common ground can be developed with everyone or with one of the two appraisers. The umpire must ensure the process stays within the limits of his or her authority and does not drift into areas that should be addressed by a court of law. For example, an appraiser for the insured might ask the umpire to agree some goods were destroyed in a fire. The appraiser for the insurer argues the goods were not in the premises destroyed. An umpire can drive the process to reach a conclusion as to the www.claimscanada.ca
Integrity.
CSN Members care about customer satisfaction. Rest easy knowing you’ve made a good decision. CSN Members pride themselves on genuine service and on the fact that they personally care about delivering a job second to none. The CSN network delivers on the promise to provide an honest, quality repair that is built on confidence, trust and integrity. Your policyholders reap the benefit of a National Lifetime Warranty on all repairs thanks to our CSN network of leading collision repair facilities across the country.
Confidence. Trust. Integrity. www.csninc.ca
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value of the loss, but cannot conclude whether the property was on the site when the fire happened. Any such conclusion has to be left to a court of law. While, an appraisal session is often concluded in one meeting, there are times where multiple meetings are required. The umpire also can adjourn the session while an appraiser develops and submits further documentation. Most appraisals cover many separate issues in dispute. The umpire might choose to try and settle the issues oneby-one. As each item is debated, there may be some situations where both appraisers and the umpire reach an agreement; the appraiser for the insurer and the umpire agree; or the appraiser for the policyholder and the umpire agree. When two out of three parties agree on an issue, it is deemed to be resolved. The Award Document can reflect either individual items or, by consent, the parties can use the issues they have resolved to arrive at a macro settlement number whereby at least two of the three agree on the figures. There is some flexibility in how this is completed.
Legal case review The Insurance Act of each province has similar wordings with respect to their Statutory Conditions. Interpretation of that wording has been subject of a number of legal cases across Canada that impact and define the process. This includes answers to a number of frequently asked questions: 1. What is the intent of appraisal? It is to encourage settlement and to expedite litigation by providing the trial judge with valuations based on the expertise of appraiser(s) and/or umpire. Shinkaruk Enterprises Ltd. v. Commonwealth Insurance Co. et al.; O’Brien et al v. Lloyds et al. 2. Does a proof of loss have to be filed before appraisal can be triggered? Yes. Arguments have also been raised as to whether an incomplete proof of loss can still trigger the process. The case speaks to the proof of loss being complete, but the reality is this entire area is a gray zone that the umpire can deal with prior to the appraisal session. Remember the goal of the process is to 30
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provide a quick and efficient outcome. LeBlanc v. The Co-Operators. 3. Can either side elect appraisal if there are policy coverage issues at play? Yes! This extends to situations in which the insurer claims the insurance policy is void. Interpretation of coverage and policy term is for a trier of fact and not the appraisal venue. This should not delay the process of determining the
The Insurance Act of each province has similar wordings with respect to their Statutory Conditions. Interpretation of that wording has been subject of a number of legal cases across Canada that impact and define the process amount of loss. David v. Canadian Northern Shield; Viam Construction Ltd. v. Zurich Insurance Company. 4. When a party elects to go through the appraisal process, does the normal limitation period that might exist on the policy change? The simple answer is no. Most property policies contain a one-year limitation period on fire loss-
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es. Someone electing appraisal or perhaps filing a proof of loss at the last minute does not extend the prescription date. An insurer may consider granting an extension so that parties involved do not incur unnecessary legal costs, but any waiver or extension should be clearly communicated between both parties. Two cases suggest if a case flows into appraisal an argument can be raised that the limitation period is suspended. An insurer must be absolutely clear with their policyholders or their representatives on their intention: Are they relying on the prescription period or not? A clear critical path letter initiated early in the process can spell this out so there is no ambiguity. Feist v. Gore Mutual Insurance Company; Sadema Lumber Products Limited v. Hanover Insurance Company; Terraco Industries v. The Sovereign General Insurance Company. 5. What happens if one party does not agree to participate in the process? In these situations, the party initiating the process would apply to the court for the appointment of an appraiser to act for the other side. If the two appraisers could not reach a mutual agreement on the choice of umpires, a judge would appoint an umpire. Trentmar Holdings Ltd. Et al v. St. Paul Fire and Marine Company. This is an interesting case. The policyholder’s court-appointed appraiser refused to show up for the appraisal session with the umpire. This appraiser felt he had no instructions about the claim, so he was not prepared to participate. The appraisal went ahead, and when the umpire and appraiser for the insurer reached consensus on damage issues, they executed an award document since two out of three parties involved agreed on the issues. So, in spite of the lack of cooperation by one appraiser, this matter concluded in a way that precluded further costs of litigation on damage issues. 6. Can an umpire hear evidence in an appraisal session? Generally speaking, no. The umpire can allow certain people into the room to provide information or assist in clarifying a point, but usually there is no testimony under oath. An exception took place in the www.claimscanada.ca
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case of Royal Insurance Company of Canada v. Brown (unreported). In that case, the court determined that the appraisers could hear testimony under oath and receive evidence by way of sworn affidavits. 7. Can a public adjuster’s fees to a policyholder form part of the insured’s claim? This will depend on the policy wording if the claim is being made via a professional fee’s endorsement. Many insurance contracts do allow for certain fees to be paid, but they exclude public adjuster fees. An interesting case to review (it is currently being appealed) is 854965 Ontario Ltd. v Dominion of Canada General Insurance Company. 8. Does the allegation of fraud abort the ability of either side to embark on the appraisal process? No. If an election is made, the matter must go forward, but keeping strictly in mind what the process allows to be decided. Many insurers who are involved with a possible fraud defense on a file resist appraisal, as this ADR mechanism may confuse strategy on the file. This creates interesting dynamics for the umpire, but there is no choice but to go the appraisal route if the process is triggered. Arlington Investments v. Commonwealth Insurance Company; Shinkaruk Enterprises Ltd. v. Commonwealth Insurance Co. et al. 9. Can restrictions be placed on the umpire as to what methods might be used to determine the amount of loss? For example, on an ACV argument can the umpire be instructed on what method (i.e. market value; RC less depreciation; income approach) to be used to arrive at the amount of loss? No. Greer v. Co-Operators. In this decision the judge said: “There is no clause in the insurance contract which must be interpreted by this court. I am satisfied that qualified appraisers are quite capable of making that determination or in the event of a dispute an umpire chosen by the appraisers can properly determine the matter. There is no question of law for this court to decide and there is no need to provide directions.” Barrett et al Vs. Elite Insurance Company and Sehdev v. State Farm. Both of these cases affirmed the umpire’s abiliwww.claimscanada.ca
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ty to choose the path to determine the amount of loss. 10. Does the appraisal process provide the umpire with authority to direct an insurer to take salvage? No. This is not something the appraisal section of the Act provides the power to determine. I.C.B.C. v. Dawd Holdings Ltd. 11. Does an umpire have to declare any previous dealings or relationships with either party to the appraisal process? Yes. If, for example, the
umpire is a loss adjuster, he or she should be declaring any past dealings with the insurer who is a party to the process. Peak v. Herald Insurance Company. 12. Is the finding of the process binding on everyone? Yes. Any result of the process can be subject to judicial review, but the courts have consistently held that in the absence of fraud, collusion or bias, the decision will stand. Parslow v. Pilot Insurance Co. is a case
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Public adjusters are professional, well-trained loss adjusters. They are also very well organized with strong marketing and sales professionals who solicit business after a loss. When a policyholder engages public adjusters, this can change the dynamics of loss handling for insurers. where two appraisers resolved the ACV on a building and contents without using an umpire. A lawyer for the policyholder challenged the result. A judicial review of the decision was demanded. A panel of three Ontario Court justices concluded: “Wrongdoing by the appraisers has not been alleged or proved. We can see no reason to go behind the appraisal. The application is dismissed with costs. . . .” Pfeil v. Simcoe & Erie Insurance Co. also affirmed that an umpire’s award was binding and could not be set aside except for fraud, collusion or bias.
Public adjusters In the past 20 years, there has been a dramatic increase in the number of public adjusters who are now licensed to do business in Canada. Each province has licensing requirements relating to public adjusters that are similar to these required of independent adjusters. They must be licensed to act for a policyholder in the settlement of a claim. Public adjusters are professional, well-trained loss adjusters. They are also very well-organized with strong marketing and sales professionals who solicit business after a loss. When a policyholder engages public adjusters, this can change the dynamics of loss handling for insurers. Some things insurers should keep in mind: 32
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• In this day of 24/7 service, the insurer should respond to a first notice of loss by immediately sending an adjuster to the scene of an event. • The insurer’s adjuster should go to every such scene with the view that a public adjusting firm will be in contact with the policyholder. With that thought in mind, the loss adjuster should take a proactive role in explaining the potential contact, role and compensation of public adjusters to the policyholder. Policyholders should understand that they are responsible for paying a public adjuster’s fee out of their policy proceeds. Such discussions should be fair and even-handed on the part of an insurer’s adjuster; at no time should he or she make derogatory remarks about public adjusters. • Loss adjusters should keep good notes of discussions between themselves and the public adjuster. • Public adjusters are required to be licensed. Request that the public adjuster confirm his or her license. • If a public adjusting firm is retained by the insured, request a copy of the engagement contract. • Take note of any directions signed by your policyholder to add the public adjusting firm as a payee to the settlement funds. If the insured party gives you this direction, you must fol-
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low it when issuing funds. • Do a detailed scope of building and content loss. Most arguments in appraisal are won or lost on the scope of damage as opposed to pricing issues. • Be prepared to prove your point of view with letters of opinion from appropriate experts. You bear the costs of obtaining these opinions. Similarly, the public adjuster bears the cost for his or her experts. In any appraisal session where you have an expert report and there is none forthcoming on the other side you can certainly argue the best evidence rule in pulling the umpire’s opinion in your direction. • Solicit written opinions from contractors or experts on areas of depreciation repair issues, etc. Do not be caught up in situations where you are the one expressing opinions. • Put everything you are doing in writing to the public adjuster and consider sending copies of all correspondence to the policyholder. While it is true the public adjuster is representing the insured, bear in mind that public adjusters are not lawyers. You have every right to communicate with your policyholder. If the insured advises you not to communicate with the public adjuster, though, you must comply with this request. www.claimscanada.ca
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• The prescription period on the loss should be clearly spelled out. And, you should outline the intention of the insurer to rely upon it or perhaps alter it to allow the process to unfold without a Statement of Claim being issued. • Ensure that the insured, or his or her representative, is authorizing payments that reduce the policy limits. As an example, the insurer’s adjuster might authorize major dry-cleaning of clothing following a loss. The policyholder may not have authorized the cleaning or understood that a major bill that will reduce policy limits has been incurred. • All concerns on mitigation and efforts to reduce further loss or damage should be made in writing. • Insist on strict compliance with Statutory Condition #6 and proof of loss requirements It is a common practice of public adjusters to ignore listing the date and location of the original purchase of contents. They simply work up what they call sound value and leave it to the insurer to figure out what this means. Insurers have every right to insist on a reasonable effort to comply with Statutory Condition #6. • Do not get caught in moving salvage off-site without thinking through the consequences. Remember there is no abandonment of salvage to the insurer pursuant to Statutory Condition #10. • It is unprofessional and inappropriate to direct anger against the insured and/or public adjuster simply because the policyholder has chosen to exercise his or her right of choice. There are many valid reasons why a public adjusting firm might be engaged. This could include ill health, lack of time or a negative previous loss experience. Deal with policyholders in the same manner you would had they not exercised their right of choice. • Make advance payments where appropriate, following typical practices. Resist the temptation to play hardball with the policyholder. You never know how much goodwill you sow at the outset of the claim that will help you in later negotiations. www.claimscanada.ca
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• Be fair and reasonable at all times. Try to resist setting up a high-low game. • Use reputable and experienced general contractors to price repairs. Umpires are quite familiar with the reputation of firms in the marketplace and will be influenced by the quality of vendors. It is important on every property claim that the insurer’s loss adjuster performs consistent, quality work on every loss. The involvement of a public adjusting firm should have no impact on the decision-making process. As always, act in good faith on any file.
