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June/July 2010
EARTHQUAKE Preparing for the Inevitable
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Contents JUNE/JULY 2010 • VOLUME 4 • NUMBER 3
Cover Feature
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12 Earthquake: Preparing for the Inevitable With the potential for earthquakes in Canada, Haiti and Chile serve as a reminder for the need to have a catastrophe plan in place. Are we ready? BY LAURA KUPCIS
Spotlight 20 Family First At Cormier Adjusting Limited, a familial environment means everybody is free to offer insight on how the company advances and grows. BY LAURA KUPCIS
Education Forum
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42 Remedies and Recovery A number of the surety’s options for responding to a claim exist, both before and after payment has been made.
News Features 22 The Decision is in the Bag
36 A Biocmechanist’s Role
A recent win for insurers on CGL coverage provides clear meaning on property damage.
A biomechanist can help an insurer determine whether injuries are consistent with the reported claim.
BY BRUNO DE VITA AND HOLLIS BROMLEY
BY MICHAEL SINNOTT
24 Surveillance Hot or Not?
38 Combat Auto Fraud
Insurance companies need to be aware of the affect PIPEDA and the Guidance on Covert Surveillance in the Private Sector could have on litigation.
An Ontario Superior Court case demonstrates the challenges insurance companies face when handling potential fraud; and a decrease in auto theft recovery is indicative of increased organized crime.
BY MONIKA M.L. ZAUHAR
28 Preparing for the Worst; Hoping for the Best A retired adjuster in British Columbia offers up a reminder, and some tips, on having an up-to-date catastrophe plan. BY DON MANLEY
30 An Oft Forgotten Risk Hot water heater failures, due to age or damage, are among the top five sources of water losses in homes. BY DENNIS TURRIFF AND MARK BAILEY
34 Confusion Surrounds HST Proposed GST/HST changes to the definition of financial services and the potential concerns resulting from that create questions for the insurance industry. BY STEPHEN LEE
BY LAURA KUPCIS
40 When What Could Go Wrong Goes Right When a company’s claims procedures and processes are put to the test on a major holiday, one can quickly determine whether those standard practices are as effective as they should be. BY NAOMI DUMMETT
30 Departments 4 First Notice 44 On The Scene
Columns 42 Education Forum
F first notice FSCO outlines transition rules for Ontario’s new auto reforms As of Sept. 1, 2010, as a general rule, the New Statutory Accident Benefits Schedule (SABS) enshrined in Ontario’s new auto insurance reforms “will govern claims processing relating to old accidents,” as well as “the determination of amounts payable by insurers on account of expenses paid to establish benefit entitlements arising out of old accidents,” the Financial Services Commission says in a recent bulletin. “Old accidents” are defined in the bulletin as automobile accidents occurring on or after Nov. 1, 1996 and before Sept. 1, 2010. Old SABS will continue to apply, however, to the calculation of benefit entitlements for old accidents. FSCO’s bulletin outlines some of the transition rules in play when the Ontario auto insurance reforms are implemented on Sept. 1, 2010. The bulletin is available at: http://www.fsco.gov.on.ca/english/pu bs/bulletins/autobulletins/2010/a04_10.asp. Coverages and coverage limits available in accordance with the Old SABS
under any automobile insurance policy in effect prior to Sept. 1, 2010 will remain unchanged until the policy expires or is terminated. “The only exception is if the named insured and insurer agree otherwise in writing,” FSCO’s bulletin notes. In the following sample situations, New SABS will apply to the processing of old claims [A complete list is found in the bulletin.]: • The accident benefit claim forms currently in use will no longer be approved for old claims. Only the revised forms will be approved. • An application for determination of catastrophic impairment (OCF-19) must be prepared by a physician or, if the impairment is only a brain impairment, by a physician or neuro-psychologist. • An assessment of attendant care needs (Form 1) must be completed by an occupational therapist or a registered nurse. • Interest on amounts that become overdue on or after Sept.1, 2010 with respect to old accidents will accrue at the New SABS rate of one per cent per month and be compounded monthly.
But in calculating benefit entitlements, Old SABS will apply to old accidents in the following scenarios (to name a few): • Income replacement benefits will continue to be calculated at 80 per cent of net income. • Coverage limits (e.g., $100,000 for medical/rehabilitation benefits) will continue to be governed by the Old SABS. • Entitlement to caregiver, housekeeping and home maintenance benefits will continue to be governed by the Old SABS. • Attendant care benefits will continue to be based on the hourly rates that are in effect on the date of the accident. • The “minor injury” definition, Minor Injury Guideline and $3,500 medical and rehabilitation limit referred to in the New SABS will not apply to old accidents. • For the purposes of old accidents, references to the Minor Injury Guideline in the New SABS will be deemed to be references to the Pre-approved Framework Guidelines under the Old SABS. ●
Nova Scotia keeps minor injury cap, triples limit to $7,500 Nova Scotia has kept its minor injury cap on pain and suffering awards for automobile accident injuries, but tripled its maximum limit to $7,500. The government announced amendments to the Insurance Act and draft regulations on Apr. 28. The amendments and regulatory changes will: • amend the definition of minor injury to mean strains, sprains and whiplash-associated disorders, mirroring the definition used in Alberta; • increase the maximum pain and suffering award limit to $7,500; • index the cap limit to inflation; and • enable at a later date the introduction of optional full-tort coverage, which would allow injured persons
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to seek greater compensation. “The new measures will apply to injuries on or after today,” the government announced in a release. “The amendments and regulatory changes will come into force July 1 to allow insurance companies time to make necessary system changes.” Nova Scotia Finance Minister Graham Steele told the CBC that the “changes won’t be retroactive . . . because that would have cost $69 million and
driven up premiums for all drivers.” “Optional fulltort coverage requires additional time to develop,” the government added in its release. “Government will conduct a broader review of automobile insurance this fiscal year.” The amendments represent the government’s response to a public discussion paper it launched earlier in 2010. The consultation paper was part of a cap review promised during Nova Scotia’s election campaign in 2009. ●
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F first notice Ontario Appeal Court refines concept of damages “too remote” for recovery The Ontario Court of Appeal has refined the concept of “damages too remote for recovery,” recently distinguishing the fact situation in Frazer v. Haukioja from that of the Supreme Court of Canada case, Mustapha v. Culligan of Canada Ltd. In Frazer, the Ontario Court of Appeal noted Grant Frazer was injured in a motorcycle accident on Nov. 25, 2001. Frazer was taken to the emergency room at Northumberland Hospital, where Dr. Haukioja was the attending physician. Haukioja diagnosed a left-ankle fracture and a right-ankle soft tissue injury. A cast was placed on Frazer’s left ankle only. On Dec. 6, 2001, a radiologist examined Frazer’s x-rays and immediately noticed a talar fracture in Frazer’s right ankle. Haukioja discussed the results with the radiologist that day, but Haukioja made no effort to communicate the x-ray result with Frazer until a follow-up appointment six weeks later. Even then, Haukioja characterized the fracture as tiny, barely visible and not requiring treatment. He suggested Frazer’s continuing pain was attributable to soft-tissue damage. On Jan. 23, 2002, Frazer met with another doctor, who advised Frazer of
the seriousness of the injury and the potential complications. Frazer learned that his complications could include arthritis, avascular necrosis (death of the bone as a result of an interruption of the blood supply) and the possibility that he might need surgery to fuse a joint in his ankle. When Frazer realized the full extent of his injuries, he became focused on the fact that Dr. Haukioja had lied to him. Frazer saw a psychiatrist, Dr. Joel Sadavoy, who found that Frazer suffered from an anxiety disorder with features of panic disorder. A trial judge found Frazer’s psychiatric diagnosis was totally as a result of Dr. Haukioja’s failure to properly treat his patient. Frazer received damages of $2,500 for non-disclosure, $150,000 for psychiatric injury, $283,378 for lost income, $1.2 million for future lost income and $14,911 for future care. The doctor appealed the damage award against him. Along the lines of Mustapha, he argued he could not possibly have “reasonably foreseen” that his failure to notify his patient about the fracture earlier would have led to a psychiatric disorder. In Mustapha, the plaintiff argued the
discovery of a fly contained in his bottle water ultimately led to a psychiatric disorder. But the Supreme Court said the plaintiff’s severe psychiatric condition was “too remote” from his initial discovery of the fly in the water bottle to allow recovery for his damages. The Ontario Court of Appeal noted a commercial relationship existed between a consumer and a company in Mustapha. But in Frazer the relationship was different, the court argued: it was based on a relationship of trust between a doctor and his or her patient. “Mere ‘general emotional upset’ and compensable psychological injury fall along a spectrum that is difficult to navigate with any degree of precision,” the Ontario Appeal Court found. “The former is unquestionably foreseeable in this case. However, it seems to me that it was also foreseeable that Dr. Haukioja’s non-disclosure could give rise to a recognized psychiatric illness. Dr. Haukioja was an experienced doctor and Grant Frazer was his patient.” ●
Insurance companies in N.S. could see 17 per cent increase in claims costs after change to minor injury cap Recent amendments to Nova Scotia’s minor injury cap and definition will increase average bodily injury claims costs by 17 per cent, Oliver, Wyman Limited estimates. The Nova Scotia government announced amendments to the Insurance Act and draft regulations on Apr. 28, 2010. The amendments triple the minor injury cap’s maximum limit to $7,500. Oliver Wyman estimates the required average premium for 2010 will increase by $24 to approximately $723 because of the changes to the Minor
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Injury Regulation (MIR). Nova Scotia’s superintendent of insurance contracted Oliver Wyman to provide a cost estimate in regards to the changes to the MIR. If all open claims as of Jul. 1, 2010 were to be settled based on the new minor injury cap and definition, insurers will pay approximately $7 million in additional claims costs, Oliver Wyman suggested. If all open or closed claims subject to the current cap and definition were to be retroactively paid — which the province has said won’t be the case —
insurers would pay an additional $69 million in claims costs. The firm noted that both estimated figures would be higher if a large number of those recently injured in an automobile accident waited for the government’s review of the definition and cap before proceeding with their respective claims. ●
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F first notice Cleanup costs vary widely for hydrocarbon spills The cost of domestic fuel oil losses can range greatly, from $30,000 on the low end to $900,000 for a really bad spill trapped under a large home; the result of a 900-litre tank that has either let go or been leaking for a while, according to Mark Samis, vice president of operations with Environmental Remediation Services. Samis was speaking at the Canadian Independent Adjusters’ Association Ontario Chapter seminar at the Albany Club in Toronto on May 7. The cost of a hydrocarbon spill cleanup varies widely, depending upon a range of factors, such as: • size of the release/damage; • how quickly the cleanup begins can affect how much the damage spreads; • remediation criteria, meaning the condition to which the affected site is to be returned (i.e. to its original background condition, to pristine condition, etc.); • geology and hydro-geology of the site (sand, clay, limestone, water, bedrock, etc.); • how far away is the site and how much travel is involved; • the need for and extent of site assessment; • land use; • infrastructure • whether or not there are competing jurisdictions (for exam-
ple, having to wait for a police investigation to be concluded before gaining access to the site to be cleaned up; • third parties (if the leak moves from one property to another); • seasonal conditions, which might make the impact of a spill better or worse — i.e. a rainstorm could wash the contaminant into a storm sewer and then it’s gone or a major snowstorm could impede cleanup if the access roads to the site are closed. Adjusters should keep in mind that if contractors are not provided clear direction from the beginning, or if a clean-up project manager is not independent (i.e. he or she has a vested interest in a particular solution), the costs of the cleanup can increase significantly. Samis said in a typical transportation cleanup, 40 per cent of the costs are related to disposal of contaminants and another 40 per cent goes to subcontractors. These two areas are the most likely to get out of control if not management properly, he said. Another 15 per cent of the costs go to project management consulting, sampling and reporting. In total, 95 per cent of the costs are indemnity costs. The other five per cent are expenses such as consulting, sampling and reporting. ●
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A bi-monthly magazine (6x per year), Claims Canada is published by BIG Magazines LP, a div. of Glacier BIG Holdings Company Ltd. Business Information Group is located at: 12 Concorde Place Suite 800, Toronto, ON, M3C 4J2. Claims Canada magazine is the Official Publication of the Canadian Independent Adjusters’ Association [CIAA] and through its editorial content and circulation brings together the ‘entire property & casualty insurance claims market nationally’ with information and insight into the profession, business and people of insurance claims and loss adjusting. All key claims process stakeholders are reached as part of our readership community – including: both CIAA member and non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management and
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Message from the President La Plume du Président PATTI KERNAGHAN I’m writing this message on Mother’s Day, and Father’s Day will be right around the corner when this issue of Claims Canada hits the streets. I’m blessed and lucky to have two beautiful, intelligent and successful daughters who always spoil me on Mother’s Day, plus I get to spoil my eighty-eight year old Mom! For me Mother’s Day is also a time of reflection; as a working Mom for over three decades I’ve rushed between dance classes, field hockey, soccer, Guides, Institute classes, catching planes, volunteer commitments, plus visioning and leading my corporate team. Through the swirl of activities, I’ve been fortunate to have a very supportive husband and an excellent management team who have also supported me. Giving back to one’s community and industry is very gratifying. It brings meaning to our everyday lives. When I started in the insurance industry my father instilled in me the importance of volunteerism, for which I remain very appreciative. Giving back to help develop, improve and support the Canadian Independent Adjusters’ Association for me is an opportunity to invest in our industry and to commit to the profession of independent adjusting. Giving back to our profession of independent adjusting through the CIAA is a way to collectively promote our profession and ensure it remains relevant. Our career recruitment planning national executive chair, Wendy Fralick, is working very hard with her committee to develop strategies and action plans to attract employees to fill upcoming vacancies specifically in the field of independent adjusting. She is partnering with the Insurance Institute of Canada to gather ambassadors to work with high schools across Canada. Encouraging the next generation of claims professionals in the field of independent adjusting is a great opportunity to give back. I’m receiving very positive feedback from the membership across Canada regarding our proposed strategic plan. The executive feels confident that the direction we are moving in is the right one. The regional associations continue to update local members, so if you have yet to see a presentation, please contact your president to find out when and how you can learn more. All CLA holders were recently notified of the proposed changes. I received two terrific letters from CLA recipients who wholeheartedly endorsed the direction. Other great 10
