Canadian Underwriter February 2013 by Annex Business Media

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

F E B R U ARY 2 0 1 3 A Business Information Group Publication #40069240

Diving Into Big Data BY CRAIG HARRIS

Change in Real Time BY DAVID GALLAGHER

Getting Mobile BY JEFFREY PURDY

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VOL. 80, NO. 2, FEBRUARY 2013 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY BUSINESS INFORMATION GROUP

www.canadianunderwriter.ca

COVER STORY

Diving Into Big Data

Amidst the hype around “big data,” insurers and brokers are discovering tangible applications for unstructured information in areas such as marketing, risk assessment, underwriting, loss mitigation and claims management. BY CRAIG HARRIS

FEATURES

Data Centre Certification

Real-Time Policy Change

It is essential to store data in a secure environment given the increase in the volume of sensitive data that insurance companies are handling today. Third-party certification of data centres must be considered.

New technology is needed to ensure when a policy change is made in the broker’s software, it is updated properly in broker and carrier systems, data are reviewed and errors are logged. BY DAVID GALLAGHER

BY LAURA STEVENSON

16 Technology in Restoration The restoration industry is poised to begin more fully employing technology advancements, a move that can help foster innovation. But are businesses keeping pace and able to operate in this new environment? BY BRUCE DERRAUGH

24 XML Standards Standards-based systems provide benefits to brokers and insurers by allowing them to make the most of information technology. Consistent implementation of standards can help achieve both cost and time savings.

42 Commercial Insurance Where will technology take commercial insurance in the next decade? The pervasiveness of apps has clearly changed expectations of software, but what will be the effect on the broker distribution channel? BY STEVE PIEROWAY

49 Cloud Computing By storing data and running applications from a service provider’s data centre, brokers are able to offer advanced mobile technologies without having to administer their own servers. BY JEFFREY PURDY

BY GRANT PATTEN

Driving and Dementia

Brokerage of the Future

There is debate over the reliability of senior motorists. Auto insurers need to address underwriting, rating and claims management of drivers with cognitive impairments.

The demand from insurance clients who want to communicate with brokers 24/7 will be more easily met with real-time policy change that helps make existing workflow more efficient.

BY SCOTT KNIGHT & KONSTANTINE ZAKZANIS

BY COLIN SIMPSON

February 2013 Canadian Underwriter 3

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VOL. 80, NO. 2, FEBRUARY 2013

PROFILE

Editor Angela Stelmakowich astelmakowich@canadianunderwriter.ca (416) 510-6793 Associate Editor Greg Meckbach gmeckbach@canadianunderwriter.ca (416) 510-6796

10 Technology Partners Sean Graham, principal broker for KTX Insurance Brokers Ltd., suggests that using technology can be a natural fit with efforts to improve customer service, regardless of whether that customer is technologically savvy or “less comfortable” with new platforms. BY ANGELA STELMAKOWICH

SPECIAL FOCUS

Editorial

Marketplace

52 Moves & Views 54 Gallery

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EDITORIAL

Ripple Effect

“The flexibility that provides a modern supply chain with its cost advantages has also created its inherent vulnerability.” Angela Stelmakowich, Editor astelmakowich@ canadianunderwriter.ca

Canadian Underwriter February 2013

As is often the case, it comes down to supply and demand. But sometimes supplying that demand is slowed — even stopped — by a single event or a tangle of interconnected ones that break vital supply chains, producing adverse and expensive ripple effects. Supply chain disruption should be a concern, and certainly is if several recent reports and surveys reflect an accurate image of what’s what. Consider the results of Allianz Risk Barometer 2013, a survey of 529 corporate and industrial insurance experts from 28 countries across the Allianz Group. Allianz Global Corporate & Specialty (AGCS) reports business and supply chain interruption was identified as the top risk companies face in 2013, cited by 45.7% of respondents. Compare that to natural catastrophes at 43.9%. For the United States and Canada as a region, the top concern did not change, though the percentages were higher: business interruption, supply chain risk was at 54.8%, and natural catastrophes at 53%. “The flexibility that provides a modern supply chain with its cost advantages has also created its inherent vulnerability,” Paul Carter, global head of risk consulting at AGCS, notes in the company’s survey report. “Checking a supplier’s own business continuity planning should also be embedded in the supplier selection process and, ideally, include even the suppliers of the primary

suppliers,” the report adds. Business interruption often goes hand in hand with natural disasters. But despite the connection — as shown by Hurricane Sandy, for example — companies are not properly prepared for certain types of business interruption, such as IT failures and power outages. Not only are supply chain interruptions a concern when it comes to preparedness, they are a concern when it comes to cost. A new survey from Deloitte Consulting LLP indicates that of the 600 polled manufacturing and retail executives (mostly in North America, Europe and China), 53% said these interruptions have become more expensive over the last three years, while 48% noted the frequency of risk events with negative outcomes has increased. A report from PwC, based on its 16th annual global CEO survey, says the move to “new and unfamiliar markets is opening up insurers to risks about which they have virtually no data.” It points to the $12 billion in losses linked to the Thai floods two years ago, prominently from supply chain and business interruption claims from other countries. “The flooding disaster in Thailand showed that business interruption at a key supplier can cause a ripple effect felt across an entire industry,” adds Timon Mueller, AGCS’s head of property underwriting. Last December, Amy Ingram, vice president and worldwide clean tech manager for Chubb

Group of Insurance Companies, noted that “a catastrophe like the Japanese tsunami can shut down suppliers for months and sink a company that does not have a business continuity and recovery plan.” Ingram made the comments in a statement announcing results from the Chubb 2012 Clean Tech Industry Survey, which involved decision-makers at 268 clean tech companies in the U.S. and Canada. The survey found that 36% of clean tech companies polled have not created a supply chain disruption plan. Last March, the Business Continuity Institute reported results from 17 organizations interviewed earlier that year. The time for business supply chains to recover from the earthquake and tsunami in Japan or the earthquake in New Zealand, both in 2011, varied widely: 29% of respondents reported their supply chain was back online within a week; 24% said within a month; and 41% said within one to six months. For the two respondents in the survey affected only by the Christchurch earthquake, they reported it took between one and 12 weeks to recover. Being properly prepared demands looking beyond a particular event; it requires understanding that supply chain disruptions can result from numerous influences. A supply chain risk assessment is a must to quantify disruption exposures, calculate recovery costs and identify mitigation actions.

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MARKETPLACE Sign up to receive Canadian Underwriter’s free Insurance Headline News Email Alert: http://bit.ly/cuenews

Canadian Market CANADIAN MARKET LOOKS STABLE FOR 2013: MARSH It is anticipated the Canadian insurance market will see continued stability in 2013, although there could be modest rate increases in the second half of the year, notes a report by Marsh. Renewal rates generally remained flat in the second half of 2012, a trend Marsh expects will continue, states Canada Insurance Market Report 2013. “Intense competition between insurers and brokers in the small and midsize enterprise market segment and improved Canadian property and casualty loss ratios are helping to keep the insurance market soft.” There may be some rate firming in cat-exposed areas, such as British Columbia and Quebec. Hurricane Sandy may mean marine underwriters “who may not have paid attention to flood and earthquake accumulation risks in the past, may start taking a deeper interest in the location of risk, and the deductibles and sub-limits that may apply to higher risk regions.”

Regulation ONTARIO PROPOSES CHANGES TO COMBAT AUTO FRAUD The Ontario government proposed several regulatory amendments in January in its bid to advance efforts to

8 Canadian Underwriter February 2013

fight auto insurance fraud. The proposed changes include requiring insurers to provide claimants all reasons for denying a claim; allowing claimants to receive a bimonthly, detailed statement of benefits paid out on their behalf; increasing the role of claimants in fraud prevention; and making providers subject to sanctions for overcharging insurers for goods and services and banning them from asking consumers to sign blank claim forms. The changes are set to take effect June 1, 2013.

BUILDING CODE CHANGE DESIGNED TO LIMIT DAMAGE Canadian insurers have successfully lobbied a change to Ontario’s Building Code related to roof nail patterns for new homes in the wake of research suggesting the change could have minimized damage following several Ontario tornadoes. The Institute for Catastrophic Loss Reduction (ICLR) team at Western University, along with letters of support from the Insurance Bureau of Canada and several insurers, submitted proposals for three changes to the code, one of which was accepted. The change increases the number of nails in plywood roof sheathing on new homes from a 6x12 to a 6x6 pattern. “The 6x12 pattern requires that nails along the outer edge of a roof sheathing panel, where the panel shares the upper cord of the

joist with the adjoining sheet, be spaced every six inches apart, while those nails in the interior of the panel can be 12 inches apart,” ICLR reports. “A 6x6 pattern requires that nails be spaced six inches apart, regardless of whether they are on the outer edge or in the interior of the sheet.” This is a much safer option in cases of extreme winds, and one that adds little to construction costs, ICLR adds.

“because it is suspected that the fire may have been deliberately set.” Bennett argued State Farm should not be allowed to get RCMP documents related to the fire. The court noted: “If the documents are not otherwise cloaked by privilege or immunity, and if they are relevant and shed light on the truth, the interests of justice are served by their disclosure, not by their suppression.”

Claims

ONTARIO LANDLORD CAN SUE TENANT OVER OIL LEAK

NB CLAIMANT ORDERED TO PRODUCE FIRE DOCUMENTS New Brunswick’s Court of Appeal upheld a lower court ruling requiring a fire insurance claimant to produce records for State Farm Fire & Casualty Insurance. On January 10, the appeal court dismissed an appeal from Karen Bennett, upholding a Court of Queen’s Bench ruling for Bennett to produce the documents. Court records show Bennett was the owner of a property in Nashwaak Village that was destroyed by fire in June 2008. State Farm denied Bennett’s insurance claim on the grounds that the home had been vacant for more than 30 consecutive days, that there had been “a material misrepresentation regarding the vacancy of the home” and that she “failed to give notice of a material change in the risk when the home became vacant.” The RCMP investigated

The Court of Appeal for Ontario has ruled a landlord can proceed with a lawsuit against a tenant for damages after oil leaked from an above-ground storage tank. In the December 28, 2012 decision, the judge reasoned there was no clear indication of an agreement on the part of the property owner to insure against a loss alleged to have been caused by a tenant’s negligence. The claims have not been proven in court. An oil spill occurred on Michael Cain’s property in 2007 as a result of damage to The Antique Shoppe’s above-ground oil tank and its subsequent filling. “In the course of cleaning up the spill from the above-ground oil tank, contamination from a former underground fuel storage tank, of which the plaintiff had no knowledge, was also discovered,” the lower court ruled last May. Petroleum hydrocarbon contaminant migrated to the neighbouring property. To

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effect property remediation, it was necessary to demolish the building, Ontario’s Superior Court of Justice noted. A motion by The Antique Shoppe sought to determine if the commercial lease between Cain and The Antique Shoppe “contains a covenant on the part of the lessor to insure against the loss alleged to have been caused by the negligence of the tenant.” The lower court ruled the lease agreement did not, and that the lawsuit can proceed. The business appealed, but the appeal court ruled, “Based on the record before us and the state of jurisprudence, it is not plain and obvious whether the lease contained a covenant to insure for the loss claimed by (Cain).”

in Canada take place away from populated centres, Castaldi said, this lowers insured losses. This is problematic, in part, because it has made Canada a lower priority for catastrophe modelling

and the country may not be preparing sufficiently for risks. Based on gross written premiums and gross domestic product, the loss potential for Canada is significant, he said. When a disaster

occurs, especially in a major centre, loss of power and associated business interruption losses are greater. A webinar recording is available here: http://bit.ly/ canadianriskwebinar.

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Risk Management DO NOT UNDERESTIMATE CAT RISK: SWISS RE Canada has been much less affected by major catastrophes than other regions worldwide over the past 25 years, but one industry expert cautions against underestimating risks. Canada has been comparatively unaffected despite the increasing losses from natural and manmade catastrophes over the past decade, Andrew Castaldi, Swiss Re’s head of catastrophe perils for the Americas, said during a webinar sponsored by Swiss Re and co-presented by Canadian Underwriter. Since many natural hazards

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PROFILE

Technology Partners Angela Stelmakowich Editor

Sean Graham suggests that capturing online customers, a number that is growing, demands meeting the needs of everyone from the most technologically savvy to those who are “less comfortable.” Ask Sean Graham about his background in technology, and he may laugh as he mentions he snagged third place honours in the City of Hamilton for a Grade 8 computer fair — the great computer caper. Third place is nothing to sneeze at, true, but Graham is no longer in Grade 8; nor is his current effort around customer service as much of an individual pursuit. As principal broker for Toronto-based KTX Insurance Brokers Ltd., the approach to customer service is often advanced through strong partnerships, which these days is likely to include use of different forms of technology. In line with the approach used at KTX, it is Graham’s view that customer service can be realized through a mix

10 Canadian Underwriter February 2013

of old and new: traditional, one-on-one service that brokers have always provided married with the use of cutting-edge technology.