!
Adjusters need to constantly improve their communication skills and find ways to resolve issues in dispute as quickly as possible Situations for use of appraisal The appraisal process has achieved its goals in many situations, including the following examples: • A truck ran into the plate glass window of an upscale ladies fashion store. Shattered glass was thrown everywhere. Is all of the stock a total loss? • One year after a fire loss, the policyholder was still complaining that his home smelled like smoke. The appraisers did not agree on issues. An umpire conducted several site visits and reached agreement to engage a neutral expert to inspect the home. Further testing validated the smoke issue and led to significant increases in the original settlement offers. • Water damaged 15 Persian rugs. What was value of loss? The two appraisers were $50,000 apart. • After a major commercial fire, arson was alleged against the named insured. The insurer denied the claim, but the policyholder demanded appraisal. Both parties agreed that a business interruption claim would be part of the process. This led to a decision to resolve the amount of loss
based on agreed scenarios. By doing this, if the matter were litigated, the trial judge would then be able to use the scenarios as a basis for determining the actual damages. This would save time and money at trial. • In a commercial fire claim, arguments were raised not only on direct damage but also on coinsurance issues. By agreement, the process determined the coinsurance penalty. • An insurer repaired aluminum siding on house, but the insured felt that the entire home should be re-sided instead. What should be the outcome? • After a theft from their home, the policyholders represented themselves. An agreement was reached on the replacement cost and ACV of the content loss.
Conclusions The appraisal process has been around for many years, but the process has been largely under-utilized. Over the last 12 months, however, insurers have begun to use this tool as a means to quickly and effectively reach decisions on matters in dispute with policyholders. The legal profession has now seen that decisions made in this process are full and final in the absence of being able to prove fraud, collusion or bias. In recent years, British Columbia has passed amendments to its Insurance Act to deal with appraisals. It is compulsory that all property damage claims go to appraisal, including claims for business interruption and loss of rent. Furthermore, an insurer must now give the insured notice within 21 days of the insured’s rights to appraisal where the insurer and insured disagree as to the value of the property insured, the value of the property saved or the amount of the loss. Whether other provinces go this route, time will tell. We work in a fast-changing, complex society that is becoming more knowledgeable and demanding. Adjusters need to constantly improve their communication skills and find ways to resolve issues in dispute as quickly as possible. Glenn Gibson is the global chief strategy officer with Crawford & Company.
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Meet the President Rick Yates has just started his two-year tenure as the president of the Canadian Insurance Claims Managers Association Ontario Chapter President BY LAURA KUPCIS
A
fter two years of serving as president of the Canadian Insurance Claims Managers Association (CICMA), Rick Yates wants to be able to look back and say, “I made a difference.” Yates, senior manager of national claims with TD Insurance, would like nothing more than to end his two-year tenure as president by knowing he, and his executive, were able to execute the changes necessary to bring the CICMA to new levels of membership and value. “I believe that the CICMA is in a transition phase as we work to grow our membership and find ways to reach our future leaders of claims and provide them with information, training and networking,” Yates says. He’s placed a “fairly lofty goal” on himself for his two-year term: To increase the traffic to the CICMA web site, making it the go-to site for all claims managers across Canada. “In doing so, I believe we can restore the value proposition that the CICMA brings to all claims organizations, as well as to our young claims managers who embrace technology,” Yates says. “The CICMA offers access to information, training and networking for all our members. The growth of our web site also provides a great tool to help us grow and communicate with all claims professionals and executives across the country within the next two years.” In keeping with the theme of communication, Yates is looking to reintroduce the Insight Claims newsletter on a quarterly basis as a means to inform claims managers of current issues affecting all regions. And finally, he would like to see the CICMA embrace a new vision to help provide joint softskills training to members — to fill the gap between the Chartered Insurance
Professional (CIP) programs and the in-house training that claims managers require. “We absolutely need to provide additional benefits to our members by leveraging the use of the web to provide information and opportunities to our membership,” Yates says. “Training is an area that we can work collaboratively with other associations to provide valued training to our members.” Yates and the executive are already well on their way to accomplishing these goals. A feature has been added onto the web site where minutes from meetings and events can be posted, visitors can email members or contact the executive, book meetings and pay for membership. Two new roles have been created on the executive for communications and training, both with a two-year term as a means to help execute any plans. The executive intends to send out a survey to members to determine what they would like to see from the association as a means to determine next steps. “I believe the CICMA has a purpose to provide communication, networking, training and access to information to all our members to help keep them up to speed in our changing industry,” Yates says. By being a part of the executive, Yates is able to help foster and accomplish this purpose. To date, he has held the position of membership, secretary, treasure and vice-president. But his proudest accomplishment is being the organizer of the annual charity golf tournament. The tournament raises funds for Camp Oochigeas — a camp for children living with cancer. This year’s tournament raised $26,000 — a significant increase over the first tournament held three years ago, which
raised an impressive $15,000. “Our annual golf tournament is the event of the calendar for the claims management,” Yates says. “We’ve been able to improve it each and every year with the great support of the golf committee and the executive.” Working together and supporting each other is also why the Canadian Independent Claims Managers Association/ Canadian Independent Adjusters’ Association (CIAA) Ontario Chapters’ Annual Joint Conference is a key industry event. “The CICMA/CIAA Joint committee meetings allow us to work together and develop opportunities that will benefit both organizations,” Yates says. “The joining of resources allows us to develop programs that bring value to both groups. We are both working towards common goals for the betterment of all our members.” The conference serves not only as a great networking opportunity, but is also an educational event that provides up-to-the-minute information pertinent to all claims personnel, Yates adds. Currently, Yates and the executive, are working with both the CIAA and the Canadian Defense Lawyers (CDL) to brainstorm educational programs that can be jointly offered to members, ideally at a reduced cost. The goal is to educate all members on the issues of today that are affecting day-to-day claims decisions. “The better educated and informed our members are, the better the results for all our clients,” Yates says. “At the end of the day, our goal is to provide access to information and all solutions for our members. A relationship with the CIAA, OIAA (Ontario Insurance Adjuster’s Association) and CDL helps all our members.”
The Canadian Independent Adjusters’ Association’s Ontario chapter president is Richard Swierczynski. The position is a two-year tenure. To read about Richard’s goals as president, please see the December/January 2010 issue of Claims Canada or access it online at http://www.claimscanada.ca/issues/article.aspx?aid=1000353425. 34
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Investigating IRBs Adjusters must ensure a claimant is paying income tax before approving Income Replacement Benefits BY LAURA KUPCIS
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t is important for adjusters to determine whether or not a claimant has been scamming Revenue Canada when considering the claimant’s entitlement to income replacement benefits (IRBs), according to Donna Ford, an investigator with Northwood & Associates. “If a person is trying to cheat an insurer with respect to an IRB claim, you can almost be sure, based on my experience, that they are also trying to cheat [Revenue Canada],” Ford told delegates at the Annual Toronto Fraud Forum on Sept. 29. Section 4(5) of the Statutory Accident Benefits Schedule (SABS) has been added in the new regulations, which became effective Sept. 1, 2010. This section codifies the serious consequences of a claimant’s failure to pay income tax, Ford said. If a person fails to pay income tax, according to section 4(5), “the person’s income before an accident shall be determined for the purposes of this part without reference to any income the person has failed to report contrary to that act or legislation.” If adjusters have any questions about the legitimacy of an IRB claim, they should ask for the income tax returns with enclosures and notices of assessment. “An honest claimant won’t have any problem giving you that information,” Ford said.
Forms must be filled out entirely Ford also suggests that adjusters read both part 8 of OCF1 (Application for Accident Benefits) and OCF-2 (Employer’s Confirmation Form) carefully to determine whether the applicant has failed to fill out any of the important information or aspects of the income replacement benefit claim. If part 8 of the OCF-1 states that income information will be provided at a later date instead of being filled out, then the form is not complete and this information must be request36
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ed. It is important to determine whether the insured was “employed at the time of the accident,” according to section 5 of the new SABS, Ford said. “If not, then you can’t start the IRBs and your enquiry continues,” Ford said. “You have to figure out if the person wasn’t employed at the time of the accident, was he employed for at least 26 during the 52 weeks prior to the accident or receiving EI (Employment Insurance) at the time of the accident or self employed.” Next, examine whether the OCF-2 is legitimate and accurate — examine it carefully: What is included and what is left out, Ford cautioned. If there is information missing, adjusters should be making enquiries as to why and fill in any voids. “It’s so important to emphasize not starting IRBs until those questions are answered to your satisfaction and you feel that you are dealing with a legitimate employment situation that your company legitimately has to pay IRBs on,” Ford said. Tax returns are a great way to determine someone’s income — and whether they were employed by a company or self-employed. People hide income and tax returns for a reason: Get to the bottom of why a claimant might be doing so in each individual instance.
Start digging There is information an adjuster can gather quite quickly, which can aid in the investigation process, including a web search for a business phone number (often people will provide cell phone numbers as contacts), a business address, a corporation, partnership or sole proprietorship search to determine whether any of the claimant’s relatives are officers or directors, etc. By phoning the business number, versus the cell phone contact, if the person is employed by a company, an adjuster can speak with human resources to verify that the claimant was actually an employee, when the first day and last day worked were and whether the insured was a full time or part time employee or a contract or subcontract employee. The employer or human resources can also diswww.claimscanada.ca
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close whether the claimant was paid by cash or direct deposit, are pay stubs provided and do they show deductions for taxes or benefits, and how frequently the insured is paid. “I am amazed when I get that information from the employer and then I ask the same information from the claimant, how often there are serious differences in the answers to those questions,” Ford said. The best way, however, to get information is not through a quick call, but an actual visit to the place of employment. When you go in, you can review an employee file, including the TD1 Form which will indicate taxes withheld, (hopefully) cancelled or cashed cheques (check both front and back if possible to see when they were cashed), notice of termination (if there isn’t one, why?), punch cards or time cards if applicable, the company’s cheque disbursement journal, benefits policies, application forms, etc. When an adjuster goes right to the workplace, there exists also the opportunity to speak with other employees who might either confirm or clarify the claimant’s employment or job function. If the claimant has a physical job, determine the percentage of time the insured spent doing activities. What percentage of time is spent sitting, standing, bending, carrying or lifting; and how much weight are they lifting or carrying?