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Je rédige ce message le jour de la Fête des mères et quand vous le lirez dans ce numéro de Claims Canada, la Fête des pères sera imminente. Je suis comblée et heureuse d’avoir deux filles, jolies, intelligentes, qui réussissent bien, et me gâtent à chaque Fête des mères. Par ailleurs, j’ai la joie de pouvoir gâter ma propre mère âgée de quatre-vingt-huit ans! Pour moi, la Fête des mères est également un temps propice à la réflexion. En tant que mère de famille sur le marché du travail depuis plus de trois décennies, j’ai fait la navette entre les cours de danse, les parties de hockey sur gazon et de soccer, les Guides, les cours de l’Institut, les avions à prendre, le bénévolat, en plus de superviser et de conseiller mon équipe de travail. J’ai eu la chance de pouvoir compter sur un mari compréhensif et une excellente équipe de direction pour mener à bien mes nombreuses occupations. Apporter sa contribution à son milieu et à son domaine de travail est très gratifiant et donne un sens à la vie quotidienne. À mes débuts dans l’industrie de l’assurance, mon père m’a inculqué l’importance de l’esprit d’entraide. Je lui en suis toujours reconnaissante! Participer au développement, à l’amélioration et au soutien de l’Association canadienne des experts indépendants me donne l’occasion de m’investir dans notre industrie et de m’engager au service de la profession d’experts en sinistres. L’ACEI est l’outil qui nous permet de rendre à notre profession ce qu’elle nous apporte et nous fournit le moyen de promouvoir collectivement cette profession et d’en maintenir la pertinence. Wendy Fralick, notre présidente nationale de la planification du recrutement professionnel, participe avec ardeur aux efforts de son comité à l’élaboration de stratégies et de plans d’action susceptibles d’attirer du personnel pour combler les postes à pourvoir, en particulier dans le domaine des experts en sinistres. Elle collabore avec l’Institut d’assurance du Canada pour recruter des ambassadeurs qui visiteront les cégeps du Canada. Encourager la prochaine génération de professionnels en sinistres et d’experts indépendants est un excellent moyen de s’investir. Au sujet de notre plan stratégique, les commentaires que m’envoient nos membres de partout au pays sont très positifs. La direction est convaincue que l’orientation que nous avons choisie est la bonne. Les associations régionales continuent d’en informer les membres locaux. Par conséquent, si vous n’avez pas encore été convoqué à une séance d’information, contactez votre président pour savoir où et quand vous renseigner. Tous les experts en sinistres agréés (ESA) ont récemment été informés des changements proposés. Deux de ces experts m’ont dernièrement envoyé des lettres enthousiastes dans lesquelles www.claimscanada.ca
strides forward include a ton of updates to our website and another upcoming webinar on the HST. My travels in the last month included a trip to Winnipeg for the CICMA Educational Day and Manitoba CIAA meeting, and closer to home the Pacific Regional CIAA /CICMA Joint Luncheon and CIAA Educational Program. I also travelled to San Antonio, Texas to speak at the PCS Catastrophe Conference to present the Canadian cat perspective to an engaged group of US cat professionals, which was very interesting. We have an excellent conference planned in Victoria from August 26 to 29. Join us for everything from whale watching to some very creative professional education opportunities — after all it is beautiful British Columbia, and you can’t help but have a great time! The strength of any not-for-profit organization is found in the wealth of its volunteers. Organizations are measured by the commitment and strength of their volunteers to not only move association issues forward, but to celebrate the successes and have fun. Think about joining as a member and come out to support your local CIAA; it will make a difference. As George Foreman said, “be afraid to stay the same.” ■
ils endossent sans réserve cette orientation. Les grandes étapes qui suivront comprennent de nombreuses mises à jour de notre site web et un autre webinaire sur la TVH. Entre autres déplacements, je suis allée à Winnipeg le mois dernier assister à la journée de formation de l’ACDSA et à la réunion de l’ACEI du Manitoba. Plus près de chez-moi, j’ai participé au déjeuner conjoint de l’ACEI/ACDSA et au programme de formation de l’ACEI de la région du Pacifique. Je me suis aussi rendue à San Antonio au Texas, où j’ai présenté le point de vue canadien sur les catastrophes à la PCS Catastrophe Conference qui réunit des professionnels américains intéressés à ces phénomènes. Une expérience très enrichissante! Nous planifions une excellente conférence pour vous du 26 au 29 août à Victoria. Venez vous joindre à nous. Nos activités porteront sur l’observation des baleines, comme aussi, sur des ateliers de formation professionnelle très novateurs. Après tout, vous serez dans la belle province de la Colombie-Britannique: ce sera tout simplement merveilleux! La force de tout organisme sans but lucratif réside dans la générosité de ses bénévoles. Ces organismes sont appréciés pour l’engagement et la volonté de leurs bénévoles, non seulement de faire avancer les objectifs de leur association, mais aussi d’en célébrer les réussites et de faire la fête. Pensez à vous joindre à nous en tant que membre et venez donner votre appui à l’ACEI de votre région; votre participation fera la différence. Comme l’adit George Foreman: «craignez de demeurer le (la) même». ■
Translation provided by Henry Arcache, Themis Translations.
NATIONAL EXECUTIVE 2009 – 2010 PRESIDENT Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300-1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 Email:pkernaghan@kernaghan.com 1ST VICE-PRESIDENT Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 Email: Mary.Charman@crawco.ca 2ND VICE-PRESIDENT Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca
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SECRETARY Marie C. Gallagher, FCIP, CRM McLarens Canada 71 King Street, Suite 204 St. Catharines, ON L2R 3H7 Phone: (905) 984-8282 Fax: (905) 984-8290 Email: marie.gallagher@mclarens.ca TREASURER Randy P. LaBrash, CIP, CFE, CFEI Crawford & Company (Canada) Inc. 300 – 191 Lombard Avenue Winnipeg, MB R3B 0X1 Phone: (204) 947-2340 Fax: (204) 943-9168 Email: Randy.Labrash@crawco.ca PAST-PRESIDENT Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 Email: Reno.Daigle@crawco.ca
EXECUTIVE DIRECTOR Patricia M. Battle Canadian Independent Adjusters’ Association/ L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Avenue West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 Email: pbattle@ciaa-adjusters.ca DIRECTOR 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
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EARTHQUAKE Preparing for the Inevitable As Haiti and Chile begin the slow rebuilding process after earthquakes rocked each of the two countries, it’s time for the Canadian insurance industry to take a closer look at its preparedness measures for when an earthquake strikes closer to home. Given the potential for a magnitude-8 earthquake in Vancouver and a magnitude-6 earthquake in Montreal, the need to have an emergency readiness plan in place is essential.
BY LAURA KUPCIS
J
ust as the world rallied to raise funds for Haiti after a 7.0 magnitude earthquake ravaged Port-auPrince, the country’s largest city, an 8.8 magnitude earthquake tore through Chile, leaving devastating damage in its wake. A fault slip triggered the earthquake and warped the ocean floor, generat12
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ing a tsunami along the fault-rupture area. The entire Chilean city of Concepción moved 3.04 metres west because of the quake. As countries around the world set off to help rebuild in these countries, it raises the question: How prepared are we if an earthquake rocks the core of one of our Canadian cities? Research abounds as to the risks of www.claimscanada.ca
an earthquake in Vancouver. There is a 10 to 15 per cent chance of a megaearthquake hitting the northern segment of the Cascadia Subduction Zone — an area that runs from Vancouver Island into the United States — at some point during the next 50 years. Research suggests there is very little doubt that Vancouver Island or the Greater Vancouver Area will suffer through an earthquake of the magnitude as Chile at some point. Montreal, on the other hand, also faces an incredible earthquake risk. How will the Old Port fare when this catastrophe strikes? Will we be able to move fast enough to mitigate damage? What lessons can be learned from the devastation in Haiti and Chile?
Haiti McLarens Canada sent two adjusters to Haiti to aid in rebuilding the city. Well-experienced in claims handling, the adjusters found the devastation in Haiti to be shocking. “I have done [catastrophes] over the years, I have done quite a few of them, and I have to be honest: I can’t say as that I’ve seen damage on that grand a scale,” Keith Wright, Regina branch manager of McLarens Canada, said. “A lot of people dislodged, a lot of people living in tents — what would not pass to us as tents, but to them was home. A lot of these things were just 6x6, 6x8 or 8x8 pole-framed places with sheets over the top of them. That was their home after the incident.” However, as an adjuster and former firefighter, Wright has learned to separate his emotions from the task at hand. “Please don’t misunderstand me, it was tough,” he said. “There are things that get to you mentally. But, if you’ve done it before, you’ve got a good idea of some of the devastation that you could be expecting.” www.claimscanada.ca
Quite a few of the claims were total losses. In the downtown core of Portau-Prince, it was as if an aircraft had come across and bombed the heck out of it, Brian Pilkington, senior adjuster at McLarens, said. Outside the downtown core, heavy shaking in certain places left certain houses shaken up; other houses were completely destroyed, depending on where the earthquake struck. “It was like when we had those tornadoes [in Ontario] last year, and you’d see one side of the street completely destroyed and the other side of the street was fine,” he said. “The earthquake did the same sort of thing; it would hit certain spots and other spots it would leave alone.” On a case-by-case and building-bybuilding basis, it was the same as adjusting any other claim, Pilkington said. But the complete and total devastation was unnerving. Pilkington has worked on total losses before, but he said adjusting claims in Haiti was “a new deal” because everything was demolished. This, in combination with the injuries, suffering and death, made it a whole different ball game for Pilkington, who has adjusted other major natural catastrophes such as Hurricane Hugo, which hit South Carolina in 1989. Three adjusters — Pilkington, Wright and a third adjuster from Barbados — handled roughly 160 files on contract from one of the larger property and casualty insurers in Haiti. The three witnessed all of the claims, photographed and itemized all damages and subsequently settled whatever they could. The more complicated files were to be settled locally at a later date. Of the 160 files, Pilkington estimates 50 per cent would have been total losses; the other 50 per cent required negotiation of a settlement. Claims ranged between small losses (from
$10,000 to $15,000) and much higher sums for the total losses, Wright said. “Now, we use the words ‘total loss,’ but it’s not really accurate,” he said. “If the slabs were still intact, if the main and footings were still intact, even though the building was down, it would not be deemed as a total loss.” Many of the total losses were underinsured, Pilkington said. He said he heard from a broker representative that four to five reinsurers involved in property and casualty work in Haiti would be on the hook for roughly $200 million dollars in insured damages. Actual damages were expected to approach $14 billion. “The numbers may not be entirely real, but what it does show is a perspective as to how many of the buildings were actually insured — it wasn’t very many,” Pilkington said. The adjusters observed that the roads and sidewalks were cleared rather quickly, with the United Nations hiring local Haitians to help with the clean-up. Those receiving insurance money would hire local labour to clean debris off the properties. However, the cost of erecting a new building is no different than in North America; for most people, the cost to rebuild is prohibitive. Institutions that did have money, such as banks, took the initiative to start the repairs on their own. Others were left with a site filled with concrete rubble. “I was very impressed with the majority of Haitian people I met,” Wright said. “Even though they had gone through hardship, they were out there trying to salvage [items] and put their lives back in order.” Stores owners and residents, instead of waiting for someone else to come along and help, began the clean-up process themselves. A claim is a claim no matter what June/July 2010
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the location. Still, adjusters face particular difficulties when it comes to adjusting claims in areas where a significant portion of the population has nowhere to go. Damaged roads meant there was no way to get out of the downtown core. With no homes in the core to go to, residents created tent cities wherever there was room. Navigating through these camps was nearly impossible, since every inch of space had been claimed. To simplify tracking down potential claims, the insurance company had ads on the radio letting insureds know they were open for business and where to find them. Phone systems were haphazard at the beginning. Cell phones were intermittent, so much of the claims-handling process had to be done through word of mouth. The biggest priority was to meet with the insureds within the first two weeks to make them aware of their coverage. In Haiti, the first language is French. Therefore, a translator accompanied the adjusters in order to prevent any
miscommunication due to a language barrier. Wright said his first priority upon arriving in Haiti was to gain an understanding of the country’s pricing systems and construction. “Any time you go into a catastrophe area, that’s the first thing that you should be doing,” he said. “Find out what the local pricing is, how the houses are constructed and the general workup of the land.”
Chile In Chile, construction was vastly different than in Haiti. A strict construction code enacted in 1996 lessened the damages the country might have experienced during the earthquake, Mauricio Alonso, senior vice president and regional managing director for Latin America at Crawford & Company, said. Damages to buildings and infrastructure spanned a wide range, depending on location and construction. Some buildings were completely destroyed. Others suffered enough damage that they will need to
be demolished. Still others, mainly newer constructions, fared much better, suffering little damage. All told, 168,194 claims had been filed as of April 16, 2010, according to the Chilean Insurers Association. The deadline for filing claims was Apr, 30, 2010. The largest number of claims was for homes. The largest financial losses were in industries such as cellulose, fisheries, concession highways and vineyards, Alonso said. One obstacle facing adjusters in Chile was the large number of claims spread out over a wide territory affected by the earthquake. Early on, accessing the badly damages locations was challenging, especially given that there was no communication, electricity, water or fuel. The language barrier proved to be the biggest challenge when bringing in adjusters from other countries to help with claims-handling. Adjusters needed to be fluent in Spanish to discuss complex issues with the insureds and to read and write the reports. But there
weren’t enough full-time translators to assist outside adjusters. Additionally, adjusters arriving in the country had to comply with Chilean regulations and operate through a licensed local adjusting firm. A licensed adjuster must sign all adjustment reports. In order to obtain a loss adjuster’s license from the regulator, the Superintendence of Securities and Insurances, applicants must pass a test. This means all foreign adjusters were working through a local office, Alonso said. Not to mention, the loss adjustment procedure is governed by strict local regulations — Decree Supreme No. 863 (enacted in 1989) is the governing regulation. When it came to adjusting the claims, challenges varied from being able to find traces of the lost property and being in touch with the insured, depending on the level of damage, to a building or other structure. There were challenges when it came to handling claims and even with respect to rebuilding damaged property. Regula-
tions prohibit building in certain areas, such as those too close to the coast. Other times, property owners had to wait while the Chilean authorities determined whether a building needed to be demolished. “The main impediment will be the magnitude of the rebuilding and the time it will take,” Alonso said.