PARTNER WELL KTX Insurance Brokers deals with some of Canada’s largest insurers, having formed specific partnerships with some of them. One key partner has been Kanetix Ltd., which offers the insurance quote comparison website Kanetix.ca, and has been very active of late: • The company acquired InsuranceHotline.com from subsidiaries of Torstar Corp. Kanetix.ca and InsuranceHotline.com, which also includes ComparaSave.com, will continue as separate brands managed by Kanetix since there is not much overlap among sites and keeping the brands intact can help satisfy more of the market. The idea is to combine online knowledge and marketing efforts to support insurance partners by helping grow that channel even faster and, therefore, provide all partners with more new business from the online channel. • Partnering with credit reporting agency Equifax and Invis-Mortgage Intelligence, Kanetix has expanded its mortgage rate comparison services to allow Ontario consumers to lock in rates and get pre-approved online. After comparing rates, users can call in to connect with a licensed broker. The move

follows input from consumers who come to Kanetix’s sites for insurance, but once there, may branch out to other financial needs. • The company launched a mobile app that allows users to scan and compare auto insurance quote estimates for their iPhones, a move that, in light of the popularity of smartphones, is regarded as the logical next step in evolving customers’ experience.

“We’re always talking about wanting to compete with the direct writers for clients, and if we’re going to do that, we need to compete on technology.” In a partner, Graham says KTX is looking for a combination of product and pricing that adds “the service element” to a distribution model; for Kanetix, which has a large mass of online shoppers asking for various types of products, the idea is to match consumer needs with those of insurance company or financial institution partners to assist them in growing their businesses.

NEW CUSTOMERS Instigated by KTX, another partnership has emerged among KTX, Kanetix and Gore

Mutual Insurance Company. Kanetix.ca has expanded its site’s commercial quote service to make it available to commercial insurance customers in Ontario and Alberta. “We felt (Gore) had a great offering for our clients and that could be brought online. It just so happens that Gore was looking to do something in the commercial space online, so it was a great fit,” Graham says. Kanetix agreed about the fit and completed a technology build on the site to give the effort some visibility with online shoppers. “Business owners are looking for new ways to purchase and manage their insurance,” Kevin McNeil, president and CEO of Gore Mutual, comments in a statement. And it is in these new ways that Graham sees great potential for insurers, brokers and customers. Kanetix, for its part, suggests that if one looks specifically at mobile, growth is faster than the younger generation is growing up, indicating there is adoption by a wider swath of ages. With regard to the market for commercial online, Graham comments it is very young. Consumers “may be a little wary in terms of insuring their business online as opposed to their home and auto, because they’re just not used to it,” he says. “That’s where we know we have to add value in terms of our brokerage model,” by allowing people to

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PROFILE

IN TOUCH An online approach should never remove the potential for contact. With the online channel and the use of mobile devices growing, the best online experience demands allowing those who want to transact completely online to do so, but to make information available (from a live broker or agent) when desired. “Different consumers are looking for different types of service levels and they have different comfort levels with the interaction with technology. So what we’re really looking to do is help those who are tech-savvy, and already buying online in other sectors or other industries, but we’re looking to add that personal touch of a brokerage,” Graham says. “We’re using technology to fulfill those demands from the most technologically savvy people to those who are less comfortable,” he adds. “The next few years are going to be really telling for the brokerage distribution channel. Brokers are behind the technology curve. We’re always talking about wanting to compete with the direct writers for clients, and if we’re going to do that, we need to compete on technology,” Graham contends.

Plenty of things can and should be done, he suggests, including having broker connectivity, E-docs and online quoting capability, or at least the ability to access the online market through lead generation sites. “There are a lot of things brokers need to do

And you really need to start thinking about where your business is headed.” Graham sees places like KTX and Kanetix headed forward. “We’re sort of cuttingedge in terms of where the industry is going, so there’s a lot of opportunity there.” A rare bird in the insurance

but has been part of KTX and Kanetix for about nine years. “You get the sense that we’re doing something new and exciting.” Graham says he enjoys the personal interaction inherent in being a broker, but also allowing customers to use technology to amalgamate the whole experience. “It’s having those traditional

to catch up because, as it is, we’re losing market share, in part, due to the fact that we’re behind on technology.” Graham suggests looking at the rates of online and mobile adoption. “If you don’t go down that path, you don’t go where the market is going, you’re really going to miss out.

industry at the time, Graham attended insurance studies at Mohawk College in Hamilton, Ontario right out of high school. “It was a really high placement rate through the college and I kept hearing great things about how the industry is always looking for good people.” He originally worked for a direct writer as a sales agent,

sorts of relationships, but also adding something new,” he says. Graham suggests that the industry looks to be “coming toward the tipping point in the next few years in terms of adoption of online by consumers and the adoption for insurance.” And that’s likely going to be even better than hitting it big at the great computer caper.

Photo: Simon Cheung

easily get a quote online, but also “holding their hand to make sure they’re comfortable with the transacting.”

February 2013 Canadian Underwriter

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With the marked increase in the volume of sensitive data that insurance companies are now handling, it is essential to have clients’ data housed in a secure environment. Laura Stevenson Third-party certifications are Director of Product key when choosing what data Management centre should be used. BLACKIRON Data On any given day, insurance companies are dealing with large volumes of sensitive data, including clients’ personal and financial information. As such, it is essential that clients’ data is safeguarded and housed within a secure environment. That data is growing exponentially as the use of smartphones, tablet computers and other mobile devices are contributing to the increasing amount of data that a company gathers and stores. Add to this the fact that insurance organ-

12 Canadian Underwriter February 2013

izations are faced with the growing issue of maintaining compliance with the changing statutory and federal regulations that are part of their business — whether it be the 2011 changes to the Bank Act that outline how banks are able to go to market with their insurance offerings, changes to the Insurance Companies Act that impact the reporting and reissuing of insurance so as to remain compliant, or switching of financial reporting from Canadian Generally Accepted Accounting Principles to the International Financial Reporting Standards that impact how Canadian corporations value and report assets and liabilities on their balance sheets. When it comes to ensuring the security and availability of your companies’ data, choosing a data centre provider that offers colocation services can often be your best option. Colocation offers the features and benefits of a large IT department without the cost, while also ensuring industry best practices and certifications, which provide peace of mind that data is safe, secure and available when it is needed.

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However, there can be a divide between what a data centre provider says it does with regard to security, uptime and compliance, and what it actually does. When selecting a data centre provider, one thing is clear: proof beats promises. Opting for a data centre partner that has validated, third-party certifications to back up its claims will help to minimize risk while maximizing availability and peace of mind. Third-party certifications such as the Statement on Standards for Attestation Engagements (SSAE) or Health Insurance Portability and Accountability Act I (HIPAA) compliance mean there is assurance companies’ data is going to be protected and available when needed.These certifications are especially important for organizations facing rigorous financial, operational and compliance obligations — when compliance is not optional, but a must. Certifications benefit data centre customers in a number of ways. Partnering with a certified data centre often makes it easier and more feasible for an organization to obtain its own certifications. In some instances, partnering with a data centre that has gone through arduous certification and external audit processes saves the user the monumental task and financial burden that is required to carry out an audit or certification process on its own. In addition, it also means the data centre is shouldering the risk and responsibility of compliance. Once a centre has received certification, it is on the hook to maintain and keep those designations current and up-to-date.

NATURAL SELECTION All data centre policies and procedures need to be documented so that they are understood and followed. Inconsistencies in the performance of data centre management and operations can lead to outages.The implementations of certifications help to mitigate that risk. While certifications can be home-grown to meet Canadian or North American regulations, it is the global certifications that have become important, especially in today’s borderless business environment.

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Meeting global certifications allows a company to expand its business, working with partners and customers in other parts of the world. Canadian data centres can have any number of both local and global certifications, so what should be top of mind when selecting a data centre partner? Here are four certifications that every insurance provider should look for in a data centre partner and what benefit they bring:

SSAE and International Standards for Assurance Engagements SSAE No. 16 was created by the Auditing Standards Board of the American Institute of Certified Public Accountants.

This is an auditing statement that defines professional standards used by a service auditor to assess the internal controls of businesses that are providing a service — such as a data centre providing hosting services. As a result, partnering with a data centre that has achieved SSAE certification offers confidence that the company is maintaining effective and efficient internal controls related to financial, information or security reporting. Similarly, ISAE 3402 — the International Standards for Assurance Engagements 3402 — is a global assurance standard for reporting on controls at service organizations. Compliance with these internationally

recognized audits is important to any organization that faces rigorous financial, operational and compliance obligations.

Uptime Founded in 1993, Uptime Institute is an unbiased, third-party data centre research, education and consulting organization. Based in the United States, this global organization awards tiered certifications to data centres, certifying the guarantees they make for uptime and availability. Uptime Institute’s tiered classification system is an international industry standard that is recognized and accepted here in Canada. The classifications identify data centre infrastructure design and address common benchmarking standard needs for operation. Why is this important? Given the nature of the insurance business, companies need to have access to client data 24 hours a day, seven days a week, 365 days a year. Partnering with an Uptimecertified data centre provider means that data is going to be available how and whenever it is required. Some data centres that have not been certified still try to hang on the coattails of these certifications by assigning their own tiers to their facilities. Be wary of any data centre providers that claim an uptime guarantee without certification from an unbiased, third party such as Uptime Institute. HIPPA The U.S.’s Health Insurance Portability and Accountability Act, also known as HIPAA, was developed with the purpose to protect personal medical information. This is a critical certification for any company within the medical industry — doctor’s offices, hospitals, diagnostic imaging providers and, of course, the insurance companies that are dealing with these health care providers day in, day out. Protecting medical information is serious business and non-compliance with HIPAA regulations can mean hefty fines for companies. As such it can be much more cost-effective for organizations to partner with an HIPAA-certified

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hosting provider. Not only does this save a company money, it ensures that clients’ sensitive medical data is protected.

Leadership in Energy and Environmental Design It is no secret that as the world’s data proliferates, so grows the environmental impact of our data centres.Today, it is crucial that companies partner with a data centre provider that is taking steps to minimize its environmental footprint. Leadership in Energy and Environmental Design, better known as LEED, is an internationally recognized green building certification system. Data centres that are LEED-certified have taken significant steps to lower electricity and water usage, waste and carbon emissions, while promoting environmental

mately, the risk of outage at the site. A data centre’s certifications can offer peace of mind and save money — providing a greater independent assurance and objectivity that the controls, process and procedures the centre has in place adhere to third-party accreditation requirements and that hosting facilities are compliant with industry best practices. Companies need to invest in trusted and proven data centre partners

that take a company’s data as seriously as the company does. Beyond that, it is cost-efficient for insurance organizations to purchase hosting services from a data centre that focuses on achieving and maintaining certifications. The results are not only peace of mind, but reduced risk and cost savings thanks to forgoing the expensive audits required for an independent company to become certified.

PCA Adjusters We Investigate We Negotiate

Partnering with a data centre that has gone through arduous certification and external audit processes can minimize the monumental task and financial burden of a user completing these efforts on its own. sustainability. LEED provides a concise framework for identifying and implementing practical and measurable green building design, constructions, operations and maintenance solutions. As companies around the world strive to be more environmentally friendly, it is important to partner with other companies that take going green as seriously as your company does. However, a green data centre does not just benefit the hosting company housing data. Energy savings often translate into cost savings, which may be passed on to customers. LEED-certified data centres are not simply good for the environment; they are good for a company’s bottom line. At the end of the day, third-party verification and certification should not be underestimated. Without it, it is the buyer’s responsibility to validate the design, operational process and, ulti-

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February 2013 Canadian Underwriter

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Technological

Restoration

The restoration industry is poised to undergo a revolution, one in which technological advances promise to foster innovation. But are businesses keeping pace Bruce Derraugh and able to operate in this Chief Operating Officer new environment? FirstOnSite Restoration In recent years, the restoration industry has seen some impressive technological advancements that have fostered development of truly significant innovations in the way business is done. Specifically, software integration, Internet connectivity, storage and security capabilities, as well as some very impressive mobile and tablet device advancements, have flooded the market. For some in the industry, it may not seem that long ago that restoration professionals and insurers communicated primarily via phone and fax. Claims, files and reports were paper-based and stored in filing cabinets — sometimes under lock and key.

16 Canadian Underwriter February 2013

As with almost any business, restoration companies have replaced the fax machine with email, and electronic servers have replaced the filing cabinets. But have business operations truly entered the new century? As service providers, are we taking full advantage of the technological advancements and tools currently available at our fingertips? Not as much as we could be, certainly. The ability to send messages, documents and photos electronically — while useful for communicating with adjusters — has not drastically improved the claims-processing cycle. Restoration project managers still need to physically visit a site where details of a job are manually recorded and a site report provided. Whether the information is recorded on paper or electronically, it may not be until day’s end before it makes its way back to an office. The package could then sit in an inbox tray until it is manually entered into claims systems, increasing both the length of time since it was generated during the site visit and the margin for human error. In addition, some jobs then need to be re-entered into different systems for submission to different insurers, thereby creating duplication and inefficiency.

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At the same time, insurers are implementing claims management systems that allow them to measure major milestones within the claim cycle, including how long it takes to receive a site report. Manual, paper-based processes create challenges for getting data into these systems, whether for restoration contractors or for insurers.

STRESS ADDS TO CHALLENGE Consider if this system is then put under some stress — the Goderich tornado, for example.The event resulted in restoration companies receiving hundreds of calls from insurance companies and individual property owners. Anyone who has worked in a catastrophe (Cat) response situation understands the massive scope of work that these large-scale disasters create for everyone involved, including insurance and restoration professionals. It is further understood that the objective of all parties is the same: to mitigate damage and to get restoration projects moving forward, and ultimately completed, as quickly as possible. Unfortunately, natural inefficiencies in the paper-based claims process can create delays, making it challenging to gather information, manage timelines and facilitate communication throughout the job. Once the dust has finally settled, insurance adjusters can be presented with stacks of estimates, work orders and invoices for all of the work that was completed. Now imagine if all job information was entered into a claims system directly from the restoration project manager’s first visit to a claim, then wirelessly transmitted directly to the adjuster, who could receive updates as the job progressed. No duplicate entry, no paper piling up in an inbox, and no major gap in time between an initial site visit and an initial site report.