Consider other options Sometimes employers won’t make the time an adjuster might require. For these instances, Ford suggests creating a form in-house, which includes questions and checklists that can be read-through and answered quickly. The employer
can sign off at the end, or the adjuster can send a confirmation letter setting out the information provided. Surveillance is always an option, as well, especially in the event an adjuster has a gut feeling the claimant is still working despite saying they are not. At the same time, an often under-used, yet critical, form is the OCF-13 (Declaration of Post-Accident Income and Benefits). Ford recommends using this form, which is signed by the claimant, and press the insured to have it returned within the 14-day timeframe. “Supposing you do surveillance and you find that the claimant is working during the period of surveillance and the OCF-13 comes back and indicates post-accident income, consider if you have enough evidence to deny the IRBs,” Ford said. They can be denied under section 53 of the SABS — a very important section, according to Ford, in that if an adjuster feels they have enough evidence to prove that the insured willfully misrepresented the facts concerning the IRB, then the IRBs can be denied. “Review all the documentation carefully, looking for consistencies and inconsistencies,” Ford said. “If you cannot reconcile that it was a legitimate IRB claim then I suggest you set out the discrepancies and issues in a letter or EOB (Explanation of Benefits) and ask for income tax returns and a statutory declaration pursuant to section 33(1)(2), where the discrepancies are explained.” This request for a statutory declaration should be in addition to the full statement that you will obtain from the insured on all issues, Ford added. If the request is refused, then proceed with Examination Under Oath.
The Association of Certified Fraud Examiners and the Canadian Association of Special Investigation Units held the Annual Toronto Fraud Forum on Sept. 29. The event, held at the Premiere Ballroom & Convention Centre in Richmond Hill, Ont., featured a mix of both general and insurance fraud seminars, in addition to a trade show. ●
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Legal Fees
Cause and Concern BY ROCCO NEGLIA
Legal costs are a significant component of the Canadian property and casualty product. The p&c insurance marketplace represents approximately $40 billion in annual net earned premiums (NEP). The amount the insurance industries spent on legal services approached $ 1 billion ($971 million) in 2009. Therefore, legal services expenses accounts for three per cent of the industry net earned premiums. It should be kept in mind that the p&c industry operates on small margins. Assuming a similar growth trend on premiums and legal expenses as experienced over the last two to three years, it is projected that within the next four to five years, legal expenses will approach four per cent of NEP. Moreover, as a percentage of allocated loss adjustment expenses (ALAE), legal expenses in 2009 accounted for 50 per cent of all external adjusting expenses. Given the nature of the p&c business, legal costs will always remain a significant component of p&c insurance products. Nevertheless, litigation expenses are a major cost driver and a concern for p&c carriers. Rising costs have therefore led to a number of initiatives aimed at slowing down the growth of legal services expenses. Top U.S. and U.K. law firms 38
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have, for example, spent billions annually on back office work, which is outsourced and off-shored to countries like India. Macro economic influences currently impacting the legal industry are similar the those factors which have already affected (and continue to affect) other professional service industries such as engineering, medicine, finance, etc. The United Kingdom is considering whether to allow law firms to become public entities and trade on the Stock Exchange. This will allow law firms the opportunity to raise capital for expansion into other countries and to invest significantly in information technology. Lord Denning must be turning in his grave — or maybe not? Entrepreneurship is transforming the legal service industry. Changes, as I see them, are transforming law from a practice focus to a business focus endeavour. Information technology has already commoditized many basic legal services. Today, anyone can log into the Internet to become an informed consumer of legal services and download forms and documentation to process simple legal services, e.g. wills, uncontested divorces and other similar transactions. Alternative fee arrangements are another example affecting the legal service community as the p&c industry attempts to slow the growth of legal costs. Many claims organizations have
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developed alternative fee arrangement as a means of paying for certain commodity type of litigation. This model represents an alternative to the billable hour model. Depending on the insurer, an alternative fee structure covers all associated legal expenses bundled into a standardized fee for non-complex or commodity type litigation. In some cases, a combination of a bundled rate and billable hours model is used depending on the complexity of the litigation. The $64,000 question is: Does this alternative fee arrangement model work? In typical claims fashion, yes and no. Pardon the pun, but the jury is still out on the effectiveness of this type of cost containment initiative. The reason being is that at this point, it is difficult to assess the effectiveness of these types of arrangements. In the absence of objective quantifiable data to measure the value of legal work, insurers are, by default, developing alternative fee arrangements in the hope that they work. In fact, one can argue that alternate fee arrangements amounts to putting the proverbial cart before the horse. Well, what does this mean? Before we go off and expand the use of alternate fee options, it’s necessary to measure the value derived from the current model and from which, jointly with legal service firms, develop a comprehensive compensation www.claimscanada.ca
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model. First and foremost, this initiative requires developing metrics, aligning insurers and counsel goals, measuring results and ultimately, rewarding performance. This must come first. That is to say, a successful performance management solution of legal firms requires measuring what matters in the litigation process from a insurer standpoint: i.e. quality of results, good case management, case planning, expense and budget management. Measuring these key activities is necessary in order to develop and implement a quality performance management system. Critical to the performance management process is continuous systematic audits and metric analysis to drive results. Metric analysis may include closed and pending caseloads, closing ratios and counsel costs per file, cycle times, file results and perhaps other variables. The data can then be used to analyze results of files within a particular firm and files amongst different firms. Tracking this type of data/information over periods of time will lead to certain litigation trends regarding staffing, expenses and results. The use of these metrics can also be used to develop scorecards for each lawyer and firm. As such, benchmarking will become key in assessing performance. Whether we are talking about alternate fee arrangements or the traditional billable hour’s model, without data, the ability to critique the effectiveness of any fee structure is impaired. Therefore, the benefits of performance managing legal services will allow insurers to objectively allocate to legal counsel whose quality value (as measured through metrics) exceeds the competition. This approach will help to identify issues with counsel and insurers that negatively impact litigation spend at all stages of the litigation process. Conversely, this approach will also help to identify top performers and best practices. Overall, the key to measuring counsel and the litigation process is to develop, analyze and create measurable data. Simply put, you can’t manage what you can’t measure. Billable hours or alternate fee arrangements, at www.claimscanada.ca
the very best, measure time not value. I’m certainly not advocating for the “Walmartization” of the legal services industry or that low cost provider is the way to go. On the contrary, I’m advocating through the use of data and metrics, to identify and reward high value providers. Thus, the goals of counsel and insurers can best be aligned through the use of incentivebased fee arrangements and metric driven compensation, which rewards performance, productivity, efficiency
and cost control. By measuring what matters, the deployment of a comprehensive performance management system — utilizing audits and metric assessment — will improve litigation performance, and more effectively manage litigation spend. This, in turn, will also improve business relations between an insurer and counsel. Rocco Neglia is the vice president of claims with The Economical Insurance Group.
THIS IS MORE THAN A HURRICANE. To business owners who have tirelessly committed themselves, it’s the loss of their dream and livelihood. To insurance professionals, it’s the challenge to fairly and accurately quantify what their loss is worth. When disasters strike, trust the firm that provides an expert, objective opinion 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
Jeffrey C. Smith jsmith@bdo.ca 905 946 6802
www.bdo.ca/advisory
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
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Construction Deficiencies Court Clarifies Coverage Controversy for Contractors BY DAVID MACKENZIE
The Supreme Court of Canada recently resolved divergent lines of case law, which had emerged across the country in respect of coverage for claims alleging construction deficiencies. In Progressive Homes Ltd. v. Lombard General Insurance Co., on review from the British Columbia Court of Appeal, the Supreme Court ruled that a duty to defend was owed by a CGL insurer to a general contractor faced with a claim for construction deficiencies in a series of buildings it had constructed.
Issues in contention The owners of the four buildings in issue, alleging that the building envelopes had failed and were leaking, sued the general contractor, Progressive Homes. Progressive Homes tendered the claim to its CGL carrier, Lombard. Lombard, in denying coverage, relied on the BC Supreme Court’s decision in Swagger Construction Ltd. v. ING Insurance Company of Canada. That ruling supported the view that the damage alleged pertained only to structural elements, which formed part of the general contractor’s obligations under its construction contract, and therefore did not allege “property damage.” Lombard further cited Swagger for the premise that damage is the natural result of the alleged faulty workmanship, and therefore did not arise as the result of an “accident” or “occurrence”. Lombard successfully defended its denial in BC Supreme Court, and a 2-1 majority in the British Columbia Court of Appeal affirmed that judgment. The analysis of the majority was premised in large measure on “general principles” of insurance law, which were used to guide the Court of Appeal’s interpretation of the words used in the insurance contract. Standing in contrast to the BC decisions were decisions from Courts of Appeal of Ontario and Saskatchewan. In both Bridgewood Building Corp. v. Lombard General Insurance Co. of Canada and Westridge Construction Ltd. v. Zurich Insur40
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ance Co., in which coverage obligations had been found to be owed to general contractors facing allegations of construction defect on similar, if not identical, policy language.
Supreme Court of Canada The Court specifically rejected the use of “general principles of insurance law,” and focused instead on the specific wording of the insurance policies in question. In this regard, the Court rejected the insurers’ contention that “property damage” could not be found where the damage alleged was limited to the building constructed by the general contractor, and its contention that faulty workmanship could not result in fortuitous, accidental damage. Nature of property damage Citing to the lower court rulings in Bridgewood and Westridge, Justice Rothstein, writing for the Court, found: I cannot agree with Lombard’s interpretation of “property damage.” The focus of insurance policy interpretation should first and foremost be on the language of the policy at issue. General principles of tort law are no substitute for the language of the policy. I see no limitation to third-party property in the definition of “property damage.” Nor is the plain and ordinary meaning of the phrase “property damage” limited to damage to another person’s property. In this respect, Rothstein rejected the B.C. courts application the “complex structure theory,” (set down in the Supreme Court’s decision in Winnipeg Condominium Corporation No. 36 v. Bird Construction Co.), stating both that it was inappropriate to apply a tort principle in what was clearly a contract analysis, and that the determination of what constituted “property damage” had to look to the specific words used in the policy. I would construe the definition of “property damage,” according to the plain language of the definition, to include damage to any tangible property. I do not agree with Lombard that the damage must be to third-party property. There is no such restriction in the definition. www.claimscanada.ca
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In dicta Rothstein commented further that he saw no reason that Lombard’s definition of “property damage” did not also include the defective property itself. This was another clear rejection of “general principles,” and a tacit instruction to insurers who wish to exclude some part of “damage to tangible property” from coverage, to use express language to do so.