Risk in Canada The magnitude of the Chilean earthquake is similar to that of the Great Cascadia Megathrust earthquake expected off the West coast of Canada, according to Gail Atkinson, professor at the University of Western Ontario. Atkinson is a research chair in earthquake hazards and ground motions. Researchers at Oregon State University have just concluded there is a one in three chance that a major earthquake will strike the Pacific Northwest coast within the next 50 years. There is a 10 to 15 per cent chance of a megaearthquake hitting the northern segment of the Cascadia Subduction Zone
at some point during the next 50 years. The northern segment of the Cascadia Subduction Zone covers an area from Vancouver Island, B.C. to Seaside, Ore. On the other hand, a 37 per cent chance exists that a major earthquake will strike the southern end of the Cascadia Subduction Zone — from Newport, Ore. to northern California. Researchers at the university found Cascadia is essentially made up of at least four segments, and earthquake activity varies from segment to segment. “The largest earthquakes occur in the north and usually rupture the entire fault,” Chris Goldfinger, a marine geologist at Oregon State University, said. “These are quakes of about magnitude-9, and they are just huge,” he said. “But they don’t happen as frequently. “At the southern end of the fault, the earthquakes tend to be a bit smaller, but more frequent,” he added.
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“These are still magnitude-8 or greater events, which is similar to what took place in Chile, so the potential for damage is quite real.” “Perhaps more striking than the probability numbers is that we can now say that we have already gone longer without an earthquake than 75 per cent of the known times between earthquakes in the last 10,000 years,” Goldfinger said. “And 50 years from now, that number will rise to 85 per cent.” While the largest seismic risk in Canada is in Vancouver — and most seem to realize there is a large risk of earthquake activity in the East — with about a third of the total risk, Montreal is a close second, followed by Ottawa, Victoria, Toronto and Quebec. “We do have earthquakes in the East; they are not historically as big physically in terms of the geology,” Kristy Tiampo, assistant professor at the University of Western Ontario, NSERC and Aon Benfield/ICLR industrial research chair in earthquake hazard assessment said.
Are we ready? In terms of how it addresses seismic activity, Chile’s building code is quite similar to the one in Canada. A group of Canadian engineers went to Chile after the earthquake to look at the damage sustained there and determine what lessons could be brought home. The engineers reported that when buildings did fail in Chile, it was clear that it wasn’t because of any weakness in the building code; rather, it was because some mistake had been made. “Even if you have good codes and people with good intentions, and they are all doing their best to build according to code, you’re still going to occasionally have mistakes,” Atkinson said. Buildings constructed in Canada since the 1970s have been built to code, but those constructed prior to that would benefit from retrofitting, Atkinson said. Programs to assess and identify the most vulnerable of the older infrastructure and subsequent remedial action would be beneficial, she added. The Canadian Seismic Risk Network, which includes 26 primary 16
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“I was very impressed with the majority of Haitian people I met,” Wright said. “Even though they had gone through hardship, they were out there trying to salvage [items] and put their lives back in order.”
researchers from eight universities, working in partnership with various government and public agencies, is looking into ways to reduce urban seismic risk in Canada. The idea is to create guidelines and plans to identify the most vulnerable infrastructure and then mobilize agencies to make
changes. Currently the ministry of education in British Columbia has committed to a $30-million program to retrofit schools in that province. “Engineers can and do build buildings that don’t fall down on people; it’s more than possible to do that,” Tiampo said. Chile’s death toll was reduced because residents in low-lying areas knew to evacuate. Since they were prepared, they moved quickly to higher ground as soon as the shaking stopped — and before the tsunami hit 30 minutes later. “I’m not sure that people on the West Coast of Canada are prepared, in the sense that obviously time is of the essence,” Atkinson said. “We could be better prepared in that respect.” There should be drills and widespread education to teach people who live in low-lying areas that there is very little time to move in the event of a tsunami, she said. They must move to higher ground immediately. “Certainly there are a lot of coastal areas in www.claimscanada.ca
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In Canada, this type of situation could be avoided in part through the harmonized licensing of independent adjusters. This would allow adjusters to move freely from province to province to assist as required.
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Western Canada where we could be better-prepared,” she said. “Citizens could be actively encouraged to form an emergency plan, so that if they feel a large earthquake, if they get woken up in the middle of the night by a large earthquake, they already know exactly where to go.” The sheer logistics of mobilizing a response to an earthquake is one of the key issues in adjusting claims, Jim Eso, vice president of national property & casualty at Crawford & Company (Canada) Inc. said. Insurers must be constantly aware of the requirements for successfully adjusting the claims. He notes Chile’s licensing requirements did create a situation to be avoided in Canada. While Chile’s strict regulations created an enviable front line of indigenous Chilean adjusters, they made it difficult for outside adjusters to help when the local adjusters were overwhelmed, creating a bottleneck. In Canada, this type of situation
could be avoided in part through the harmonized licensing of independent adjusters. This would allow adjusters to move freely from province to province to assist as required. At this time, licenses are provincially-based. Generally, once a catastrophe has been declared in Canada, independent adjusters are able to move from province to province, and even to the United States, to help adjust claims. To do so, however, does require negotiating through some red tape, potentially taking valuable time away from claims handling. Construction, design and hydraulics are different from one location to the next, and adjusters do need to be aware that an earthquake in one part of Canada will produce different stresses on buildings than in another part of the country. Also, the term ‘shaking’ used to describe an earthquake may not be an accurate description of what is really happening. “When you get an earthquake, you get the impression that things just shake back and forth, but they don’t,” Wright said. “When you have earthquakes and shocks, you’re getting kind of a rotation motion: it doesn’t just shake back and forth, it kind of wiggles around.” The California Earthquake Authority has training and certification courses for adjusters in the United States. Thus, in the event of an earthquake on Canada’s West Coast, adjusters in California would be able to assist Canadian adjusters, Eso said. “I think the general consensus would be that in Canada we have a pretty well-developed emergency response plan,” Eso said. “The provincial governments each have their own emergency measures programs in place for uninsured natural disasters.” Most insurance companies have standalone operation plans in effect for earthquakes, because the scale of the damage would be so significant. These plans include how to handle potential widespread disruptions involving accommodation, transportation, telecommunications, etc. Earthquakes could shut down airports, damage cell phone towers or damage www.claimscanada.ca
the power grid. Most companies have discussions with independent adjusters about these very issues and the contingency plans they have in place, Eso said. In North America, military bases and equipment are available for use in the response to an earthquake, thereby potentially reducing response time, Pilkington said. Canada has a history of successful evacuations in the event of a disaster. During the Mississauga train derailment in 1979, for example, more than 200,000 people left Mississauga due to a threat of explosive and chemicals on the freight train. “That just goes to show with a country like ours, with the infrastructure we have and the education of the people and alternative resources — with the insurance coverage, money and everything else — I don’t think the response would be that bad,” Pilkington said. The trick is to have the right infrastructure in place so that, although the right supplies are close to an affected area, they are not so close as to be damaged or rendered inaccessible. Coverage issues also need to be addressed. This includes determining the length of an event, and whether or not there was more than one event (especially in the case of aftershocks). And what about fire following an earthquake (a major risk in British Columbia)? “These are the sorts of ongoing discussions that a well-prepared insurance industry should have the answer to before the event occurs, so that adjusters can get immediate instructions on coverage even when the claims are being assigned,” Eso said. Discussing these questions, having catastrophe programs in place and dealing with mobility issues can all help to mitigate damage costs in the event of a quake. As seen in Chile, strict construction codes diminish the loss of human lives and material damages. Construction codes should not only regulate building structures, but www.claimscanada.ca
also fixtures, fittings and finishes. Insurers need to have catastrophe programs in place beforehand. And adjusters need to have catastrophe teams ready to be deployed and operating effectively on the ground. These are some of the issues and lessons learned from the losses in Haiti and Chile. By revisiting what worked
and what did not work in those countries, Canada can be better prepared when an earthquake rocks this nation. “Earthquakes happen, and they will happen here in Canada,” Tiampo said. “One of the goals is to try and get a better idea of when and where they might happen so that we can be really prepared for them.”
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S spotlight
Family First At Cormier Adjusting Limited a familial environment means everybody is free to offer insight on how the company advances and grows. BY LAURA KUPCIS
ormier Adjusting Limited grew from a one-man, one-office adjusting firm in Parry Sound, Ont. into an eight staff, full-line adjusting firm — a very family-oriented one. While the staff remains tight-knit, the firm’s geography is expansive, servicing Parry Sound, the District of Muskoka and the County of Haliburton. The four adjusters cover an area of roughly 20,000 kilometers. And when disaster strikes, members of the firm have volunteered to join CAT teams nationally and internationally, as well. Wayne Cormier, adjuster, began his insurance career with the Sun Alliance and the Royal Insurance Company, before moving in to the world of adjusting when he took a job with Beatty and Armstrong in Barrie. He established an office in Parry Sound for the company, and in 1972 purchased the business, forming Wayne C. Cormier Insurance Adjusting Limited. Wayne’s brother, Al Cormier, joined the firm as an adjuster in 1977. By 1980 the brothers opened a second office in Huntsville. Three years later the firm expanded to include a Bracebridge location. Al started his claims career at Scottish & York Insurance Company before moving on to Chubb Insurance and the Commercial Union Insurance Company. He has been adjusting claims ever since he joined his brother’s firm in 1977. The brothers worked alongside one another for more than two decades — they did part ways for a few years, even
C
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becoming competitors for a short time — when in 2003 Wayne decided to retire and Al and his wife Germaine purchased the business. The change in ownership also brought a change in moniker to Cormier Adjusting Limited. Over the years, the company has continued to evolve to meet the changing needs of its clients. Cormier Adjusting remains committed to growing its market share in the industry by bringing younger adjusters on board to keep the firm growing.
Who’s who Carrying along the family tradition, Al’s son Adam joined the firm in 2009 as an adjuster, after working with an insurance company and earning his CIP. “He brings fresh ideas, energy and a good understanding of new technology,” Al says of Adam. In addition to Wayne (who recently came out of retirement to handle some claims) Al, and Adam, there are five additional staff members at Cormier Adjusting Limited. They include: Germaine, co-owner, bookkeeper and accountant; Alexandra Cormier, office manager; Jim Dewar, an adjuster who has been with the firm since close to its inception; and Karen Taylor and Kate Wilson, support staff who handle the day-to-day aspects of the office. “We operate our business as a family business, and each of our employees are treated as family,” Al says. “This is one of the main benefits of being a
small business.” The staff all know each other, they know each others families, and this has developed into a caring and loyal relationship.” Collectively, the senior adjusters have more than 100 years of diversified experience, he continues. This wealth of experience helps younger adjusters grow in the industry. At Cormier Adjusting, younger adjusters are given the opportunity to handle all types of claims as the more experienced adjusters have the expertise to guide them. “They need experience to gain experience!” Al says.
Covering all bases “We work together to get the job done,” Al says. “With the wide range of contacts, it makes the job easier, faster and more cost effective.” Cormier Adjusting handles all facets of insurance claims from property losses to liability claims, including automobile losses, marine losses, transportation and cargo losses, environmental and oil spills, heavy equipment losses, municipal claims, catastrophic losses and pre-construction surveys. One of the company’s main strengths is emphasis on education. The staff is encouraged to attend seminars and conventions to keep abreast of changes within the industry. Keeping up with the changes in the claims industry is a never-ending battle, but can be managed by attending courses that help to educate adjusters about www.claimscanada.ca
important issues. Furthermore, regular review of policy wordings can also help to ensure adjusters are keeping abreast of the changes. Al adds that the firm has made it a priority to keep up with advances in technology. “We make sure our estimating program is current to meet the needs of our industry.”
Flexibility is key The company’s small size allows it to be nimble and adapt to changes quicker than a larger firm might be able to. Additionally, the company’s smaller size allows them to offer a more personal service to clients when handling claims. Al says that being small also means the firm can often be more price-competitive. Because the adjusters in the firm are also long-time residents of the community, they have far more contacts withwww.claimscanada.ca
in the area. “We know the community and the community knows us,” is the company motto according to Al. Not only do the adjusters live and work within the community, but they also get involved in local affairs, community service clubs and organizations as much as possible. It is also possible to hold regular monthly meetings with everybody on staff to discuss ideas and concerns regarding the day-to-day operations or any long-term plans. All staff are encouraged to offer-up suggestions on ways to improve the business. According to Al, this is essential to the firm’s growth. The biggest challenge to Cormier Adjusting Limited’s growth is competition and the competitor’s ability to arrange national contracts with direct insurers. “We strive to provide personal service at a reasonable rate,” Al says.
The adjusting community Over the years, the adjusters have been intricately involved with the Canadian Independent Adjusters’ Association and the Ontario Independent Adjusters Association. Wayne is a past-president of CIAA’s Ontario Region, Al is a past-president of the OIAA’s Georgian Chapter, while Adam has been nominated for director of the OIAA’s Georgian Chapter. The company has been a long time member of the CIAA. “It is with the dedication of the CIAA that has helped shape and mold the adjusting industry as to what it is today,” Al says. “They never stop trying to improve our industry and are our voice in the insurance field. We have been involved serving on the CIAA and have found it an asset to our business.” June/July 2010
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The Decision is in the Bag A recent win for insurers on CGL coverage provides clear meaning on property damage. BY BRUNO DE VITA AND HOLLIS BROMLEY
The Supreme Court of British Columbia, in a decision released Apr. 1, 2010, provided a comprehensive review of the principles behind the meaning of “property damage” in a CGL policy. In Bulldog Bag Ltd. v. AXA Pacific Insurance Company, 2010 BCSC 419, the plaintiff applied for judgment against the defendant insurer for the amount of $732,420.60 pursuant to a CGL policy. The policy contained the typical CGL wording of property damage, defining it as “physical injury to or physical destruction of tangible property.” Bulldog sustained losses when it settled the claim of its customer, Sure-Gro Inc., arising from defective plastic packaging. Sure-Gro manufactured garden products for consumer use, including packaged sheep manure, cattle manure, topsoil and black earth. Bulldog was responsible for manufacturing plastic bags for Sure-Gro and for printing Sure-Gro’s product labelling information on the bags. Bulldog used ink designed for outdoor applications. However, Sure-Gro discovered that moisture caused the ink to come off the packaging, rendering the labelling illegible. The ink did not penetrate the plastic packaging, or otherwise contaminate the packaged soil and manure. Sure-Gro concluded the bags of soil and manure with the defective packaging were not saleable to consumers. Sure-Gro incurred expenses related to repackaging its manure and soil, removing and disposing of the defective packaging and salvaging the manure and soil contained in that packaging. Further, when Sure-Gro salvaged its raw material from the defective packaging, about 10 per cent of that material was lost in the process, worth roughly $12,000.