CAPITALIZING ON TECHNOLOGY This is the next step that the restoration industry needs to take. As the industry explores new ways to improve service, decrease inefficiencies and save time

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and money, it is necessary to capitalize on technology in order to satisfy the needs of insurers and property owners by standardizing and streamlining the claim process, which, ultimately, should help to shorten the claim cycle. For instance, tablet and mobile technology can be used to gather claims information from the field and complete numerous tasks: draw up floor plans; identify issues and needs; take photos; and capture all required data at the site of the claim. That data, in turn, can be pulled to standardized reports and forms, and transmitted directly to insurers. This would facilitate communication, speeding up the decisionmaking process, and consolidate the complete claim file into an electronic file for easy auditing and review. Further, it would allow for measuring and monitoring major job milestones, enabling restoration companies to im-

As industry explores new ways to improve service, decrease inefficiencies and save time and money, it is necessary to capitalize on technology in order to satisfy the needs of insurers and property owners. prove against key performance indicators (KPIs) established by each insurance company. Once data capture is consolidated, technology can facilitate the implementation of standard scoping utilities and standardized documentation. Of course, things can be taken even further through use of moisture-reading technology, roof-mapping software and remote monitoring capabilities in conjunction with mobile and tablet hardware. All of these technologies already exist individually — the opportunity exists to integrate them into systems and standard processes. In general, there are three main benefits of increased technological integration: • Shorter claims cycles: Using technology to integrate contractor and adjuster systems would mean less tedious ad-

ministration for each party, resulting in shorter claims cycles. In addition to the resulting cost savings, it is anticipated there would be more timely and complete information for decision-making by the adjuster, and decreased chances of delays, thereby mitigating future problem claims. • Improved customer satisfaction: Shorter claims cycles mean that insured clients will get back on their feet more quickly, contributing to improved customer satisfaction and retention. The improved communication between contractor and insurer will help to properly manage customer expectations and project scheduling. • Building trust: Increased communication and transparency between contractors and insurers will not only allow each party to better understand the other’s challenges, but it will provide the means to work together to develop solutions.The exchange of information would be improved, resulting in reduced misinterpretations and increased accuracy of communications. Working closely together with a collective focus on customer needs can also improve the perception by the end client, the insured. Technological tools give restoration contractors the ability to offer a superior level of service to both insurance companies and the insured — and to remain ahead of the competition. Insurers will be able to do the same by choosing contractors who allow them to meet their own service expectations. Armed with measurable performance indicators, insurers can then fine tune their claims services ahead of the competition. Over the years, restoration service providers have embraced a great number of innovations that have allowed the companies to dry up after floods, remove mould, clean materials and property, and restore documents more quickly and more effectively. It is now time to look at how these providers can integrate data, technology and systems in support of a standard claim service process, and deliver continually increased value to customers.

Educate. Elevate. Celebrate. In the ever changing world of insurance, continuous learning isn’t optional—it’s essential.

National Education Week February 25 to March 1, 2013 Elevate your professional development by taking advantage of special seminars and celebratory events offered by the Insurance Institute during National Education Week. New this year at participating Institutes, event attendees will be asked to share their thoughts on topics in today’s P&C industry. By participating in a video interview, your name will be entered in a draw to win an iPad! To discover what’s going on in your local area, visit our website or talk to your local Institute or Chapter manager.

www.insuranceinstitute.ca/NationalEducationWeek

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Scott Knight

Executive Director The Hemisphere Centre for Mental Health & Wellness

The population is aging, fuelling the debate over the reliability of senior motorists. The situation has revealed looming challenges that North American auto insurers need to address with regard to underwriting, rating and claims management of drivers who have pre-existing cognitive impairments.

A “74-year-old driver plowed his SUV through a crowded intersection and into a group of people waiting for the bus in Montreal… killing two bystanders and sending pedestrians hurtling through the air ‘like bowling pins’”… an “87year-old man drove his car through a crossed street market in Santa Monica, California, killing Konstantine 10 people…” Zakzanis News stories like these seem to be occurring Associate Professor more frequently, sparking renewed debate over Department of Psychology whether or not North America’s aging populaUniversity of Toronto tion poses a public-health hazard on the roads.

20 Canadian Underwriter February 2013

Transportation statistics, based on a variety of reports, indicate that seniors, those aged 65 and older, have a higher annual fatality rate than younger drivers and, measured by distance driven, these older drivers are involved in accidents out of proportion to their numbers. The debate over the reliability of aging motorists usually includes discussion about the diseases and other health issues that are often part of the aging process. In particular, dementia is cited as a growing concern. In an insurance role, whether it be as an underwriter or adjuster, understanding dementia/ cognitive impairments and how to assist clients who may be suffering from dementia is likely to become more pertinent. For the North American auto insurance industry, there are looming challenges to be addressed on the underwriting, rating and claims management of drivers with pre-existing cognitive impairments. However, there is a lack of data available to insurers from which to base rating and underwriting decisions. Without family doctors and health care professionals proactively and reliably documenting their own files, there is insufficient information on which claim personnel may form decisions. Notwithstanding the missed opportunities

Illustration by Dave Whamond/threeinabox.com

Screen Capture

You might say “seamless integration.” We just call it a good fit. At CARSTAR we are dedicated to making the transition from claim to repair as seamless and simple as possible for you and your clients. We are working with many insurance companies to significantly reduce their claim-processing times and find solutions to their common challenges. We have also implemented various programs through our CARSTAR Care Centre to facilitate the claims process such as our cross-province and cross-border claim support. With 160 locations in 10 provinces — Just think of us as your Vehicle Repair Management Company.

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with respect to rating and underwriting, this lack of information on a single claim may cost an insurer upwards of $1 million to $2 million on an alleged catastrophic injury claim.

RISING INCIDENCE OF DEMENTIA The population continues to age. By 2011, the oldest baby boomers, those born in 1946, had reached age 65 and the proportion of people that age and older had started to increase rapidly. This shift in the population size of the elderly will have far-reaching effects, especially on the health care system. A major issue will be the incidence of dementia: more than 50% of the residents in nursing homes are affected by dementia; one in every 13 seniors over the age of 65 has Alzheimer’s disease, the most common form of dementia; and one-third of seniors have some form of dementia by age 85, while more than half do by age 95. A joint report released last April by the World Health Organization and Alzheimer’s Disease International, Dementia: A Public Health Priority, indicates a global time bomb that needs to be addressed statistically: • there are in excess of 10 million cases of dementia globally; • there are 7.7 million new cases of dementia per year globally; • there are 5.4 million people in the United States with Alzheimer’s disease, 2.3 million with other dementias and almost 11 million with other cognitive impairment disorders; and • there are 7.9 million licensed drivers over the age of 80 in the U.S. The prevalence of cognitive impairment disorders is expected to increase by 50% in the next 20 years with the “greying” of the U.S. population. Here at home, findings of a Canadian Psychiatric Association research paper from 2004, Driving and Dementia in Ontario: A Quantitative Assessment of the Problem, include the following: • the number of drivers 65 years or older will increase from slightly less than 500,000 in 1986 to almost 2.5 million in 2028;

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• there will be almost 100,000 drivers with dementia in Ontario by 2028; • most drivers with dementia will continue to drive as the disease progresses, increasing the likelihood it will eventually affect their driving ability; and • The Ministry of Transportation does not require any remedial driver testing until age 80, and testing does not screen for dementia deficits related to driving or screen any population exhibiting possible deficits under the age of 80.

sive nature of dementia and highlights the importance of early intervention. In North America, the prevalence of dementia alone in the +65 years population group (excluding cognitively impaired not dementia, or CIND) approaches 25%. Research indicates that within the older than 65 age group, the annualized incidence rate of undiagnosed cognitive impairment is 2%. The Alzheimer Society cites research documenting early-onset dementia occurring as early as 45 years of age, and when considered with advancing research on concussions/post concussive syndrome, there are serious implications with which to contend.

UNDERSTANDING DEMENTIA

In North America, the prevalence of dementia alone in the +65 years population group, excluding cognitively impaired not dementia, approaches 25%. For those older than 65, the annualized incidence rate of undiagnosed cognitive impairment is 2%. EFFECTIVE SCREENING ESSENTIAL The findings also recommend the risks associated with the dramatically increasing number of drivers with dementia demand a psychometrically sensitive and efficient screening procedure. An effective approach in guiding decisionmaking related to dementia is the use of neuropsychological testing, which offers an understanding of the progres-

Dementia is an acquired condition of intellectual impairment produced by brain dysfunction. It can be defined as an acquired persistent impairment of intellectual function that affects at least three of the following areas of mental activity: language; memory; visuospatial skills; emotion/personality; and cognition (i.e. abstraction, calculation, judgment, executive function, etc.) Depending on the type of dementia, cognitive deficits in the early stages may vary. However, regardless of the specific type, it is important to note that all are progressive. A prerequisite for driving is the integration of high-level cognitive functions with perception and motor function. Aging, per se, does not necessarily impair driving or increase the crash risk. But medical conditions, such as cognitive impairment and dementia, become more prevalent with advancing age and may contribute to poor driving and an increased crash risk. The extent to which driving skills are impaired depends on the cause of dementia, disease severity, other co-morbidities and individual compensation strategies. Dementia often remains undiagnosed and, therefore, general practitioners (GPs) can find themselves in the difficult situation to disclose a suspicion about cognitive impairment and queries about medical fitness to

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drive, at the same time. In addition, the literature suggests that cognitive screening tests, most commonly used by GPs, have a limited role in judging whether or not an older person remains fit to drive.

EARLY IDENTIFICATION AND INTERVENTION Early identification is the best way to prevent harm and reduce risk (literature further suggests that pharmacological strategies, namely use of medications, can slow the progression of dementia). Early intervention also helps to ensure the individual is brought to the attention of the appropriate health care practitioner as soon as possible so that he/she may immediately begin appropriate treatment. Dementia is identified by neuropsychological testing, which evaluates/ tests disturbances in the various areas of mental activity. The testing is a specialized sub-discipline of psychology that focuses on the relationship between brain and behaviour by way of formal standardized paper and pencil measures. Unfortunately, full neuropsychological assessments are not only very expensive (these cost an estimated $3,500 to $6,000) and time-consuming, limitations exist on accessibility and language barriers of assessors within a multicultural context, meaning this cannot be considered a practical solution. Looking to clear these obstacles, Konstantine Zakzanis, Ph.D., a professor at the University of Toronto, has developed a 15-minute, patent-pending test sensitive to cognitive disorder secondary to numerous disease states or injury. These include the early stages of Alzheimer’s disease and other dementia syndromes; post-concussive syndrome; attention deficit disorder; or other disease processes affecting brain function. Dr. Zakzanis’s test, called Brainscreen, demedicalizes the screening process.The screen, costing about $25 apiece, can be completed without the aid of an administrator on various mobile and personal computing devices.

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TEST AT POLICY ISSUANCE Rafts of research confirm the correlation between cognitive function and driving, creating an opportunity for insurers to deploy a cognitive screening tool at the time of policy issuance. If the test in question does not require special training or administration, costs could be lowered since an applicant could access the tool in the home, direct via the underwriter or via the broker/agent network. All results and data

Early identification is the best way to prevent harm and reduce risk. Early intervention also helps to ensure the individual is brought to the attention of the appropriate health care practitioner as soon as possible so treatment can begin immediately. could be instantaneously delivered to the insurer and its approved designates. Insurers could use the test on suspected traumatic brain injury claims and validate a client’s cognitive decline relative to his or her scores at the time of policy issuance — this would be similar to baseline scoring as might be employed for concussion management programs. Immediately following submission of a claim, a case manager or

adjuster could “administer” the test to validate or compare any cognitive deficits from policy issuance to claim. Even without a pre-test, administering the screen following the submission of a claim will help validate any cognitive deficits relative to the normative population as well as assist in determining whether or not to employ full neuropsychological testing and, possibly, identifying what specific test batteries ought to be used in the assessment. A report published in the September 2012 issue of the New England Journal of Medicine indicated a proactive reporting system associated with fitness to drive, with study authors estimating annual savings to the Province of Ontario of approximately $7 million through crash prevention (the figure does not take into account the additional savings for auto insurers). For their part, consumers would be better served with rating and underwriting specific to their own unique risk factors. With the large aging cohort moving forward and research expanding on cognitive awareness/function impacted by trauma and pharmacological contraindication, serious significant ramifications abound.The advantages to be had as a result of cost-effective and accessible early screening — not only from the public safety perspective, but also from that of an insurer considering underwriting and claims — outweigh any disadvantages. Over the past seven years, there has been ongoing research that directly links cognitive function to driving abilities across all age groups. Industry stakeholders should be working together to champion a policy of cognitive screening for the benefit of their customers and society. Society will benefit through access to a health care tool that ought to form part of every annual check-up, while insurers and consumers benefit through more exacting underwriting and rating. This will be reflected in more accurate premium calculations at policy inception and renewal, and help to drive down injury assessment costs on claims.

