Claims Canada April-May 2011 by Annex Business Media

www.claimscanada.ca

April/May 2011

Official Journal of the Canadian Indeépendent Adjusters’ Association

HITTING THE MARK

Aiming for Successful SABS and MIG Outcomes

A BUSINESS INFORMATION GROUP PUBLICATION Publications Mail Sales Agreement #40069240

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Exceptional expertise

• Forensic Engineering • Environmental Engineering • Health and Safety • Computer Forensics

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Contents A P R I L / M AY 2 0 1 1 • V O L U M E 5 • N U M B E R

Cover Feature 12 Hitting the Mark There are steps that adjusters and health care providers can be taking to ensure that all points are covered and the claimant receives the required and necessary care. BY LAURA KUPCIS

Spotlight 22 Consistent Commitment At Claridge Insurance Adjusters all files are handled with the same dedication, commitment and care, no matter how small or large the claim might seem. BY LAURA KUPCIS

Education Forum

48 Adjusting to the Conditions When adjusting catastrophe claims, there are always issues of safety, claims handling practices and response evaluation which need to be considered.

News Features 22 Mitigation Strategies

36 Problems in the Pipes

At the CIAA/CICMA joint meeting, a panel of industry professionals discusses their issues around settlement and mediation.

The result of the vast amount of new plumbing products has been an increase in product related failure rates.

BY LAURA KUPCIS

BY ROBERT SPARLING

26 Workers’ Compensation

38 Insurance Intermediaries

It is critical to determine early whether or not a claim falls within the framework of workers’ compensation.

The law imposes certain duties on brokers that requires them to adequately perform the services they offer.

BY HENRY J. MURPHY

BY MONIKA ZAUHAR and AMANDA EVANS

30 The Evolution of the Paper Staged Accident

42 Is it Worth the Hassle?

The paper accident — which never really occurs — is the simplest type of staged accident. BY CASIU

32 Established Rates Shift Claims assignments and cost trends contain powerful lessons for insurance professionals. BY JOEL DAGENAIS

34 Defamation 2.0

Often the not-so-straightforward claims also contain a moral hazard. By ADAM CORMIER

44 Snowmobile Acceleration and Braking Performance Understanding the acceleration and braking performance is critical when reconstructing an accident.

Departments 4 First Notice 50 On The Scene

Columns 48 Education Forum

BY KEN ILIADIS and PAMELA D’ADDARIO

46 Salvaging the Bottom Line

Internet publishers need to keep apprised of the risks of potential liability arising from Internet posting.

Identifying salvage in property claims can lead to cost recovery for an insurer.

BY KAREN ZIMMER

BY DAVID ALLAN

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• first notice FN Common law spouse of husband who dies of injuries sustained in home fire cannot receive full home insurance payout until estranged children of spouse are contacted: judge The widow of a common-law husband, who died without a Will as a result of injuries from a fire that engulfed their insured home, cannot receive the balance of the home insurance payment until her husband’s estranged children can be contacted, the New Brunswick Court of the Queen’s Bench has ruled. In the same ruling, Stanley Mutual Insurance Company received permission to pay the unresolved balance of the home insurance policy proceeds ($45,447.26) into court. The court thus discharged the insurer of all liability for the monies while the issue of whether the widow is entitled to the money is resolved. “This matter is indeed complicated by the intestacy of [the deceased husband] Vernon Pell and the fact that he and [June Yvonne] Shepherd, although they lived as common law spouses for

many years, never married,” Court of Queen’s Bench of New Brunswick Justice Thomas Riordon wrote. Pell and Shepherd lived as a commonlaw couple for approximately 28 to 30 years. Pell, who was divorced prior to his relationship with Shepherd, had children from his previous marriage, but had not had any contact with them for many years. The whereabouts of the children were unknown. In 2001, the couple moved to New Brunswick from Ontario and purchased the house. They bought a home insurance policy from Stanley Morgan. The house was damaged in a fire on Sept. 18, 2009. Pell died the next day as a result of a heart attack connected to serious burns to his body in the fire. Pell died without a Will at the age of 75.

Stanley Mutual paid proceeds owing to Shepherd, and made an application to the court to pay to Shepherd the remainder of proceeds owed to Pell ($45,447.26). The court ordered that some effort be made to find Pell’s surviving children first, prior to determining Shepherd’s entitlement to the remainder of the insurance policy payment. “I can understand and appreciate the arguments advanced on behalf of the respondent, Ms. Shepherd,” the judge wrote. “However, considering that Mr. Pell died intestate, that he and Ms. Shepherd were not married and that he had children and the provisions of the Devolution of Estates Act [in which the widow of “marital property” is entitled to an intestate’s proceeds], I am not prepared at this time to approve payment of the remaining proceeds to Ms. Shepherd.” The judge allowed the insurer to pay the balance of the proceeds into court, pending a search to find Pell’s children and/or heirs. l

Insured doesn’t know about policy cancellation if registered notification comes back as “unclaimed”: arbitrator An insurance company cannot presume a policyholder knows his or her insurance has been cancelled when a registered letter informing the insured about the cancellation is stamped “unclaimed” by Canada Post, an Ontario arbitrator has found. Marcia Walker was injured in a motor vehicle accident on Aug. 11, 2008. She had purchased a President’s Choice insurance policy, administered through Scottish and York Insurance (owned by Aviva Canada), on May 22, 2008. Walker phoned President’s Choice on Aug. 12, 2008 to report the collision and to make a claim for income replacement and housekeeping and home maintenance benefits. She was then told her policy had been cancelled for non-payment of her premiums. Scottish and York argued Walker was not entitled to the benefits because she knew or ought to have known she was driving without insurance. Walker gave evidence she was touring the United States with her children

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in the Drum Corps Games in the summer of 2008. She was receiving Ontario Disability Support Payments each month, and she said before she left on her U.S. tour in June 2008, she made sure there was enough money in her account to pay her bills. While gone, she entrusted her house to her 20-year-old son. Scottish and York testified that when it attempted to make the first premium withdrawal, the attempt was returned by the bank for insufficient funds. The insurer then prepared a notice to Walker, informing her that her policy would be cancelled as of July 15, 2008 if she didn’t submit the missed payment and insufficient funds charge prior to July 14. Scottish and York sent the notice by registered mail, which was returned to Scottish and York on July 10. Canada Post marked the unregistered mail as “unclaimed.” Walker said she had no knowledge of the registered mail, and that her son had not told her of

any notice. Scottish and York argued, on the other hand, that she had effectively refused to be notified of the cancellation by not claiming her registered mail. The arbitrator concluded the onus was on Scottish and York, not on Walker’s son, to ensure the notice got to Walker. “In light of the fact that Scottish and York provided no proof that Ms. Walker knew or ought to have known that her insurance had been cancelled, I find that Walker had no reason to believe that she was driving without insurance,” Financial Services Commission of Ontario (FSCO) arbitrator Lloyd J.R. Richards wrote. l

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• first notice FN Insurers may want to “try hardest” to settle claims with self-represented litigants: judge Given the additional time, effort and expense required to try cases involving self-represented litigants, insurers might want to give special consideration to settling these cases early, a Nova Scotia judge observed at the Canadian Defence Lawyers 7th Annual Insurance Symposium held in Toronto on Mar. 4. “There’s not always going to be a good experience [in cases involving selfrepresented litigants], no matter what you can do,” said Nova Scotia Supreme Court Trial Division Justice John D. Murphy. “The difficulties that arise can be very hard to predict. There may be a lot of ill will, frustration and expense for your [insurance] client. “We always like to see you in court, but the cases that you may want to try hardest to settle are those where there is a selfrepresented litigant on the other side.” Murphy spoke at the CDL judges’ panel, which included trial judges from B.C., Ontario, Quebec and Nova Scotia. The panel considered a range of civility issues facing the bar, including lawyers filing affidavits on substantive issues on a client’s behalf (which in many cases cancels solicitor-client privilege), assessing costs for unreasonable court conduct and selfrepresented litigants.

Judges on the panel all noted the number of self-represented litigants in Canadian courts is increasing. Ontario Superior Court Justice David Brown noted self-represented litigants are estimated to be involved in 25 per cent of the Ontario’s civil cases, and in a much higher percentage [up to 50 per cent] of family law cases. “We can’t handle that,” Brown said. “The system is not designed to manage that large of a volume of litigation with parties who really don’t know what they are doing.” Litigants may go without representation on a point of principle, or because they cannot afford a lawyer, Murphy observed. One major frustration within the bar may be that while the legal profession’s Rules of Civility apply to trial lawyers, they do not apply to self-represented litigants. “So you may feel the playing field is not level, and in some ways it is not,” Murphy said. “Because an unrepresented litigant is not an officer of the court or bound by professional confidentiality rules, you may want to ask the court to take steps to make an order that materials will not be disclosed outside the process.”

Murphy appealed to counsel to be patient with the courts when dealing with claims involving self-represented litigants. Judges have to spend a lot of time explaining the process to self-represented litigants, as well as making them aware of their procedural rights, Murphy said. He asked defence counsel to remind their [insurance] clients that this does not mean judges are showing favoritism toward or adopting the position of the self-represented litigant. Murphy recommended getting everything in writing from a self-represented litigant. Brown added that courts may wish to consider hybrid trials — featuring a combination of written and oral trial submissions — so that when the oral or written skills of a self-represented litigant falter, they can fall back on a different means to deliver their arguments at trial. Murphy said using humour or sarcasm with self-represented litigants will almost always backfire, and thus shouldn’t be attempted. Also, attempts to characterize or summarize the arguments of self-represented litigants can inflame the passions of self-represented litigants, thus causing the focus of the proceedings to meander, resulting in additional time and expense for the insurer. l

Good faith claims may just ‘distract’ from common law principles that apply to insurance contracts: lawyer An insurer’s duty to act in good faith may not actually mean much beyond the standard common law doctrines that apply to insurance contracts, according to Roderick Winsor of Blaney McMurtry LLP. Winsor is the author of Good Faith in Canadian Insurance Law. He spoke as a panelist at the Canadian Defence Lawyers 7th Annual Insurance Symposium held in Toronto on Mar. 4. Winsor said the insurance defence bar has not really defended good faith claims effectively. In particular, he noted defence counsel have been too quick to defend the merits/demerits of ‘good faith’ actions without first considering whether or not standard contract law principles apply. “There have been a number of cases in Canada when plaintiffs have sued, as6

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serting bad faith claims,” Winsor said. “To me I wonder, why? Is this not simply a breach of the policy that has given rise to the damages? Is it not better analyzed using contractual principles?” Winsor also noticed he had yet to see an insurance policy that included a specific reference to acting in “good faith.” If the insured thought this was such an important principle, then one had to ask why the insured didn’t insist on that being part of the insurance contract in the first place. “More often than not, I think [reference to ‘good faith’] is just rhetoric and laziness on the part of counsel, the rhetoric of plaintiffs, trying to turn a nice, contractual claim into something juicy and so on,” Winsor said. “It really confuses and distracts.”

For example, contract law analyzes the intentions of both parties to a contract [i.e. the insurer and the insured]. As such, the courts — and defence counsel — should not allow ‘good faith’ actions to buttress the legal doctrine that only one party to a contract matters (i.e. “the reasonable expectation of the insured”). Nor should insurance defence counsel necessarily adopt the presumption that insurers always have unequal bargaining power over the insured. Contractual principles already exist to defend those who are disadvantaged in contractual negotiations, Winsor noted. “There are insureds that are far larger, more sophisticated, better funded, better capitalized than some insurers,” he said. “Why would you ever apply good faith obligations on the basis of a perceived inequality of strength and sophistication, which is patently untrue in a significant portion of these commercial insurance [cases]?”l www.claimscanada.ca

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• first notice FN Court voids claims waiver based on power imbalance between adjuster and plaintiff The Ontario Superior Court of Justice has voided a release waiving all claims against a defendant and his insurer in an auto accident claim, based on the fact that the insurance adjuster had used his unequal bargaining power to low ball a settlement agreement with the plaintiff. Specifically, the court noted the adjuster did not share information with the plaintiff about the true extent of the plaintiff’s serious injuries. Also, the adjuster had incorrectly applied Fault Determination Rules, significantly reducing the settlement offer. In Jones v. Jenkins, the plaintiff, Brandon Patrick Jones, was injured in a motor vehicle accident when his motorcycle collided with a vehicle driven by Jack Jenkins. Jenkins wanted the court to enforce a release in which the plaintiff agreed to receive a payment of $19,411 in return for a waiver of any future claims against Jenkins and his insurer, ING Insurance Company of Canada.

The agreement was reached after discussions between the ING insurance adjuster and Jones. The adjuster asked Jones to make a settlement offer based on heads of damages such as disfigurement, pain suffered, future pain and future loss of employment. Jones proposed $241,000. The adjuster made a counter-offer. A deductible of $30,000 was applied to the general damages. Also, based on the adjuster’s assertion that Jones was 75 per cent responsible for the accident, the general damages ($35,000 net of the deductible) and future economic loss ($22,500) were reduced by 75 per cent. The total counter-proposal was $19,411. The court described the plaintiff, who trusted the adjuster, as “unsophisticated” and “not good with words.” Jones feared losing his job after the accident, and so he stated to a person filling out a medical report that he felt he had recovered and could return to work. But the adjuster had access to Jones’ accident benefit file, which indicated

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Subscription inquiries (416) 442-5600 • 1-800-668-2374 (416)Indeépendent 442-2191 Official JournalFax: of the Canadian Adjusters’ Association

www.claimscanada.ca Produced by the publishers of Canadian Underwriter magazine

A bi-monthly magazine (6x per year), Claims Canada is published by BIG Magazines LP, a div. of Glacier BIG Holdings Company Ltd. Business Information Group is located at: 12 Concorde Place Suite 800, Toronto, ON, M3C 4J2. Claims Canada magazine is the Official Publication of the Canadian Independent Adjusters’ Association [CIAA] and through its editorial content and circulation brings together the ‘entire property & casualty insurance claims market nationally’ with information and insight into the profession, business and people of insurance claims and loss adjusting. All key claims process stakeholders are reached as part of our readership community – including: both CIAA member and non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management

Jones had suffered a much more serious injury — severe and acute radial nerve damage — than disclosed in the medical report. The adjuster should have shared this information in the file with the plaintiff, the court noted. Also, the court found: “More troubling is the fact that the adjuster reduced the general damages and future economic loss claim by 75 per cent purportedly on the basis of the plaintiff being 75 per cent responsible for the accident. There is no evidence that this was the case. “There was no reason to apply Fault Determination Rules as they were guidelines which were only applicable as between insurers and not as between a plaintiff and a defendant.” As a result, the court found the adjuster had “used his position of power to achieve an advantage and that the agreement reached was sufficiently divergent from community standards of commercial morality as to be unconscionable and it should be set aside.” l

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Gary White Production Manager (416) 510-6760

and claims adjusting personnel; corporate risk managers and loss control professionals; insurance brokers; insurance law firms; forensic engineers and accountants; appraisal, restoration, rehabilitation and collision repair professionals; Insurance Institute chapters; insurance associations, regulators and related claims market recipients. The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent.