Physical incorporation Bulldog claimed the salvaging costs flowed from “property damage” as a result of the incorporation of the defective packaging into Sure-Gro’s final product. It relied on the decision of the B.C. Court in Gulf Plastics Ltd. v. Cornhill Insurance Co. (1990), 47 B.C.L.R. (2d) 379, aff’d 61 B.C.L.R. (2d) 22
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64 (C.A.), which found that where a defective product is physically incorporated into a third party’s product “property damage” will have ensued. It was AXA’s position the defective packaging and SureGro’s manure and soil were not incorporated into a single product that sustained property damage. Rather, the two products were separable and the cost of repairing or replacing Bulldog’s defective work did not constitute a claim for “property damage” and therefore did not fall within the insuring agreement of the policy. It distinguished the Gulf Plastics case by arguing there was no physical incorporation of the insured’s product into the third party’s product. Alternatively, it was AXA’s position that if there was property damage, it was limited to the 10 per cent of Sure-Gro’s product that was not salvaged. However, the exclusion for loss of use of tangible property resulting from the failure of the insured’s products or work should exclude coverage for even that small amount.
Absence of third party damage The court underwent an extensive analysis of the case law interpreting “property damage.” The court concluded that under CGL policies the insurer’s obligation to indemnify will generally not be triggered where the property damage resulting from the insured’s defective work is confined to the insured’s own property or to property for which the insured is responsible. In the absence of damage to a third party’s property, the insured will not be entitled to indemnity for the cost of replacing or repairing its own defective work or work product. The court also referred to the line of American and Canadian cases that considered the effect of incorporation of the insured’s defective product into a third party’s product, where the two cannot be separated. It was Bulldog’s contention that its defective packaging was incorporated into Sure-Gro’s end product, which consisted of the packaged soil and manure, and that there was physical damage to that product because it was rendered useless for its intended purpose. However, AXA argued this was not a case where the use of Bulldog’s packaging changed the essential nature of either www.claimscanada.ca
its product, or Sure-Gro’s product, so as to make it impossible to identify which product was manufactured by the plaintiff and which was produced by Sure-Gro. Bulldog’s product was the plastic packaging, whereas the third party’s property was separate and identifiable as the soil and manure contained in that packaging.
stances where the loss of use of property did not involve physical injury to tangible property. The disposal of the 10 per cent of material, whether it occurred because it could not be readily extracted from the plastic packaging, could not be recovered at an economical cost or was lost during reprocessing, amounted to “physical injury.”
Complete incorporation of product The Court found that where an insured’s defective product is completely incorporated into a product of a third party, and the end product is rendered wholly useless for its intended purpose, the third party’s product has sustained property damage. The Court then likened this case to a situation where an insured supplied a soft drink manufacturer with defective bottles which, without contaminating the contents, rendered the third party’s bottled soft drink unfit for sale. The soft drink manufacturer was able to salvage 90 per cent of the contents of the defective bottles, but 10 per cent of the soft drink was lost in the salvaging process. In that situation, the Court said it would be possible to separate the insured’s defective product from the manufacturer’s soft drink, to replace the defective bottles and to reuse the salvaged soft drink. The insured would have no claim for the cost of the defective bottles or for the cost of salvaging the manufacturer’s soft drink and re-bottling it since all of those costs would flow from the insured’s own faulty workmanship. In the absence of property damage to the third party’s product, the soft drink, the insured would not be able to recover those costs from its insurer. At best, and depending on the language of the policy, the insured’s claim would be limited to the 10 per cent of the soft drink lost in the salvaging process.
Partial indemnification In summary, the Court found Bulldog was only entitled to indemnification with respect to the costs associated with the loss of 10 per cent of Sure-Gro’s product, which was roughly $12,000, and the balance of the plaintiff’s claim was dismissed (roughly $720,000). This decision is helpful to insurers in that it reaffirms that CGL policies are not performance bonds and are only intended to cover fortuitous risks involving tangible physical property damage. Further, it clarifies that where products are manufactured and provided for use in another entity’s product, coverage will only result where that incorporation is physically indivisible. The decision is presently under appeal. No date has been set for the hearing of the appeal. Bruno De Vita is a partner and Hollis Bromley is an associate with Alexander Holburn Beaudin & Lang LLP. Alexander Holburn Beaudin & Lang is a member firm of The ARC Group Canada.
Integral, not inseparable That is the result the Court ultimately applied in the case at bar. Distinguishing Gulf Plastics, the court stated Bulldog’s product was an integral, but not inseparable, part of SureGro’s finished product. There was no penetration or contamination of Sure-Gro’s product by the defective ink. When the ink ran, Sure-Gro’s finished product, the bagged manure and soil, was no longer suitable for its intended purpose. However, at that point, the manure and soil contained in the defective packaging was undamaged, and could be separated from the packaging. Sure-Gro only temporarily lost the use of the undamaged product, while it was salvaged and repackaged. The costs associated with these actions all constituted economic loss flowing from Bulldog’s supply of defective packaging in breach of its contract with Sure-Gro. Bulldog was not entitled to indemnification for the costs incurred by Sure-Gro to repackage its product, unless there was physical injury to or destruction of some tangible property of Sure-Gro. And what of the remaining 10 per cent of material that was either lost or discarded during the salvage process? The Court found that this portion of the claim constituted property damage and the failure of performance exclusion did not apply. The court found the exclusion applied only in circumwww.claimscanada.ca
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June/July 2010
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Surveillance Hot or Not? BY MONIKA M.L. ZAUHAR
Have you ever suspected the plaintiff is exaggerating their disability or been suspicious the claimant might be malingering? Have you considered placing them under surveillance? If so, you may want to keep in mind the Personal Information Protection and Electronic Documents Act (PIPEDA).1 Since Jan. 1, 2004, PIPEDA has regulated the collection, use and distribution of personal information in the course of commercial activity. It defines what is considered personal information, as well as what is to be considered a ‘record’, which includes a videotape. Further to the enactment of the PIPEDA, in May of 2009, the Office of the Privacy Commissioner of Canada (OPC) released Guidance on Covert Video Surveillance in the Private Sector (OPC Guidance).2 The OPC Guidance purports to “outline the privacy obligations and responsibilities of private sector organizations contemplating and engaging in ‘covert’ video surveillance.”3 24
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Insurance companies, including first party insurers, should be aware of the impact, if any, PIPEDA and the Guidance on Covert Video Surveillance in the Private Sector might have on the conduct of litigation, in particular, any restrictions such legislation and guidelines might impose on the ability of insurers to undertake covert video surveillance. Various questions must be further examined to determine whether the Act applies to surveillance. Is the scope of ‘commercial activity,’ as defined by the Act sufficiently broad to include activities related to litigation such as surveillance? Within a litigious context, would it actually be appropriate to first obtain consent of the claimant before undertaking surveillance? Will surveillance, found to have been conducted covertly for the purpose of defending an action, be admissible as evidence in court?
Commercial activity Commercial activity is defined at Section 2 of PIPEDA to mean “any particular transaction, act or conduct or
any regular course of conduct that is of a commercial character, including the selling, bartering or leasing of donor, membership or other fundraising lists.” It has been argued by defence practitioners that drafters and legislators did not contemplate either the act of surveillance itself, or the actual litigation in defining the ambit of a commercial activity. Plaintiff counsel, on the other hand, have argued the retention of an investigator reflects a commercial transaction, for the request of a commercial type of activity undertaken by one commercial entity [investigative company] at the request of another commercial entity [the insurance company]. This issue was specifically addressed in the case of Ferenczy v. MCI Medical Clinics and Dr. Gary Weinstein.4 The plaintiff sued the defendant for medical malpractice. The defendant sought to introduce the videotape to impeach the plaintiff’s credibility, while the plaintiff opposed the admissibility of the videotape on the basis that it was collected in breach of PIPEDA, as the plaintiff’s consent was not obtained. www.claimscanada.ca
In discussing the applicability of the Act, the Court held the surveillance did not fall within the definition of commercial activity. To conclude surveillance as not being in contravention of PIPEDA only if conducted personally by a defendant rather than by a paid agent would be absurd.
Issue of consent Generally, PIPEDA requires consent of the individual prior to the collection, use and disclosure of personal information, including record of video surveillance. The Office of the Privacy Commissioner of Canada views covert surveillance as an “extremely privacyinvasive” form of technology that may only be used in the most limited of cases, and as a tool of last resort, as stated in its guidelines.5 It is, nonetheless, recognized under PIPEDA that there are circumstances where consent is not required.6 Paragraph 7(1)(b) allows for the collection of personal information, including covert video surveillance, without the consent or knowledge of the person, where consent would compromise the information and the collection is related to a breach of an agreement or a contravention of the law.7 Additionally, Ferenczy implied once an individual initiates formal action against the defendant, implied consent is considered to have been given to the defendant for the collection and recording of personal information in a public place.
Admissibility test of the video surveillance It must be recognized, as stated by the Ontario Superior Court in Ferenczy, that PIPEDA does not prohibit the admissibility into evidence of personal information collected or recorded in contravention of the Act. PIPEDA merely provides individuals and the Privacy Commissioner with a right to bring a complaint resulting in an investigation, and as decided by the Supreme Court of Canada in the seminal case of Canada (Privacy Commissioner) v. Blood Tribe Department of Health the Privacy Commissioner holds an administrative role, whose position cannot be equated to that of a Superior www.claimscanada.ca
Court judge, able to make rulings on admissibility of evidence.8
PIPEDA restrictions on covert surveillance The OPC Guidance sets out that the purpose for collecting personal information must be considered appropriate in the circumstances and mere suspicion is insufficient to justify covert surveillance. Surveillance continues to be a proper investigative technique for
insurers to prove an unmeritorious claim by their insureds, under reasonable circumstances.9 The insurer’s obligation of utmost good faith does not prevent it from covert surveillance to ensure an insured is also respecting his/her obligations of utmost good faith under the policy.10 However, surveillance should be undertaken only in situations where it is warranted and justified, based on the medical and documentary evidence. Without prop-
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er factual basis to undertake surveillance, the insurer may be subject to a valid complaint by the OPC, in addition to being in breach of its duty of good faith and of the insurance contract.
• Destroy surveillance materials as soon as is practicable — ensure in-house staff and service providers are aware of this policy. • Policies and claim forms should include language that provides consent for collection, use and disclosure of personal information reasonably necessary to investigate and verify all claims. • Seek advice from counsel when there is uncertainty as to whether surveillance would be acceptable.
Jurisdiction State Farm Insurance has challenged the jurisdiction of the OPC in State Farm v. Privacy Commissioner of Canada, where an insurer was allegedly having surveillance conducted on a plaintiff.11 The plaintiff made a complaint to the Privacy Commissioner under PIPEDA. The matter is proceeding in Federal Court, Trial Division. The insurer is seeking a ruling as to whether the OPC has jurisdiction over the video surveillance the insurer conducted on the plaintiff. As of the date of this article, State Farm’s challenge has yet to be heard. The ruling should address the authority of the OPC to regulate the activities of insurance companies in defence of judicial claims.
Conclusion PIPEDA, as well as the OPC Guidance, have yet to be fully considered by the courts and, until that time, remain open to interpretation. In the interim, insurers may take measures to minimize successful complaints in relation to covert surveillance. While not a sure-fire way to prevent complaints, the following suggestions do provide some ground against allegations of privacy violations: • Examine the nature of the allegations and required surveillance evidence to provide an adequate defence. • Determine the best method of obtaining the surveillance — daily activities, work habits, social activities — to identify which would allow for public access. • Ensure the private investigator has a good reputation and a proper privacy policy and obtain a copy for your records. • If the investigator is a member of a provincial association of private investigators determine if there is a specific policy members must abide by and obtain a copy for your records. • Provide the investigator with direc26
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Monika M.L. Zauhar is a partner in the Atlantic law firm of Cox & Palmer. Cox & Palmer is a member firm of the Risk Management Counsel of Canada.
Without proper factual basis to undertake surveillance, the insurer may be subject to a valid complaint by the OPC, in addition to being in breach of its duty of good faith and of the insurance contract.
• • •
•
tion, for example do not approach the subject under surveillance.12 Ensure surveillance is in a public area.13 Ensure information gathered is relevant to the merits of the claim. Handle captured third party information cautiously, as editing may render it inadmissible by a court due to tampering/manipulation; disclosure of the identity of third parties could potentially lead to exposure of a complaint. Insurers should be cautious when considering surveillance where a duty of utmost good faith is owed. There must be a strong and well-founded basis for undertaking surveillance, supported by evidence.
This article is an excerpt of a longer article, which can be found at www.coxandpalmerlaw.com. It is to be noted that, this article is neither intended to be an exhaustive review of PIPEDA, nor intended to debate its application to the litigation process. Readers are advised to seek appropriate legal advice in addressing specific issues related to the law of privacy. 1. Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5. 2. Guidance on Covert Video Surveillance in the Private Sector – May 2009, Office of the Privacy Commissioner https://www.priv.gc.ca. This document is for guidance only and the OPC considers each complaint on a case-by-case basis. 3. See the OPC Guidance. 4. Ferenczy v. MCI Medical Clinics, et al. 2004 CanLII 12555 (ON S.C.). 5. See the OPC Guidance. 6. PIPEDA, s. 7. 7. In Ferenczy, it was also held that ‘once the collection of the information has been found to fall within s. 7(1)(b), then pursuant to s.7(2)(d) it can be used’. Surely, s. 7(3)(c) and para. (i) are broad enough to cover the disclosure of the information at trial, in accordance with the Rules of Court; see para. 33. 8. Canada (Privacy Commissioner) v. Blood Tribe Department of Health, [2008] S.C.J. No. 45; 2008 CarsweII 2244. 9. Adams v. Confederation Life Insurance Co. [1994] A.J. No. 308 at paragraph 68. 10. Poersch v. Aetna 2000 CanLII 22613 ON S.C., at para. 81; 152 A.R. 121; [1994] I.L.R. paras. 13096 at 2985. 11. State Farm v. Privacy Commissioner of Canada (2009), 341 N.B.R. (2d) 1 (C.A.). 12. Cowles v. Balac, [2004] O.J. No. 4534. 13. See Ferenczy, supra. www.claimscanada.ca
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Preparing for the Worst; Hoping for the Best BY DON MANLEY
A retired adjuster in British Columbia offers up a reminder, along with some tips, on why having an up-to-date catastrophe plan is essential. Every time I see a catastrophe on television — flood, fire, windstorm or earthquake — my mind automatically wonders how and what we would need to handle the resulting claims. I dare say some of you looked at the disaster in Haiti and concluded the majority of the damaged buildings would not be insured and switched to another channel. However, a devastation such as this one is a reminder to the insurance industry that it should pull out its catastrophe plans, read them over and determine whether they will work or if revisions are required. Living as I do on the Pacific Coast, I am conscious of the inevitable earthquake that will affect residents of British Columbia; it is not a question of “if” but “when” it will happen. Priority number one, when the earthquake hits, will be survival and many establishments have a stockpile of emergency supplies to help with this goal. Now let us transpose the damage in Haiti to Vancouver and re-evaluate. 28
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The city is filled with bridges and one tunnel. In fact, every time I drive through that tunnel I wonder, what if? The exact location of the earthquake — be it on land or out at sea creating a tsunami — will have great effect on how we proceed.
