C A N A D A’ S I N S U R A N C E A N D R I S K M A G A Z I N E . C A N A D I A N U N D E R W R I T E R . C A
M ARC H 2 0 1 1 A Business Information Group Publication #40069240
Protecting Our Pipelines by vanessa Mariga
Money Laundering By Amber Scott and Lucy Tran
Excise Tax By David Gambrill
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SEEING THE
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VOL. 78, NO.3, MARCH 2011 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY BUSINESS INFORMATION GROUP
www.canadianunderwriter.ca
COVER STORY
Boom Times
30
Risk managers in Canada’s onshore oil industry must deal with a multitude of risks related to the country’s precious natural resource, chief among them environmental and reputational risks. A lesser-known risk is that the new technologies developed to limit the potential for environmental damage may carry with them risks of their own. BY VANESSA MARIGA
FEATURES
14
44
20 ERM and Sustainability 48 Social Media Policies Sustainability is here to stay, and enterprise risk management plans should be taking it into account. BY TINA GARDINER AND MARIE ENDICOTT
Money Laundering
Creating Captives
Canada’s property and casualty insurance industry needs to be aware that the purchase of P&C insurance could be a means to legitimize unscrupulous transactions.
Many companies wishing to transfer risk from their books overlook the option of creating a captive insurance company.
BY AMBER D. SCOTT AND LUCY TRAN
BY TREVOR MAPPLEBECK AND ROB LANDOLT
24 52 Excise Tax
Nature Unleashed
The Canada Revenue Agency is interpreting the federal Excise Tax Act in a new way, potentially creating headaches for Canadian commercial brokers, insurers and their clients.
Allstate Canada is supporting an exhibit at the Ontario Science Centre designed to help Canadians understand the science behind natural catastrophes.
BY DAVID GAMBRILL
BY CHRIS KIAH
4
Canadian Underwriter March 2011
28 Engaging Risk Professionals RIMS Canada Council is planning a number of new offerings in 2011 to stay engaged with its risk management members. BY TINO BRAMBILLA
40 Multinational Insurance Non-owned broker networks offer a solution for international risk managers who want both a domestic “coordinating broker” and oversight over the foreign placements of their global program. BY T. NEIL MORRISON AND BRUCE BASSO
Companies are using social media more often. Therefore, they should create policies to help mitigate risks associated with social media. BY J.M. REYNOLDS
56 Optional Benefits Ontario’s auto insurance reforms may have inadvertently created a dilemma for insurers when it comes to the portability of optional benefits in priority of payment disputes. BY DANIEL STRIGBERGER
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VOL. 78, NO.3, MARCH 2011
PROFILE
10 Taking it to The Hill RIMS Canada Conference co-chairs Kim Hunton (right) and Barbara Carscadden are emphasizing the personal and professional connections to be made at the 2011 RIMS Canada Conference in Ottawa.
Editor David Gambrill david@canadianunderwriter.ca (416) 510-6796
Art Director Gerald Heydens Art Consultation Pylon.ca
Associate Editor Vanessa Mariga vanessa@canadianunderwriter.ca (416) 510-6793
Production Manager Gary White (416) 510-6760
Senior Publisher Steve Wilson steve@canadianunderwriter.ca (416) 510-6800
Subscriptions/Customer Service Gail Page gpage@bizinfogroup.ca (416) 442-5600 ext 3549
Associate Publisher Paul Aquino paul@canadianunderwriter.ca (416) 510-6788
Circulation Manager Mary Garufi mgarufi@bizinfogroup.ca (416) 442-5600 ext 3545
Account Manager Michael Wells michael@canadianunderwriter.ca (416) 510-5122
Print Production Manager Phyllis Wright
BY VANESSA MARIGA
SPECIAL FOCUS
8
Editorial
10 Marketplace 60 Moves & Views 62 Gallery
Advertising Sales Christine Giovis christine@canadianunderwriter.ca (416) 510-5114
President Bruce Creighton Vice President Alex Papanou
Canadian Underwriter is published thirteen times yearly (monthly + the Annual Statistical Issue) by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd., a leading Canadian information company with interests in daily and community newspapers and business-to-business information services. Business Information Group is located at 12 Concorde Place Suite 800, North York, ON, M3C 4J2. Phone: (416) 442-5600. All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, including photocopying and recording, 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. Š Published monthly as a source of news, technical information and comment, and as a link between all segments of the insurance industry including brokers, agents, insurance and reinsurance companies, adjusters, risk managers and consultants. Privacy Notice From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374 Fax: 416-442-2191 E-mail: jhunter@businessinformationgroup.ca Mail to: Privacy Officer, 12 Concorde Place., Suite 800, North York, ON, M3C 4J2
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Canadian Underwriter March 2011
ISSN Print: 0008-5251 ISSN Digital: 1923-3426
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EDITORIAL
It Can Happen Here
The current hardship in Christchurch, New Zealand is a grim reminder that Eastern Canada needs to be far better prepared to protect itself against a similar threat of earthquake here in Canada. David Gambrill, Editor david@canadianunderwriter.ca
8
Canadian Underwriter March 2011
Someone took eerie cell phone footage of the Magnitude 6.3 earthquake that has killed at least 155 people so far in Christchurch, New Zealand. Aired on network television in Canada, the footage showed a typical tourist shot of an intersection in Christchurch, presumably taken to get a feel of the city’s architecture. Then the quake hits, the cell phone wobbles, and briefly the daytime scene turns to black. The video clip gives viewers the impression the place had plunged from daytime into darkness. Which, metaphorically speaking, it has. The 6.3 quake is considered to be an aftershock of a bigger, Magnitude-7.1 earthquake that hit Christchurch in September 2010. But damage caused by the aftershock turned out to be more deadly for two reasons, the first being the characteristics of the aftershock quake — its epicenter was 39 kilometres closer to the downtown area, its depth was shallower and it hit in the afternoon, when the downtown was busiest. Secondly, the city’s infrastructure had already weakened as a result of the September 2010 quake. Catastrophe modelers are still calculating potential insured damages, but so far initial estimates of insured losses range between $3 billion and $8 billion. Experts are already drawing comparisons between what happened in New Zealand and what might be expected in the event of an earthquake hitting the area around Vancouver,
B.C. in Canada. It seems every time an earthquake happens elsewhere in the world, we are always reminded of the exposure on Canada’s West Coast. In fact, in its August 2007 issue, Canadian Underwriter drew parallels between the social dislocation caused by Hurricane Katrina and what might be expected to happen if an earthquake were to hit the West Coast. The title of the piece, written by Vanessa Mariga, asks the obvious question: ‘Are We Ready?’ One might argue Canada’s West Coast is more prepared for an earthquake now than it was when that 2007 piece was written. For example, the Institute for Catastrophic Loss Reduction (ICLR), a research body supported by Canada’s property and casualty insurance industry, notes The City of Vancouver has finally started to bury underground the electrical wiring currently supported by wooden poles in the downtown core area — wooden poles that would very easily get knocked over in the event of an earthquake, thus creating a electrical/fire hazard. ICLR identified the need to beef up infrastructures in a report sponsored by Lloyd’s Canada, Reducing the risk of earthquake damage in Canada: Lessons from Haiti and Chile. In addition, in January 2011, the Insurance Bureau of Canada (IBC), an association representing the country’s home, building and auto insurers, announced their gold sponsorship of ShakeOut, the largest earthquake drill to take
place in Canada. IBC said more than 400,000 people participated in this drill in homes, schools, businesses and government across the province. These initiatives show a better awareness and preparedness for an earthquake hitting where the risk exposure is highest — the Greater Vancouver Area. But what about other areas of Canada, where the risk is also great? Alas, earthquake preparedness still has a long way to go in major urban areas such as Ottawa, Montreal and Quebec City. In fact, a Magnitude-5.0 earthquake hit the Ottawa area in late 2010, causing $16 million in damage. This isn’t enough to qualify as a ‘catastrophe’ — in the insurance business, the threshold is $25 million — but it did highlight a thorough lack of preparedness for something bigger. Insurers note the takeup on earthquake insurance remains quite low in the Ottawa and Montreal areas. So when these densely-populated areas get hit by an earthquake, there won’t be a whole lot of insurance available to fix or replace homes, cars and businesses after a quake. What happened in Christchurch is an absolute tragedy. No doubt, the hearts of everyone in the industry reach out to the people in need of rebuilding their lives. The current hardship suffered by people in Christchurch is a grim reminder that Eastern Canada needs to be far better prepared to protect itself against a similar threat here in Canada.
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MARKETPLACE
Canadian Market CANADA’S NEW RULES PROHIBIT BANKS FROM PROMOTING NON-AUTHORIZED INSURANCE ON WEB SITES Canada’s Department of Finance has published its proposed rules for preventing banks from promoting nonauthorized insurance products on its Web sites. The regulations are a follow-up to the federal government’s stated intention in 2009 to include bank Web pages within the general prohibition on banks from promoting certain types of insurance services. The proposed amendments for Section 2, subsection 7.1(1) of the Insurance Business Regulations read in part: “A bank shall not, on a bank Web page, provide access to a Web page — directly or through another Web page — through which there is a promotion of: (a) an insurance company, agent or broker that does not deal only in authorized types of insurance; or (b) an insurance policy of an insurance company, agent or broker, or a service in respect of such a policy, that is not of only an authorized type of insurance.” A “bank Web page” is defined as “a Web page that a bank uses to carry on business in Canada, including any information provided by the bank that is accessible on a telecommunications device.”
10 Canadian Underwriter March 2011
CANADIAN P&C INDUSTRY’S UNDERWRITING PROFIT DECLINES ON A QUARTERBY-QUARTER BASIS Canada’s property and casualty insurance industry has seen a gradual, quarter-byquarter decline of its underwriting income, which plummeted from a profit of $592 million in 2009 Q4 to an underwriting loss of $308 million in 2010 Q4. Statistics Canada reported the data in its 2010 Q4 Quarterly Financial Statistics for Enterprises, released on Feb. 23. The $308-million underwriting loss in 2010 Q4 was a slight improvement over the $315-million underwriting loss the industry posted in 2010 Q3. But the deterioration of the industry’s underwriting income from quarter to quarter is evident. Prior to the underwriting losses in the last two quarters of 2010, Statistics Canada data show the industry posted a quarterly underwriting profit of $592 million in 2009 Q4, a $389-million underwriting profit in 2010 Q1, and a $60-million profit in 2010 Q2.
SOFT COMMERCIAL LINES IN CANADA ARE EXPECTED TO PERSIST IN 2011: MARSH CANADA Soft commercial insurance market conditions persisted throughout Canada in 2010 and are poised to continue into 2011, according to a comprehensive report pub-
lished by Marsh Canada. “Key commercial insurance market drivers from 2009 — including intense competition among insurers, abundant capacity and relatively few insured catastrophe losses — continued through 2010 and are forming market conditions for 2011,” Marsh said in its report, Approach Your Risk With Clear Direction: North American Insurance Market Report 2011. The report found clients are seeing lower rates on average across all major coverage lines. For Marsh clients renewing in the fourth quarter of 2010: • property rates typically declined 5% to 10%; • primary liability rates declined 7.5% to 12.5% for clients with low-risk profiles and little U.S. exposure; and • directors’ and officers’ (D&O) liability insurance rates for public companies not listed in the United States were flat to 15% down.
Claims VALUE OF PROPERTY LOSS ESTIMATES REPORTED THROUGH XACTWARE IN CANADA INCREASES BY $200 MILLION IN 2010 The value of property loss estimates reported through Xactware in Canada grew to $1.32 billion in 2010 from $1.10 billion in 2009. The total monthly loss estimate value started at $84.9 million in January 2010 and peaked at $148.3 million in August. The spike followed
the massive July 12 hailstorm in Calgary and Southern Alberta, Xactware said in its 2010 Year-End Claims Analysis. By December, this figure dropped back down to $87.6 million. In total, 136,927 loss estimates were reported to Xactware in Canada, the report adds. The average value of a property estimate in Canada in 2010 was $9,659, marking an increase from 2009’s average of $9,007 per estimate. The value of the estimates peaked in February, when they averaged $10,184.
SUM OF CATASTROPHES IN 1998, 2005, 2009 AND 2010 COSTS INDUSTRY $3.8 BILLION IN CLAIMS: PCS-CANADA PCS-Canada has reviewed the sum of all catastrophes in Canada from 1998, 2005, 2009 and 2010, and has determined that these events collectively cost the industry $3.8 billion, involving 850,000 insured properties. “These may be surprising numbers to the Canadian insurance industry,” according to a ‘Summary of Catastrophe Activity in 2010 and Earlier Years,’ appearing in the MSA/Baron Outlook Report Q3-2010. PCS-Canada identified four catastrophes in 2010, including tornadoes in Ontario, storms and flooding in Saskatchewan, a hail storm in Alberta and Hurricane Igor hitting Newfoundland and Labrador.
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MARKETPLACE
“In summary, the four catastrophes caused an estimated insured property loss of nearly $800 million, based on current estimates,” according to the summary. “These same events also produced over 85,000 claims to the insurance industry.” PCS-Canada said reviewing past catastrophes was a difficult assignment, because many insurers did not have recoverable records and mergers and acquisitions made it difficult to capture some data. But a review of the 1998 Ice Storm shows it resulted in $1.5 billion of insured property damage to more than 660,000 properties
ance Council of British Columbia in writing prior to conducting any insurance transactions with an unauthorized insurer. The written notification must include:
• the name of the individual broker or agency; • the primary broker at the agency; and • confirmation that the broker understands the disclosure and trust require-
ments contained in Rule 7(11.1). Related to the last point, the broker must disclose to a client in writing the risks associated with an unauthorized insurer.
Cunningham Lindsey offers expert claims handling for the most complex and specialized losses. To access our team of experts, write to us at corpservices@cl-na.com for a copy of our new Specialty Services Directory.
Regulation B.C. IMPLEMENTS NEW RULES FOR PLACING COVERAGE WITH UNAUTHORIZED INSURERS A new rule outlining procedures B.C. brokers must follow when placing coverage with an unauthorized insurer took effect on Feb. 28, 2011. Section 76(1)(c) of the Financial Institutions Act in British Columbia provides a limited exemption from the restriction prohibiting the placement of insurance with an unauthorized insurer. Rule 7(11.1), which took effect in February, establishes a course of action when conducting an insurance transaction related to this exemption. According to Rule 7(11.1), brokers must notify the Insur-
www.cunninghamlindsey.com
March 2011 Canadian Underwriter
11
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PROFILE
Taking it to the Hill Vanessa Mariga Associate Editor
RIMS Canada Conference cochairs Barbara Carscadden and Kim Hunton are encouraging risk managers to make connections at the September 2011 RIMS Canada Conference in Ottawa. RIMS Canada Conference cochairs Kim Hunton and Barbara Carscadden are heavily promoting the benefits of personal and professional ‘connection’ in light of the upcoming 2011 RIMS Canada Conference in Ottawa. The conference is themed Capital ConneXions — Where Vision and Action Intersect. It is to be held on Sept. 18-21, 2011 at the Ottawa Convention Centre. Hunton and Carscadden both have strong professional connections with RIMS Canada; each has worked on past conference committees before. Carscadden recently retired
12 Canadian Underwriter March 2011
after a 30-year career with Canada Mortgage and Housing Corporation. Hunton has served for 25 years with the City of Ottawa. At CMHC, Carscadden started out in clerical functions, but pursued continuing education in the evenings, eventually earning her CIP and CRM designations. Within the first five years or so, she had moved into a risk management role, where she remained for the rest of her career, primarily focusing on the hazard side of the business. Hunton celebrated her 25th anniversary with her employer in November 2010. She started in 1985 with OC Transpo, Ottawa Carleton’s Regional Transit Commission. In 2001, when the City of Ottawa amalgamated with 11 other cities, the transit authority also got rolled into this new one entity. “At that time, I became the ‘new city’s’ first risk manager,” Hunton says. “Like Barb, we handled insurance, claims, contract review and all the traditional things risk managers do.” Hunton remained in that capacity until 2008, at which time she took charge of leading Ottawa’s enterprise risk management implementation. Carscadden and Hunton say the role of the traditional risk manager has evolved to encompass a much more holistic view
of an organization. “At one time, in the 1980s, if you wanted to call yourself a risk manager, people just assumed you were the insurance buyer because that was the primary thing you did,” Hunton says. “Today, it’s probably about one-tenth of what a risk manager does.”