completed operations hazard’.” The Court’s analysis of this exclusion could, in the writers’ view, if too narrowly applied, defeat the commercial expectations of the parties, and give a windfall to insureds. The Court wrote: Unlike the standard form version of the “work performed” exclusion (clause (i)) reproduced above, this version expressly contemplates the division of the insured’s work into its component parts by the use of the phrase “that particular part of Accident your work.” . . . It will have to be determined at trial which Not surprisingly, the Supreme Court also rejected the “particular parts” of the work caused the damage. Repairs to argument that faulty workmanship was not “fortuitous” those defective parts will be excluded from coverage. . . . and therefore not covered. Following on this analysis, the Court suggested it was Fortuity is built into the definition of “accident” itself as the appropriate to read the exclusion (if a case were concerned insured is required to show that the with water leakage through windows damage was “neither expected nor installed by the insured) as excluding intended from the standpoint of the “‘property damage’ to ‘the window’ insured.” This definition is consistent arising out of ‘the window’ or any with this Court’s core understanding part of ‘the window’ and included in of “accident”: “an unlooked-for the ‘products-completed operations mishap or an untoward event which is hazard’.” not expected or designed” . . . When In the weeks following the decision we have already seen insureds suggest an event is unlooked for, unexpected that in fact the window itself which or not intended by the insured, it is was defective, but the caulking that fortuitous. . . . It will depend both on was improperly applied, or the winthe circumstances of the defective dow flashing that was improperly workmanship alleged in the pleadings placed. If the Supreme Court’s analyand the way in which “accident” is sis comes to be applied in lower defined in the policy. I, therefore, cancourts so as to enable insureds to narnot agree with Lombard’s view that row “the particular part” in such a faulty workmanship is never an accimanner the purpose of the exclusion dent. may well be defeated (it was a chemiThe analysis of the accident/occurcal component of the caulking which rence requirement must be assessed was flawed, so damage to the caulkon a case-by-case basis, and not in ing is also covered). It may be that the light of rules of general application. It may be that the wording of the exclusion allows such Exclusions wording of the exclusion a literal interpretation, but the writHaving determined the requireers suggest that such a reading would allows such a literal ments of the insuring agreement were be inconsistent with the reasonable interpretation, but the met, the Court turned its attention to commercial expectations of the parthe “work performed” exclusions writers suggest that such ties. Courts have not been directed to found in the policies. Rothstein reread exclusions in the narrowest a reading would be affirmed the principles of constructerms the words themselves can supinconsistent with the tion that the Court had laid down in port, but, in terms that are consistent previous decisions, most particularly with the reasonable expectations of reasonable commercial that so far as the language of the polithe parties. expectations of the cy and commercial reason will allow, As with all Supreme Court deciparties. coverage grants should be interpreted sions, the true scope and effect of the broadly, while exclusions should be Progressive Homes decision will only interpreted narrowly. be felt as lower courts apply it across The Court’s analysis of the specific “work performed” the country. The Court’s instruction, however, was clear: If exclusions used in the various policies issued to Progressive insurers do not wish to cover particular kinds of damage, over a series of years warrants review as each exclusion (or their policies must clearly express that intent. close variants thereof) have been used widely in Canada. The Court’s analysis of the second exclusion, however, warrants particular scrutiny. That exclusion excluded: “‘PropDavid Mackenzie practices commercial and insurance litierty damage’ to ‘that particular part of your work’ arising gation, with an emphasis on insurance coverage and complex out of it or any part of it and included in the ‘products - multi-party disputes with Blaney McMurtry LLP in Toronto. www.claimscanada.ca
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Large Loss Adjusting Techniques and procedural know how BY GREG W. MADILL
Large loss does not imply large monetary value, rather it is a claim involving complexity, based on monetary value or stakeholders interaction. Stakeholders are akin to a jugglers’ balls all being kept airborne during the claim progression. At the outset consider your interaction with: • building owners and tenants within the building of origin and exposures; • insurers of stakeholders of interest being manufacturers or trade personnel relating to the subrogated claim to be considered; and • other insurers, engineers, lawyers, contractors and accountants. The adjuster is faced with stakeholders who do not have the benefit of insurance, those without suitable limits, and/or parties who have retained independent counsel or public adjuster representation.
Site release The large loss lends itself to interaction with authorities including the Office of the Fire Marshal, Technical Standards & Safety Authority (TSSA), Ministry of the Environment and Energy (MOEE), fire agencies, building authorities and/or engineering and demolition personnel. Often these agencies were on site and have controlled or altered the site prior to insurer access. Initiate dialogue with authorities as soon as possible. 42
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As the claim progresses other jugglers’ balls to be left airborne include: • engineering representation relating to cause determination, and/or structural impairment.; • service contractors seeking access to undertake emergency loss mitigation and/or subsequent claim assessment; and • the public, including personnel who may have used the damaged facility (church, school or commercial occupancies) and/or operated businesses in proximity to the affected fire or explosion area. The underlying role of the large loss adjuster is to work with and coordinate the stakeholders within the confines of a policyholder’s interest and to protect that interest. When reviewing authorities’ retention, advise a policyholder of the pending protocol prior to site release. In Ontario, the Office of the Fire Marshal will release the site back to an insured or their delegate. Coordination of access requires pre-planning to release and secure the site. Take steps to protect the site. Review access restrictions relating to the condition of the
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property (structural and air quality issues) and requirements for stabilization. Consider the ongoing safety issues at all times. Address causation access, as there are requirements for coordination of the release involving all affected parties who may reasonably anticipate litigation. These include causation personnel of the unit of origin (tenant and building owner) and related occupancies, all of whom will seek timely access prior to the alteration of the evidence. Access to a fire scene must not be considered with a ‘first to the post’ mentality. Set up email groups to coordinate release of a site and/or agreement on retention of a single security firm to control the site to maintain site preservation. Secure insurer and engineering representations at an early stage to maintain the information portals. Coordinate review of the evidence to facilitate an opportunity for the known stakeholders to assess the area of origin in situ and/or the altered materials without further alteration. Alteration of evidence may give rise to issues of spowww.claimscanada.ca
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liation. Consider notification to stakeholders in a large loss scenario. This is relevant in that when dealing with any subrogated claims, all parties should be apprised of the alteration conditions to preclude prejudice to those alleged responsible at a later date. Anticipate litigation. Do not be in a rush to alter a site, as proper notice is critical in protecting the subrogated entitlement. Timing of the release and coordination of the engineering inspections to avoid spoliation is critical. As additional stakeholders are known (manufacturer or installers of suspect components) notice should be communicated with limited (if any) evidence alteration. The right of subrogation must be considered at the outset. This may entail review of the evidence and notification to the parties. Occasionally, it is necessary to alter evidence. When this is to be undertaken, all steps should be taken to preserve the evidence condition.
What do you insure? Understand who your principals are insuring and the basis of the coverage provided. Confirm other insurance and have the insured convey notice to the exposed insurers. Review the underwriting criteria. Is the insurer insuring the risk they thought they were insuring? Adjusting decisions impact the uninsured or under-insured claim components and it is critical the policyholder be apprised of the shortfalls in coverage (including co-insurance implications) in advance of decisions, which may financially impact an insured. Deal with the adequacy of insurance at early stage of the adjustment, if at all possible, as the alteration of the site condition occurs quickly and items to be quantified may be disposed and/or decisions may be made which ultimately render your insured as partially accountable for the monetary exposure. The policyholder’s authorization to an emergency services vendor is generally undertaken with an insured understanding that indemnity will be available for the services being authorized. Apprize the policyholder of coverage reservations (if any) to facilitate both 44
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protection of the vendor, the adjuster and their principals. This protection may be undertaken based on presentation of a clear authorization and or either a Non-Waiver Agreement and/or Reservation of Rights (where there are suspected issues relating to the restriction in coverage). Undertake an Internet search on the site, clarify web information on any involved stakeholders, secure a map and satellite image of the property, and review media information. The timely media release is relevant in that often weeks post loss certain articles and
The underlying role of the large loss adjuster is to work with and coordinate the stakeholders within the confines of a policyholder’s interest and to protect that interest. other documentation released may not be available. The media is a perishable resource. Media and Internet chat information develops witness leads and observations outside of the official documentation
Managing expectations Adjusters assist the policyholder in loss mitigation, quantification and coordination. The following approaches may be considered: • Instruct the insured to provide a single point of contact. Dealing with a large loss at a church, a school or condominium corporation often involves interaction with a board. A single
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point of contact with authority to make decisions clarifies the information portal to lessen the number of balls remaining to be juggled. • Explain the role of the insurer, the adjuster and the typical process of adjustment. • Confirm the vendors assisting the policyholders are retained by the insured. This is relevant with respect to both consideration of GST/HST remittance and payment of accounts where there are coverage shortfalls. • Advise the insured of options on the repair and that they can utilize their own preferred contractors subject to agreement on scope. • Adjusters cannot authorize costs outside of specific direction. Know the limits of your authority. • Include discussion with respect to a Proof of Loss form, and its implications with respect to the Statutory Conditions of the policy. • Review the role of a public adjuster, as with the media exposure public adjusters will contact your insured. Convey to an insured a balanced approach regarding your role and that of the public adjuster. • In all cases involving a public adjuster expect to proceed to appraisal. A successful adjustment involves stick handling insureds’ expectations. Explain the implications of filing a Proof of Loss and insurers’ obligations upon receipt of a Proof of Loss. Confirm the insurers’ obligations for payment, the requirements on the insured to substantiate the amounts claimed and the protocol with respect to a possible dispute pertaining to coverage or quantification. Review leasing agreements or condominium declarations, as they identify insurable interest of improvements, rights of subrogation and rental considerations. Each lease/declaration must be viewed on its own merits. Select leases will provide full abatement of rent, whereas others may restrict the abatements to include either only base rent or burdens. Review the privacy considerations. Secure authority to allow dialogue with other stakeholders, insurers, public authorities and related entities. A successful adjustment entails information www.claimscanada.ca
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exchange. Completion of PIPEDA materials facilitates this exchange.
Damage review Explain categories of damage including: • costs prior to site turnover; • costs on an emergency basis; and • costs to restore. Costs prior to a site turnover should be considered with representative parties and the insurers they represent. There may be commonality between demolition or shoring costs for adjoining structures undertaken by municipal authorities. Agree on how the costing is to be apportioned. In the case of the Queen Street West fire (2008), there were seven adjoining buildings sustaining varying degrees of damage. Insurers, non-insured owners and municipal authorities were presented with a formula, entailing frontage to pro rate costs taxed to the owners. Emergency expenditures entail work being undertaken on a time and material basis. These are scenarios where timely remediation is critical, including schools, multiple unit residential occupancies or related facilities. Timely mitigation without a control estimate also mitigates the exposures and protects the site from further loss. Negotiate with the restoration vendor to ensure appropriate cost control. Request: • an agreed scope of loss with the vendor on what is to be considered as an emergency cost, define the scope, secure a budget; • copies of all contract agreements with the subcontractors together with their invoicing to which the general contractor may have applied burdens • clarification that the subcontractors retained on site are not owned by the primary vendor • reductions in overhead and profit considerations • sign-in and sign-out criteria • time cards for responding employees • your insured’s direct retention of select sub contractors to limit the overhead and profit burdens being generated in the event the vendors are not required to be under the guidance of a general. Tracking costs from the outset is critical. This entails development of a www.claimscanada.ca
spreadsheet to assess the costs on a percategory basis. Maintain reserve analysis. As policies have individual segregated limits, these exposures should be tracked to entail building, contents, stock, extra expense, etc. This allows an easier monetary reconciliation. Prepare an ongoing payment reconciliation summary and track the payments. Communicate quantification issues to the insured. Large losses and the inherent discussions with insurers, insured’s, accoun-
tants, lawyers and other claim personnel can be handled in a timely and efficient manner. The challenges relate to communication, evidence retention, file coordination and the management of expectations.
Greg Madill is president of Upper Canada Adjusters Inc., a Toronto-based independent firm that handles predominantly larger liability and complex property exposures.
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Ending Report Frustration When it comes to insurer examination reports, providing the assessor with direction is key. BY JUDY FARRIMOND AND IAN ELLIOTT
Far too often adjusters and claims staff lament insurer examination reports that are lengthy and difficult to follow. They are filled with irrelevant information that adjusters need to wade through and often lack appropriate and useful information. As a starting point, the expertise of the assessor is critical in terms of not only ensuring accepted practices and information that will withstand scrutiny if challenged, but also regarding clear, concise and prompt reports. Qualified and experienced assessors will follow your direction by providing answers that directly correspond to each of your questions with recommendations, if requested, that are relevant and realistic. To select the most appropriate assessor, be sure to check everything from their education, training, current license and area of specialty to practical experience and professional memberships, as well as authorships, research, and expert witness testimony experience. Once you have selected the most appropriate assessor, provide all documentation on file such as accident details, medical records, reports, and case notes. The pre-injury medical records and clinical notes are especially important for Minor Injury Guideline determinations. In addition to the background information, it is important to provide the assessor with a well-defined request that specifically outlines the type of information you need. With IEs, getting the right answers is often directly related to asking the right questions and requesting specific information.