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Message from the President La Plume du Président MARY CHARMAN

Hopefully, with this being the April/May issue, ice scrapers, shovels and snow blowers have been replaced by the first signs of tulips, lawn furniture and barbecues! Your executive is hard at work ensuring your association is representing and protecting your best interests while continuing to raise our profile and differentiate you as a professional member of CIAA. I am pleased to provide the following update. Following CIAA’s strategic planning exercise it became clear that education and professional status were to be key areas of focus for the association. Professional designations are one of the most important services an association can provide its members and stakeholders told us that when engaging the services of an independent adjuster, they would place increased value on an adjuster that has established and proven competence in their particular discipline. CIAA’s existing accreditation program, which includes Fellow of the Canadian Independent Adjusters’ Association (FCIAA) and Chartered Loss Adjuster (CLA), identifies experienced and accomplished loss adjusting professionals in our industry. The current examination program (now FCLA) was developed to depict successful candidates as independent adjuster veterans with outstanding competence, knowledge and skill. Upon approval by the membership at our AGM last August, all holders of the CLA designation are now recognized under the newly created FCLA designation. In keeping with our clearly defined mandate to provide leadership for Canada’s independent adjusters through advocacy, education and recognized professional standards, we are excited with the prospect of adding a third credentialing program, affording CIAA members further opportunity to raise their professional status and respond to the identified need for specific recognition of a highly qualified independent loss adjuster. The frequency and intensity of extreme weather events, as evidenced by the recent devastation in Australia and Japan, are becoming more and more the norm. The term “if ” has been replaced by “when” as disaster losses are now measured in the billions of dollars and continues to rise steadily. CIAA’s National Insurance Industry Advisory Board identified catastrophe pre10 Claims Canada

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J’ai bon espoirqu’à la publication de ce numéro d’avril/mai, les grattoirs, pelles et souffleuses ont été remplacés par les premiers signes de la floraison des tulipes, de l’ameublement de jardin et des barbecues! Vos dirigeants travaillent sans relâche pour que votre association représente et protège au mieux vos intérêts, tout en se préoccupant de rehausser notre profil et de vous distinguer en tant que membres professionnels de l’ACEI. Je me fais un plaisir de vous mettre au courant des récentes mises à jour effectuées. Les séances de planification stratégique de l’ACEI ont clairement indiqué que la formation et le statut professionnel devaient constituer les buts essentiels de notre association. Les appellations professionnelles sont l’un des plus importants services qu’une association peut rendre à ses membres. Les parties prenantes ont affirmé qu’au moment de retenir les services d’un expert indépendant, elles attacheraient une grande importance à celui dont la compétence aura été reconnue et établie dans leur domaine de travail particulier. Le programme actuel d’accréditation de l’ACEI, qui inclut les désignations de «Fellow de l’association canadienne des experts indépendants (FACEI)» et «Expert en sinistres agréé (ESA)», identifie les experts en sinistres professionnels expérimentés et accomplis de notre industrie. Le programme d’examen actuel (maintenant FESA) a été créé pour permettre de qualifier les candidats acceptés d’experts indépendants chevronnés ayant une compétence, des connaissances et un savoir-faire exceptionnels. Lors de notre assemblée générale du mois d’août dernier, tous les détenteurs de la certification ESA ont automatiquement obtenu le nouveau titre de FESA. Conformément au mandat clairement exprimé qui nous a été donné d’établir le leadership des experts indépendants canadiens par l’engagement, la formation et des normes professionnelles standardisées, nous nous réjouissons de la perspective d’ajouter un troisième programme d’accréditation pour rehausser d’un cran le statut professionnel des membres de l’ACEI et répondre à la nécessité absolue de repérer d’emblée les experts en sinistres indépendants hautement qualifiés. Comme le prouve la dévastation récemment subie par l’Australie et le Japon, la fréquence et la gravité des www.claimscanada.ca

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paredness as a “hot” p&c core issue and CIAA is currently developing a strategy to assist insurers’ with a CIAA catastrophe response. The strategy includes, with the support of our key industry stakeholders, achieving an effective common licensing application that supports seamless mobility of adjusters when a disaster occurs which in turn will better support consumer protection and boost the publics’ confidence in the Canadian insurance marketplace. We are pleased to be setting CIAA and its membership apart by working cooperatively with key industry stakeholders toward the development of solutions to common industry issues. Stay tuned for further updates on these initiatives and all the work underway by your national and regional executive members. n

conditions climatiques extrêmes constituent malheureusement actuellement la normale des choses. Le mot ‘si’ a été remplacé par ‘quand’ le prochain désastre surgira et à combien de milliards de dollars se chiffreront les dommages. Selon le Conseil consultatif national de l’industrie de l’assurance de l’ACEI, la capacité de réaction en cas de catastrophes est la question centrale des assurances IARD et l’ACEI planche sur un plan stratégique approprié pour venir en aide aux assureurs. Avec l’appui des principales parties prenantes de l’industrie, cette stratégie comporte une demande d’accréditation commune effective qui facilitera la mobilité des experts en cas de désastres pour que les consommateurs jouissent d’une meilleure protection. Le marché canadien de l’assurance bénéficiera ainsi d’un plus grand prestige auprès du public qui lui fera confiance. Nous sommes heureux de donner à l’ACEI et à ses membres l’occasion de se distinguer en travaillant la main dans la main avec les principales parties prenantes de l’industrie pour apporter des solutions aux problèmes qui nous sont communs. Soyez à l’affût des nouvelles mises à jour sur ces initiatives et sur tous les travaux entrepris par les membres de l’exécutif national et régional. n Translation provided by Henry Arcache, Themis Translations, Montreal, Que.

NATIONAL EXECUTIVE 2010-2011 PRESIDENT Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca

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

1ST VICE-PRESIDENT Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca

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

2ND VICE-PRESIDENT Delores Thorbourne, BA, FCIP McLarens Canada Suite 103 Greystone VII 4208 - 97 Street Edmonton, AB T6E 5Z9 Phone: (780) 442-3077 Fax: (780) 466-0325 E-mail: delores.thorbourne@mclarens.ca

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

EXECUTIVE DIRECTOR Patricia M. Battle Canadian Independent Adjusters’ Association/ L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Avenue West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 E-mail: pbattle@ciaa-adjusters.ca

DIRECTOR David Porter, LL.B., FCIP, CRM Advance Claims Service Ltd. 206 - 2323 Boundary Road Vancouver, BC V5M 4V8 Phone: (604) 642-0660 Fax: 1-888-452-5246 E-mail: davidp@advanceclaims.com

DIRECTOR James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca DIRECTOR John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca

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• cover story

HITTING THE MARK Aiming for Successful SABS & MIG outcomes BY LAURA KUPCIS

Adjusters and health care providers can take steps to ensure claimants receive the required and necessary care, all the while trying to not get caught-up in the ‘he said, she said’ — or more aptly ‘he’s doing, she’s doing.’

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he more things change, the more they stay the same. Slightly more than six months after the rollout of the revamped Statutory Accident Benefits Schedule (SABS), including the implementation of the Minor Injury Guideline (MIG), health care providers have raised concerns about decisions adjusters are making with respect to a claimant’s health. Conversely, adjusters are raising concerns about health care providers’ treatment requests made on behalf of claimants. There may always be a professional divide — and perhaps even a little mistrust — between the two sides. But steps need to be taken to ensure the claimant is receiving the appropriate care in order to return to a preaccident state of health. Furthermore, steps should be taken to reduce the risk of bad faith claims or unnecessary payouts in the event of a tort case. As adjusters work through a claim, they should ask for all the appropriate information before making a decision about the care a claimant needs. This will aid in the reduction of the need for prolonged care and hopefully the risk of a tort claim in future.

Minor Injury Guideline If a claimant falls within the Minor Injury Guideline, the health care provider should be submitting an OCF 23 (Pre-approved Framework Treatment Confirmation Form) to initiate the treatment. If a health care provider believes the claimant falls outside the MIG and requires access to the higher limits, they will submit an OCF 18 (Treatment Form). The OCF 18 must be accompanied by compelling evidence as to why a pre-existing condition would prevent the claimant from reaching maximum recovery if they were subject to the limits under the MIG. Simply sending in an OCF www.claimscanada.ca

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18 with no accompanying compelling evidence is not adequate. Unfortunately, a number of clinics, especially in the Greater Toronto Area, are not processing OCF 23s; everything is being sent to the insurer on an OCF 18, outlining reasons why the claimant should not fall within the MIG, according to Lisa Fazzari, accident benefits claims technical advisor with The Economical Insurance Group. She says this is in direct conflict with the Financial Services Commission of Ontario’s (FSCO) bulletin, Superintendent’s Guideline No. 02/10, which states: “most persons injured in car accidents in Ontario sustain minor injuries for which the goods and services provided under this Guideline are appropriate.” The Guideline goes on to say: “The existence of any pre-existing condition will not automatically exclude a person’s impairment from this Guideline. It is intended and expected that the vast majority of preexisting conditions will not do so. “Only in extremely limited instances where compelling evidence provided by a health practitioner satisfactorily demonstrates that a preexisting condition will prevent a person from achieving maximal recovery from the minor injury for the reasons described above is the person’s impairment to be determined not to come within this Guideline.” According to Fazzari, FSCO’s expectation was that 65 per cent of all claims would fall under the MIG. “When we hear that, from our standpoint, that’s what we expect to come in through the door and it’s not,” Fazzari says. On the other hand, an adjuster cannot simply deny a claim because he or she feels it should fall within the MIG, Fazzari points out. It is up to a medical assessor to determine what the injury is and whether the preexisting condition is such that the

MIG is inappropriate. “Our adjusters do not make the medical decisions, they make the benefit administration decisions,” she says. “They have a right under the regulation to go to an insurer examination to determine what’s reasonable and necessary based on the information provided . . . . And once they get that subsequent information, that’s when they make the benefit determination.” When the OCF 18 comes through the door, the adjuster’s role is to review the diagnosis and whether the evidence is compelling enough to warrant the claimant with a pre-existing condition being bounced out of the MIG. This is when gathering information is critical to making a decision with respect to the administration of benefits. “Certainly the adjuster is not a medical assessor,” said Kelly Stevens, chair of the educational committee for the Canadian Independent Adjusters’ Association Ontario Region. “When a benefit is denied, the adjuster has to give all medical and non-medical reasons why a benefit is denied. It is very important that whenever you deny entitlement, or deny goods or services, you give careful consideration to all medical and non-medical reasons.” “Adjusters have to be really cautious — especially through the independent [adjuster] network in Ontario, where we are acting on behalf of our clients — about not appearing to render a pseudo-medical opinion in the denial,” Stevens adds.

Adjuster decisions Ensuring the file is complete is critical. The adjuster must help the claimant receive required and adequate care and treatment. He or she must also ensure adjusters and insurers are not being accused of acting in bad faith. The health care community is concerned about decisions some adApril/May 2011

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justers are making after receiving an OCF 18. Undertaking research for an article, Teresa Riverso, president of Supportive Environments, contacted rehabilitation associations throughout Ontario to ask them what common issues they faced as a result of the province’s auto insurance reforms. Associations told her some adjusters were denying OCF 18s on the grounds of the treatment not being necessary. “They didn’t think that the diagnosis deemed the assessment of the treatment that was being planned,” Riverso said. “That’s really concerning, because obviously they are making medical decisions without knowing the client, not having med/rehab training and not knowing what kind of diagnosis requires what in terms of assessment and rehab. “Perhaps they are not really cognizant of the fact that they are making a medical judgment. I think in some cases it could be an internal policy. Perhaps they are being told that certain diagnoses are to be automatically denied, or that certain diagnoses don’t require treatment, and as such they are to deny the OCF 18 without consideration given to individual circumstances, such as pre-existing medical conditions. There is a lack of communication between adjusters and providers and, as such, adjusters are making decisions in a vacuum; decisions for which they do not have med/rehab training. This raises all kinds of ethical and legal questions..” Adjusters are hesitant to agree with this statement. They way they see it, they are following the requirements under the SABS to gather appropriate documentation. And thus, if they do ultimately reject a treatment plan, they will have the medical evidence to back up their judgment call related to the administration of benefits. “We are absolutely not allowed to reject a treatment plan without medical documentation indicating it is not necessary,” says Lori Ryther, president of Claridge Insurance Adjusters Inc. Kadey B.J. Schultz, partner with Hughes Amys LLP, says she has not seen denials without medical information. Sometimes when adjusters deny claims, the decisions reflect a 14 Claims Canada

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lack of information from health care providers that would support the belief a claimant has suffered more than just a predominantly minor injury, she points out. Some insurers, when they receive the treatment request, send the file straight to a paper assessment. As a result, the medical records on which the denial is based might be restricted to the submitted treatment plan. Insurers could also call for an in person insurer’s examination (IE). Based on the results of the IE, the claimant will either be kept within the MIG or be bounced out.

The adjuster must help the claimant receive required and adequate care and treatment. He or she must also ensure adjusters and insurers are not being accused of acting in bad faith. In other instances, an insurer might deny an OCF 18 based on the medical information in the file and comments within the OCF 18 that do not support exemption from the MIG limits. If this happens, the claimant is entitled to treatment under the MIG until such a time when medical information shows the MIG does not apply, or a second OCF 18 is submitted. By this time, most insurers have arranged for

an IE, if it wasn’t completed initially, Schultz says. When it comes to a psychological issues being raised, most insurers are arranging for in person IEs right away. “I’m not seeing any insurers not doing anything and just leaving them in the MIG,” Schultz says. “What should be happening is the treatment providers should send in an OCF 23 to initiate the MIG process. And if they still need more treatment after the MIG process has been completed, then they would explain why they would fall out of the MIG.” But it doesn’t seem to be going that way. “There has not been a shift at all in terms of these rehab facilities of concern,” she points out. “They aren’t claiming that their clients fall within the MIG. They are submitting OCF 18s instead of OCF 23s and they are just pounding the insurers with OCF 18s — whether it’s for assessments or for treatments, they are still doing it.” The reality is, the determination an adjuster makes relates to policy coverage and affordability of the payment, says Laurie Walker director of Ontario auto accident benefits with McLarens Canada. “There has to be some understanding on the part of the adjuster, and it’s based on the information that they have been provided with,” Walker says. “It [comes] from the person who is assessing that injured party and if they have been clear in the goals that treatment plan is to achieve.”

Pre-existing medical conditions Riverso says she has heard health care providers are providing information about pre-existing medical conditions, as well as the required medical documentation, and yet adjusters are still coming back saying they are not in agreement with the diagnosis and recommended treatment. “They are providing compelling evidence and they are still being denied, so that the person, once they are finished with the MIG, do not get any other kind of ongoing treatment.” Adjusters, however, say they are not always seeing compelling evidence www.claimscanada.ca

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come through the door. “I believe that the intent of that wording (in the SABS) was additional medical documentation outside of that treatment plan,” Ryther says. “The compelling evidence isn’t the OCF 18. The compelling evidence is the accompanying documentation indicating there is a problem here that would take them out of the MIG. I beg of these health care providers to provide me with whatever documentation they may have in their file, other than a phone call from a lawyer, that makes them think this assessment in needed.” Ideally, for many adjusters, compelling evidence would come from a family doctor — or a health care provider — who has seen the claimant prior to the accident. Someone who knows the claimant well. “I don’t believe the compelling evidence should be from the treatment provider,” Ryther says. “I believe it should be a separate letter from a family doctor. That’s what [happened] in the past: You would get these treatment plans with these diagnoses, none of which were in any of the documentation that preceded it. We’re not saying their diagnosis is wrong, but there is no other supporting evidence. They are saying ‘compelling’ evidence. Well, if that the only compelling evidence is your assessment, no, it’s not going to work.” Ryther added she has seen occasions when a treatment plan comes in, and a specialist has made an assessment that appears to be outside his or her area of expertise — a chiropractor diagnosing a psychological injury, for example. “That, to me, isn’t compelling evidence,” because the proper testing hasn’t been done — an intake interview, for instance,” she says. Some adjusters have suggested a claim should be initiated under the MIG to ensure the claimant is able to start recover and treatment immediately. From there, further review can be done — perhaps by way of an IE or after re-submission of an OCF 18 — to determine if the claimant requires more care or if there is an actual diagnosis there. 16 Claims Canada

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“Adjusters have to make decisions based on medical evidence, and so we acknowledge that adjusters aren’t always equipped to do that. That’s why we’ve gone to that team approach of [referring matters to] the medical people within that team.” Psychological symptoms/ diagnoses Since Ontario’s auto insurance reforms were implemented on Sept. 1, 2010, adjusters report seeing more frequent diagnoses of psychological and psychosocial impairments. “There is a significant increase, and it is occurring at the onset of a claim as opposed to prior to September, when it was somewhat mid-stream to the claim,” Walker says. She submits the psychological and psychosocial claims are coming in earlier because there are differing opinions on whether the minor injury guideline includes psychological impairment. “Psychological symptoms are being listed on the request for treatment — sleeplessness, anxiety, fear of driving, tearfulness,” Walker observes.

“Those are symptoms. That is not a diagnosis. The minor injury guidelines, as issued in the bulletins by FSCO, clearly state the minor injury treatment protocols offer treatment for psychosocial issues, so for symptoms.” Tammie Norn, president of ProFormance Adjusting Solutions, says she will receive a first OCF 18 with eight psychological impairments listed on the form. “That’s no longer ‘minor’ as defined by the guideline,” Norn says. “But at that point, we’re not medical experts; we’re not going to make that decision just based on that form. It’s not a predominantly minor impairment because of all these psych issues, so let’s go have this assessed by way if an IE.” Early diagnoses of post traumatic stress disorder (PTSD) are also being www.claimscanada.ca

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submitted, even though PTSD cannot be diagnosed for at least three to six months, Walker says. “We’re getting it very shortly after the motor vehicle accident,” she says. “And we question whether that is an effort simply to pull someone out of the minor injury guideline, to access a higher level of benefits.” Others have not seen a huge influx in psychological claims as anticipated. “There are certainly instances where that is there, so we are trying to address that through the independent examination route to get a baseline and to have a review of whether or not that does necessitate some different management of the claim,” says Lynn Anderson, vice president of health care services at Aviva Canada. “But by and large, we haven’t seen a huge . . . influx of those kinds of conditions.”

Asking for more information A key to handling and adjusting these OCF 18s, is to request more information from the health care provider straightaway. Sometimes, it’s a matter of simply making a phone call to let the practitioner know the OCF 23 is available for MIG claims. Riverso says she has never been asked for more information after submitting an OCF 18. It’s usually a straight denial. She says she has heard the same from other health care providers to whom she has spoken: the claim is denied with no explanation as to why even if the adjuster is called. Norn says her firm always calls the clinic first to hear out a situation. In fact, they have had some success in getting a clinic to resubmit a request under an OCF 23. Sometimes an OCF 18 is submitted that does not indicate pre-existing conditions at all. But because they don’t want the claimant to be limited to $3,500, they will check off ‘no’ under minor injury. At this point, if a call to the clinic yields no or limited result, Norn says adjusters will go to paper review to ensure nothing is being missed. “We are asking for the right disciplines to be doing a review of that, www.claimscanada.ca

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then examination, to ensure that’s actually the accurate and correct diagnosis,” Anderson says. If an adjuster has the proper information and requests what is needed to make a determination, then he or she is in a good spot to decide confidently whether they fall in or out of the MIG, says Debbie Laxton, national client service manager of accident benefits at Crawford & Company (Canada) Inc.