February 2013 Canadian Underwriter

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The

Standards Commitment Grant Patten

Communications Specialist Centre for Study of Insurance Operations

Brokers and insurers can greatly benefit from standards-based systems that allow them to make the most of information technology. The consistent implementation of standards can help achieve both cost and time savings. The consistent implementation of standards can be highly advantageous for companies looking to remain competitive in today’s information-based economy. Standards can help brokers and insurers communicate with one another more quickly and efficiently, thereby saving time and money. The smartphone market provides an excellent example of the value of implementing standards — Google’s Android operating system was reported to have captured 72.4% of the overall smartphone market share in Q3 2012. This is largely because Google has embraced open standards in the development of Android, which

24 Canadian Underwriter February 2013

has allowed the operating system to run on many different devices. Compare that to Apple’s iOS, which runs exclusively on the iPhone and has been steadily losing market share. The broker channel can learn from Google by also adopting standards actively. The Centre for Study of Insurance Operations (CSIO) offers a number of standards, including its XML standards. XML is the backbone used to transfer structured policy and service transactions from the broker’s management system to the insurance company’s system, then back again, completing the cycle. CSIO standards allow brokers to use one accepted method of communicating with multiple trading partners, thus reducing complexity and increasing collaboration. CSIO XML standards are designed to efficiently transport and store insurance policy data between brokers and insurers. XML is arguably the most efficient means of transferring insurance policy data currently available. With CSIO XML standards in place, companies will be well-positioned to compete against direct writers. An important competitive advantage that brokers have over direct writers is that they can

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A key component to building efficiencies into the broker distribution channel demands recognizing that custom, one-off solutions are ultimately not helping the channel as a whole.

offer quotes from multiple insurance markets, whereas direct writers can only offer quotes from their own companies. The real-time capabilities of XML allow brokers to communicate with all their markets more quickly, thus increasing the likelihood of outcompeting the directs. A number of the largest insurance companies in Canada are consistently implementing CSIO standards to achieve significant cost savings. In January, CSIO interviewed a senior executive from one of its member companies, The Dominion, to get more information on how implementing CSIO standards has translated into concrete benefits for the company. “We integrate with five broker management systems (BMSs). If we had to build a custom solution for each one of them, our cost would be [at least] five times what it is today. Time to market is also faster with standards because, of course, it takes a lot longer to build five different solutions than just one,” said Steve Whitelaw, The Dominion’s senior vice president of business solutions. “We can build a solution that uses CSIO standards and have the vendors [integrate their software with] the standards,” Whitelaw continued. “We receive the information in our systems, pitch it back to the vendors and they catch it using the standards. If there’s a BMS having to do the same thing with all the insurers, they wouldn’t be able to keep up.The work to build all those interfaces with all the insurers would be incredibly massive. They would have to have a dedicated team for each company they’re integrating with and, clearly, that’s not efficient,” he reported.

26 Canadian Underwriter February 2013

CONCERTED EFFORT Whitelaw suggested a key component to building efficiencies into the broker distribution channel demands recognizing that custom, one-off solutions are ultimately not helping the channel as a whole. Custom solutions “may help an individual company on an individual product or transaction, but from a channel perspective, there’s little value in that,” Whitelaw said. CSIO takes the view there are adverse ramifications for the broker channel if these proprietary, one-off solutions continue proliferating, such as companies siloing themselves, thus making it harder to transact their data efficiently with other industry stakeholders. If a software provider implements CSIO standards, but a broker using that vendor’s solution turns off the edits in the BMS, then the standards have not achieved anything because the broker is now doing business in a proprietary manner. Similarly, if an insurer transforms the standards before sending data to the BMS, not all brokerages will be prepared to parse that insurer’s proprietary information delivery method. To date, the CSIO standards have already achieved significant industry buy-in. A number of the largest insurance companies in the Canadian property and casualty industry regularly participate in CSIO working groups to get involved in the development of the standards. Furthermore, any company that consistently implements CSIO standards is enhancing its opportunity to produce innovative solutions. Whitelaw affirmed that standards have helped The Dominion innovate and advance the company’s technology plat-

forms. “In 2012, we used CSIO XML standards to develop and roll out an innovative personal lines solution for submitting new auto and property business.The solution was well-received by our brokers and now over 50% of our new personal lines business is coming in through that solution. A lot of that business used to come in on paper and through the old AL3 (EDI) standards,” he said. “We’re now delivering a policy to the broker and customer a lot more quickly with this new solution than we did with the old,” Whitelaw added.

MEASURING VALUE A major factor in increasing standards adoption is identifying ways to measure the value of standards. The persistent misconception that the value of standards cannot be measured may deter some companies from exploring, let alone adopting, standards. However, there are concrete metrics that companies can use when adopting standards, such as looking at reduced project duration times, reduced project costs, reduced labour costs, increased successful transactions and the amount of new business created. Whitelaw said that The Dominion would not be receiving more than 50% of new personal lines business through the aforementioned solution had standards not been involved in its creation. The consistent implementation of standards enables companies to communicate more readily with one another, facilitating the process of innovation that is essential to keeping the broker channel competitive and retaining its market share.

Every file is different

From city to city, shore to shore – no two insurance claims and litigation files are ever the same. In addition to natural case differences, regional rules and nuances often come to bear and shape outcomes. ARC Group Canada is a national network of independent law firms providing legal and risk-related services to Canada’s insurance and risk management communities. Each member firm within ARC Group intimately understands and is connected with its local market – providing you with national expertise at a regional level.

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Diving Into Big Data Amidst all the hype around â&#x20AC;&#x153;big data,â&#x20AC;? insurers and brokers are discovering tangible applications for unstructured information in areas like marketing, risk assessment, underwriting, loss mitigation and claims management. As data creation becomes faster, wider and more voluminous in the digital age, some industry pioneers are experimenting with ways to glean insight and translate that into real-life business strategies. CRAIG HARRIS

28 Canadian Underwriter February 2013

hat is “big data?” It is a basic question with no easy answer. Given that the term was coined more than a decade ago and has come into popular usage within the past two years, one might imagine a concrete definition would be simple to find.Yet differing interpretations from both technical and business perspectives, coupled with what some say is a fair bit of hyperbole, mean a quick characterization is elusive. “I would say there is a technical definition, which is more firmly understood, and a business definition that is more fuzzy,” notes Eugene Lee, senior director, new initiatives for Guidewire, a provider of core system software to the property and casualty insurance industry. “The technical definition appears to mean data that exceeds the threshold that can be efficiently managed within a traditional relational database,” Lee reports. In the information technology world, big data is often characterized by data sets that are so complex and large that new tools are required to capture and analyze the information. Apache Hadoop is the most commonly cited platform — or “ecosystem” — to handle this explosion of data. On the business definition side, big data is often referred to as the three “Vs”: volume, velocity and variety (sometimes a fourth “V” is cited as veracity, or the ability to rely on information as a trusted source for business decisions).

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COVER STORY

Diving Into Big Data An IBM white paper notes that more than 2.5 quintillion bytes of data are created each day, while about 90% of the data in the world today has been created in the last two years alone. Velocity often refers to “real-time” or streaming data and the need to incorporate that information into business processes and decision-making. And then there is the variety of data: structured, semi-structured and unstructured information. This could involve text, sensor data, audio, video, radio-frequency identification (RFID), click streams, log files, Twitter and Facebook posts — essentially, any type of measurable data. “All of these terms are valid and interpret what ‘big data’ can be determined to be,” says Mark Cairns, vice president and chief information officer for RSA Canada. “Personally, I see big data as a meshing of information from every possible touchpoint… and the activities to evaluate, interpret and glean value from this data by turning it into information… to enhance any organization’s decisionmaking capabilities,” Cairns says. “It (big data) is the bringing together of a large volume of data from a variety of sources that can exceed an organization’s ability to access and analyze it in a timely manner,” observes Anna McCrindell, vice president of commercial insurance solutions for Gore Mutual Insurance Company. “Big data to us is how we can effectively and intelligently manage massive amounts of data (historic data, transactional data and external data), structured and unstructured, to support our business operation and gain competitive advantage,” offers Robert Merizzi, chief information officer and executive vice president, business systems transformation for Aviva Canada. Of the “Vs” associated with big data, “variety” may be the most relevant part of the equation for the p&c insurance industry, notes Aon’s global chief information officer, Steve Betts. “When we look at the primary insurance market, I would say that only about 10% to 20% of data is in a structured format, in terms of it being organized 30 Canadian Underwriter February 2013

by headers and key information,” Betts reports. “The majority of data is in the underlying descriptions and exposures, so getting a handle on that and having the ability to draw insights from that data presents a huge opportunity across the industry,” he suggests.

In the information technology world, big data is often characterized by data sets that are so complex and large that new tools are required to capture and analyze the information. Apache Hadoop is the most commonly cited platform — or “ecosystem” — to handle this explosion of data. NEW INSIGHTS The ability to interpret new and emerging forms of data is what interests most brokers and insurance companies. “What was once a disjointed and ‘siloed’ set of information can now offer real-time insights when these varying data sets are compiled into an interactive structure,” suggests Geoffrey Kendrick, senior underwriter in Zurich Canada’s global corporate division. “No longer is interpretation and analysis limited to a sole set of parameters that

offered a singular view or application. Credible modelling for future behaviours and a better understanding of historical trends is what is now available,” Kendrick says. “I think the real challenge is how you extract value from that mass of internal and external data, evaluate and then apply it to business decision-making in terms of underwriting, claims and marketing,” says Dan Adamson, president and CEO of Outside Intelligence, a firm that offers big data services to insurers such as Gore Mutual, RSA Canada and The Dominion. There are several commonly cited areas for application of big data in the p&c sector, such as marketing and new business generation, broker measurement, risk assessment, underwriting and pricing, risk or loss mitigation and claims management, especially fraud detection. Given that more insurance companies are spending substantial money on advertising, it should be no surprise that senior executives are asking questions about the return on investment, says Julie Donahue, vice president, insurance global services at IBM. “A lot of insurance companies are evaluating marketing programs to measure degree of success and new business generation,” Donahue reports. “Some of the questions coming down from the board level are: Was this sponsorship effective? How much sales growth did that marketing campaign yield? There are advantages if an insurer can pull different parts of data together to measure these areas.” Risk selection and broker productivity are also emerging areas that are top of mind among insurance companies. “They (insurers) want to know what percentage of brokers are selling their products as opposed to stuff from other companies, especially given that a big chunk of business is distributed through brokers,” Donahue notes. “What are the sales percentages divided by brokers? Is there a certain threshold of business per brokerage per year? Does it fluctuate by months or quarters? Some of those answers will likely involve big data.”

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Which way to Policy Change?

CMY

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COVER STORY

Diving Into Big Data Adamson agrees the type of business brokers bring to an insurer is a heightened area of scrutiny. “Companies have been examining the risk selection of brokers and the kinds of risks that are coming in to them from an underwriting perspective,” he says. “There may be too much of a negative risk in terms of selection, but there may also be areas where brokers are leaving out positive information, which could lead to more aggressive pricing on an account. That is data insurers want to have,” he explains. Adamson cites the example of a bakery for which an insurer provides commercial coverage. “Does that insurer take into account inspection reports, online reviews, safety records? This type of information is not necessarily structured,” he says. “We had an example of a bakery that was voted one of the top employers in its region. The broker had no idea, but this information was publicly available and the underwriter was quite interested in it,” Adamson adds.

INFORMATION OPPORTUNITY Brokers themselves are also showing increased interest in big data, sources say. Adamson reports his firm is working with Hub International in this area. “(Brokers) want to more accurately assess risks and provide detailed information to underwriters,” he suggests. “I think brokers are going to be looped in to this, but like always, there are those who are leading this and others that do business the traditional way. The Hub people see this as an opportunity to know more about their customers and provide better information to their insurance company partners,” he adds.

Aid to Risk Assessment One example of big data in broker risk assessment is Aon’s Global Risk Insight Platform (GRIP), says Betts. This repository of information offers clients realtime data to compare coverage options and pricing against benchmarks in relevant sectors. For Betts, “GRIP pulls together the data into one place across insurance businesses, geographies, industry segments. 32 Canadian Underwriter February 2013

When you look at the fact that we do business in more than 120 countries, and draw $60 billion in premiums for our primary business, that represents a lot of data. Our focus has been on getting this data together and overlaying it to allow us to draw business insights.”

focused on structured elements of data, but as the tools mature, we are really able to draw more insight out of broader, unstructured sets of disparate data,” he observes. “We need to go across the spectrum with our broker and reinsurance business, and that means looking at exposure information, underwriting, policy and premium data, claims data, portfolio risk and reinsurance/cat exposures,” Betts says.

