Claims Canada February/March 2010

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February/March 2010

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Contents FEBRUARY/MARCH 2010 • VOLUME 4 • NUMBER 1

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Cover Feature 12 Revitalizing the CIAA After soliciting feedback from the insurance industry, the Canadian Independent Adjusters’ Association has created an action plan for change.

BY LAURA KUPCIS

Spotlight 18 Finding a Fit No matter what comes their way, Quelmec Insurance Adjusters always overcomes the challenge with integrity and hard work.

BY LAURA KUPCIS

Education Forum

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38 Taking Care of Business Commercial property risks, both in nature and in wording, are different from personal property risks. The Insurance Institute navigates through the Commercial Property Board Form.

News Features 20 Property Loss Update The Supreme Court of Canada provides clarification on bad faith. For adjusters this reiterates the need for clarity surrounding the terms and conditions of the policy and files which prove that the adjuster has communicated with the policyholder.

BY GLENN GIBSON

26 Managing Hazardous Materials During Demolition and Reconstruction

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With taking on the role of managing contractor restoration and reconstruction activities comes some important regulatory compliance requirements and responsibilities.

BY MATTHEW R. ALLEN

28 Mary Carter: All for One? Or None for All? The usefulness of Mary Carter Agreements was raised in Laudon v. Roberts; a decision which is left binding after leave to appeal to the Supreme Court was dismissed.

Departments 4 First Notice

BY MONA GORBAN and JOANNE BLACKLOCK

30 Adjusters on the Airwaves A new television series, Cra$h and Burn, portrays an insurance adjuster in Hamilton — but not everyone is happy with the direction the show takes.

40 On The Scene

Columns

BY LAURA KUPCIS

34 Recognizing Red Flags and Slips and Falls When reviewing a slip and fall claim, watch for red flags to help determine causality and responsibility.

BY JEFF ARCHBOLD and MAJA REHOU

36 Reintroducing HCAI HCAI, after a nearly two year period of remediation, is set for reintroduction in 2010.

BY ALLISON BRAND

38 Education Forum

F

first notice

Insurers under-reporting fraud to police: StatsCan Insurance companies beset by fraudulent claims are under-reporting the fraud to police, according to a Statistics Canada report, Survey of Fraud Against Businesses.

The report is based on a survey covering about 7,500 business establishments and head offices from the retail, banking, health and property insurance sectors.

The study found just under half (about 45 per cent) of health and property insurance establishments reported experiencing fraud in 2008.

More than three-quarters (77 per cent) of all fraud incidents related to these businesses involved false or inflated claims.

Of the individual health and property insurance establishments experiencing fraud, about seven in 10 reported financial losses as a consequence.

And yet, despite the scope and impact of the reported fraud, the study found 46 per cent of all health and property insurance establishments in the survey never or rarely contacted police in cases of fraud.

“Overall, the most common reasons for not contacting police were that the incident was too minor (34 per cent) or that it was handled in some other way (33 per cent),” the StatsCan study says.

About 36 per cent said that they reported the fraud to police on occasion.

About 18per cent of all individual health and property insurance establishments said they always or often reported fraud to police.

The full report can be found at: http://www.statcan.gc.ca/dailyquotidien/091210/dq091210ceng.htm ●

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Should judge or jury hear cases involving multi-accident scenarios Is a jury capable of assessing damages in cases involving multi-accident scenarios, overlapping injuries and complicated medical evidence?

In Hossny v. Belair Insurance, an insured was injured in three separate motor accidents between 1997 and 2004, the first of which led to a trial before a judge.

The judge’s decision on damages in the first accident was rendered just one month prior to the insured’s second accident. The plaintiff’s lawyer asked the court to strike a request for a jury prior to the second trial.

Counsel for the injured victim, Galal Hossny, argued the facts and issues relating to his client’s second claim were too complex for assessment by a jury. Hossny’s lawyer, Murray Miskin, said the injuries Hossny suffered in his second accident on Jan. 13, 2002, both physical and psychological, completely overlapped injuries suffered in the first accident on Nov. 22, 1997.

Miskin argued a global assessment of damages in the first two accidents and apportionment to each accident would be required according to case law established by the Ontario Court of Appeal.

Miskin also argued that the judge’s reasons for decision in the first case would have to be considered by the court in assessing the plaintiff’s claim in this action; for a jury to do so would be difficult and create issues of prejudice, he argued.

In contrast, counsel for Belair submitted that: • the decision of the judge in the first case was not relevant; • a global assessment of the injuries would not be needed; and • a jury could determine Hossny’s condition immediately before the (second) accident in question and determine if his condition was aggravated by the accident or not and, if so, assess damages.

Belair argued that Hossny is no different from any other case in which there is a pre-existing condition. Therefore, the matter was not too complicated for a jury to decide.

Ontario Superior Court Justice Nancy Spies did not decide the matter one way or another. Instead, she offered a number of possibilities in which either a judge or a jury might hear the matter, depending on the caselaw used and further (forthcoming) evidence about the damages claimed. ●

Nova Scotia court throws out Charter challenge against cap for minor auto injuries In Hartling v. Nova Scotia, the Supreme Court of Nova Scotia has thrown out a Charter challenge to the province’s $2,500 cap for minor auto injuries, saying the cap does not discriminate on the basis of either sex or disability. In his 104-page decision, Supreme Court of Nova Scotia Justice Walter Goodfellow said the evidence in the case before him not only failed to establish an infringement of the applicants’ rights on a balance of probabilities, “but rather established overwhelmingly that there is no stigmatization or marginalization resulting from the legislation.

“What limited stigmatization and marginalization exists is a by-product of the adversarial system which pre-dates the [cap] legislation and which, through the process of education, etc., is everdiminishing.” Goodfellow noted the nature of the adversarial tort system requires “patients to focus on their pain

and disability, which is counter to the best methods of treatment which focuses patients on their abilities.”

Goodfellow also drew a distinction between the Nova Scotia case and the Alberta Court of Queen’s Bench decision last year in Alberta. “The legislative scheme being attacked, specifically s.

113B(1)(a) of the Insurance Act, is, as noted, broader than the Alberta provision held by Wittmann to be unconstitutional,” Goodfellow wrote. “The cap applies to all minor injuries and not restricted solely to ‘soft tissue injuries,’” Goodfellow observed.

Goodfellow further observed the cap scheme in Nova Scotia wasn’t discriminatory in the sense that “the legislative scheme does not deny those accident victims who suffer minor injuries the right to pursue their pecuniary losses such as loss of income, health care costs, loss of domestic services, et cetera, et cetera.” ●

www.claimscanada.ca

F first notice Insurance contract to pay accident benefits not “a contract for peace of mind”: Ontario judge The daughter of a woman who was injured in an auto collision and subsequently denied accident benefits is not entitled to collect benefits under her mother’s policy based on the loss of her mother’s care and guidance, the Ontario Superior Court has ruled.

In Mirjagic v. State Farm Mutual Automobile Insurance Company, the plaintiff and her mother were involved in an automobile collision. State Farm denied benefits to the mother.

The daughter pleaded the insurer’s denial of the benefit caused the mother to suffer a total physical and mental breakdown.

As a result, the insurer’s decision had caused the daughter to lose her mother’s care and guidance at the age of 11. This further caused the daughter to be put in foster care, compromising her education and ruining her life, Hamilton trial lawyer Lou Ferro argued before the court on behalf of the daughter.

Citing s. 270.5(a)(ii) of the Insurance Act, a motions judge held the insurance

company could be liable to the mother for damages for mental distress for breach of contract, because this was a contract for peace of mind.

Since the daughter was a dependent, she was also a party to the contract for peace of mind, the motions judge found.

But Ontario Superior Court Justice James Ramsay disagreed, saying “there is good reason to doubt the correctness of the proposition that this was a contract for peace of mind.

“The contractual provisions in question were imposed on the parties by statute,” the judge wrote. “Furthermore, even assuming that this was a contract for peace of mind, there is good reason to doubt the correctness of the proposition that the plaintiff was in the same position as her mother.”

The judge acknowledged there is a tort of negligence for infliction of psychiatric damage, but “the plaintiff has not pleaded mental distress to herself that amounts to a recognized psychiatric illness.” ●

Nova Scotia presses ahead with its review of minor auto injury cap Nova Scotia’s government is moving ahead with its promised review of the province’s $2,500 minor auto injury cap.

The government has issued a discussion paper entitled Concerning the Cap on Pain and Suffering Awards for Minor Injuries, and is calling for public input on the paper by Feb. 15, 2010.

“The Office of the Superintendent of Insurance will conduct the review over the next few months with a target completion date of spring 2010,” the discussion paper says.

The paper includes sections about the history of the cap, damage awards that are not subject to the cap and the minor injury definition.

It also has a page outlining ‘Issues With the Cap,’ which acknowledges the following: “Since the introduction of the cap, there has been a measurable decrease in average premiums for private passenger vehicles. Premiums

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February/March 2010

have also been relatively stable.”

Even so, the discussion paper goes on to say, “the precise impact of the cap, if any, is difficult to determine.”

“Fortunately, most Nova Scotia automobile insurance consumers have not been involved in an automobile accident or sustained injuries where pain and suffering awards were limited by the cap,” the discussion paper goes on to say. “However, over the past six years, some automobile accident victims who have been injured and subject to the cap on pain and suffering awards have expressed concerns about fairness.”

These and other expressed concerns “have prompted the decision to proceed with this focused review to develop and analyze alternatives to the cap.”

The paper is available at: www.gov.ns.ca/finance/en/home/insur ance/

FSCO approves average auto rate increase of 2.49 per cent in 2009 Q4, based on entire market Ontario’s insurance regulator has approved a 2009 Q4 auto insurance rate increase of 2.49 per cent, based on the entire market.

In the fourth quarter of 2009, for the 55.48 per cent of the province’s auto insurance market that had rate changes approved, the average rate change was +4.49 per cent, when weighted by market share, the Financial Services Commission of Ontario (FSCO) reported.

Rate changes approved in 2004, 2005, 2006, 2007, 2008 and 2009 were -10.60 per cent, -2.43 per cent, -1.27 per cent, +0.55 per cent, +5.59 per cent and +8.77 per cent, respectively, for the entire market.

A sampling of 2009 Q4 rate filings in order of auto insurers with the largest 2008 market share is as follows: • State Farm Mutual Automobile Insurance Company: No change.

• Intact Insurance Company: 3.75 per cent increase.

• Security National Insurance Company: 3 per cent increase.

• The Dominion of Canada General Insurance Company: 7.79 per cent increase.

• Unifund Assurance Company: 9.29 per cent increase.

• Traders General Insurance Company: 15 per cent increase • The Personal Insurance Company: 0.03 per cent decrease. ●

www.claimscanada.ca

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REAL VALUE EXPERTS

F first notice Ontario auto reforms need to clarify ‘incurred cost’: defence lawyer There is a need to provide a clear definition for the word “incurred” under Ontario’s Statutory Accident Benefits Scheme (SABS), said Philippa Samworth, a partner at Dutton Brock LLP. Typically, “incurred” is interpreted to mean that a person has paid for an expense out-of-pocket, she told delegates of the Ontario Risk and Insurance Management Society (ORIMS) professional development seminar on Jan. 15 in Toronto.

“Well, incurred doesn’t mean that [under] the Statutory Accident Benefits Schedule. Incurred means I wanted the service, I needed the service, I didn’t get the service, but now the insurer is going to have to pay me because somebody says they had to.”

The issue revolves around the notion that insurers deliberately “starve” claimants by denying a benefit such as attendant care, and then insureds, because they did not have the money, could not pay for the service, she said. For example, she points to insureds with claims that are initially deemed non-catastrophic. In such instances, the insured is entitled to $1,500 in attendant care benefits for two months. If in two years those injuries are ultimately deemed to be catastrophic, the limit of that attendant care benefit increases to $6,000 a month. In addition, the insured is entitled to collect for attendant care expenses they incurred during the interim time before they were determined catastrophic, Samworth explained.

During the two-year interim period, it’s unlikely the insured

was able to pay for $6,000 worth of attendant care, she said.

“The insurer’s going to say: ‘Well, you didn’t get the services, so I’m not going to pay. I’ll start paying now because you’re getting the services’,” Samworth said. “The insured says: ‘I couldn’t get them because you didn’t pay me. I didn’t have any money and I wasn’t working because I was obviously disabled. You had no right to deny me that, because the grounds of it were bogus’.”

According to the proposed changes, if the arbitrator feels an insurer took a reasonable position based on the medical information available, the arbitrator can say the insured’s costs weren’t incurred, and therefore the insurance company will not have to pay the costs. However, if the arbitrator feels the insurer was wrong in its approach, then, despite the insured not having incurred actual expenses, the insurance company will be required to provide the insured with the funds.

“A number of legal organizations and the Insurance Bureau of Canada asked the government to do something about the meaning of incurred,” Samworth said. “There has to be a clear definition of the term as no one seems to understand the true meaning.

“So do we see a definition [in the proposed reforms]?” she asked. “No. We see this weird section. There’s a great deal of disappointment because incurred expenses apply to care giving, housekeeping and attendant care. It is still going to allow for this potential for fraud, but on reduced limits.” ●

Paul Aquino Publisher (416) 510-6788 paul@canadianunderwriter.ca

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Christine Giovis Advertising Sales Representative (416) 510-5114 christine@canadianunderwriter.ca

Laura Kupcis Editor (416) 510-5215 laura@claimscanada.ca

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SUBSCRIPTION INQUIRIES (416) 442-5600 • 1-800-668-2374 Fax: (416) 442-2191

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Produced by the publishers of Canadian Underwriter magazine.

A bi-monthly magazine (6x per year), Claims Canada is published by BIG Magazines LP, a div. of Glacier BIG Holdings Company Ltd. Business Information Group is located at: 12 Concorde Place Suite 800, Toronto, ON, M3C 4J2.