Request for IE/further information An opportunity exists to go to an IE as a means to determine whether or not the requested treatment is required. There is some debate about how frequently this is being used. Prior to the auto reforms, Riverso says she used to receive more requests for IEs. Since September 2010, occupational therapists have noticed a decline in referrals for IEs. “I don’t

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think adjusters are using them as much as they did before,” Riverso says. “What also seems to be happening is they don’t necessarily go along with the recommendations being made in the IEs if a claimant does require intervention. Then you ask the question, ‘Well why did we bother? What’s the point of doing an IE if you are not going to abide by the recommendations being made by your own therapist’?” An adjuster is not qualified to make a decision about what constitutes a pre-existing condition and what doesn’t. Therefore, they will look to an in-person IE to have the person physically assessed. According to Norn, as soon as the claims are submitted, adjusters are asking for pre-accident notes and records, hospital records, ambulance call reports, etc. “That’s a key tool to be able to use that,” Laxton says. An IE is not a requirement in a denial. However, since adjusters are not medical doctors, they need documentation to be able to support a denial. Adjusters need to be able to make a decision confidently and if they can’t, then they use the IE. “That’s a tool and that’s something that will support our position in the long run,” Laxton says. “You have not just the decision that the adjuster made, without any good supportive documentation or reasons behind it, but you do have the insurers examination to support you. Either way, if you are going to approve or deny. I think that’s a key tool.” Sources say adjusters should be requesting further information, including: • medical documents from all health care and treatment providers; • clinical notes and records of any health care provider the claimant has seen before and accident the accident; • pharmacy records; • decoded OHIP summary/OHIP records to determine health care providers the claimant has seen; • educational records; • employment records; • hospital records; • walk-in clinic records; 18 Claims Canada

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• test results; • x-ray reports; • pre-accident history; • treatment provider records; and • transcriptions; Other steps an adjuster should be taking include: • gathering as much information as possible; • reviewing the documentation as it comes in; • willingness to reverse a decision if compelling evidence comes in; • more internal supervisory touches

In the end, it will be years before the courts give some guidance as to whether adjusters, insurance companies and health care providers are proceeding as they should post-reforms. on the file to assist and ensure adjusters are handling them per the protocols; • detailed statement-taking; • following-up with appropriate questions; • statutory declaration; and • examination under oath Meet with the claimant and find out what is going on, Schultz recommends. “Many OCF 18s that come across my desk talk about symptoms,” she says. “When you meet

with the claimant, they tell you they have never had that symptom. This is why you have to investigate; why you have to meet with the claimant; why you have to ask them questions about what their symptoms are.” Schultz recommends asking them what they are experiencing. “Ask them frankly about the actual treatment they are receiving, detailed questions.” Some independent adjusting firms have a health care department internally. This department should be used to provide medical expertise on a file. “Adjusters have to make decisions based on medical evidence, and so we acknowledge that adjusters aren’t always equipped to do that. That’s why we’ve gone to that team approach of [referring matters to] the medical people within that team,” says Heather Matthews, vice president of health care management at Crawford & Company (Canada) Inc. “Those medical people are not doing anything from an adjudicative standpoint. They are simply there as medical expertise . . . It’s basically, ‘Here is our expert opinion on that treatment plan or the clinical notes.”

Arbitration/mediation In the end, it will be years before the courts give some guidance as to whether adjusters, insurance companies and health care providers are proceeding as they should post-reforms. “Right now, we are essentially in a two-year holding pattern,” Schultz says. “Every insurer is doing their best to figure out what the MIG and what the minor injury definition actually means; what ‘medical reason’ actually means; and how they are supposed to approach these initial OCF 18s that are coming in when it would appear, from all of the information on the file, that the person should fall under the minor injury definition. We are not going to know if we are doing it right, if anyone is doing it right, probably until the spring of 2013, when the first decisions will start to come out, particularly given the enormous backlog (mediation and arbitration) at FSCO.” This leaves a huge uncapped exposure for the insurance companies.  www.claimscanada.ca

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Consistent Commitment At Claridge Insurance Adjusters, all files are handled with the same dedication, commitment and care, no matter how small or large the claim might seem BY LAURA KUPCIS

fter spending 17 years adjusting accident benefits claims — and enjoying the small independent atmosphere — Lori Ryther set out on her own. She launched Claridge Insurance Adjusters on Feb. 14, 2008 filling a void in the accident benefits world in Barrie, Ont. “It was tough being an independent unit in a property office,” L. Ryther says of her time at H.R. Leiher Insurance Adjusters Inc. “I saw a real need for specialized auto adjusters — for accident benefits and bodily injury — in this area. There are not a lot of people doing it up here — that was my main motivation. It wasn’t actually to start a business.” In fact, on most days, L. Ryther says she still feels like an adjuster, not a business owner, thanks mostly to her business partner, and husband, Craig Ryther who has handled much of the business end of things.

Stepping in to help C. Ryther used his 17 years of business experience to help start up the business and keep it running smoothly, all the while working towards his Chartered Insurance Professional (CIP) designation — a designation he earned in two years. “I’ve always had 20 Claims Canada

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a keen interest in insurance, since the May 1985 tornado in Barrie,” he says. “It seemed like a good opportunity and it coincided with Lori opening the business. I came over to see if I could help, which got us over the immediate need to hire someone in the office.” That ended up being a huge blessing considering L. Ryther started the process to open her business around the New Year and six weeks later was up and running — all while still handling claims for H.R. Leiher. “It ended up being an absolute gift that we were able to do this together and that he was able to progress so quickly in his courses and that he had a knack for it,”

L. Ryther says. “I’m extremely detailoriented and for him to come into that environment, it had to be extremely stressful for him, as well. He was able to do all the behind-the-scenes stuff, getting everything that we needed in place, while I handled the files.” There are two other staff also on board: Vandie Teskey, a “Godsend” who has been with the company since the beginning, working part-time when the need arises, especially to cover the odd day when both Rythers need to be out of the office, and Krystine Wolochatiuk started in April, full-time. Wolochatiuk will be working at the firm while completing both her BA and her CIP. www.claimscanada.ca

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Claims handling The claims handled at Claridge Adjusters are not typical — they tend to have some atypical circumstances surrounding them. These could be coverage issues, pre-accident injuries, catastrophic claims or anything that causes a red flag on a file. They also cover a wide territory — the shoreline of Georgian Bay all the way up to Tobermory. These “everything but the cookie-cutter claims,” combined with the wide territory, means all hands on deck at Claridge to ensure top-notch claims handling. And if Claridge doesn’t have enough hands, or the claim is too far out of their territory, they will look to the Canadian Independent Adjusters’ Association’s (CIAA) National Claims Manual to find another reputable independent adjusting firm able to handle the claim. They have looked at opening up satellite offices or having a reciprocal arrangement with other small independents in Toronto, but, unfortunately, have not had the time or manpower to pursue it further. But they keep all their options open, C. Ryther says. “We definitely have good relations with other independents,” L. Ryther adds. Works well with others The firm also has excellent relationships with other industry personnel, in part because they work in a smaller town, but mostly because the firm takes every single claim seriously and handles every file with the same attention — no matter how big or how small. You never know where a claim can take you, L. Ryther says. “Lori has been consistent over the last 20 years in doing things exactly the same way time in and time out,” C. Ryther says. “And no matter how crazy it might drive me, I get it now; I get why it’s important.” “Consistency is definitely one of the strengths,” L. Ryther adds. “I have had examiners who have followed me through the years, and they haven’t really cared one iota who holds the license. They know that when they call me, no matter how busy we happen to be, that a claim will get the immediate attention that it needs. The claim www.claimscanada.ca

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will not get sat on, it will get addressed because I really believe that the initial handling is the most crucial part of any claim.” The advantage of being such a small office is that things don’t get shoved under another file, she points out. Every person in the office has an equal interest in every file to ensure that even if the main point of contact is out of the office or unable to answer a question, the client doesn’t have to wait, because someone else can step in and take the lead. “It’s about going the extra mile,” L. Ryther says, “It’s dropping everything to attend to whatever task needs to be done for that insurer.”

Claims is a very human business; throughout the whole claims chain, it’s a matter of human connections and human relationships which can affect just how smoothly the process goes. This dedication is reflected in their mission statement: The Claridge Insurance Adjusters team will provide quality service with honesty and integrity. We will pay exceptional attention to detail and accurate reporting. Our goal is to provide timely and consistent service in a cost efficient matter while reflecting each of our clients’ own unique needs. This means tailoring the claims handling process to the needs of the client. “Whatever their unique needs are, we match,” C. Ryther says. “If they want it emailed, we email, if they want a paper file, we do that, if they want computers involved, we do that. Whatever they request, we accommodate.” “I know that this one insurer needs this done or that done,” L. Ryther adds. “And within that company is the examiner who has their own preferences.”

The claim is fine-tailored for not only the company, but the person handling the file.

Consistency is key “There are some insurers that we work for, that have dealt with us long enough and they hand us the claim; they know it’s going to be handled correctly and they know that the things that need to be addressed are going to be addressed, and they don’t worry about it,” L. Ryther says. “They know we are going to consistently handle each claim and each file the same way,” C. Ryther adds. “Consistent in that every time I settle a claim on a full and final settlement basis, I do it the same way,” L. Ryther points out. “If I was ever to be brought to task on that, I would be able to say I know I did it this way, because I’ve done it this way for the past 20 years.” Just as important, is to love the job. While accident benefits has, stereotypically, a huge burnout rate, L. Ryther loves it and has always loved it, in spite of the stress. “For whatever reason, the SABS make sense to me,” she says. “I can sit and flip that thing and find sections when someone tells me something. I love the nitty-grittiness of it all.” There’s also the personal relations that small independents are able to make with their clients that the Rythers hold dear. Claims is a very human business; throughout the whole claims chain, it’s a matter of human connections and human relationships which can affect just how smoothly the process goes, C. Ryther says. “There’s a lot of interconnections going on there, so it’s how you manage those connections that matters,” he adds. And part of those interconnections, is being a member of the CIAA. Being a member provides the firm with information, support, E&O insurance benefit plans, helping adjusters stay on top of licensing and other regulations, connecting independents across the country, among other benefits. “I feel it is a privilege to be a member of the CIAA and I can’t imagine why any independent would not want to,” L. Ryther says.  April/May 2011

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Mitigation Strategies A panel of industry personnel discusses their issues around settlement and mitigation BY LAURA KUPCIS

nsurers need to evaluate cases properly and send adjusters to mediation with proper authority, said Alf Kwinter, partner with Singer Kwinter LLP, said. Adjusters do not come out with enough authority when settling a claim in mediation, he said, while speaking at the Canadian Insurance Claims Managers’ Association/Canadian Independent Adjusters’ Association Ontario Chapters’ 44th Annual Joint Conference in Toronto on Feb. 8. This is why mediations fail. “We find all too often that there isn’t a proper evaluation of these cases,” he went on to say. “I’m amazed at how few insurers take the advantage to settle claims early and where decisions are taken which really don’t make sense or claims aren’t properly evaluated. You really do, in so many cases, miss an opportunity to settle cases early.” Insurers always take their best-case scenario and negotiate on that basis. “As plaintiff counsel we know when to discount, we know when to bail and we know when a case has weakness,” he stated. “Insurers, in my experience, don’t seem to appreciate when cases have strengths that they don’t allow for. We discount for weaknesses, you should allow for strengths.” Early and proper evaluation of a case, in addition to property authority of a case, will settle it at a much earlier stage, he pointed out. “Once you’ve got your investigation done, take a proactive, realistic view of the case,” Craig Walker, director at Maltman Group International, added during the panel seminar. If you have blinders on and are not looking at all the possibilities, then there will not be a proper evaluation of the loss, the strategies and where files should be reserved, he cautioned. “An unrealistic view is no good to anybody, your client in particular, and you get into situations . . . where if it 22 Claims Canada

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gets to mediation and you have not done a realistic evaluation you are going nowhere fast,” he said. Insurers are in the compensation business, said Harvey Klein, partner with Benson Percival Brown LLP. “It’s in our interests to look at cases realistically and it’s in our interest to pay them quickly, reasonably, for an appropriate amount of money and before it comes to me.” Klein disagrees with Kwinter that insurers do not look at things appropriately. “Once an adjuster does his job and once we’re in a position to assess the risk, which is what we do, I think insurers try to settle these cases quickly. I think they try to do it fairly and once the case comes to me, if the risk isn’t assessed properly, obviously we have the production and discovery process.” He goes on to note that most plaintiff lawyers are not going to negotiate until mediation and, in his view, it’s because experience tells them they will get a better result after mediation than they will if they negotiate with a lawyer without the adjuster. “It’s becoming incredibly expensive to got to mediation now,” said Johanne Deloges, senior manager of the litigation unit at Aviva Canada. “Paying mediators to go back and forth between rooms is simply not effective.” There are cases where a particularly difficult claim needs to be heard by an independent party, but, in most instances, there is no reason that the two sides can’t sit down and talk. “Pick up the phone and call plaintiff counsel and try to resolve the case early. Why do we need to go and spend money for a mediation?” A key aspect to this, is getting information from plaintiff ’s counsel early. Sometimes, on the eve of mediation, plaintiff counsel will provide the adjuster or defense with new expert reports, leaving less than 24 hours to evaluate, consult with defense experts or review it with the client, Walker said.

“If you are blind-sided in the last 24 hours before a mediation with several expert reports or changes to an expert opinion without proper time to evaluate, then how can you get back to what the initial concept is, which is a realistic evaluation of the case, to decide how best to run with it?” Walker asked. Every case has an opportunity to settle and a time to settle, Klein said. Mediation is just the settlement meeting — one opportunity to settle a case. However, if information is handed to the defense lawyer at the last minute so there is no time to pass it over to the adjuster or defense to analyze the information, the mediation is going to fail. “I’m happy to tell (plaintiff counsel), ‘You’ve given the stuff to me at the last minute, we are here, we are not in a position to deal with it, you’ve lost your opportunity to mediate with us, now get ready for trial or we will come back and settle another time’,” he adds. If the insurer received the reports well in advance, they would be more than willing to sit down and try to resolve the case. However, Deloges notes there seems to be a reluctance from the plaintiff ’s bar to provide information and reports before the claim goes to litigation. Typically, the information does not come through until defense counsel has been retained, with the reasoning being that plaintiff ’s get a better deal with defense counsel is on the file,” she notes. “What that tells me is that either we are not properly evaluating case reports or our liability assessment is too optimistic.” Alternatively, she goes on to add, the insurer is not making the extra effort: Call the plaintiff counsel and schedule an appointment to discuss. “With mediation now, insurers are too quick to settle cases at mediation,” Klein said. “There is a short-term agenda with settling cases expeditiously. There is also a long-term agenda of making sure you settle cases properly.”  www.claimscanada.ca

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• on the scene OTS The CICMA/CIAA Ontario Chapters’ 44th Annual Joint Conference, Litigation, Mitigation and Strategies In Between, was held on Feb. 8, 2011 at the Metro Toronto Convention Centre. The panel of speakers included Harvey Klein – Benson Percival Brown LLP; Alf Kwinter – Singer Kwinter LLP; Johanne Deloges, Aviva Canada; Craig Walker, Maltman Group International; Moderator – Sandra Corbett – Parlee McLaws LLP. The luncheon speaker was Maureen Holloway, Canadian radio personality, entertainer and comedian. l

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Workers’ Compensation Interaction with Liability Claims BY HENRY J. MURPHY

Workers’ compensation — a system of social insurance that has evolved over the last few decades — is sometimes said to be the first no-fault insurance system in this country. Various workers’ compensation systems were passed at various times between 1913 to 1950, designed to protect the employer from being sued for work conditions. Workers’ compensation is subject to the requirements set out in the Workers’ Compensation Act. It is, generally, mandatory. It is critical when handling a claim, to determine early whether or not it falls within the framework of workers compensation. There are questions that need to be answered immediately: • Was the worker in the course of employment at the time of the incident • Is the employer registered or required to be registered under the applicable Workers’ Compensation Act • Was the person who caused injury to the worker, if applicable, also in the course of employment at the time. A detailed statement is required in order to identify all of the issues necessary and determine whether you have a bar to the claim. The statement must include not only the facts of the accident, but also historical information on the claimant, including where they work; when they last worked; where they had been for the preceding 12 to 24 hours; when were they working next; and what 26 Claims Canada