Being prepared Yes, the industry has catastrophe plans that have been tried and work well. However, anyone who has been worked a catastrophe, knows the problems that can arise. During these cats, which involved floods, hurricanes and tornadoes, the local infrastructure remained, for the most part, intact, and bringing in adjusters from other parts of the country was not problematic. Adjusters and others involved in claims handling could get to the scene and rent a car and a hotel room and local claims services were still available to help out. This was not the case in Haiti — there was little to no air service, and there were no hotels, restaurants or car rental locations in Port-au-Prince. When the tornado hit Barrie some years ago, it happened on a Friday evening and I was at a Toronto Blue Jays game. A gentleman a few seats over, who was a doctor in Barrie, got a page and left immediately. I did not understand the full extent of the dam-
age until I arrived on scene Sunday morning. By Monday, the company I was working with had a mobile office in situ staged with adjuster, appraisers and clerical personnel. We were issuing cheques to insured for $5,000 to get the necessities to get them started on rebuilding their lives.
Accessing the location In Vancouver, however, if the bridges are down or unsafe, we would be left with areas approachable from only one direction. Hence, adjusters would most likely only be assigned to a specific area. Getting around even an assigned area could be problematic; we would be governed by the availability of rental cars and gasoline in that area. Further to that, I can’t imagine we would even be allowed access to the area until EMO had rescuing those trapped and ensured the area was safe for us to enter. There is a light here, however, as the delay could be to the industry’s advantage, giving us a little more time to get our ducks in a row. Getting around Vancouver has two airports; one is located on the coast where an earthquake and tsunami could render it inoperable, the other is in Delta and it www.claimscanada.ca
could just slip into the ground. This would leave either Abbotsford in British Columbia, or Bellingham in Washington, if those were not damaged. However, both are a good hour’s drive from Vancouver. Once adjusters arrive at either of these two further airports, what is the plan for getting to Vancouver if rentals cars — and fuel — are scarce? We could be reduced to mini scooters and motorbikes, which, incidentally are easier to lift over obstructions in the road. Insurance companies and adjusting firms should be aware which of their adjusters are able to operate this type of vehicle.
Accommodation Accommodation could be at a premium, and by the time outside adjusters are brought it, it would be doubtful as to whether enough, if any, accommodation would remain. However, adjusters and support staff cannot be housed hours away, so what are the alternatives? Do we need to set up a facility closer in to the area to provide
for their needs? While it might seem far-fetched to assume there’s no accommodation and that another facility would have to be set up, it must be considered when conducting catastrophe
Communication must be considered. Despite the advances we’ve made in technology — mobile phones and internet — there can be issues with reception if towers are down.
planning. While doing so, I recommend checking with EMOs in various areas to determine what local policies are for accommodation. For example, I am under the impression that in Victo-
ria, EMO takes control of all accommodation in the event of an earthquake.
Communication Communication must be considered. Despite the advances we’ve made in technology — mobile phones and internet — there can be issues with reception if towers are down, etc. Having a back-up, such as ham radio operators, to handle this task should be considered. As local policy information may be destroyed and the insured’s may not be able to report a loss, insurers should have policy information available out of the immediate area and a computer programme to determine who has earthquake coverage. I realize all this sounds very alarmist, but we must consider the very worst case scenario, plan for it and if it turns out not to be as bad as we thought, then things should work out well. Don Manley is a retired adjuster living in British Columbia.
Disaster Restoration Services
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June/July 2010
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An Oft Forgotten Risk Hot water heater failures, due to age or damage, are among the top five sources of water losses in homes. BY DENNIS TURRIFF AND MARK BAILEY
Hot water heaters — large cylindrical units commonly referred to as water tanks — are often hidden in basement closets and ignored until a cold shower or growing water puddle reminds the homeowner of their startling importance. Failures, such as slow leaks, can go undetected, and water heater claim severities can be high. Water heater failures constitute one of the top five sources of residential water losses, according to a recent review of U.S. homeowners’ insurance claims.1 Out of 700 tank failures, the majority (69%) were due to the tanks slowly leaking or suddenly bursting via rust and corrosion issues, the study showed (see Figure 1). The age at failure ranged widely from one to 30 years — the average is 10.7 years.
Anatomy of hot water heaters In North America, most homes utilize one of two distinct tank-type heaters: electric or gas-fired. In an electric heater (Figure 2), cold water enters through the top of the tank and travels down to the bottom through a dip tube. Electric elements inside the tank heat the water to a temperature controlled by an adjustable thermostat found on the tank’s exterior. Colder, denser water remains near the tank bottom and hotter, less dense water rises to the top of the tank, where it is drawn off by the outlet pipe to supply household demands. The steel tank often contains a horizontal, circumferential 30
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lap weld joining the lower portion of the cylindrical tank to the upper portion of the tank, with some overlap at the joint (detail a in Figure 2). The tank is surrounded with an insulation layer that is enclosed in a thin, painted metal outer shell or jacket. To impede corrosion, the interior surface of many steel tanks is lined with a thin protective coating consisting of an organic or glass/ enamelbased material.1,2,3 As an additional corrosion protection mechanism, one or more metal rods (anodes) are installed inside the tank. The anodes consist of a steel core wire surrounded by an aluminum or magnesium alloy. This alloy is designed to preferentially corrode or dissolve over time instead of the tank wall, which is why the rod is referred to as a sacrificial anode.4
Water heater issues A recent consumer-based study examined the interiors of 18 different heaters and, not-surprisingly, found that more expensive heaters often had larger heating elements, thicker insulation and larger protective anode rods, which correlated to longer warranty periods.2 Unfortunately, many homeowners aren’t aware of the anode rods within their heaters or the fact they should be periodically inspected to monitor intended gradual degradation over time. In water heater corrosion failure investigations, removal and examination of the rod can reveal if it has been inspected and/or replaced. Figure 3 shows the cross-section of a new anode (left) compared to anodes with increasing degrees of degradation (right). As the anode surface area decreases, it becomes less effective as a sacrificial www.claimscanada.ca
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protection system for drawing corrosion away from the steel tank. The rate of anode corrosion can be elevated when water softeners are used due to the higher salt concentrations generated by the softening process1,2 Generally, once half of the anode is consumed or when the steel core wire is exposed, the anode becomes ineffective and should be replaced.1 The Canadian Standards Association (CSA) code B139ON-06 provides some basic guidelines for proper
Gathering evidence promptly When dealing with water losses such as water tank corrosion failures, it is important to collect installation, inspection and maintenance records (if any), as well as manufacturer documentation. Photographs should be taken of the tank, connected plumbing and any signs of the leak. The evidence (usually the whole tank) should be secured for further investigation. It is important to collect this material promptly, while it is still available and unaltered since an expert may be required to perform a detailed analysis at a later date to identify the failure mechanism. A case study
Figure 1: Institute for Business and Home Safety (IBHS) data regarding hot water heater failures.
When the jacket and insulation of heaters where water had gradually leaked via a small hole in the steel tank wall and down into the inner shell/jacket space were stripped, extensive corrosion damage of the steel tank was found (figure 4). The heater’s single anode was also badly deteriorated. Figure 5a shows the top region of the tank where a leaking hole was found near the horizontal weld. An area of the tank wall surrounding the hole was removed for further metallurgical analysis (dashed red square area). Figure 5b shows the exterior surface with a hole near the weld line (1mm in diameter). The interior surface view (Figure 5c) shows the hole location coincided with the stepped overlap weld area on the interior of the tank, which is referred to as a gap or crevice region. A significant amount of rust and corrosion deposit had accumulated in this area. The interior surface also contained corrosion pits (small dark holes) that indicated corrosion of the steel surface below the glass lining had begun.
Figure 2: Schematic of an electric hot water tank and tank wall cross-section.
Figure 3: Anode rod cross-sections showing different stages of consumption: left-new, right-degraded.
installation of hot water heaters, but does not provide specific inspection or maintenance requirements. The code does state homeowners should follow the manufacturer’s instructions, which typically recommend annual anode inspections depending on the tank model.1 It is the owner’s responsibility to monitor and maintain the anode. 32
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Figure 4: Defective hot water tank. Significant tank wall corrosion is apparent once the outer shell and insulation are removed. www.claimscanada.ca
tions (e.g., dark pores, inclusions, impurities). From the left image, it is clear the tapered corrosion hole penetrated through the lower tank wall very close to the weld, thus explaining the water leak.
Maintenance defects When considering the degraded condition of the anode and the significant corrosion deposit observed near the crevice opening (Figure 5c), this failure is consistent with gradual under-deposit pitting corrosion of the tank wall near the weld crevice/gap.4 This leak likely initiated at a slow rate and could have been avoided with periodic anode inspections and replacement, thus constituting a maintenance failure. Manufacturing defects
Figure 5: a) Sample of wall excised at weld, b) sample outer surface near weld, c) interior surface.
To identify important root/contributing causes and to clarify the failure mechanism, the sample was mounted and polished for metallographic examination at higher magnifications using an optical microscope. Figure 6 shows a mosaic optical micrograph of the weld microstructure as well as the structure of the tank walls, which consist of ferritic steel containing minor imperfec-
Product or manufacturing defects can also be contributing factors to a tank failure. According to leading tank manufacturers, the glass-based coating placed on the interior tank surface can contain imperfections due to manufacturing issues.1 These imperfections (e.g., pores visible within the dark coating in Figure 6 inset) have been known to form at discontinuities such as welds.3 They can impede coating performance and longevity by eventually leading to delamination and the early onset of corrosion and leaks.3
Installation defects Other potential contributing factors to the loss are the timeline between first leak detection and water shut-off, and the presence/location of water drains or basins at the site. These issues are not causes of the tank failure, but they are important in terms of mitigating water damage such as prolonged water accumulation and mould growth. In the case of missing or defective water drainage or shut-off valves near the tank, there may be an installation component to the claim. Summary Determining the cause of failure requires straightforward evidence gathering, careful examination of the evidence (destructive and non-destructive), and proper interpretation of the results by an appropriately qualified metallurgist or materials engineer. If an expert is required, it is important to be aware of their qualifications and how they can contribute to the investigation team. Mark Bailey is a mechanical and metallurgical engineer with MEA Forensic Engineers. Dennis Turriff is a senior engineer with the product and property groups in MEA Forensic’s Toronto office. 1. Institute for Business & Home Safety (IBHS), At the Forefront: Emerging Issues in Property Loss, Water Heater Failure Risks. (2007).
Figure 6: Mosaic optical micrographs showing steel tank structure near failure location (2% nital etch).
2. Storage tank water heaters: tips for a better buy (November 2007): ConsumerReports.org (accessed Jan. 15, 2010) 3. L. Fedrizzi, F. Deflorian, S. Rossi, L. Fambri, and P.L. Bonora, Study of the corrosion behaviour of phosphatized and painted industrial water heater, Progress in Organic Coatings, vol. 42, pp. 65–74, (2001). 4. M.G. Fontana, Corrosion Engineering, 3rd ed., McGraw-Hill, Montreal, (1986)
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Confusion Surrounds HST Proposed GST/HST changes to the definition of financial services and the potential concerns resulting from that create questions for the insurance industry. BY STEPHEN LEE
Much confusion has arisen as the new Harmonized Sales Tax (HST) draws near its implementation date of Jul. 1, 2010. This is due in part to recent an announcement made by the Department of Finance and a subsequent Canada Revenue Agency (CRA) notice. The Department of Finance proposed to change the definition of “financial service” to exclude certain services that facilitate financial services such as management, administration, marketing and promotional services, on Dec. 14, 2009. CRA released GST/HST Notice No. 250 on Feb. 11, 2010, in response to the proposal. By excluding the aforementioned services from the definition, they would now become taxable for GST/HST purposes. In the CRA notice, many examples it constituted as excluded services — as part of “arranging for” financial service — completely reversed a number of the CRA’s own published positions on what was previously constituted as GST/HST exempt services. Under the current legislation, the vast majority of products and services that insurance companies offer — including providing insurance policies and selling of investment products — are considered financial services, and, as such, GST/HST exempt. As a consequence, the new HST implementation will see increased operating costs and claims as insurers will be unable to claim input tax credits.
The new legislative proposals/ The CRA Notice 250 The Department of Finance’s announcement was intended to amend and clarify that investment management services, services that facilitate financial services and services of man34
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aging credit will be GST/HST-taxable and would apply retroactively to past transactions where the supplier treated these services are taxable. The first exclusion from exemption identified by the Finance department is the service of the facilitatory service, which includes the provision of one or more of the following: • market research, product design, document processing or preparation, customer assistance, advertising, promotional or similar activities; and • collection, collation or provision of information. The second exclusion from exemption identified in the Finance release is the service of managing credit when supplied to a person that is granting, or prospectively granting, credit. Managing credit includes (and hence may not be limited to): redit checking; valuation; authorization services; making decisions relating to a grant or an application for a grant of credit; crediting and maintaining records relating to a grant or an application for a grant of credit on behalf of the credit provider; and monitoring payment record or dealing with payments. The notice provided details and several examples on the types of services that could be potentially subject to GST/HST. Some key examples in the notices include the following:
Investment dealers’ trailer fees Investment dealer who arranges to purchase units of mutual fund for investors receives “trailer commissions or fees” from the fund manager. The prospectus describes these fees as being paid in recognition of investment advice and ongoing administrative services provided by the deal to the investors. In this situation, the CRA says the services provided by the investment dealer, including advice, arrang-
ing for the purchase of the units and ongoing administrative service, are GST/HST taxable.
Arranging for car loans An automobile dealership has a financing department where employees help customers obtain financing. The dealership receives a commission from the financial institution for every successful loan. Employees obtain customer information, help customers select a type of loan, determine interest rates and make recommendations on the acceptance of loans. In this example, the CRA says the automobile dealership’s services to the financial institution are GST/HST taxable.