In the 1980s, if you called yourself a risk manager, people just assumed you were an insurance buyer. Today, it’s probably one-tenth of what a risk manager does. Carscadden adds risk managers have evolved to become mentors within their organizations. Such personal connections have helped to make others aware of what risk managers do, thus extending the responsibility for risk in a company beyond individuals holding the ‘risk manager’ title. “Now, we’re doing a lot more mentoring of our peers in the company on risk management, and those people we’re mentoring are taking ownership of risk management in the organization,” she
says. “Everyone in the organization is involved in the assessment of risk profiles.” Creating a cultural shift within an organization around the ownership of risk is not a simple task — especially when the organization is large and complex. The City of Ottawa dubbed its ERM program ‘enhanced risk management,’ Hunton says. It’s tricky to “change the culture” of a municipality because municipal entities are essentially comprised of multiple business units and departments; each has a very different and unique function. For Hunton, the first step was to create a formal enhanced risk management policy to set direction. Next, her team added tools people could use when doing their risk management thinking. “For example, we created a risk impact chart,” she says. “We have tried to articulate in a chart what people in our city think are low-risk items versus high risk.” For example, one item on the chart is business interruption or an inability to deliver services. For bus services, a half-hour service interruption would be considered low-risk. A two-hour service interruption would be cause for concern. A full-day service interruption would be a rather serious risk, especially if it af-
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Photo: Tom Alfoldi
PROFILE
RIMS Canada Conference co-chairs Barbara Carscadden (left) and Kim Hunton fects all buses. And a prolonged interruption, perhaps due to a labour strike, would be a highimpact risk. “These tools allow people to assess risk in their own context,” Hunton says. Risk managers can expect to learn about these sorts of techniques, theories and emerging trends at the 2011 RIMS Canada Conference. The theme ‘Capital ConneXions’ weaves together several threads running through the conference, Carscadden and Hunton say. “Ottawa is the capital of Canada, so ‘capital’ seemed to be a good fit,” Hunton
says. “We decided early on we wanted to use that reference because we own it, it’s ours.” As for ‘ConneXions,’ that’s exactly what the pair hopes will be accomplished at the event. “We’re hoping to build on that theme of ‘Connect with your peers, connect with education and connect with networking,’” Carscadden says. Hunton adds the conference will allow colleagues from across the country to re-connect with one another. It will also be a place where underwriters might ink some deals. “For whatever reason you’re
coming to the conference, it will allow you to connect,” she says. Details about the conference program are yet to be finalized. But a new addition to this year’s event will be a public sector stream. Rather than offering a specialized panel of speakers from the public sector in a plenary session that everyone attends, the organizing committee is promoting a public sector session as an option during each of the concurrent session time slots. “Ottawa is home to the federal government, so we think that specific stream will be a great attraction for one-
day attendees and will really help to pull in the government crowd at all levels, be it federal, provincial or municipal,” Hunton says. Carscadden notes the facility hosting the event, the Ottawa Convention Centre, will be brand new — quadruple the size of the old Ottawa Congress Centre. Construction is on schedule to be completed by April 2011. The facility is located downtown, right on the old footprint of the Congress Centre, around the corner from Ottawa hot spots like Parliament Hill and the Byward Market. But instead of having only one floor, the Ottawa Convention Centre has four, adding the bonus of convenience for delegates. “It’s significantly larger than the old space, to the point that we can host all of the functions there,” Carscadden says. “The exhibit hall, the gala, the concurrent and plenary sessions will all be held under one roof. It’s big enough that we don’t have to dismantle the Exhibit Hall in time to set up for the gala on Tuesday night. That should be a real stress reducer.” Registration for the conference will open in the spring. See www.rimscanadaconference.ca for more information.
March 2011 Canadian Underwriter
13
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Keeping it
Amber D. Scott Williams McGuire AML Inc.
Money laundering in the Canadian P&C industry is not featured in Canada’s antiterrorism legislation, and no one is in a hurry to invite more regulation, but insurers need to be wise to schemes to launder money through P&C insurance products.
To paraphrase a well-placed lawyer in the Canadian property and casualty (P&C) insurance world, Canadian anti-money laundering (AML) legislation does not mention P&C insurance and no one is in any hurry to add to their regulatory burden. For the most part, this statement is accurate. Canadian AML legislation does not explicitly Lucy Tran make reference to P&C insurance (although refWilliams McGuire erences are made to life insurance). This, howAML Inc. ever, should not be taken to mean money cannot This article was written with be laundered through P&C products (a growing the assistance of Allison base of cases refute this idea). Nor should it be Murray, A.M. Associates taken to mean P&C agents, brokers, dealers or Insurance Services Ltd. other insurance professionals are free from reg-
14 Canadian Underwriter March 2011
ulatory obligations with regards to AML. These obligations come into play when the insurance product in question originates from an insurance company that operates out of a country that does have P&C-related AML obligations, such as the United Kingdom. These obligations often extend extra-jurisdictionally; they relate in particular to situations when the jurisdictions in which the product is being sold do not meet the same standards as those of the originating country. This is of particular concern to Lloyd’s coverholders in Canada, for example, and other Managing General Agents (MGAs) that underwrite on behalf of foreign P&C insurers. What do money laundering and terrorist financing schemes related to P&C products look like? What are the red flags? What do Canadian P&C insurance professionals need to know about AML compliance to be on the right side of the law? In particular, what do they need to know about products originating from companies based in the United Kingdom and in the U.S.A.?
RECENT CASES The Financial Action Task Force (FATF) is an inter-governmental body that develops and promotes national and international policies to combat money laundering and terrorist financ-
Illustration by Greg Hargreaves/www.threeinabox.com
Clean
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Figure 1
Placement
Funds (often in cash) enter the financial system
Layering
The funds that have been placed in the system are moved between accounts and financial products to obfuscate their true source
Integration
The funds, once separated sufficiently from their criminal source, appear to be part of the legitimate economy
•
Disposal of bulk cash via: • Payment of premiums for policies, including top-ups • Large number of transactions • Using cash or cash equivalents rather than through banking channels
•
Disguise origin of initial funds through: • Multiple transactions • Borrowing against life insurance policies • Termination of policies • Sale of units in investment-linked life insurance products
Placement
Layering •
Use layered funds to purchase “clean, legitimate” assets: Money assets • Fixed assets • Business •
Integration
•
ing. Their 2003-04 typologies report P (available at www.fatf-gafi.org) included a special section on the insurance sector, highlighting a number of red flags and discussing several sample cases. The report states: “Financial institutions view payments originating from insurance companies as commonplace.The money is assumed to be clean and the payments do not attract attention. If money launderers can place funds into an insurance policy, then they will have made significant steps in layering and integrating the funds into the international financial system.” In addition, at the placement stage of the laundering cycle, for example, the industry has been used through the outright purchase of insurance products with criminal cash proceeds. In these cases, money launderers have exploited the fact that insurance products are often sold by brokers — that is, agents who are not acting directly under the control or supervision of the company that issues the product.” These observations are more meaningful in the context of the money laundering cycle, a process involving three stages — placement, layering and integration — depicted below. Through these stages, the proceeds of crime (often in cash) are placed into the legitimate financial system and the source of the funds is systematically obfuscated through a series of transactions. The goal of these transactions is to make the funds appear legitimate. All financial services professionals should consider ways money laundering might be possible given the products and services being offered. Terror-
16 Canadian Underwriter March 2011
ist financing often uses many of the same steps as money laundering, although the goals in this case are somewhat different. Terrorist financing aims to fund terrorist groups and activities. For many of the same reasons money launderers wish to hide the source of their funding (they do not want the underlying crimes to be detected), terrorists also do not wish for the source of the funds to be connected to their groups or actions. Figure 1 above is adapted from the International Association of Insurance Supervisors (IAIS) AML Guidance from January of 2007 (available at www.amlcft.com). It depicts some ways in which insurance products might be incorporated at each stage of the cycle. For those in the life insurance business, which has been covered under Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and associated regulations (PCMLTFR) since 2008, everything stated thus far should feel a bit like a review of annual AML and CTF training. P&C insurance professionals, on the other hand, are not covered under the current Canadian legislation. However, this does not mean there have been no money laundering or terrorist financing cases related to P&C insurance products. Many examples exist of P&C insurance for luxury personal items or large commercial risks being used to launder funds. These schemes may, but do not always, include an element of fraud. One of the most common methods is to make a fraudulent claim against a property policy. This ensures the funds
received in settlement come from a reputable source and appear legitimate. The case study below is detailed in the U.S. Department of the Treasury’s Financial Crimes Enforcement Network’s (FINCEN) Anti-Money Laundering Program and Suspicious Activity Reporting Requirements For Insurance Companies (available at www.naic.org).
CASE STUDY: P&C PRODUCTS AND MONEY LAUNDERING Four broking agencies were forced to freeze funds after U.S. court action followed an investigation into Latin American drugs smuggling. The Drug Enforcement Agency (DEA), based in the U.S.A., coordinated the drug trafficking investigation, code-named ‘Golden Jet.’The Federal Bureau of Investigation (FBI) and the United Kingdom authorities were also involved. The funds frozen by the court action related to commercial aircraft insurance policies. The brokers affected by the court order included some of the largest U.K. insurance brokers. The case highlighted the potential vulnerability of the insurance market to sophisticated and largescale drug trafficking and money-laundering operators. The court order froze aircraft insurance policies taken out by 17 Colombian and Panamanian air cargo companies and by nine individuals. The action named 50 aircraft, including 13 Boeing 727s, one Boeing 707, one French Caravelle and two Hercules C130 transport aircraft.The British end of the action was just one small part of a massive anti-drug trafficking action coordinated by the DEA. Offi-
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cials of the DEA believe Golden Jet is one of the biggest blows they have been able to strike against the narcotics trade. Led by the DEA, American authorities swooped in on an alleged Colombian drug baron, seizing tons of cocaine valued at many billions of dollars. A massive cocaine- processing factory located in Colombia, together with aircraft valued at more than $22 million, were destroyed in the DEA-coordinated action. According to the indictment, the cargo companies were responsible for shipping tons of cocaine from South to North America throughout the 1980s and early 1990s, providing a link between the producers and the consumers of the drugs. Much of the cocaine flowing into the U.S.A. was transported into the country by air. During this period, the Colombian cartels rose to wealth and prominence, aided by those transport links. Although certain elements of this case may seem dated, it is important to remember it can take a number of years for a case to move through the court system; until the case is finalized, law enforcement is often not at liberty to discuss the specifics. It is also worth noting the elements that facilitated money laundering through P&C products in this case persist today.
RED FLAGS A number of confirmed red flags should prompt action by P&C insurance professionals. It is important to remember a red flag does not necessarily mean the client is a criminal or that money laundering or terrorist financing are occurring. All suspicious activity should be investigated as a matter of good corporate governance. The following is an aggregate list of the red flags noted by FATF, IAIS and FINCEN: • unusual payment methods such as large cash payments or cash equivalents such as money orders are used; • attempts are made to use a third-party cheque to make a proposed purchase of a policy; • an applicant requests to make a lump sum payment by a wire transfer or with foreign currency;
18 Canadian Underwriter March 2011
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• an applicant is reluctant to provide identifying information when purchasing a policy, or provides minimal or unverifiable information without supporting documentation; • early termination of a policy is requested where cash was tendered and/or the refund cheque is to a third party; • transfer of the benefit of a product or claim settlement to an apparently unrelated third party is requested;
imum cash value of a single premium policy soon after paying for the policy (life insurance); • an applicant uses a mailing address outside the insurance broker’s normal territory; • an applicant cannot be contacted directly via telephone; • an insured makes frequent claims and the claims amounts are conveniently under a limit that would be flagged, such as a claim settlement authority limit in a binding authority agreement. Further to the above red flags, internal staff may be involved. As a result, ensure internal controls and governance are strong, especially in the cash receipt and claims areas. Any transaction involving an undisclosed third party should be suspect. In the fight against money laundering and terrorist financing, our first line of defense is always the education, instincts and diligence of front-line people. In order to deter, detect and prevent we must first recognize the signs of illegal money-laundering activity and make sure all staff is aware of the issue and trained to spot suspicious activity.
Many examples exist of P&C insurance for luxury personal items or large commercial risks being used to launder funds. These schemes may include an element of fraud.
THE BOTTOM LINE
• an applicant shows heightened interest in the cancellation terms; • an applicant appears to have policies with several institutions through different brokers; • an applicant purchases policies with insurance limits that appear to be beyond the customer’s apparent means or needs; • an applicant purchases a high premium insurance policy using cash; within a short time, he or she cancels the policy and requests the cash value returned, possibly payable to a third party; • an applicant wants to borrow the max-
Canadian insurance professionals who do business with insurance companies domiciled in the United States, United Kingdom or other international jurisdictions should be aware the insurer may choose to — or be required to — impose the same standards on their international business as on their domestic business. If your firm works closely with a company headquartered outside of Canada, you should be aware of the rules imposed by that country and company. The good news is that the nature of insurance often involves the collection of the types of information required to build solid AML and CTF controls. The challenge is to make sure internal policies and procedures reflect the actions your firm is undertaking to detect, deter and prevent money laundering and terrorist financing.Your documentation should be aligned with requirements applicable to you and your business.
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ERM and Sustainability:
Beyond Buzzwords Tina Gardiner
Manager, Insurance and Risk, The Regional Municipality of York
Marie Endicott Senior Risk Analyst, The Regional Municipality of York
Sustainability is more than just a fad, and it should be incorporated into any solid enterprise risk management (ERM) framework.
Processes that were once seen as too expensive to justify are now regarded as the normal cost of doing business. And now comes the latest shift in corporate culture, emphasizing enterprise risk management (ERM) and sustainability.