The right questions, the right answers The best way to avoid the frustration of receiving an IE report that is difficult to follow, lengthy and filled with irrelevant information, is to be very clear and direct in terms of the IE questions. Never assume that the assessor will know what you are looking for. Regardless of benefit category, here is an overview of question topic areas to include for all types of IEs: • diagnosis • prognosis • pre-existing issues and their impact on injuries • return to pre-accident status • recovery to date • recommendations regarding present treatment, its effectiveness and other treatment that would be beneficial, as well as suggested duration • other comments pertinent to the case 46
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While ensuring your questions cover all the basic topics listed above, it is important to be as clear and specific as possible regarding how you pose the IE questions and how you ask for specific information. To follow are some additional guidelines concerning possible questions to ask—and how to word them —related to different benefit categories and possible assessments. Income Replacement Benefits: Possible assessments include worksite assessment, functional abilities assessment, transferable skills analysis, and vocational testing. Guidelines for possible questions include: • Does the client have a substantial inability to carry out the essential tasks of his/her employment? • Please precisely identify the limitations and restrictions preventing return to employment and comment on the objective findings that support these limitations. • What type of work is the client capable of participating in? • Please comment on the possibility of modified work and/or a graduated return to work. Med-Rehab Benefits: Possible assessments include home assessment and assistive devices assessment, attendant care assessment, physiotherapy assessments, massage therapy assessments and chiropractic assessments. Guidelines for possible questions: • Do you have any recommendations regarding the present treatment? • Is the present treatment effective? • Do you recommend any other treatments that may be effective? If so, please advise the treatment(s) you recommend and estimate frequency and duration(s). • Are the recommended assistive devices reasonable and necessary? Housekeeping benefits (optional): Possible assessments include home assessment and assistive devices assessment and functional abilities evaluations. Guidelines for possible questions include: • Does the client suffer a substantial inability to perform the housekeeping/home maintenance services that he/she performed before the accident? • Please precisely identify the limitations and restrictions preventing a return to housekeeping and home maintenance activities, and provide the objective findings that support these limitations. • Please identify complications that may be prolonging the disability, preventing a return to housekeeping and home maintenance activities. • If the client is unable to perform housekeeping and home www.claimscanada.ca
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maintenance activities, when is it anticipated that he/she will be able to resume them? • Please provide recommendations to address the barriers (e.g. treatment, referrals). Caregiver benefits (optional): Possible assessments include caregiver assessment, home assessment, and functional abilities assessment. Guidelines for possible questions include: • Does the client have a substantial inability to carry out the essential tasks of his or her caregiving activities? • Please precisely identify the limitations and restrictions preventing a return to his or her caregiving activities and comment on the objective findings that support these limitations. • Please provide recommendations to address the barriers (e.g. treatment, referrals). Non-earner benefits: Possible assessments include home assessment, functional abilities evaluation and attendant care assessment. Guidelines for possible questions include: • Does the client continue to suffer a substantial inability to carry on a normal life as a result of the accident and within 104 weeks of the accident? • Please precisely identify the limitations and restrictions preventing a return to his or her activities of normal living and comment on the objective findings that support these limitations. • Does the client require the services of an attendant to man-
age or assist with activities of daily living? 104-week mark: Possible assessments include home assessment (for post-104 caregiver only), functional abilities evaluation, medical assessment(s), and vocational/psycho-vocational assessments. Guidelines for possible questions include: • Does the client suffer a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience? • IRB: Does the client suffer a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience? • Please provide recommendations to address these barriers (e.g., treatment, referrals).
Cover all the basics; be specific Taking control by providing clear and specific direction to the assessor goes a long way in decreasing IE report frustration. Qualified assessors will not only appreciate this highly organized, professional approach, in turn, they will mirror it by providing you with answers and recommendations that are highly organized and professional by directly meeting your requirements. The IE is definitely an example of where quality input leads to quality output. Judy Farrimond is technical advisor catastrophic and legal services, and Ian Elliott is the national director of clinical services at Sibley & Associates Inc.
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Alberta’s
New Rules of Court BY NANETTE S. KUFELDT AND LOVELY ANN N. REJZEK
The new Alberta Rules of Court — proclaimed in force on Nov. 1 — apply to all existing proceedings. The new Rules have been completely reorganized and are now arranged chronologically according to the stage of litigation. Ideally, the justice system will be easier to navigate, not only for lawyers, but also for the insurance industry and even self-represented litigants. As such, all should be aware of the most significant changes in order to effectively manage files in the landscape of the new Rules.
Purpose and intention The Foundational Rules in Part.1 set out the underlying philosophy and explains the purpose and intention of the new Rules. Once an action is commenced, parties must ensure they are using public funded court resources effectively and actively attempting to identify the quickest way to resolve a claim with the least expense. This part also acts as a source to assist with interpretation. Undoubtedly, this section will be used to assist with clarification should the need arise. Commencing and defending an action There are now only two ways to bring an action: by statement of claim or by originating application. Both are now in prescribed form. Backers are no longer necessary for any pleadings. 48
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Individuals may continue to represent themselves unless otherwise provided for in the Rules. The court can also permit another person to assist the selfrepresented litigant. The person giving assistance may not contravene the Legal Professions Act, meaning they cannot act as an advocate and cannot make representations on their behalf. The assistance given cannot be disruptive and is not allowed if it does not meet the purpose and intention of the Rules. A statement of defence is also a prescribed form and must be filed within 20 days if the defendant was served in Alberta, a time period five days longer than the old rules. A statement of defence must be filed within 30 days if the defendant was served outside of Alberta, but within Canada, and within two months if the defendant was served outside of Canada.
Service of Documents Service of Documents has been substantially changed, and all rules respecting service are now grouped together in Part 11. A statement of claim may still be served personally, but may also be served via “recorded mail.” There are additional rules for service of commencement documents on litigation representatives, partnerships and corporations as well as other parties. For non-commencement documents, the ambit of service is also wider than previously. Non-commencement documents may be served like a commencement document, electronically, by recorded mail or by a
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method agreed to by the parties. To serve electronically, the party must “specifically provide an address to which information or data may be transmitted.” The need for an order for service ex juris within Canada is now eliminated. As long as there is a “real and substantial” connection between Alberta and the claim, the document may be served to any province or territory in Canada without an order. Service outside of Canada will still require an order for service ex juris.
Actions: Standard or complex Actions are now categorized as standard or complex. In deciding on how to categorize an action, the parties or the court must consider things like the number of parties, documents and complexity of issues, whether expert reports are required and whether a third party claim has been or is likely to be made. The parties must determine within four months of filing a statement of defence, whether the case is standard or complex. If no agreement is reached, the action will default to Standard. If the litigation had been classified as a standard case at the outset, but later becomes more complex, the court or the parties to the litigation can class the action as complex. Once a matter is classed as complex, the parties then have fou months to agree on a complex case litigation plan. Rule 4.5 sets out the tasks that must be established like setting the date for completing disclosure of records. Once the parties have agreed www.claimscanada.ca
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to the complex case litigation plan, or an amendment to the plan, the plaintiff will need to file and serve it on all parties.
Affidavits of records A plaintiff will be obliged to serve an affidavit of records within three months of being served with the first statement of defence. A defendant will have one month from the date of service of the plaintiff’s affidavit of records to file their affidavit of records. This could greatly shorten the timeframe defendants have to file and serve their affidavit of records. A third party defendant will have three months from the date it files its defence. Of course, it is still open for counsels to agree, between themselves, to extend these time frames. Disclosure and questioning There have been some changes in terminology around how information and records are disclosed. Examinations for discovery are now called “questioning”, and discovery of evidence and documents is now referred to as disclosure. As well, the undertaking process is now specifically referred to in the new Rules. Questioning may now be done orally, under oath, or through written questions. Parties must first file and serve their affidavits of records before they can question another party. The new time limit for service of an appointment on the opposing party is at least 20 days before the questioning date. The scope of who may be questioned has been expanded to include a person who has provided services to a corporation. Interlocutory matters Interlocutory matters are now dealt with by filing an Application rather than a Notice of Motion. A notable change is that the timeframe for providing notice of an application to the opposing side has increased from two clear days to five days. Appeals from a Master Appeals from a Master will no longer be de novo, but will now be an appeal on the record. However, a judge www.claimscanada.ca
may permit new evidence to be heard if that evidence could not have been presented to the master, and is significant enough that it could have affected the master’s decision. The Rules for appeals to the Court of Appeal have not changed.
Dispute resolution (ADR) Dispute resolution is now a compulsory step in litigation commenced by way of statement of claim, as all parties must attempt a dispute resolution process before obtaining a trial date. The court can waive the request
Parties must also now confirm to the court, at least three months before the scheduled trial date, that they are ready to proceed to trial via a prescribed form, Confirmation of Trial Date.
for ADR in certain situations, for example, if the parties can show that they have already engaged in a form of ADR before litigation was commenced.
Dismissal for long delay (Drop Dead Rule) The Rules have significantly shortened the time period with which an applicant can bring an application to dismiss the action from five years to two years. This puts an onus on the
plaintiff to ensure that the action is moving forward so as to not be caught by the much shorter drop-dead rule. Likewise, parties will be able to push for a dismissal of an action much sooner if there is no movement on the action. For matters where no steps have been taken prior to implementation of the new Rules, one should refer to the bridging provision in Rule 15.4. Of course, there are still provisions with respect to agreements for delay, stays and adjournments, which will affect any delay.
Trials Prior to being allowed to schedule a trial date, the parties must provide a certificate indicating that they have performed all the necessary prerequisites, including participating in at least one of the dispute resolution processes described in Rule 4.16. Parties must also now confirm to the court, at least three months before the scheduled trial date, that they are ready to proceed to trial via a prescribed form, Confirmation of Trial Date. If neither party confirms the date, it will be cancelled. Pre-trial conferences will no longer be required to obtain a trial date. The Transitional Rules allow for matters in which Examinations for Discovery have been completed under the old Rules, to be set for trial under the new Rules without the need to engage in any dispute resolution process. Conclusion The new Rules are meant to provide parties with the means for timely and more efficient resolution of issues. How this will actually work in the field of insurance litigation remains to be determined, as there will certainly be some issues that will need to be further defined through application to the courts. Yet, the possibility of more timely resolution of claims is a bright light on the horizon of this new landscape. Nanette Kufeldt is an associate and Lovely Ann N. Rejzek is a lawyer with Chomicki Baril Mah. Chomicki Baril Mah is a member firm of the Risk Management Counsel of Canada.
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Chronic Subjective BY BRAD NICKERSON
INJURYCLAIMS
A major issue confronting liability, health, and disability insurers is persistent or chronic subjective injury (CSI) claims. A CSI is a descriptive medical condition where there is not an objective diagnostic test available to verify the severity — or even existence — of the alleged condition. The ultimate financial exposure of a CSI claim, however, can often meet or exceed what is typically seen with severe and objective physical or neurological injuries. A CSI claim is typically a soft tissue injury, a mild traumatic brain injury or a psychologically disruptive event leading to conditions such as Post Traumatic Stress Disorder (PTSD), that evolves into a chronic injury or persistent behavioral disorder. In order to assess the severity, or even the existence of a CSI, adjusters typically rely on the claimant’s subjective selfreport of their condition, rather than on objective injury diagnostic criteria. Diagnostic tools for objective injuries include physical examinations, x-rays, MRIs and CT scans. When an insurer receives notice of a serious objective injury, such as a spinal cord injury, a moderate to severe brain injury or a severe orthopedic injury, it is usually a relatively straightforward matter to predict and reserve for the ultimate probable claim exposure. Claims handling and rehabilitation procedures for serious or catastrophic objective injuries are also typically efficient and well-developed. With a serious objective injury, the insurer generally knows with a fair degree of certainty what it has on their hands, and therefore how to effectively manage its exposure. But when a CSI claim is initially reported, the acute medical condition will often appear relatively minor or benign. That being said, a certain percentage of these apparently minor injury claims evolve, irrespective of the specific compensation environment, into conditions that can have a financial impact on the insurer similar to that of the serious or catastrophic objective injury. To date, efforts and programs to effectively manage CSI claims, which are essentially defined by their epistemic uncertainty, have proven less than satisfactory.