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brought them to the location where the accident occurred. The same detail that goes into describing what was done by the claimant immediately prior to the accident occurring should go into a history of his employment in order to determine whether, at the material time, he was in the course of employment. In order to fund the system, the various workers compensation acts require the registration of employers who have at least three full-time employees under the system throughout the year. As an example, see the New Brunswick Regulation 82-79 under the Workers’ Compensation Act, s.3(1). New Brunswick has even gone one step further than many other jurisdictions in bringing a situation under the Workers’ Compensation Act even if a particular employer was not registered as an employer under the Act at the time of an industrial accident. Section 70 of the Workers’ Compensation Act, R.S.N.B. 1973, c. W-13 has been used successfully to find that socalled independent workers, such as taxi drivers and couriers, are covered by workers’ compensation. This included a situation where the employer attempted to argue that couriers were

independent contractors and therefore should not have to pay workers’ compensation premiums. The courts of New Brunswick, as well as the Workers’ Compensation Board, found that as a result of Section 70 of the Workers’ Compensation Act they have it in their power to assess these types independent contractors under the Act and therefore they would become covered by the Workers’ Compensation Act: Joey’s Delivery v. WHSCC. New Brunswick Regulation 8279 under the Workers’ Compensation Act provides that the fishing industry is excluded from the scope of the Workers’ Compensation Act “except for undertakings in which 25 or more workers are at the same time usually employed” [s.3(2)]. In other words, people working on fishing boats would generally be excluded, but workers in a fish processing plant where there were at least 25 or more workers employed would be covered. In order to be covered by workers’ compensation, the worker must have been injured while “in the course of employment.” There is a presumption that where an injury was caused by an accident that arose out of the employment of a worker it is presumed to have www.claimscanada.ca

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occurred in the course of the employment. There are many injuries that take place in the “grey area,” where it is questionable as to whether or not the employee was in the course of employment at the time and therefore should be covered. When an application is brought to apply the civil litigation bar to a particular fact situation, there are a number of variables that are considered in deciding that issue. Some of those variables include: • Whether the injury occurred on the premises of the employer; • Whether it occurred in the process ARS_ExperCount_large1.pdf 1 25/11/10 10:32 AM of doing something for the benefit of the employer; • Whether it occurred in the course of action taken in response to instructions from the employer; • Whether it occurred in the course of using equipment or materials supplied by the employer; • Whether it occurred in the course of receiving payment or other consideration from the employer; • Whether the risk to which the worker

was exposed was the same as the risk to which he is exposed in the normal course of production; • Whether the injury occurred during a time period for which the worker was being paid; • Whether the injury was caused by some activity of the employer or of a fellow worker.1 There is never a question about coverage in the course of one’s employment when the accident takes place on the shop floor or while carrying out the clearly defined duties of ones employment. However, the wealth of cases take place in those grey areas which are not quite so clearly defined as being within the work environment. For instance, a number of cases take place during the course of going to or leaving work and in many instances a question may arise as to where is the workplace located. For a travelling salesman the workplace is different than someone who works in an office in downtown Moncton. Where travel is part of a job function, an injury re-

sulting from the travel is obviously one resulting from the person’s employment. Situations can arise, however, where a travelling salesman or other employee is injured while at a hotel in another city. It doesn’t need to occur during business hours and can happen late at night when the employee is watching TV, leans back too far in a chair and falls to the floor of the hotel room injuring himself. In such a situation, one would argue that he would not be in that hotel room if not for his employment and the risks that he was exposed to were not out of the normal course of events that one would find for such an employee. In that particular case, not only would the employee be covered by workers’ compensation, but if he considered suing the hotel, and that hotel was a registered employer under the Workers’ Compensation Act, then any claim would be barred as against that employer. We have had situations where an employee will be on a refreshment break and the question arises as to

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whether or not they are covered under workers’ compensation. If the injury occurs during a coffee break or a refreshment break it is generally one that would be covered under workers’ compensation if it occurs at the premises of employment. This would include for instance the cafeteria or lunchroom of a particular business. Similarly, if the break is taken in the course of travel for an employment purpose, then generally speaking you would be covered if you were insured as you drove through, for example, the Tim Horton’s drive-thru. However, if the worker is at a fixed place of employment and elects to leave his place of employment during that break to get a coffee at the Tim Horton’s next door, then since the injury takes place off of the premises it will generally not be one where workers’ compensation would cover the situation. In relation to company cars and their use the following general rules have application: • If the car is being used for travel in the ordinary course of work, the injury is obviously compensable. • If the car is provided for business use only and the injury occurs while commuting to or from work, the injury is compensable. • If the car is provided as a fringe benefit for the personal and business use of the worker and the injury occurs while commuting to or from work, there are different views. The injury is compensable in Manitoba, but not in British Columbia or Alberta. • If the injury occurs while the car is being used for purely personal purposes, it is not compensable. • If the injury occurs while taking the company car to a dealership for service, it is compensable, and it makes no difference if the journey is undertaken outside of normal working hours.2 In New Brunswick, it is Sections 10 and 11(1) of the Workers’ Compensation Act, which take away the cause of action of an injured worker. The issue which the Board must determine is whether the plaintiff’s right to sue is taken away by the provisions of Section 11(1) of the Workers’ Compensation Act. 28 Claims Canada

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Section 11(1) reads as follows: “In any case within section 10, no employer and no worker of an employer within the scope of this Part or dependent of that worker shall have a right of action against any employer within the scope of this Part or against any worker of that employer, where the workers of both employers were in the course of their employment at the time of the accident, but in any case where it appears to the satisfaction of the Commission that a worker of an employer in any class was injured or killed owing to the negligence of an employer or the worker of an employer in another

If the injury occurs during a coffee break or a refreshment break it is generally one that would be covered under workers’ compensation if it occurs at the premises of employment. class, the Commission may direct that the compensation awarded in that case shall be charged against the class to which the last mentioned employer belongs.” Section 10 and 11(1) of the Act clearly prohibit the right of a fellow worker to sue for personal injury by accident, which “arises out of or in the course of employment.” The meaning of this phrase is a question of fact and law. It is to be determined by reference to the circumstances of the plaintiff’s employment and the facts existing at the time of the accident. It is also a question of law to be determined after consideration of the various tests and jurisprudence that have developed in relation to the interpretation of the phrase arising out of or in the course of employment.”

In a non-motor vehicle accident situation, as long as both workers are in the course of their employment at the time the claimant was injured, then the Workers Compensation Act would bar the claim against the tortfeasor worker and tortfeasor employer. The Workers Compensation Act of New Brunswick has a special provision applicable to motor vehicle accidents. Section 11(1.1) has been interpreted in conjunction with the other enabling legislation to mean that if two workers are not employed by the same employer, then this section would apply to restrict the workers compensation bar if the injured worker is injured while being transported in a motor vehicle where PLPD insurance would be required or as a result of an accident involving the use of a motor vehicle. However, it has been interpreted such that if both the injured worker and the tortfeasor worker are both workers of the same employer and in the course of their employment at the time then the bar does apply. Where a civil action is not barred, then the worker may elect in New Brunswick to pursue the remedy in damages against the tortfeasors, i.e. person responsible for the damages, or to claim compensation: Workers’ Compensation Act, R.S.N.B., 1973, c. W-13, s.10(1). You should keep an open mind as to what other claims might be barred pursuant to the Workers’ Compensation Act against an insured employer or employee. When a former employee sues for wrongful dismissal and includes a claim for harassment, sexual or otherwise, assault or battery, is it possible that parts of the claim being made constitute an injury? If that is the case could not an application be brought to the Workers’ Compensation Board to bar that portion of the claim and its ensuing damages?  Henry Murphy is a senior partner at Murphy Collette Murphy in Moncton, N.B. 1. Workers’ Compensation in Canada, Second Edition, Terence G. Ison at page 26 2. Workers’ Compensation in Canada, Second Edition, Terence G. Ison at pages 31, 32 www.claimscanada.ca

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National Standing Committees 2010-2011 ADVISORY Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca Delores Thorbourne, BA, FCIP McLarens Canada Suite 103 Greystone VII 4208 - 97 Street Edmonton, AB T6E 5Z9 Phone: (780) 442-3077 Fax: (780) 466-0325 E-mail: delores.thorbourne@mclarens.ca Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 - 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca 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 David Porter, LL.B., FCIP, CRM Advance Claims Service Ltd. 206 - 2323 Boundary Road Vancouver, BC V5M 4V8 Phone: (604) 642-0660 Fax: 1-888-452-5246 E-mail: davidp@advanceclaims.com CAREER RECRUITMENT PLANNING Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3 P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail: Richard@azclaims.ca COMMUNICATIONS Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Avenue, Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com Paul Hancock, B.Sc., CIP Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: Paul.Hancock@crawco.ca CONSTITUTION & RULES John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca CONVENTION Marie Gallagher, FCIP, CRM McLarens Canada 71 King Street Suite 204 St. Catharines, ON L2R 3H7 Phone (905) 984-8282 Fax (905) 984-8290 E-mail: marie.gallagher@mclarens.ca DESIGNATION Paul Hancock, B.Sc., CIP Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: Paul.Hancock@crawco.ca

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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 Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Avenue, Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com John L. Taylor, BBA, FCIP, CLA Ontario Mutual Insurance Association 350 Pinebush Road, PO Box 3187 Cambridge, ON N3H 4S6 Phone: (519) 622-9220 Fax: (519) 622-9227 E-mail: jtaylor@omia.com DISCIPLINE Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia St. Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com EDITORIAL Fred Silvestri, BA, CIP NCRS 6725 Airport Road, Suite 300 Mississauga, ON L4V 1V2 Phone: (905) 293-7715 Fax: (866) 278-0310 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 BBCG Claim Services Limited 3660 Hurontario St., Suite 601 Mississauga, ON L5B 3C4 Phone: (905) 279-8880 Fax: (905) 279-5338 E-mail: webaker@bbcg.ca EMERGENCY MEASURES Richard Van Horne Action Investigations Inc. 2 Catelina Court Dartmouth, NS B2X 3G9 Phone: (902) 462- 1222 Fax: (902) 462-3688 E-mail: richardvanhorne@actioninvestigations.ca FINANCE Randy P. LaBrash, CIP, CFE, CFEI Crawford & Company (Canada) Inc. 300 – 191 Lombard Avenue Winnipeg, MB R3B 0X1 Phone: (204) 947-2340 Fax: (204) 943-9168 E-mail: Randy.Labrash@crawco.ca

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 Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 - 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com IBC: LIAISON, LEGISLATIVE & FORMS David McKeon, CIP McKeon & Associates Adjusting Company 2120 Rathburn Road East, Suite 91 Mississauga, ON L4W 2S8 Phone: (905) 602-0321 Fax: (905) 602-4025 E-mail: david@maaac.ca LICENSING J. Miles O. Barber, B.Comm. (Hons.), FCIP, CRM Network Adjusters Ltd. 67 Folkestone Blvd. Winnipeg, MB R3P 0B4 Phone: (204) 897-5793 Fax: (204) 897-5797 E-mail: mbarber@mts.net MEMBERSHIP & QUALIFICATIONS Santo Carbone, CRM, FCIAA Crawford & Company (Canada) Inc. 300-123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 364-6341 Fax: (416) 435-0546 E-mail: santo.carbone@crawco.ca NOMINATING Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 – 1575 West Georgia St. Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca David Porter, LL.B., FCIP, CRM Advance Claims Service Ltd. 206 - 2323 Boundary Road Vancouver, BC V5M 4V8 Phone: (604) 642-0660 Fax: 1-888-452-5246 E-mail: davidp@advanceclaims.com PRIVACY James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca Keith P. Edwards, FCILA, CLA, FUEDI-ELAE CIAA Honorary Life Member c/o CIAA National Office 5401 Eglinton Ave. W., Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Fax: (416) 621-7776 E-mail: info@ciaa-adjusters.ca

CIAA REGIONAL PRESIDENTS 2010 – 2011 NEWFOUNDLAND & LABRADOR Marcel Pitcher, CIP, CRM Crawford & Company (Canada) Inc. 300 – 44 Torbay Road St. John’s, NL AlA 2G4 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Marcel.Pitcher@crawco.ca NOVA SCOTIA E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Grant.King@crawco.ca NEW BRUNSWICK & PRINCE EDWARD ISLAND Luc Aucoin, BBA, FCIP Plant Hope Adjusters Ltd. 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: laucoin@planthope.com QUEBEC/AESIQ Elaine Savard, LL.B., FPAA Les Expertises Richard Racette 1090, rue Principale Sainte-Agathe des Monts, PQ J8C 1L6 Phone: (819) 326-0012 Fax: (819) 326-2023 E-mail: elaine.savard@exprr.ca ONTARIO Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3, P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail: richard@azclaims.ca MANITOBA Timothy W. Bromley J.P. Hamilton Adjusters Ltd. 125 Enfield Crescent Winnipeg, MB R2H 1A8 Phone: (204) 944-1057 Fax: (204) 944-1606 E-mail: tbromley@mts.net SASKATCHEWAN Lee Dixon Crawford & Company (Canada) Inc. 210 – 227 Primrose Drive Saskatoon, SK S7K 5E4 Phone: (306) 931-1999 Fax: (306) 931-2212 E-mail: Lee.Dixon@crawco.ca WESTERN Bea Boutcher, CIP Horizon Adjusters Ltd. #207, 9814 – 97 Street Grande Prairie, AB T8V 8H5 Phone: (780) 402-8383 Fax: (780) 402-7888 E-mail: bea.boutcher@horizonadjusters.com PACIFIC David Porter, LL.B., FCIP, CRM Advance Claims Service Ltd. 206-2323 Boundary Road Vancouver, BC V5M 4V8 Phone: (604) 642-0660 Fax: 1-888-452-5246 E-mail: davidp@advanceclaims.com

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The Evolution of the Paper Staged Accident BY THE BOARD OF DIRECTORS OF THE CANADIAN ASSOCIATION OF SPECIAL INVESTIGATION UNITS (CASIU)

uto insurance fraud is a multibillion dollar industry that stretches around the globe. Like any other successful industry, it is innovative and market-driven, quick to take advantage of new opportunities and to adapt to changing regulations or threats to its profitability. It is also organized and professional, reflecting the huge dollars involved. That’s not to say that there’s no room for the amateur, opportunistic fraudster operating on his own. But the reality is that insurance fraud is increasingly sophisticated and predominantly run by highly-professional organized crime rings with deep pockets, and lots of experience and expertise. There are various types of insurance fraud, including staged accidents, caused accidents with innocent victims, auto arson, fake collision claims, false theft claims and so on. All frauds are costly to the insurance industry and consequently to innocent policy holders. But the most costly usually involve phony injury claims from faked, staged or caused collisions.

The made-up accident The simplest type of staged accident is known as the paper accident. A paper accident is a prevarication; it never occurred. However, a claim would be submitted, backed by the required paperwork and so-called physical evidence — a damaged vehicle. When this type of crime was originally devised, the perpetrators would purchase previously salvaged vehicles from a salvage yard. They would devise a scenario that involved either a single or multiple motor vehicle accident. In the case of a single vehicle, the driver would report that either he lost control of the vehicle or was the victim of a hit 30 Claims Canada

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and run collision, but regrettably was only able to provide a vague description of the other vehicle. The multiple vehicle scenario would be similar, but would involve a reported collision having occurred between two vehicles which, of course, were also cheaply purchased salvage vehicles. In both cases, the fake accident would trigger a whole series of phantom claims costs: towing, auto repair or replacement, legal or paralegal representation and, most expensive of all, accident benefits for the multiple people in each of the vehicles. Each of the (non) service providers was part of the conspiracy, and each would take its cut of the pie.

Making it happen How is all of this possible? The organized crime cells are tiered conspiracies that start with towing firms and auto body repair shops. These facilities have the necessary licences to allow them to purchase salvaged vehicles from designated salvage yards. These connections also provide falsified documents to support the rebuild, safety and emissions tests for the vehicles, allowing them to be registered and supposedly put back on the road. In reality, the only work performed was the false paperwork. Once the vehicle was registered as fit, it could be insured, and not surprising, it was soon reported to have been involved in an accident — all without ever actually leaving the bodyshop’s storage yard. Once the accident was reported, the bills for towing, appraising the damage and replacing the vehicle, car rental, legal representation, along with the nu-

merous health assessments and treatment plans would begin. The new branding legislation in Ontario (and similar regulations in other jurisdictions), was designed to halt the use of salvage vehicles in these phantom accidents, and it has forced the crime rings to change how they operate. However, it hasn’t eliminated the problem. Today the paper accident has evolved to overcome the branding challenge. Recent investigations have proven that the organized crime groups now provide their own “accident vehicles” rather than rely on local salvage yards. For the most part, these are older model vehicles, usually in poor mechanical condition with existing damage from prior mishaps. Some of them are higher-end vehicles from manufacturers such as BMW, Mercedes Benz and Audi, often salvage vehicles brought in from the United States, where the branding requirements don’t apply. The use of false documents to certify and register vehicles remains just as effective.