The business world is full of buzzwords, paradigm shifts and new corporate focuses. Just walk down the aisles of the business section of any bookstore and check out the ever-changing selection of the latest and greatest methods for being the best. How do you know when it is real, lasting and something to which you should pay attention? One of the last big changes in the way business was done happened in the 1980s, when there was a move to Total Quality Management (TQM). Simply put, TQM takes a holistic approach to long-term success in an organization, seeking long-term, continuous improvement and the engagement of all employees in an organization. TQM informed the production processes of Toyota, Motorola, as well as the Six Sigma movement. As a result, the business world as we know it transformed for the better. Expectations and business cultures shifted accordingly.
THE TRIPLE BOTTOM LINE APPROACH
20 Canadian Underwriter March 2011
The concept of sustainability has its roots in environmental protection and social justice as far back as the 1970s. But the ‘Triple Bottom Line’ definition widely accepted today hails from British economist John Elkington in 1997. Simply stated, it defines sustainability in business as a three-legged stool: the environmental, social and economic aspects of sustainability are all incorporated into business management. The purpose of the sustainability strategy at The Regional Municipality of York is to provide a long-term framework for making smarter decisions about growth management and municipal responsibilities that integrate the economy, environment and community. This strategy focuses on integrating a sustainability approach into all of our policies and practices, including water and energy conservation, forestry stewardship and public transit.
”We had to move this 700 ton component more than 400 miles. Scores of risks, but Zurich made us feel confident we were well covered.” Herbert Peters, Managing Director, Sasol-Huntsman, Moers, Germany
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RISK MANAGEMENT DEFINED Risk management is here defined as a scientific process of well-defined, sequential steps that supports better decision making by providing greater insights into risk and their impacts. In layperson’s terms, risk is often conceived within four broader categories: • Technically: Risk here is expressed as a statistical probability of an event occurring, often multiplied by magnitude and scope. • Economically: Risk is expressed as the damage attributable to an event. • Psychologically:This would be a qualitative evaluation of something as being “risky” or dangerous. • Sociologically or Culturally: A framework of a situation based on collective or cultural patterns. Enterprise Risk Management (ERM) is a popular business practice incorporating the five steps of risk management into its business processes. Much has been written about ERM approaches and definitions, including development
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of various working models. At York Region, we have developed our own hybrid model, using our risk management committee at its core for implementation.
ULTIMATE RISK PERFORMANCE We have brought together management staff from each of our business units to take part in our Ultimate Risk Performance approach to holistic risk management. After intense training and culture-building in the area of risk management (including defining our categories of frequency/likelihood and severity/impact), we formed teams to compile a comprehensive risk registry. Risks were then evaluated, “heatmapped” and prioritized to help develop specific and general plans regarding risk treatment and mitigation. In developing the risk registry, we created a process that included several steps to be followed: • Define a risk event. • In teams, identify risk events for your
operation. This includes a detail of the event, the cause and the evaluation of current mitigation techniques, if any. • Evaluate each risk event in terms of likelihood and impact. This includes a scale of likelihood and seven categories of impact. Impact categories include: - health/safety and liability; - financial; - region (reputation, social); - service delivery (internal and external); - compliance (regulatory, guidelines, protocols); - internal specific (any operational or administrative issues, strategies or plans); and - environmental influences (impairment or initiatives). • Assess/prioritize and implement treatment plans. • Monitor and report. We have embraced and included sustainability concepts in our approach through the impact categories we developed. Measuring these impacts supports
A large loss
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the development of sustainability strategies in conjunction with more traditional risk treatments.
Sustainability and the Environment Sustainability acknowledges responsibility for the effects of our relationships with the world in which we live. The common definition of sustainability is to meet the needs of the present without compromising the ability of future generations to meet their own needs. It has been said that sustainability is an evolution not a revolution. The environmental component has been widely accepted and supported over the years. This has taken various forms, including reducing waste, Leadership in Energy & Environmental Design (LEED) programs, ratifications of protocols such as Kyoto, as well as lifecycle assessments of product or service design processes.These life-cycle assessments help make sure environmental and social costs during a product or service life cycle are not detrimental.
Social Justice and Sustainability Social justice has been in the forefront of many news stories in the past decade, and has played a prominent role in educating the public about workers rights and abuses, socially responsible investing, boycotts of various “unfriendly” products and even new litigation arising from dangerous additives causing illness such as silicosis. Brand attractiveness and stock performance are often tied to social responsibility in business. Economics and Sustainability The final leg of this stool focuses on economics. This is not a measure of profitability alone but a measure of prosperity, opportunity and longevity of a corporation and its brand reputation. It includes overall performance, talent recruitment/retention and economic value. Many guidelines and certifications have been developed and promoted as measures and processes for companies to follow regarding acceptable sustain-
ability practices. These include ISO 14001, CERES’ 10-point code of corporate environmental conduct, International Chamber of Commerce (ICC) and its Business Charter of Sustainable Development, United Nations Environment Programme (UNEP) and other specific sustainability assessments.
HERE TO STAY We believe sustainability is, in a word, ‘sustainable.’ It is not a fleeting buzzword for this decade. It embraces the need for us to be responsible corporate citizens of this world and to incorporate this culture into everything we do. It promotes the idea that profitability is not the only measure of cost. Sustainability assessments need to be part of the already existing risk management culture. Defining risk too narrowly, without encompassing the three components of sustainability, fails to recognize opportunity for improving and continuing successful performance for now and into the future.
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Excise Tax Extends Its Reach
David Gambrill Editor
Clients involved in cross-border commercial insurance transactions are being audited and billed retroactively for the Canada’s 10% federal excise tax, because the Canada Revenue Agency (CRA) has taken a fresh look at old legislation that applies to tax on unlicensed insurance placements. Canadian commercial insurance brokers note the section of the Excise Tax in question is designed to promote the use of licensed Canadian brokers and carriers in situations in which U.S. or other foreign companies seek insurance coverage for their Canadian operations. But the CRA’s new emphasis on ensuring the Canadian broker is the lead broker in any crossborder commercial insurance transactions — transactions involving both licensed Canadian brokers and unlicensed U.S. brokers — may in fact have the opposite effect, Canadian commercial brokers note. It may cause unlicensed brokers to steer business to U.S. carriers in an effort to avoid paying the 10% Canadian Excise Tax. It may also complicate cross-border insurance transactions, since Canadian brokers may require procedures to be followed that are unnecessary elsewhere in order to keep commercial
24 Canadian Underwriter March 2011
insurance clients from having to pay the federal Excise Tax. “This legislation [The Excise Tax Act] goes back to the MacKenzie King era, so its not new legislation,” says Michael Boire, president of the Toronto Insurance Conference, which represents Canadian commercial insurance brokers across the country. “In my opinion, the intent of the legislation in the 1930s was to make sure that Canadian businesses were insuring through licensed Canadian brokers and licensed Canadian carriers, so that a company in Montreal,Toronto, Vancouver was not insuring through a New York broker and a New York insurance carrier. They (clients) were to go through a Canadian broker and a Canadian carrier and provide jobs to the industry and really to ensure the insurance purchase is in Canada. If you use an unlicensed broker or an unlicensed carrier, a 10% federal excise tax applies and then there are various provincial penalties that apply.” Provincial penalties for the use of unlicensed insurance vary by province. They range anywhere from 3 or 4% of the unlicensed insurance premium in Ontario, all the way up to 50% of
Illustration by Greg Hargreaves/www.threeinabox.com
The Canada Revenue Agency is taking a fresh approach to legislation applying to unlicensed insurance, creating a potentially costly nuisance for commercial brokers, clients and insurers involved in cross-border insurance deals.
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the unlicensed insurance premium in Alberta. Up until about a year ago, the CRA did not charge the 10% federal excise tax if the insurance carrier or broker in a cross-border transaction was licensed in Canada, and if the broker did some form of work in the cross-border insurance purchase — i.e. a negotiation of renewal terms, providing binders of insurance, certificates of insurance, analyzing, collecting, remitting, providing claims service, etc. But now the CRA has started to take a literal interpretation of Section 4.4 of the Excise Tax Act, which states: “Where a contract of insurance is entered into or renewed through more than one broker or agent, or where payment of the premium or any part of the premium thereon is effected through more than one broker or agent, the contract shall, for the purposes of this Part, be deemed to have been entered into or renewed, as the case may be, through the broker or agent directly retained or instructed by the insured and not through any other broker or agent. [Emphasis added.]” In other words, a licensed Canadian broker must now be ‘directly retained and instructed’ by the client.To see how this works, take the following fictitious example: Bruce Springsteen Commercial Brokers Inc., an unlicensed broker based in the U.S.A., is looking for commercial insurance coverage on behalf of a U.S.based client, a business that just opened up a new operation in Vancouver, B.C. Springsteen Brokers contacts Bryan Adams Insurance Brokers Inc., a licensed commercial broker in Canada, to help find an insurance carrier for their client. Adams gathers a list of quotes and suggests the best deal is to insure through the licensed Canadian carrier Jann Arden Insurance Inc. in Alberta. On behalf of its client, Springsteen gives instructions to Adams to go ahead and bind the coverage. In the eyes of the CRA, since the licensed Canadian broker Adams received its instructions from the unlicensed U.S. broker Springsteen, the 10% federal Excise Tax applies. Had Adams received its instructions directly from
26 Canadian Underwriter March 2011
Springsteen’s U.S. client instead, the transaction would be exempt from the Excise Tax. This shift in interpretation has already cost clients of Canadian brokers big money. “The big concern is that the clients here in Canada are all of a sudden being assessed a 10% surcharge on their insurance,” said Boire. “And since the CRA can go back four years, and depending on the premiums paid, that could turn into a fairly lofty amount.”
Thus, if a client is paying $100,000 in premium, they could be on the hook for $10,000 in retroactive tax for a single year, Boire notes. And if the CRA goes back four years, “they’re getting a bill for $40,000 that they didn’t budget for and that they didn’t anticipate. That’s creating a bit of angst between the client and not only the Canadian broker, but whoever the foreign broker is as well.” Ironically, the legislation, which is supposed to promote business through licensed Canadian brokers and insurers, may in fact drive business away from Canada. In the above example, if the licensed Canadian carrier, Jann Arden Insurance Inc., has a U.S. affiliate, the unlicensed U.S. broker Springsteen may choose to place the insurance with Arden’s U.S. affiliate instead, thus remaining the broker of record and negating the possibility of the client paying the 10% tax surcharge by placing the coverage in Canada. “A U.S. broker may say: ‘I don’t need to place [the insurance] with you in Canada if I’m still going to get the 10% surcharge,” as Boire
puts it. “‘ I might just keep it all down here in the United States.’” Brenda Rose of Firstbrook Cassie Anderson is one of a number of broker representatives negotiating with the CRA on this issue. She says the CRA’s current interpretation of the legislation is perfectly legitimate, but the legislation itself is outmoded and does not reflect the day-to-day reality of crossborder insurance placements, which often require Canadian and U.S. brokers to talk to one another about coverage.This is particularly true of complex deals in which the coverage with the licensed Canadian carrier is predicated on the financial capacity of its U.S. counterpart.This means brokers and underwriters on both sides of the border will be in constant touch with one another. “The business reality is that where there is a customer outside of Canada, but they have a global program, they will have one broker from whom the instructions are often disseminated and that, according to the CRA, disqualifies an otherwise compliant placement,” says Rose. “So this is problematic: a) because nobody has been interpreting it this way up until now, and b) because it creates extra work in the process. If you’ve told the client, ‘Okay, you’ve given your broker in Zurich your instructions, but by the way in Canada we’re special, and you need to advise us specifically and separately,’ it creates a boondoggle. It creates more work and room for errors. This legislation was drafted years and years ago, before this type of placement was contemplated.” Commercial brokers are now lobbying officials in both Industry Canada and the Finance Department of Canada to change the legislation. In the meantime, the TIC has issued a bulletin advising brokers on how to stay onside of the tax law. It notes the CRA is looking for evidence of a specific appointment of a broker licensed in Canada (a broker of record letter); ongoing and direct communication between the insurance purchaser and the Canadian broker, and negotiations with and instruction of the insurer by the Canadian broker.
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Engaging
Risk Professionals RIMS Council Canada is championing a number of new offerings to stay engaged with its risk management members in 2011. Tino Brambilla
Chair, RIMS Canada Council
At its annual planning meeting in Saskatoon in January 2011, the RIMS Canada Council (RCC) reviewed its two-year strategic plan and re-committed itself to meeting the plan’s objectives. The strategic themes of the RCC are effective volunteer leadership; strong and engaged membership, aided in part by offering continuing education to members; raising the profile of risk management in Canada; and organizing “the” risk management conference in Canada. We are enthusiastic about the progress the RCC has made toward our goals in 2010. And we feel confident the building blocks are in place to achieve our strategic goals and continue to serve Canada’s risk management community as we move forward. The RCC is a standing committee of the Risk and Insurance Management Society Inc. (RIMS). It addresses the Canadian activities and strategic initiatives of RIMS and risk management in Canada through its three subcommittees: the National Conference Committee, National Education Committee and Communications and External Affairs Committee.
28 Canadian Underwriter March 2011
The mandate of the RCC is to serve Canadian RIMS members and the Canadian risk management community, by ensuring the products and services provided by RIMS address the needs of Canadian members and chapters while supporting the Mission and Strategic Plan of RIMS.
VOLUNTEER LEADERSHIP To further the goal of effective volunteer leadership, RCC made a concerted effort to re-staff its committees at the beginning of 2011, ensuring representation of the diversity of RIMS members in Canada. Two committees have new chairs. Karin McDonald, director of risk and insurance for Hydro One Networks Inc. in Toronto, is the new chair of the National Conference Committee. Steve Pottle, manager of insurance and risk management at York University in Toronto, now heads up the Communications and External Affairs Committee. Dave Jackson, director of insurance and risk management at the Saskatchewan School Boards Association in Regina, continues to chair the National Education Committee.
MEMBERSHIP The RCC made great strides towards the goal of strong and engaged membership in 2010. The year saw a 7% increase in Canadian RIMS membership, and membership increases in each of the 10 Canadian RIMS chapters.The RCC is plan-
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ning a membership campaign in 2011 to reach a number of different targets. Membership is engaged through the 10 RIMS chapters in Canada. Each RCC meeting has a component called a “chapter roundtable,” in which representatives from each chapter discuss challenges and offer best practices and solutions to help each other with programming and chapter management.
that are easily accessible to Canadian members. The three CRM courses are also available online: in English from the University of Toronto, and in French from Université du Québec – TELUQ.
2011 RIMS CANADA CONFERENCE The RIMS Canada Conference will be held in Ottawa this year, from Sept.
18-21.The theme of this year’s conference, Capital ConneXions: Where Vision and Action Intersect will be explored through keynote addresses and timely concurrent sessions, as well as in the Exhibit Hall and at networking events (Please see the profile of the RIMS Canada Conference co-chairs Kim Hunton and Barbara Carscadden on Page 12).