An escalating public health concern It is apparent from the available data that CSI claims are 50
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an escalating public health problem. Estimates from Health Canada indicate that persistent chronic disorders have become an epidemic, currently affecting 20 per cent to 30 per cent of Canadians. The last National Population Health Survey estimated chronic pain conditions cost the economy approximately $15,000 per person affected per year. A report on the Economic Burden of Illness in Canada determined that indirect costs, such as long-term disability payments were highest for chronic musculoskeletal disorders.1 A Danish study found that patients with chronic pain experience twice as many days missed at work, are seven times more likely to quit their job due to health reasons, make twice as many contacts with health care professionals and make 25 per cent more use of health care resources.2 Non-specific chronic pain conditions were costing the U.S. economy over $60 billion per year in lost productivity and health care costs, according to a calculated analysis by Stewart and Colleagues published in 2003. This was at least equal to the costs of heart disease or cancer.
Investigative programs When assessing CSI claims adjusters must rely on the claimant’s subjective self-report. The validity of the claimant’s self-report is, by it’s very nature, contingent on their truthfulness. The problem is that it can be exceptionally difficult to know when someone is being truthful. Knowing truth implies getting inside the mind of another human being. When confronted with CSI claims, the insurance industry still commonly applies investigative programs designed and intended for objective injuries. These measures are of questionable value when applied to CSI claims, except for exclusionary purposes. For example, one may use one such measure to determine what types of injury are not present. Investigative programs intended for objective injuries may in fact increase the financial severity of a chronic subjective injury claim. What is required are more effective methods as opposed to more effective individual tools. Tools implemented as part of a general claims handling program can contain the costs associated with CSI claims and other types of behavioral disorders simply by being applied differently. Unfortunately, some traditional claims management approaches also tend to assume if the claimant does not have www.claimscanada.ca
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a serious objective injury, and their disability persists beyond typical time lines, then the claimant is likely be exaggerating their claim. However accurate this view may be in any given case, the courts do not default to a description of the patient’s condition as fraud or exaggeration simply because the claimant does not appear to have suffered a clinically significant objective injury and their disability persists beyond a normal time frame. The courts are generally indifferent as to whether the plaintiff’s condition is the result of an objective injury or a valid behavioral disorder. If the validity of the claimant’s condition is established to the court’s satisfaction, then the only remaining concern is whether the defendant is responsible for causing the plaintiff’s condition. In cases involving disability carriers and other types of no-fault insurance regimes, the question becomes whether there is any right to indemnity under the terms of contract or governing statute. The key consideration in determining if a CSI is a compensable condition, aside from the issue of causation, is the mental state of claimant. Is their condition real to them? Programs designed to investigative and validate objective injuries do not tell anything about a claimant’s intent or interior mental state.
Integrated claims management Integrated claims management (ICM) seeks to discover how the subject sees the world, without taking the accuracy of the subject’s view for granted. Rather than an all or nothing approach, ICM practitioners consider the claimant authoritative only about how things seem to them. This requires the practitioner listen to the claimant and takes what he or she says seriously, but to also look at everything else available to us. These things include the subject’s behavior, interactions, bodily responses and environment, and the practitioner will be ready to conclude that the subject is wrong even about his or her own mind. The approach is to set up integrated programs designed to function as an experiment. The tools utilized function as a scientific test to assess the validity of the individual’s self-reported mental state; that on which their medical diagnosis is based. An ICM practitioner regards medical diagnosis as provisional; in fact, it is only a working hypothesis to be applied to a process for verification. ICM demands that one remain skeptical about what one can claim to know, until that information is empirically verified. When we apply an objective injury assessment model, which first and foremost requires the claimant to prove that they are injured, we risk driving the claimant further and deeper into their illness role, sometimes irredeemably. Ultimately, an objective injury validity model, applied to a CSI claim, is self-defeating and often to the insurer’s financial detriment. ICM does not dismiss the first-person perspective, but rather brackets it so that it can be inter-subjectively verified by empirical means. Once the experimentation ensues, a claimant’s perspective is assessed like scientific evidence. Applying a validating experiment is compatible with the application of falsifiability as a criterion for demarcating science from non-science. The criterion of falsifiability was enshrined in United States law as part of the Daubert Standard set by the U.S. Supreme Court for whether scientific evidence is admissible in a jury trial. 52
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That something is falsifiable does not mean it is false. It means that if something were false, then its falsehood could be demonstrated by way of a conceivable experiment. An example of this type of reasoning is the well-known Black Swan hypothesis, where the assertion “all swans are white,” can be proven wrong by experiment. In Australia where a species of black swan was found to exist, this assertion is proven false. As Albert Einstein is reported to have said, “No amount of experimentation can ever prove me right; a single experiment can prove me wrong.” ICM is quite simply a program to design and implement validating experiments to prove if a claimant is credible.
Integrated investigative program If we cannot verify the validity of the claimant’s alleged injury condition or if the claimant is inconsistent in their presentation or non-compliant with treatment, these behaviors will be carefully documented. Mitigation or credibility defenses that might later arise in litigation will possess significant, if not compelling, narrative power. ICM assumes a comprehensive assessment program that can include a wide variety of possible investigative tools. The overall goal is to determine if the claimant’s provisional diagnosis, based on their subjective self-report, is incompatible with possible empirical observations. This type of integrated investigative program may utilize, but is certainly not limited to: • the behavioral observations of clinicians (physicians, therapists, psychologists) within a designed “treatment as assessment” rehabilitation program; • independent medical examinations and/or functional capacity evaluations; • surveillance and video-documentary programs; • general background and lifestyle investigations. In the accident benefit and disability realm, an ICM based “treatment as assessment” rehabilitation program can be a critical determinant. An experiment-based ICM program in the clinical environment can also facilitate the behavioral remodeling of the claimant. With a valid CSI disorder, an ICM program provides scientific tools to functionally rehabilitate the claimant, and move them away from the injury role they have assumed. If compliance or consistency issues arise and persist in the clinical environment, sufficient evidence will often be obtained during the course of the ICM program to demonstrate, to a legal standard, that the claimant is not credible. In such cases, if a claimant continues in the litigation or adjudication process, they do so at their own peril. Whether it is determined that a given claimant is credible but can be returned to functional wellness, or whether it is shown that the claimant is not credible, and assertive defense tactics need to be implemented, the application of ICM programs to the current CSI epidemic, would doubtless result in very significant financial savings to the North American insurance industry. Brad Nickerson is a senior loss consultant with Canpro Investigations. 1. Public Health Agency of Canada, 1998 2. Sjøgren et al., 2003 www.claimscanada.ca
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Subrogation Rights The Ontario Court of Appeal addresses subrogation under the standard mortgage clause BY MICHAEL S. TEITELBAUM
Farmers’ Mutual Insurance Company v. Pinder is a recent Ontario Court of Appeal decision dealing with the question of subrogation rights of an insurer under the standard mortgage clause in a policy of insurance. It is an important case in terms of clarifying the right of an insurer to subrogate in a situation where it has paid a loss award to a mortgagee without establishing that it has no liability to the insured mortgagor. The Court found that there are two preconditions before the insurer can subrogate: The insurer must make payment of all or part of the mortgage, and it must establish that it has no liability to the insured mortgagor. The issue on the appeal was whether the motion judge erred by finding there were no genuine issues for trial and granting the insurer summary judgment based on its claimed right of subrogation under the standard mortgage clause. In particular, the issue was whether the payment made by the insurer to the mortgagee of any part of the loss award under the insurance policy was the only precondition for the insurer to claim a right of subrogation under the standard mortgage clause. Prior to delving into the facts and principles of subrogation in play in the present case, a few words on the function and importance of standard 54
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mortgage clauses in relation to contracts of insurance and mortgages. A major concern for lenders is protection against the possibility that the borrower will do something that would result in nullifying coverage under an insurance policy. In essence, the standard mortgage clause constitutes a separate contract between the insurer and a mortgagee that provides a mortgagee can collect payment even if the policy is void or voidable with regard to the insured. The lender will therefore maintain coverage and receive payment regardless of any potential breach of the policy that would otherwise result in a denial of coverage.
Royal Bank of Canada v. State Farm and Casualty Co. Accordingly, standard mortgage clauses constitute vital terms in policies of insurance relating to mortgaged properties, and this importance has been recognized by the courts. For instance, the paramountcy of the standard mortgage clause in a policy of insurance is outlined in the case of Royal Bank of Canada v. State Farm Fire and Casualty Co., which stands for the proposition that a mortgagee’s coverage would remain in force despite any act or omission of the mortgagor, including one which may cause a material change in the risk. In State Farm, the insurer argued that a material change in the policy — i.e., that the property had been vacated by
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the mortgagor prior to the loss – vitiated the policy of insurance. The court disagreed, holding instead that the standard mortgage clause superseded all other conflicting terms, including the one that apparently required the mortgagee to give notice of the vacancy to the insurer. The protection a standard mortgage clause affords a mortgagee results in ramifications for the insurer, who, despite having paid in some instances on a policy of insurance where alleged policy breaches have occurred, will now have to consider how to recoup losses it deems wrongful. The insurer in such instances may wish to pursue the insured in a subrogated action. In the present case, there was a fire at the home of the appellants, Joyce and Cindy Pinder, who held a policy of insurance with the respondent, Farmers’ Mutual Insurance Company. There was a five-year mortgage with the Bank of Montreal. The Pinders submitted a claim to Farmers as a result of the damage caused by the fire, which was denied on two grounds: That the Pinders voided the policy through their failure to notify the insurer of a material change in the risk, www.claimscanada.ca
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and they willfully made a false statement with respect to their claim. The Bank of Montreal submitted a proof of loss to Farmers, seeking payment of the mortgage under the standard mortgage clause of the policy. Farmers paid the principal balance. The Pinders initiated a claim against Farmers seeking an Order declaring that their insurance policy was valid and binding, which has yet to be tried. Farmers in turn commenced an action against the Pinders, relying on its right of subrogation under the standard mortgage clause. The standard mortgage clause provides in part: “Whenever the insurer pays the mortgagee any loss award under this policy and claims that — as to the mortgagor or owner, no liability therefore existed, it shall be legally subrogated to all rights of the mortgagee against the insured . . . or the insurer may at its option, pay the mortgagee all amounts due or to become due under the mortgage or on the security thereof, and shall thereupon receive a full assignment and transfer of the mortgage together with all securities held as collateral to the mortgage debt.”