Aid to Underwriting

Traditionally, high-level analysis of risks and exposures were heavily focused on structured elements of data, but as the tools mature, is it possible to draw more insight out of broader, unstructured sets of disparate data. He cites the example of a client in a certain industry looking to expand to another country. “We now have the span and scope of data to provide key metrics on that region,” Betts says. “Where are the risks? What are the market conditions? How does that apply to property, general liability, directors and officers liability?” The increasing prevalence of unstructured data is a relatively new dimension for this kind of risk assessment, Betts notes. “Traditionally, high-level analysis of risks and exposures were heavily

Underwriting is another area of big data that insurance companies have started to embrace. McCrindell notes that Gore Mutual’s “first step” involved using Outside Intelligence Risk Discovery, a platform for big data analysis. “We are able to have rapid access to large amounts of data from many sources that may not have been as readily accessible before,” McCrindell says. “This allows us to deliver decisions on submissions faster to our broker partners, as well as learn more about the risks we already write. The competitive advantage can be lost if too much time is taken to analyze a risk,” she says. “The goal is to focus on giving underwriters better information to identify and price risks more accurately,” Adamson comments. “We know insurers want to prove this out in terms of return on investment. For example, if we can get ahead of certain kinds of risks by gathering information from new sources and integrate that into existing data, can we underwrite and price that risk more accurately?” Guidewire’s Eugene Lee suggests that big data can also result in better underwriting decisions in real time. “It means better underwriting decisions for underwriters who can access real-time forecast and forensic weather information to determine whether they should inspect a property for prior damage or block a policy change if the property falls inside the path of an oncoming hurricane,” he notes as one example. For RSA’s Mark Cairns, he expects that pricing will be influenced by new data sources and analytic tools. “In the

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Diving Into Big Data insurance industry, we have seen some of our larger pioneers taking advantage of vehicle telemetry to aid in driver insight analysis,” he says. “This will lead to another metric or rating component when determining the optimal pricing (and) alter how traditional actuarialbased personal auto rating has been calculated,” he predicts.

Aid to Loss Prevention Access to new forms of data can affect loss prevention measures for clients, says Kendrick. “Zurich has a wealth of data that we utilize for our partners; from implementing industry-specific loss reduction strategies to global risk transfer solutions that result in operational efficiencies,” he notes. “(We) take advantage of broad data sets to help identify evolving and international claims trends and make strategic underwriting decisions.”

“There is a strong need to have industry-wide data sharing to gain business insights (e.g. anti-fraud) that will enable the insurance industry to provide better service and lower cost to the consumers,” suggests Robert Merizzi of Aviva Canada. Lee also notes that big data may have a wider application in the efficiency of claims management departments. “(Big data) can mean reduced claim expenses for managers who can more accurately allocate their internal and independent

FRAUD DETECTOR When it comes to claims, one of the most frequently touted benefits of big data is in improved fraud detection. IBM is using big data analysis techniques for insurance fraud with a large Canadian p&c insurer — an initiative that Donahue reports is the first of its kind in the world. “In terms of fraud, we are taking internal, external data and using sophisticated analytic tools to look at it through a different lens,” Donahue explains, adding that initial results of the project are expected this spring. “We are backing up a bit into the customer selection and underwriting process. We’re asking: ‘Can we use data, claims, customer information and location intelligence to screen out fraud earlier in the process?’” The true benefits of big data fraud detection and prevention will be found in greater information sharing amongst p&c insurance companies, Donahue suggests. “The real opportunity, of course, is to do this across companies,” she says. “As many in the industry know, organized fraud rings will use multiple companies, so access to the widest possible data is crucial.” 34 Canadian Underwriter February 2013

“You can’t just do a science experiment — the data, both external and internal, has to be extracted into meaningful business decisions. It is not just dumping more screens of data onto underwriters.” adjusting resources to those properties that require inspection and remote adjust those that do not,” he comments. While there are rapidly emerging examples of big data in the p&c insurance sector, several sources say that true business adoption of unstructured information is still in the early stages. “At RSA, we are in our infancy taking advantage of big data,” Cairns observes. “We are in the process of augmenting

our infrastructure to include the requisite tools to be able to interpret big data in a more succinct and timely manner,” he says. “I don’t think of big data as a thing,” Lee says. “It’s the water we swim in. So the practical application of big data in the insurance industry is to help our organizations do everything we do, but to do them more effectively.”

HURDLES TO CLEAR Several challenges stand in the way of full-fledged implementation of big data analysis for real business outcomes. “I think one of the key challenges is that there is no magic formula to bringing disparate data sets together to get a common basis from which to draw insights,” Betts notes. “You have to constantly work at it, and in some cases, it is a gradual, iterative approach,” he says. “I go back to proving out the return on investment,” Adamson says. “You can’t just do a science experiment — the data, both external and internal, has to be extracted into meaningful business decisions. It is not just dumping more screens of data onto underwriters; they already have that. It means weeding out the noise and synthesizing the data to allow the underwriters to do their jobs better,” he says. “There are many challenges when it comes to big data,” Merizzi observes. “A few come (to) mind: How to manage and store these massive amounts of data in a cost-effective way? How to deal with historic data that have different formats? How to combine structured and unstructured data seamlessly in order to enable analytics?” For McCrindell, one of the “Vs” that applies to big data is a potential concern for insurers: veracity. “One of the main challenges when it comes to big data is being able to identify what information is credible,” she suggests. “Ensuring the accuracy of data is key. As an insurer, we need to vet what is credible, and balance it with traditional information and experience to make the best decisions,” she emphasizes.

All software providers are not created equal. The pressures of the P&C insurance industry can often result in quick, short-term solutions to needs as and when they arise: solutions which may fix an immediate problem, but which all too often – and all too soon – crack under the strain of the exponential rate of change. Such an approach is tactical in nature, providing short term relief but, frequently, long term pain. Carriers who have a longer term vision – who want the job done right – take a more strategic approach. Which is why so many have turned to iter8, observing its track record of success in streamlining insurance processes and saving companies’ money. We design, build and implement progressive solutions which are both scalable and flexible, enabling future growth and handling future change; solutions which are broader in scope and deeper in functionality, and which can integrate quickly, easily and completely with existing architecture. iter8 increases profitability through innovation and proven expertise in both the insurance business and in technology. It’s what carriers have come to expect from Canada’s leading insurance technology provider. Because when it’s worth doing, it’s worth doing right.

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Diving Into Big Data

Changes in data analytics and actuarial capabilities allow companies to do analysis that was not previously possible. “This changes how business is priced, the speed at which insurers can respond, and their ability to provide sound risk management solutions for their broker partners.” In addition, big data’s arrival on the insurance scene has been preceded by pre-existing IT projects at companies. “In many cases, insurance companies already have several multi-year data warehousing projects on the go, so they need to look for solutions that help piece this information together,” Adamson says. “We often find we can help them with the external data part of the solution, and then we can deal with the integration problem.” The p&c insurance industry has a frequently cited reluctance to be on the leading edge of technological innovation. Big data’s tendency to be seen as a “living exercise” that will continue to grow and “morph dynamically” may represent a “contrarian mindset to the traditional insurance space,” Cairns suggests. Donahue holds that insurers have to roll up their sleeves and get started. “A lot of insurers spend a great deal 36 Canadian Underwriter February 2013

of time getting ready for the party; they should just have the party. Define a key business issue, understand your desired outcomes and start a big data pilot project,” she says. For Betts, there is an undercurrent of interest in big data among Aon senior managers that he has not traditionally seen in IT projects. “Our insurance executives in the risk business have shown a real enthusiasm with the possibilities found in GRIP and big data,” he says. “When they see what is possible through this data, they get excited,” he adds. “With the changes in data analytics and actuarial capabilities, companies are now able to do analysis that was not previously possible,” McCrindell observes. “This changes how business is priced, the speed at which insurers can respond, and their ability to provide sound risk management solutions for their broker partners,” she says.

“The applications for utilizing a big data structure are unlimited and present meaningful opportunities for insurers to offer new, optimized and tailored risk reduction strategies,” Kendrick notes. “The possibilities are almost endless what can be gleaned from all this information,” Cairns adds. “Firms that can take advantage of the tens of millions of tweets per day or the in excess of 10 terabytes of Facebook information per day will be able to garner immense value from both aspects,” he argues. “I think the biggest challenge for enterprises is analogous to the challenges we face as a society; namely, that we need to become a lot more ‘data-literate,’” Lee concludes. “What is data good for? How should it be read and interpreted? As our society becomes more data-literate, consumer expectations will change and businesses will have to change along with them.”

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Automated Policy Change

Real-time policy change has gone from the drawing board to reality in 2012. It is safe to say that it will ultimately change the way in which brokers serve customers and carriers serve brokers. It is an essential technology innovation necessary for insurers and the brokers with whom they work. The challenge for all stakeholders is to ensure sustainable long-term success and to provide access to real-time policy change for all brokers. Just what has been done and what needs to be done? Let’s focus on the changes insurers are making, within insurance carrier systems.These changes enable brokers to serve customers faster, more accurately and with less effort.

38 Canadian Underwriter February 2013

While each carrier is unique and each has unique systems, the business process, functions and necessary activities apply to all. The incorporation of Centre for the Study of Insurance Operations (CSIO) XML standards is an essential element in this process.

POLICY CHANGE IN 2012 Real-time policy change efforts in 2012 focused on two distinct areas:

Broker Management Systems (BMSs): Changes were necessary within the BMS. This includes gathering and storage of data and documents; policy editing; extraction, creation and sending of the standard transaction request; and handling the subsequent receipt and reaction to the response information from the insurer to finalize the broker-approved changes that are made. Insurance Carrier Systems: There have been changes to the receipt and processing of the request, as well as to the resulting response — conversion and preparation of both incoming and outgoing information; comparison routines of the submitted data versus carrier records; mapping and integration to core systems; policy adjustments from the application of new underwriting rules; new rating of the

Illustration by Dave Whamond/threeinabox.com

Policy changes can take up a significant amount of a broker’s workload. New technology will be needed to ensure that when a policy change is made in the broker’s software, it is David Gallagher updated properly in both Vice-President broker and carrier systems, iter8 Inc. data is reviewed and errors are logged.

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changed data; retrieval of third-party data to add or verify information; integrated processing of the actual change to the policy when broker-approved; security protocols; and formulating appropriate standard responses for each of the connecting systems that need to be updated or changed.

INSURER ACTIVITY FOCUS A comparison of the policy within the BMS to the insurer’s policy of record in the policy administration system (PAS) must be implemented. This is fundamental — before one policy can be changed in two different systems by a single transaction, it must start as the same policy in both the BMS and the insurance carrier’s PAS. Connected to this is the need to extract a “before” image from the BMS so that when changes are made, they can be exposed and highlighted along with explanatory notes if they are necessary. It is then clear what the broker intended to change, so underwriter notes and rules can be based on this. Technology solutions approach this differently, but for 100% accuracy, consistent processing and reduced workload, this comparison should be automated and not handled by the broker through a visual review or manual intervention. Ideally, the automated solution will offer a Web service to the broker so that any identified differences and the requisite updates can be made immediately, in real time. Someone needs to review the change in the policy data, apply the underwriting rules, establish the eligibility and complete the rating or log the errors. One sentence, but a large amount of work is necessary to ensure a real-time change is made. Most insurers do not have an automated method of performing this process and, therefore, new solutions are necessary. It is at this stage where any gaps, errors or omissions in the policy change are identified and corrective actions undertaken.Two processes are in practise.The first is simple. Gaps, errors or omissions are identified and the change is rejected. Either the broker must start over or contact the carrier by phone. The second method also identifies any gaps, errors or omissions, and the carrier provides a Web service with a user interface for the broker to modify and update the policy change. In this option, the changes are then forwarded to the carrier and sent back to the BMS to update records at both systems. This method is more functionally rich, more complete and resolves far more problems. Its weakness is that in order to be a real-time transaction, the broker management system needs to receive any edits and updates, making changes to the BMS data. An alternative, which is less powerful but still workable for BMS solutions that cannot handle a real-time change, is to make any necessary edits with the carrier, sending a batch download containing the edits to the

To Read the Full Story for Each Press Release visit insPRESS.ca Granite Claims Solutions Acquires Subrogation Group Ltd. by Granite Claims Solutions – Feb. 14 DKC Launches New Educational Courses by Disaster Kleenup Canada Ltd. (DKC) – Feb. 11 CARSTAR appoints new National Operations Manager by CARSTAR Automotive Canada – Feb. 8 STRONE Acquires TCR of Muskoka by STRONE-Itech – Feb. 1 Policy Works and Policy Bill Announce Strategic Partnership by Policy Works Inc. – Jan. 28 CARSTAR multi-store owner opens newest location in Atlantic Canada – CARSTAR Amherst by CARSTAR Automotive Canada – Jan. 28 A meaningful Impact for those out in the cold Impact Auto Auctions staff to help the homeless, hungry and hurting by Impact Auto Auctions – Jan. 23 Cira Medical Services Welcomes Graham Kitson as Vice President of Western Canada by SCM Insurance Services – Jan. 22 Audatex Canada Appoints Darcy Gorchynski as Director Business Development (Western Canada) by Audatex Canada – Jan. 22

February 2013 Canadian Underwriter 39

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BMS when the policy change is issued by the carrier. To ensure guaranteed quotes for policy changes, the carrier must use exactly the same underwriting rules and rating routines that will be used when the policy change is actually processed and put in force at the carrier. Carriers need to put a set of automated eligibility and underwriting rules in place to guide which changes can be automated straight-through, and which ones require underwriter review and intervention. Collaboration with brokers is part of this process — what is straightforward within their authority and what requires consultation before it is processed. In order to automate submitting the underwritten and rated policy change directly into the carrier’s PAS, many carriers require a data preparation step that transforms the contents of the change into a form that can be processed by the policy system at the carrier. In addition, the data preparation step must be reversed to transform the completed policy system change into a form that can be sent back to the BMS. Policy changes must then be sent to the broker for approval and issued as part of the policy in force. This requires the creation of a work-in-progress file, as well as a final data comparison to ensure that a file that was worked on was not opened and modified during

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this brief period. Finally, it requires the return to the BMS to close the realtime circle.