RISK MANAGEMENT EDUCATION Year 2011 will feature a new opportunity for current Canadian Risk Management designation holders to upgrade to the CRM-E, indicating knowledge and training in enterprise risk management (ERM).The new CRM-E designation was created to demonstrate a risk manager has training in ERM fundamentals as well as in risk assessment, risk control and risk financing. RIMS also developed a new three-day workshop called Enterprise-Wide Risk Management: Developing and Implementing. CRM holders who take the new course and pass an online exam developed specifically for Canadians will be able to upgrade their CRM designation to the CRM-E. The first offering of this new workshop in Canada will be in Toronto on June 1-3, 2011.The workshop will also be held from Oct. 17-19, 2011 in Edmonton. Other professional development workshops scheduled in Canada for 2011 include two programs to be held before the RIMS Annual Conference in Vancouver this year. The first is called Developing a Risk Management Program for Your Organization. The second is Business Continuity/Disaster Planning and Management. Finally, the workshop schedule is rounded out with Integrating ERM and Strategic Planning in Montreal in June. Also, Harnessing ERM to Tap Risk Appetite,Anticipate Emerging Risks and Limit Future Shock will follow the RIMS Canada Conference in Ottawa in September 2011. In addition to in-person professional development workshops, RIMS now offers a wide range of electronic options for professional development, including Webinars, podcasts and coursecasts
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Protecting Our Pipelines The Alberta oil sands have undergone intense growth in the past decade. This growth has amplified the challenges for Canadian risk managers operating in this space. By VANESSA MARIGA
30 Canadian Underwriter March 2011
Oil
has always been a booming business, but in the past decade that business has turned into a sonic boom in the Canadian marketplace. Alberta’s oil sands, an area roughly the size of the state of New York, now ranks second worldwide — behind only Saudi Arabia — for total proven oil reserves. The province has reserves of about 171-billion barrels, or about 13% of total global reserves. The vast majority of these, about 170-billion barrels, are found in the oil sands in northwest Alberta. The development of these reserves is relatively new. The first geological survey of the sands occurred in 1875, but the first large-scale oil sands operations at Fort McMurray launched in 1967. It would be more than a decade before the second major project came on board in 1978, also in Fort McMurray. In 2000, production expanded into the remote areas of the oil sands. That’s when things really started to pick up. By 2010, the number of operators in this field had ballooned to 91, according to Alberta’s Department of Energy. And alongside the increasing number of participants came an increase in investment. In 1999, oil sands brought $2.4 billion of investment into Alberta. Ten years later, that figure grew to $13.5 billion. A record $20.7 billion was invested in 2008.
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Protecting Our Pipelines In terms of the economic value of the oil sands, the stakes are high. And with high stakes come big risks. Extraction of bitumen in the area poses a huge exposure to environmental liability. The oil sands contribute about 5% of Canada’s greenhouse gas emissions, but they are also Canada’s fastest growing source, according to the Royal Society of Canada (RSC). Add to that the risk of a well blow-out, contamination of an area or a failure of a tailings pond, and the environmental liabilities stack up. In an industry undergoing such rapid growth, many view the technologies designed to aid mounting production requirements and lower the operations’ environmental impact as not only prohibitively expensive, but unproven. Thus, technological solutions to reduce exposure to liability pose a liability risk in and of themselves. Mining and the extraction of natural resources has always been a contentious issue in the public realm. But recent events in other jurisdictions — the BP Gulf of Mexico oil spill, for example — have drawn the attention (and ire) of the public and garnered negative media attention, posing heightened reputational risk. Traditionally, the players in the field have been major, integrated, global oil production companies. But now the area is seeing an increase in smaller players in the market. Sources say keeping pace with the evolution of technology, the costs of production and keeping a lid on liabilities are even more challenging for risk managers of these smaller organizations, which have balance sheets a fraction of the size of their conglomerate counterparts. As all of these different moving parts churn and twist, external drivers such as heightened regulatory requirements and stringent lender requirements are also driving change in how risk managers manage these risks. Some of the ‘mega projects’ taking place in the oil sands have physical damage and business interruption exposures exceeding $10 billion, says Joe Seeger, executive vice president and managing director of Willis Global Energy. “Some of the facilities make in excess of $10 32 Canadian Underwriter March 2011
million per day in revenue. If a plant like this were down for two years then it would be more than a $7 billion loss to the company. Right now the insurance market can provide about $1.5 billion in capacity, so the owners really take on a considerable amount of the risk.” he says. “At that point, the operators need to understand the risks really, really well because they’re taking on the bulk of it, even after they’ve taken on all of the insurance they can get.”
Environmental regulations are going to be changing around the world. An event can occur in one part of the world that has nothing to do with your local operations, and yet it can change regulations throughout your geographical region and impact you directly. As a result, a new form of risk management has emerged in the sector. Organizations are putting competitive differences aside to share research and development discoveries and new technologies, all in the name of finding the right technology with the least amount of impact on the environment. Risk managers are looking further afield to other jurisdictions for indicators of what impending climate change regulations may bring. They’re also getting involved much earlier in the actual development of the projects, instead of waiting until it’s time to sit down with a broker at renewal time.
The insurance market is also responding, sources say. As the number of operators has increased, so too has the number of insurance carriers. The result is increased competition, increased available capacity and more specialized environmental liability product offerings. Back to the Way Things Were When it comes to onshore oil risk, reclamation may be the most uncertain environmental liability exposure. In its report, Environmental and Health Impacts of Canada’s Oil Sands Industry, the Royal Society of Canada noted a clear definition or timeline of what reclaiming lands really means does not yet exist, nor does the cost of such an endeavour. Alberta’s government requires that all developers restore oil sand mining sites to “at least the equivalent of their previous biological productivity.” This means “the region as a whole forms an ecosystem landscape at least as healthy and productive as that which existed before development,” says information from Alberta’s Energy Department. In its report, the RSC found that while tailings pond operation and reclamation technologies are emerging, the rate of improvement has not prevented a growing inventory of these ponds. Tailings are the materials left over after the process of separating the valuable fraction from the non-economic portion (gangue) of an ore. To prevent tailings from being released directly into the environment, companies often create ponds at their facilities to dispose of them. Reclamation and management options for wet landscapes derived from tailings ponds have been researched but are not adequately demonstrated.The RSC report says operators are required to post financial security deposits, in the form of secure letters of credit, in case they declare bankruptcy or fall short of completely reclaiming an area, leaving the province — and ultimately the taxpayer — on the hook. But that financial backstop is estimated to fall 40% short of the required costs. On Mar. 1, 2011, The Globe and Mail reported “leaked information” from the Alberta government indicating the province is about to release new financial
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Protecting Our Pipelines security requirements. These would see smaller payments at the outset of production, with the payments increasing over the lifetime of the project. According to the Globe, new rules will force all mining companies to post security on plant sites to the tune of $30 million, or $60 million if the site has an upgrader. Larger operators, specifically Syncrude and Suncor, which have received a bit of a break in the amount they’ve had to post, will see increased requirements, bringing them on par with the other operators, the Globe added. Kevin Doyle, managing director of Zurich’s Global Energy in Canada, says a general liability policy, or excess layers above that, would only cover pollution on a timed-element basis. “In other words, the pollution would have to occur or happen in a certain period and be reported in a certain period,” he said. “After that, there would generally be no coverage. From an insurance company perspective, we’re looking to provide coverage for a fortuitous event, something that is unintended and unexpected from the standpoint of the insured. So, if you’re into reclamation and clean-up, which you know is there but you have not gotten around to, there may not, in all cases, be a product that insurance companies can provide.” In response to pressures of government and the public, oil sands operators have put aside competitive differences to share their respective ‘secret sauces,’ as it were, related to technologies around reducing environmental liability. In December 2010, the Canadian Natural Resources, Imperial Oil, Shell Canada, Suncor Energy, Syncrude Canada Ltd, Teck Resources and Total E&P Canada announced they plan to work together to advance tailings pond management. Each company pledged to share its existing tailings research and technology and to remove barriers from collaborating on future tailings research and development. Experts agree the announcement was a hallmark step forward in the risk management field for the sector. “As companies put aside confidentiality issues 34 Canadian Underwriter March 2011
to share research and development and best practices to speed up tail pond reclamation, I think we’re going to see a lot more of that type of collaboration,” said Sylvia Layton, head of Risk Engineering, Energy and Marine, at Zurich North America. “What needs to happen now, those findings from research and development need to be escalated up into an organization’s enterprise risk management framework.”
Operators trying to do well in respect of minimizing pollution liability and emissions through new forms like carbon capture synchronization are really concerned about future liabilities, because it’s new technology. What happens if the new technology turns out to have long-term negative effects? Environmental Exposures and Policies As Alberta’s oil producers band together to tackle the reclamation risks, the issue of greenhouse gas emissions seems to be a moving target. The oil sands accounted for 31.4% of Alberta’s greenhouse gas emissions by the industrial sector in 2008. One year earlier, the province passed the Specified Gas Emitters Regulation requiring all facilities emitting more than 100,000 tones of carbon dioxide per year to
reduce emissions intensity by 12% from 2003-05 levels. The province’s Climate Change Strategy outlined further reduction goals in 2009. Last year, oil sands operators were to have reduced CO2 emissions per barrel by 45%, Alberta Energy says. More regulation in this area is expected. “Environmental regulations are going to be changing around the world,” says Layton. “An event can occur in one part of the world that has nothing to do with your local operation, and yet it can change regulations throughout your geographical region and impact you directly. Anything an organization can do to understand its exposures more holistically and to understand the total cost of risk — and, if it decides to retain the risk, anything it can do to be sure it can afford to retain it — is basically what an organization is going to have to do more and more.” Historically, the biggest insurance spend to cover environmental liabilities in the oil sands has been the sudden and accidental coverage under the CGL policy. Sudden and accidental coverage would respond to an event in which, for example, an explosion or spill caused damage to a thirdparty property. However, in the oil sands business, the remote geographic location of the industry means this insurance is not necessarily the best fit to cover this kind of risk, since third-party properties are typically not at risk of damage. David Mew of Marsh Canada’s energy practice makes this exact point. From a liability perspective, most of these locations are very, very remote, he says. “They have very little else around them, aside from muskeg and forests. You can have an incident there and it’s not necessarily going to affect a city like Fort McMurray. From a third-party liability perspective, that risk is quite remote.” And so if sudden and accidental insurance coverage isn’t a sensible option for transferring a company’s risk, what other options are available? Kate Dodge, Dodge, vice vice president presidentand andleadlead er of Aon Reed Stenhouse’s Environmental Practice, says clients in the onshore oil sector are re-evaluating
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COVER STORY
Protecting Our Pipelines how they manage their environmental risk based on external drivers. These external drivers include: • changes to the regulatory frame work (the strictness of remediation standards, for example, in addtion to forthcoming climate change regulation); • a higher level of director and officer accountability, both in terms of financial reporting and disclosures as well as operational and compli ance issues; • tighter lender requirement; and • “unprecedented” shifts in contractual liability. Traditionally, environmental coverage has been narrow in scope, with few carriers and high prices. But Joe Restoule, a consulant with Aegis Insurance Services, points to an increase in the number of carriers in the sector, offering a broader spectrum of environmental liability products and a new capability to layer capacity. Dodge adds the increased availability of dedicated insurance has allowed clients to consider new risk transfer options beyond the often expensive and narrow sudden and accidental coverage. “And that’s where we look at dedicated environmental liability products,” Dodge says. “These coverages may include fixed site liability policies, environmental impairment liability, pollution legal liability and cleanup cost cap programs.” Mew notes the uptake on dedicated environmental liability products has been slow, suggesting risk managers are retaining those exposures on their books. He thinks risk managers may be hoping that by investing in new technologies, they will minimize their environmental liabilities and create efficiencies to meet production demands. Liabilities and New Environmental Technologies But the use of new or unproven technologies can open a whole new can of liabilities. “Operators who are trying to do well in respect of minimizing pollution liability and emissions through new forms like carbon capture synchronization are really concerned about future 36 Canadian Underwriter March 2011
liabilities, because it’s new technology,” says Restoule. “What happens if [the new technology] turns out to have long-term negative effects? You’ve invested all of this money into research and development, and into the project, and then you get stuck with a huge liability in the end. Although there is a lot of money being spent on research and development, there is no 100% guarantee that the reward will be greater than the risk they took.”
When it comes to onshore oil risk, reclamation may be the most uncertain environmental liability exposure. In a report, the Royal Society of Canada noted a clear definition or timeline of what reclaiming lands really means does not yet exist, nor does the cost of such an endeavour. Derek Robinson, vice president of Aon’s Energy Practice, agrees. As new projects come onstream, insurance companies begin looking at the different emerging technologies as a potential issue. That can sometimes create constraints of available insurance capacity. “As technologies emerge, it requires a greater need or level of understanding and knowledge by the underwriters in order for them to establish a comfort level in underwriting that risk,” Robinson says.
Jerry McAloon, senior vice president and account manager of Aon’s Energy Practice and Global Large Accounts, believes it’s up to the risk manager to help convey that information to the underwriter or broker. “The risk manager has to understand exactly what the technology is and understand how the underwriter is going to respond to it. A classic tactic brokers use when confronted with a project that underwriters perceive to be a new technology is to make the case that it’s not new technology, it’s a new application of proven technology, if it is in fact a truthful statement. So, you’d better have a good story, and you better be able to communicate it well to [underwriters], because we’re also seeing more and more underwriters with an engineering background.” Robinson says the key is for risk managers to work with internal engineers and engineers from the brokerage firm to put together a very comprehensive package. Arranging a meeting between the underwriter, broker and the risk manager and the project’s engineering team well in advance gives the underwriter the opportunity to ask any questions then and there. “So later, when a broker sits down to negotiate terms, we’ve already addressed all of those concerns.” Funding Formula The same approach should apply when dealing with lenders to fund these projects, McAloon adds. Lenders have always had loan requirements in place. But one consequence of the economic recession has been a tightening of these requirements, placing lenders in the driver’s seat when it comes to influencing the purchasing patterns of risk managers. Adding to the complexity is the increasing involvement of international financiers, who may have requirements with which a Canadian risk manager is not familiar. “There has always been pressure on risk managers to comply with requirements of the loan agreement,” McAloon says. “There have been examples of cases in which the risk managers were not consulted until after the loan agreements were concluded. The risk managers then
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COVER STORY
Protecting Our Pipelines found themselves trying to comply with requirements that were very difficult, if not impossible — and possibly very expensive — to comply with.” Also, lenders will likely require risk managers to buy insurance that perhaps hasn’t been purchased in the past. “Smaller companies have smaller balance sheets,” says McAloon. “That means either they or their lenders are going to say: ‘Here’s a risk that we can’t afford to eat, so we’re going to have to transfer it to the market.’” One example of this might be business interruption (referred to as delay in start-up insurance in construction). A risk manager should want to make a presentation to underwriters on any new and emerging technologies being used in the project. The lender requirements should also be a part of that presentation package, McAloon says. “Have a slide in the presentation that says, ‘This is the type of insurance we’re required to have. I know we haven’t required it in the past, but here’s the reason why we require it now,’” McAloon adds. Talking ‘Bout My Reputation In spite of their economic benefits, mining operations have never ranked high in public opinion polls when it comes to their handling of environmental risk. In today’s environment, operators in Alberta’s oil sands are increasingly facing public pressure to mitigate the risk of environmental damage. Seeger points to a 2009 protest in which Greenpeace activists occupied an operation in the tar sands. In another example, following the BP oil spill in the Gulf of Mexico, Corporate Ethics International launched a mass media campaign in the United States called ‘Rethink Alberta.’ In the campaign, Alberta’s oil sands were compared to the BP spill, and tourism to the area was discouraged. The campaign worked. It motivated highprofile Hollywood director James Cameron to take a much-publicized tour of the oil sands “to see for himself.” Canada West Foundation released a report in July 2010, entitled Blackened Reputation: A Year of Coverage of Alberta’s Oil Sands. Prompted by media reports in 2009 of the death of 1,600 ducks on 38 Canadian Underwriter March 2011
a Syncrude tailings pond, the report examined media coverage over the course of a year. In the report, researchers found 71% of coverage about the environmental effects of the oil sands were negative. The economic stories, on the other hand, were for the most part positive (61%). Alas for the industry, the environmental stories outnumbered economic stories by a margin of nearly 2-1. The RSC report examined claims that the Alberta’s oil sands were the world’s
Some of the ‘mega projects’ taking place in the oil sands have physical damage and business interruption exposures exceeding $10 billion. ... Right now the insurance market can provide about $1.5 billion in capacity, so the owners really take on a considerable amount of the risk. “most environmentally destructive project on earth.” The claim is not accurate, the panel decided. “Despite the lack of evidence to support this particular view, it has gained considerable traction with the media and it now pervades the Internet,” the report says. “This depiction is clearly aided by photographs of ugly surface-mine landscapes, but the claims of global supremacy for oil sands environmental impacts do not accord with any credible quantitative evidence of environmental damage.” “I think the Canadian oil sands used to fly under the radar,” says Seeger. “With the rise in commodity prices, and the need to search the globe for more resources, it’s definitely on the radar screen now.”