Telemarketing agency An insurance company provides specialized group insurance coverage for members affiliated with a particular organization. The insurance company uses a telemarketing agency to contact the group members, explain the insurance coverage and answers questions on it, screen the eligibility of applicants, prepare the applications and forward them to the insurance company for final approval. In this situation, the CRA would say that the service provided by the telemarketing agency to the insurance company would be GST/HST taxable. Insurers, and the financial institutions and business who provide services to them, should review the examples to assess whether any could apply to a transaction. Brokers (insurance brokers and agents) who provide services similar to those provided by auto dealership and telemarketing entities in the CRA’s example could be considered “arranging for” financial services and thus excluded from the GST/HST exemption. If insurance brokers and agent agreements are considered taxable sales, it would have significant consequences for insurers. www.claimscanada.ca
Budgeting may be required for increased tax costs as GST or HST payment may be required on services previously note taxed.
Update from the finance department Minister of Finance Jim Flaherty issued a statement on Mar. 26, 2010, to clarify that the Dec. 14, 2009 announcement was intended only to address uncertainty arising from certain court decisions and not as a change in policy. The legislative proposal was not to impose new taxes and CRA is currently reviewing and updating the guidance it has published. Although there appears to be assurance no new changes will be implemented, there will continue to be uncertainty until the legislation is passed. It is currently unclear on what or how the CRA’s position will be changed and whether certain or all positions will be reversed with respect to previously GST/HST exempted services. As of the date of this article, there have not been any written revi-
sions to CRA Notice 250 or announcements detailing which activities considered as “arranging for” financial services will continue to be exempt from GST/HST.
Actions recommended for insurers and financial institutions Insurers and financial institutions should review all supplier arrangements and vendor contracts that bring the services and product to market and confirm with CRA which situation could have GST/HST implications. Insurers should consult and confirm with CRA continuously, along with tax experts, to gain a full understanding of the potential impact to their organization of any revisions to the previously exempted financial services, if they do, in fact, become taxable. Any entities, including insurance brokers, adjusters, and other related service providers, assisting with any same or similar arrangements mentioned by Notice 250 should review
their own operations to identify potential taxable consequences. They maybe now required to register for GST/HST and to charge GST/HST on certain services provided. With any changes in tax legislation comes complications. It is important to gain as much knowledge and prepare early to anticipate any potential effects HST changes might have as the implementation date of July 1 looms. As if the strain of operational and claim costs increasing as a direct result of harmonization is not enough, further challenges are ahead for insurers and financial institution in complying with the incomplete HST harmonization rules. Stephen Lee is a manager at Matson, Driscoll & Damico Ltd. with more than seven years in financial advisory services practice. The content of this article is for general information purposes, Readers are advised that they should always seek professional advice in connection with their particular circumstances.
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A
Biomechanist’s Role
A biomechanist can help an insurer determine whether injuries are consistent with the reported claim. BY MICHAEL SINNOTT
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involving expertise in injury biomechanics can often be more interesting than typical types of losses. When a claim is reported — and the injuries don’t appear to be consistent with the reported circumstances — a biomechanist is able to quantify the likelihood of a resulting injury. Information on how injuries are sustained can be useful in determining the actual damages associated with an incident and how to handle the claim. In the following four cases, all of which involved unique situations of falling obstacles, the insurer or claimant benefitted from injury biomechanics expertise.
Case Study 1: Damages reduced due to excessive injury claim A claimant was shopping at a grocery store and when they went to remove items from the top shelf and place them into the grocery cart, several items fell from the shelf hitting them in the head, neck and back. As a result of this incident, a permanent brain injury and soft tissue injuries to the neck and back were reported. Based on the available information and on-site testing, the mass of the items that fell, where they fell from and the potential severity of the various impacts sustained was calculated. A biomechanist
was able to determine that the forces actually involved in this incident were drastically less than what would be required to cause the claimed injuries. With that knowledge, the defendant’s exposure to damages was significantly reduced.
Case Study 2: Damages stick due to potential for severe injury A child was returning to school when a piece of ice fell from the roof of the school and struck the child’s head. A traumatic brain injury was claimed. Several witnesses provided crucial information regarding the incident that helped in assessing the severity of the head impact. With knowledge of the forces required to cause hard and soft tissue injuries to the skull and brain, respectively, it was possible for a biomechanist to conclude that the claimed injuries were consistent with the reported circumstances and were not excessive.
Case Study 3: Client alerted to risk of high damages and to set reserves high A claimant was in a restaurant when an object falling from a nearby shelf struck them. An expert was retained www.claimscanada.ca
Illustration by Glenn McEvoy
It is not uncommon for a biomechanist to hear “I’ve got a pretty strange one for you . . .” from a client, often because an injury is being reported under fairly unusual circumstances. The question on most people’s minds is “Did this injury result from this incident?” The answer to this question takes into consideration whether the injuries preexisted the incident, whether they were embellished or whether they could have been mitigated or prevented altogether. When the damages of a claim arise from personal injuries, a qualified biomechanist can determine if there is a causal relationship between the claimed injuries and the reported event. A biomechanist has a unique theoretical and experimental background, which enables the understanding of fundamental engineering principles as it relates to biological tissues of the body, such as bones, ligaments, muscles, and the brain. As a result, a biomechanist is able to understand — and effectively communicate — the mechanisms of injury and the likelihood of them occurring. Simply, a biomechanist is an engineer — or scientist — who studies the human body instead of machines, buildings or bridges. As a result, claims
quickly on the file, prior to the claim being issued, to assess the risk of exposure and appropriate future reserve levels for damages. Based on the incident report, the height of the patron, the weight of the object and its original location before falling, a biomechanist was able to predict a high likelihood for a significant head injury. As a result, the insurer was prepared in advance to set appropriate reserves for the anticipated claim.
Case Study 4: Injuries pre-dated incident and were not aggravated by incident A claimant was shopping at a department store when a small piece of wood trim fell from the wall, hitting the head and shoulder. A brain and soft tissue injury to the neck were claimed as a result of this incident. On-site testing revealed the dimensions and mass of the wood trim, the distance the wood fell and the speed at which it fell. With that knowledge, the severity of the impact and the resultant head and neck motions were considered. After finding the impact to be minor in nature and well below accepted injury thresholds, the previous injury history of the claimant was considered. It was discovered the claimant had been in several motor vehicle collisions before this incident and had sustained various injuries as a result of those collisions. With details of the pre-existing injuries, a biomechanist was able to assess whether or not the current incident was severe enough to have aggravated those injuries. It was determined the claimed brain and neck injuries pre-existed the incident and were not worsened as a result of the minor impact. What if the injury is not in dispute? A claimed injury is not always questioned because sometimes an injury is clearly the result of a particular incident. However, when there is a question as to whether an injury could have been lessened or possibly prevented in an alternate scenario, a qualified biomechanist can be consulted. Knowledge of what could have happened can www.claimscanada.ca
be very beneficial to the insurer or claimant. For instance, many claims arise from head injuries when a cyclist who is not wearing a helmet is involved in a collision with motor vehicles. If the presence and causation of the injury is
In cases where vehicle evidence may be less than conclusive, an expert in injury biomechanics can provide additional information as to how the observed injury occurred that may allow a conclusion on restraint use to be reached. clear, the next question should be: Would a helmet have affected the injury outcome? Based on details of the collision and the sustained injuries,
a biomechanist can determine whether or not a helmet would have been effective or ineffective in mitigating the claimant’s injuries. Biomechanists often supplement reconstructionists in accident reconstruction cases. In cases where vehicle evidence may be less than conclusive, an expert in injury biomechanics can provide additional information as to how the observed injury occurred that may allow a conclusion on restraint use to be reached. Additionally, if it is accepted or determined an occupant was not restrained, the effect proper restraint may have had on mitigating or preventing injuries should be considered. A qualified biomechanist can determine how effective restraint usage may or may not be for occupants of varying sizes and vehicle positions during collisions of varying severity and orientation. Michael Sinnott is a biomechanist at Giffin Koerth Forensic Engineering and Science in Toronto.
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Combat Auto Fraud: ISB-U Education Series Combat Auto Fraud, an ISB education training and resources session, was held May 12 at the Glencairn Golf Club in Halton Hills. BY LAURA KUPCIS
Comer v. Pilot illustrates challenges insurers face in proving fraud in court Cary Comer v. Pilot Insurance Company demonstrates the challenges insurers face when trying a suspected fraud claim, Richard Bickford told delegates at the ISB-U Education Series. In Comer, the insurance company faced a judge who seemingly sided with the plaintiff at every turn, no matter what evidence the insurer presented to the contrary. The question before the Ontario Superior Court of Justice was fairly simple: Was the truck stolen? But the court’s manner of answering this question was anything but straightforward. The judge was clearly unimpressed with the insurer’s arguments, and the case demonstrates that meticulous documentation of facts can ultimately overcome even the most skeptical triers of fact.
The evidence Cary Comer alleged he parked his GMC Sierra, which was towing a boat and a trailer (not covered by the policy and not registered to Comer), in the parking lot of the Pavilion Hotel & Bar on Highway 117 in Baysville, Ont. He stated in court documents that he received a ride home from the bar. The police recovered the truck, trailer and boat on Highway 60 near Algonquin in Park in the Township of Peck in a damaged condition. The vehicle had its hazard lights on, both doors locked and the passenger window rolled down. Inside the vehicle, the police found an empty beer bottle, half a bottle of whiskey and controlled substances including prescription narcotics. The police found photos on the claimant’s cell phone of marijuana plants. Comer told police he had the only set of keys to the vehicle. He said nobody else had access to the keys, and 38
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that he had locked the vehicle before heading into the bar. The police found no signs of forced entry or damage to the ignition. Pilot denied the claim after the insured provided a different version of events during an examination under oath than he had told police officers. Still, the judge said he was “completely unimpressed with evidence based on innuendo from the presence of some hashish in the car, and there is no evidence that the presence of the narcotic drugs was illegitimate.” Bickford said the police reported it made no sense for a thief to steal a vehicle and leave it on the side of the road with the hazards on and the doors locked. The judge apparently gave short shrift to this argument. According to Bickford, the judge said the thief could have stopped and gone for a pee, turning on the flashers as a warning to other drivers. The court constantly questioned the insurer’s evidence, dismissing much of it as circumstantial, Bickford said. “The fact that the insured didn't cooperate with the police was ‘an exercise of his rights under the Charter of Rights and Freedoms,’” Bickford said, citing the judge’s observations in court. “What do you do with that?” Similarly, the court did not interpret the insured’s lack of responsiveness to Pilot’s standard procedures as a sign of fraudulent behaviour. Instead, the judge found it to be a sign that the insured’s “thinking does not seem to be burdened by attention to detail.” The judge went on to note that Comer being slack in his response to insurance procedures is entirely consistent with sloth rather than guile. “As defense counsel I’m ready to cry,” Bickford said. “I have all this good evidence and it’s all going up in smoke.”
The deciding factor Despite these challenges, the insurer ultimately won the case. The ‘key,’
as it were, turned out to be the inconsistency of the insured’s evidence related to the location of the car keys. There was no sign of forced entry or damage to the ignition. The steering wheel was locked. Based on these facts, the judge inferred the driver was in possession of the keys at the time. In speaking to police, Comer said he had the only set of keys. He told police he had locked the truck before heading in to the bar. During the examination in chief, however, he said he wasn’t certain if he had locked the truck. He said he normally had the keys in his pocket or on the table. Subsequently said he said he thought the keys were in his sweater, which was hung up in the cottage, but when he went to get them, they were not there. In cross-examination, he testified he had two sets of keys when he purchased the truck, but lost one set shortly, so he had only the one set. He reported there was no spare key in the stolen vehicle. He also said there was a key to the cottage, but he did not know where it was. He said he had lost the second set of keys to the vehicle a long time ago and couldn’t find them, guessing that they must have fallen out of his pocket. He told a police constable the keys were in his pocket and that nobody else had another set. “The inconsistency of these statements, one to another, gives rise to concern about the reliability of Cary Comer’s evidence about keys,” Ontario Superior Court Justice Margaret Eberhard wrote. “Further, it is not logical that Cary Comer would head into Baysville to retrieve his truck without keys.” The judge determined that since the truck had been driven to the accident with keys, with no reliable evidence that the keys were missing or that another set of keys was used, she was www.claimscanada.ca
unable to find that the truck was stolen.
Need for proper preparation “I love that case because it demonstrates the hurdles we face,” Bickford said. “It demonstrates the uphill battle we face. It also demonstrates that with proper evidence, with proper preparation, these cases are defensible. If you handled your claim properly, objectively and your documents show clear concise thinking and objective investigation, then punitive damages should never be attracted.”
Recovery rate for stolen vehicles drastically reduced, suggesting organized crime involvement: OPP Ontario Provincial Police jurisdictions currently have a recovery rate of about 50 per cent for stolen vehicles, compared to a 90 per cent recovery rate in 1990. The figures were presented by Stephen Boyd, detective sergeant and program manager for the provincial
auto theft team (PATT) at the organized crime enforcement bureau of the OPP. The theft rate across the province, including the GTA, remains the same every year, give or take one per cent or two per cent, he said. In rural Ontario, 78 per cent of the stolen vehicles are recreational vehicles. The number one stolen vehicle in OPP jurisdiction is the Honda ATV. Roughly $2.7-billion worth of truckloads is stolen every year. Boyd said the decrease in the recovery rate is indicative of organized involvement in auto theft. And the nature of the organized crime is changing. He said organized crime traditionally follows a pyramid structure, with a leader at the top and then it fans out to the bottom. “What we are seeing now across the province is this pyramid is becoming flatter and flatter all the time,” Boyd said. In the past, community and nationality would segregate these groups, but “now it’s like the United Nations” and
everybody is working together. “All the lines are becoming blurred and it's becoming tough for us,” he added. One of the “hottest trends” is the theft of homemade trailers, cargo and campers. In a project run by PATT, 57 cargo trailers were recovered, with an additional 150 not yet found. These are all registered with the Ministry of Transportation of Ontario (MTO) under the listing “homemade.” Boyd notes there are currently 68,000 homemade trailers registered with the MTO in the last three years. These are homemade campers with a hydraulic slideout kitchenette, he said. “You can’t build that in your garage, but you can insure it as homemade,” he said, while showing a photo of an upscale camper. All of this stuff is being registered as homemade when it is not, he said. Embellish a little when the loss occurs, and suddenly every trailer is filled with ATVs and recreational equipment. “By the time we total it all up, we have about $7 million of loss that was supposedly in all these trailers that we got back,” he said.
Canadian Insurance Claims Education Benevolent Foundation OBJECTIVE • To assist with funding needed to further education of Canadian students entered in an insurance claims related discipline.