Bringing it full circle So how does it all come together? It starts with a recruiter for the organized cell, who entices various individuals to become involved in the scam. The recruiter is generally paid about $200 for every person he recruits, with the goal of filling each of the vehicles that will participate in the phantom accident. These vehicle “occupants” are usually promised $1,500 if they report the accident as instructed and attend five treatments at a delegated rehabilitation facility. The occupants are told that the balance of their benefits will come from their insurer. Each vehicle is registered in the name www.claimscanada.ca

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of one of the occupants and this individual is designated as the “driver.” The fake driver is instructed to insure the vehicle with a randomly chosen insurer, with the organizers providing the funds to pay for one or two months of premium. Obviously, the driver doesn’t bother to shop around for the best premium, and won’t worry about the cost of his coverages. Considering the potential windfall from the accident claims, the cost of a couple of months of premium is a small investment for the crime ring. Not surprisingly, once the claim is submitted, the insurance will be cancelled. Investigations have proven that the involved drivers almost never get behind the steering wheel of the vehicle that they insured. The vehicles are not damaged as a result a traffic accident, but deliberately to simulate a collision. The fake drivers are supplied with a description of the phony accident, along the necessary insurance and other information about the other fake driver and car. In the vast majority of cases, the two drivers never actually meet, let alone crash into each other. The drivers are also supplied with a list of the names of the “friends” who were in their vehicle at the time of the fake accident. Chances are the driver has never met any of these individuals either. The organizers understand that realistic details are important in order to allay suspicion. The fake drivers are typically provided with a map of the location of the alleged collision, and in some cases they are given drawings to show how it occurred. Some will even go so far as to take the drivers to the accident intersection so they can familiarize themselves with the area, and thus sound more credible when reporting the accident. The drivers are also provided towing information and the location of the vehicle after the collision. Once the driver is familiar with all the necessary, though phony details, the recruiter and the driver meet up with the tow truck driver with the previously damaged vehicle in tow. Then ,as a group, they attend a collision-reporting centre to report the accident. The centre will merely take down the information as reported by the driver. www.claimscanada.ca

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Later, the fake drivers report the accident to their respective insurers and the injury claims begin to evolve, usually to the tune of tens of thousands of dollars for each driver and occupant. In the end, the only real part of the scenario is the money paid out to the closely linked network of assessment centres, rehab centres, body shops, legal firms and towing companies. Fortunately, insurance investigators are becoming smarter at recog-

nizing and investigating these types of paper frauds. However, this has a downside, as the fraud industry has merely evolved to more complex and potentially more dangerous staged and caused accidents — raising the bar yet again for insurance investigators.  The Canadian Association of Special Investigation Units (CASIU) is a lowprofile association whose members come from the claims side of the p&c industry.

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18/04/11 3:00 PM

Established Rates Shift

Claims Assignments, Cost Trends Contain Powerful Lessons for Insurance Professionals; reliable information is vital to navigating unstable economy BY JOEL DAGENAIS

The Canadian economy began to reemerge last year from the global recession as evidenced by a surge in building, remodeling and reconstruction activity. However, worldwide market forces continued to impact on many costs in the Canadian property insurance industry. Even though the economic crisis in Canada isn’t nearly as extreme as the downturn in the United States, many well-established trends for rates of construction materials and labour showed significant shifts. Comprehensive information on cost research and assignment trends can do much to help risk managers and claims managers identify emerging trends and make informed business decisions. Xactware experts analyzed hundreds of thousands of structural repair assignments, totalling more than $1.3 billion, and monitored more than 14,000 individual material, labour and equipment rates in 37 economic markets across Canada in 2010.

Claims assignment analysis Several catastrophes struck various parts of Canada in 2010, causing widespread damage and stimulating reconstruction activity. By year’s end, the property assignments reported to Xactware totaled 136,927 for a value of more than $1.32 billion, which is significantly higher than the nearly $1.1 billion total reported in 2009. Losses related to water (70,869 assignments), wind (12,102 assignments) and hail (9,080 assignments) accounted for the majority of all property losses — about 67 per cent — reported to Xactware last year. The average value of property assignments in Canada reported to Xac32 Claims Canada

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tware in 2010 was also much higher than in the previous year, $9,659 compared to $9,007 (see Table 1). The month-by-month analysis of claims assignment volume and value shown in this table illustrate how major disasters drove property loss activity throughout the year.

Table 1

For example, an immense recordsetting hailstorm pummeled Calgary and southern Alberta with golf ball– sized hail on July 12. In the aftermath of that storm, the total value of claims assignments swelled to a high of $148.3 million in August, as shown in Table 2.

Table 2

The storm also contributed to the total number of hail-related property losses, which numbered 9,080 at the end of 2010 — more than double the number of hail losses recorded in 2009. Hurricane Igor followed, leading to high claims activity in September and October. The storm struck Newfoundland and Labrador in September, causing more than $65 million in damages from wind, backed-up sewers, fallen trees and water. As the impact of these storms subsided, claims-handling activity gradually declined until the end of the year.

Although both the value and volume of claims assignments analyzed by Xactware were significantly higher in 2010 as compared to 2009, many costs associated with the building industry deflated throughout the year. The sluggish economy even reversed many long-running trends for construction rates.

Reconstruction costs Many well-established assumptions about building costs have been challenged by the recent economic chaos. For example, based on trends from previous years, many insurance professionals could have reasonably assumed that the cost to rebuild a home in Canada increased in 2010. However, data collected by Xactware reveals that reconstruction costs have actually dropped since 2009. The national average decreased 0.8 per cent, which appears small at first glance, but eight of the 10 Canadian provinces report significant declines. This trend is also telling because over the past 20 years, year-end national reconstruction costs have rarely trended downward. Only Newfoundland and Manitoba reported increases in the average cost to rebuild, as all other provinces reported declines, as shown in Table 3. Reconstruction costs declined most

Table 3

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Better data, better decisions Current data that accurately depicts trends for commonly used materials is increasingly important for insurance professionals. Even small changes can have a significant impact on claims payouts and risk. For instance, 34.75 per cent of all Canadian structural claim assignments analyzed by Xactware in 2010 included drywall repair. At the same time, the average cost of drywall materials increased 3.45 per cent (as shown by Table 5), which rep-

All claims activity noted in this article is based on claims assignments reported to Xactware’s XactAnalysis assignment and analytical network. Joel Dagenais is president of AXP Software, and a Canadian and international consultant for Xactware.

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Table 4

surers can use up-to-date and reliable information to quickly make the best decisions for both their policyholders and their organizations, even in lessthan-ideal market conditions. 

pd s

Lumber costs Rate changes for commonly used lumber products also illustrate the volatility of the current market. Lumber costs steadily declined between 2007 and 2009. But lumber bucked the overall materials trend in 2010. Lumber costs were up 12.72 per cent by the end of 2010, as shown in Table 4. Worldwide lumber prices are heavily influenced by the Canadian lumber industry. Ballooning exports to developing countries, particularly China, kept the demand for lumber high in 2010. At the same time damage from the pine beetle and other supply constraints are continuing to exert price pressure on lumber.

resents significant added risk for underwriters. Reliable cost information allows insurers to identify these trends as they develop so they can quickly act to minimize the risk that they and their policyholders face. The economic crisis has shown the strength of the Canadian market and its property insurance industry, but it has also shown that trends for claims assignments and building costs can shift rapidly. They also serve as a reminder of the difficulty of forecasting cost and claims trends. Fortunately, in-

The PDS Network

dramatically in New Brunswick (down 4.87 per cent) and Prince Edward Island (down 2.04 per cent).

Claims Canada 33 11-03-10 10:42 AM

18/04/11 3:13 PM

Defamation

2.0

BY KAREN ZIMMER

Almost every individual and corporation in today’s society is engaged in publishing, whether it is on websites, blogs, tweets, Facebook or various other social media forums. There is a misconception that the law of defamation is not keeping up with Internet publications. The more likely reality is that most Internet publishers are failing to keep apprised of the risks of potential liability arising from their own Internet postings and from simply exercising editorial control over websites, Facebook pages and blogs. Our Courts have been able to draw from a long line of jurisprudence to impose liability for defamatory postings on the Internet in a similar fashion as they do for publications appearing in the traditional media. There is nothing about the technology that reduces potential liability. Internet users may be surprised to learn that using a hyperlink to a website on which defamatory statements appear could result in liability in particular circumstances, according to the recent British Columbia Court of Appeal decision in Crookes v. Newton. This case is perhaps a bit less astonishing when one considers the decision of Hird v. Woodmade over a century ago. The Court in Hird found that the act of pointing people passing by to defamatory words on a sign was a sufficient act to constitute publication of the defamatory words on the sign. This conclusion was reached notwithstanding there being no evidence that the respondent was involved in writing the words or erecting the sign. Hird was considered by our British Columbia Court of Appeal in Crookes v. Newton. At issue in Crookes was a commentary on free speech and the Internet that referenced the plaintiff’s defamation action against a third party and hyperlinked readers to the article alleged to be defamato34 Claims Canada

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ry. Both concurring and dissenting appellate judges found that a hyperlink, depending on its content, could be a sufficient act of invitation or encouragement to view the impugned site, or an adoption of all or a portion of its content to constitute publication of that site. The justices differed on whether the facts in this case established that there was a sufficient invitation to view the defamatory content. The majority found there was not a statement of approbation or adoption appearing with the hyperlink and that in the circumstances the hyperlink was more comparable to a footnote or an index card in a library. The Supreme Court of Canada has heard the appeal, but has not yet rendered reasons. The Court in Crookes considered and followed Carter v. B.C. Federation of Foster Parents Association. Our firm was counsel for the defendant, Federation. Part of the claim included an allegation that distributing a hard copy newsletter which referenced a website address “for more news” constituted publication of the defamatory statements on that website. Carter distinguished Hird on the basis that the Federation did not take active steps to draw the attention of others to the actual defamatory statement appearing on the website and also did not have any element of control over the defamatory postings. The Court of Appeal upheld the dismissal of this part of the claim. Internet users may also be surprised to learn that liability can arise for the defamatory postings made by a third party on their own website, Facebook page or blog if they become aware of the defamatory posting but fail to remove it. This liability arises from old English cases in which defendants were found liable for publishing defamatory materials that were created and displayed by someone other than the defendant on premises controlled by the defendant. In such cases, where the defendant elected to leave the materials in a place over which he had control, the failure to rewww.claimscanada.ca

18/04/11 3:15 PM

move the materials was a basis for liability. An example of net campaign; and Reichmann v. Berlin, where the plainsuch a case is Byrne v. Deane, involving the words appearing tiff, who was a successful businessman, was awarded on a notice board at a golf club. $400,000 as a result of the defendants alleging on the InThe English court in Godfrey v. Demon ternet that he engaged in dishonest and Internet Ltd., ruled that a defendant Indishonourable conduct. ternet service provider (ISP) that carried Today’s Internet publishers would be what is often referred to as a newsgroup, wise to follow the practices of publishers was a publisher of defamatory postings in traditional media by having potentially on that newsgroup because it was aware sensitive materials vetted by an experiof the defamatory posting, but refused to enced libel lawyer and obtaining advice remove it. on how to limit risks arising from their An Internet user also specific type of internet publishing and The prerequisite for liability is knowledge of the posting and the ability but cannot avoid liability editorial control exercised on the Internet. failure to remove it. The English court in When faced with a threatened claim, arising from a website Internet Bunt v. Tilley, found that an ISP, which publishers should promptly seek over which he has performs no more than a passive role legal advice. A quick response can signifiin facilitating postings on the Internet, cantly reduce exposure to liability, reduce editorial control by could not be deemed a publisher at comdamages, or enable you to resolve a dissimply suggesting mon law. pute before ending up in Court. Where The decision of Carter also addresses appropriate, apologies or retractions that he is not the this issue. Part of the claim concerned should be considered.  domain name the defamatory postings made by othregistrant for ers on the Federation’s online chat room. Karen Zimmer is a partner practicing The plaintiff demanded that the infringdefamation law at Alexander Holburn that website. ing materials be removed. The Federation Beaudin & Lang in Vancouver. thought it had removed the postings only Alexander Holburn Beaudin & Lang is to learn two years later, after it received an Amended State- a member firm of The ARC Group Canada. ment of Claim, that the postings remained on the website. The British Columbia Court of Appeal decided the plaintiff was entitled to a remedy since the Federation failed to take effective steps to have the offensive materials removed in a timely way, and referred the claim to a full trial on that issue. The case never proceeded further. In some circumstances, Internet users can attempt to rely on the long established defence of “innocent disseminator.” This defence is applicable to distributors such as libraries, bookstores and news vendors and requires a defendant to establish that: He was not aware of the defamatory statement contained in the publication; he did not know that the publication was of the type that would contain a libel; and, such want of knowledge was not due to negligence on his part. This defence did not succeed in Carter, as the Federation failed to remove the defamatory statements after being made aware of them. Internet users cannot avoid liability by posting anonymously. A court application can be made to compel the ISP to reveal the identity of the anonymous poster. As was evident in WeGo Kayaking Ltd. v. Sewid, an Internet user also cannot avoid liability arising from a website over which he has editorial control by simply suggesting that he is not the domain name registrant for that website. Because Internet publications are widely disseminated, Internet publishers are more vulnerable to high damage awards. For example, Southam Inc. v. Chelekis, where an award of $875,000 was made against the defendants who defamed the plaintiff on the internet; Newman v. Halstead, where $626,000 was awarded to eleven plaintiffs as a result of the defendant’s vindictive Interwww.claimscanada.ca

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18/04/11 3:16 PM

Problems in the

Pipes

Water causes exceptional damage when it leaks from plumbing systems. In a residence, a water leak can lead to hundreds of thousands of dollars in damages; in high-rise residential or industrial buildings it can lead to millions. Forty years ago most plumbing systems were built with steel or copper piping systems, and with relatively simple fixtures and fitting systems. Today, plumbing systems may be PVC (Polyvinyl Chloride), CPVC (Chlorinated Polyvinyl Chloride), PEX (Crosslinked Polyethyelene), PB (Polybutylene) PVC or other plastic systems. Fittings, which were typically soldered or threaded, are now â&#x20AC;&#x153;push to connect,â&#x20AC;? PEX/PB barb, rolled groove, flanged, compression or solvent cemented. Fixtures may be pressurebalanced, temperature compensating, automatic, and/ or employ a variety of alloys and plastics which were uncommon in plumbing systems even twenty years ago. Increas36 Claims Canada

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ingly, low cost/low quality fittings are being imported from overseas. High style fixtures are being imported from Europe, which may not be suitable for use in our plumbing systems and additionally may not be certified for use in Canada. Companies are introducing new systems and products at an almost alarming rate. As a result, mechanical system designers, plumbers, and mechanical/HVAC contractors are overloaded with choices of systems, fittings and fixtures.

Increase in failure rates The net result of all these new plumbing products has been an increase in product related failures within the construction industry. These failures have ranged from failures of flexible toilet connector hose nuts to failures of entire piping systems. Manufacturers touted PB piping as the next wave in plumbing in the 1980s; it was flexible, easy to

BY ROBERT SPARLING

install and offered a lower overall installation cost. Five to 10 years later, PB systems began to fail at an alarming rate. It was found that the chlorine in drinking water had been attacking the fittings and piping, leading to early failures. PEX-Al-PEX (PEX piping with an aluminum layer) was launched as the best plumbing product yet in the 1990s. It was flexible, kept its shape once formed and was easily installed. This product was subsequently pulled from the market due to leaks and, as a result, many homes had to have their piping replaced. Low-cost flexible toilet connector hoses began to be imported into Canada around 2002. These hoses have since failed at a very high rate, leading to water damage in many homes. Many of these have failed due to poor manufacturing quality and a poor choice of plastic for the attachment nuts. In addition, design, manufacturing and material defects in numerous plumbing fixtures and fittings have been found. www.claimscanada.ca

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Document the failure Perhaps the most concerning aspect of the sudden surge in the variety of the plumbing systems and products available is the relatively short period of time the industry has worked with these systems/ products. How will these products perform after ten, twenty-five or fifty years in service? The previous experiences with PB, PEX-Al-PEX and numerous fixture/fittings designs have shown that we cannot fully anticipate how well new plumbing systems/fixtures/fittings will perform. The net result is that plumbing system failures are likely to continue to be an issue and product liability suits will ensue. In the case of a plumbing product failure it is essential to adequately document the failure and collect evidence. A plumbing product failure may be related to the environment in which the product is installed. Water quality or exposure to sunlight/chemicals may contribute to the failure. A failure may also be related to the orientation of the piping, the type and material of adjacent piping/fittings, and/or water pressure. The collection of a water sample from the piping, photography of the piping as installed and water pressure measurements should be performed whenever possible. When removing the failed product, try not to disturb or rotate any adjacent fittings, piping, etc. When possible, cut the piping well beyond the failure point and include any fittings to which the incident product was attached. Product liability can be difficult to prove and a well-documented failure is much easier to subrogate/litigate. Plumbing product failures are common and are likely to become even more common. When product liability is suspected, photograph

the installation, measure the water pressure, sample the water and carefully remove the product as evidence. Also, be sure to involve a forensics engineer early in the investigation to help collect and document the evidence as well as report on the cause of the failure. î &#x2014; Robert Sparling is a senior associate with Giffin Koerth Forensic Engineering.