GENERATING WIDESPREAD ADOPTION Real-time policy change will deliver immediate benefits to brokers and insurers in 2013, and will act as a launch pad to the future, where the broker network will effectively compete with direct writers.

Ideally, the automated solution will offer a Web service to the broker so that any identified differences and the requisite updates can be made immediately, in real time. Industry estimates cite policy change as being 25% to 35% of a broker’s daily workload, and in some cases this generates less than 1% of revenue. Real-time policy change will act to reduce these costs for both brokers and insurers. Customer satisfaction will markedly improve as policy inquiries and changes can be processed in real time.The challenge for 2013 is to generate widespread adoption. With such enormous benefits, how can this be a concern? The answer lies in these two areas: • There needs to be integration across

BMS, bridge and carrier systems. Partnerships among suppliers, across the whole spectrum of the supply chain, are paramount to success. The insurance industry has many systems, many versions, and differing levels of core technology in different combinations already in place. In 2013, BMS vendors, service providers and carriers need to work together to broaden adoption. • Prioritize the investments needed. Although brokers and carriers are fully supportive of real-time policy change, it does take time to budget, fund and develop solutions. Insurance carriers and broker organizations need to work together to address the threats to the broker distribution model posed by direct writers. The good news is that insurers have told us they are budgeting for real-time policy change in 2013. Real-time policy change has gone from the drawing board to reality in 2012. It is now live and operating in brokers’ offices. Brokers are saving time. Insurers are saving money. Consumers are experiencing brokers who can make real-time changes to their policies, and anticipating the next step of online selfservice, while maintaining broker involvement. In 2013, we need to prioritize this activity and ensure that when it is worth doing, it is worth doing right.

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Where will technology take commercial insurance over the next 10 years? The pervasiveness of apps has clearly changed expectations of software, but what will be the effect on the broker distribution channel? Since 2009, the number of apps available on Apple's App store has grown by more than 2,000%.That is not a typo — 2,000%. As of this January, there were approximately 775,000 apps available to download. Granted, many of these apps are for use in the consumer context. And many are games. But the pervasiveness of apps in our daily lives has forever changed our expectations and view of software. The question is: How will this change impact software’s role in the independent broker distribution channel? What might the industry look like in 10 years from a technology standpoint?

42 Canadian Underwriter February 2013

Take a look at the technology that exists today and how it supports the established workflow. Most brokers use a broker management system (BMS) to manage their book of business. The modus operandi of software vendors in the old world order was to create all-in-one systems: policy management, abeyance, claims, accounting and customer relationship management functionality. These systems entail the common “huntergatherer” broker workflow. Producers find the business out in the field; information is gathered, typically on paper documents; and that information is brought back to the account executives in the office who enter the information in the BMS and kick-start the processing workflow. Not only was the information entered into one system, it was only accessible inside the office’s network.

ANALYZE THIS But things are changing. Anyone who follows the Canadian Insurance Broker Strategy Group on LinkedIn will see discussions around using desktop applications in the field, on mobile devices. It is possible to use desktop solutions on

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In the new world order, if someone wants to do five different things, that person looks for the five best apps. The apps are then strung together to match specific workflow needs.

a tablet through an RDP connection. But the experience is so underwhelming and frustrating, a person is unlikely to ever want to do it again. The desire to process this business in the field is an interesting development. It may even represent a watershed moment for the insurance industry — one where cloud computing, apps and mashups will shape the technology ecosystem. Cloud computing is the delivery of computing resources over a network, such as the Internet. Cloud-hosted software, for example, is accessible from any place an Internet browser can be accessed. Salesforce.com is a good example.The advent of cloud computing, and cloud-related services, untethers the broker from his or her desktop. Data about customers and prospects can now be easily accessed at the point of sale. The philosophical approach to how functionality is delivered through software has changed because of the introduction of apps. Apps, or applications, are those bite-sized pieces of software that a person can download and run on his or her smartphone or tablet. These pieces of software are characterized as “bite-sized” because they are very narrow and specific in their functionality. Typically, apps do one or two things, but do them very well. In the new world order, if someone wants to do five different things, that person looks for the five best apps. The apps are then strung together to match specific workflow needs. Think of this as the software version of the assembly line. What is more effi-

44 Canadian Underwriter February 2013

cient and effective: one person making an entire car, or 100 workers specializing on focused tasks, working together? It’s pretty clear what Mr. Ford would say. When apps are strung together, a mashup effect begins to form.Wikipedia reports that a mashup is a web-based application, “that uses and combines data, presentation or functionality from two or more sources to create new services.The term implies easy, fast integration, frequently using open application programming interfaces (APIs) and data sources to produce enriched results.” A simple, yet powerful, example of a mashup is Google Maps. At Policy Works, Google Maps was integrated into the company’s iPad app. Users can search for an address of a prospect, and then import that address directly into the app. While Google did not develop its map service specifically for any one company, companies can nonetheless use its service to populate their apps with an address. Simple, yet effective and valuable.

ANALYZE THAT The exciting part of mashups is the potential to use currently disparate information in a meaningful manner (think “big data”). Information stored in BMS systems; information stored in insurer back-end systems; third-party data collectors; Google Maps; websites — the information is out there. The real value is putting it all together in a manner that is meaningful to the end-user. This is the goal of analytics. The conversation around analytics has been growing, but is mostly focused on

insurers. Brokers should consider the value they could bring to customers and prospects if they could slice and dice the data, in all of their current systems, any way they wanted to. Trends would emerge. Hidden opportunities would be revealed. What is the result of the collision of cloud computing, mobile technology and mashup of data? A decentralized, untethered workflow, especially in commercial lines. Much of what has been traditionally done in the office will be pushed out to the field. This decentralized workflow will become the commercial producer’s greatest advantage: cultivating the customer relationship to be a much richer experience; reviewing policy details, and making changes; and sending the new risk to be endorsed, remarketed or renewed. This can all be done on site. Receiving back quotations — again, all on site. For prospecting, the intelligence to be gleaned from mashups, and the agility of cloud computing, will mean the potential for far more effective lead generation. Perhaps the greatest benefit will be the insight into how qualified a lead is, so that time can be spent on only the best leads. Will the desktop disappear? Absolutely not. The need for desktop solutions to do the “heavy lifting” will always be around. The change seen in desktop applications will be in the scope of what this software is expected to do. Desktop versus mobile/cloud is not an either-or scenario. It is one of complementary technologies and workflows.

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Brokerage of the Future

Opinion/Analysis

Colin Simpson President & CEO Intrinsync

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In the future, insurance clients will want to communicate with their brokers 24 hours a day, seven days a week. Meanwhile, real-time policy change will make existing workflow more efficient. The value proposition is quite clear. A broker will offer the best value products and service in the country. Through a broker, customers will obtain personalized support and advice that will protect them and their families. Brokers will have access to multiple insurance companies (not just one) from which customers will be able to choose the best product and service that suits their needs and lifestyles. In the near future, all of this will be available through a consumer’s medium of choice, 24/7, 365 days a year. This unique value proposition of a broker offering personalized service and choice of carrier leads me to believe that even given today’s trend of consumers moving away from the broker distribution network, the brokerage of the future could quite feasibly return as the epicentre of

46 Canadian Underwriter February 2013

consumer choice for both value and for service. It is a value proposition so strong that the broker network could regain the market share it has lost in recent years. There are many ongoing discussions, industry workshops and industry groups aligned with developing solutions for the challenges of today’s marketplace. Industry associations are busier than ever, but one thing is clear: the pace of change has significantly increased. The broker distribution model today is complex and inefficient; it is frequently categorized as more expensive when compared to other distribution models. The broker distribution supply chain will need to collaborate with key stakeholders to resolve these complexities and inefficiencies in order to create sustainable value for consumers.

IN THE FUTURE In the future, a broker will have seamless, realtime communication with its customers and suppliers. Data required to transact business will be collected and processed via the broker and this will be done only once. The consumer’s product of choice will be delivered in the format requested by that consumer and it will

Illustration by Dave Whamond/threeinabox.com

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be made available immediately. Consumers will be able to transact business with “The Brokerage of the Future” 24/7, 365 days a year. Access to buy new products or change existing products will be through the consumers’ medium of choice, whether that be by mobile device, the Web, telephone or by visiting the physical brokerage office on the high street. The broker network will be supported, outside of office hours, through in-house or centralized shared service centres delivering professional advice and customer support that are specifically tailored and branded as if they were coming from the broker itself. As far as the consumer is concerned, the broker is available when he or she needs the broker to be available, through whichever medium the consumer chooses. The ability for the broker to leverage customer base to increase overall value proposition by providing additional products and services beyond those commonly found today is significant. These offerings may be generic by nature or be targeted at specific segments of the general population or in the broker’s local community.They could be lifestylebased or demographically based. The broker of the future will leverage its customer base to its maximum potential. With an increased number of valued contact points with customers between insurance interactions, the relationship between the broker and consumer will only become that much more rewarding and enduring. Today’s broker network is challenged, but through the realignment of production activity and effective use of technology, the supply chain as a whole will become more efficient. Technology will be used to simplify many of the complexities in existence, allowing for single-data capture and straight-through processing. The realization of production efficiencies, if shared equitably, will lead to more competitively priced products while retaining the profitability of the various segments of the distribution model. Any meaningful price differential between competitive distribution models will be eroded.

If the price differential between distribution models is no longer material to a consumer, then the consumer will likely choose the model that provides the best choice of value-added service. To re-emphasize, the ability to offer unique personalized and valued service to consumers is the defining feature of the broker distribution network. There may be some aspects of the brokerage of the future that may be difficult to attain in the short to medium term, as a result of human limitations, limitations of technology or even the lim-

Access to buy new products or change existing products will be through the consumers’ medium of choice, whether that be by mobile device, the Web, telephone or by visiting the physical brokerage office on the high street. itations of our regulatory framework. However, there are many aspects that may become a reality in tomorrow’s world as opposed to some far-distant time period.

REAL-TIME POLICY CHANGE AND CONSUMER SELF-SERVICE In 2012, industry stakeholders witnessed the birth of real-time policy change (RTPC), a development that will form the bedrock upon which consumer self-service will be based. Now available for personal lines automobile

and property, the RTPC process allows a broker to begin and end a transaction from its broker management system and obtain seamless, real-time communication and processing with its insurance company. RTPC brings significant efficiencies to existing workflows to both the broker and insurance company, but it will not, in itself, significantly change either working model. In contrast, it is fully expected that consumer self-service will create significant change in today’s operating model by completely modernizing the service offering of a broker. In conjunction with RTPC, it will simplify current complex multi-touch processes, resulting in significant cost reduction potential across the supply chain. The broker’s efforts will no longer be muddied by back office processing, but rather become a model that is clear and focused in providing consumers with true value-added service.The broker and the insurance company can return to their core value proposition of providing personalized professional advice based on sales and underwriting risks/ risk selection, respectively. Consumer self-service is a new way of transacting property and casualty business and it will offer significant opportunity to those who embrace it. The challenge of implementing such a major change in the existing broker model is a material undertaking. Significant time, effort and resources must be spent to create realistic implementable solutions with measurable outcomes. Partnerships will need to be formed among suppliers in the chain, with material input required on an ongoing basis to and from the industry associations and their memberships. A new openness of communication and teamwork will be required across the board to ensure success. Tomorrow’s world is here today. RTPC was successfully delivered in 2012 and consumer self-service is coming in 2013. I encourage all of you to reach out to your local, provincial or national broker association to find out how you can participate in shaping the brokerage of the future.

February 2013 Canadian Underwriter

CU Seminar ad February 2013_Layout 1 13-01-22 10:33 AM Page 1

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: St. John’s - CIP Society Curling Bonspiel . . . . . . . . . . . . . . . . . . . . February 27 Toronto - CIP Society Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . March 6 CIP Society PROedge Seminars: Ottawa - Leading Insurance Cases of 2011–2012 . . . . . . . . . . . . February 28 Hamilton - Slips, Trips and Falls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 5 Vancouver - Professional Liability (E&O) . . . . . . . . . . . . . . . . . . . . . . March 13 Kitchener - Equipment Breakdown Insurance . . . . . . . . . . . . . . . . . March 29

2012 Demographic Research To learn more, plan to attend one of the following seminars: Edmonton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 6 Calgary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 7 Vancouver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 8 Halifax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 13 Winnipeg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 26 Regina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 27 Montreal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 18

Keeping you at the forefront of the P&C industry. The CIP Society. MEMBERS BENEFIT. www.insuranceinstitute.ca/cipsociety

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The Mobile Cloud Jeffrey Purdy

Senior Vice President & General Manager for Canada Applied Systems

With brokers continuing to face challenges, mobility may hold the key to unlocking improved growth and profitability. By storing data and running applications from a service providerâ&#x20AC;&#x2122;s data centre, brokers are able to offer advanced mobile technologies without the burdens of administering their own servers. Brokers have had to endure several years of soft markets, forcing them to streamline operations and cut costs.While there are indications that the market is hardening, some analysts predict that growth and profitability for brokerages in 2013 and beyond will continue to be challenging. Technology has significantly changed the way companies and their customers interact. With consumers able to access information, sales and

service from other industries through the Internet, they expect the same ease and responsiveness from their insurance providers. To remain competitive, brokers need to consider how these market dynamics are affecting their business. Mobile technology can be an effective option that gives brokers an additional platform to open new lines of communication with their customers and remain competitive in the market. Some brokerages might believe mobile technology for insurance is too new to adopt or it will require a significant investment and capital outlay. In fact, mobile technology for insurance has advanced rapidly and many brokerages are using it successfully in business every day. Cloud computing is one technology that makes it easier and more cost-effective to deploy a mobile system. It allows brokerages to extend their business activities beyond the confines of the office while also reducing the costs of managing and maintaining technology infrastructure. Mobility enabled through the cloud can help brokerages meet client demands in a competitive market that requires responsiveness without significant financial investments that weigh down the bottom line.