• Applications must be received at the CIAA National Office by July 31st annually. • Awards will be announced at the CIAA Annual General Meeting in September.
VALUE • A minimum of one $500.00 award annually.
DONORS • Canadian Independent Adjusters’ Association • Canadian Federation of Insurance Claims Associations.
SUBMISSION • Applications are available at The Canadian Independent Adjusters’ Association National Office: CIAA Centennial Centre, 5401 Eglinton Ave. W., Suite 100 Etobicoke, ON M9C 5K6 Tel: (416) 621-6222 Fax: (416) 621-7776 E-mail: info@ciaa-adjusters.ca
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When What Could Go Wrong Goes Right When a company’s claims procedures and processes are put to the test on a major holiday, one can quickly determine whether those standard practices are as effective as they should be. BY NAOMI DUMMETT
major fire north of Toronto last December demonstrated the value of a clearly communicated and understood regimen of protocols — and the value of trusted and experienced relationships in the industry. Picture it: 100,000 square feet of ashes, water-soaked debris, burned out windows — and it’s December 25. When a fire broke out at Global Precast in Maple, Ont. on Christmas Eve, much of one factory building was damaged and another, where the fire took place, was completely destroyed. The company, who created precast structures for all types of buildings, had been looking forward to a year with orders to fill and signed contracts in the works. Now, it seemed unlikely those plans would be fulfilled. The fire was so intense structural I beams were warped, everything was stained black with soot, all electrical wiring was destroyed and the forms essential to create the company’s products were ruined. Vito Cannone, president, called the broker to see what could be done in the middle of the holidays. “Our cherished
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business suffered a devastating blow as a result of the fire, Cannone said. “It ravaged our production area and rendered our company totally inoperable. We had uncompleted and unstarted contracts worth millions of dollars and no possibility of completing them. A total of 150 people faced unemployment and our family’s dreams were shattered.”
Claim timeline: • December 25: the broker calls the independent adjuster, as per the insurance company’s protocol, while the fire marshal begins working on their investigation. • December 26: The insurers claims manager is on-site and more than 75 workers are contracted to begin the clean-up so repairs can begin. • January 18: From Boxing Day through New Years, despite the holidays, work continued and Global Precast was back pouring concrete and filling orders. As a result, the company kept all its contractual commitments. Two months later Building A is up and running — fresh clean paint, electrical, water lines, brand new floors — and Precast Concrete is happily back at work. Building B is moving along swiftly and will be in
full operation soon. “We’re pulling in revenues and see growth ahead. The important thing to me is that we kept up with orders and didn’t let any of our customers down,” Cannone said. “I’m amazed at how smoothly and quickly the repairs were made – even in the middle of the holidays.”
Why it worked Post event analyzing as to what went right to ensure a smooth recovery for the claimant is just as eye opening as investigating problems when things go wrong. When the insurance company reviewed the case, it became evident that protocols developed prior to the incident were well understood and precisely followed, resulting in a well-run claim. In short, each piece of the puzzle fell into place.
Protocol 1: Each person knew who to call Prior to the incident, and as a regular policy, the broker was in regular contact with the insured and had been provided a document with protocol instructions in event of a loss, including who to call after hours. The independent adjusting firm had people manning the phone lines during the holidays who had the skills to start compiling the information without delay. They prepared a well-documentwww.claimscanada.ca
ed portfolio of information that was ready when the insurer arrived on the scene the next day. As a result, immediate decisions could be made. The insurance company had a person available and on-the-scene with the authority to make crucial decisions. Also, a list of pre-approved contractors was prepared so there were no delays in getting workers to the scene immediately. A pre-approved list of contractors makes it easy for people at the scene to easily and quickly identify approved contractors who have the necessary resources for fire restoration with the appropriate level of manpower at a moment’s notice.
Protocol 2: Each person understood their role and had resources Aside from an up-to-date and accurate list of contacts, each person involved in the claim understood their role. Training can make the difference between starting repairs on day one as opposed to day 10. Well-communicated and understood protocols make for better outcomes for insurers and the insured. Handbooks and training sessions — some as short as a half day — can help minimize delays, costs and enable customers to feel they got help when they needed it the most. Training books should be provided to adjusters and branch offices to ensure each person understands the process as well as the insurance company’s expectations on handling claims. Each adjuster should complete the training and sign off to indicate they understand each process and procedure. Protocol 3: Each person had authority In this case, the staff on call understood their role in the claim process and had the information and authority to take the appropriate action. If claims staff does not have the authority and confidence to make decisions, the entire process can grind to a bureaucratic halt. Alternative measures for holidays and special cases were communicated and tested beforehand. “[The insurance company] was there to help restore our business, took www.claimscanada.ca
charge of the situation and immediately authorized emergency work, which saved valuable time and ultimately millions of dollars in business,” Cannone said. “Constant contact with us during the holiday period guaranteed a smooth flow of required authorizations and protocols that ensured we were up and running as quickly as humanly possible.” A smooth claim boils down to protocols that are well communicated and understood. That may seem obvious,
but ensuring they come alive and don’t just live on paper is harder than it appears. When a high pressure situation arises, protocols can provide simple solutions to complex problems, provided they are: • Clearly understood • Well communicated • Kept up-to-date, and • Followed with discipline Naomi Dummett is a communications specialist at Zurich.
Diversity Matters Diverse perspectives, singular solutions. Gilbertson Davis Emerson LLP recognizes the value of diversity. Within the firm we understand that the diverse perspectives of our lawyers offer our clients a more considered solution. Come see things from our perspective. Visit our website at: gilbertsondavis.com
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E
education forum
A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA
Remedies and Recovery: Responding to a Surety Claim
n the last issue of Claims Canada, Education Forum reviewed basic principles of surety and discussed three kinds of construction contract bonds: bid bonds, performance bonds, and labour and material payment bonds. In this issue, we look at some of the surety’s options for responding to a claim. Unlike insurance contracts, where underwriters expect losses, suretyship is premised on the theory that no losses will be incurred. If a default occurs, the surety expects to recover any payments made from the principal, from other indemnitors, or through other forms of security. The surety has remedies both before and after it has paid a loss.
I
Before paying: remedy, completion, retendering When the principal is in default under a performance bond, the bond specifies the surety’s options for discharging the obligation: • remedy the default • complete the contract • retender the contract and arrange for a new contractor to complete the work remaining Remedying the default: If the contractor is competent and the default is caused by lack of capital, the surety can finance the contractor to complete the 42
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contract. This has the advantage of maintaining job momentum and avoiding the costs of a shutdown. Although the amounts advanced are labelled loans, they are almost always a permanent loss to the surety. The funds loaned to the principal do not automatically reduce the penal sum of the bond, so the surety risks incurring higher total costs on the claim than the penal limit of the bond. To avoid this, the surety may ask the obligee to execute a completion agreement in which the financing reduces the penal sum of the bond. The surety must have the complete cooperation of the principal, must have absolute confidence in the character of the principal and its management staff, and must be convinced that the arguments in favour of financing outweigh the potential disadvantages. Completing the contract: If the work is so close to completion that it would be awkward to award the job to another contractor, and if financing the contractor is not practical, the surety may choose to hire its own consultants or contractors to complete the defaulted project. Setting a definitive cost of completion can be difficult, but efforts must be made to eliminate substantial overruns and unnecessary financial surprises. Steps should also
be taken to limit the surety’s liability to the penal sum of the bond — a takeover agreement may be executed in which the obligee acknowledges that the bond limit will apply. Even so, the surety may be liable for warranty obligations that extend past the completion of the physical construction. Re-tendering the contract: In this alternative, the surety retenders the project, obtains another contractor to complete the work, and then has the new contractor enter into a direct contractual relationship with the owner In a performance default situation, the surety’s choice of whether to remedy, complete or retender may depend on factors such as
• how much work remains to be done • the quality of the work completed by the principal • the potential for additional claims or delay penalties • the funds available • the financial involvement of the indemnitors • the cooperation of the principal and the obligee
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(obligee) to complete the work. The surety seeks the same types of bonds from the new contractor as were part of the original construction contract. The surety reimburses the obligee the difference between the remaining contract funds and the cost of completing the work using the new contractor. This option is preferred in many contract defaults because it establishes a specified loss amount prior to completion of the contract. However, government performance bonds often forbid re-tendering; the government cannot contract with a replacement contractor without violating the various statutes governing the public bidding process.
Buying the bond back Buying the bond back is an extracontractual alternative; it is not a specified option in the performance bond. Where the obligee is able to complete the construction project itself, the surety may negotiate a settlement and pay a sum of money in exchange for the obligee surrendering the performance bond. This cash buyout alternative can be suggested at any time in the adjustment process. After paying: salvage The surety’s rights to recover losses after payment are referred to collectively as salvage. Salvage includes the surety’s right to contractual indemnity and subrogation, as well as its common law and statutory rights against its principal, indemnitors and their bankruptcy estates, if applicable. Subrogation is generally limited to the surety’s efforts to recover from third parties responsible for, or contributing to, the surety’s losses. To fulfill its primary obligation to the obligee, the surety must consider its various salvage prospects, rights of indemnity and subrogation, and any other avenues of recovery when determining the best means of responding to a surety loss. The consideration of salvage is an important part of the overall strategy in investigating, www.claimscanada.ca
adjusting and resolving all bond claims. Indemnity: Most surety bonds are backed by an indemnity agreement (a side contract) executed by the principal and by other related companies and individuals. This is known as contractual indemnity. The agreement provides separate rights to the surety to have property assigned or trans-
To fulfill its primary obligation to the obligee, the surety must consider its various salvage prospects, rights of indemnity and subrogation, and any other avenues of recovery when determining the best means of responding to a surety loss. ferred to it, to have loss payments reimbursed, or to recover funds to relieve a default directly. As soon as a surety has notice of a potential claim, all indemnitors should be notified in writing of their financial
exposure to the surety. This often galvanizes indemnitors to respond to the default or potential default directly, although the surety should still monitor the situation to ensure that bond obligations to the obligees are carried out diligently. Sometimes indemnitors are unwilling to cooperate; they may defend against the surety’s claim for indemnification on the basis that the surety either paid too much or went beyond the principal’s responsibility. For an indemnitor to succeed in this line of defence, it must prove that the surety’s actions showed a lack of good business judgment and a lack of good faith. Some indemnity agreements permit the surety to pursue the indemnitors immediately upon posting a claim reserve, and this can be an effective strategy against a hostile indemnitor. The highest return on an indemnity agreement is usually realized at the first report of a loss. This is an important consideration when the surety is considering options for discharging obligations under the bond. Subrogation: Through subrogation, the surety can advance claims against implicated third parties such as the obligee’s engineers, architects and other sub-trades not necessarily contracted to the principal. Quite apart from the construction project itself, claims can also be advanced against other professionals upon whom the surety relied: for example, insurance brokers and chartered accountants. Indemnity agreements and subrogation are the cornerstones of suretyship: they ensure that the principal remains primarily obligated in the event of a claim. They also provide incentives to keep costs to a minimum.
