27 minute read
INTERVIEW
RISK MANAGEMENT
AWARDWINNING CAREER
Betty Clarke, winner of the Donald M. Stuart Award, the highest honour within the risk management field in Canada, has had an expansive career in insurance. Find out what she’s accomplished, the secrets to her success, and what she loves most about being a risk manager
By Adam Malik, Managing Editor
cu | Tell us about your career path
I started off as an insurance renewal clerk. Within a few years, I accepted the position of insurance underwriting supervisor and later as manager with the Insurance Corporation of Newfoundland. Then I accepted another promotion to vice president of underwriting with the same company. I took on the additional role of vice president, administration with Anthony Insurance, which was their sales arm.
AXA subsequently bought into Anthony Insurance. Our views were not totally compatible so the timing was right for me to move on to expand on other opportunities. While in Toronto, I met with Baird MacGregor Insurance Brokers. They offered me a position within their special programs department. They wanted it revamped. I’ve always considered myself to be pretty good at going through the operations of a company and finding what the roadblocks were for people on the frontlines; then I would put together information on how I thought it could be run better.
I joined Baird MacGregor’s special programs department, which provided insurance to restaurants and used car dealers. They felt I did a pretty good job in making recommendations for this division. I was then asked to complete another review and make recommendations for their Mississauga, Ont., office that looked after transportation.
cu | How did you end up in risk management?
A former colleague from Baird MacGregor reached out to see if I would consider joining Hunter Keilty Muntz & Beatty, where he worked. I was offered a great position in their transportation division, which I accepted. While there, I assisted some of my larger transportation and marine clients with risk management. I fell in love with that part of my position. I loved working with this company. However, I missed my family back home, so I waited for the right career opportunity to move back to Newfoundland.
I saw Fishery Products International had a job posting for risk management, so I applied and got the job. That’s how I got into risk management.
cu | You’ve had a wide-ranging career. How has this helped you in your job?
I understand what the insurance broker and underwriter do because I held similar positions. I understand what the insurance underwriters need to do and what their tasks are, and that they need to make a profit. At the same time, they need to deliver proper service to their customers. I understand the language, so that if I’m presented with a challenge — for example, if an insurance company says no — then I can get on the phone and deal directly with the underwriter. It is important in situations when I deal directly with underwriters to always update the broker, since we all need to share the same updates. I understand the language of the insurance policy wording. It has made a huge difference for me in being able to do risk management more effectively because I know enough about what happens from the insurance industry perspective and how most things work.
cu | Why are these relationships so important?
You’ve got to be open to ideas and work with people. They’re your partners. I don’t look at insurance people as, ‘Oh, those insurance people.’ I look at them as partners. I call them partners because it makes a whole lot of difference for everyone to see themselves that way. Because if you’re in something together, it’s going to work. If one has gone off on one trail and the other has gone out on the other trail and you have this animosity between you, it’s not going to work.
When we could meet face-to-face, I’d spend the time to meet with my broker — since working with the city, my broker has
been Aon — say, before a conference. We would set aside time to sit down and talk about what the city has done; the new issues; whether things have been good, bad, whatever, and work out between us what the best solutions may be for all. In doing that, I’ve managed to keep the insurance premiums under control over the years, while keeping good coverage in place. And if you must have a rate increase, it’s usually reasonable and it’s easy to explain why.
cu | What advice do you have for managing relationships?
Be respectful of other people and what they have to say. If somebody has been good enough to give me an idea, I will never shout it down. I’ll explain why this could be a good idea for something but won’t work in this particular case. I’ll tell them why, in my opinion, it wouldn’t work.
You’d be surprised where the majority of good ideas come from. In a lot of instances, I found they came from the frontlines where people are dealing with the issue every day. Managers don’t always see the things they see. When you take their ideas and make them work, it makes people feel good.
cu | How can risk managers continue to learn from each other in these times?
You’d be surprised how much you can learn by reaching out to your colleagues. Always reach out to other risk managers all across the country, and even across the continent. I find that folks in the U.S. have helped us out an awful lot.