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18/04/11 3:19 PM

Insurance Intermediaries: Fulfilling the Role of an Insurance Expert

Do you know your client’s business? BY MONIKA M.L. ZAUHAR AND AMANDA EVANS

When insurance brokers engage in a commercial relationship with customers, the law imposes certain duties on brokers that require them to adequately perform the services they offer.

Brokers are experts in their field Insurance brokers undergo more professional training than in years past. Because of this specialized training, and the heavy reliance customers place on the advice of a broker, the law now views insurance intermediaries as professionals or experts in placing insurance. As such, a higher duty of care is being imposed on brokers by the courts. As an expert, the insurance broker has a duty to determine the customer’s needs and place appropriate coverage. The overall duty imposed on insurance intermediaries was described by the Supreme Court of Canada as a “stringent duty to provide both information and advice to their customers” and that it reasonable and appropriate to impose a duty not only to convey information but also to provide counsel and advice.1 Generally, in order to satisfy the duty of care owed to the insured, an insurance intermediary is required to: • inform him/herself about the client and/or the client’s business; • assess the foreseeable risks; and • obtain the appropriate coverage or 38 Claims Canada

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inform the client that the coverage is not available.

Basis for liability The legal basis for which insurance intermediaries may be held liable has widened over the years. The fastest growing and widest area of insurance intermediary liability is negligence. It is hoped that armed with knowledge, brokers and agents may minimize their potential exposure and avoid finding themselves on the defending end of a negligence claim. At the outset, it is important to understand that it is no longer sufficient for professionals to blindly rely on “industry practice.” The assertion that “all the brokers do it this way” is not a defence. The test is whether the broker has provided the customer with reasonable advice expected of a reasonable and informed broker or agent, considering all of the circumstances. The duties which apply to insurance brokers stem from case law arising from duties of insurance intermediaries generally, (i.e. agents and brokers). As an insurance intermediary, one must ask, what steps do I take in similar situations? Would my practice have passed the court’s scrutiny? If not, what steps do I need to take to ensure my brokerage firm meets the duty and standard of care expected? Duty to provide appropriate insurance and advice: What are the customer’s insurance needs? Any discussion on broker or agent liability must begin with the foundation case of Fine’s Flowers Ltd. v. Gen-

eral Accident Assurance Co.,2 wherein the Ontario Court of Appeal identified two types of situations where agents or brokers are asked to provide coverage and described the corresponding duty owed in each situation. Where the agent or broker is asked to provide specific coverage The duty on the agent or broker is to use a reasonable degree of skill and care in obtaining the coverage. If the coverage is unavailable or the broker is unable to obtain it, the agent or broker must inform the customer so that he or she does not rely on the agent or broker for successful completion of the transaction. Where the agent or broker is asked to provide “full coverage” The duty on the agent or broker is more onerous in that the agent or broker must make sure the customer is aware of all insurance coverage available so that he or she can be protected against all foreseeable risks. The agent or broker must inform him or herself on the client’s business in order to determine all foreseeable risks. An agent or broker who does not have the skills to understand the customer’s business should not offer to provide full coverage insurance. Negligence cases today continue to rely on the duty described in Fine Flowers and have continued to expand. Where the customer adequately describes the nature of his or her business to the agent, the onus is then on the agent to review the insurance needs of the customer and provide the full coverage requested. Should an uninsured loss occur, the liability will be found www.claimscanada.ca

18/04/11 3:22 PM

Settling catastrophe claims • Confirm accuracy of information obtained from the customer – ask questions!

• Client requests “full coverage”? Red alert: Approach with caution; must be familiar with their business!

• Consider whether you need to seek additional information from other sources.

• Appropriate insurance? Is it available to the client? Explain options.

• Document all steps/activity on your file.

• Ensure adequate familiarity with the customer’s business.

• Renewal? Cancellation? Updating? Is the coverage still adequate? Annually review the policy and contact the customer to determine if their circumstances or insurance needs have changed.

• Advise the customer if the insurance coverage they seek is unavailable and explain what other options are available.

• Convey all material information to customer and/or insurer; e.g. check fax numbers!

• Advise the customer of consequences of improper disclosure or misrepresentation.

• Be aware of third parties e.g. beneficiaries of a life insurance policy.

• Know the limits of your binder authority.

• Send the customer reminder notices of upcoming renewals.

• Explain any exclusions, gaps or limitations regarding the coverage to the customer.

• Advise of any proposed non-renewal or cancellation.

• Know the type of coverage the customer wants and needs.

• Be sure any comparative quotes are actually “comparative” – if they have different coverage, explain and document your explanations. • Do not offer advice on the basis of self interest (i.e. high commission rate). • If desired, express exclusion of tort claims in the contract.

unless the insurance intermediary has pointed out the gaps in coverage to the customer and advised him or her how to protect against those gaps.3 The broker must take steps to ensure the coverage is appropriate and adequate. A situation that frequently arises is the request for a comparative quote. Where a customer seeks particular coverage and the broker agrees to provide it, the broker will be under a duty to procure the insurance requested. If the broker is unable to do so, the client must be advised the coverage is not available and the alternative options must be explained.4 Although the duty is high, a broker will not have to explain each and every clause in an insurance policy to the customer in order to fulfill their duty of care. Where the meaning of the clause is clear, the broker will not have to explain the clause.5

Duty to make inquiries: Be inquisitive! Sometimes the broker will be required to obtain information from other sources to ensure proper coverwww.claimscanada.ca

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• Discuss all possible implications to the customer before completing a cancellation, termination or non-renewal notice. • Consider getting Errors and Omissions insurance coverage. • Don’t forget your duty to the insurer! This checklist is not intended to cover all possible situations or areas of potential liability.

age is placed for the customer. Casual questioning is not always sufficient. If a piece of information is missing, take the initiative to seek out adequate and accurate answers. The agent must make sufficient inquiries, perhaps in some cases from an independent source or by inspection, to satisfy him/ herself that answers given are indeed correct. This may appear to be a very onerous duty on a broker, but it is a judicially recognized duty,6 especially if the broker has some knowledge that invokes this duty to question further or obtain additional independent information.7

The duty to know your customer’s business: Be a busybody! The courts require a broker or agent to take the time to know and understand the customer’s needs and expect them to ask the appropriate questions or conduct the appropriate investigations to obtain the necessary information to properly assess the risks of the customer. This duty is especially relevant to the broker of CGL poli-

cies. The broker must know the client’s business. Failure to update insurance needs based upon changes in a company may give rise to liability.8 Knowing one’s customer may also come into play when placing personal lines of insurance, especially when the agent had knowledge of the insured’s personal circumstances from previous dealings.9

Duties regarding renewal, cancellation and updating: Have a system! The view of many brokers is that it is the customer’s sole responsibility to be aware of the expiry date of their policy; any information provided to the customer in regards to upcoming renewals is done as a “courtesy.” However, in recent years there has been a significant change in how courts view the duty of a broker with regard to renewals of insurance policies. Where there has been a history of the broker arranging renewals, some courts now consider a duty to arise to notify the customer of an impending expiry, a proposed non-renewal or a cancellaApril/May 2011

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tion. Liability may arise when the broker’s conduct amounts to an undertaking, which is reasonably relied upon by the customer. However, although the customer’s reliance may be reasonable, that fact alone does not totally displace the obligation of the customer to protect his or her own position. While a broker may be found to be negligent for failing to inform a customer of an impending renewal or cancellation, the customer is often found to be contributorily negligent for failing to be more alert to his or her own policy.

Cancellation: Explain the consequences! In order to avoid liability, brokers should explain to a customer the consequences of the decision not to renew or to cancel an insurance policy. This is particularly important where there is going to be a gap in time between coverage or where the customer may have difficulty getting new insurance as a result of having a period of no coverage. Liability may be found for failing to fully explain to a client the consequences of cancelling an insurance policy before its replacement takes effect.10 Possible defences Even if the broker is negligent, the insured must show a causal link between the broker’s negligence and the inadequacy of the coverage. Where the broker’s default is the failure to advise

about the unavailability of coverage or about gaps in the available coverage, the customer must show that he or she would have reacted differently had the broker properly informed them of this

ing imposed from circumstances arising from the initial contact by a customer to the circumstances arising at the time of cancellation of a policy. In future, customers may demand more and more of brokers, requiring updated advice and recommendations regarding the limits of liability.  Monika M.L. Zauhar is a partner and Amanda J. Evans is a senior associate with the law firm of Cox & Palmer. Cox & Palmer is a member firm of the Risk Management Counsel of Canada.

In future, customers may demand more and more of brokers, requiring updated advice and recommendations regarding the limits of liability. fact, possibly by seeking other insurance or modifying business practices to minimize the uncovered risk. As referenced earlier, there may be cases where a customer may be contributorily negligent for the loss.

Conclusion The liability of brokers is widening. The best defence is to avoid a claim in the first place. Liability is be-

1. Fletcher v. Manitoba Public Insurance Co., [1990] 3 S.C.R. 191, at paragraph 57 2. Fine’s Flowers, (1977), 81 D.L.R. (3d) 139 3. G.K.N. Keller Canada Ltd. v. Hartford Fire Insurance Co. (1983), 1 C.C.L.I. 34 (Ont. H.C.) (confirmed on appeal at (1984), 4 C.C.L.I. xxxvii (Ont. C.A.)) 4. 232 Kennedy Street Ltd. v. King Insurance Brokers (2002) Ltd., 2007 MBQB 291. 5. Marine Ltd. v. Axa Pacific Insurance Co., 2010 BCSC 88 6. Sotiropoulus v. Bernard Freedman Insurance Ltd. (1982), 44 N.B.R. (3d) 319 (Q.B.) and Strougal v. Coast Capital Insurance Services Ltd., 2008 BCSC 17 7. Rosenblat v. Reliable Life Insurance Co. 2003, MVCA 6 and Fleet v. Federated Life Insurance Co. of Canada, 2009 NSCA 76 8. Johnson v. W. G. Barton Ltd. (1986), 21 C.C.L.I. 73 (B.C.S.C.) 9. King v. Sullivan Insurance, [1993] P.E.I. No. 73. 10. Brisee v. Royal Life Insurance Co. of Canada (1994), 26 C.C.L.I. (2d) 89 (N.B.Q.B.) and Engel v. Janzen (1990), 41 C.C.L.I. 284 (B.C.C.A.).

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Is It Worth the

Hassle? A Look At Moral Hazard BY ADAM CORMIER

Claims come in two forms: straightforward or not so straightforward. In a straightforward claim, the cause and origin is clear, the insured is cooperative and compliant in completing the conditions and requirements asked of them and the policy responds as to how the risk was underwritten. Then there are those not so straightforward claims. The cause and origin is often undetermined, pre-existing damages overlap damage caused by the reported claim, the insured is difficult and demands the company pay for everything even if there is no coverage under the policy. Furthermore, this claim can contain moral hazards.

What is a moral hazard? Moral hazards relate to human behaviour. Often the insured that represents a potential moral risk displays an uncaring attitude toward responsibility, does not consider the law of indemnity and knows how far to push before the claim can be called fraudulent. Some examples of moral hazard include hoarding, poor property maintenance, claiming for items that were not damaged as a result of the loss, a morally corrupt character and poor outlook on life (this type of risk is explained further in Chapter 3, pages 9 through 11 of Essential Skills for the Insurance Broker and Agent Moral Hazard, published by The Insurance Institute of Canada). The moral hazard or difficult insured is the person who demands the company’s time and money regardless of whether their demands are reasonable or not. They don’t care if their expectations are unrealistic and will aggravate claims reps. They will be persistent to the point where they get what they want because it is not worth the company’s effort to deal with them. This type of insured steals away from the service, which should be reserved for the straightforward claims (the majority of claims) by effectively draining the claim representative’s time and energy. This type of claim increases claim costs, frustrating both the claims representative and the broker. The insured, more often than 42 Claims Canada

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not, defeats the purpose of indemnification for which the insurance world is suppose to stand.

The unforgettable ones There are always those few claims that you’ll never forget. The one I recall best, regarding moral hazard and a difficult insured, was assigned from an insurance company who recognized the value of farming out this claim to an independent adjuster. The insured had hired a friend to act on their behalf to settle the claim. Essentially, this person was acting as a public adjuster, but without a valid license, and was harassing the claim’s staff to the point where they felt this person might be dangerous (it just occurred to me now we should charge more for life threatening claims!). When power was restored to the claimant’s residence following an outage, a power surge caused damage to the appliances and some of the contents. The insured was claiming approximately $15,000 worth of damages, which included a new home theatre system, a new electrical panel, almost all of the appliances and an amount for pain and suffering. Experience has shown that sometimes it is necessary to have an actual presence in order to settle a claim. During our first meeting with the insured, we presented a list of conditions necessary for them to comply and cooperate with before the claim could be settled. It was also necessary to get the insured and friend to sign an “Authority to Act” form and to make it clear to the friend that acting as a public adjuster without a license was illegal. Attend the scene After completing a thorough investigation, which included inspecting all the appliances and completing the necessary paperwork, the claim was reduced from $15,000 to under $4,000. The other thing we were able to do, by attending the scene, was gain leverage and information to successfully negotiate with the insured to come to a settlement. Some of the items being claimed would have been impossible for the insured to even check because of all the contents piled around www.claimscanada.ca

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or on top of them, yet they were included on the insured’s certain information from the insured. This included: • a witnessed authorization by the insured giving the adSchedule of Loss forms. This is sometimes a frustrating process when handled over the phone. I truly believe that at times juster authority and permission to act on behalf the claimant, as well as it being signed by the adit is necessary to have a company presence juster and a witness. felt in person and not just over the phone. • having the electrical panel checked The claim was settled after every single During our first by a certified electrician and having a relevant document was notarized, includmeeting with the diagnostic analysis drawn up by him to ing a Final Proof and the acquirement of the insured’s signature was obtained. This insured, we presented determine if the panel is damaged due to a power surge. particular insured was also one of the first a list of conditions • having all of the appliances being homes I have been in where hoarding was necessary for them claimed on the Schedule of Loss form to a problem, and, if left on the books, could be checked and a report stating whether have potentially an even greater claim imto comply and they can be repaired or have to be repact in the future. You couldn’t see the carcooperate with placed and if the damage is the result of pet for all the items in the house. before the claim a power surge. People who present a moral risk are often controlling, manipulative and try to in• completing an inspection and record could be settled. timidate you into meeting their demands. the make, model and serial numbers of However, calling their bluffs can lead to any of the larger items. them backing down. The best way to stop • a completed Schedule of Loss Form this type of claim relies on preventive measures, which for the food items that were damaged should serve as a reminder to those who bind policies that • electronics brought in for inspection. the risks, both inside and out, should be inspected. • a Proof of Loss must signed and notarized in exchange for the settlement 

Setting conditions When it came time for us to handle this particular claim, we set forth certain conditions, and requested

Adam Cormier is an adjuster with Cormier Adjusting.