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

All key claims process stakeholders are reached as part of our readership community – including: both CIAA member and non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management and

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Claims Canada

February/March 2010

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

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

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Message from the President La Plume du Président PATTI KERNAGHAN

CIAA is in an important period of reflection and change and for an organization whose roots date back over five decades — this is a significant undertaking that will help shape the profession of independent adjusting in the years to come. As the president, I am honoured to be at the helm during this pivotal time and humbled at the work our volunteers are engaging in on the association’s behalf.

Our creative strategic planning (CSP) session took place in early December. I was very pleased with the camaraderie and intellectual power of our stakeholder group and CSP committee. The ultimate goal of reassessing the direction of our association was front and center and we made great strides. Concerto Research presented the results of our p&c Industry Constituents Survey, which included members, non-members and stakeholders in the industry. This was an important catalyst for the advice from our stakeholder group: Ted Hellyer, vice president programs, Insurance Institute of Canada; James Geuzebroek, manager communications, IBC; Justin MacGregor, president IBAC/ EVP Martin Merry & Reid; John Welton, associate senior consultant, Transformation Dynamics; Michelle Reid, vice president ORIMS/ risk manager, TSSA; Carmen Place, past president CDL/ partner Lindsay Kenney; Bob Grouchy, manager, Claims Allianz Global Risks; Carol Jardine, president, CUMIS General; Keith Shakespeare, COO, CURIE; Heidi Sevcik, vice president claims, Gore Mutual; Mark Weir, special projects claims, Intact; and Joel Baker, chair NICC and principal Baron Quarterly Outlook. Their unrestrained comments during the four-hour morning session were taken very seriously by CIAA’s CSP committee. The CSP committee worked diligently over the next thirty-six hours to build the framework for CIAA’s future plans.

Our CSP committee includes Mary Charman, Greg Merrithew, Pat Battle, Ted Baker, Miles Barber, Reno Daigle, Jim Eso, Allan Hart, Jean-Marc Laurin, Carol Messervey, John Seyler, Craig Walker, Lesia Yacht and myself. The group was very engaged and arrived at a solid strategy map focusing on six key areas: designations, education, branding & communication, financial & resource, value to member and license harmonization.

I would like to thank the many respondents to our survey and also congratulate our survey winners. iPods were won by: 10

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February/March 2010

L’ACEI traverse actuellement une phase importante de réflexion et de changement. Pour une organisation dont les racines remontent à plus de cinq décennies, il s’agit d’une tâche énorme qui devrait permettre de caractériser la profession d’experts indépendants en sinistre dans les années à venir. En tant que présidente, je suis honorée d’être à la barre de l’ACEI durant cette période charnière et suis remplie d’admiration envers nos bénévoles qui se consacrent à cette tâche au nom de notre association.

Notre session de la planification stratégique créative (PSC) a eu lieu au début de décembre. J’ai beaucoup apprécié les bonnes relations et les échanges intellectuels entre notre groupe des parties prenantes et le comité PSC. Notre but ultime de réévaluation de l’orientation de notre association était au coeur des débats, car nous avons fait d’énormes progrès dans ce domaine. Concerto Research a présenté les résultats de notre étude sur l’industrie des dommages représentée par des membres, des non membres et diverses parties prenantes. Ces résultats ont joué un rôle catalyseur sur les réactions du groupe des parties prenantes composé de: Ted Hellyer, vp programmes, Institut d’assurance du Canada; James Geuzebroek, directeur des communications, IBC; Justin MacGregor, président IBAC/evp Martin Merry & Reid; John Welton, consultant associé principal, Transformation Dynamics; Michelle Reid, vp ORIMS/risk manager, TSAA; Carmen Place, président sortant CDL/partenaire Lindsay Kenney; Bob Grouchy, directeur, claims Allianz Global Risks; Carol Jardine, président CUMIS General; Keith Shakespeare, COO, CURIE; Heidi Sevcik, vp claims, Gore Mutual; Mark Weir, special projects claims, INTACT; et Joel Baker président du conseil NICC et mandant Baron Quarterly Outlook. Les remarques spontanément exprimées au cours de la séance matinale de quatre heures ont été accueillies favorablement par le comité PSC de l’ACEI. Ce groupe a travaillé diligemment au cours des trente-six heures qui ont suivi pour jeter les bases des plans futurs de l’ACEI. Notre comité PSC est formé de Mary Charman, Greg Merrithew, Pat Battle, Ted Baker, Miles Barber, Reno Daigle, Jim Eso, Allan Hart, Jean-Marc Laurin, Carol Messervey, John Seyler, Craig Walker, Lesia Yacht et moi. Ce groupe a travaillé d’arrache-pied pour rédiger un Plan stratégique solide axé sur six secteurs clés: appellations d’origine, éducation, image de marque et communication, finances et ressources, valeur pour les membres et harmonisation des permis. www.claimscanada.ca

Jane Richardson of Crawford, Halifax; Heather Hanna of MPI, Winnipeg and Nelson, BC’s Ashcroft Insurance Adjusters principal, Leona Ashcroft who entered as a non-member and has now decided to join the CIAA! My personal thanks to the companies that sponsored our initiative — gold sponsors: IBC, IIC and Aviva; silver sponsors: Portage Mutual, Wawanesa Mutual, Canadian Underwriter, Canadian Defense Lawyers, Claims Canada; and bronze sponsors: Gore Mutual and ACE INA. Without their support it would have been very difficult to achieve the success we have had to date. Both our survey results and actionable plans will be presented at CIAA’s mid-year meeting on Feb. 1, 2010.

Our CIAA/CICMA Joint Conference on Feb. 2 is sold out again this year! The value of building relationships between the Canadian Claims Managers’ Association and the Canadian Independent Adjusters’ Association cannot be under estimated — hence the importance of this conference. I look forward to meeting with many of you at the Joint Conference and also discussing CIAA’s survey results, which will be made public at the conference. Please watch for changes at the CIAA throughout 2010! ■

J’aimerais remercier les nombreuses personnes qui ont participé à notre étude et féliciter également les gagnants de ce projet. Ont gagné un iPod: Jane Richardson de Crawford, Halifax; Heather Hanna de MPI, Winnipeg et Nelson, Leona Ashcroft, directrice, Ashcroft Insurance Adjusters, C.-B. Cette dernière, d’abord inscrite comme non membre, a décidé d’adhérer maintenant à l’ACEI. Je tiens à remercier personnellement les sociétés qui ont commandité notre projet — catégorie or: IBC, IIC et AVIVA; catégorie argent: Portage Mutual, Wawanesa Mutual, Canadian Underwriter, Canadian Defense Lawers, Claims Canada; catégorie bronze: Gore Mutual et ACE INA. Sans leur appui, le succès obtenu jusqu’ici, aurait difficilement pu être atteint. Les résultats des études et les plans d’actions seront dévoilés à la réunion semestrielle de l’ACEI du 1er février 2010.

La conférence conjointe ACEI/ACDSA du 2 février se tiendra à guichet fermé cette année encore! L’importance de créer de bonnes relations entre l’Association canadienne des directeurs de sinistres d’assurance et l’Association canadienne des experts indépendants ne doit pas être sous-estimée — d’où l’intérêt de cette conférence. Je me ferai un plaisir de vous voir à la conférence conjointe et d’y discuter avec vous des résultats des études de l’ACEI qui y seront dévoilés. Soyez aux aguets — l’année 2010 réserve de grands changements à l’ACEI! ■ Translation provided by Henry Arcache, Themis Translations.

NATIONAL EXECUTIVE 2009 – 2010 PRESIDENT Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300-1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 Email:pkernaghan@kernaghan.com 1ST VICE-PRESIDENT Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 Email: Mary.Charman@crawco.ca 2ND VICE-PRESIDENT Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca

www.claimscanada.ca

SECRETARY Marie C. Gallagher, FCIP, CRM McLarens Canada 71 King Street, Suite 204 St. Catharines, ON L2R 3H7 Phone: (905) 984-8282 Fax: (905) 984-8290 Email: marie.gallagher@mclarens.ca TREASURER Randy P. LaBrash, CIP, CFE, CFEI Crawford & Company (Canada) Inc. 300 – 191 Lombard Avenue Winnipeg, MB R3B 0X1 Phone: (204) 947-2340 Fax: (204) 943-9168 Email: Randy.Labrash@crawco.ca PAST-PRESIDENT Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 Email: Reno.Daigle@crawco.ca

EXECUTIVE DIRECTOR Patricia M. Battle Canadian Independent Adjusters’ Association/ L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Avenue West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 Email: pbattle@ciaa-adjusters.ca DIRECTOR James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca

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

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

February/March 2010

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The Canadian Independent Adjusters’ Association has started down a road of change. The end goal is to be the voice of independent adjusters in Canada and provide exceptional value to its members.

BY LAURA KUPCIS

Vision: Building awareness of the profession, providing advocacy services and the choice for adjuster education and designations that reflect the rigorous professional standards of independent adjusting.

omeone once wrote that if nothing ever changed, there would be no butterflies. Much like the caterpillar turns into a butterfly, the CIAA is entering its own period of change and rebirth. At the end of the metamorphosis, the CIAA expects to re-emerge stronger and more valuable to its independent adjuster members — with educational and personal development offerings and memberonly designations.

“My hope and my focus is to be the organization that all independents look to to help preserve and grow the profession of independent adjusting,” Patti Kernaghan, president of the CIAA, says. “Right now, independent adjusters are a really fragmented group within the industry and we need to work together collectively. That’s what I hope to do — bring all independents into the fold eventually. It strengthens us as a profession if we work together as opposed to individual needs and focuses.”

S

In the beginning Kernaghan began to take a look at what the CIAA was doing when she was head of the association's advisory committee in February 2009. Reno Daigle, the CIAA's president at that time, asked Kernaghan to conduct a self-analysis exercise for the CIAA. As a result, Kernaghan did some research with concerto research inc., a marketing research firm, and ViRTUS, a consulting firm. The feedback showed the association should survey the stakeholders and hold a creative strategic planning (CSP) session. From there, a survey was created and sent out to members, non-member independent adjusters and industry stakeholders. A total of 250 CIAA members, 117 independent adjuster non-members and 367 property and casualty loss insurance industry stakeholders responded to the survey, which asked questions about the value of CIAA, negative views, positive views, and where the association might be able to improve.

Subsequent to that, a CSP session was held for two days in Toronto at the beginning of December 2009. Twelve stakeholders from across the insurance industry, along with the 14-member www.claimscanada.ca

CIAA CSP committee, attended the first half of day one. Rob Dawson of concerto marketing group presented the results of the survey. Following that, Rick Evans, consultant, facilitated the planning session, wherein the stakeholders provided their opinions about the CIAA and made suggestions on how to move forward.

“We took a look in the mirror and said how can we serve our members better,” Mary Charman, first vice president, says. “We need to know what we’re doing right and what we think we’re doing right — because there is a big difference. We sit back in our conference room and think we’re doing this for our membership, then you have this creative strategic planning session and you bring in the stakeholders and suddenly it’s ‘Oh my God.’.”

The entire exercise evaluated the effectiveness of the CIAA in achieving its purpose, and involved a review of governance practices, standards and operations to assess whether CIAA is meeting its objectives and to identify areas for improvement, Pat Battle, executive director of the CIAA, says.

“It was necessary to have all this input and realize that we’ve got a lot of potential. Now, we just have to buckle down and get to work. We have to be accountable for all our action plans and just make sure that we continue on the path, keep hammering away at it and make sure that nothing falls off the rails.”

“It was a really good inward look at our association,” John Seyler, CSP committee member and past president of the Ontario region, says. “We needed a slap in the face. We needed to take a step back and look at ourselves. When you do the same thing over and over again and expect a different outcome, that’s the definition of insanity.”

dent adjuster within the industry, offering more education and training (both online and in specialized areas), and increasing communication among the membership. Further to that, 83 per cent of members surveyed are in favour of harmonized licensing.

Members were happy with the benefits of the E&O program, the information available through CIAA publications and having a professional association in place to act as a watchdog on behalf of the profession.

Non-members offered a mixed bag of both positive and negative perceptions; many reported they could not join because their employer had chosen not to. On the positive side, they said the CIAA is known for being professional, promoting education, providing industry updates and working for the independent adjuster. Negative feedback included no definitive purpose to the association, favouritism shown towards large firms, and very little return on investment. Although non-members said they saw value in the CIAA’s initiatives, they nevertheless reported they were often not made aware of such initiatives. Non-members said the CIAA’s greatest value came in harmonizing licensing among provinces and territories. Many nonmembers did not believe the CIAA had been successful in raising the profile of independents. Better communication was the most frequently cited solution to this problem.

Stakeholders’ input Stakeholders generally saw the CIAA as a means to promote education and knowledge among members, and to ensure that independent adjusters are professional and accredited. Some stakeholders agreed there were advantages to working with a CIAA member — high levels of pro-

And the survey says…

Members are looking to the CIAA to provide a unified voice for independent adjusters and to set the bar for ethics and conduct within the profession. The association should be focusing on promoting the role of the indepenFebruary/March 2010

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fessionalism, knowledge and expertise, to name a few. But when it came time to choosing an independent adjuster, the independent adjuster’s relationship to the CIAA was often overshadowed by things such as specialized skills and years of experience. The largest negative perception among stakeholders surveyed was that independent adjusters were handling too many cases at a time or dragging cases out too long.

Other feedback from stakeholders who attended the meeting on Dec. 7, 2009, showed: • a lack of understanding about CIAA designations, as well as a need for the CIAA to control designations; • brand weakness and a need for a better awareness about the CIAA; • a lack of knowledge that the Claims Manual was a CIAA product; • education should be a member benefit; • a need for training and education; • a need for a broader adjuster designation — and communication about the value of such a designation; and • the need for more communication on

the part of CIAA — in particular, more information about who they are, what they do, who their customers are, the value of association membership, etc.