Mew suggests this negative public perception could translate into certain U.S. buyers boycotting Alberta’s oil sands’ products. “Only so much of it can be refined and upgraded in Canada, because there is only so much capacity at the refineries to deal with that type of crude. So they may have to find another market for their product, which could mean shipping it out West by pipelining it through the Rockies and then tankering it out to China.” Layton says recent oil industry losses around the world have tarnished the image of the industry as a whole, highlighting the need for government and industry to keep pace with changing environmental and technological exposures. “In January [2011], the U.S. National Commission released a report that calls for a more formalized, proactive, risk-based performance approach to risk assessment and risk management,” she says. “Regulators will expect industry to look further afield — globally if necessary — to see what their peers are doing with regard to best practices.. That’s very different from the local prescriptive approach that currently exists.” Seeger suggests some industry leaders are taking steps towards promoting a more positive image by allowing their leadership teams “to take on educational roles and show the benefits of the industry and how they can responsibly go after those barrels [of oil], and have those barrels provide a benefit to society.” Once an insular marketplace, with only a handful of participants, the oil marketplace has now arguably grown into the largest driving force behind Alberta’s — and to an extent, Canada’s — economy. With this growth come new responsibilities and pressures. Risk managers, as a result, will need to be on their toes and ready for them. “You have a lot of changing parts that are going to be happening in the midterm,” Layton says. “Risk managers are going to have to understand these exposures, understand the operational issues and their impact on strategic goals. As well, they cannot just look at these issues locally, but expand [their focus] globally,” Layton says.
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Multinational Insurance:
The Case for Non-owned Broker Networks T. Neil Morrison
President, CEO, HUB International, HKMB Ontario, Chair, Worldwide Broker Network Limited
Bruce Basso
CEO, Worldwide Broker Network Limited
Non-owned broker networks give international risk managers both a domestic coordinating broker and oversight over the foreign placements of their global program. The stewardship of a multinational insurance program entails being familiar and knowledgeable with each country’s laws, insurance requirements, cultural and economic considerations and customs that might affect their firm’s risk management objectives. Impractical as it is for any one individual to keep abreast of all the disparate pieces, the risk manager relies on people and resources on the ground in the various geographies to ensure timely and efficient execution of their risk and insurance mandate, and to ensure it is done so in concert with the core values and global risk strategy. Upon whom do you rely?
40 Canadian Underwriter March 2011
Risk Managers have three distinct options: • Build a “captive network” of brokers in each territory dedicated to their interests. • Engage a broker with an “owned” office present in each territory. • Engage a broker with a non-owned network of trusted broker-partners domiciled in each territory. Having control over your destiny and objectives is every risk manager’s desire. However, except for in the situations of very large multinational financial institutions, building and investing in a captive broker network is prohibited by time, expense and the ability to manage the system with sufficient business to sustain the relationship. Engaging an international brokerage firm with owned international offices might pose a problem when one or more country relationships falter in an otherwise well-run program. The risk manager is faced with the problem of tolerating the non-performing office or changing the entire program. Non-owned networks such as the Worldwide
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APPOINTMENTS
Mario Sousa, President of Elliott Special Risks LP, is pleased to announce the following appointments which will be effective March 01, 2011: Connie Peplinskie, VP has been appointed to Manager of the Canadian General Liability (CGL) department. J.D. Farquhar has been promoted to AVP and Assistant Manager of the CGL department. Rod Spurrell has been promoted to VP and Manager of the Environmental Insurance Liability (EIL) department. Anne Towns has been promoted to VP and Assistant Manager of the EIL department. Cathy Lanktree, VP has been appointed to Manager of the Umbrella & Excess department. Frank Reda has been promoted to VP and Special Accounts Project Manager. In addition, he will also be the Assistant Manager of the Umbrella & Excess department. Our Montreal Office will take on a new structure with Richard Champagne, VP appointed as the Underwriting Manager. All nonunderwriting aspects of the branch will now be managed by Laetitia Bourdin,VP Finance/Controller. Earlier this year, ESR welcomed two new members to the family. Glenn Minnis who will be the presence out west with the launch of our Vancouver Office, and Nancy Costa who joins as the National Marketing Manager based out of our Toronto Office. Elliott Special Risks has been providing insurance solutions to the brokering community since 1966 and continues to serve with the utmost professionalism and expertise.
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Broker Network (WBN) offer an alternative hybrid solution popular with many international risk managers who want both a domestic “coordinating broker” and also the versatility and oversight over the foreign placements of their global program.This model is successful because it meets four critical success factors: flexibility, collaboration, communication and responsiveness.
Non-owned broker models are able to correct or replace nonperforming country partners quickly with another option that may better meet the needs of the client. FLEXIBILITY Non-owned models such as WBN enjoy the benefit of low investment costs to be a member and participate.They are motivated by the desire to meet fully the client’s needs and objectives. They are able to correct or replace non-performing country partners quickly with another option that may better meet the needs of the client. Owned office brokerage models entail significant investment costs to enter the marketplace and tend to focus on margin and profit center exclusivity. Poorly performing offices in an owned network cannot be easily substituted because they are part of an overall package and hierarchy.
Collaboration The non-owned model exists by virtue of a mutual desire among its members to formalize longstanding business relationships that have the benefit of trust and a strong reciprocity in services and culture. Their mutual interests have forged protocols, guidelines, responsibilities, objectives and a common use of a credentialed international information system that focuses on client delivery as the Number 1 priority. This environment avoids the owned network’s inherent issues of hierarchy and office politics.
Communication In an owned or non-owned model, effective international technology — collaborative with the client, its varied locations, brokers, insurance carriers and any designated interested party — is critical to executing a program that successfully meets all client objectives and supplies timely information upon which a client can make an informed decision. Knowing the up-to-date and current status of issues and the activities pursued to address them reduces error and puts these solutions on the correct path for saving time and money. Allowing all parties to converse and manage a client's objectives in real time gives the client a strong advantage in the global management of information. Responsiveness If all the parties understand the mutual objectives of the client and have formed relationships that foster timely communication and results, then the propensity for success is much higher. Responsiveness wanes when the broker is internally focused or hindered with ineffective hierarchical processes.
In an owned or non-owned model, effective international technology — collaborative with the client, its varied locations, brokers, insurance carriers and any designated interested party — is critical. WBN members from around the world meet twice annually at host country venues.They invite all risk managers of their clients and prospects to be a guest of the members, and meet and work with their global account partners. The added value derived from the personal relationships that a client forms produces superior results in both the general administration and problem solving aspects of a global program. The WBN members next meet in Vancouver on Apr. 28-30, 2011, just ahead of RIMS.
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Creating Captives
Trevor Mapplebeck
Managing Director, Marsh Canada Limited
Rob Landolt
Managing Director, Marsh Canada Limited (Vancouver)
For many Canadian corporations, insurance purchasing decisions are dictated by laws, regulations, bank covenants and other stakeholder requirements. Also, many choose to purchase insurance to cover potential catastrophic losses from natural disasters and material litigation and liabilities because it is a sound business decision. However, such risk-financing decisions should not be made without an objective evaluation of options. Decisions about whether to transfer or retain risk on the corporate balance sheet should be made with the goal of reducing financial volatility by protecting the company’s earnings and/or cash flow. Additionally, as with other risk finance decisions — which address, for example, currency and interest rate fluctuations and commodity
44 Canadian Underwriter March 2011
price volatility — it is essential to evaluate riskfinancing decisions relative to a corporation’s defined risk appetite. If a company is willing and financially capable of retaining the risk on its own balance sheet, then decisions need to be made as to how to optimally fund for the retained risks. In considering these issues, Canadian companies frequently overlook or undervalue one viable, longstanding, self-financing option: forming a captive insurance company. A captive insurance company is a legal entity formed by a company primarily to insure the risks of that company, a number of affiliated entities or controlled third parties.
WHAT CAPTIVES OFFER Captives offer a number of financial, insurance and risk management advantages. Financially, captives help reduce insurance costs, improve cash flow, match revenue and expense (especially for longer-tail liabilities), generate tax efficiencies and can also provide a source of additional revenue. Insurance advantages include securing coverage for risks typically not insurable, reducing the need for commercial insurance, improving a
Illustration by Greg Hargreaves/www.threeinabox.com
When considering whether to retain or remove risks from their corporate balance sheets, companies often overlook the option of creating captive insurance companies.
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company’s negotiating position with insurers, creating flexibility in insurance program design and developing broader, simpler contract wordings. Captives also facilitate risk management benefits through the design of cost allocation systems, the accumulation of loss data, the design of more effective claims handling and loss control programs and the development of uniform expectations and standards for risk management across divisions or subsidiaries. For these reasons, corporations around the world have created captive insurance companies to finance risks both at home and abroad. Today there are approximately 5,400 captive insurance companies.
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ized properly. Beyond insurance, captives also can serve as viable alternatives to other financial instruments, including letters of credit or other guarantees. Not every company is an ideal candidate to form a captive, however. In addition to having a healthy risk appetite, companies also need to be in a strong financial position in order to meet capital and surplus requirements. In Canada, strong commodity pricing and efficient
CAPTIVES IN CANADA According to the ratings agency A.M. Best, Canadian companies or associations owned approximately 145 operating captives as of 2007. This is in addition to numerous registered but no longer active captives.The vast majority of these captives are domiciled in Barbados, due primarily to the tax treaty in place between Barbados and Canada. For some organizations, especially Canadian companies with no foreign risks, it makes sense to maintain their captives locally within Canada. According to the Canadian Captive Insurance Association, 21 captives are currently domiciled in British Columbia, the only province with captive legislation in place. Canadian companies continue to explore new and innovative uses for their captives.Traditionally, captives have been used exclusively for deductibles of property, casualty and workers’ compensation programs. More recently captives have assisted companies in financing environmental liability, product recall, weather risk, intellectual property infringement risks and other business risks. Organizations also have begun evaluating financing portions of their employee benefits programs through their captives. There are few limits on the types of risks a captive can finance, provided the risks are evaluated, priced and capital-
46 Canadian Underwriter March 2011
Recently, captives have assisted companies in financing environmental liability, product recall, weather risk, intellectual property infringement risks and other business risks. production have led to strong financial results for many companies in such industries as mining, energy and agriculture. These companies, which tend to have global operations, are ideal candidates to explore a captive program.
GLOBAL TRENDS Canadian companies with captive operations or those interested in forming new captives should be aware of several regulatory and legislative trends that might affect their decisions. Barbados has been the domicile of choice for most Canadian companies, but recent changes in tax agreements between Canada and other domiciles are likely to level the economic playing
field. Tax Information Exchange Agreements (TIEAs) have been signed between Canada and several countries, including Bermuda and the Cayman Islands, the world’s largest captive domiciles. The Canadian Parliament is expected to ratify these agreements in early 2011. Once ratified, dividends paid to Canadian parent companies out of the active business income earned by their foreign affiliates in Bermuda and Cayman will be exempt from Canadian taxation. Certain provisions of the U.S. DoddFrank Wall Street Reform and Consumer Protection Act of 2010 will affect Canadian captive owners with U.S. risks. Although its specific impact remains unknown, the act is likely to affect state premium tax obligations from premium payments on U. S. risks made to a captive. In the United States, the Terrorism Risk Insurance Act and Terrorism Risk Insurance Program Reauthorization Act (TRIA and TRIPRA) provide a reinsurance backstop for U.S. terrorism losses insured by captives and traditional insurers. The act is set to expire on Dec. 31, 2014. Uncertainty about the impact of Solvency II on captives domiciled in the European Union may also affect companies’ decisions on captive formation. Solvency II will establish strong capital and solvency requirements for insurers.
LOOKING FORWARD Soft market conditions are expected to continue in 2011, and so Marsh expects companies will continue to assess the feasibility of new captives for valueadded cost savings and further business and risk management objectives. Current captive owners will continue to evaluate their captives for efficiencies, enhancements and cash-access strategies. Although insurance is often a financially efficient method of managing risk, in today’s environment, in which every dollar counts, companies should evaluate their risk financing strategies to ensure efficient combinations of risk retention and risk transfer.With both financial and risk management benefits, captives have proven to be an effective solution for many companies.
TM
See you at Relay... By James Daw, Insurance Bureau of Canada
Paul Martin President and Chief Operating Officer, RRJ Insurance Group Ltd.
Randy Carroll Chief Executive of the Insurance Brokers Association of Ontario
Paul Martin had seen cancer touch the lives of many friends and associates. So he fully appreciated the importance of raising money for research.
across the nation – were each invited to write a tribute to a loved one on a fragile paper bag.
What he never imagined was how inspirational it would be to spend a night circling a running track with those determined to survive, and to mark the passing of others. “I get shivers now talking about it,” says the president and chief operating officer of RRJ Insurance Group, a leader in the insurance industry’s efforts to support the Canadian Cancer Society. He and other Toronto participants in the Relay For Life – one of the many 12-hour events that have become the charity’s top focus for fund-raising
Other glowing tributes were placed in the stands to spell hope, and other words for the walkers to contemplate as they walked from sunset to dawn.
Randy Carroll, chief executive of the Insurance Brokers Association of Ontario, says he expected Relay For Life would be a chance to bond with his office team and members of their families.
compare it with a giant sleepover in a tent city, or a long parade with banners and team T-shirts.
“But it came as a surprise that it would be an opportunity to bond team to team,” says Carroll, who walks as a tribute to his late mother Evelyn. “You are forever walking, taking turns doing a couple of laps. Then someone will be coming up to see you, and having a conversation on the track.” When participants are not walking, they chat over refreshments; play soccer, Frisbee or football; watch movies and listen to music; renew old connections and make new ones. Participants
WICC at Relay For Life
The bags are then lit by flickering candles and placed around the track at Esther Shiner Stadium, named for an alderman who died of cancer at the age of 63.