Two preconditions The Pinders took the position that the standard mortgage clause is triggered only by Farmers not being liable to the Pinders for the fire loss. The insurer argued that the clause provides that the insurer’s payment of the mortgage debt to the mortgagee is the only precondition for the insurer’s right of subrogation. Justice Juriansz, on behalf of a three-member panel, found the insurer’s interpretation was incompatible with the language of the clause. He found that the language of the clause in fact outlines two preconditions to the insurer’s right of subrogation: The first is that the insurer pays the mortgagee some portion of the loss award under the policy, and the second is that the insurer must establish that it is not liable to the mortgagor. On the second precondition, Juriansz observed that if read literally, it could mean the insurer’s right of subrogation would be triggered by the www.claimscanada.ca
mere assertion that it has no liability to the mortgagor. He held that such a meaning would be incompatible with the clause’s language and inconsistent with the insurance policy as a whole. It contradicts the longstanding principle outlined in Consolidated Bathurst Ltd. v. Mutual Boiler & Machinery Insurance Co., that the literal meaning of insurance contracts should never be read in a way as to bring about an unrealistic result, or one which would not be within the reasonable contemplation of the parties at the time the contract was formed. Despite the fact that the standard mortgage clause is
An interesting question, however, is whether an insurer can fully pay off the mortgagee, take an assignment from the mortgagee, and then pursue the mortgagor under the mortgage. for the benefit of the mortgagee in the event of loss, it is also for the benefit of the insured — as long as the policy remains in force, the insurer’s payment to the mortgagee would be a fulfillment of its obligations to the insured just as much as to the mortgagee. Accordingly, the second precondition in the clause should be interpreted to require that the insurer establish that the insured mortgagor has voided the policy in some way.
Juriansz noted the importance of ensuring that there remains a consistency in terms of insurance schemes throughout North America, and described it as “essential” to examine American jurisprudence regarding this issue. A series of American cases consistently maintain that a right to subrogation in these circumstances does not arise as the result of a “naked claim” asserting that there is no liability to the mortgagor — there must be some basis or merit relating to the claim that the policy is void. Here, the court found the second precondition was a genuine issue for trial. Farmers’ claim that there was a material change in risk resulting in the policy being vitiated had not been established prior to initiating the subrogation action. Given the court’s decision, the approach often taken by insurers of paying the insured mortgagee’s claim and then pursuing the insured mortgagor without the mortgagor’s entitlement being determined is no longer viable. An interesting question, however, is whether an insurer can fully pay off the mortgagee, take an assignment from the mortgagee, and then pursue the mortgagor under the mortgage. Based on American authority cited by the court, even this approach is not acceptable unless the insurer establishes it has no liability to the mortgagor as its insured. We query whether the mortgage clause can be read to permit this, as, from a contractual perspective, there should be no reason why such an assignment is not permissible. Ultimately, however, it appears the court is saying it would be inappropriate and beyond the parties’ contemplation that an insurer can use this tactic against its insured without it being found that one or more grounds exist for the negation of an insured mortgagor’s rights under its policy. Michael S. Teitelbaum is a partner with Hughes Amys LLP. Juliana Stone, student-at-law, assisted in preparing the article. Hughes Amys is a member firm of The ARC Group Canada.
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A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA
Not My Fault: Defences to Product Liability Claims
I
n the last issue of Claims Canada, Education Forum reviewed the legal bases for product liability claims in common law provinces. In this issue, we look at defences to claims brought in tort against a product manufacturer.
Policy coverage issues Product liability is often covered under a CGL policy, and may be on a claims-made basis or an occurrence basis. Where a loss is suffered months or years after the item was manufactured, one insurance policy, written on an occurrence basis, may provide coverage while another, written on a claims-made basis, may cover only claims that are made and reported by the insured during the policy period, regardless of when the damage occurred. The adjuster must establish when the claim was made, when it was reported by the insured, when the loss actually occurred and what coverage the policy provides. The CGL policy excludes damage resulting from products in the insured’s care, custody or control. Product liability and completed operations insurance provides coverage for bodily injury or property damage resulting from an occurrence or accident arising out of the product or the work performed, but only applies if the occurrence or accident happens away from the insured’s premises, after control of the product 56
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has been relinquished or work has been completed. Most CGL liability policies insure against liability imposed by law upon the insured for damages resulting from bodily injury to others or injury to the property of others. They do not intend to pay for removing and replacing an insured’s defective work. In addition, there must be actual physical damage to property, or loss of use of tangible property even though it is not physically damaged, in order to qualify for coverage under the CGL policy. The policy does not cover pure economic loss. For example, it will not cover a decline in a third party’s fund of cash because it was not invested wisely. Finally, CGL policies may have an aggregate limit applicable to products liability losses. The adjuster must identify the claim accurately to ensure that the claim is allocated properly.
If it can be shown that the intervention led to the defect, then the insured may have recourse against another party or may be held jointly responsible for the damages.
Others responsible for the defect A consumer may receive a product in the same form as when it left the manufacturer, or the product may have been examined or altered by someone before the consumer received it. When an intervening activity such as inspection, wholesaling, distribution or installation creates or contributes to a defect in a product, this can affect the injured party’s claim against the manufacturer.
Sometimes a product that does not harm the majority of the population may nevertheless be harmful to individuals with an allergy or other sensitivity. If one person is sensitive, it does not necessarily mean that the product was defective and that the manufacturer will be found liable. However, where many persons may be affected and the results are more serious, the manufacturer may have a duty to warn the consumer.
December/January 2011
Loss Mitigation
A claimant is required to do everything possible to mitigate any injury and must accept any reasonable treatment that would improve his or her condition. If the claimant declines to do so, deductions are usually made from the claim to reflect the improved state the claimant would have experienced had the treatment been administered.
Sensitivity of User
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For example: • If a negligently conducted intermediate inspection of the goods contributed to the loss, the inspecting party may bear a share of the damages. • If a product was adequate when delivered but was installed negligently, the installation contractor may be liable instead of the manufacturer. In addition, the plaintiff may or may not have inspected the product before using it, and this could affect the liability of the parties. If the manufacturer can show that a party handling the goods, or even the ultimate consumer, should have noticed and corrected an obvious defect, the manufacturer’s liability may be limited.
Contributory negligence When a consumer knows of a defect in the product yet continues to use it or does not take reasonable care in using it, he or she may contribute to the cause of the injury. Provincial legislation permits damages to be apportioned between the claimant and the defendant when contributory negligence is a factor. Abnormal use If the defendant can prove that the product was put to a use that was totally unpredicted, the defendant will be absolved of liability. For example, in Rae v. T. Eaton Co. (Maritimes) Ltd., a can of artificial snow was banged on concrete and it exploded, injuring a child’s eye. No liability was found because the use was considered abnormal. Voluntary assumption of risk The defence of voluntary assumption of risk (volenti non fit injuria) rests on the principle that those who waive their rights are not protected by law. When a consumer is provided with information about a product that would lead a reasonable person to fully appreciate the risk associated with the product, and yet the person continues www.claimscanada.ca
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to use the product until an accident happens, then the volenti maxim could be applied: a court would likely rule that the claimant had voluntarily assumed the risk.
Obvious danger A manufacturer does not have a duty to warn the consumer of an obvious danger. The law assumes that when the consumer decides to use a product and its use leads to foreseeable results, the consumer has voluntarily assumed that risk. Learned intermediary rule The learned intermediary rule is another exception to the manufacturer’s duty to warn a consumer about the risks of a product. The rule applies when a product is technical and intended to be used only under expert supervision. Many medical and pharmaceutical products fall into this category. The expert — a “learned intermediary”
— generally needs less information about the product than the general public would. For example, a manufacturer selling its products only to veterinarians might provide information about the active ingredients of a medication but not outline their possible harmful effects. The manufacturer could rely on the learned intermediary rule, expecting any competent veterinarian to know the relevant contraindications. As in any liability claim, prevailing judicial trends affect the recommendations loss adjusters should make on liability and settlement amounts. It is important to keep up with changes in the law. 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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• on the scene OTS Deanna Hodges has joined Insignia Forensic Group Inc. Hodges is a chartered accountant who has specialized in insurance loss quantification for 10 years, with a particular expertise in income replacement benefit calculations. ●
Deanna Hodges
John Chippendale
Richard Evans
Granite Global Solutions Inc. — the holding company of McLarens Canada, Sibley & Associates, King Reed & Associates and Rochon Engineering — has announced a series of board and executive appointments. The appointments include: • John Chippendale, vice chairman of HKMB Hub International, to Granite’s board; • Richard Evans, a past president of Liberty Insurance Company of Canada, to Granite’s board; • Duncan Smith to chief financial officer of Granite; and • Will W. Chang to vice president, general counsel and coporate secretary of Granite Global Solutions. Smith most recently served as CFO of EISI, a private equity-backed technology company. Chang’s previous post was head of legal for Transat Holidays. ●
Esporta Wash Systems Inc. no longer has an exclusivity agreement with WINMAR Property Restoration Specialists and Disaster Kleenup Canada (DKC). WINMAR and DKC signed an agreement with Esporta Wash Systems in 2007, giving the two Canadian restoration contractors exclusive rights to use the Esporta technology for the restoration of soft contents. Esporta Wash Systems’ patented and proprietary technology helps restore large amounts of the soft contents traditionally cashed out by insurance companies, thus requiring fewer damaged goods to be transported to landfill sites. “The Esporta Wash System technology has provided us with the benefits of reduced loss costs, as well as being more sustainable,” said Glen Oxford, national property claims manager for Co-operators Insurance. “The end to the Canadian exclusivity is important to us, because it makes the technology available to more contractors and other organizations who can bring the benefits of the Esporta to a greater number of our clients.” ● In anticipation of the transition of HCAI from a project to an operation, an insurer user group has been formed. The user group consists of six elected representatives from the corporate adjuster community and one elected representative from Ontario’s independent adjuster community. The members of the group are: Insurers with +10% Market Share • Erin Warry • Valerie Burke Insurers with 4%-10% Market Share • Ann Shewchuk • Stephanie Brown Insurers with 0%-4% Market Share • Jackie Brouwers • Rowena Griffin Laurie Walker of McLarens Canada will be filling the seat of independent adjuster, with Kelly Stevens of Crawford & Company (Canada) Inc. serving as the alternate. A subcommittee is being formed of all independent adjusters handling Ontario Statutory Accident Benefits Claims. If you are an independent adjuster and wish to participate in this group, please email laurie.walker@mclarens.ca or kelly.stevens@crawco.ca for more information.●
Duncan Smith
Will W. Chang
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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Crawford & Company (Canada) Inc. opened an office in Prince George, B.C., effective Sept. 1, 2010. “The addition of this office, which covers an important territory in northern British Columbia, will allow us to service our clients even more effectively than before,” said Walter Waugh, vice president of Crawford’s Western Canada operations. Robin Stevens, CIP, managing professional, will operate the Prince George office. Stevens has more than 18 years of experience as a multi-line adjuster, and will report to Dave Lemire, branch manager for Vancouver and Vancouver-area offices. ●
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CIAA New Members — October 2010 CORPORATE MEMBERSHIP Cunningham Lindsey International MGB Claims Consultants Inc. INDIVIDUAL MEMBERSHIP Allied Claims Adjusters Barry Fiendell, CIP Laureen Major, CIP Tom Rixon Canadian Claims Services Thomas Miller Keith James Jason Harris, CIP A.T.(Tim) Hauck, CIP Diane Tremblay, CIP Janice Meyers, CIP Brian Carlson, B.Comm. Brad Christensen Crawford & Company (Canada) Camille LeRose, FCIP, CRM Jane Rogers, CIP, CRM Mike Tolan, B.Sc., FCIP Ashley Dunlay, CIP Richard Nicolle
Vancouver, BC Toronto, ON
Saskatoon, SK Saskatoon, SK Saskatoon, SK
Level 3 Level 3 Level 3
Vancouver, BC Vancouver, BC Vancouver, BC Calgary, AB Calgary, AB Calgary, AB Calgary, AB Calgary, AB Inc. Hamilton, ON Hamilton, ON Hamilton, ON Toronto, ON Toronto, ON
Level 1 Level 3 Level 3 Level 3 Level 3 Level 3 Level 3 Level 1 Level 3 Level 3 Level 3 Level 3 Level 3
Canadian Independent Adjusters’ Association Nova Scotia Region president Grant King presented a plaque and cash award to Jennifer Greene of Intact Insurance in Halifax for Best Performance by a 1st Year CIP Student, during the Insurance Institute of Nova Scotia’s Awards Dinner on Nov. 3, 2010. ●
Canadian Independent Adjusters’ Association Nova Scotia Region president Grant King presented a plaque and cash award to Susan Hatt of Marsh Adjustment Bureau for Highest Result in C110 –Essentials of Loss Adjusting, during the Insurance Institute of Nova Scotia’s Awards Dinner on Nov. 3, 2010. ●
Shannon Price Toronto, ON Marisol Torres Toronto, ON Nicole McGrath Bathurst, NB Kimberley Barker, BA, CIP Fredericton, NB Dennis Cormier, CIP Moncton, NB Reg Inman Miramichi, NB Cunningham Lindsey International Denis Smith Vancouver, BC John Farthing Vancouver, BC Kernaghan Adjusters Limited Karin Bezurova Vancouver, BC Larry Cote Vancouver, BC Terry Lee Winnipeg, MB McLarens Canada Spencer Bailey London, ON MGB Claims Consultants James Giffen Toronto, ON Pinnacle Adjusters Group Inc. Karen Forsey-Perry Toronto, ON Sedgwick CMS Canada Doris Salvatore, CIP Mississauga, ON
Level 1 Level 1 Level 1 Level 3 Level 3 Level 3 Level 3 Level 3 Level 1 Level 1 Level 3 Level 3 Level 3 Level 1 Level 3
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• on the scene OTS Carstar Automotive Canada announced its intention to build a 16,000-square-foot head office in Hamilton, Ont. during a special groundbreaking ceremony on Nov. 22. The facility will be called Carstar Vision Park, “reflecting the company's vision to be the leader in the Canadian collision repair industry.” The new facility will be located at 1460 Stone Church Rd. E, overlooking the Mount Albion Conservation Area. It will also be home to Carstar University, the company's learning and research centre. This facility will include a training centre with production bays and the latest repair equipment, allowing the corporate field team to test new processes. It will also be a central point for franchise partners to bring in their management and repair technicians to receive up-to-date, hands-on training in addition to classroom learning. “It is with great pride that I announce today the beginning of a new and exciting chapter in Carstar’s history,” said president and CEO Sam Mercanti. “Although our success is a result of the hard work of over 140 franchise partners from coast-tocoast, it all started in Hamilton and we are thrilled to make this major investment today in our hometown.” ●
Insurance Professionals Know Where to Look for Their Next Career Move.