February 2013 Canadian Underwriter

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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

PCA Adjusters Limited Adjusting to Meet your needs™ www.pca-adj.com

GRAPHIC COMMUNICATIONS Quelmec Loss Adjusters Identifying, Investigating, Resolving... for over a quarter century! www.quelmec.ca

Cameron & Associates Insurance Consultants Ltd. Insurance & Risk Management Consultants. 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

DAMAGE COST CONSULTANTS SPECS Ltd. (Specialized Property Evaluation Control Services) Providing Innovative Solutions to Control Property Claim Costs www.specs.ca

EMPLOYMENT ONLINE I-HIRE.CA Canada's Insurance Career Destination. www.i-hire.ca

Cunningham Lindsey International independent claims services. www.cunninghamlindsey.com

ENGINEERING SERVICES

Granite Claims Solutions Global Adjusters and Marine Surveyors www.graniteclaims.com

Canadian Underwriter February 2013

Informco Inc. Integrated Graphic Communications Specialists. www.informco.com

INSURANCE SOFTWARE APPLICATIONS Kanetix Ltd. - SAAS Division We provide corporate clients with fast & reliable insurance quoting systems, web services, web systems and hosting. www.kanetix.ca/about_dev_services

INSURANCE COMPANIES CONSULTING FIRMS

CRU Adjusters Calm in the face of a storm. www.cruadjusters.com

Kernaghan Adjusters Doing What Is Right®. www.kernaghan.com

complex engineering incidents. www.waltersforensic.com

Giffin Koerth Forensic Engineering and Science Investigate Understand Communicate www.giffinkoerth.com Rochon Engineering Inc. Forensic Consulting Engineers & Code Consultants. www.rochons.com Walters Forensic Engineering Inc. Providing scientific answers to

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 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 The Guarantee Company of North America “Specialized insurance products...professional service” www.gcna.com

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

Wawanesa Insurance Earning your trust since 1896. www.wawanesa.com

The ARC Group Canada Inc. Your Partner in Insurance Law and Risk Management. www.thearcgroup.ca

INSURANCE LAW

SPECIALTY INSURANCE

The ARC Group Canada Inc. Your Partner in Insurance Law & Risk Management. www.thearcgroup.ca

William J. Sutton & Co. Ltd. Insuring Special Risks since 1978 www.wjsutton.com

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Mobility gives producers a chance to build better client relationships by being more responsive and having necessary information at their disposal. When mobile systems are integrated with a brokerage management system, brokers have access to more information to better serve customers at that point of interaction.

OVERCOMING CHALLENGES A recent report from research firm Ovum, 2013 Trends to Watch: Insurance, states that growth in developed markets will either be low or flat in 2013. The key to growth of insurance revenue, despite such conditions, is acknowledging the growing power and influence consumers exercise through social networking and increased use of market-facing technology. Ovum also determined that too often, brokerages do not take advantage of technology’s full range of benefits. They use just enough to make their businesses run. Mobility is one such technological benefit that brokerages can use to their advantage now, as the market continues to evolve. Being mobile and connected to customers has two different meanings. In one respect, it means that producers out in the field have access to the information they need through a smart device. Mobility gives producers a chance to build better client relationships by being more responsive and having necessary information at their disposal. When these mobile systems are integrated with a brokerage management system, brokers have access to more information to better serve customers at that point of interaction. On the other hand, mobility also means giving customers remote, selfservice access to information when needed, or demanded, including even outside normal working hours. Secure Web portals, where insureds are able to obtain basic policy information, liability certificates or certificates of

insurance, serve to empower the insured consumer and can increase overall service and satisfaction for the broker.

MOVING TO MORE MOBILITY Providing a brokerage mobility and flexibility that frees producers to be more efficient and profitable, while meeting customers’ demands for service and convenience, may sound like a monumental task. But it does not have to be. There are variations in what “cloud computing” means, depending on with whom you speak. Most will agree it is an all-encompassing term for data centres that control computing operations. Rather than a brokerage having to run and maintain its own information technology infrastructure, going to the cloud means it can store its data, run its applications and maintain its system through a third-party data centre. The software, data and applications are all contained on the cloud vendor’s servers and are accessed through an Internet connection. They are also protected by advanced information security. Most third parties continually enhance their data security systems so that brokerages have access to some of the latest security technology. That is what makes mobility through the cloud so attractive. Information is accessible through a smart device equipped with a Web browser. Brokerages are freed from the constraints of hard-drive, wired-in computing. They no longer have to travel into the office to get what they need. They can work from home if need be. They can also work on a laptop and a Wi-Fi con-

nection. This way, they can be more responsive and efficient, offering their customers the results and service they want almost immediately. That is not to say the same kind of mobility cannot be achieved if brokerages chose to stick with their local area networks (LANs). Adding mobility to an existing LAN would require some changes. Brokerages would need servers to host data and applications on a robust system that would be capable of running all day, every day. They would also need an Internet connection with enough bandwidth to allow users to access such data and applications. Security is imperative, so brokerages would need to implement the right security measures to prevent intrusions or unauthorized access. They would need system recovery in the event of a disaster and would need a method for backing up crucial data. Brokerages also need to make sure they employ experienced personnel to manage these systems. Going to the cloud does not mean there will be significant changes in the way that brokerages conduct their dayto-day business. Those that have gone to the cloud already have reported that, other than a slightly different process for logging into their computers, operations have not changed. In today’s changing marketplace, brokerages need to think differently about how they do business. Mobility and the cloud can provide the leverage brokerages need to get a leg up on the competition and meet consumer expectations for realtime information access and technologyenabled communication.

February 2013 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

Everest Insurance Company of Canada (EvCan) has appointed David Crozier to the position of CEO, effective January 21. Crozier was most recently senior vice president of operations for Economical Mutual Insurance Company, where he had oversight of all field operations, including claims, sales and distribution. He joined Economical in 2006 as vice president of commercial lines and previously held positions at Chubb Insurance Company of Canada, most recently as vice president for the Prairies. Mark Teitelbaum will continue as president of EvCan with primary responsibility for the Premiere Underwriting Services operation, which focuses on entertainment, sports and leisure insurance products.

Justin MacGregor [2] has been named Avec Insurance Managers Inc.’s new executive vice president. A former executive vice president of Martin Merry and Reid Ltd., MacGregor has held various positions with Sedgwick Marine and Cargo, Willis Canada and Hugh Wood Canada Ltd., where he was president. He has also served as both chairman and president of the Insurance Brokers Association of Canada. In 2005-2006, he was president of the Toronto Insurance Conference, notes his LinkedIn profile. Avec provides marine and several

52 Canadian Underwriter February 2013

commercial covers, including boiler and machinery. Its marina and boat dealers composite insurance covers several risks in one policy, such as property, hull, protection and indemnity, commercial general liability, marina operators liability and limited pollution.

Online financial comparison website, Kanetix.ca, has launched a new mobile app that allows users to scan and compare auto insurance quote estimates from their iPhones. The free Kanetix Car Insurance Quick Quote app is a first in Canada, the company reports, adding that it is available through the Apple App Store. Using the app, consumers can compare quote estimates ranked low, medium or high; scan in car VINs for quote updates; save quote and vehicle details for repeat visits; get policy renewal reminders delivered to their phones; and connect to Kanetix in one tap.

CARSTAR Automotive Canada Inc. has appointed a number of senior officials as part of a business transition plan in the works for three years. Michael Macaluso [4a] has been named CARSTAR’s new chief operating officer, Lisa Mercanti-Ladd [4b] has been appointed executive vice president and M.J. Marshall

[4c] will continue in the company as vice president of finance. Macaluso joined CARSTAR in 2008 as manager of insurance relations and has since held the positions of director of quality systems and most recently assistant vice president of operations. Mercanti-Ladd was previously CARSTAR’s vice president of marketing and client services. Marshall joined the company in 2005 as a controller. Mercanti-Ladd and Marshall will report to Macaluso, who will report to Sam Mercanti, CARSTAR’s president, CEO and chairman of the board. Mercanti will remain as the chairman while Larry Jefferies will be executive vice president, ex-officio. Dennis Concordia will continue as vice president of human resources. CARSTAR Collision & Glass Centres has

also opened a location in Medicine Hat, owned by Bruce Hemstreet and Trevor Jones, with Dale Critchlow managing the store.

The Dominion has launched a tablet version of its commercial insurance quoting portal for brokers, available for Apple Inc.’s iPad and Research in Motion Ltd.’s BlackBerry Playbook. E-CLIPS is the insurer’s quoting portal for small and mid-sized businesses. The mobile portal now allows brokers to provide quotes and do business from anywhere with an Internet connection, aiming to reduce customer wait times and streamline the quote process. “We know agility is important for our broker force, and we’re working to ensure our

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MOVES & VIEWS

technology supports them,” says Shelagh Paul, vice president of corporate communications at The Dominion. “The Dominion believes consumers are best served by independent brokers, and we want to leverage their strengths to compete with the direct channel,” Paul adds in a statement.

Claims services firm Cunningham Lindsey Canada has launched a new division, Cunningham Lindsey Research Services Inc., which will provide investigative, surveillance and information services to the insurance industry. While the new division is geared toward the Canadian insurance industry, it also services the needs of corporations, lawyers and private individuals,

notes a statement from the company. Among the wide range of services for the life and health, and the property and casualty industries are surveillance, corporate investigations, asset searches, statement taking, due diligence, accident reconstructions, undercover operations, stolen vehicle investigations, fraud ring investigations, cargo theft investigations and employee thefts, notes Gary Dalton [6], the company’s senior vice president and executive director.

Zurich Canada has launched a new mobile app, providing information to brokers and businesses on commercial coverages and risk management tactics. The app, available for Apple and Android smartphones and

tablets, offers users information on Zurich coverages by industry segment, relevant risk management tips by industry segment, claims contact information and informationsharing capabilities for brokers and customers to communicate. App users can choose the customer’s industry, identify details about their businesses, select the coverages they need and review relevant risk prevention techniques. Users can then build a customized package of information to share with stakeholders or review later, Zurich notes. The app can be downloaded through Apple’s iTunes or using the GooglePlay store for Android devices.

Elliott Special Risks (ESR) has bid farewell to its senior vice president and underwriting manager, Anne Toms [8], who retired December 31 after 27 years with the company. Toms began her insurance career in 1970 and has worked at the Canadian Indemnity Company, Markel Insurance Company and Reed Stenhouse Ltd. before moving to Elliott Special Risks as a senior underwriter in 1985. She was appointed assistant vice president in 1989, vice president in 1993, took over management of the company’s Primary Liability Department in 2000 and was appointed senior vice president and underwriting manager in July 2009.

First Insurance Agencies Ltd. of Campbell River, British Columbia recently joined Western Financial Group’s network of insurance brokerages across western Canada. Marking Western Financial Group’s third acquisition on Vancouver Island in the last year, the company now has offices in Campbell River, Nanaimo, Victoria and Sidney, notes a statement from the company. “We’re experiencing exciting growth across western Canada and believe Vancouver Island offers some of the best opportunities for our company,” Scott Tannas, president and CEO of Western Financial Group, says in the statement. “Our customers will see an improved selection of residential, auto and commercial insurance services,” notes Greg McGill [9a], the company’s regional senior vice president for B.C. The Campbell River office will be part of a growing network of branches featuring property and casualty insurance, life insurance, group insurance, marine insurance and other services. “We are pleased this sale will enhance the overall long-term strategies of both Western Financial Group and First Insurance,” says Kevin Sigouin (9b), vice president of insurance for First Insurance.

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February 2013 Canadian Underwriter 53

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Quebecâ&#x20AC;&#x2122;s RIMS chapter, QRIMAâ&#x20AC;&#x2122;s Market Update session held January 17 was a great success. Topquality, dynamic speakers discussed results for 2012 in the P&C market, which had been looking quite positive until Hurricane Sandy hit the Eastern seaboard. The speakers; Carsten Scheffel (Allianz), Bill Lacourt (Swiss Re) and David Dienesch (Euler Hermes) discussed the North American and E.U. economies, the impacts on our organizations and how credit risk insurance can help mitigate some of the risks. Close to 100 people from Montreal and Toronto attended this annual tradition, where key players offered their predictions for the year to come. Photos courtesy of QRIMA

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“Managing the Threats to Your Organization’s Vulnerabilities” was the subject of Quebec’s RIMS chapter, QRIMA’s monthly luncheon held October 18, 2012. Keynote speaker, Richard Bertrand of RDI Inc. addressed 66 participants on business continuity, which in his words “is a question of risk appetite and the balance between accepting risk and mitigating vulnerabilities.” Bertrand also discussed the key steps in developing business continuity plans. Photos courtesy of QRIMA

0DUN 5LFKDUGVRQ Cathy Brune, Chairman of the Board of Allstate Insurance Company of Canada, and President, Eastern Territory for the Allstate Corporation in Northbrook, Illinois, is pleased to announce Mark Richardson has been appointed to the Board of Directors for Allstate Canada. A graduate of the University of Western Ontario’s school of law, Mark has been a practicing lawyer for more than twentyfive years. With work that spans the areas of mergers and acquisitions, corporate reorganizations, finance, commercial contracts and corporate governance in a broad number of industries, Mark brings a wealth of experience to Allstate Canada’s board. Mark is currently the Vice-President and General Counsel for the Toronto Port Authority and was instrumental in structuring the re-vitalization of the Billy Bishop Toronto City Airport, including agreements with Porter Airlines, Air Canada, the City of Toronto and other stakeholders. He is also active on a number of other boards.