You also have an opportunity to make new friends and contacts all across the world with diverse backgrounds. And you certainly personally benefit from it as well. It’s opened doors for me in my career, and it will do it for people coming on stream. It helps us to grow as individuals and professionals, especially by being part of the risk management society.
You learn better communication skills. You lose the fear of public speaking. I used to be scared and felt better when no one in the room knew
BETTY CLARKE
Title: Manager, Corporate Risk and Recovery, City of St. John’s, Nfld. Industry experience: 30-plus years of experience in underwriting, brokering, and risk management. Spent time at Merit/Sovereign Insurance, Aon Reed Stenhouse, Anthony Insurance, Baird MacGregor, Hunter Keilty Muntz & Beatty Insurance Brokers, and Fishery Products International Ltd. Currently with the City of St. John’s Education: FCIP, RF, ICS-300 and Certificate in Business Administration from Memorial University Volunteer work: NALRIMS, currently director on board. Previously president and NALRIMS RCC chapter delegate. Also, previous chair of RCC, former president of Insurance Institute of Newfoundland, and RIMS Canada Conference co-chair in 2009 and 2018
me. But I got over that. Public relations are so important. Just improving your skills so that you can understand and motivate others is so rewarding.
cu | What opportunities has COVID-19 created for risk managers?
It creates an opportunity for others to understand the value in what you do. I do lots of research anyway, but it’s shown how important it is to have all of that stuff ready in case something like this happens so that you can explain, ‘Okay, this is why the capacity is the way it is.’
The pandemic has shown that we’re not alone. People don’t like to be alone in anything. There’s an opportunity to learn from this. Continue to research and find out how everybody else did during these times. Find out what the pluses and minuses are. Compare that with your own experience, and update your plans the way they should be.
cu | What emerging risks should be on peoples’ radar?
In my mind, it’s cyber first, then climate change and pandemic.
Just a few years ago, I don’t think anyone had cyber insurance in place. Now few, if any, are left without it. As you know, a lot of people have been working from home since COVID. There’s been a lot more hacking into different computer systems. And so you really have to be on the ball and have the right assessments and response in place. Cyber insurers are not just there to insure you. They’re also advising on good risk controls to put in place. Down the road, you’ll probably see better coverages become available.
With climate change, we’ve all got to be aware of it and find out what we can do to minimize the risk successfully.
As for the pandemic, well, I don’t think that’s going anywhere out of people’s minds for a long time. That will be a topic for awhile, for sure.
cu | What excites you about the risk management profession?
I think it’s just huge that you can be called upon to make things better for people.
It’s just so rewarding to be able to sit down with people, figure out all t he risks you’re dealing with, and come up with measures that can eliminate some of these risks altogether. I really enjoy that kind of thing.
2021 RISK REPORT
ELEVATED CONVERSATIONS
Thanks to COVID-19, it seems like everyone in the organization is playing the role of a risk manager these days. How that benefits risk managers, and where they are setting their sights moving forward…
By Adam Malik, Managing Editor
WHAT A DIFFERENCE A YEAR MAKES.
Before the pandemic was declared in March 2020, risk managers were pushing for the ability to have a seat at the executive table to offer insights and help shape corporate strategies around risk. Typically, they were called upon to help senior executives only when something went wrong.
Today, though, is a different story. Managing risk has become top of mind at companies of all shapes and sizes. Leaders are including risk considerations in their thoughts about managing the business through COVID-19.
Company leaders are carefully thinking about how to keep staff and customers safe, by preventing the spread of the virus. Take, for example, directional arrows at the grocery store. Their purpose is to manage the flow of traffic in the store to prevent people from coming too close together in the narrow aisles. That’s something a risk manager would have co-ordinated before the pandemic. Now, it’s a standard consideration by company leaders in any office.
In fact, company employees of all stripes are starting to sound like risk managers. That’s giving risk managers more confidence about the importance of their role in the company’s day-to-day operations.