“The symbolism of the experience is quite powerful . . . like passing through the stages of cancer, from diagnosis to the dark hours and, finally, survival or the celebration of life. “It’s a very reflective time. You might have a few tears here and there, but you are celebrating life. You realize you are never really alone in life anymore.”
Carroll says the stories his team told after their first relay event have made it easier to recruit others. Now there is a friendly rivalry to see which team can find the most donations. Sponsors register their pledges online, and teams can peek at how others are doing by visiting the website of the Women in Insurance Cancer Crusade. Fifty-five teams of WICC supporters from all corners of their industry helped raise $328,500 for research into breast cancer during 2010 Relay For Life events. IBAO’s team raised about $7,500 in 2009, and more than $25,000 in 2010. “This year we are probably looking at $30,000,” says Carroll. “We know we have to get out of the gate early (to solicit pledges). So I will be sending you an email!”
the Canadian Cancer Society’s biggest event at Esther Shiner Stadium in North York on June 24, 2011 Design compliments of For more information and to register your team(s) go to wicc.ca
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Framing the New Frontier Opportunities arising from social media do not come without risks, and a company would be wise to have a social media policy in place. J.M. Reynolds
Social Media Consultant
Once rejected as a trend, social media is quickly becoming a communications imperative for organizations — although it’s not without its risks. Organizations without policies in place to manage, monitor and respond to social media activities may find themselves on the losing side of a lawsuit related to intellectual property, employment, competition and/or defamation law. Putting in place a social media policy will provide needed guidance to your employees and enable your organization to realize the benefits of social media while mitigating some of the associated risks.
SOCIAL MEDIA: RISKS AND REWARDS Facebook eclipsed Google as the most popular Web site in the United States in 2010,1 while other social media platforms such as LinkedIn, Foursquare and Twitter continue to grow. The ubiquity of social media, expansion of Web 2.0 tools and growth of user-generated content has provided fertile ground for organizations to engage directly with consumers and stakeholders alike.
48 Canadian Underwriter March 2011
However, as with all new frontiers, the opportunities — and potential downfalls — are immense. The same qualities that make social media valuable also expose organizations to significant risks. According to a 2009 survey by Deloitte2, 74% of 2,008 employees surveyed said it was easy to damage a company’s reputation online. The speed, sense of anonymity and informality inherent in the medium make social media a breeding ground for corporate liability and litigation. Even the best-intentioned employees may unwittingly expose an organization to legal risks, as underscored by a question posed to The Ethicist in the New York Times3. In it, “Name Withheld” from Dallas asked if it was ethical for his boss to require staff to use personal accounts to give a favourable rating to iPhone apps the company creates.Also known as “Astroturfing,” this false advertising is unethical and contravenes competition law in the United States and Canada. Had appropriate policies and procedures been in place from the start, the company in question would likely never have engaged in such deceptive practices. Social media provide a potentially global platform for employees to reveal, whether wittingly or unwittingly, privileged or proprietary information, infringe intellectual property, violate privacy rights or make defamatory statements. Most organizations have a policy governing
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employee behaviour in place. But policies covering telephone, email or inperson exchanges cannot fully address the novel uses of social media. Companies should not wait until they are in the middle of a public relations or legal crisis to put a social media policy in place. Proactive management is the best way to mitigate the legal and reputational risks. The time to act is now. One out of every six executives in Canada believe social media are the most important means for an organization to engage the public about their brand3, and 90% of Canadian companies are now participating in the social media in some way. The efficiency, security and success of organizations with employees using social media depend on developing a coherent and responsive policy.
A description of the role employees play in social media should follow the statement of purpose and definitions. Staff must have a clear understanding of roles and expectations. In the absence of a social media policy, some employees might take it on themselves to act as spokespersons, for example, thus blurring the distinction between sanctioned and unsanctioned online activity. From unofficial blogs to tweets about company activities, an enthusiastic or dis-
GETTING YOUR POLICY OFF THE GROUND
gruntled employee with a penchant for posting can easily influence a brand for the better, or worse. Establishing an unambiguous line between authorized and unauthorized communication, as well as putting in place an approval hierarchy, is vital to managing and monitoring use of social media.
A social media policy is a tool to educate, guide and control employee behavior online. An effective social media policy will reflect the organization’s goals and activities. It will contain a self-evident statement of purpose (i.e. what the document is for and why it is needed). This purpose will not only help determine the appropriate scope but align communications activities with organizational goals. A policy too limited in scope will do little to mitigate risk. A policy too broad may become unwieldy and therefore ineffective. The first step towards compliance, and ultimately optimizing an organization’s activities online, is for all employees to be on the same page. To understand their responsibilities fully, employees must understand the threat that seemingly innocuous online behaviour can pose to the organization. Explaining the intention of the policy — to mitigate risk — positions employees as equal partners in protecting the reputation and interests of the organization. Because the policy is meant to guide employee behavior, clarity and transparency is paramount. A list of key terms and definitions can further aid in comprehension.
50 Canadian Underwriter March 2011
As a starting point for reputational and legal risk management online, social media policies are the first defence against liability and damages arising out of social media.
ESTABLISHING THE BOUNDARIES Once you have defined the purpose, key terms and clarified employee roles, it is critical to set out the boundaries of acceptable use. Many current examples exist of employees making unauthorized statements online, such as 15 British Airways employees suspended in February for comments made on Facebook5. A description of prohibited content or behaviour, as well as examples of such behaviour, will help employees self-monitor their actions online and provide organizations recourse for violation. Descriptions should be specific to the platform used (such as Twitter or Foursquare) to ensure accuracy and relevance. By cross-referencing descriptions of prohibited use to existing policies such as anti-discrimination policies and confidentiality agreements, organizations can further strengthen their social media policy by ensuring comprehensive coverage of prohibited activities and use.
The consequences of contravening the policy should be unequivocal, but support mechanisms should be in place to assist in compliance. Contact information for the various departments involved in managing and monitoring social media activities for the organization must be included for the policy to be effective. Employees looking to report violations, receive clarification or flag issues may be left without recourse if the appropriate contacts aren’t provided, rendering the policy useless in the event of a crisis. Including this contact information at the end of a document, following an explanation of consequences for contravening the policy, will highlight the obligations of employees and commitment of the organization to supporting acceptable use. Litigation related to social media activities is an evolving area of law. Imprudent comments and disclosure of confidential or proprietary information can have devastating consequences for individuals and organizations. As the lines between work and personal life blur, so too does the distinction between the roles and the voice of the individual. As a starting point for reputational and legal risk management online, social media policies are the first defense against liability and damages arising out of social media. 1 Experian Hitwise, 2010, www.hitwise.com/ us/press-center/press-releases/facebookwas-the-top-search-term-in-2010-for-sec/ 2 Deloitte Ethics in the Workplace Survey, 2009, www.deloitte.com/assets/ DcomUnitedStates/Local%20Assets/Documents/us_2009_ethics_workplace_survey_220509.pdf 3 The Ethicist, by Randy Cohen, New York Times July 30, 2010, www.nytimes.com/2010/08/01/magazine/01FO B-Ethicist-t.html 4 SAS/Ledger Social Media Survey, March 2010, www.sas.com/offices/NA/canada/ en/news/preleases/social-media.html 5 ‘BA suspends cabin staff in Facebook row over list of strike-breaking pilots,’’ Feb. 12, 2011, http://www.guardian.co.uk/ business/2010/feb/12/bae-facebookstrike-action.
WICC Announces a New National Sponsor at the Platinum Level
www.wicc.ca
WICC is delighted to announce a recent addition at the Platinum Level to its National Sponsorship Program.
Chubb Insurance Company of Canada has selected the Women in Insurance Cancer Crusade (WICC) as its chosen charity for national sponsorship. Chubb is WICC’s newest national sponsor at the platinum level, representing a commitment of Cdn$45,000 over three years. This is an escalation of the company’s support for WICC as 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. “We are exceptionally proud of WICC’s accomplishments and are inspired by the good work of these dedicated volunteers,” Ellen Moore, Chairman, President and CEO of Chubb Insurance Company of Canada, said. “Chubb sees its Platinum National Sponsorship as an extension of its already strong local support for WICC and a natural next step relaying the mission at a countrywide level. Chubb employees coast to coast will appreciate first-hand the benefits of being a part of this national initiative and can be proud of Chubb’s connection to WICC as a meaningful, industry-engaging organization.”
Chubb volunteers have been very involved with WICC. “Our selection as one of Canada’s top employers shows that Chubb supports a balance of work, life and charity for our employees,” said Moore. “Having a greater connection with WICC gives our employees the opportunity to realize that balance in a way that also supports one of our industry’s biggest success stories.” Chubb’s support for WICC endorses WICC’s work in raising funds and awareness for the Canadian Cancer Society. Chubb Insurance Company of Canada has offices in Calgary, Montreal, Vancouver, and Toronto providing property and casualty insurance for personal and commercial customers through an exclusive network of more than 200 brokers across Canada. The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb’s global network includes branches and affiliates in North America, Europe, Latin America, Asia and Australia.
Chubb Insurance is now a part of a very special group of WICC National Sponsors at the Platinum Level. WICC is extremely thankful to this group of organizations which share the vision and desire to put an end to cancer! WICC National Sponsors at the Platinum Level also include:
Design compliments of
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Nature Unleashed
President, CEO, Allstate Insurance Company of Canada
Our planet is a constant source of dynamic, daily change. Nature and the environment have a profound effect on almost every aspect of our lives. On a personal level, nature’s power can affect our moods or change our travel plans. On a global scale, nature’s power can alter the course of history. The recent earthquake in Christchurch, New Zealand is a sobering reminder of the devastating power our planet can exert over our communities. While the prospect of a disaster can be terrifying, we know that coping with and learning from events of this magnitude is important to understanding the world in which we live and making our lives better in the future.
52 Canadian Underwriter March 2011
SCIENCE CENTRE EXHIBITION As part of this learning process, the Ontario Science Centre unveiled the temporary exhibition, Nature Unleashed, on Feb. 9, 2011. Presented by Allstate Insurance Company of Canada, this exhibit reveals the dynamic relationship we have with the earth by exploring the science behind, and our responses to, natural disasters. Nature Unleashed focuses on four types of disasters: earthquakes, volcanic eruptions, hurricanes and tornadoes. In Canada, we may not be exposed to certain catastrophes, like volcanoes, but we’re certainly no strangers to nature’s wrath. Snowstorms are responsible for 100 deaths every year, and millions of acres of trees are lost to Canada’s 8,000 annual wildfires. We believe Nature Unleashed is a great opportunity to educate people about how natural disasters happen.We also hope it will get people thinking about how they would handle a catastrophic natural event if it were to hit their community. Whether a disaster happens locally, such as Hurricane Juan battering the Maritimes in 2003, or internationally, including the recent earth-
Illustration by Greg Hargreaves/www.threeinabox.com
Chris Kiah
Allstate Canada is supporting the Ontario Science Centre exhibit Nature Unleashed, which teaches visitors how to understand and cope with the effects of natural disasters.
BASEMENT FLOODING Symposium May 26, 2011 Toronto Board of Trade Presented by the Institute for Catastrophic Loss Reduction (ICLR) Basement flooding is one of the biggest challenges facing homeowners, municipal governments and personal property insurers across the country. All industry stakeholders are invited to join the Institute for Catastrophic Loss Reduction (ICLR) at a comprehensive full-day event, as we discuss the issue of basement flooding in depth. Symposium discussions will focus on basement flooding causes, mitigative best practices, homeowner perceptions research, as well as the legal side of the issue - including discussions surrounding government liability and the role of laws and bylaws.
Contact: Tracy Waddington 416 364 8677 or twaddington@iclr.org for both attendee registration and event sponsorship opportunities. For more info see www.iclr.org
Presenters at this one-day symposium will include: * City water/wastewater experts and managers * Researchers * Insurance experts Cost: $295 per person (includes HST)
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quakes in New Zealand, Chile or Haiti, natural disasters have far-reaching effects. They have a way of reminding us of how interconnected we all are.
THE SCIENCE BEHIND NATURAL CATASTROPHES The exhibit at the Ontario Science Centre teaches visitors about several historical events using state-of-the-art animations, large-scale images and cultural displays. It helps us understand how we can better cope with and make sense of the many awesome natural phenomena occurring across our planet. It goes beyond looking at the history and headlines of significant natural disasters: it also examines the science behind these events. For example, the exhibit highlights research into links between global warming and weather-related natural disasters. It asks questions about the impact of increasingly warm air and sea temperatures on the severity of storms. A greater understanding of the causes of natural disasters around the world can help us to better prepare for, and in some cases minimize, the impact. The exhibit also gives visitors a chance to interact with hands-on displays. For example, visitors can: • experience standing inside a roaring tornado;
54 Canadian Underwriter March 2011
• trigger an underwater earthquake and simulate a tsunami; • create a virtual volcanic eruption by controlling levels of gas and silica; and • examine real rock and lava specimens that tell of past geologic events.
The Nature Unleashed exhibit at the Ontario Science Centre highlights research into links between global warming and weather-related natural disasters. Greater understanding of the causes of natural disasters around the world can help us better prepare for, and in some cases minimize, the impact. As an insurance company, helping customers better prepare for nature’s worst effects and helping them to recover from a natural disaster is part of our business. Our hope is that with the proper resources, people will know what to do to protect their families and homes in the event of a natural disaster. Allstate Canada makes a point of working year-round to help prepare Canadians for these unforeseen events.
We accomplish this by helping to generate awareness through our support of initiatives like Nature Unleashed and Emergency Preparedness Week, which educates Canadians about steps they can take to help protect their homes and families in the event of a disaster. To this end, we encourage Canadians to take these steps to prepare themselves for an emergency: • Understand the risks: Learn about the climate and weather patterns in your region and how to best prepare for those kinds of catastrophic events.This can be done online using a trusted source such as the Government of Canada’s Web site. • Make a plan: Prepare an emergency plan with your family and practice it to make sure it runs smoothly. The plan should include the safe exits from your home and neighbourhood and also where to meet if you are separated from each other. • Prepare a kit: This kit will include everything you need to make sure you and your family are able to get through the first 72 hours of an emergency. Make sure the kit is easily accessible, easy to carry and stored in a waterproof container. The Nature Unleashed exhibition runs until May 1, 2011, and is free with admission to the Ontario Science Centre.
WICC Ontario Chapter is challenging you in its battle to help conquer cancer
Change for Change Your SPARE CHANGE is helping to CHANGE the face of CANCER
WICC Ontario Chapter encourages you, along with your associates and colleagues, to participate in this worthwhile cause. The smallest contributions collectively make a significant difference. Over the past 15 years the insurance industry and its associates’ donations have totaled over $5.5 million for cancer research. This year, with your help, the industry can make a difference with hopes of raising over $750,000 for cancer research.