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Snowmobile Acceleration and Braking Performance BY KEN ILIADIS AND PAMELA D’ADDARIO

Understanding the acceleration and braking performance of a vehicle is crucial when reconstructing an accident. As experts, we are often asked how fast a vehicle was travelling or whether a driver could have braked to avoid a collision? Answers to these questions can help establish liability for the collision and its consequences. Decades of research have built a vast pool of data for car and motorcycle dynamics. Snowmobiles, on the other hand, have received much less attention, despite the fact that there are more snowmobiles registered in Canada than motorcycles and mopeds combined. Each year, nearly 200 fatalities and 14,000 injuries occur with snowmobile use in North America. Despite these numbers, only limited research data exist for the performance characteristics of modern snowmobiles. To help fill this knowledge gap, the acceleration and braking characteristics of a variety of modern snowmobiles were tested and measured. The goal was to 44 Claims Canada

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generate the data needed to accurately calculate a snowmobile’s speed if its braking or acceleration distance is known. Based on motorcycle behaviour, it was hypothesized that a snowmobile could accelerate more rapidly than it could brake. Like a motorcycle, the weight of the sled and rider shifts off the front skis and onto the rear track during acceleration. This additional weight improves traction between the track lugs (small protrusions on the track belt) and the snow. During braking however, the weight of the sled and rider shifts off the rear track and onto the front skis. The reduced weight on the rear track decreases traction between the track and snow, and produces less traction during braking than during acceleration. This is identical to how a motorcycle with no front brakes would behave. About 500 straight-line acceleration and braking performance tests were completed in February 2010 in rural Ontario. The test sleds included both two and four-stroke engine styles, with engine power ranging from 80 to 135 horsepower. This covered the majority of snowmobiles found on Canadian and US trails. Each of the snowmobiles

was instrumented to measure its motion throughout the acceleration and braking phases. Also measured was track speed, brake pressure, and throttle level. Track patterns in the snow were also documented to identify differences in marks left by different levels of acceleration and braking. Tests were performed on a groomed/packed snow surface to simulate a snowmobile trail. According to the International Snowmobile Manufacturers Association (ISMA), approximately 80 per cent of riders use their snowmobiles for trail riding on groomed, marked trails. To keep the snow conditions as consistent as possible, the test surface was groomed regularly. Throughout our testing, monitored weather conditions were monitored and snow conditions were monitored using the International Classification for Seasonal Snow on the Ground (IACS) protocol. To limit fluctuations in human performance and to maintain a consistent rider weight, a professional rider performed all tests. For the acceleration tests, mechanical stops were placed on the thumb throttle to limit the maximum throttle applied to either quarter, half or www.claimscanada.ca

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full throttle. The rider accelerated up to a specific speed, between 20 to 60 km/h depending on the test, and then braked to a stop. The deceleration tests involved the rider either braking fully (locked track), or allowing the snowmobile to “roll down” to a stop. Roll down is the lay term for when the throttle is released on a moving snowmobile and “engine drag” slows the track. Half of the roll down tests were completed with the engine power on, and half with engine power off. This allowed the ability to document the effect engine power had on roll down deceleration. In terms of snowmobile acceleration, there was a significant increase in acceleration with increasing throttle position. There was also an increasing trend in acceleration for higher power sleds; however, the two-stroke 800cc engine (rated at 135 hp) did not perform better than the four-stroke 1000cc engine (rated at 120 hp). The lowest acceleration observed at quarter throttle was 0.27g, while the highest acceleration observed at full throttle was 0.70g. From the braking data, the full braking deceleration rate across all sleds was relatively consistent. No one sled performed better than another, and all fell within the range of 0.32 to 0.42g. In the roll down tests, there was no difference between the power-

on and power-off conditions, but the deceleration rate decreased as speed decreased. This means that a snowmobile in roll down will gradually slow down more gradually as its speed decreases. Outside of these statistical results, there were a few additional observations made. First, all four snowmobile speedometers consistently over-reported the actual sled speed, often by more than 10 km/h. Second, a subtle side-to-side weight shift by the rider was often necessary to maintain directional control of the sled during the full acceleration and braking tests, particularly with the high powered snowmobiles. This alludes to the potential importance of rider experience and warrants further investigation. Third, snowmobiles slow at a fairly constant rate under full braking. For years, a theory has existed that the locked track of a snowmobile acts like a plow, thereby slowing the sled at an increasing rate as snow accumulates ahead of the locked track. The tests proved this theory wrong and instead showed that snowmobiles decelerate at a relatively constant rate. A video camera placed under the sleds to monitor snow build-up ahead of the locked track confirmed this phenomenon did not occur. A comparison to road vehicles helps to put a snowmobile’s performance

into perspective. A common four-cylinder sedan (e.g., Hyundai Elantra) is able to accelerate on dry roads at about 0.3g. A snowmobile — even a relatively low powered one — can easily accelerate at 0.5g or more. This is similar to the maximum acceleration capability of a high-end sports coupe (e.g., Porsche 911 Turbo) or a typical motorcycle. For emergency braking however, most cars can brake at between 0.7 and 0.9g on dry roads. The same is true for motorcycles when both front and rear brakes are applied. A snowmobile’s braking capability, however, is barely half that. This means it’s easy for a snowmobile to get up to speed, but not so easy to stop quickly in the case of an emergency. So how does this snowmobile research help? With this new research data, experts can now more reliably calculate snowmobile speed if the brake or acceleration distance is known. In addition, more accurate avoidance analyses are possible since the dynamic capabilities of modern snowmobiles are now better understood. Using these new data, experts can better answer the questions needed to establish liability in snowmobile crashes.  Ken Iliadis is a senior scientist and Pamela D’Addario is part of the Toronto office transportation group at MEA Forensic Engineers & Scientists.

On Feb. 28, 2011 MEA Forensic Engineers & Scientists held a snowmobile course at Horseshoe Valley. The attendees spent the morning in a safety training course led by Clinton Smout of Horseshoe Riding Adventures, to learn about the steering, acceleration and braking capabilities of the sleds. After lunch at Horseshoe’s “Crazy Horse” restaurant, the attendees rode on a groomed OFSC trail.

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Salvaging

the Bottom Line BY DAVID ALLAN

The most recent financial crisis has left ripples in almost every industry, and insurance is certainly no exception. It has forced businesses and consumers alike to adopt a new way of thinking — one of frugality and financial responsibility. Even as the recovery progresses and purse strings are starting to be let out, the memory of the crises seems to be lingering, and fiscal awareness is staying at the top of everyone’s mind. Insurers are not removed from this phenomenon, as demonstrated by their continued efforts to reduce claims costs and find effective sources of cost mitigation. One such area of cost mitigation and cost recovery that seems to be popping up in conversation more often these days is salvage. Insurers are obviously well aware of the auto salvage industry and the financial benefits it has yielded, but property salvage has largely been overlooked for the last couple of decades. The paradigm shift towards frugality and cost recovery, however, is bringing property salvage back into vogue for not only the insurers, but for consumers as well. Property salvage can take many different forms: Anything that has any intrinsic value in a property claim can potentially become salvage. This means that property salvage can range from the excruciatingly common to the exorbitantly obtuse. For example, property salvage can range from construction materials to haute couture dresses, from warehouses filled with 10-cent pens to ones filled with millions of dollars of powdered chemicals. Property salvage can be anything — there is no limit.

Cost recovery The obvious benefit of identifying salvage in property claims for insurers is cost recovery. The recovery is actually two-fold: Not only do the insurers receive a cash settlement for the salvaged item(s), but they also avoid disposal fees for junking. Presently, this cost recovery is a largely unaccounted for benefit for most major insurers; there is very little accounting around any expected recovery on property claims. This is largely because on most property losses there is the expectation that there are no salvageable contents because of the extent of damage sustained. A significant portion of property claims, however, would (or could) yield some level of salvageable contents if salvors were engaged. Any recov46 Claims Canada

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ery an insurer can receive is better than having to pay to dispose, and this one extra step has the potential of helping insurers recover millions of dollars. It is not only major industry that is experiencing a shift in thinking in the wake of the financial crisis. Consumers are feeling the ripples and lingering effects as well and are reacting accordingly by adjusting spending habits. Consumers are not necessarily ceasing to spend entirely, but they are spending differently. In the wake of the financial contraction, they began looking for bargains — high quality items at discount prices. This allowed consumers to satiate their needs and desires to shop, while keeping costs down.

Purchasing behaviour Consumers’ current purchasing behaviour is different than it ever has been — no longer do consumers only purchase items in brick and mortar retail stores, but rather they purchase through a combination of classic retail, online virtual stores and even online classifieds. The Pew Internet & America Life Project found that in 2005, only 22 per cent of Internet users had ever used an online classified site. By 2009, that number had more than doubled to 49 per cent. Consumers’ buying patterns are changing and consumers are looking to become more responsible with their purchases. These recent behavioural changes are a perfect fit with property salvage. Property salvage is often clean (or cleaned) product, which can no longer be sold as new; perhaps the box has been damaged in some way or the item needed ozoning. The fact is, there is an enormous subset of the modern consumer who isn’t concerned with their purchases being factory fresh — especially if they are discounted. This is why there is such an appetite for property salvage on the consumer market — and why property salvors are often willing to purchase almost anything as salvage. This altered consumer spending affects insurers because it means that property salvors are willing to pay more for property salvage. As the consumer demand increases for discounted products, the supply of such products comes at a premium. This allows insurers to maximize their recovery on property claims that yield salvage — and this phenomenon is only becoming more popular. www.claimscanada.ca

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Thinking green There are additional benefits to engaging property salvors above and beyond the cost recovery they can provide for insurers. Most salvors will likely have some sort of landfill avoidance policy in place, allowing their customers (and insurers) to learn how they work with items that are not saleable and how they dispose of items. Corporate responsibility projects and green policies are a popular business priorities, and working with property salvors can allow major insurers to direct large amounts of material away from disposal sites and landfills; all while avoiding costly disposal fees and potentially generating positive press for environmentally responsible practices. Not just salvage Property salvage companies these days are also no longer just salvage companies, but are typically beginning to vertically integrate additional services, such as: • performing inventories of damaged stocks • relocation of inventories • temporary warehousing All are services designed to encourage adjusters to engage salvors early in the claim process, and to keep the process of engaging a salvor as easy as possible. This simplicity is the key to getting adjusters to use property salvors. Salvage companies realize how much adjusters have on their desk already and salvors are here to help,

not hinder. So, property salvage companies are doing everything they can to help the adjusters who engage them, whether it be organizing removal and temporary warehousing of large inventories or taking responsibility for logistical problems that would otherwise be a thorn in the adjuster’s side. Everyone is experiencing a paradigm shift as a result of the experiences over the last couple years, and frugality and fiscal responsibility is largely back in vogue. This has created a unique opportunity for the business of property salvage. Not only are insurers looking seriously at how they can recover more from property claims, but consumers are also trending towards buying more responsibly, and are looking for products that can be found in insurance salvage. Now it is the salvor’s responsibility to make sure they are easily engaged by adjusters and provide the assistance that is asked of them. The ripples of the financial crisis have created an opportunity that insurers, adjusters and consumers can all take advantage of and has created a situation where everybody wins and everybody walks away happy.  David Allan is president & CEO of Modern Salvage Consultants.

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 August.

VALUE • A minimum of one $1000.00 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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• education forum

A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA

Adjusting to the Conditions: Catastrophe claims

n the last issue, Education Forum looked at when and how catastrophe response services are set up. In this issue, we consider catastrophe claims issues of safety, claims-handling practices and response evaluation.

Safety issues The investigation of catastrophe claims can pose a range of safety and security issues. While adjusters are accustomed to certain occupational hazards, they may need additional training, equipment and awareness to cope with the particular hazards of a catastrophe. For a start, it may not be physically safe for loss adjusters to enter the catastrophe zone directly after an event has occurred. A disaster site will be littered with debris, making it dangerous to be in the area. Buildings may be unstable, weather conditions may be hostile and drinking water may be contaminated. When adjusters do enter the zone, adaptations may be necessary: • The precarious state of buildings and other structures may call for the use of hard hats and steel-toed boots on the job. • If very cold winter temperatures are expected, appropriate clothing and accessories will be required. • If the local water source becomes contaminated, loss adjusters should be informed about the risks of drinking the water; given instructions on how to treat the water to make it safe; and told about the symptoms of water poisoning and what to do if they become ill. Another factor is human behaviour. The chaos that results from a catastrophic event may lead to vandalism or looting. In addition, some neighbourhoods might have had a high crime rate even before the catastrophe, or problems 48 Claims Canada

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with gangs or violence. Loss adjusters unfamiliar with the area should be briefed on these dangers and made aware of gang characteristics and features so that they can identify them — and also so that they can maintain neutrality in their own clothing choices. Individual policyholders can sometimes pose a risk, as well. Faced with insecurity, personal loss and the strain of experiencing scenes of mass destruction, policyholders can become emotionally drained and fragile. Under such trying circumstances, anyone perceived to be bearing bad news may be vulnerable: stress may find an outlet in aggression against the loss adjuster. Adjusters should be aware of these risks and pay attention to their own safety. If adjusters wear identifying company clothing on the job, they should change into street clothes after their last appointments each day.

Maintaining professionalism Loss adjusters are conditioned to dealing with tough situations. In the extraordinary conditions of a catastrophe, they must draw deeply on those wells of experience in order to maintain their focus on professional claims handling and successful interactions with policyholders. Adjusters must deal with the stress of being far from home and possibly working under dangerous conditions. Catastrophe claims team members, working closely togethA local source of information, such as a broker, agent or other contact, may help to identify hazardous conditions, risky neighbourhoods and other problems that loss adjusters may encounter.

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er over long hours, are often a source of support to each other, helping one another through the tragic circumstances faced daily. Different people react in different ways to such stresses; and respect and tolerance for each individual must be maintained and encouraged from all concerned. Humour can be an excellent way to relieve pressure. The catastrophe coordinator may suggest a curfew for loss adjusters. This could be related to a government-imposed curfew, or it could be an acknowledgment that the hectic pace maintained by catastrophe loss adjusters must be tempered with rest to prevent burnout.

Although consistency in claims handling is always a goal, it is particularly important in a catastrophe situation. Policyholders affected by the same sorts of catastrophe damage often compare their experiences, including how much money they received from their insurers and what kinds of property were included in the calculations. To ensure fairness and consistency, adjusters must identify a range of allowances that qualify for the insurance settlement, use this range as a template to ensure that areas of likely damage have been considered, and document how settlements were negotiated. Once the immediate needs for safety, shelter and security have been met, restoration activity may begin. Local contractors will be in great demand, resources To ensure fairness will be strained, and prices are likely to and consistency, be high. Ideally, adjusters will have a list adjusters must of pre-approved local service contractors who have agreed to work on hourly-based identify a range of contracts to do specific work on the spot. allowances that As with any other property claim, salvaging whatever can be salvaged will offset qualify for the insurance settlement, some losses.

Catastrophe claims handling practices Through sheer necessity, loss adjusters investigating a catastrophe handle many more claims in a short period than they would under normal conditions. Ordinary claims handling standards may be modified somewhat to meet the needs of the situation, and some documentation standards may be somewhat relaxed. However, claims must still be proven by Evaluating the catastrophe use this range as a policyholders, and adjusters must ensure their documentation practices remain template to ensure that response Some time after the event, insurance adequate. Adjusters need to manage policyhold- areas of likely damage companies and loss adjusting companies er expectations about how claims will have been considered, may evaluate how the insurance companies’ operations fared. Adjusters may be settled and to communicate the paand document how be invited to participate in information rameters of the insurer’s responsibilities settlements were with respect to any other activities. To sessions to share their thoughts on what do so, adjusters need to know about any worked and what didn’t. Loss adjusters’ negotiated. measures undertaken by the insurer to experiences in handling catastrophes streamline the claims process, and about have sometimes led to the development any other initiatives the insurer has implemented to provide of new insuring agreements and endorsements, such as the value-added services. mass evacuation policy endorsement. Information may also be gathered to measure the outcome of customer service. For example, a company may analyze the length of time taken to issue payment on claims or Settling catastrophe claims the number of complaints received about loss adjustments. • In most catastrophe scenarios, loss adjusters retain The operating expenses of managing the catastrophe operathe same claims-settling authority they have in settion must also be analyzed. This will include exercises like tling everyday claims, and larger claims may be subcomparing expenses incurred for the operation to the volject to review by a more senior person. ume of claims handled. The results of such a catastrophe response evaluation • In some circumstances, insurance companies may aucan then be used to strengthen a company’s catastrophe rethorize independent adjusters to issue loss payments sponse plan.  to policyholders on the spot. • Insurers may provide adjusters with field cheques or permit hand-written drafts to be used. • Insurers may require adjusters to prepare a letter to accompany each cheque written, to provide documentation for the file and the policyholder.

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

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• on the scene OTS Craig Ryther of Claridge Insurance Adjusters has successfully completed his CIP and FSCO All Classes Licensing Requirements. Ryther is beginning his fourth year in the industry working as an accident benefits, bodily injury and liability adjuster in the Barrie area. He is also a licensed truck and coach/automotive technician, having worked in that industry for the past 17 years. l

Kernaghan Adjusters has opened a new branch in Courtenay/Comox, British Columbia. Brad Murray has joined the branch as appraiser and specialty risks adjuster. Currently he serves as the control adjuster for several logging and forestry programs. Debbie Halstead also joins the team as a senior adjuster. She began her career in 1978, working for major insurance companies. She moved to the independent adjusting side in 1988 and has been a multi-line adjuster ever since. She has extensive experience in large commercial and residential losses, casualty, professional liability, products liability and in bodily injury claims, to name a few. l

Jody W. Iczkovitz has been admitted to the partnership of Gilbertson Davis Emerson LLP, a Torontobased insurance law firm. Iczkovitz articled with the firm in 2006-07 and joined it as an associate upon his call to the Bar in 2007. He is active in the civil litigation section of the Ontario Bar Association as technology liaison. He holds a B.Sc (Eng.) in matheJody W. Iczkovitz matics and engineering (Hons.) and a Juris Doctor, both from Queen’s University. l

FirstOnSite Restoration has launched a national campaign to raise awareness of how unprepared many Canadian companies are to deal with manmade or natural disasters. The Priority Response Emergency Plan (PREP) is designed to help commercial companies be prepared in the event of a property disaster. FirstOnSite meets with a participating organization to gain an understanding of its infrastructure so, when a flood or fire happens, the FirstOnSite team knows the business’ needs and priorities beforehand and can respond immediately to begin restoration work. In the program, FirstOnSite develops a communication strategy and conducts physical walkthroughs of a company’s site(s) to identify potential trouble areas and learning protocols. “While many companies have a plan in place if its CEO is out sick or a product is recalled, it is astounding they don’t have a plan in place for handling a natural or manmade emergency - something that could literally prevent a company from operating,” said Barry Ross, FirstOnSite’s managing director of its commercial division. l

Craig Ryther

Crawford & Company (Canada) has announced two appointments, one within its Contractor Connection operations and the other in its Class Action Services department. Michael Mooney is Crawford’s new vice president of Class Action Services. He joined the company in 2008, and in his new role will oversee the daily operations of Class Action SerMichael Mooney vices. This department has administered some of the most complex class action settlements approved by Canadian courts, a Crawford release says. Dan Loosemore now serves as district manager for Crawford’s Contractor Advantage. In this role, he will collaborate with Crawford’s sales team to expand this product line. He will also work with network contractors to Dan Loosemore build a successful partnership and create value for customers, a Crawford release says. l

Claims Canada Wants You!