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Held Oct. 6th at Deer Creek Golf and Country Club, The Insurance Community 3rd Annual Wish Upon a Star Charity Golf Tournament in support of the Starlight Children's Foundation was a sold-out success. Generous golfer’s teedup to help make a difference in the life of children and the tournament organizers presented over $46,500 to the Starlight Children’s Foundation. For more than 20 years, Starlight Children’s Foundation has committed itself to improving the quality of life for children with chronic and life threatening illnesses and life -altering injuries by providing entertainment, education and family activities that help them cope with the pain, fear and isolation of prolonged illness. ●
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• on the scene OTS Delegates of the 2010 National Insurance Conference of Canada (NICC), held in Montreal, Que., enjoyed the opportunity to share refreshments and conversation during the opening night of the conference and before enjoying the dinner. More than $14,000 was raised in lieu of speaker gift donations, in addition to a silent auction and raffle for WICC Quebec Chapter, the 2010 NICC charity of choice. �
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McLarens Canada, King-Reed Investigations, Rochon Engineering and Sibley & Associates (Granite Global Solutions companies) held a RIMS Canada Edmonton Conference ‘Kick-Off’ reception on Sept. 25 at the Rose & Crown Pub in Edmonton, providing delegates with an opportunity to mingle and kick-start the conference. ●
Crawford & Company (Canada) Inc. held its annual RIMS Canada dinner on Sept. 25 at Sorrentino’s restaurant in downtown Edmonton. ●
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• on the scene OTS More than 70 companies and organizations filled the Exhibit Hall at the 2010 RIMS Canada Conference in Edmonton. Exhibitors worked the show and showed their work, as delegates networked with colleagues and checked out the latest company offerings. �
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ARC Group Canada hosted a reception at the RIMS Canada Conference in Edmonton at Lux Restaurant on Sept. 27, including entertainment and a networking opportunity for guests and delegates. â—?
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• on the scene OTS More than 130 guests attended Gilbertson Davis Emerson’s Annual Fall Reception. This year’s event was held at the National Club on Sept. 30. Guests were treated to appetizers and drinks, with musical entertainment provided by a harpist and flute duo. ●
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• on the scene OTS More than 1,200 Crawford & Company employees joined forces around the world as part of the company’s annual Global Day of Service. At home, events were held in Vancouver, Calgary, Windsor, Toronto, Kitchener and Ottawa. Various projects included volunteering in homeless and women’s shelters, planting trees, donating food and clothing to charitable organizations and volunteering with the Children’s Aid Society “As we have in the past, we continue to support a number of community initiatives with our corporate dollars, but we also know that when we roll up our collective sleeves and work together to help our communities, the results are tremendous,” Jeffrey T. Bowman, president and CEO, said. “I am proud of the generosity our employees and their family members showed to the towns and cities where we live and work in our second Global Day of Service.” ●
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Spring Fresh, a division of FirstOnSite, celebrated its 30th anniversary with an Open House. Guests were able to have a tour of the new office and plant location in Grande Prairie, Alta. The evening started with cocktails before a tasty selection of food was served, while entertainment throughout the evening was provided by Laurie Middaugh. â—?
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• on the scene OTS The Insurance Brokers Association of Ontario (IBAO) held its 90th Annual Convention and Exhibition in Niagara Falls on October 20 and 21. More than 75 exhibitors were on site to showcase their products and services and meet with others in the industry. �
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The ARC Group Canada held its Annual Seminar & Cocktail Reception on Oct. 28 at the St. Andrews Club & Conference Centre. Delegates heard from the insurance and legal perspectives with respect to professional liability. Immediately following the seminars, guests attended a reception. â—?
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• on the scene OTS WICC Ontario Chapter held its annual Breakfast for Cancer on Nov. 3 at the Arcadian Court in Toronto. The sold-out event — with more than 450 insurance industry supporters in attendance — absorbed the personal and courageous story of Ovarian Cancer survivor and speaker Cynthia Badburn. Despite her obstetrician/gynecologist’s belief that her rash of symptoms was caused by an ovarian cyst, Bradburn had a gut feeling that it was something more serious. When she attended an Ovarian Cancer Canada ‘Listen to the Whispers’ awareness presentation at her workplace, “I cried and came out of there convinced I had ovarian cancer.” “Ovarian cancer may have changed my life, but I am determined to not let it ruin my life. I’ve learned that life has no guarantees, so I’m living each of my days to the fullest and I’m living without regrets. Anything that’s within my control, I’m going to take it and run with it.” ●
Disaster Restoration Services
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Paul Davis Systems Burlington location held a Holiday Open House on Nov. 4. Guests were able to take a tour of the location, where they learned about different cleaning and drying techniques, among other restoration practices. Mayor Cam Jackson was on-hand for the official ribbon-cutting ceremony. â—?
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• on the scene OTS The Toronto Insurance Conference’s (TIC) 55th Annual Black Tie Dinner was held on Nov. 11 at the Four Seasons Hotel in Toronto. Lorne Rubenstein, award-winning golf writer, columnist for The Globe and Mail and author of eight books, most recently, This Round's on Me: Lorne Rubenstein on Golf, was the guest speaker. ●
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National Standing Committees 2010 – 2011 ADVISORY 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 Delores Thorbourne, BA, FCIP McLarens Canada Suite 103 Greystone VII 4208 - 97 Street Edmonton, AB T6E 5Z9 Phone: (780) 442-3077 Fax: (780) 466-0325 E-mail: delores.thorbourne@mclarens.ca Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 - 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com 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
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
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
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
Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 - 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com
Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Avenue, Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com John L. Taylor, BBA, FCIP, CLA Ontario Mutual Insurance Association 350 Pinebush Road, PO Box 3187 Cambridge, ON N3H 4S6 Phone: (519) 622-9220 Fax: (519) 622-9227 E-mail: jtaylor@omia.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
DISCIPLINE 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
David Porter, LL.B., FCIP, CRM Advance Claims Service Ltd. 206 - 2323 Boundary Road Vancouver, BC V5M 4V8 Phone: (604) 642-0660 Fax: 1-888-452-5246 E-mail: davidp@advanceclaims.com
EDITORIAL Fred Silvestri, BA, CIP NCRS 121 King Street W., Suite 1810 Toronto, ON M5H 3T9 Phone: (416) 733-9265 Fax: (416) 733-0510 E-mail: fred.silvestri@srsconnect.com
CAREER RECRUITMENT PLANNING 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 COMMUNICATIONS Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Avenue, Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com Paul Hancock, B.Sc., CIP Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: Paul.Hancock@crawco.ca 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 Marie Gallagher, FCIP, CRM McLarens Canada 71 King Street Suite 204 St. Catharines, ON L2R 3H7 Phone (905) 984-8282 Fax (905) 984-8290 E-mail: marie.gallagher@mclarens.ca DESIGNATION Paul Hancock, B.Sc., CIP Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: Paul.Hancock@crawco.ca
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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 BBCG 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 Richard Van Horne Action Investigations Inc. 2 Catelina Court Dartmouth, NS B2X 3G9 Phone: (902) 462- 1222 Fax: (902) 462-3688 E-mail: richardvanhorne@actioninvestigations.ca FINANCE 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
IBC: LIAISON, LEGISLATIVE & FORMS David McKeon, CIP McKeon & Associates Adjusting Company 2120 Rathburn Road East, Suite 91 Mississauga, ON L4W 2S8 Phone: (905) 602-0321 Fax: (905) 602-4025 E-mail: david@maaac.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 Santo Carbone, CRM, FCIAA Crawford & Company (Canada) Inc. 300-123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 364-6341 Fax: (416) 435-0546 E-mail: santo.carbone@crawco.ca NOMINATING 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 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 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 David Porter, LL.B., FCIP, CRM Advance Claims Service Ltd. 206 - 2323 Boundary Road Vancouver, BC V5M 4V8 Phone: (604) 642-0660 Fax: 1-888-452-5246 E-mail: davidp@advanceclaims.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 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 2010 – 2011 NEWFOUNDLAND & LABRADOR Marcel Pitcher, CIP, CRM Crawford & Company (Canada) Inc. 300 – 44 Torbay Road St. John’s, NL AlA 2G4 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Marcel.Pitcher@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. 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: laucoin@planthope.com QUEBEC/AESIQ Elaine Savard, LL.B., FPAA Les Expertises Richard Racette 1090, rue Principale Sainte-Agathe des Monts, PQ J8C 1L6 Phone: (819) 326-0012 Fax: (819) 326-2023 E-mail: elaine.savard@exprr.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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• on the scene OTS The Ontario Pond of the Honourable Order of the Blue Goose hosted its annual Christmas Galabration on Dec. 17, 2010. More than 100 ganders and guests attended an elegant evening of fellowship, dining and dancing in the true spirit of the Christmas season. The event was held at the trendy Thompson Toronto hotel. �
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