“The overwhelming comment by

al is to The end go ership, emb increase m r brand, te have a bet osure, xp increase e tion to ca u d increase e become a nd members, a ociation. s a strong s stakeholders was that the CIAA really wasn’t on the radar,” Seyler says.

“They don’t see us as a body that does much. That was surprising.”

Lack of awareness One common thread running throughout the survey responses and

shareholders’ commentary is that, outside of the independent adjustment community itself, the CIAA brand is not well known, Greg Merrithew, second vice president, says. “That is was definitely one area where we’ve got a weakness that we can turn into an opportunity.”

The CIAA is an important national body that speaks for independent adjusters, but the value of being a member seems to have diminished as of late, Bob Grouchy, assistant vice president of claims at Allianz Canada, says.

Currently, the CIAA has the Chartered Loss Adjuster (CLA) designation. This is a very difficult accreditation to achieve, and people agree it truly demonstrates professionalism in the industry. Unfortunately, knowledge of this designation is not widespread within the industry.

“The CLA designation needs to be a CIAA-recognized identifier,” Grouchy says. “Then you heighten that to make it mean something, in the sense that as a CLA you are a chartered loss adjuster

— you have experience, you are a member of an organization that monitors what we do, you follow a statement of ideals, and you follow a national perspective of service and quality.”

But the CIAA is not well understood as an association, even though it offers designations and a national magazine, Justin MacGregor, president of the Insurance Brokers Association of Canada, says. “They are not leveraging their own identity successfully — even to the tune that they have publications that people don’t even realize come from them.”

The CIAA may have a tough road ahead to improve awareness, but some feel they are on the right track. “I really wanted to make it clear to the CIAA executive that they were doing the right things, by asking the tough questions of their members and of the stakeholders regarding what is the value of our organization,” Carole Jardine, CUMIS General Insurance president and chief operating officer, says. This includes a discussion of “how could we add or

improve value not only to the larger organizations that are our members, but also to the individuals within those organizations,” Jardine says. “They are to be applauded for leading a process to redesign their organization from the outside in.”

Action plan The end goal is to increase membership, have a better brand, increase exposure, increase education to members, and become a strong association, Charman says. The overall goal is to add value to members.

Therefore, based on the survey responses and stakeholders’ feedback, the committee has created an action plan aimed at addressing certain weaker areas. The top five action plans are: • short-term communication plan, • long-term communication and branding plan, • designation program, • education program, and • advocacy plan for harmonized licensing.

“If what’s important to them is

attracting new members so that they have a weight and a voice in the community . . . the only way you are going to attract corporate members is to deliver value,” MacGregor says. “If they can see value, they will be a member."

Communication One of the first priorities is communication, requiring both shortterm and long-term strategies. There needs to be increased and improved communication regarding CIAA’s value proposition to members, nonmembers and stakeholders alike to achieve a higher level of awareness and recognition, Battle says.

Michelle Reid, director of professional development at the Ontario Risk Management Society (ORIMS), suggested the CIAA might want to model their communications on some of the things ORIMS is doing. For example, the RIMS communication model includes e-groups, Twitter, Risk Management magazine and various chapter communications.

The next generation is extremely

When you’re not FirstOnSite, who is?

computer literate, and so the association needs to recognize that email and online networks are dominant methods of communication. Canadian Defence Lawyers (CDL) and a number of other organizations offer list-serves, which give members access to chat facilities and/or email programs. This allows members to send out queries and get instant feedback on any topic. A listserve is intended to be an educational tool as well as a facilitation process for communication among members.

Currently the CIAA communicates with members by sending out minutes from its national executive committee.

“But how many people read them?”

Kernaghan asks. “Should we be highlighting more of that in the magazine?

Should we be doing a monthly or bimonthly electronic newsletter?”

Branding Brand awareness is another major consideration. When IBAC first developed the magenta symbol representing insurance brokers, commonly known as ‘The Bipper,’ the association intended to raise awareness among politicians.

Today, however, IBAC markets its Bipper brand to both the public and the industry — with an annual advertising budget that matches those seen in the United States. “Should [the CIAA] be taking a bigger public role? Because I don’t think that the public understands what and who an adjuster is,” MacGregor says. “That goes part and parcel with improving their visibility, their branding. The public understanding is going to improve the industry understanding.”

Claims Canada, the association’s official publication, is yet another means to get the word out about the association and its brand.

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Many stakeholders suggested members start using the CIAA logo on business cards, letterhead and correspondence as a means to draw more attention to the association.

Education Ongoing education is another recommended value-added service.

The CSP committee will be looking into webinars as a way to provide education to members. This will be especially beneficial to people based outside major city centres, Battle says. The website will become a main hub for education and research for members.

“Education is the kingpin that holds the whole organization together,” Merrithew says.

is the “Education olds t h kingpin tha the whole n organizatio ,” r e togeth says.

Merrithew The CDL holds boot camps for younger lawyers. At these camps, senior and mid-level lawyers provide mentorship and training on issues pertinent to the industry. Such training gives young lawyers — those who have been in the industry for fewer than five years — a good groundwork of knowledge about issues that might arise, problems they need to address or even just general education about the industry, Carmen Place, past president of the CDL, says.

Mark Weir, Intact Financial Corporation’s director of national claim process improvements, suggests part of the CIAA’s role is to broaden its consultation within the insurance industry to help identify the most important issues facing the adjusting profession. Such consultation would determine in which

areas the association should focus educational seminars and workshops.

“We are a large industry and a small industry at the same time,” Jardine says. “We don’t need to be duplicating efforts, nor competing with others within the industry.”

The Insurance Institute has done a “marvelous job” of instilling a desire in people to be accredited, Jardine says. As a result of the Institute's work in this area, people are willing to spend a great deal of time and effort earning designations. “There are things [the Institute] could teach us or work with the CIAA to build,” Jardine says. “As we are looking to bring the next generation of claims adjusters into the arena, we need to have the ability to facilitate their training not only in soft skills training, but in technical training. And as we talk about brain drain or the war for talent, the CIAA has a wonderful opportunity to utilize some of its members to train some of the younger members.”

Accreditation The CIAA will be looking at the availability of an accreditation program. Currently, CIAA members are able to attain a charted loss adjuster (CLA) designation. As the stakeholders noted above, this designation is extremely difficult to earn. But too few people know about the designation.

“They’ve got exclusive professional designations that are almost invisible,” MacGregor says. “They’ve got two professional designations that nobody really knows about outside of the profession. It became apparent that if insurers understood the designations better, they may be prepared to pay a premium for expertise identified by use of those designations.”

This lack of awareness speaks to the importance of better publicity, Battle says. “It was extremely discouraging to hear that they don’t really know about it,” she says. “For our members, achieving the CLA and FCIAA designations is a huge accomplishment and promoting and communicating that has to be bumped up.”

Jardine says the goal is for the CLA designation to be as widely recognized as the CIP designation. www.claimscanada.ca

Part of the new action plan will be to explore new designations, including ones that are more accessible and attainable for members. One possibility is for the current CLA designation to be changed over to the FCLA (much like the CIP and the FCIP).

After doing this, a new, more accessible CLA designation can be created.

Merrithew says the committee will also be looking at things such as making it mandatory that one must be a member of the CIAA to hold the designation. (Currently those who have earned a CLA can use it after ceasing to be a member). Other potential CLA requirements might include earning a coinciding CIP designation or completing three or four online education modules specific to the adjusting profession, among others.

Once the education process is in place and the designation is created, the branding will begin, Merrithew says. It would be widely publicized that anybody with a CLA designation is first and foremost a member of the CIAA; they carry a significant amount of knowledge; and they should be well-regarded within the claims industry.

The CIAA should promote their designation as the “gold standard” for adjusters, Reid says.

Harmonization For a number of years, Miles Barber, past president of the CIAA, has

been working tirelessly on the issue of harmonization.

“Harmonized licensing would allow us to better work with the existing entities that regulate us; to be regulated — licensed — in a consistent manner across the board in each province and territory,” Barber says. “We look at it from the standpoint that if you are adjusting a property or a casualty claim in Nova Scotia or Ontario, why are licensing requirements any different than they are in Manitoba, Alberta or British Columbia?”

Barber is confident that harmonization can be achieved across the regions, although it will likely not happen anytime soon. Currently, each jurisdiction’s licensing regime is comprised of a blend of field experience and book education; the more experience and education the adjuster has, the higher the level of license he or she will attain. The CIAA believes there is a benefit to having consistency among the licensing requirements for a number of reasons, including portability of licensing, which makes it easier for adjusters to move from province to province, especially in the event of a disaster or emergency situation.

“If we have an insured catastrophe

To serve our mission, CIAA/ACEI will:

• Highlight the value and high level of professionalism of independent adjusters and represent their needs to governments, industry and the public in all parts of Canada.

• Provide members with a broad rage of services and resources to support their business and professional needs, which include relevant, continuous training, education and highly recognized professional designations.

— tornado, severe hailstorm, sewer backup — and you’ve got to get a lot of adjusters in on a timely basis, it would be easier to transition and facilitate that movement of adjusters into the required geographic jurisdiction to address the insured event if we had a harmonized licensing regime, with consistent requirements in each jurisdiction,” Barber says. “It allows for better planning; it allows for a more fluid and prompter response to insured catastrophic events.”

Timelines There is, without a doubt, a long and busy road ahead for the CIAA. In order to ensure tasks are completed in an appropriate amount of time, timelines are set as soon as tasks are assigned. “We’re posting timelines, who is assigned to it, how they are going to it and when they are going to have it done,” Battle says. “We’re also including the strategic action plans on each and every meeting agenda, so the report will be expected on what they have done in the last six weeks and it will never fall off the agenda.” Over the next few issues, Merrithew will be updating Claims Canada readers as to the CIAA’s progress.

“We recognize that it’s not going to happen overnight, but we’re going to have a plan of action and just keep plugging away,” Battle adds.

And so begins the CIAA’s revitalization process.

• Develop and maintain the highest standard of professionalism through a defined code of ethics and fair practice policies.

• Proactively communicate with members and the clients they serve.

www.claimscanada.ca

*with files from Rick Evans, consultant and creative strategic planning session facilitator.

February/March 2010

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S spotlight

Finding a

Fit

As the industry changes, so too does the work at Quelmec Insurance Adjusters, but never at the risk of compromising integrity.

BY LAURA KUPCIS

While he might have felt as though he was the round peg in the square hole, relying on his own talents has served Pat McFadden and Quelmec Insurance Adjusters well. “I thought I would rather live or die by my own talents than live or die by someone else’s whim,” McFadden, president of Quelmec, says of going out on his own.

He figured he would be better off just doing his own thing. And he might have been right, given that after 27 years, the company is still going strong.

Quelmec was founded in 1983 and by 1987, there were three equal partners. It remained this way until early 2000, when the stress of spearheading the provincial government’s 1998 ice storm compensation program caused one partner to leave the industry entirely. Shortly thereafter, the other partner decided to spend the last few years of his career outside of the independent ranks, leaving McFadden as sole proprietor of the business. Along the way, Quelmec opened up various sub-offices and even a rehabilitation firm, bringing in some minority partners. Realizing that small branches are difficult to manage and make money on, however, McFadden sold off the offices and rehabilitation firm. Today, he has one office in Ottawa and one in Hull, Qué.

Trials and tribulations While being in its 27th year is a testimony to the people in the firm, it has not been without its changes and chal18

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www.claimscanada.ca

lenges. When the company first started out, it was not uncommon to be handling windshield claims and low deductibles. “You’re doing a little bit of everything for insurers and, predominantly, 99 per cent of your business is for insurers,” McFadden says of the past. “You’re doing very little within self-insured retention and self-insured entities.”

The greatest evolution, he says, is that as a local firm the company is more focused and specialized in what it does; it adapts to what the industry really wants of independent adjusters. “When you look back, there was always trending towards insurers favouring local regional firms and then national firms — it sort of yo-yoed back and forth for years,” he says. “But the product was generic — it wasn’t price driven and it wasn’t commoditized. When you look back to the late ’80s, it was all about the talent base.”

Now, smaller regional firms like Quelmec are more focused and more specialized. “We’re doing more risk management claims and analysis-type service for clients directly,” he says. “So with the advent of higher self-insured retentions, what we find is that we’re working more and more with the client and less and less with their insurers on many accounts.” Over the years, Quelmec began specializing in construction claims, professional liability claims, directors’ and officers’ liability, publishers’ liability, self-insured retention programs. “If you’re going to be a small firm and you want to maintain price integrity and not compete on a transactional level, then you’d better develop specific expertise,” McFadden says. “That’s what we see more and more of and that’s where a good part of our business comes from.”

For Quelmec, the key is being focused, professional and service-driven. “You’ve got to service the client to death,” he says. “There’s not an infinite amount of clients that are willing to pay the price point that we want, so you had better be able to give them unparalleled service and the results that they need.”

The service philosophy starts where the rubber meets the asphalt – what does the customer want? It is about determining how you can create a situation where everybody wins and then buildwww.claimscanada.ca

ing the organizational structure from there, not from the top down. “It’s all about taking care of the individual or corporate entity that has had a significant event occur in their life,” he says.

“You can’t always cover the loss, but you can treat people with dignity and respect. My yardstick is that if a claim is declined, I want the customer to say ‘thank you.’ They may not like the message, but they should appreciate the level of service and professionalism.”