Allstate Insurance Company of Canada has been providing property and casualty insurance to Canadians since 1953. www.allstate.ca

February 2013 Canadian Underwriter

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On December 13, 2012, Quebecâ&#x20AC;&#x2122;s RIMS chapter, QRIMA hosted its annual Christmas lunch. The soldout event was attended by members of our industry from Montreal, but also greeted guest from Toronto and St. Johnâ&#x20AC;&#x2122;s. As part of the celebration, Michel Turcotte gave a speech to thank everyone who helped him win the 2012 Donald M. Stuart Award. Photos courtesy of QRIMA

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5LFK =DPSHULQ John O’Donnell, President and CEO of Allstate Insurance Company of Canada, is pleased to announce Rich Zamperin is appointed Vice President, Claims for the Allstate Canada group of companies, including Allstate, Pembridge and Pafco Insurance companies. Rich assumes leadership of Claims from John Greb, who is retiring after thirty-six years of service with Allstate Canada. Rich has been a member of Allstate’s claims team since 1980, when he joined as a part-time Customer Service Representative while still attending York University where he studied Economics. He joined full-time in 1981 and has been progressively responsible for larger and more complex claims issues. In his most recent role as Director, Auto/Property Claims, Rich was responsible for vendor management, property and non-injury auto strategy and compliance, best practices and process improvement. As Vice President, Claims, Rich will work on a number of strategic initiatives, building on the exceptional work currently being done in the Claims department to support Allstate’s top-ranking Claims service and customer experience for the Allstate group of companies.

Allstate Insurance Company of Canada has been providing property and casualty insurance to Canadians since 1953. www.allstate.ca

February 2013 Canadian Underwriter

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McCague Borlak LLP ushered in the New Year on January 15, by hosting industry guests at its annual “Christmas in January,” a traditional reception of cocktails and hors d’oeuvres. The event gave guests a chance to mix and mingle at McCague Borlak’s office on King Street West in Toronto.

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To kick off the New Year, RSA hosted an Executive Road Show on January 31, welcoming about 300 brokers in Toronto for an afternoon. Rowan Saunders, president & CEO, and Shawn DeSantis, executive vice president, shared market insights, an update on 2012 and highlights of 2013 plans.

0DUFHOR 5HJHQ John Oâ&#x20AC;&#x2122;Donnell, President and CEO, Allstate Insurance Company of Canada, is pleased to announce the appointment of Marcelo Regen, MBA, CMA, as Vice President,Allstate Brand. In this role Marcelo oversees the Allstate Insurance Agencies, Customer Contact Centres, Marketing, Brand Education, Group Insurance and Online Experience for customers of the Allstate Insurance Company of Canada. Marcelo began his career with Allstate in 2004 in Finance and Planning. He was promoted to Director, Business Planning and Analysis in 2007 and played a key role in the development and launch of a redesigned agency distribution system. In 2011 he moved into sales as Director, Business Development and was then promoted to Assistant Vice President, Corporate Development, working with leaders throughout the company to identify growth opportunities. Prior to joining Allstate, Marcelo worked in the consulting industry, specializing in organizational change for the financial services sector. Marcelo holds a degree in Economics from the National University of Tucuman (Argentina). He graduated Magna Cum Laude with an MBA from Austral University (Argentina) and also obtained his CMA designation in Ontario. Allstate Insurance Company of Canada has been providing property and casualty insurance to Canadians since 1953. www.allstate.ca

February 2013 Canadian Underwriter

GALLERY

A Canadian insurance executive is projecting a small underwriting profit for the industry for 2012, while expressing concern about economic uncertainty, climate change and the condition of the nation’s roads and sewers. Philip Cook, chairman and CEO of Omega Insurance Holdings Inc., is predicting the loss ratio for the Canadian insurance industry will be 66% to 67% for 2012 while the expense ratio will be “in the 30% to 30.5% range,” meaning the combined ratio will be 96% to 97.5%. “I think we’re going to end up this year with a very small underwriting profit,” Cook said of the industry

as a whole during the recent Annual Industry Trends Breakfast. “On the basis of those numbers it would be 2.5%.” The event, organized by the Insurance Institute of Ontario, was attended by roughly 100 executives and held at the National Club in Toronto. Cook said he compiled his financial projections forecasts using insurance firms’ actual results for the first three quarters of 2012 and then extrapolating from their fourth quarter results from the previous five years, noting that he is “assuming that history will repeat itself.” He was using both Canadian firms and Canadian

branches of foreign firms. Although the investment return this year was “not too bad, given the investment climate out there,” he said when you adjust returns to account for additional capital reserves, insurance firms would have a return of about 2.85%. But economic uncertainty makes consumers reluctant to accept increases in personal insurance premiums. “It’s very, very difficult for us to get the type of rate increases that we need at a time when people can’t afford those increases,” he said, suggesting that the industry will not return to a “hardened market” this year.

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The Greater Toronto Area remains Ontario’s trouble spot for auto despite the fact that the September 2010 reforms are working well on the accident benefits side, Brigid Murphy, president and CEO of The Dominion, said in a speech January 22. “The changes in the regulations have worked incredibly well on the accident benefits side, better than expected. That’s the good news. The bad news is people who were living off accident benefits coverage have moved over to the tort side,” Murphy noted during the Insurance Brokers of Toronto Region (IBTR) January luncheon. She praised the approach used by the Ontario Auto Insurance Anti-Fraud Task Force, saying the group looked at the system as a whole.

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William R. Berkley, Chairman of the Board and Chief Executive Officer of W. R. Berkley Corporation is pleased to announce the appointment of Mr.Andrew Steen as President of Berkley Canada. Andrew will be responsible for the implementation and delivery of Berkley Canada’s strategy and for overall profit and growth objectives. Mr. Steen will work with Berkley Canada’s senior management team to strengthen its position within the Canadian property casualty insurance market. Berkley Canada is excited to have Andrew on board and looks forward to continued growth across the country. Andrew brings with him over 20 years of experience in the property casualty insurance industry in Canada. He also brings many years of leadership experience at a Canadian subsidiary of a major property casualty insurer. Andrew is a graduate of the University of British Columbia and holds a CIP designation. Berkley Canada is the trade name for the Canadian branch of Berkley Insurance Company, a member company of W. R. Berkley Corporation. W. R. Berkley Corporation, founded in 1967, is one of North America’s premier commercial lines property casualty insurance providers. Each of the operating units in the Berkley group participates in a niche market requiring specialized knowledge about a territory or product. Our competitive advantage lies in our long-term strategy of decentralized operations, allowing each of our units to identify and respond quickly and effectively to changing market conditions and local customer needs. Berkley Canada has offices in Toronto (head office), Montreal and Vancouver. As a member company of W. R. Berkley Corporation, Berkley Canada provides customers access to the resources and stability of a global corporation with the outstanding customer service and understanding of a local company. Berkley Canada is a local company with local flexibility and underwriting authority. We develop our own products and underwriting niches. Contact Information: Andrew Steen, President 416-594-4800 ASteen@berkleycanada.com

C A N A D A

A Berkley Company

www.berkleycanada.ca

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The Insurance Institute of Ontario held its 114th Annual Convocation & Awards Night on January 24 at the Metro Toronto Convention Centre. Randy Bushey, president of the Insurance Institute of Ontario, served as MC. Maurice Tulloch, chairman of The Insurance Institute of Canada, addressed the more than 400 Chartered Insurance Professional (CIP) and Fellow Chartered Insurance Professional (FCIP) graduates. The keynote speaker was Yvonne Camus, participant in the â&#x20AC;&#x153;Eco-Challenge,â&#x20AC;? the world championship of adventure racing conceived by Mark Burnett of Survivor fame (hers was the first rookie team to complete the gruelling competition).

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More than 400 repairers, insurers and suppliers representing the insurance claims and collision repair industries attended the Canadian Collision Industry Forum (CCIF) meeting on Saturday January 25 in Toronto. Speakers included Tom Bissonnette, Parr Autobody, Saskatoon and CCIF chairman; Mike Bryan, CCIF administrator; Andrew Shepherd, Automotive Industries Association of Canada on behalf of I-CAR Canada; Leanne Jefferies, CCIF

Skills Program; and Matthew Ohrnstien, Symphony Advisors, who provided a detailed and thorough perspective of the current state and future trends shaping the collision repair industry. Discussing top CCIF action items, a panel moderated by Ohrnstien included: Flavio Battilana, CSN Collision & Glass/ Carrossier ProColor, Canada; David Low, Wolf Collision, Halifax; Michael Macaluso, CARSTAR Automotive,

Canada; Kevin MachellCox, Craftsman Collision, Vancouver; Sam Piercey, Budd’s Collision, Oakville, Ontario; and Paul Prochilo, Prochilo Brothers, Toronto.

ADVERTISERS’ INDEX ACE INA Insurance Allstate Insurance Company of Canada Applied Systems The ARC Group Canada Inc Aviva Canada Inc.

7 55, 57, 59 13 27 68 (OBC)

Brovada Technologies Incorporated

CARSTAR Automotive Canada

Crawford & Company (Canada) Inc. Cunningham Lindsey Canada

67 (IBC) 5

Custom Software Solutions, Inc.

The Economical Insurance Group

The Guarantee Company of North America insPRESS.ca Insurance Institute of Canada Insurance Internet Directory

9 39 19, 37, 48 50

inswire.ca – Property & Casualty Insurance Newswire

iter8

Keal Technology

Ontario Insurance Directory 2013 Edition

PCA Adjusters

RSA Canada

2 (IFC)

RIMS

WICC

41, 45

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RIMS the Risk Management Society has donated $30,000 to The William H. McGannon Foundation, a charitable non-profit organization that provides funding and resources to support the advancement of the risk management and insurance professions in Canada. The donation was presented on January 31at the McGannon Foundation’s 10th Anniversary Luncheon in Toronto by RIMS executive director Mary Roth. “RIMS’

mission is ‘to advance risk management for your organization’s success and contributing to charitable organizations like McGannon Foundation is key to ensuring that our profession continues to thrive,” Roth comments in a statement. “RIMS believes that this support is crucial and we’re delighted to be able to provide it.” The McGannon Foundation was established following the release of a study by the

Canadian Underwriter February 2013

RIMS Canada Council in 1999 that evaluated the need for a Canadian organization to support the future of risk management in Canada. It was established to provide resources in the form of grants to advance risk management by way of education, research, mentorship programs and work experience programs. “With a large number of risk practitioners entering the twilight of their careers, fostering

educational programming, scholarships and other resources that benefit the next generation of this profession is a RIMS priority,” RIMS president John Phelps says. “We are proud to be able to lend our support to help further the McGannon Foundation’s exceptional work and commitment to the future of the profession,” Phelps adds. “As president of the William H. McGannon Foundation, I am proud to state that

our success is directly attributed to our dedicated Board of Directors and our many financial supporters,” Joe Restoule, the foundation’s president, says. “Since our inception 10 years ago, RIMS has been one of the key contributors, generously supporting the promotion and development of new risk practitioners in Canada. There is no doubt RIMS’ commitment will take us to new heights in the next decade.”

Crawford CMS Property ADVANTAGE Wireless claims handling anytime, anywhere The future of claims adjusting is here with Crawford CMS Property ADVANTAGE. This innovative and award-winning software is delivered on wireless tablet technology, allowing for on-the-spot reporting at the claims site. Information gathered at the scene is sent immediately to the claimant and the insurer. By streamlining the claims handling process, ADVANTAGE lowers costs and ultimately increases customer satisfaction. Contact us at info@crawco.ca for more information on Crawford CMS Property ADVANTAGE or any of our services.

www.crawfordandcompany.ca Crawford & Company (Canada) Inc. is an equal opportunity employer

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2012 Grand Prize Winners The Children’s First Playground: Where Arctic Kids can play – Inuvik, NWT Gladstone Greenhouse for Science and Foods Program – Vancouver, BC Rescue for Life - Spay/Neuter Initiatives – Spruce Grove, AB Riehl Skate Park – Pelham, ON Promoting Human Bear Coexistence – Education & Action – Sprucedale, ON Please Fill our Pool! A Swimming Pool for Smiths Falls – Smiths Falls, ON

All winning ideas are supported by brokers!

Kaiden’s Care Kits for Cystic Fibrosis – Russell, ON Une vraie cour d’ecole pour ados! – Bois-des-Filion, PQ Fighting for Healthy, Affordable Food in North End Halifax – Halifax, NS At Risk Youth Grand Prize Winner: Undercurrent Youth Centre – Glace Bay, NS Broker Grand Prize Winner: Chase Kraynick “Pay it Forward” Splash Pad – Canora, SK

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Aviva and the Aviva logo are trademarks of Aviva plc and used under license by Aviva Canada Inc. and its subsidiary companies.

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