To help us reach our 2011 Change For Change (C4C) Ontario industry goal of $20,000 – we’re inviting you to join in some friendly competition with your insurance industry colleagues. The WICC C4C Insurance Industry Challenge is a fun, motivational fundraising event to raise as much funds as possible with C4C donation boxes. • It is not just about the donation box – have some fun with your employees such as simply donating change to ‘change’ their work attire for a day from business to casual wear • Great prizes are available throughout the year for the top fundraisers! • The top three companies with the most funds raised by the end of April, July and October in 2011, will have their companies featured in a one-page advertisement in Canadian Underwriter • The company which raises the most funds by the end of December 2011 will receive our grand prize of a full one-page advertisement profiling your company in the February 2012 issue of Canadian Underwriter and recognition at our 2012 Gala Dinner! We will give you everything you need for a successful challenge.
Don’t miss out on this great opportunity to do the right thing to help Make Cancer History. Visit our www.wicc.ca and click on Change for Change icon for more details and full contest rules or contact Adrian Hall at info@wicc.ca
Thank you for joining WICC’s Fight Against Cancer.
Design compliments of Informco
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Optional Paralysis Ontario’s auto insurance reforms may have inadvertently created a dilemma for insurers when it comes to the portability of optional benefits in priority of payment disputes. Daniel Strigberger Partner, Miller Thomson
Ontario’s 2010 auto insurance reforms may have created a dilemma related to the “portability” of optional benefits in priority of payment situations. In 1996, Ontario approved the OPCF 47 endorsement, designed to make sure an insured person is able to access optional benefits regardless of how the priority of payment rules set out in subsections 268(2), (4), (5), (5.1) and (5.2) of the province’s Insurance Act are interpreted. Although the OPCF 47 has been available since 1996, optional benefits did not surface in many claims files before Sept. 1, 2010, when Ontario
56 Canadian Underwriter March 2011
introduced an auto insurance reform package. The 2010 reforms converted previously mandatory benefits such as caregiver, housekeeping and home maintenance benefits into optional benefits. If more consumers buy the optional benefits to preserve their pre-Sept. 1, 2010 coverages, there will be more OPCF 47 endorsements in the marketplace. In turn, more insurers will become the priority payor of claims they otherwise would not have had to pay before Sept. 1. It follows that insurers could be faced with paying millions of dollars in claims under a policy with an OPCF 47 that they otherwise would not have had to pay under the priority rules.
BACKGROUND The Automobile Insurance Rate Stability Act, 1996 (Bill 59) sought to lower the cost of compulsory automobile insurance in Ontario. Among other changes, the legislature tried to set the mandatory accident benefit coverages at a level that would satisfy consumers’ needs, while allowing insurers to price their products appropriately. Until Sept. 1, 2010, all auto polices in Ontario
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included basic caregiver and housekeeping /home maintenance benefits. Accident benefit claimants with non-catastrophic (non-CAT) injuries were entitled to claim medical/rehabilitation benefits up to $100,000 per accident. Non-CAT attendant care benefits were available for up to two years after an accident, to a maximum of $72,000 ($3,000/month). On Sept. 1, 2010, auto insurance reforms went into effect, significantly changing basic coverages for non-CAT claims. Under the new benefits schedule (Reg. 34/10, “the SABS”), caregiver and housekeeping benefits are no longer available by default. Likewise, the nonCAT limits for medical/rehabilitation benefits have been reduced to $50,000. Attendant care benefits have been limited to no more than $36,000 for nonCAT claims (down from $72,000). Again, the plan was to adjust basic coverages to meet consumers’ needs, giving consumers more choices for non-CAT
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Changes in the basic coverages arising from the Ontario auto insurance reforms should cause insurers to consider the impact optional benefits might have on future claims, specifically within the ambit of the priority rules (and their exceptions) in the Insurance Act. claims while allowing insurers to adjust their premiums. In the spirit of “more choice,” consumers wishing to preserve their preSeptember 2010 benefits could purchase them as optional benefits under s. 28 of the SABS. Once purchased, optional benefits become available in the event of a claim to the named insured (actual or deemed), their spouse, their dependent(s) or a listed driver. Optional
benefits are not available to anyone else claiming under the enhanced policy. For example, an uninsured pedestrian struck by a vehicle insured under a policy with optional benefits would not be entitled to those optional benefits when claiming under that policy. Although the changes to the basic coverages offer more choices and premium levels, they pose some new challenges for underwriters and claims adjusters. Insurers should consider the impact optional benefits might have on future claims, specifically within the ambit of the priority rules under section 268(2) of the Insurance Act and the exceptions to the priority rules set out under the OPCF 47 endorsement (Agreement not to Rely on SABS Priority of Payment Rules).
IMPACT OF THE REFORMS We are only six months into the updated policy. As more insureds renew their post-Sept. 1 policies, they are faced
With the right team by your side, no goal is unattainable. STRENGTH AND SUPPORT TO KEEP YOU IN THE GAME. For more than a century, CNA has helped businesses prepare for any challenge. Our “A” rating for financial strength, breadth of coverages, exceptional claim service, global presence and local underwriting authority enable us to support you, however and whenever you need it. When you are looking for a carrier with the experience and insight you need to keep you competitive in the face of risk … we can show you more. SM
For more information, please contact your local underwriter or visit www.cnacanada.ca.
www.cnacanada.ca CNA is a registered trademark of CNA Financial Corporation. Copyright © 2009 CNA. All rights reserved.
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with less coverages unless they purchase the optional benefits. Conceivably, the number of optional benefits purchased could skyrocket. From an underwriting perspective, the optional benefits provide an opportunity to sell additional coverages that consumers are used to having anyway. Meanwhile, brokers might be inclined to promote these optional benefits to avoid possible E&O claims against them arising from a failure to inform their customers about the significant changes to the basic auto policy. However, from a claims perspective, the increasing prevalence of optional benefits amplifies the frequency of incidents in which the OPCF 47 might be triggered. This could significantly increase the insurer’s exposure to paying sizable amounts of benefits it otherwise would not have had to pay. Here’s why. In a nutshell, the priority rules under s. 268(2) of the Insurance Act determine which insurer is ultimately
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From a claims perspective, the increasing prevalence of optional benefits amplifies the frequency of incidents in which the OPCF 47 might be triggered. This could significantly increase the insurer’s exposure to paying sizable amounts of benefits it would not otherwise have to pay. responsible for paying a claimant accident benefits. A claimant’s first recourse is against his or her own insurer (as named insured, listed driver, spouse or dependent). If that recourse isn’t available, the claimant next has recourse against the insurer of the vehicle they were in or, if the claimant is a pedestrian, the insurer of the vehicle that
struck them. If there is still no insurance available, the claimant next has recourse against the insurer of any other vehicle involved in the accident. Finally, if there is still no insurance available, the claimant has recourse against the Motor Vehicle Accident Claims Fund. Often claimants will have recourse against more than one insurer on the same priority level. For example, a named insured also has recourse against their spouse’s insurer. Likewise, an uninsured passenger in an uninsured vehicle would have recourse against the insurers of any other vehicles involved in the accident. In these cases, section 268(4) of the Insurance Act allows a claimant to choose one of the equally ranked insurers, settling the priority dispute. Sections 268(5) to (5.2) prescribe additional priority rules to break the deadlock when the claimant is a named insured (actual or deemed), their spouse or their dependent(s). These prescribed rules under sections
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HUB International www.hubinternational.com At your service in all 50 United States and the provinces and territories of Canada. 58 Canadian Underwriter March 2011
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268(5) to (5.2) may cause significant issues if optional benefits are otherwise available. Consider the following example. John is insured with ABC Co. He has purchased optional caregiver, housekeeping, attendant care and med/rehab benefits to restore his coverages to the pre-Sept. 1, 2010 policy. He is driving his wife Ann’s car, insured with 123 Co. Their three young children are also in the car. Ann’s policy does not have the post-Sept. 1, 2010 optional benefits. John gets into an accident and all of the occupants in Ann’s car are injured. Section 268(5.2) of the Act requires 123 Co. to pay John’s claims, since he is Ann’s (the named insured’s) spouse and he was in her vehicle at the time of the accident. Further, 123 would also have priority over the children’s claims, since they are Ann’s dependents and were in her vehicle at the time of the accident. Consequently, the priority rules would deprive John and his children of the
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Often claimants will have recourse against more than one insurer on the same priority level. In these cases, the Insurance Act allows a claimant to choose on of the equally ranked insurers. These rules may cause significant issues if optional benefits are otherwise available. optional benefits John purchased for his policy, for an additional premium, to protect his family. Enter the OPCF 47 endorsement. Insurers are required to issue the OPCF 47 in all instances in which an insured purchases optional accident benefits. The purpose of the endorsement is to make sure an insured is able to access op-
tional benefits under their own policy regardless of how the priority rules are interpreted. With the OPCF 47, John and his three children could claim benefits from ABC under John’s policy. ABC would then have to accede priority over 123 despite section 268(5.2). Since John’s policy includes the optional (pre-Sept. 1, 2010) benefits, whereas Ann’s policy does not, it is very likely the four claimants would choose to apply to ABC over 123. Depending on the nature and seriousness of the various claims, John’s OPCF 47 could cost ABC considerably. Therefore, under the current SABS, it is important for underwriters/brokers to consider the implications of selling optional benefits to insureds who might also have coverage under other, equal policies. Given the likely increased prevalence of optional benefits after Sept. 1, 2010, the OPCF 47 endorsement and its application may have some unintended consequences to the bottom line for which insurers have not accounted.
8 I\c`XYc\ 9lj`e\jj GXike\i Wherever You are WBN is the world’s largest international organization of privately held Insurance Brokerage Firms. With our independent partners around the globe, we are able to: ;\j`^e Xe[ j\im`Z\ `ek\ieXk`feXc `ejliXeZ\ gif^iXdd\j DXib\k Xe[ XiiXe^\ Xcc ZcXjj\j f] `ejliXeZ\ Zfm\iX^\ Gifm`[\ i`jb dXeX^\d\ek Zfejlck`e^ j\im`Z\j DXeX^\ pfli `ejliXeZ\ gif^iXd fYa\Zk`m\j Xifle[ k_\ nfic[
Worldwide Broker Network, Ltd. 23 Austin Friars Cfe[fe# LB <:)E )HG Telephone +44-207-084 6386 Fax +44-207-084 6386 www.wbnglobal.com info@wbnglobal.com
Local knowledge - worldwide network March 2011 Canadian Underwriter
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MOVES & VIEWS UPCOMING EVENTS: FOR A COMPLETE LIST VISIT
www.canadianunderwriter.ca
AND CLICK ‘MY EVENTS CALENDAR” ON THE HOME PAGE
1
Travelers Canada has promoted vice president Francine Armel to lead its financial and professional services division. Armel joined Travelers Canada in 2005 in the financial and professional services division, which offers management liability and professional indemnity products for public, private and non-profit companies and financial institutions. Previously, Armel served as a senior claims counsel for specialty claims at Liberty International Underwriters and practised insurance law at private law firms. In addition, Sally Turney [1] has joined Travelers Canada to lead the communications, marketing and branding functions. Turney came to Travelers Canada from Aviva Canada, where she most recently held the position of vice president of corporate affairs.
2
Optimum West Insurance Company and Offsetters, a carbon management solutions provider based in Vancouver, B.C., have teamed up to bring a home insurance policy to the B.C. marketplace that offsets a household’s annual greenhouse gas emissions. Called the Optimum Green-Home Extension, the carbon-neutral home insurance policy is scheduled to roll out to B.C. homeowners and renters on Mar. 1,
60 Canadian Underwriter March 2011
2011. The product extends a conventional home insurance policy with up to $10,000 of additional coverage for the cost difference to replace damaged items with more environmentally friendly alternatives. Applicable to B.C. homeowner, condo and tenant insurance policies, brokers use tables developed by Offsetters to estimate the homeowner’s annual household carbon footprint, which can then be offset. The policy will be available through insurance brokers who offer Optimum West Insurance.
3
Keal Technology’s Commercial Management System (CMS), comXP and Lloyd’s Canada’s Lineage system are now integrated to streamline broker workflows, the companies have announced. “Keal and Lloyd’s Canada brokers can now upload commercial risk statistical data (traditionally known as bordereaux),” Keal announced in a press release. “The integration electronically sends client data from the brokerage using Keal’s CMS, comXP, to Lloyd’s Lineage, reducing duplicate data entry. “comXP now includes addressXP, which uses Canada Post’s postal code database for address validation to meet Lloyd's requirements and enforce superior data in-
tegrity of all commercial accounts.” The integration not only saves brokers time, the release says, but it also minimizes errors and omissions exposure inherent with manual duplicate data entry and incorrect addresses. There is no cost to Keal brokers for this integration.
4
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.
5
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 na-
1 tional 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.
6
Pembridge Insurance Company and Brovada Technologies have launched Broker Connectivity Upload, the second phase of a joint venture offering real-time transactions intended to improve broker workflows. Broker Connectivity Upload allows brokers to begin and end a new business transaction in their own broker management system, eliminating the need for the use of a portal. In November 2010, Pembridge delivered single sign-on and inquiry functionalities using a combination of Brovada’s NexCenter and NexExchange solutions.
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Sara Robb has been appointed vice president of finance. She will be responsible for finance, accounting and IT, including premium financing and mergers and acquisitions. Responsibilities for all four individuals extend to the Ft. McMurray (Rogers Insurance North) and Red Deer (Mooney Insurance) offices of the Rogers Insurance Group.
•
9
10a strategy and conducts physical walk throughs of a company’s site(s) to identify potential trouble areas and learning protocols.
10b
7
FirstOnSite Restoration has launched a national campaign to raise awareness about Canadian companies’ preparation for man-made 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 beforehand so, when a flood or fire happens, the FirstOnSite team knows the business' needs and priorities and can respond immediately to begin restoration work in the event of a loss. In the program, FirstOnSite develops a communication
8
Rogers Insurance Ltd., an employee-owned independent brokerage in Western Canada with 200 employees, has announced a number of new staff appointments. • Karyn Fair has been appointed vice president of commercial lines. She has been with Rogers for seven years and is also responsible for insurance software systems. • Austen Lillies has been appointed vice president of new business development, responsible for all aspects of large commercial sales. Lillies has been employed with Rogers for 10 years. • Mary Murray has been appointed vice president of personal lines. Murray will be responsible for all aspects of personal lines sales and operations including group, VIP and regular personal lines divisions.
9
Willis North America has appointed Jeff Elliott as director of operations, a newly created position. Elliott’s role will be to refine Willis North America’s target operating model and oversee its major technology initiatives. In addition, he will develop standards and policies to ensure Willis delivers high-quality services to its clients. Prior to joining Willis, he served as senior vice president of outsourcing and offshoring for the wealth, brokerage and retirement group at Wells Fargo.
10
Crawford & Company (Canada) has announced two appointments, one within its Class Action Services department and another within its Contractor Connection operations. Michael Mooney [10a], who joined the company in 2008, is Crawford’s new vice president of Class Action Services. This department has administered some
of the most complex class action settlements approved by Canadian courts, a Crawford release says. Dan Loosemore [10b] 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 build a successful partnership and create value for customers.
11
iter8 Inc. and York Fire and Casualty Insurance are extending existing realtime broker connectivity using collabor8. York has already provided real-time processing of inquiry, new business and endorsement transactions for brokers using Keal, CIM-Data and PowerBroker broker management systems. The broker’s options have now expanded through the direct integration of PowerBroker, CIM-Data and Keal broker management systems to the York portal. collabor8, the technology solution used to deliver full carrier and broker integration, receives the uploaded information from the broker management systems, applies York’s underwriting rules, criteria and edit capabilities and integrates with their policy administration system OPUS.