McFadden is happy to report that neither he nor his adjusters are prone to “dropping the ball.” “We’re handling very specialized files and we’re doing them well, and that allows us not to drop the ball because of the expertise we have developed over the years,” he says. “I never get complaints about our

Most of the staff have been working at Quelmec for between 10 and 27 years, allowing for a nurturing and drama-free environment, making it easier to take on new challenges. adjusters, their service, or their professionalism. That’s one of the things that we strive for. We just don’t make a lot of mistakes; we have the experience behind us.”

Office life The staff certainly accomplish that goal as they stay the course yet continue to challenge themselves professionally. Because of this desire to continuously take on new challenges, no day at Quelmec is like the last. “Our day starts with what’s going to be cool that comes through the door,” McFadden says.

Most of the staff have been working at Quelmec for between 10 and 27 years, allowing for a nurturing and dramafree environment, making it easier to take on new challenges. Of course, having a pushover for a president is always ideal, as well. “If I could change one thing, I would be tougher,” McFadden laughs. “My attitude is, even though

I’m the sole proprietor, we work in a very cooperative and collaborative way.

Even in business decisions, I seek input from staff. Many heads are better than one by a long shot.”

McFadden says he’s like the sweep in a dragon boat – he steers the boat in the direction the rest of the crew says it should go. “It’s not autocratic; it’s very collegial and collaborative,” he says.

“And if you can’t convince me of anything . . . then you are not very good at what you do because I am such a freaking pushover!” One thing he holds very dear to his heart is the fact that he has never had anybody whom he has worked with that he is no longer friends with. “I hope there’s not a person in the world that can say, ‘I was mistreated when I worked at Quelmec’,” McFadden says. “That’s just the way I want to live my life.”

This extends outwards to his CIAA brethren, as well. One of Quelmec’s clients is a province-wide entity and in many instances, when it does not make sense to send an adjuster from Quelmec to cover a field assignment, McFadden will call up a CIAA member firm and have them be their eyes and ears.

Because Quelmec is a small firm, this allows them to handle the claims without having to send a senior adjuster to cover the event. This means McFadden does not have to worry about bringing on more staff when there is generally a lack of strong technical adjusters available. He likes being a firm of under 20.

“I do what I want, when I want, where I want,” he jokes. “The benefit of being a small firm is that we do it our way, that’s the bottom line.” He has the team with whom he wants to work rather than the team with whom he’s forced to work. Furthermore, when an opportunity is presented, he can adjust on a dime if the idea makes sense and respond quickly without having to flow it past a plethora of upper management.

McFadden is able to continue to motivate his staff, not only through challenging and exciting work, but through a better commission structure, employee awards and other incentives.

This means that Quelmec sees little to no staff turnover, allowing for a stable and professional work environment in the office.

February/March 2010

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Property Loss Update

BY GLENN GIBSON

For the most part, 2009 was a rather quiet year in our court system for property cases. But, as we moved into the last quarter of the year things started heating up with some very interesting judgments. The past decade has resulted in some interesting decisions relating to bad faith claims. As we moved through a number of groundbreaking decisions, we have seen the Supreme Court of Canada provide clarification on what constitutes bad faith. This has resulted in greater clarity around what we can and cannot do when dealing with some of the tricky situations we find ourselves in as loss adjusters.

It boils down to two key things, in my opinion: 1. We need as much clarity as possible in setting out the terms and conditions of the insurance contract. Do the people selling and buying this product clearly understand the product?

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2. Files need to demonstrate that the adjuster has clearly and fully communicated with the policyholder in regards to the handling of the file.

TGA Contracting and Restoration Inc. v. Cirillo; Cirillo v. Wawanesa Mutual Insurance Co. Ontario Superior Court of Justice, DiTomaso J., Oct. 15, 2009 On Mar. 7, 2004 an accidental fire caused significant damage to a familyowned dwelling. The insureds had a homeowner’s policy with Wawanesa Insurance Company. The building limit was $219,500, but there was a Guaranteed Replacement Cost Endorsement (GRC) on the policy.

In the immediate aftermath of the fire, the loss adjuster brought in two experienced fire general contracting firms to scope the damage and submit repair prices. They quoted $175,000 and $203,000. Early in the process, the insureds also engaged a public adjusting firm who inspected the damage and

produced an estimate of $235,000 to repair the building. The relationship with the public adjusting firm was terminated and the insureds engaged TGA Contracting — a contractor of their choosing — to do the repair work. This firm used the public adjusters’ scope of damage as their initial guideline, recognizing the GRC endorsement was going to be involved which would push the policy indemnity past the stated limits on the building coverage.

When the insured was authorizing repairs to the building, the insurer made it clear it was taking the position that the policy obligation to indemnify for repair costs was based on the lowest quote obtained. The initial stage of the repair process was to strip out firedamaged materials that required replacement. In the course of doing this it became evident there was additional damage to the building structure. This led to a re-inspection of the damage by the insurer and their contracting representative and a re-estimate of $295,000.

As the repairs continued, the insured’s engaged a second firm to do www.claimscanada.ca

some sub-trade work on the building.

Wawanesa made regular progress payments up to the point where they felt they had reached their maximum responsibility. This was based on the lowest priced estimate and the additional repair costs. The insureds not only disagreed with the position of the insurer, but also ran into conflict in reconciling the amount of money that TGA Contracting was owed for work completed. This resulted in two lawsuits: One was against the insurer for breach of contract and the other was defending a “lien” action commenced against them by TGA. Both actions were consolidated into one trial. In an unusual move, the insureds chose to represent themselves.

There is a lengthy review in the judgment of the flow of this loss. The trial judge commented specifically on the evidence at trial of two Wawanesa employees: Sharda Dookhie-Kangal and James Phinn. He commented that: “…(they) were excellent witnesses.

Their oral evidence was clear and cogent. They had excellent recollection of this particular claim which was supported by a meticulous insurance file consisting of telephone call notes, reports, summaries, computer entries involving Ms. Dookie-Khangal, her manager Mr. Phinn and his manager Dieter Mayer. Their evidence demonstrated a consistent and professional handling of the file which entirely supported the position taken by Wawanesa.

They were professional and competent in handling this claim which was acknowledged by Mr. Ferris [son-inlaw] and Mr. Wilkins [contractor]. Mr. Ferris also testified that Wawanesa’s representatives were courteous in all their dealings with the Cirillos.”

The comments by the judge provided an early insight to the outcome, which included: • Wawanesa was entitled to rely upon the lowest repair estimate.

• The insurer was not party to any contract involving the insured and their choice of contractor.

• The insurer had clearly and effectively communicated their point of view to the insured and their contracting firms. www.claimscanada.ca

• There was no disagreement that TGA Contracting had done excellent work on the repairs they had completed.

They were granted their lien and a judgment for the work they performed.

Case summary This was obviously a complex loss with many interesting dynamics including the early involvement of a public adjusting firm. The trial judge was clearly and distinctly impressed

with the work of Wawanesa’s claim professionals.

Wu v. Gore Mutual Insurance Company Ontario Superior Court of Justice, J. Nolan, Dec. 2, 2009 Some time around Oct. 10, 2006 an arson fire destroyed a rental dwelling in Windsor, Ont. The dwelling owners, Paul and Wendy Wu, lived several blocks away

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21

from the rental property and had owned it for 13 years prior to the fire.

The owners had a variety of tenants during this period of time with no issues until they rented the property to a new tenant in 2002. Initially there were no problems until the tenant’s boyfriend moved into the residence in 2003. From that point onward there were complaints of garbage piling up on the property. This led to a citation from a building department inspector in early 2006. The tenant responded to a clean up at that time, but it wasn’t long before conditions deteriorated.

This led to an ‘order’ to clean-up the property in March 2006, which again resulted in appropriate clean-up action from the tenant. But, it wasn’t long before problems escalated and the tenants were eventually ordered by the owner to leave the property. They left on Aug. 4, 2006.

The owners, who were at the house daily, orchestrated a major clean up of the dwelling resulting in over 1,400 kilograms of refuse going to the city dump. By mid-September, they were ready to rent the house. A new tenant was scheduled to move in on Nov. 1, 2006.

On Oct. 11, 2006, the dwelling owner discovered a fire had occurred in the property. The fire had burned itself out without being discovered. Fire and police services investigated the fire and determined it was arson with most of the suspicion focused towards the prior tenant. The authorities laid no charges in this matter.

When the dwelling owner reported the fire loss to his broker he was advised of the 30-day vacancy exclusion. Wu reports this was the first time he became aware of the exclusion.

Initial damage estimates were in the area of $70,000. No repairs were carried out immediately and by the time this case went to trial the suggestion was the damages had crept upward into the $130,000 area.

Key dates and events in the handling of this fire loss: • The fire was discovered on Oct. 11, 2006.

• An adjuster met the dwelling owner on Oct. 12, 2006 and obtained a Non22

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Waiver Agreement. This was based upon initial information that a policy exclusion could be involved with the loss.

• On Nov. 7, 2006 the handling adjuster sent a blank proof of loss form to the insured. They also advised their investigation was still ongoing.

• The proof of loss had not been returned before the adjuster, on

Fire and police services investigated the fire and determined it was arson with most of the suspicion focused towards the prior tenant.

Dec. 6, 2006, formally advised the insured that his claim was being denied because the insurer investigation had determined the dwelling had been vacant since Aug. 5, 2006. This was more than the 30-days that was allowed under the policy.

• On Jan. 9, 2007 the owner received a formal letter of cancellation of coverage for the rental property based upon its current condition.

• The proof of loss form was provided to the insurer on Jul. 12, 2007. The

insurer continued to maintain its position on the damages being excluded.

At trial the insurer moved beyond relying only the 30-day vacancy exclusion and also adopted the position that there had been a breach of statutory condition four, which suggested the insured had also failed to notify the insurer of a “material change in the risk.”

During the trial, an underwriter appeared as one of the insurer’s witnesses. Her evidence at trial hit on a few points: • The insurer was not aware the property was vacant prior to learning of the fire.

• They also had not been aware of complaints from neighbours nor the involvement of the city building inspector.

• A property “vacancy” is considered by an insurer to be a “material change in risk.”

• If the insurer had been aware of the deteriorating condition of the property before the fire they would have cancelled the policy.

In cross-examination the plaintiff’s lawyer elicited clarification that: • There was no requirement in the policy for the insured to get a vacancy permit.

• There was also no requirement the insurer had to be notified each time a tenant might move from the insured premises.

• There was no policy requirement relating to being informed of complaints about the property condition.

• The usual chain of events was that if a property was vacant for one to two weeks the insurer is notified.

• When the tenants moved out on Aug. 4, 2006 and the dwelling was not immediately habitable, then the insurer should have been notified on that date. When challenged on where the contract required this type of notification, the underwriter promptly referred to statutory condition number four.

• The underwriter conceded there was no policy definition for occupancy.

But, rightly pointed out there was a clear definition for what vacancy was supposed to mean. www.claimscanada.ca

• It was the broker’s responsibility to go through the contract with the insured.

The trial judge reviewed a variety of legal cases from the lawyers handling this case. None of the cases was exactly on target, but the trial judge noted that, “In the case before me, the tenants moved out on Aug. 5, 2006 and had moved out all their possessions. No one else moved in or even stayed overnight occasionally.”

The judge noted that this was, “. . . not a seasonal property and was insured as a rental property . . . ” Various arguments were raised by opposing lawyers including an effort to use the case of Tilden Rent-a-Car Company vs. Clendenning (1977), 18 O.R. 601 (Ontario Court of Appeal. In the case involving a rental car, the Court of Appeal held that the provision on the reverse side of the contract was in “small type and so faint on the customer’s copy to be hardly legible.” The company had not taken steps to alert the customer on the onerous provisions of the standard form contract and the defendant was not aware of them. So, the provisions did not apply.

But, in this situation the trial judge did not feel the policy exclusions or statutory conditions were “ . . . hidden in any way in the insurance policy.”

While the dwelling owner argued his broker did not explain the policy to him, he acknowledged he did receive a copy of the policy. There was no evidence that Wu was not able to understand the policy, so the judge concluded he was “…deemed to have understood the provisions.”

It was of interest that the plaintiff lawyer did try to argue the “fairness principle.” The trial judge did not agree. This was a case of interpreting the terms of the contract. Both parties owe a duty of good faith to each other.

In this case, the dwelling owner had a duty to inform the insurer or their broker of the vacancy and the deteriorating condition of the property. The case against the insurer was therefore “dismissed.”

Case summary It was interesting to see the broker was not included as a co-defendant in this legal action. www.claimscanada.ca

It is also noteworthy how the policy exclusion for vacancy has evolved to the current language: “[The insurer] does not insure direct or indirect loss or damage “occurring after your dwelling has, to your knowledge been vacant, even if partially or fully furnished, for more than 30 consecutive days”.”

This was the second time this same definition was subject to a trial. It was also seen in Saavedra vs. Gore Mutual Insurance Company, Thomson J., Ont.

Superior Court, Unreported decision, Windsor file 47338.

2069190 Ontario Inc. v.

Economical Mutual Insurance Group, Ontario Superior Court of Justice, Lalonde, J., Dec. 8, 2009 A piece of forestry machinery was allegedly stolen Oct. 7. 2006. The policyholder initiated an action against the insurer on Mar. 16, 2009. The insurer

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was seeking to dismiss the action by way of a summary judgment on the basis there was no genuine issue for a trial judge to determine as it was statute barred.

There is a key sequence of dates that need to be noted: • By early November 2006, the adjuster sent proof of loss forms to the insured.

• A proof of loss was received on Feb. 5, 2007.

What follows in this decision is an interesting review of limitation arguments and the manner in which the plaintiff lawyers framed their pleadings. But, the main argument being raised was that the policyholder had been lulled into a false sense of security by the adjuster and that this had worked to his detriment. They argued that the insurer had not told the insured the reasons as to why his original proof of loss was being rejected.