Claims Canada magazine wants you to send us your company news, appointments and event photos for possible inclusion within our ‘On the Scene’ department. Please help us share your items with the claims industry across the country. For more information, please email: laura@claimscanada.ca

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Crawford & Company (Canada) Inc. and The North Waterloo Farmers Mutual announced the launch of Crawford’s Contractor Connection program at North Waterloo. Contractor Connection provides insurers with an effective, high-quality managed repair network for residential and commercial property claims programs in the Canadian insurance marketplace. “We are very pleased with this announcement and look forward to partnering with North Waterloo Farmers Mutual” John Sharoun, CEO, Crawford & Company (Canada) Inc, said. “Contractor Connection provides enhanced customer satisfaction and indemnity management, as all facets of the repair are tracked and managed in real-time on our state-of-the-art management system.” l Mario Albert is officially president and CEO of the Autorité des marchés financiers. In January, he took on the role on an interim basis following the departure of Jean StGelais. Albert joined the AMF in 2008 as superintendent of distribution. Two years later, he assumed responsibility for the agency’s institutional affairs, including communications, research and strategic monitoring. Beginning in February 2010, he also began overseeing client services, supervising activities pertaining to investor education and awareness programs, fraud victim compensation programs and complaint examination. l

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APPOINTMENT

Association des Experts En Sinistre Independants du Québec Inc (AESIQ) hosted the seventh annual Cabane à sucre (sugar shack) event on Feb. 24. The event was held at the Cabane à Sucre Constantin in Saint-Eustache, Quebec. Mary Charman, president of the Canadian Independent Adjusters’ Association attended the event, along with more than 350 insurance personnel. l

Sandra L. Corbett

Chubb Insurance Company of Canada has selected the Women in Insurance Cancer Crusade (WICC) as its chosen charity for national sponsorship. Chubb’s support for WICC endorses WICC’s work in raising funds and awareness for the Canadian Cancer Society. Chubb is WICC’s newest national sponsor at the platinum level, representing a commitment of $45,000 over three years. This is an escalation of the company’s support for WICC. Chubb has long been a supporter of WICC through local chapter support and the volunteer actions of many Chubb employees. Chubb is also Founder of the WICC Lifetime Achievement Award. l

Crawford & Company (Canada) Inc. presented a cheque for $111,035.00 during a luncheon hosted in honour of WICC (Women in Insurance Cancer Crusade) on March 22. In the past, Crawford employees have annually raised between $50,000 and $55,000. The donation increased in 2009 to $80,000 with the 2010 donation surpassing $111,000. “This year more than any other year, our employees completely embraced WICC and Crawford Cares,” Steve Anderson, senior vice president of corporate markets and administration, said. “They jumped in whole-heartedly and participated in various fundraisers, payroll deductions, the Relay for Life and other activities. I really don’t think we can express how proud we are of our staff and all of the efforts they consistently make for this wonderful cause.” Crawford Cares has raised more than $450,000 for WICC since Crawford Cares was established in January 2004. “Crawford employees threw their hats into the ring and raised the bar this year,” John Sharoun, CEO, commented, “The addition of the Relay for Life event really boosted our employees’ enthusiasm and fundraising efforts. We had a wonderful time staying up all night, honouring friends and loved ones. For that event alone, employees and Crawford branches across Canada raised more than $75,000.” l

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Field Law is pleased to welcome Sandra Corbett to the partnership and as a senior member of our Edmonton Insurance and Litigation Groups. Sandra has dedicated her practice to defence of serious personal injury claims, and resolution of complex tort/liability matters in the insurance area including products liability, municipal and school liability, fire loss and coverage disputes. Sandra is extensively involved in the civil defence bar in Canada and in the United States, a Member of the Federation of Defense & Corporate Counsel (FDCC), and a Member of the International Association of Defense Counsel (IADC).

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• on the scene OTS The HKMB HUB Hockey Challenge for Charity dropped the puck on the 6th annual event to raise funds for the United Way and WICC (Women in Insurance Cancer Crusade) on Mar. 7. The event has grown steadily since the inaugural game in 2006 to a six team tournament at the Air Canada Center with more than 66 players, 30 major corporate sponsors and 300 spectators. The afternoon included not only hockey, but music provided by the live band, the Accidental Benefits, in the Ice Box Lounge. Michael Burgess sang the national anthem, before Dwight Drummond of CBC News dropped the ceremonial puck to open the tournament. Gord Stellick was on-hand as the celebrity MC for the evening. More than $30,000 was raised for both charities. l

CIAA New Members — February 2011 CORPORATE MEMBERSHIP Hans-On Adjusting Ltd. – Red Deer, AB Pike and Associates Adjusting Ltd. – Holyrood, NL INDIVIDUAL MEMBERSHIP Crawford & Company (Canada) Inc. Tammy Galea Hamilton, ON Level 1 Rita Filippo Newmarket, ON Level 1 Sonya Philipsz Newmarket, ON Level 2 Sharon Cardoso Orangeville, ON Level 3 Conar Marcoux Ottawa, ON Level 1 Kelly Tuplin St. Catharines, ON Level 3 Anna Collins Toronto, ON Level 1 Rahul Datta Toronto, ON Level 1 Sanjay Kumar Mississauga, ON Level 1 Christine Barone Whitby, ON Level 3 Heather L. Davenport Whitby, ON Level 3 Yolanda Baldwin Willowdale, ON Level 1 Hans-On Adjusting Ltd. Dennis R. Hanson

Red Deer, AB

Level 3

MGB Claims Consultants Inc. Shawn Burnett Toronto, ON Shawn Malik Toronto, ON

Level 3 Level 3

NWO Claims Services Inc. Christopher Saelens

Kenora, ON

Level 3

Pike and Associates Adjusting Ltd. Arnold F. Pike Holyrood, NL

Level 3

More than 350 stakeholders representing the insurance claims and collision repair industries attended the Canadian Collision Industry Forum (CCIF) meeting on Jan. 29, 2011 in Toronto. Speakers included Tony Canadé (Assured Automotive), departing CCIF chairman; Tom Bissonnette (Parr Autobody), incoming CCIF chairman; Mike Bryan, CCIF administrator; Andrew Shepherd, Automotive Industries Association; Jerome Flanagan, Renewit Inc.; Norm Angrove, PPG Canada Inc.; Leanne Blackborow, CCIF Skills Program; Steve Fletcher of the Ontario Automotive Recyclers Association (OARA); Pete Tagliapetra, NuGen IT; Kathryn Graham, Meyers Norris Penney LLP and Larry Miller, Fix Auto. Fletcher of the OARA presented Blackborow of the CCIF Skills Program with a cheque for $37,000 on behalf of his association. This was the largest ever single contribution to the CCIF Skills Program and came from an association fund for supporting deserving causes, established by the recyclers’ “Retire Your Ride” program, and to which OARA members contributed $35 per “retired” vehicle. l

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The Insurance Institute of Ontario held its 112th Annual Convocation & Awards Night on Jan. 20 at the Metro Toronto Convention Centre. Carlos Rodrigues, president of the Insurance Institute of Ontario, served as the master of ceremonies. Franรงois Faucher, chairman of the Insurance Institute of Canada, addressed the more than 400 Chartered Insurance Professional (CIP) and Fellow Chartered Insurance Professional (FCIP) graduates. Kevin Newman, Canadian television news anchor, was the keynote speaker. l

I HIRE JOB DONEman half page 3

5/1/08

4:19 PM

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â&#x20AC;˘ on the scene OTS Hundreds of insurance claims industry guests attended the 5th Annual post CICMA/CIAA Joint Conference Cocktail, The Big Mingle, held in the style of the television show Mad Men. The event, hosted by Giffin Koerth Forensics and Blouin Dunn LLP, was held at the Maison Mercer in Toronto on Feb. 8, 2011. The event provided an opportunity for claims industry stakeholders to connect with colleagues and friends. Event sponsors included Able Translations and Able Transport, Belfor, A.R.S., MasterClean, ServiceMaster Restore and Garda. l

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• on the scene OTS More than 150 exhibitors from across Canada showcased the latest and greatest in the industry at the Ontario Insurance Adjusters’ Association (OIAA)’s Professional Development & Claims Conference in Toronto on Feb. 9, 2011. The event featured a trade show and seminars covering a wide variety of timely claims topics. Celebrity hockey player, Theoren Fleury was the luncheon keynote speaker. During the lunch, the OIAA presented a cheque for $9,999 to the Big Brothers and Big Sisters of Canada. l

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• on the scene OTS Concours Collision Centres-CSN announced the ground breaking of a new state-of-the-art collision repair facility in the northwest district of Royal Oak: Concours Collision-CSN Royal Oak.The collision centre will operate adjacent to existing automobile dealerships, with convenient access for customers who live or work in the northern section of the city. Ken Friesen, president and CEO of Concours Collision Centres-CSN, said he felt it was necessary to expand its operations to better serve the growing needs of the area. “In the Alberta market, we have been blessed with a steady flow of work for the past few years, causing a backlog in production,” Friesen says. “This new facility will offer our customers quicker turnaround and better service.” Concours Collision Centres Royal Oak, located at 37 Royal Vista Drive NW, Calgary, Alberta, is scheduled to open in Fall 2011. l

CAA Insurance Company did something a little different this Valentine’s Day hosting an I Love Claims initiative. Staff were asked to dress casually, but to ensure they wore something pink or red. When they arrived, staff were given an I Love Claims t-shirt, which they were asked to wear for the day, along with some chocolate. In the afternoon, all staff came together for cake, coffee and social time. To keep the spirit of I Love Claims alive, staff have been asked to keep the t-shirts for future special occasions throughout the year. l

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• on the scene OTS The 2011 Ontario General Insurance (OGI) Hockey Tournament was held in Kitchener, Ont. March 18 to 20. This year’s tournament — the 30th annual — had a record 50 teams participate over the weekend. All proceeds raised through registration fees and corporate sponsorship will be donated to Camp McGovern and Camp Everton to support the youth programs. This year’s tournament is projected to raise more than $40,000, bringing the nine-year fundraising total to $290,000. l

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19/04/11 11:21 AM

See you at Relay...

By James Daw, Insurance Bureau of Canada

First he lost his father to cancer at 10. Then, five years ago, his mother was diagnosed.

Crawfordâ&#x20AC;&#x2122;s Campaign for the Cure

â&#x20AC;&#x153;I could see the fear in her eyes and the memories flooding back,â&#x20AC;? says John Sharoun, chief executive of Crawford & Co. Then a wave of worry and grief struck at work, too. â&#x20AC;&#x153;It seemed we were getting news from around the country of employees, their mothers, fathers, brothers, sisters, friends and loved ones being touched. At a very young age, one of our VPs lost his life to cancer.â&#x20AC;? â&#x20AC;&#x153;So to honour their memory â&#x20AC;&#x201C; to celebrate their lives, their struggles â&#x20AC;&#x201C; we do what we can to bring an end to this dreadful disease.â&#x20AC;? His national insurance adjusting company threw its support behind the Women in Insurance Cancer

Go all of the way when you support cancer research.

Ensurco Quest for the Cure

Thatâ&#x20AC;&#x2122;s how teammates from Ensurco Insurance Group Inc. approached their first candlelit Relay For Life last summer. For them, there would be: s .O NAPS OR EARLY EXITS FROM %STHER 3HINER 3TADIUM IN .ORTH 9ORK EVEN THOUGH IT S ALLOWED h7E stayed up ALL night,â&#x20AC;? recalls the brokerageâ&#x20AC;&#x2122;s president, Raymond Faraone. s .O HALF HEARTED FUND RAISING (IS TEAM CAJOLED nearly $17,000 in pledges. â&#x20AC;&#x153;We were third overall (for a single team) in fundraising.â&#x20AC;? s .O lRST TIME mUKES h.OW THAT WE HAVE A CLEARER idea as to what to expect, weâ&#x20AC;&#x2122;ll be better prepared this year. Our goal for 2011 is to exceed last yearâ&#x20AC;&#x2122;s donations!â&#x20AC;?

Crusade, before and after it began promoting industry participation in the Canadian Cancer Societyâ&#x20AC;&#x2122;s Relay For Life. At last count, the more than 1,400 Crawford employees had raised about $440,000, much of that through the 20 teams that have walked and run in the relay each of the last two years. â&#x20AC;&#x153;My first year I was overwhelmed,â&#x20AC;? Sharoun recalls of Relay For Life. â&#x20AC;&#x153;The survivorsâ&#x20AC;&#x2122; lap is powerful and emotional.â&#x20AC;? â&#x20AC;&#x153;You canâ&#x20AC;&#x2122;t help but be filled with admiration. Any time, talking with the survivors is a remarkable journey. It brings back a flood of emotions for all of those youâ&#x20AC;&#x2122;ve lost.â&#x20AC;? The team members knew every cent they raised would go to cancer research. Thatâ&#x20AC;&#x2122;s because when WICC formed in 1996, it was on the basis that 100% of the funds donated through WICC campaigns would directly support cancer research projects. .OW 7)## IS RALLYING TO MAKE THE INDUSTRY S THIRD sponsorship of Relay For Life the best yet. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s uplifting to think that, for every dollar we raise, weâ&#x20AC;&#x2122;re getting that much closer to a cure,â&#x20AC;? says Faraone. He found that participants reflect and connect DURING THE WELL ORGANIZED EVENT â&#x20AC;&#x153;The lighting of the candles was a very emotional experience for our entire team,â&#x20AC;? he recalls. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s truly wonderful to see humans embracing each other, working together toward a common goal.â&#x20AC;?

Relay Facts: all you need to know to be part of Relay this summer! s 4HE #ANADIAN #ANCER 3OCIETY S .ORTH 9ORK Relay For Life at Esther Shiner Stadium is now one of the biggest industry events in the GTA. s 4HIS YEAR IT TAKES PLACE ON &RIDAY *UNE 3AVE THE DATE s RFL celebrates cancer survival and commemorates lost FRIENDS AND FAMILY MEMBERS FROM PM AM s 3TAYING OVERNIGHT IS NOT MANDATORY BUT IT IS A UNIQUE PART OF the event. s 7)## IS ENCOURAGING TEAMS FROM THE INSURANCE INDUSTRY TO raise $440,000.

s 4EAMS CAN BE MADE UP OF COLLEAGUES FAMILY FRIENDS

clients (itâ&#x20AC;&#x2122;s ok to have teams that are larger or smaller than 10). s )T S ALL ONLINE 'O TO www.wicc.ca/relayforlife to set up a team or join an existing one. s 7HEN SETTING UP A TEAM PICK @7)## UNDER @#OMPANY TO ensure your team funds count for the industry campaign. s 2EGISTRATION COSTS PER PERSON s %ACH TEAM MEMBER IS ASKED TO RAISE A MINIMUM OF in pledges.

WICC at Relay For Life For more information and to register your team(s) go to wicc.ca

Design compliments of

• on the scene OTS The Toronto Insurance Women’s Association (TIWA) Wine and Cheese was held at a new venue this year — The Hyatt Regency in Toronto on King. More than 1,200 guests attended the association’s signature event on Feb. 17, 2011. l

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Trust.

Quality workmanship, promised and guaranteed. The definition of trust is, a firm reliance on integrity, ability, or character. Trust us, we care. CSN Members offer service and quality workmanship that can be trusted. Our national reach starts with a local focus that cares about delivering a repair that is second to none. Trust a CSN repair facility to deliver on the promise to provide an honest, quality repair that is built on confidence, trust and integrity. Your policyholders reap the benefit of a National Lifetime Warranty on all repairs thanks to our CSN network of leading collision repair facilities across the country.

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HASSLE FREE CLAIMS SERVICE LETS CUSTOMERS LOOK FORWARD, NOT BACK. When one of your customers makes a claim, RSA’s skilled team of professionals will get their life back on track promptly with our Hassle Free Claims Service. RSA’s Hassle Free Claims Service provides customers with: • Fast track settlement for eligible property loss claims. • $ 500 Service Guarantee: Calls returned on new claims within 6 hours or $500 paid to your customer, no questions asked. • Free counseling from Graham Guidance Outreach to ease the emotional trauma a customer may experience after a car accident. • Access to a live agent 24/7. RSA provides the finest services and solutions to meet your customers’ insurance needs — and that includes our Hassle Free Claims Service. For more information, visit www.rsabroker.ca

Docket #:

RS 7680

Description of Ad: Claims RSA Client:

Creative Network Contact: Laura Francey

Ad or Trim Size: 8.125 x 10.875” Bleed Size:

8.375” x 11.125”

Publication: issue:

Claims Canada

DUE@PUB

26 november 2010

FILE COLOURS:

eMail: mail@creativenetwork.ca Phone: 416.488.1033 x22