“It’s kind of cool to see departments applying risk management thinking and techniques on their own,” observes Tina Gardiner, who is a board member for the Risk and Insurance Management Society (RIMS), and the risk manager for York Region, a regional municipality bordering Toronto to the north.
Gardiner says that when she and her staff meet with company working groups, they see that others in the group have done scenario testing under the corporate business continuity plan.
“Or they’ve already said, ‘This is going to affect this, this and this, so here’s what we need to do,’” Gardiner says. “And they’re using risk terminology like ‘mitigation’ and ‘loss prevention.’ And I’m like, ‘This is great.’ It’s really good to see people were actually listening all that time. And I just thought I was nagging.”
Workplace conversations about risk have become “elevated,” especially around scenario planning, reports Steve Pottle, RIMS Canada Council vice chairman and risk manager for Thompson Rivers University in British Columbia. That means taking into account all the ifs and buts — and there are so many of them.
“I think most of us would have loved to have had [these elevated conversations] years ago with our boards and our senior administrators,” he says. “Just to say to them, ‘We’ve got to start to think about this, and what happens if this isn’t available?’ Then we can at least have some way for planning, as opposed to sort of making it up at the moment.”
In one specific example of a challenge his school is facing, Pottle notes the issue of international students attending the university during the pandemic. What if they can’t get into the country to attend classes? Most universities depend on international student tuition. What do they do in this case? “What are those risk drivers and what are the risk indicators?” he asked.
Vaccination not the magic bullet Speaking about safety, as the COVID-19 vaccine rolls out across the world, risk managers and their work colleagues are turning their minds towards handling a return to the office. How will they manage the safety of staff when some may be vaccinated and others may not? One additional wrinkle is that vaccinations don’t necessarily stop the virus from circulating, but rather they reduce mortality rates among those who are infected.
For risk practitioners advising on a return to work, “it’s about making sure you [i.e. employees] understand that, despite getting a vaccination, you could still get the virus and you can still be spreading it,” Pottle explains. “For some people, there will be a lot of discomfort about suddenly being ramped up to full capacity.”
The point being that vaccinations aren’t the magic bullet that will return everything back to its pre-2020 “normal” state. In fact, much of the strategy from what is considered the “new normal” today will carry over for some time.
“People are going have to get into their heads that you’re going to still have to follow the safety protocols for a while,” Pottle says. “You’re still going to have the mask. You’re going to have to follow good hygiene practices for yourself. And for the facilities, we have to constantly maintain that level of cleanliness. And that means making sure we have sanitization.”
Gardiner agrees. “Just because you get a needle, or someone next to you gets the needle, that doesn’t mean you’re safe,” she says. “Masks don’t come off. Hand sanitizing doesn’t stop. The station cleaning doesn’t stop. We’re in this for the long haul.”
For risk managers, it won’t be about blocking the entrance for those who aren’t vaccinated, or requiring staff to prove that they’ve been vaccinated. “It’s being able to support employees, whatever their decision is about immunization, and making it a safe environment for everyone to come back and really supporting that,” Gardiner says.
This will be the reality for quite some time and risk managers should be preparing for it, experts counsel.
“As much as I don’t like to say it, I think [of] COVID as endemic, as opposed to [a] pandemic,” Pottle says. “It’s something people are going to have to get their heads around for a long time.”
If that’s true, risk managers must consider one very important thing: “Do we all have the bandwidth and the stamina to get us there?” Pottle said.
Indeed, the mental health aspect is gravitating to the front of risk managers’ minds. “We’ve been at this a long time,” Gardiner said. “How is everybody’s stamina? I think the mental health piece is becoming a big thing, for sure. How we’re supporting that mental health piece is huge.”
One answer to that question lies for the most part with human resources. They should have the tools to help colleagues manage through the process. But they’ll need risk managers to help them out.
“As risk managers, we have to support our partners in HR,” Pottle said. “They are the risk managers in some respects. We can support, but they have the expertise.”