The main argument being raised was that the policyholder had been lulled into a false sense of security by the adjuster and that this had worked to his detriment.

• The adjuster felt the form was incomplete. He sent a new form to be completed by a letter dated Mar. 5, 2007.

• A new proof of loss was completed and signed on Aug. 16, 2007. It was sent to the insurer in a lawyer’s letter dated Aug. 23, 2007.

• On Oct. 17, 2007 a lawyer acting for the insured wrote the adjuster and requested a status report on the claim.

• On Feb. 22, 2008 the lawyer requested a reason behind the apparent denial of his clients claim.

• On Mar. 19, 2006 the adjuster advised the lawyer his client’s claim was statute barred as the reason for denying the claim.

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They also argued that the limitation period should run from the date that the insurer formally rejected the claim in March 2007 and not from the date of loss.

The plaintiff lawyer also moved onto arguments relating to the principle of fairness. Their arguments in this area related to the level of responsiveness to the lawyers request for a status report. The plaintiff lawyer then moved on to a novel argument relating to Section 438 of the Insurance Act R.S.O. 1990 c. 1.8. This relates to “unfair or deceptive acts or practices” by an insurer. The plaintiff lawyer arguments came in the face of what seemed to be an obvious missing of a limitation period.

The insurer’s lawyers led their own strong arguments on many fronts with the trial judge concluding a number of things: • Section 438 of the Insurance Act does not apply to this case.

• There was no evidence in the affidavits filed of deliberate acts or delays by the insurer.

• The language was clear that the insured had a one-year prescription period running from the date of the loss.

• The plaintiff could not argue the “discoverability” strategy because they had not included it in their pleadings.

• Breach of trust and breach of duty also must be pleaded as stand alone causes of action. They had not been included in the pleadings.

• The plaintiff was represented by council prior to the expiry of the one-year limitation. There is no duty owed to the plaintiff’s lawyer for the insurer to advise them of their strategy.

The judge granted the motion and dismissed the action against the insurer.

Case summary The critical thing here was that the policyholder was represented by legal counsel prior to the one-year limitation period expiring.

Conclusions The Court of Appeal is passing along some very important messages, including their views on the application for insurance. That is a core, fundamental starting point for the selling of our product, so the points they have raised are very important to recognize.

Our purpose as adjusters is to help people. Your commitment to achieving this purpose is important. Keep this in mind as you move forward into a new decade of what should be exciting but challenging times.

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

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Managing Hazardous Materials During Demolition and Reconstruction: The Claims Perspective

BY MATTHEW R. ALLEN

Whether resulting from wind, fire or water jects and in Buildings2 applies to the disturbance of asbestosdamage, insurance claims often involve the containing materials (ACMs) on construction projects. demolition, reconstruction and restoration Similarly, the regulation requires that owners arrange for of buildings and property. Insurance com- an examination of the building or project area to establish panies and adjusters often take on the task whether any material that is likely to be handled, dealt with, of initiating and managing the related con- disturbed or removed is asbestos-containing.3 This must tractor restoration and reconstruction activ- also be presented in report format including drawings, ities. In so doing, they may take on the equivalent role of plans and specifications as necessary and is generally included as a subset of the full designated subthe owner in that they may tender, constance survey report. Third party profestract and administer payment of contracFailure to sional (consultant) resources are generally tors directly. Along with this role comes carry out this retained for such survey and reporting some important regulatory compliance activities given the special health & safety requirements and responsibilities within critical regulatory precautions and environmental and matethe province of Ontario (and other requirement rials expertise involved. provinces) that insurance and claims Failure to carry out this critical regulatoprofessionals must be aware of. Failure can carry with it ry requirement can carry with it significant to undertake the necessary pre-demolisignificant consequences under the Act. An owner who tion and reconstruction surveys of hazconsequences fails to comply is liable to the general conardous materials, asbestos in particular, tractor and every subcontractor who suffers can create exposure to potential liability under any loss or damages (including injury) as a and legal penalties for those involved. the Act. Under Section 30 of the Ontario Occuresult of the subsequent discovery of a despational Health and Safety Act1, designatignated substance that the owner ought reaed substances and other potentially hazardous building sonably to have known of but that was not reported.

It is therefore essential that property loss adjustment and materials must be identified prior to construction or demolition activities that could potentially disturb such materi- insurance professionals incorporate this critical step into als. The regulated designated substances include: asbestos, their claims resolution timeframes and budgets. It is also lead, mercury, silica, isocyanates, vinyl chloride, benzene, key that environmental engineering resources are engaged acrylonitrile, coke oven emissions, arsenic and ethylene early for greatest effect and to avoid costly delays once work oxide. Of these eleven, the most common concerns in mod- is underway. ern buildings are asbestos, lead, mercury and silica.

Specifically, the Act mandates that the project owner preMatthew R. Allen is a principal with Giffin Koerth Forenpare a list of identified designated substances, generally in sic Engineering, where he leads the environmental, health & the form of a survey report. A copy of the report must be safety group. Allen is a professional chemical, materials & provided to the general contractor in advance of the initia- environmental engineer with more than 12 years of experience tion of the subject work. The general contractor must in in the assessment and management of environmental contamturn submit the report to all subcontractors and trades inants and hazardous materials. prior to work being initiated.

Additional regulatory requirements must be met for the 1. For full Act visit www.e-laws.gov.on.ca most rigorously controlled designated substance: asbestos. 2. For full Regulation visit www.e-laws.gov.on.ca Regulation O. Reg. 278/05 – Asbestos on Construction Pro- 3. For Guide visit www.labour.gov.on.ca/english/hs/pubs/asbestos 26

Claims Canada

February/March 2010

www.claimscanada.ca

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Mary Carter All for One? Or None for All?

BY MONA GOBRAN AND JOANNE BLACKLOCK

he recent decision of the Ontario Court of Appeal in Laudon v.

Roberts1 has raised some questions about the usefulness of Mary Carter Agreements. On Nov. 5, 2009, leave to appeal to the Supreme Court was dismissed without reasons, leaving the Court of Appeal decision binding.

The potential for the use of a Mary Carter Agreement (MCA) arises when a plaintiff has sued at least two parties as joint and several tortfeasors and where at least one of the defendants wants to settle with the plaintiff and the other defendant does not. A plaintiff who enters a MCA with one of the parties receives a guaranteed amount and maintains the chance for a better recovery in proceeding against the remaining defendant(s). The settling defendant — in exchange for a cap on liability, and an agreement to indemnify from the cross claims of the non-settling defendant(s) — receives peace of mind as the exposure has been capped. In addition, there is an opportunity to recover a portion of the money paid to the plaintiff if the plaintiff succeeds in recovering more than the settling defendant has paid. The MCA must contain a clause requiring the plaintiff to partially reimburse the settling defendant if more was paid under the MCA than what was awarded at trial.2 The plaintiff, regardless of the finding of liability by the trier of fact, receives a predetermined amount of damages and also benefits from the fact the settling defendant is now co-operating with the plaintiff, placing more

T

MCA Pre-Laudon

pressure on the non-settling defendant(s). The MCA Pre-Laudon chart illustrates the positions of each of the parties pre-Laudon based on the hypothetical percentages of liability assessed at trial, assuming the plaintiff and defendant entered into a $3 million MCA and the plaintiff is later awarded $6 million at trial.

Laudon The May 7, 2009 decision of Laudon changed the roles of plaintiffs and nonsettling defendants involved in a MCA. The plaintiff, Rick Laudon, was injured in a boating accident when the boat he was in, operated by Keith Sullivan, collided with a boat operated by Will Roberts. Laudon and Roberts entered into a partial settlement agreement; Roberts made a payment to Laudon in the predetermined amount of $365,000.

The case proceeded to trial and a jury assessed the plaintiff’s damages at $312,021. The jury found Laudon 11 per cent contributorily negligent, and assessed 50 per cent against Roberts and 39 per cent against Sullivan. The trial judge refused to deduct the amount paid to Laudon by Roberts under the Mary Carter Agreement from the damages award and instead awarded the plaintiff judgment against Sullivan for $121,688.19 (39 per cent of $312,021).

Sullivan, the non-settling defendant, appealed. Regardless of the 39 per cent finding of liability assessed against Sullivan, the Court of Appeal found the plaintiff had been fully compensated by

(inclusive of the reimbursement clause)

the settling defendant’s payment under the MCA, excusing Sullivan from making a payment to the plaintiff. To make matters worse for Laudon, in allowing Sullivan’s appeal, the Court of Appeal not only issued a judgment dismissing the action against Sullivan, but also ruled Laudon was liable for Sullivan’s costs. In following Justice Beverley McLachlin’s decision in Ratych v.

Bloomer4, the Court reasoned: “It is the fundamental principle of tort law in this country that an injured plaintiff should be neither over nor under, but fully compensated by way of damages for injury sustained by the negligence of others.”

Why settle?

Courts have consistently favoured the settlement of lawsuits, and there is an overriding public interest in favour of settlement5. The Court of Appeal decision of Justice John Callaghan in Sparling reasoned that public policy promotes the interest of litigants generally by saving them the expense of trial, while reducing the strain on an already overburdened court system.

Further, Rule 2.02 (2) of The Rules of Professional Conduct enacted by the Law Society of Upper Canada encourages settlement, and provides that: “A lawyer shall advise and encourage the client to compromise or settle a dispute whenever it is possible to do so on a reasonable basis and shall discourage the client from commencing useless legal proceedings.” [emphasis added] The unanimous decision of Justices

3

LIABILITY

SETTLING DEFENDANT PAYS OUT

NON SETTLING DEFENDANT PAYS OUT

PLAINTIFF RECEIVES

50-50

$1,500,000 [50% of $3 million]

$3,000,000 [50% of $6 million]

$4,500,000 $1,500,000 [the remainder of the $6 million awarded at trial is repaid to the Settling Defendant]

75-25

$2,250,000 [75% of $3 million]

$1,500,000 [25% of $6 million]

$3,750,000 $2,250,000 ➜ Settling Defendant

25-75

$750,000 [25% of $3 million]

$4,500,000 [75% of $6 million]

$5,250,000 $750,000 ➜ Settling Defendant

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Claims Canada

December/January 2010

www.claimscanada.ca

Jean MacFarland, Karen Weiler and Russell Juriansz in Laudon places the non-settling defendants and plaintiffs on an equal playing field and may entice the non-settling defendant who has a meritorious defence to try the case instead of being bullied by the settling defendant and plaintiff. If a nonsettling defendant is successful on the issue of liability and/or damages, they will benefit from the MCA that the settling defendant and plaintiff entered into. This is the reward for going to trial to defend a claim instead of settling.

Another option to the MCA as a form of settlement is the Pierringer Agreement. The purpose is to completely remove the settling party from litigation. The plaintiff is paid a set amount in full satisfaction of the claims against the settling defendant, in exchange for the discontinuation of the action against that party. The action then continues against the nonsettling defendant(s). The settling defendant is assured by the plaintiff it will be indemnified for any contribution paid to the non-settling defendants.

determines success is likely at trial on the issue of damages and/or liability, trying a case will likely be in the best interest.

Laudon will motivate lawyers involved in litigation to more carefully weigh the risks and benefits to their clients, considering all the possible outcomes at trial that plaintiffs and defendants post-Laudon may expect.

Joanne Blacklock, Blouin, Dunn LLP, has practiced exclusively in the area of insurance defence for more than 10 years.

Mona Gobran is articling with Blouin, Dunn LLP. She is working in several areas of insurance defence litigation.

1 Laudon v. Roberts, [2009] O.J. No. 1824.

2. Most MCAs contain a clause requiring the plaintiff to partially reimburse the settling defendant if he had paid more under the MCA than what was awarded at trial. The MCA in Laudon was not a typical MCA, but indeed an “atypical” MCA because it did not contain such a clause. The plaintiff ended up receiving $52,979 more than the damages assessed at trial because the clause was omitted.

5 figures are based on Pettey 6 Ratych v. Bloomer, [1990] 1 S.C.R. 940 at 94.

Pre- and post-Laudon Payments made under a MCA are deductible from any damages awarded at trial, based on the principle that plaintiffs are not entitled to double recovery. The non-settling defendant will therefore not owe any monies to the plaintiff if payment from the MCA is higher than the amount of damages awarded at trial. This is regardless of whether or not the non-settling defendant was liable as was the case in Laudon.

Prior to the Court of Appeal decision in Laudon, MCAs were criticized as being unfair to non-settling defendants. It had the effect of aligning the interests of the settling defendant with those of the plaintiff, eliminating the normal adversarial relationship. The Laudon decision changes that, so it is now possible for the non-settling defendant to benefit from not entering into the MCA.

Future of MCAs The settling defendant must make sure the MCA contains a clause requiring the plaintiff to partially reimburse the settling defendant if more is paid under the MCA than what is awarded at trial. If the non-settling defendant www.claimscanada.ca

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February/March 2010

Claims Canada

29

Adjusters on the Airwaves A new television series, Cra$h and Burn, follows the life of “street-wise” insurance adjuster Jimmy Burn

BY LAURA KUPCIS

s news that a television show about insurance adjusters was set to hit the airwaves, rumblings — musings perhaps — about the focus of the show could be heard. Excitement abounded because finally the industry would be in the public light, hope persisted that the show would help to abolish negative stereotypes of the insurance industry, and pride swelled because the industry was set to become the focus behind a television show.

Enter Showcase’s pilot episode of Cra$h and Burn. We meet Jimmy Burn, a Hamilton, Ont. adjuster with Protected Insurance. Burn is not only forced to settle claims quickly, but is up against shady Russian mob body shop owners, backstabbing coworkers, a past he can’t seem to shake and urine-launching clients. And near the end of the episode he dips his hand into the life insurance side of things.