March 2011 Canadian Underwriter
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CU Seminar ad March 2011
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Putting the pieces together.
Events and Seminars Calendar You work hard to protect your clients’ property. Now, it’s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.
CIP Society Events and Seminars Moncton – CIP Society Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 24
Regina – Commercial Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 19
Saskatoon – PROedge Seminar: Advanced Business Interruption . . . . . . . . . . March 28
Halifax – PROedge Seminar: Leading Insurance & Liability Cases . . . . . . . . . . . April 28
Kitchener – PROedge Seminar: Leading Insurance and Liability Cases . . . . . . . March 29
Halifax – CIP Society Spring Fling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 28
Regina – PROedge Seminar: Advanced Business Interruption . . . . . . . . . . . . . March 29
Burnaby – PROedge Seminar: COC VS Wrap-Up Liability . . . . . . . . . . . . . . . . . . . . May 4
Toronto – CIP Symposium 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 6
Regina – PROedge Seminar: Ethics and the Insurance Professional . . . . . . . . . . May 17
Toronto – Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 27 - 28
Saskatoon – PROedge Seminar: Ethics and the Insurance Professional . . . . . . . May 18
Keeping you at the forefront of the P&C industry. The CIP Society. MEMBERS BENEFIT. www.insuranceinstitute.ca/cipsociety
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CSN Collision & Glass (CSN) has introduced two new locations in Calgary, Alberta. Concours Collision Crowfoot and Concours Collision South have both become members of CSN, a network of independently owned and operated collision repair facilities located throughout Canada. For 30 years, Concours owner Ken Friesen has not only built two successful collision repair centres, he has been a dedicated contributor to the overall improvement of the Canadian collision repair industry. He was the first chairman of the Canadian Collision Industry Forum (CCIF) and a past president of the Automotive Service & Repair Association (ASRA). He joined the network of collision repair professionals because “working together is essential in continuing to grow and develop our business,” he says. “CSN represents the people with whom I want to move forward in our quest for continuous improvement.” CSN's chief operating officer Flavio Battilana said CSN is excited to have Ken Friesen and Concours be part of its expansion in Western Canada. “Through
his innovative processes and continual improvement efforts, Ken has demonstrated commitment and leadership to the Calgary community and the Canadian collision industry.” Also recently, Concours Collision Centres-CSN in Calgary, Alberta has broken ground for a new state-of-theart collision repair facility located 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. 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,” he 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.
2011 IBC FINANCIAL AFFAIRS SYMPOSIUM Emerging Issues for P&C Insurers Financial Reporting | Taxation Solvency Regulation | Reinsurance
ADVERTISERS’ INDEX ACE INA Insurance Applied Systems The ARC Group Aviva Canada Inc. C.A.I.W. Canadian Litigation Councel canadianunderwriter.ca Canadian Underwriter magazine CNA Canada ClearRisk Crawford & Company (Canada) Inc. Cunningham Lindsey Canada Elliott Special Risks FirstOnSite Restoration FM Global
76 (obc) 5 37 15 73 19 74 45 57 41 17 11 42 22, 23 2, 3 (IFC)
The Guarantee Company of North America
29
HUB International
58
ICLR – Basement Flooding Symposium
53
IBC - Insurance Bureau of Canada
63
Insurance Institute of Canada
43
Risk Management Services (RMS) – An SCM Company
35
RSA – Royal & Sun Alliance Insurance Company of Canada 9, 33 SCM Insurance Services
65
Starlight Insurance Gala
49
WICC
One King West Conference Centre 1 King Street West, Toronto, ON.
7, 39, 62
RIMS Canada Conference - Ottawa
WBN – Worldwide Broker Network
Thursday, April 21, 2011 8:30 am – 1:00 pm
Register at www.ibc.ca or our members-only website at www.infosource.ca
59 47, 51, 55
WINMAR
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Zurich Canada
21
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INSURANCE INTERNET DIRECTORY ASSOCIATIONS Canadian Independent Adjusters' Association (CIAA) "The voice of Independent Adjusters in Canada" www.ciaa-adjusters.ca Honourable Order of the Blue Goose—Ontario Pond Our fraternal organization has been dedicated to fellowship and charity since 1908. www.bluegooseontario.org The Insurance Institute of Canada The professional educational arm of the industry. www.insuranceinstitute.ca Risk & Insurance Management Society Inc. Dedicated to advancing the practice of effective risk management. www.rims.org
CLAIMS ADJUSTING FIRMS ClaimsPro Inc. Committed to providing leading-edge claims management services. www.scm.ca Crawford & Company (Canada) Inc. Enhancing the customer experience, every day. www.crawfordandcompany.com CRU Adjusters Calm in the face of a storm. www.cruadjusters.com Cunningham Lindsey International independent claims services. www.cunninghamlindsey.com Kernaghan Adjusters Doing What Is Right®. www.kernaghan.com McLarens Canada International Loss Adjusters and Surveyors. www.mclarens.ca
64 Canadian Underwriter March 2011
PCA Adjusters Limited Adjusting to Meet your needs™ www.pca-adj.com Quelmec Loss Adjusters Identifying, Investigating, Resolving...for over a quarter century! www.quelmec.ca
CONSULTING FIRMS Cameron & Associates Insurance Consultants Ltd. Claims consultants to the insurance and reinsurance community. www.cameronassociates.com Keal Technologies Complete technology solutions for insurance brokers. www.keal.com
CONSTRUCTION CONSULTANTS MKA Canada, Inc. Providing creative solutions to the Construction, Legal and Insurance Industries. www.mkainc.ca
Walters Forensic Engineering Inc. Providing scientific answers to complex engineering incidents. www.waltersforensic.com
EMPLOYMENT ONLINE I-HIRE.CA Canada's Insurance Career Destination. www.i-hire.ca
ENGINEERING SERVICES Giffin Koerth Forensic Engineering and Science Investigate Understand Communicate www.giffinkoerth.com Rochon Engineering Inc. Forensic Consulting Engineers & Code Consultants. www.rochons.com
The ARC Group Canada Inc. Your Partner in Insurance Law & Risk Management. www.thearcgroup.ca
GRAPHIC COMMUNICATIONS Informco Inc. Integrated Graphic Communications Specialists. www.informco.com
INSURANCE COMPANIES Aviva Canada Inc. Home Auto and Business Assurance. www.avivacanada.com Catlin Canada Underwriting Ambition. www.catlincanada.com Chartis Insurance Company of Canada Your world, insured. www.chartisinsurance.com FM Global The leader in property loss prevention. www.fmglobal.com
DAMAGE COST CONSULTANTS SPECS Ltd. (Specialized Property Evaluation Control Services) Providing Innovative Solutions to Control Property Claim Costs www.specs.ca
INSURANCE LAW
Grain Insurance and Guarantee Company Commercial Lines Underwriters www.graininsurance.com RSA Leading car, home and business insurer. www.rsagroup.ca Sovereign General Insurance Company of Canada Since 1953 www.sovereigngeneral.com
INSURANCE SOFTWARE APPLICATIONS Keal Technologies Complete technology solutions for insurance brokers. www.keal.com
REINSURANCE Guy Carpenter & Company The world’s leading reinsurance intermediary. www.guycarp.com Munich Reinsurance Company of Canada Complete reinsurance coverage from Canada’s largest reinsurer. www.mroc.com Swiss Reinsurance Company Canada The leading P&C reinsurer in Canada. www.swissre.com Transatlantic Reinsurance Company For all your reinsurance needs. www.transre.com
RESTORATION SERVICES Winmar Property Restoration Specialists Coming Through For You! www.winmar.on.ca
RISK MANAGEMENT The Guarantee Company of North America “Specialized insurance products...professional service” www.gcna.com
The ARC Group Canada Inc. Your Partner in Insurance Law and Risk Management. www.thearcgroup.ca
SPECIALTY INSURANCE Wawanesa Insurance Earning your trust since 1896. www.wawanesa.com
William J. Sutton & Co. Ltd. Insuring Special Risks since 1978 www.wjsutton.com
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10 years of industry expertise and his parents’ business background. Chris joined the CARSTAR network because it was “the right investment and a major business decision. I know that being part of a collision network is extremely beneficial, and I didn’t want this opportunity to pass me by. I wanted a relationship that I knew could support my business, and my family.” CARSTAR St. Albert has about 6,500 square feet of production space and an additional 1,500 square feet of office space. CARSTAR Automotive Canada has also announced the opening of a new CARSTAR Collision Centre in LaSalle, Ontario. Dennis Carlini is the owner and operator of CARSTAR LaSalle. The building houses 4,800 square feet of production space and another 500 square feet dedicated to office space. This is Dennis’ second store, making him a multi-store owner for CARSTAR. His first store, CARSTAR Windsor, hasrun successfully since 2004, when he joined the company.
CARSTAR Automotive Canada Inc. recently celebrated the opening of two Alberta locations – CARSTAR Calgary East Lake and CARSTAR St. Albert. CARSTAR Calgary East Lake (1) is a brand new, state-of-the-art location at 4600–112th Avenue South East in Calgary. It is one of the largest CARSTAR Collision centres in the network. It's the fourth location co-owned and operated by three business partners: Chris Stathonikos, his son Matthew Stathonikos and Dave Stretz (2). The three make up the CMD CARSTAR Group. The CMD CARSTAR Group invested in all of the latest repair equipment and chose to use environmentally friendly business practices, body paint and recycling practices — including the adoption of “lean” principles — to improve performance and efficiency. CARSTAR St. Albert (3), located at 2 Riel Drive, is owned and operated by Chris Lane and his parents, Cathy and Frank. The location has already met with success in the community thanks to Chris’
1
2
3 March 2011 Canadian Underwriter
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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); and moderator Sandra Corbett (Parlee McLaws LLP). Canadian radio personality, entertainer and comedian Maureen Holloway gave a keynote address at the luncheon.
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Coming Through For You!
THE PROPERTY RESTORATION SPECIALISTS WITH SERVICE LOCATIONS ACROSS CANADA
24 HOUR ASSIGNMENT/EMERGENCY RESPONSE TOLL FREE 1-866-4-WINMAR (494-6627) Proud to be Canadian owned and operated.
For more information visit www.winmar.ca
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Hundreds of insurance claims industry guests attended the 5th Annual Post CICMA/CIAA Joint Conference Cocktail on Feb. 8, 2011. Entitled â&#x20AC;&#x2DC;The Big Mingle,â&#x20AC;&#x2122; the event was inspired by the television show Mad Men. Giffin Koerth Forensics and Blouin Dunn LLP hosted the event, which was held at the Maison Mercer in Toronto. The event gave claims industry stakeholders a chance to connect with colleagues and friends. Event sponsors included Able Translations and Able Transport, Belfor, A.R.S., MasterClean, ServiceMaster Restore and Garda.
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More than 150 exhibitors from across Canada appeared at the Ontario Insurance Adjustersâ&#x20AC;&#x2122; Association (OIAA)â&#x20AC;&#x2122;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.
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The CIP Society, a division of The Insurance Institute of Canada, selected Paul Green, BA, FCIP, as the 2011 recipient of the Greater Toronto Area Fellow of Distinction Award. Green’s award was presented at The CIP Society’s Annual Fellows’ Reception at the National Club on Feb.3, 2011. It recognizes outstanding achievement in the insurance industry in Toronto. Colleagues nominate insurance professionals for The Fellow of Distinction Award, which is presented annually to a Fellow Chartered Insurance Professional (FCIP). At the reception , Heather Masterson, FCIP, chair of the CIP Society–Ontario said: “Paul’s dedication and contribution to the insurance industry over the past three decades has been exemplary. His expertise ,combined with his enthusiasm for innovation, makes him a force to be reckoned with and a very worthy recipient of this
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award.” Currently vice president at the CG&B Group Inc., Green has more than 30 years of experience in the property and casualty insurance industry. He has strong marketing and underwriting knowledge in both personal and commercial lines. His extracurricular involvement with the industry has seen him in a variety of roles, including past president of the Insurance Institute of Ontario and regional vice-chair of the Insurance Institute of Canada (2004-05). He served on the IIO Governing Council from 1999 to 2006, and was a past member of the CIP Council of the Insurance Institute of Canada. Green has a long history of community and charitable involvement, including volunteer positions with United Way and the steering committee of WICC Relay for Life. The evening also recognized the recent graduates of the CIP Society–Ontario Council’s Fellows program.
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2011 CAIW Annual Convention Hosted by the Montreal Association of Insurance Women Wednesday May 25th, 2011 to Sunday May 29th, 2011 Theme: A Colorful Life Location: Delta Centre Ville, 777 University Street, Montreal, Quebec H3C 3Z7 Telephone 1-888-890-3222
We are pleased to announce the Presentations for the CAIW Convention Education Day as follows, both a English and French Program Available: WHAT’S GOING ON? Reviews of the current trends and activities in the Canadian & US insurance markets Sean Mulcair, Gradient Solutions
LE RÔLE DU SYNDIC DE LA CHAD DÉMYSTIFIÉ Rôle du Syndic Enquête disciplinaire Comité de discipline Carole Chauvin, Syndic
DIVERSITY AND INCLUSION Challenges of diversity Nia Joynson-Romanzina (Swiss RE)
LEADERSHIP, COACHING & MOBILISATION Coaching, Leadership Mobilisation Louis Cyr, Le monde de l’assurance Inc.
PEOPLE ARE TALKING ABOUT YOU, ARE YOU LISTENING Appropriate look on the use of digital platforms in marketing and public relations Bruno Guglielminetti, NATIONAL
MÉDIAS SOCIAUX (In English/en anglais) Utilisation des nouvelles plateformes numériques Bruno Guglielminetti, NATIONALE
ENVIRONMENTAL RISK AND INSURANCE SOLUTIONS Risks emerging in environmental issues, trends in claims, environmental insurance Georges Boire (Marsh Canada)
www.caiw-acfa.com
À L’ÈRE DU WEB : CONTRAT D’ASSURANCE ET DOCUMENTS TECHNOLOGIQUES Formation du contrat d’assurance en ligne La gestion documentaire d’un dossier d’assurance Me Dina Raphaël, Lavery De Billy
CONTACTS FOR THIS CONVENTION ARE: Annie Arsenault 450-468-0565 annie1arsenault@hotmail.com Denise L. Hamel 450-646-2769 denise.hamel@hotmail.fr March 2011 Canadian Underwriter
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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, Toronto), departing CCIF chairman; Tom Bissonnette (Parr Autobody, Saskatoon), 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
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of the Ontario Automotive Recyclers Association (OARA); Pete Tagliapetra, NuGen IT; Kathryn Graham, Meyers Norris Penney LLP and Larry Miller, Fix Auto. On behalf of his association, OARA, Fletcher presented Blackborow of the CCIF Skills Program with a cheque for $37,000. This represented the single-largest contribution ever made to the CCIF Skills Program. It came from an association fund for supporting deserving causes, established by the recyclers’ “Retire Your Ride” program, to which OARA members contributed $35 per “retired” vehicle.
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