For Pottle, HR’s tools to help employees’ mental health are just as important as a mask, face shield, or hand sanitizers in protecting employees’ physical health. “If anything comes out of this, I think there’s going to be a proper acknowledgement that mental health is as important as a person’s individual physical health — colds, that sort of thing — and that’s a good story. I think it’s important that that continues going forward.”
Uncertainty Despite being fairly certain that the threat of the pandemic will last longer than people think, and that people’s mental health should be a main focus going forward, a lot remains uncertain.
For example, will all Canadians who want to be vaccinated actually have the opportunity to do so by the end of September? There have already been delays. The biggest one may have been in January 2021, when Pfizer announced a temporary delay in getting vaccines to several countries because it was upgrading its plant in Belgium in order to produce a larger number of vaccines in the future. There have been other de-
lays, including harsh winter weather causing hold-ups in moving vaccines into Canada.
“We’re finding a lot of uncertainty right now as to what September could look like,” Pottle says. “Will all the vaccinations be complete by September? Most likely not, especially when you’re seeing all these delays in the supply chain.”
There’s also a question about the efficacy of the vaccination. At the time of writing, CBC reported that two nursing care homes in B.C. experienced COVID outbreaks recently, even though 82% of residents in one home were vaccinated and 88% in the other. “You’re not going to be risk-proof [with the vaccine],” as Pottle points out. “You’re not going to be 100%. There’s always going to be the risk of something — it doesn’t have to be COVID. So what is the best way to minimize people’s concerns? Make sure you’re up-front and completely transparent in your processes. Communicate, communicate, and communicate.”
At the beginning of the pandemic, Gardiner and her team had to figure out how to get everyone to work remotely. Now their focus is on how to bring people back. Doing so requires four key things to consider: • Ensuring employee safety.
Measures include social distancing, personal protective equipment, and mental health. • Maintaining a service focus.
Gardiner works for a regional municipality, for example, which is responsible for its citizens. • Leveraging technology. It can be used to help staff work remotely or train them. • Pivoting as required.
Pivoting might well be key over the next several months. “There’s been a lot of unpredictability and a lot of change,” as Gardiner observes. Last March, for example, early estimates pegged an early summer return to the office. That changed to September. Then people predicted returning to the office in January 2021, which got moved again to the spring. Now? Prognosticators have learned their lesson.
“We’re aiming for when everybody’s vaccinated,” Gardiner says. “But there’s been no date this time. It’s just, ‘As soon as we can.’”
And when that finally happens, what will things look like then? Who knows?
For risk managers, it’s most important to consider what’s in the best interest of staff and customers in addition to taking into account the best interests of the business. In Pottle’s situation, that would mean taking into account the best interests of faculty and students, in addition to the big-picture interests of the university as whole.
Work is being done, Pottle says. “We’re not just waiting until September and then snapping a finger. Right now, we’ve put together three scenarios: 1) We’re back in the office, 2) we’re not back, or 3) some kind of hybrid. I think the reality will probably be that it will lead to something in the middle. Theory-based courses can probably be remote. Or, students might be given the option of coming in for one day a week for in-class session, for example, and then the rest of the time you are remote. Until things start to firm up in terms of scenarios, you’re really just trying to cover all your bases as best you can.”
Broad concerns The challenges risk managers have faced over the past year are not generic. Different industries require different responses to the pandemic. In the P&C insurance industry, for example, a recent Canadian Underwriter survey shows about 87% of the workforce transitioned to working from home. However, risk managers in the manufacturing sector had almost no time to think at all, reports Ginette Demers, RIMS Canada Council chairwoman and risk manager at Domtar in Montreal. They had to figure out a solution quickly to get their paper production plant up and running as soon as possible.
“We had to turn around very quickly because we needed to maintain operations,” she says in an interview. “It was a matter of days, weeks, for all the plans to be in place. We needed to think about, ‘Okay, how many employees do we need on the floor to operate this equipment?’ We had to re-think about shifts, and the number of employees, and then [the employees’] protection. It was a quick turnaround.”