Needless to say, the show has received mixed reviews from the insurance industry. Some were so infuriated by it that they demanded it be removed from Showcase’s line-up, calling it a gross misrepresentation of the adjusting profession.

Other’s took the liberties taken by the show in stride, essentially conceding it’s ‘just television’ and meant to be a departure from reality.

“No one had ever done a show about insurance or insurance adjusters,” says Malcolm MacRury, Cra$h and Burn’s creator and executive producer. “It may not seem the most likely candidate, but it seemed to me something like fresh terrain and something that actually is really pervasive.”

A

Where it all began The motivation behind the show was two-fold: 9-11 when suddenly insurance was front and centre on everybody’s mind, and outrageous stories about insurance. “I had a friend and colleague, who is an executive producer on the show — John David Coles — he and I started talking and wanted to do a show together,” MacRury says. “His buddy, who he went to college with . . . he is one of the founders of Progressive Insurance in the States and every time he would come to New York he would sit down with John and just bedazzle him with outrageous stories about insurance.” MacRury says he start30

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February/March 2010

ed to do some research into the insurance industry in Brooklyn and Queens and around that time, there was news about Russian cons who were ripping off the no fault laws for medical rehabilitation. A few years later, a grand jury indicted 567 people and corporations connected to what might be the largest organized insurance-fraud ring in U.S. history, according to CNNMoney.com. Many of those indicted were Russian émigrés and prosecutors refer to the investigation as the “Boris” case – Big Organized Russian Insurance Scam, CNNMoney.com added.

“It seemed to me if you could create a show that could combine the corporate world . . . with the street level con man mobster world, put those two together, you might have something kind of cool,” MacRury says. “And the pivotal figure would be the guy that had a foot in both worlds and that’s our hero, Jimmy Burn.”

“I call him the every man,” he says of Jimmy’s character.

“He’s kind of a stand-in for the embattled middle class … where their share of things is getting smaller and smaller and I think that’s why we root for him. He’s trying to get his picture: his house, his family, a job with respect; he’s trying to make it. Of course he brings with him all this baggage of being a former con man and a juvenile delinquent. He’s a charmer, but he’s got dark waters — like a temper — and sometimes he’s his own worst enemy. The juice of the series comes from knowing if Jimmy is going to make it. Is he going to make it for the dream he wants — that middle class dream — or does he go to the dark side and become like the characters he deals with all the time?”

Not everyone shares the enthusiasm for Jimmy Burn. “I think Jimmy Burn does for loss adjusters what Elmer Fudd does for rabbit hunting,” Fred Plant, president of Plant Hope Adjusters, says. “This guy, Jimmy Burn, he could have been a dentist or a plumber, it wouldn’t have made any difference, it’s just bad TV.” MacRury drew on his experiences of being on the road for a few days with adjusters from Progressive Insurance in the U.S., and information from a criminologist, the Insurance Bureau of Canada (IBC) and an independent adjuster when www.claimscanada.ca

developing the series. The show looks at staged accidents, adjuster kickbacks, the medical rehabilitation system, car thefts, equestrian euthanasia, suicide, arson, hostage incidents, crooked service providers, among other issues.

Garry Robertson of the IBC provided insight about some of the issues plaguing the industry, including car theft, staged accidents, coaching seminars in high rises in Mississauga for the “victims” of fraudulent accidents. Jane Rogers, an independent adjuster in Hamilton, read the scripts beforehand and offered up suggestions as to what might be more “realistic,” MacRury says of his research. While in the United States, MacRury rode around with adjusters — which is where he got the idea for a “ballsy insurance adjuster” — going to half a dozen body shops a day where the adjuster would have to go nose to nose with the owners to do the estimates.

tions in areas that should be changed, places where the storyline was definitely a far stretch. “For the most part, their scripts were very well written, and certainly they had a grasp of the insurance industry,” she says. “[Jimmy Burn] is depicting that person who has come into insurance, but he’s got a knack for it,” Rogers, Hamilton branch manager with Crawford & Company (Canada) Inc. Risk Management Services, says. “Here’s this young kid and he’s got a bad background and he’s trying to move on and he is in a world that could take him over that line that he shouldn’t go over. But, at the same time, he’s got that moral sense of right and wrong.

You get the impression that even though he’s been tempted and he kind of wavers on that line, at the end of the day, that sense of right and wrong comes through and I think it’s a good reflection on the insurance industry.”

Patti Kernaghan, president of the CIAA, says viewers need Not even close to reality to bear in mind the show is in the same lineup as the Trailer But for Plant, past president of the CIAA, there is nothing Park Boys — and that show is definitely not serious. “It does realistic about this show, at all. “They shouldn’t caution showcase the pressure that an adjuster has to go through,” about coarse language and nudity,” he says she says. “That you do have to respond of the warning that appears before the quickly, that you are under a great deal of While in the show starts. “They should caution about pressure, that you are dealing with adverUnited States, detachment from reality.” But while it sity at all times. So even though it’s exagmight be unrealistic, Plant is not congerated adversity, a good adjuster has to MacRury rode cerned it will influence those thinking of around with adjusters, have strong investigative skills, strong entering the industry, nor will it increase investigative abilities. So from that perwhich is where he interest in the industry. “Anybody that spective it is interesting.” really understands what the business is, got the idea for a Showcasing insurance fraud won’t be the least bit influenced by this; no “ballsy insurance more than anybody that wants to join the While the IBC is definitely not pleased adjuster” military in Britain thinks that they are with the way the insurance industry is going to end up being James Bond,” he being portrayed in the series, they do says. “It’s just not real. This isn’t even close approve of the fact the show is bringing to to what it is that we do and how the busilight organized insurance crimes seen in ness operates.”

Ontario. “Our industry does not act that While Plant says he doesn’t like the way,” Rick Dubin, vice president of invesway the show portrays the industry, espetigations at IBC, says. “Our insurance cially since he does not feel it’s a real companies are reputable, they are honest, depiction of the industry he works in, he they really do a very good job and so do does realize that sometimes when you’re the adjusters. I mean, I think with what close to something, it can be difficult you’re seeing, it’s pretty obvious insurance when someone else tells the story differcompanies do not operate that way.” ently than you might perceive it. And While IBC was consulted about activiwhile there might be situations depicted ties going on within Ontario with regard in the show an adjuster might face, there is no way one to organized insurance crime, Dubin is quick to point out adjuster will encounter all of these things over the course of they had nothing to do with the script — that is strictly the their career, let alone in a few months. “To those of us in imagination of the creators. “We would tell them the schemes the know, it makes the depth with which they went to real- that existed, what we’re finding in terms of how they were ly deal with this, you’d blow it off and go ‘they’re not really staging the accidents and then how they proceeded to make serious about this,’” Plant says. “This really isn’t about the claims and who was involved,” Dubin says. “We would insurance, cause none of this is real. Then you stop looking explain that there are a number of cases where they take a at the insurance aspect of it and look at the story and that’s vehicle and they would intentionally cause significant addiwhere the thing really falls down, because it’s just really tional damage and they would show the adjuster getting there stupid.” and he would say, ‘wait this damage wasn’t there at the scene of the accident what’s all this?’”

Well-written script Dubin says the intent on the part of IBC was to show there Rogers, who enjoys the show and feels the concept is good, are staged accidents that go very wrong, where not only those read through the scripts beforehand and offered up sugges- who intentionally involved are injured, but also innocent www.claimscanada.ca

February/March 2010

Claims Canada

31

individuals can be seriously hurt. “[In one of the episodes] the occupants in the vehicle that were actually staging got hit by a transport and it was a fatality,” Dubin says. “That really happens, where something goes really wrong, and it could be an innocent person, another vehicle being sucked in to a staged collision and getting seriously injured or killed, or it could be that something’s gone wrong right in the vehicle that is intentionally causing the accident.”

Made for TV Rogers says she understands the industry has worked very hard to ensure it is seen as a good corporate citizens and why some might be concerned about the portrayal of the industry in the show. However, she says the industry needs to bear in mind it is a television show. “We watch all sorts of shows that depict different industries,” Rogers says. “Did you ever watch the show The Shield? I loved it, but it was all about rotten cops and what they did and yet it was just a show that a lot of people really loved and enjoyed.”

She says she feels that viewers from the industry need to separate the fact that there is a storyline around a young man

and his fiancée and his past life, and that he happens to be an insurance adjuster. The show is not depicting that this is what happens to all insurance adjusters, it is about Jimmy Burn. “I think that people should look at this show and from some perspective look at it and think I wish I could do that,” she says. “Wouldn’t that be kind of fun if you could actually say that to these people, whereas we’re all entrenched in customer service and what we can and cannot say.”

“I think that they’re showing the good side and the bad side of the company,” Rogers says. “I don’t think that it depicts the entire country, I don’t think that it’s depicting all of the insurers. I think people just need to look at it with a lighter approach and laugh, ‘you might never get away with that, but I really like the way he handled that’.”

Rogers is convinced that if people give it a chance they will learn to enjoy and appreciate the show, even the farfetched parts of it.

And, as MacRury, notes, the show is independent and it is intended to be a dark comedy.

targetting the cause

CEP FORENSIC ENGINEERING INC. Our emergency phone number: 514-203-8877 / info@expcep.com

32

OTTAWA

LAVAL

QUÉBEC

Tel.: 613-234-1668 / 1 866 521-1668 Fax: 613-234-0079

Tel.: 450-686-0240 / 1 877 686-0240 Fax: 450-686-1440

Tel.: 418-622-4480 / 1 877 686-0240 Fax: 418-622-6002

Claims Canada

February/March 2010

1 866 521-1668 www.claimscanada.ca

National Standing Committees 2009 – 2010 ADVISORY Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca

Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com

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

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

Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca

CONVENTION Allan B. Hart, BBA, CIP, CRM Coast Claims Service Ltd. 2727 Quadra Street, Suite 6 Victoria, BC V8T 4E5 Phone: (250) 386-3111 Fax: (250) 386-1473 E-mail: ahart@coastclaims.com

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

DISCIPLINE Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca

Jean-Marc Laurin, FPAA, CRM, FCIAA Cunningham Lindsey 1250 Guy Street, Suite 1000 Montreal, PQ H3H 2T4 Phone: (514) 938-2124 Fax: (514) 938-5445 E-mail: jmlaurin@cl-na.com John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com CAREER RECRUITMENT PLANNING Wendy S. Fralick, AIIC Cunningham Lindsey 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com Christina Welton, FCIP McLarens Canada 637 The Queensway, Unit 9 Peterborough, ON K9J 7J6 Phone: (705) 740-0023 Fax: (705) 740-2296 E-mail: christina.welton@mclarens.ca

FCIAA E. Brian Gough, FCIP, CLA, FCIAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: ebgough@marshadj.com Robert V. Pearson, CLA, FCIAA AAL Alberta Ltd. 600 – 2424 4th Street S.W. Calgary, AB T2S 2T4 Phone: (403) 452 2195 Fax: (403) 452 3568 E-mail: rvp@aaladjusters.com Jean-Marc Laurin, FPAA, CRM, FCIAA Cunningham Lindsey 1250 Guy Street, Suite 1000 Montreal, PQ H3H 2T4 Phone: (514) 938-2124 Fax: (514) 938-5445 E-mail: jmlaurin@cl-na.com

NOMINATING Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia St. Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com

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

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

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

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

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

Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca

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

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

COMMUNICATIONS Craig J. Walker, CIP, FIFAA, FCIAA Maltman Group International 1049 McNicoll Avenue Toronto, ON M1W 3W6 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com

W.E. (Ted) Baker, BA, CFE, FCIAA Baker, Bertrand, Chassé & Goguen Claim Services Limited 3660 Hurontario St., Suite 601 Mississauga, ON L5B 3C4 Phone: (905) 279-8880 Fax: (905) 279-5338 E-mail: webaker@bbcg.ca

John D. Seyler, AIIC Cunningham Lindsey 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: jseyler@cl-na.com

EMERGENCY MEASURES David W. Lyon, FCIP, CLA, FCIAA Cunningham Lindsey 111 Granton Drive, Suite 220 Richmond Hill, ON L4B 1L5 Phone: (905) 707-5527 Fax: (905) 764-3398 E-mail: dlyon@cl-na.com

Jane Richardson, BBA, FCIP Crawford Adjusters (Canada) Inc. 237 Brownlow Ave., Suite 120 Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Jane.Richardson@crawco.ca

Roger S. Bickers, CIP, FCIAA McLarens Canada 600 Alden Road, Suite 600 Markham, ON L3R 0E7 Phone: (905) 946-9995 Fax: (905) 946-0171 E-mail: roger.bickers@mclarens.ca

www.claimscanada.ca

Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com

IBC: LIAISON & FORMS O. Martin Moran, CIP Cunningham Lindsey 50 Burnhamthorpe Road West, Suite 1102, Sussex Centre Mississauga, ON, L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: mmoran@cl-na.com LEGISLATIVE Russell E. Malkoske, BA, FCIP, CLA QA Adjusting Company 279 Provencher Blvd.

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

(Hons.), FCIP, CRM Network Adjusters Ltd. 67 Folkestone Blvd.