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. June/July 2010
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O on the scene
Sandra McInnis
Sandra McInnis of Crawford & Company (Canada) has accepted the position of Women in Cancer Crusade (WICC) Gala Dinner co-chair, WICC Gala Dinner chair Michael Butler of Giffin Koerth and past dinner chair Marilyn Horrick of Chubb Canada announced. McInnis was instrumental in the success of the 2010 dinner and will assume the role of dinner co-chair effective immediately for the WICC 2011 gala dinner and beyond. ●
CIAA notes with sadness: The passing of Donald (Don) W.R. Gilbertson on Mar. 7, 2010 at the age of 73. Don’s entire career was in the claims area with the Pearl Assurance Co., Underwriters Adjustment Bureau, B.N. Smith Insurance Adjusters and as claims manager of the Economical Mutual Insurance Company. Don’s brother, Larry Gilbertson, formerly with Gilbertson Davis Emerson, LL.P., is an invaluable supporter and contributor to CIAA. We offer our heartfelt condolences to Larry and his wife Vivienne who will dearly miss and lovingly remember their cherished brother. Donald Gilbertson The passing of Ray Gray on Apr. 10, 2010. Ray was a long time member of CIAC and then CIAA with his partners Ross Sneddon and John McHugh (both deceased) with the firm Gray Sneddon McHugh Insurance Adjusters in Kitchener, Ont. Those that knew Ray remember him as a larger than life figure in insurance adjusting and our deepest sympathies are extended to his family and friends. Ray Gray We celebrate Ray’s life by raising a toast, with a double shot of Crown Royal, just as the family requested. ● CIAA President Patti Kernaghan, along with her husband Pierre Coupey, and Joel Baker, president and CEO of MSA Research Inc., attended the PCS Catastrophe Conference in San Antonio, Texas from May 2 to May 4. ●
Joel Baker, Patti Kernaghan and Pierre Coupey 44
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FirstOnSite Restoration has selected the Women in Insurance Cancer Crusade (WICC) as its chosen charity for national sponsorship. FirstOnSite is WICC’s newest national sponsor at the platinum level, representing a commitment of $45,000 over three years. “As an organization we wanted to financially support an established and proven charitable movement,” said Ken Zardo, vice president of national sales and marketing at FirstOnSite. “I began supporting WICC in 2003 with fundraising and have received a WICC Gold Flame Award in recognition for these efforts. Little did I suspect that in 2004, my own wife Rhonda would contract breast cancer,” Zardo said. “Over the next four-and-one-half years, our family did what most families do — sought to bear the burden of our personal experience and keep it hidden from those we encountered during that painful time. Rhonda fought this personal struggle with profound grace and valour but succumbed in the summer of 2008.” ● Canadian Claims Services Inc. (CCS) has acquired Triad Claims Service, effective May 1, 2010. Canadian Claims Services Inc. (CCS) is a full-service, multi-line adjusting company with a head office in Edmonton, Alta. Triad Claims Service is a private insurance claims adjuster with three office locations in Alberta. “CCS is very excited about the addition of Triad, as it gives us a significant presence in the Calgary market,” the company said. “Triad has been a revered service provider in Southern Alberta since 1977.” Tim Hauck will be staying on as Calgary branch manager, following the acquisition. ● Cunningham Lindsey has deployed 10 of its Canadian adjusters to assist with catastrophe response efforts in Australia. Severe storm activity in March resulted in massive flooding in and around Perth. More than 120,500 property and motor vehicle claims were reported as of Apr. 14, with an estimated insurable cost of $889 million, according to the Insurance Council of Australia. Canadian adjusters have been in Australia for more than a week. They have agreed to remain for at least one month of service. ● Cunningham Lindsey is merging its Markham and Toronto North offices effective May 1, 2010. Toby Collins will be the branch manager of the newly merged office, which will be in the current Toronto North location. Toronto North adjusters Pamela Allen, Ross Arthur, Rick Bahen, Dale Reid, Gail Ross, Fred Scott and Nick Tucci will welcome Collins, Vince Umbrio and Eric Gunnell at the end of this month. ●
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
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O on the scene Janet Ley, of the CIAA Nova Scotia region, presented a cheque for $500 to Gilberte Theriault, chair of the Cancer Crusade, at the Nova Scotia Insurance Women’s Association on Mar. 17, 2010. ●
Janet Ley and Gilberte Theriault After 50 years as an independent loss adjuster, Gerry Dumont retired on Mar. 31, 2010. Dumont spent most of his career with UAB and CGI and throughout those years was a loyal member of the Canadian Independent Adjusters’ Association. Friends and colleagues recently gathered to mark the occasion of John Aucoin and Dumont’s retirement and in Gerry Dumont recognition of his participation with the CIAA, he was presented with a plaque by CIAA regional representative John Aucoin, Plant Hope Adjusters, in Campbellton, N.B. ● Roland Paxton, Crawford & Company’s assistant vice-president of global marine services for Canada, will assume direct responsibility for marine operations throughout the Americas. Paxton, who has been with Crawford for 10 years, holds nearly 35 years of experience as a naval architect and expert. His consulting work has included Roland Paxton pilotage, litigation, project management and ship design. He has handled a wide variety of marine claims, including those involving damage and loss to goods, valuation of goods and environmental and pollution-related losses. ●
Mike Morris
Mike Morris has been appointed vice president of central operations at Cunningham Lindsey Canada (CLC). Morris joined CLC in 1988 as a trainee and moved through the ranks before being appointed assistant vice president in 2008. He is based at CLC’s head office in Mississauga, Ont. Andrea Digdon has been appointed assistant vice president of the Atlantic Region at CLC. She is is responsible for the operational management of the region and working with Atlantic Canada customers to deliver superior claims solutions. She was most recently Halifax branch manager at CLC. ●
Andrea Digdon
Claudine Davoodi
Andrea Zimny
Claudine Davoodi has been appointed as Crawford & Company (Canada) Inc.’s vice president of operations for the region of Quebec. Davoodi will continue to work closely with Quebec branch managers and will have operational responsibility for all of Crawford’s claims operations throughout the province. She will continue to report to Pat Van Bakel, senior vice president of Crawford’s claims operations. In addition, Andrea Zimny has been named assistant vice president of ClaimsAlert for Crawford operations in Canada. ClaimsAlert offers centralized claim intake 24 hours a day, seven days a week, for Crawford clients. Reporting to Steve Anderson, senior vice president of corporate markets and administration, Zimny will continue to manage both the Waterloo and Montreal ClaimsAlert centres. ●
The Canadian Insurance Claims Managers Association held an educational day in Winnipeg on Apr. 9, 2010, and both CICMA and CIAA executive attended. ●
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National Standing Committees 2009 – 2010 ADVISORY Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca 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 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 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 Jane Richardson, BBA, FCIP Crawford Adjusters (Canada) Inc. 237 Brownlow Ave., Suite 120 Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Jane.Richardson@crawco.ca Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com
www.claimscanada.ca
CONSTITUTION & RULES John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca CONVENTION 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 DISCIPLINE Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca EDITORIAL Fred Silvestri, BA, 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 John M. Sharoun, FIIC, CFE, FCIAA Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: John.Sharoun@crawco.ca Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca EDUCATION Gary A. Ellis, BBA, FCIP, RF, FCIAA, CLA, FIFAA Crawford & Company (Canada) Inc. 18 Great George Street Charlottetown, PE C1A 4J6 Phone: (902) 566-1011 Fax: (902) 894-3044 E-mail: Gary.Ellis@crawco.ca W.E. (Ted) Baker, BA, CFE, FCIAA Baker, Bertrand, Chassé & Goguen Claim Services Limited 3660 Hurontario St., Suite 601 Mississauga, ON L5B 3C4 Phone: (905) 279-8880 Fax: (905) 279-5338 E-mail: webaker@bbcg.ca EMERGENCY MEASURES Roger S. Bickers, CIP, FCIAA McLarens Canada 600 Alden Road, Suite 600 Markham, ON L3R 0E7 Phone: (905) 946-9995 Fax: (905) 946-0171 E-mail: roger.bickers@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com FCIAA E. Brian Gough, FCIP, CLA, FCIAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: ebgough@marshadj.com
Robert V. Pearson, CLA, FCIAA AAL Alberta Ltd. 600 – 2424 4th Street S.W. Calgary, AB T2S 2T4 Phone: (403) 452 2195 Fax: (403) 452 3568 E-mail: rvp@aaladjusters.com 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 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 Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia St. Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca IBC: LIAISON & FORMS 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 NOMINATING Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia St. Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca
Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com PRIVACY James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca 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 Keith P. Edwards, FCILA, CLA, FUEDI-ELAE CIAA Honorary Life Member c/o CIAA National Office 5401 Eglinton Ave. W., Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Fax: (416) 621-7776 E-mail: info@ciaa-adjusters.ca
CIAA REGIONAL PRESIDENTS 2009 – 2010 NEWFOUNDLAND & LABRADOR Neil F. Lacey, CIP, FCIAA Crawford & Company (Canada) Inc. 44 Torbay Road, Suite 300 St. John’s, NL A1A 2G4 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Neil.Lacey@crawco.ca NOVA SCOTIA Nicholas B. MacDonald, AIIC Cunningham Lindsey Canada Limited 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. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: laucoin@planthope.com QUEBEC/AESIQ Charles A. Berthiaume Réclamations C. Berthiaume 44, Chemin d’Oka Saint-Eustache, PQ J7R 1K5 Phone: (450) 491-6165 Fax: (450) 491-6230 E-mail: rcb@reclamationscberthiaume.ca ONTARIO Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3, P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail: richard@azclaims.ca MANITOBA Timothy W. Bromley J.P. Hamilton Adjusters Ltd. 125 Enfield Crescent Winnipeg, MB R2H 1A8 Phone: (204) 944-1057 Fax: (204) 944-1606 E-mail: tbromley@mts.net SASKATCHEWAN Lee Dixon Crawford & Company (Canada) Inc. 210 - 227 Primrose Drive Saskatoon, SK S7K 5E4 Phone: (306) 931-1999 Fax: (306) 931-2212 E-mail: Lee.Dixon@crawco.ca WESTERN Bea Boutcher, CIP Horizon Adjusters Ltd. #207, 9814 – 97 Street Grande Prairie, AB T8V 8H5 Phone: (780) 402-8383 Fax: (780) 402-7888 E-mail: bea.boutcher@horizonadjusters.com PACIFIC TBA
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O on the scene A Winter Gala Fundraiser, inspired by Winmar Toronto/Brampton, and made possible by various partners, was held on Mar. 31 at the Pavillion Royale in Mississauga, Ont. Almost 220 people attended the gala — which raised $2,300 for the AIDS Committee of Toronto — where a truly inspirational master of ceremonies Sami Jo Small, two-time Olympian, reminded everyone to be proud to be Canadian. ● Images provided by FullMediaCenter.com
More than 500 insurance professionals — 46 teams in six divisions — participated in the 2010 Ontario General Insurance Hockey Tournament. The event was held March 19 to 21 at RIM Park in Waterloo. The annual event raises money for local youth charities, with the majority of the funds going to Camp McGovern, and this year was no exception, with $40,000 raised. Over the last eight years, the event has raised $250,000. ●
CIAA New Members — April 2010 Crawford and Company Maria Joshua, FCIP
Toronto, ON
Level 1
Cunningham Lindsey Lisa Bodemann, CIP, CRM
Mississauga, ON
Level 1
Coast Claims Service Ltd. Mark Withenshaw
Vancouver, BC
Level 1
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The best way to mitigate water damage losses — and keep costs in check — is through immediate response, Dave Bonnar, director of franchising and insurance development of Steamatic, said. "The faster we can get in, the faster we can start saving you money," Bonnar said at a Flood and Learn seminar on May 20 at Steamatic Durham/GTA East. Within 72 hours, mould begins to develop, increasing the amount of work required, resulting in increased cost to the insurer. Direct water damage may be a singular event, which is easily cleaned up, since damage is often limited to those objects with which the water came into contact, Bonnar said. But moisture damage typically accompanies a water damage incident that is either extensive or has not been cleaned up quick enough, he added. As humidity levels increase, the surrounding materials, including the drywall, concrete, ceiling, etc., begin to absorb the excess moisture, which adds to the cost of a claim. To restore a space to its original balance of moisture — which is between 30 per cent and 50 per cent humidity — the water must be extracted from the floors and carpeting, wet items need to be removed or dried, ventilation and evaporation must be encouraged through the use of air movement (high velocity air movers). When drying a structure, one to two complete air exchanges of the entire air volume of the building are generally required to aggressively dry the area, he said. To demonstrate the restoration process, Steamatic flooded two rooms of the facility 24 hours prior to the seminar, allowed guests to see the damage and then installed drying equipment. ●
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June/July 2010
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O on the scene More than 150 delegates attended the roasting of Malcolm “Mac” Ross on Mar. 31. After 42 years working in the insurance industry in Ottawa, Mac, who “didn’t think I’d ever want to be roasted,” had the honour of being the roastee at the Quarter Century Club 51st Annual Reception at the Hilton International Toronto. “It’s a wonderful day,” he said. “A day I won’t forget.” ●
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RIMS CANADA CONFERENCE
2010
Edmonton | September 26th - 29th
Plenary Speakers Peter Mansbridge
Sir Salman Rushdie
Last year this recipient of 12
Controversial, provocative, and
Geminis became the only Canadian
celebrated, British-Indian writer
TV journalist to have had a sit-down interview with a working U.S.
Salman Rushdie, 63, is uniquely Photo by Beowulf Sheehan
qualified to address the subject
president – Barack Obama.
of risk.
Leonard Brody
Jeff Rubin
A tech entrepreneur, venture
Canadian economist and energy
capitalist and author, Calgary-born
expert Jeff Rubin came to
Leonard Brody, at just 39, has already
prominence in the early 1990s with
been involved in the building and
his accurate prediction of a decline
financing/or sale of five companies.
in Ontario real estate prices.
Educational Sessions To complement these outstanding speakers, the conference will offer more than 20 concurrent educational sessions designed to appeal to delegates at every level and facet of industry. New this year will be a workshop and plant tour of a world class water treatment plant. Be sure to visit the technology showcase in the Exhibit Hall for the latest in programs and tools to assist risk managers. Early Registration ends August 1st. Visit us at www.rimscanada.ca
Discovery
Ingenuity
Resources
Integrity
Success
O on the scene The Honourable Order of the Blue Goose International, Ontario Pond held its 10th Annual Scotch Nosing at the Rosewater Room in Toronto on Apr. 8. More than 150 guests attended the sold-out event. They were treated to a four-course meal and some of Scotland’s rarest, ‘special-edition’ single malts. Ed Patrick, one of Scotland’s finest international scotch whiskey experts, was on hand to share his expertise. Jack Jackson, Piper and distinguished member of The Robert Burns Federation, made a special guest appearance. Proceeds of the event were donated to Women in Insurance Cancer Crusade (WICC). ●
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O on the scene WICC Ontario held its 14th annual gala dinner, Dream in Colour, on Apr. 14, 2010 at The Westin Harbour Castle Hotel in Toronto. WICC dinner cochair and evening emcee Michael Butler introduced WICC co-chair Carolyn Horan, who presented Rick Perciante, acting CEO of the Ontario division of the Canadian Cancer Society, with a cheque from WICC for $300,000. Gold Flame Awards went to Pat McNally, Michael Daniels and Stephen MacConnell (IBANB/ IBANS Convention Motorcycle Ride); MSA Research Inc. and North Waterloo Farmers Mutual. McKellar Structured Settlements received the Lew Dunn Memorial Award. Marilyn Horrick, past dinner chair, introduced WICC Relay for Life co-chairs Paul Martin and Robert Landry, who spoke about their renewed commitment to the event and the committee’s new $444,000 goal for the 2010 Relay for Life. A special presentation was made to Lyna Newman, who has been the executive director, board member and secretary of WICC Ontario for more than a decade. She is transitioning to the chair of the WICC golf tournament. Barb Reddick is the new board member, executive director and secretary of WICC Ontario. Attendees witnessed Etobicoke School of the Arts performances of SPLASH and DanceESAtion, and a live painting performance by artist Fritz Branschant. Since the inception of WICC in 1996, more than $4.25 million has been raised by the property and casualty insurance industry. �
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QA Adjusting Company celebrated its 10th anniversary on Apr. 22 at the Saint Bonifice Golf & Country Club in Winnipeg. Staff, former staff, clients, competitors and supports all gathered for a cocktail reception to honour the company’s successes. A great time was had by all. During the celebration, Russ Malkoske announced that Cory Malkoske was now his business partner. “I am delighted to be sharing operation of QA Adjusting Company with him,” Russ said. ●
Mixing an opportunity to network with industry friends and the chance to raise funds for Women In Cancer Crusade, the Risk Management Counsel of Canada hosted Secrets to Great Style. Guest speaker Sarah Richardson, host of Sarah’s House on HGTV, shared inside tips on home decorating, while guests enjoyed delicious treats and bid on a wonderful selection of items in a silent auction. The silent auction raised $2,172. RMC complimented those funds with an additional $5,000 – donating a grand total of $7,172 to WICC. ●
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O on the scene The 2010 Ontario Insurance Adjusters Association Out of Town Conference was held May 13 and 14 in Hamilton, Ont. The two-day Hollywood Hits Hamilton event included a trade show, seminars, a Hollywood Premiere Party, red carpet cocktails and a formal dinner, among other exciting events. â—?
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O on the scene More wishes will be coming true this year thanks to the 16th Annual Starlight Insurance Gala, held in support of Starlight Starbright Children’s Foundation. The May 1st black-tie event themed ‘Springtime in Paris’ raised $175,000, exceeding last year's amount. Attendance was up with just short of 450 tables, representing all segments of the industry. Joann Brjnas addressed the audience with very touching memories of her daughter Samantha Flannigan and her diagnosis with Osteosarcoma and her courageous fight while remaining filled with determination to express joy and love. Brjnas conveyed her gratitude towards a Starlight Wish that Samantha had received, describing how Samantha was thrilled to have the exciting anticipation of the Wish. ●
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