That said, Domtar’s workforce is largely working onsite already, so Demers’ focus is not so much on returning to the office. Indeed, her company’s top concern is how to deal with reduced demand for her company’s products. With people working from home and doing their work virtually, the demand for paper has dropped off.
“The impact [of the pandemic] on us is more on the economic side than on worrying about when we go back,” Demers says. “It’s more about, ‘How are we going to keep business?’ We’re thinking of repurposing facilities and stuff like that.”
It’s just an example of how wide-ranging a risk manager’s concerns can be. “We all have our priorities and it’s very broad as to what we face as risk managers, depending on how the economy and the pandemic affect our activities,” Demers says.
POLITICS
POLITICAL SQUEEZE
Unfortunately, the pandemic hit right during the middle of a hard market, so Canadians sought premium relief at the same time insurers needed rate increases to restore profitability. The result? Politics. How the P&C industry plans to respond
By Adam Malik, Managing Editor
In the fall of 2020, the second wave of the COVID-19 pandemic tightened its grip across the country, forcing governments to further restrict and even close some segments of businesses in an attempt to prevent the spread of the virus. Particularly hard hit was the hospitality industry, which faced the double whammy of pandemic-related restrictions and increased insurance renewal rates. Alas, Canadian businesses, shuttered and scrambling, called for premium relief at the very same time that insurers needed to hike rates to return to profitability. This confluence of events led to a perfect storm.
Lightning struck in late October, when Ontario Premier Doug Ford took specific aim at the insurance industry for a commercial insurance capacity issue that developed during the hard market pre-COVID. At a press conference to discuss the pandemic, the frustrated premier unloaded.
“They’re absolutely just refusing to insure people — we don’t play that game,’’ Ford said, specifically referencing the rate hikes and capacity issues facing banquet halls. “You guys don’t get to get all the cream and gravy…and just slough off everything else and think we aren’t going to insure it.”
Ford went on to accuse the industry of “gouging” clients by raising commercial rates and that he’s “had it” with insurance companies. He threatened to go after insurers that were seemingly making money by the truckload, although exactly how he would do this, he did not say. “I’m on to these guys,” he said. “The people are the priority, not the big insurance companies making gazillions of dollars. So I’m coming.”
Pouring gasoline onto the fire, independent MPP Jim Wilson, a former interim leader of the Progressive Conservative party, called for greater regulation of the insurance industry after hearing from condo constituents about increased insurance rates.
“What [condo corporations are] hearing from brokers is that the industry blames [the higher rates] on COVID claims and severe weather claims,” he said. “That’s just bogus…I mean, they can’t be having COVID claims yet, it’s just too early. They need to justify the need for these exorbitant rates.”
Ontario NDP Leader Andrea Horwath has also called for greater industry regulation. “The insurance industry has been running amok in this province for years now,’’ she said. Her party has been calling for a 50% reduction in auto insurance premiums during the pandemic.
Unfortunately, some of these sentiments come from outdated and incorrect perceptions, Don Forgeron, president and CEO of the Insurance Bureau of Canada, believes.
Between 2016 and 2019, the Canadian P&C insurance industry has posted a return on equity, one measure of profitability, of between 4.8% and 7.3%. That’s well below the returns of between 16% and 18% during the early 2000s.
“There’s always been a perception that the industry is wildly profitable,” Forgeron told Canadian Underwriter. “It doesn’t matter where the economy is, the industry is always making ‘gazillions.’ There’s no question that when you look at the data, the margins are pretty thin. I’ve had this discussion with [now-former Ontario Finance] Minister [Rod] Phillips, and he accepts and acknowledges that the industry certainly is not gouging. The opposite is happening.”
“There’s always been a perception that the industry is wildly profitable. It doesn’t matter where the economy is, the industry is always making ‘gazillions.’
Ford and other politicians who have expressed frustrations with the insurance industry over high premiums are simply reflecting the anger that consumers are directing at them, says Joseph Carnevale, president of the Insurance Brokers Association of Ontario.
“No one’s faulting the premier for having that outburst that particular day,” Carnevale told Canadian Underwriter. “It’s understandable. Consumers are feeling it. And so, as a representative of all consumers, he has a right to vent. And that’s okay.”