Winnipeg, MB R3P 0B4 Phone: (204) 897-5793 Fax: (204) 897-5797 E-mail: mbarber@mts.net MEMBERSHIP & QUALIFICATIONS Rob Johnston Midwest Claims Services 320 Gardiner Park Court Regina, SK S4V 1R9 Phone: (306) 522-1656 Fax: (306) 569-1256 E-mail: rob@midwestclaims.ca

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

CIAA REGIONAL PRESIDENTS 2009 – 2010 NEWFOUNDLAND & LABRADOR Neil F. Lacey, CIP, FCIAA Crawford & Company (Canada) Inc. 44 Torbay Road, Suite 300 St. John’s, NL A1A 2G4 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Neil.Lacey@crawco.ca NOVA SCOTIA Nicholas B. MacDonald, AIIC Cunningham Lindsey 11 Morris Drive, Suite 200 Dartmouth, NS B3B 1M2 Phone: (902) 421-1519 Fax: (902) 429-7296 E-mail: nmacdonald@cl-na.com 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 Charles A. Berthiaume Réclamations C. Berthiaume 44, Chemin d’Oka Saint-Eustache, PQ J7R 1K5 Phone: (450) 491-6165 Fax: (450) 491-6230 E-mail: rcb@reclamationscberthiaume.ca ONTARIO Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3, P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail: richard@azclaims.ca MANITOBA Timothy W. Bromley J.P. Hamilton Adjusters Ltd. 125 Enfield Crescent Winnipeg, MB R2H 1A8 Phone: (204) 944-1057 Fax: (204) 944-1606 E-mail: tbromley@mts.net SASKATCHEWAN Rob Johnston Midwest Claims Services 320 Gardiner Park Court Regina, SK S4V 1R9 Phone: (306) 522-1656 Fax: (306) 569-1256 E-mail: rob@midwestclaims.ca WESTERN Bea Boutcher, CIP Horizon Adjusters Ltd. #207, 9814 – 97 Street Grande Prairie, AB T8V 8H5 Phone: (780) 402-8383 Fax: (780) 402-7888 E-mail: bea.boutcher@horizonadjusters.com PACIFIC TBA

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Recognizing Red Flags in Slips and Falls

BY JEFF ARCHBOLD AND MAJA REHOU

Sue Smith was walking on a barrier free access ramp between the roadway and the sidewalk of a shopping plaza when she reportedly slipped and fell on ice. As a result of her fall, Sue reportedly sustained injuries to her face and kneecap. You are asked to evaluate her claim and decide whether her injuries are consistent with the accident. As a claims adjuster it is important to understand the complexity of slips, trips and falls. This is especially essential when there are people who claim injury or try to assign blame for a pre-existing condition. It is important to know what red flags to look for when reviewing a claim to help determine causality and responsibility for an accident, especially in these winter months when ice can be prevalent.

Causes of falls The most common reasons for falling are slip and trip events.

Slipping As a pedestrian walks, he or she generates both vertical and horizontal forces where the feet contact the ground. A walkway surface must have sufficient friction to resist the forward horizontal forces generated while walking in order for it not to be slippery. When a slip of sufficient length occurs causing a loss of balance, the pedestrian tends to fall backwards, straight down on their back or but34

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tocks, or slightly to the side. In addition to injuries to the hand/wrist from attempting to break the fall, the twisting of the knee and ankle as the weight of the body lands on these joints can also lead to injuries to connective tissue as the joints are stressed immediately prior to and during the landing. Fractures to the bones at/near the foot are also consistent with a slip. Slips may result in a higher frequency of tailbone fractures when compared to other types of fall dynamics.

Tripping When a pedestrian trips, it is because a difference in elevation has stopped the foot from moving forward during the swing-through phase of the human gait cycle.

Injuries to the hand and wrist are common because most people break a fall by putting their arms forward.

Injuries to shoulders and impact injuries to the knee are also expected for a trip. In some cases, if reaction time is insufficient, a pedestrian may land on his or her face. This is typical with the elderly. Therefore, if a claimant states they slipped on ice, but report injury to their kneecap (patella) it may be a warning to investigate the claim further.

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Slip resistance The static coefficient of friction (COF) is a measure of how slippery a surface is. For level walkways, the industry accepted standard minimum static COF for a surface to be considered slip resistant is 0.5 using a ‘standard’ traction test pad.

Snow by itself usually provides adequate slip resistance for walking. However, ice has a significantly lower COF to a polymer sole typical for a winter boot. This is a significant risk for a slip and fall and is considered hazardous.

If Sue Smith claimed she slipped on a snowy sidewalk while walking at a normal pace, and there was no ice, this should be a red flag.

Foot displacement to cause fall Since the majority of slips occur during the heel strike of human gait, a slip may occur on an area with inadequate slip-resistance as small as 1.5 inches. However, if a slippery area is smaller than four to six inches length, it will typically not allow a pedestrian to slide a sufficient distance to cause a loss of balance and fall. This information can be useful if a claimant states that he or she slipped on a patch of ice that was two inches across. www.claimscanada.ca

Slope or elevation Ramp slopes change the ratio of horizontal and vertical forces as compared to walking on level surfaces. A surface with a downward slope would behave as if it were more slippery than if the surface was level. If someone walks from a level surface to a declining one, there is a change in effective traction that can significantly increase the risk of a slip. Conversely, stepping onto an incline reduces the risk of a slip.

Sue claimed she slipped while walking towards the mall and would have been travelling up the incline of the ramp at the time of her accident. If Sue claimed she slipped with her first step onto the ramp, this would be a red flag, since this is not an expected scenario for a slip. However, if Sue claimed she slipped after taking several steps on the ramp, this would be a more likely location for a slip. Unlike most slips that occur at heel-strike of the human gait cycle, this slip would be expected to be at toe-off. Of course, the type of injury from a slip at toe-off is often different than with a heel-strike slip.

be a straightforward slip and fall case can be surprisingly complex. By being able to identify red flags — based on fall dynamics, injury, surface conditions, etc. — legitimate claims can be settled quickly and questionable claims properly investigated.

As for Smith’s injuries? Kneecap and facial injuries slipping going up a ramp?

Despite multiple red flags these injuries could have occurred if her fall was at the middle or top of the ramp.

When not creating slip hazards by making a skating rink in his backyard for his kids, Jeff Archbold, MASc., PEng., works as a forensic engineer at Walters Forensic Engineering Inc., in Toronto, Ont. For almost ten years, Maja Rehou has been using her marketing and parenting skills to successfully convince the engineers at Walters Forensic Engineering Inc. that, like Buckley’s, marketing may taste awful but it works.

Meteorological information In the above-noted scenario Sue claimed she slipped on a patch of ice.

Review of the relevant meteorological data would be required to determine whether there was rain or snowfall on the days and hours preceding the incident and to what degree. If Sue’s claim is filed days, weeks, or even months after the reported incident it is likely any evidence of ice or other slippery conditions at the mall will have disappeared. Reviewing the meteorological data will help determine whether ice would have formed and when.

If the weather data is not consistent with the formation or presence of ice, another red flag has arisen. Alternatively, if the weather data indicates ice could have formed several days prior to the date of loss, there might be the ability to apply some contributory negligence to a third-party contractor overseeing sidewalk or parking lot maintenance.

Conclusion Understanding the myriad of elements involved in what may seemingly www.claimscanada.ca

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Reintroducing

HCAI

After a remediation period in 2008, HCAI is now ready for its re-launch; fully prepared to handle the large volume of users.

BY ALLISON BRAND

With such a focus on accident benefits claims costs, Ontario’s automobile insurance industry appears ready to embrace the Health Claims for Auto Insurance (HCAI) system. For those who work within the auto insurance claims field, HCAI offers not only a paperless, streamlined and efficient auto insurance claims handling process, but also a system to capture current, quality health claims data.

Coordinating claims information between multiple stakeholders via a paper-based system can be slow and prone to error. Enter HCAI, the electronic bridge between health care facilities and insurers. Health care facilities submit completed Ontario Claims Forms (OCFs) to insurers electronically through HCAI. Adjusters review the submitted forms and record their decisions electronically.

The system, which was first launched in 2007, entered a period of remediation in 2008 in an effort to increase performance. After many improvements and continuous testing, HCAI is ready for a 2010 reintroduction. This time the rollout involves a pilot phase allowing for an incremental increase in the number of users. Aware of earlier problems, the pilot phase has been the subject of much internal and third-party scrutiny. As the performance meter on the new HCAI information website, www.hcaiinfo.ca, reveals: HCAI is working well.

With multiple users and stakeholders working within the same electronic 36

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system, HCAI has been subject to multiple levels of governance. “The board appreciated the level due diligence and governance that was put in place for the HCAI remediation program in 2009,” Andrew Szende, chair of HCAI processing, observed. “The approach involved a very transparent process based on evidence, which provided the board with confidence that risks were being appropriately managed.”

Complete transparency Third party oversight and internal transparency have been crucial to the operational capacity and functionality of the remediated HCAI system. “All decisions and recommendations have been made with complete transparency and only after third parties have independently evaluated the available evidence,” Chris Kiah, president and CEO of Allstate Canada, and chair of the information technology oversight committee at Insurance Bureau of Canada (IBC), said. With a robust governance structure in place, including involvement from the Financial Services Commission of Ontario (FSCO), IBC’s board of directors, and various working groups and internal committees, HCAI’s reintroduction involved much more than a hardware upgrade.

Transparent communication, multilayered governance and evidence-based analysis and projections have fuelled the system’s remediation. Third parties have tried, tested and approved HCAI’s system processes and technologies. System architecture has changed. Privacy and business operational procedures are in step with the improvements

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made to HCAI’s overall performance.

Based on evidence and data from the previous rollout, HCAI is prepared for 2010’s usage patterns and volumes.

Analysis has determined the hardware necessary for reintroduction, while concurrently predicting future hardware requirements. Since communication is key to the remediation process, there is discussion with current users to determine their views on system functionality.

User feedback User acceptance testing (UAT) was an important remediation milestone. A quality assurance group, led by Alexandra Ivanova, certified software quality analyst, conducted and evaluated independent tests to review HCAI’s performance and functionality. The results of a UAT survey indicated that 100 per cent of the participants found “HCAI met their needs to help them perform their jobs.”

Extensive performance testing conducted by several third parties allowed Anthony Gartrell, Hewlett Packard consultant, to conclude “the evidence indicates that the HCAI system scales well beyond the projected high volume transaction levels and shows sufficient scalability to address future capacity and increases in user and transactional volumes.” When the pilot began, Gore Mutual Insurance Company was one of the first companies to re-adopt HCAI. “The HCAI system is very intuitive to adjusters and fits well with Gore’s paperless strategy of increasing workflow efficiencies for the adjusters,” Joe Ferrito, program manager, accident www.claimscanada.ca

benefit losses at Gore Mutual, said.

A combination of due diligence, research and user surveys shows that the HCAI system works.

Although technology products typically face challenges as they mature, pilot participants’ HCAI experience has been positive. “System response times have been excellent and we have in excess of 100 users on the system at any one time,” Steve Bedard, claim process manager, State Farm Mutual Insurance, said. “As the health providers are being added, we are seeing a larger percentage of our work flowing through HCAI without delay. HCAI provides us the ability to proactively see our pending work and aids in our ability to remain compliant with all SABS time lines.”

Adapting to change has its challenges. With HCAI, the primary difference for users is the system’s improved accuracy and the speed at which transactions occur — everything else remains the same.

To further improve users’ experience, communication channels were enhanced. The HCAI information website provides access to accurate, relevant information and tools to help understand and use HCAI. Following months of redevelopment, www.hcaiinfo.ca was completely transformed and relaunched in September 2009. Not only is the improved website designed to supply information to HCAI users based on their specific roles, but the website also delivers on-demand training tools such as e-learning videos aimed exclusively at adjusters.

“The recently upgraded HCAI information website is a great learning tool for insurers to gain efficiency in the training and development of staff preparing to use HCAI,” Gavin Mascarenhas, claims unit manager for The Dominion of Canada General Insurance Company, said. The Dominion was a participant in HCAI’s pilot phase and had its Ontario claims operation fully integrated with HCAI. “The learning objectives were well thought out and constructive. It’s like having a teacher walk you through the adjudication process at your desk,” Mascarenhas added. HCAI’s information website has received rave reviews and its www.claimscanada.ca

success signifies that the industry is evolving: data collection, information coordination and above all, cost efficiency.

Signing on to HCAI for the first time will require trust in the remediated system. Health care providers and adjusters will have help available along the way through HCAI’s information website. “HCAI is essential to ensuring the sustainability of Ontario’s no-fault insurance program,” Don Forgeron, president and CEO, IBC, said. “As a

result of HCAI, health care facilities and insurers must adopt standard practices.” Streamlining the claims process, eliminating waste and improving the quality of data are the hallmarks of the HCAI system.

Allison Brand joined Insurance Bureau of Canada (IBC) as senior business advisor in 2006 and has since been instrumental in preparing the insurance community for the rollout of the HCAI system.

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E

education forum

A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA

Taking Care of Business: Commercial Loss Considerations

lthough loss investigation activities for commercial risks are similar to those for personal lines, the nature of the property is different, as are the wordings used in commercial policies.

The following review takes the standard Commercial Property Broad Form as a starting point. This form covers against all risk of direct physical loss or damage, subject to some exclusions. But it is always important to check for variances in policy forms: endorsements may limit or extend coverage, and manuscript policies are sometimes negotiated for large commercial risks.

A

the insured how the equipment was used on the day of the fire. Note the power source for the stoves so that it can be compared to the information provided on the application for insurance. If it appears that any cooking equipment may have contravened the building code, an experienced engineering consultant should be asked to document the situation.

Installed fire-suppression equipment sometimes fails. In this case, subrogation may be possible against the contractors who inspected and tested the equipment for the owners, as well as against the equipment suppliers and installers.

Commercial fire losses

Water damage losses

At a commercial fire scene, as at any other, an adjuster should examine where the fire originated if circumstances permit.

In restaurants, fires often originate with cooking equipment, which may include specialized appliances such as deep fryers, grills or wood-fired pizza ovens. Such appliances are usually equipped with devices to control the fire exposure. The history, maintenance and cleaning schedules for the equipment and devices should be checked, and the adjuster should ask

When water damage is reported on a commercial risk, determining the cause of the damage is key to the investigation. Water-related perils typically excluded under the Commercial Property Broad Form are: • Flood, including “surface water,” waves, tides, tidal waves, tsunamis, or the breaking out or overflow of any natural or artificial body of water. This exclusion does not apply to loss or damage caused directly by resultant fire, explosion, smoke, leakage from “fire protective equipment,” leakage

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from a water main, or property in transit.

• Seepage, leakage or influx of water derived from natural sources through basement walls, doors, windows or other openings, foundations, basement floors, sidewalks or sidewalk lights, the backing up or overflow of water from sewers, sumps, septic tanks or drains, or the entrance of rain, sleet or snow through doors, windows, skylights or other similar wall or roof openings, all unless concurrently and directly caused by a peril not otherwise excluded.

Named peril policy wordings, by contrast, generally cover only water that has escaped from fire protection equipment, such as sprinklers.

Loss of stock When manufacturers lose stock to an insured peril, the level of indemnity depends on the state of the stock. On finished goods and on goods partially manufactured, indemnity is restricted to the cost of materials plus the cost of labour and other incidental charges necessary to return the product to its undamaged state. Endorsements may amend this coverage to provide an agreed actual cash value for finished goods. www.claimscanada.ca

Stock that has been sold but awaiting delivery is usually valued at the price for which it was sold, less all discounts and charges to which it would have been subject had no loss occurred. Other unsold stock is valued at the factory selling price plus freight and handling charges, less all discounts and charges to which it would have been subject.

Stock declaration insurance forms provide coverage on an actual cash basis and losses are paid according to the stock values reported. The insured is penalized in proportion to the amount of any underinsurance. The last reported value is compared to the actual true value of all stock insured at the time of the loss.

Construction-related losses Builders risk or course of construction policies are designed specifically to insure property that is under construction. They typically cover the owners, the general contractor and any subcontractors, and usually contain a clause that waives all rights of subrogation against any party insured by the policy.

Under all-risks policies, adjusters should always look at the proximate cause of the loss to determine coverage, not necessarily at the consequences. Under a builders risk broad form policy, insurers provide coverage for the cost of replacing, repairing, constructing or reconstructing the property on the same project site with new materials of like, kind and quality.

Under either policy, adjusters should note any unforeseen problems that arose after the project began — such as poor soil conditions or changed water table levels — that might provide a motive for insurance fraud.

Contractor’s equipment floater (CEF) policies are non-standard wordings covering large equipment used for road building and maintenance, excavation, construction, etc. Smaller pieces of equipment and hand tools may also be insured on this form. Policies generally cover owned machinery www.claimscanada.ca

and equipment while it is in use on the job, in transit between jobs, undergoing repairs in repair shops, or being stored. They usually exclude losses that are caused by exceeding the rated capacity of the equipment. Property is often identified on a schedule, or coverage may be provided on a blanket basis but restricted to a specified limit per item. Limitations often apply to coverage for rented equipment and for a single location. Coinsurance clauses may penalize an insured for not insuring property to value.

Under all-risks policies, adjusters should always look at the proximate cause of the loss to determine coverage, not necessarily at the consequences.

Installation floaters insure fixtures (such as cabinetry) or equipment (such as heating, air conditioning, plumbing or production equipment) to be installed on a job against named perils or against all risks under a broad form wording. Wordings are often customized to each insured and each operation. Contractors who install electrical, refrigeration, mechanical or other equipment may have testing coverage added to the policy wording.

Boiler and machinery losses Boiler and machinery policies cover direct losses caused by accident to

equipment specifically insured under the policy. The term “accident” is defined as a sudden and accidental breakdown of the equipment, which results in simultaneous physical damage to it, and the physical damage must require the repair or replacement of the equipment. The equipment insured may include pressure equipment such as boilers, hot water tanks, air tanks, steam cookers and refrigeration and air-conditioning vessels and piping. Mechanical and electrical equipment, such as compressors, pumps, blowers, fans, engines, electric motors, generators, electrical panels, turbines and transformers may also be included.

Property policies cover loss from fire or smoke and from water used to extinguish a fire. They also cover loss caused by a combustion explosion.

When fire, smoke or a combustion explosion causes damage to boiler and machinery equipment, the boiler and machinery policy excludes the loss and the property policy covers it instead. A variety of other losses are treated similarly. An exception to this division of coverage arises when arcing occurs within an electrical item and causes a fire: It may be difficult to separate types of damage within the equipment, so the boiler and machinery insurer and the property insurer share the loss to the equipment.

Boiler and machinery coverage is a specialized area, and specialists usually attend to these losses. A property adjuster discovering a boiler and machinery loss should notify the insured, the insurer or the insured’s broker (depending how coverage was arranged) so that the boiler and machinery insurer is put on notice.

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

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O on the scene Donald N. Hull has been promoted to vice president, Ontario region, at McLarens Canada. In his 36-year career, Hull has been director and the senior executive for an international claims company, both in Canada and internationally. He has also previously been vice president of a major Canadian property management concern, and has managed claims services branches in London, Kitchener, HamilDonald Hull ton and Toronto. A past president of the Canadian Independent Adjusters’ Association, Hull holds the coveted Chartered Loss Adjuster designation. Reporting to Dennis Schembri, executive vice-president, Eastern Canada, Hull will be responsible for assisting claims managers, examiners and risk managers in reducing claims losses and optimizing customer satisfaction. ●

Granite Global Solutions made a donation of $20,000 to the Canadian Red Cross for the victims of the Haiti earthquake.

The partner companies McLarens Canada, Sibley & Associates, Rochon Engineering, King-Reed Investigation Services and Henderson Structured Settlements all contributed.

“We operate in the claims management arena and are therefore extremely familiar with hardship caused by small incidents or major disasters,” Murray Wallace, president and CEO of Granite Global Solutions, said. “But this disaster is so large and affects so many people; we have to do what we can to help.” ● Dave Prociuk is the recipient of the Jack Byers Award. Prociuk, with Allied Claims Adjusters Ltd. in Regina, received the award at the Insurance Brokers’ Association of Saskatch-ewan (IBAS)’s convention in October.

The Jack Byers Award is presented annually by the IBAS board of governors to an individual who has made a noteworthy contribution to the Sask-atchewan insurDave Prociuk ance industry.

Prociuk has devoted more than 35 years to serving and enhancing the insurance industry as a claims adjuster. ● 40

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February/March 2010

Dennis N. Schembri CIP, CFEI, has been promoted to executive vice president, Eastern Canada. In his 29-year career, Schembri has worked as a branch manager with a major independent adjusting firm and later founded and operated Vanler Insurance Adjusters Ltd, an Ontario-based independent adjusting firm with approx 50 employees and offices in Mississauga, Hamilton, Dennis Schembri Markham, London, Sudbury and Ottawa. He joined McLarens Canada when Vanler was acquired by McLarens in September 2007. Reporting to Mike Holden, president, Schembri will be responsible for assisting the Ontario and Eastern Canada vice presidents in enhancing customer satisfaction and growing their regions. ● A.S.A.P. Secured Inc. has launched a mobile command centre for easy deployment to large loss sites across Ontario.

The centre will allow adjusters and other insurance industry professionals to offer immediate assistance and support to their customers in the midst of a crisis or disaster. The 17foot mobile command centre is equipped with an Internetready computer, printer, copier and scanner.

It will allow on-site preparation, reporting and spontaneous meetings between adjustors and engineers in the event of large-scale losses.

The command centre itself serves as a significant visual deterrent to potential criminal activity, A.S.A.P adds. ● Cunningham Lindsey has launched Cunningham Lindsey Research Services (CLRS).

CLRS provides intelligence gathering, special investigations and surveillance services to assist in the adjudication of insurance claims.

“From researching background information and verifying details, to gathering video surveillance and conducting interviews, the services providMartin Maylor ed by this in-house unit are done so with an objective perspective of each file,” a Cunningham Lindsey release says.

Martin Maylor will serve as director of the unit. He brings more than 20 years experience investigating claims for both life and health and property and casualty industries in Canada, the United States and across Europe. ●

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 www.claimscanada.ca

Woman in Insurance Cancer Crusade (WICC) platinum sponsor Cunningham Lindsey has launched an innovative fundraising event that’s soon to turn personal losses into WICC’s gains.

Employees Martin Moran, Albert Poon, John Seyler, Kenny Huang and Mike Laberge have accepted a challenge to lose weight over the next six months. Each will try to lose the largest percentage of body weight by Jun. 30. The contestant who loses the least percentage of weight must treat the other ‘biggest losers,’ and their spouses, to a lavish sushi dinner.

In the spirit of healthy competition, the contestants are accepting $5 pledges, which will be donated to WICC, from supporters who, in exchange for their donation, can enter a pledge form on which they submit their best guess as to the percentage of body weight a participant will lose. The top five entries that come closest to guessing the actual results will win one of five bottles of wine donated by Cunningham Lindsey.

So far, Cunningham Lindsey employees have raised more than $500. The “biggest losers” will continue to accept pledges through to the end of June and welcome other members of the insurance industry to join in. If you are interested in weighing in your guess and $5 donation, contact Martin at 905-896-8181 or mmoran@cl-na.com ●

Stephen Scullion, director of professional development at Crawford & Company (Canada) Inc. has been awarded the Fellow of the Canadian Independent Adjusters’ Association (FCIAA). The Stephen Scullion FCIAA designation is awarded to members of the Canadian Independent Adjusters’ Association (CIAA) who possess outstanding qualifications and at least 15 years of practical experience in the adjustment of loss. Scullion not only possesses those qualifications, but through his efforts outside the adjustment of loss has also made a real and recognized contribution to the insurance industry. Those contributions include numerous years as an Insurance Institute of Canada instructor and marker, as well as writing articles and presenting seminars to various segments of our industry. ● www.claimscanada.ca

For completing the CIAA survey, three lucky winners received an iPod. Patti Kernaghan, president of the CIAA, presents an iPod to Leona Ashcroft of Ashcroft Insurance Adjusters in Nelson, B.C. Miles Barber past president of the CIAA, presents Heather Hannah of Manitoba Public Insurance, with an iPod. The prize will be placed into an employee prize draw collection — as is practice with all employee-won prizes at MPI. The company will then sell tickets to win the items in the collection with all the money raised going to local charities.

Richard Van Horne, CIAA Nova Scotia region first vice president, presents an iPod to Jane Richardson of CrawPatti Kernaghan and ford Adjusters (Canada) Inc. Leona Ashcroft in Dartmouth, N.S. ●

Heather Hannah and Miles Barber

Jane Richardson and Richard Van Horne

CIAA New Members — December 2009 CORPORATE MEMBERSHIP J.Ainsley and Associates

Vancouver, BC

INDIVIDUAL MEMBERSHIP J.Ainsley and Associates Jim Ainsley

Vancouver, BC

Level 3

Arctic West Adjusters Ltd. Eric Kieken

Yellowknife, NT

Level 1

Cunningham Lindsey John Farthing

Vancouver, BC

Level 1

Evaluate It Claim Services Melanie McConnell

Sedgewick, AB

Level 1

S.J. Kernaghan Adjusters Shelley Cameron – Storr

Calgary, AB

Level 3

Maltman Group International Sharon Coutinho Toronto, ON

Level 1

Mercer Myers & Associates Insurance Adjusters Ltd. Michelle Gopie Toronto, ON Level 2 Eva Kwok Toronto, ON Level 1 Tajinder Singh Toronto, ON Level 1

February/March 2010

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O on the scene The Ontario Chapter of the Risk & Insurance Management Society (ORIMS) held its Christmas Luncheon on Dec. 16 at the Royal York Hotel in Toronto. More than 650 attended and, in keeping with the spirit of giving, the ORIMS executive chose to raise funds for The Daily Bread Food Bank in support of their fight to eliminate hunger in and around Toronto. A cheque for $10,000 and more than 1,500 pounds of food was presented to the Food Bank by ORIMS president Steve Pottle. â—?

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www.claimscanada.ca

Canadian Independent Adjusters’ Association/ L’Association Canadienne des Experts Indépendants

26th Annual General Meeting and Conference August 26 - 29, 2010 Rising regally on Victoria’s spectacular Inner Harbor, The Fairmont Empress luxury hotel showcases the spirit and energy of Vancouver Island in grand style. With

her turn-of-thecentury beauty, The Fairmont Empress resort captures the grandeur and elegance of a bygone era, while her facilities and services meet the needs of today’s traveler.

A stunningly beautiful Resort!

The Fairmont Empress 721 Government Street Victoria, British Columbia

www.fairmont.com/empress

O on the scene McCague Borlack LLP hosted their annual “Christmas in January” at the Design Exchange on January 20th, 2010 and enjoyed the opportunity to share drinks, discussion and celebrate the occasion with more than 300 guests. ●

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www.claimscanada.ca

MD&D’s Annual American Thanksgiving once again attracted industry guests to an afternoon of football, food and socializing.

On Nov. 6, Montana’s M Lounge was filled with industry delegates catching up with old friends, enjoying tasty treats with football playing in the backdrop. ●

Strategy

Creativity MKA Canada, Inc., a multidisciplinary construction consulting firm,provides creative solutions to the construction, legal and insurance industries.

Agility

Experience

www.mkainc.ca www.claimscanada.ca

I

Our professional team assists in claim resolution with technical advisory services in: • Property Loss • Builder's Risk Insurance Claims • Construction Defect & Liability Insurance Claims

1-877-532-8662 February/March 2010

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O on the scene Dec. 3, 2009 saw the Ontario Pond of the Honourable Order of the Blue Goose host its annual Christmas Galabration with well over 100 Ganders and guests in attendance. Liberty Group’s newly renovated Ciao Wine Bar in Toronto’s trendy Yorkville area served as the setting. Cocktails and a fabulous meal were followed by the amazing sounds of Terri Oliver and her band Oliver Sole. ●

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Claims Canada

February/March 2010

www.claimscanada.ca

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