Forgeron agrees these types of political outbursts are to be expected, given the way things are at the moment. “I think it just makes the point even clearer that we need to continue to work with [politicians and regulators]. We need to continue to show them the good work that we’re doing. And we need to continue to ensure that we’re seen as being part of that solution that they’re looking for, and not part of the many problems they’re dealing with. The frustration is understandable.”
Even at the best of times, no one ever believes they’re getting a deal on their insurance, as Carnevale points out. So, combine the effects of the hard market with the impact of COVID-19, and customers are naturally frustrated.
“With all due respect to consumers, it is clear this is a problem,” Carnevale acknowledges. “COVID has presented a huge problem for consumers, both personal and commercial. The frustration that the premier echoes is understandable. We [in the P&C industry] all have the same frustration, and we’re dealing with something that’s still an unknown.”
Forgeron is aware of the lens through which politicians and regulators are looking at the P&C industry. The financial results for 2020 aren’t available yet, but the P&C industry is expected to make a profit, albeit barely, and that’s more than other industries and businesses can say.
“Governments are dealing on a daily basis with sectors that are not profitable,” Forgeron said. “In fact, many are failing. And that’s the lens they’re looking through. We as an industry need to be sensitive to that. Even though our margins are wafer-thin, many sectors don’t have any margins at all and have already failed.”
As far as greater regulation is concerned, the industry shouldn’t be cast as the scapegoat for the hard market conditions in some commercial lines. Politicians also have a role to play in making the situation better for consumers, as Forgeron observes. For example, governments could take measures to improve insurability and risk profile around condos and stratas.
“Governments recognize that markets work in cycles,” said Forgeron. “Unfortunately, we have a hard market twinned with a global pandemic, and obviously no one has ever seen that before — and it’s made both worse. And so we just have to find solutions through that with governance. I think the default for governments...is not to go looking at regulation to solve these problems.”
Charles Brindamour pushed back against the idea of increased regulation during a fall conference call discussing Intact Financial Corp.’s financial results for the three months ending Sept. 30.
“I don’t think that scaring insurers is the way to bring capital back into the system,” he said, later clarifying, “I don’t think you bring capital back into the industry by regulating.”
Public Education Meanwhile, brokers have listened to their fair share of customers’ frustrations directly, according to Carnavale. “We certainly feel it and hear it first-hand, more so than insurers, in that we’re the ones talking to consumers on a regular basis. Having said that, I think part of this is really a communications issue.”
The topic of public education has come up a number of times during interviews and industry virtual events.
“Unfortunately, there’s just some misinformation out there and it does not put the insurance industry in good light,” IBAO CEO Colin Simpson said while moderating the CEO panel at the virtual IBAO Convention in October. “We certainly have to continue working together to make sure that we try and educate the public.”
The industry has done a lot of work to educate elected officials and regulators, but the frequency needs to be increased, Forgeron says. Furthermore, the industry needs to call on allies in other industries to help carry the message. Associations such as Restaurants Canada, which represents the foodservice industry, the Canadian Federation of Independent Business, and the provincial Chambers of Commerce across the country could support the insurance industry’s messaging to politicians and the public.
“I think they can vouch for the hard work that the industry is doing, the heavy lifting that we’re doing,” Forgeron says. “The more government hears from us [about] the work that we’re doing, I think that’ll just position us in a much better place with them.”
Brokers need to take their message directly to the client, Carnavale advises. This will mean more in-depth conversations than compared to previous years.
“I find myself that you have to go into great detail about why we’re here and how we found ourselves here,” he says. “It’s not always about, ‘So what are your risks? What can we do to help you?’ Sometimes the messaging is, ‘Well, this is where we find ourselves as an industry. This is how it impacts you. This is how we got here. This is how we see this going forward, and when we [expect to see] changes that are going to benefit you again.’
“It’s a constant conversation. It’s the very essence of what brokers do. Part of our job is also to educate consumers about how they’re being impacted.”
