Curtain Call. Celebrating six years of recognizing our national leaders. The CIP Society created the National Leadership Awards to celebrate excellence and to recognize individuals who demonstrate a passion for learning, dedication to the profession, personal integrity and outstanding commitment to their organizations. The Society is proud of its role as a supporter of those industry leaders who act as role models and mentors. Their positive influence energizes and inspires the people around them. They enrich their communities. And they bring great credit to our industry. We thank all the nominees, as well as those who took the time to nominate them for this prestigious national award.
To the 2014 Honourees, The CIP Society offers congratulations for earning the respect and admiration of your peers in the industry.
Johanne Lépine
| FPAA
Aon Reed Stenhouse Inc. Montreal, QC Established Leader
Lynn Oldfield
Adrian Osti
| FCIP
AIG Canada Toronto, ON Established Leader
| FCIP
Northbridge Financial Corporation Toronto, ON Emerging Leader
Please join us to celebrate the achievements of these 2014 leaders as they are inducted into the CIP Society National Leadership Circle at appropriate local Institute Convocations.
Leadership Circle 2009
2010
2011
2012
2013
Established Leaders: Carla Blackmore, FCIP Andrew Janzen, FCIP Patrick McNally, FCIP H. Ross Totten, FCIP
Established Leaders: Ron Bouwmeister, FCIP Greg Thierman, CIP Raymond White, FCIP
Established Leaders: Glenn Gibson, CIP
Established Leaders: Diane Brickner, CIP Barry F. Lorenzetti, CIP
Established Leaders: Ginny Bannerman, CIP James Cameron, FCIP
Emerging Leaders: Drew Collins, CIP Frederik Pelaez, FCIP Kevin Sigouin, CIP
Emerging Leaders: Anne-Marie Dechênes, PAA Lindsay Mackenzie, FCIP Tammie Norn, FCIP
Emerging Leaders: Patrick Bouchard, PAA Thomas Newby, CIP Phillip Robichaud, FCIP Jonathan Stone, FCIP
Emerging Leaders: Rob Bickerton, FCIP Mathieu Gagnon, PAA Melanie Needham, FCIP
Emerging Leaders: Simon Charbonneau, FCIP Andrew Clark, FCIP Vincent Gaudreau, FPAA
For more information about the nomination process, or to read about our CIP Society National Leadership Circle recipients or to register to attend the awards presentation at your local Institute Convocation, please visit www.insuranceinstitute.ca/cipsociety
of bricks, mortar and physical objects and the new economy of mobile devices, data networks and analytic engines. It is estimated that billions of “things” will be linked to the Internet within the next five years through sensors located in cars, homes and businesses. How will this connectivity and data affect insurance companies, brokers and consumers?
28 Business Continuity
CANADIAN UNDERWRITER CRAIG HARRIS
Brokerages would do well to build business continuity plans and strategies, enabling businesses to quickly bounce back should a disaster occur.
VOL. 81, NO. 10, October 2014 Canada’s Insurance and Risk Magazine. Published by Business Information Group
www.canadianunderwriter.ca
By Stephane Lacasse
Cover Story
32 Contractual Interpretation
Things Connected
Canada’s high court clarifies contractual interpretation and offers some direction. By Albert Wallrap
42 Class Proceedings What are some issues of concern as national and multi-jurisdictional class proceedings become the norm?
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By Don McGarvey & Kate Whittleton
50 A.M. Best Briefing
54 Canadian Underwriter October 2014
A stable outlook for Canada’s p&c industry does not mean things are standing still.
By Craig Harris
features
By Angela Stelmakowich
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68 E&O & CGL Ensuring there is coverage when a claim is filed requires careful consideration of errors and omissions and commercial general liability policies beforehand.
There are already plenty of examples of the Internet of Things (IoT) in action. But with the frenetic pace of technological change, what exactly is the “next big thing” in IT? For IoT, the answer may be a mix of both futuristic vision and imminent reality.
Usage-Based Insurance
Quote Analytics
Risk Management
Rodney Hancock is the first-ever recipient of the Dale Rempel Award of Excellence.
Despite its promise to influence the growth and profit of commercial business, commercial quote analytics are not being fully explored or exploited.
One solution for quantifying “value” across the enterprise may be emerging data mining and analytic modelling technology that turns “data” into true risk intelligence.
With the range of usage-based insurance products growing wider, a new survey from Towers Watson shows the Canadian market is ready for widespread adoption of UBI.
By Angela Stelmakowich
By Rick Rass
By Sean Van Zyl
By Robin Harbage & Nathalie Bégin
By Michael Mallett
72 Dale Rempel Award of Excellence
78 RIMS Canada Canadian organizations today face risks from cyber crime to business interruption and even active shooters.
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By Greg Meckbach
82 Geo-Risk Research The need to understand and respond to risks created by climate change and severe weather patterns places increasing importance on the evolving discipline of geo-risk research. By Peter Höppe
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Canadian Underwriter October 2014
E-Delivery
Cyber Crime
New approaches to presenting information through e-delivery could prove revolutionary for insurance, but the challenge for brokers is to ensure consumers remain protected.
Technologically sophisticated criminals who remain one step ahead of IT systems demand that efforts to combat cyber crime include post-attack and risk transfer strategies.
By Brenda Rose
By Terri Mason
Receivables Insurance Receivables insurance could spell the difference between protecting a firm’s cash flow and threatening its existence. Still, less than 10% of companies have the protection. By Mark Attley
Chase Kraynick Splash Park Canora, SK. Winner 2012
There’s more to this year’s Aviva Community Fund At Aviva, we care more. That’s why we created the Aviva Community Fund – to help make positive change happen in communities across Canada.
Participation is even more exciting this year! ü
More prizes: $60,000 in wildcard prizes plus a $100,000 grand prize for a broker-supported idea
As an Aviva broker partner, you can get involved today. Submit or support an idea to:
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AvivaPartner.ca Home | Auto | Leisure & Lifestyle | Business | Group | Surety Aviva and the Aviva logo are trademarks used under license by the licensor. Terms and conditions apply, visit AvivaCommunityFund.org for details.
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VOL. 81, NO. 2, FEBRUARY 2014 VOL. 81, NO. 10, October 2014 PROFILE
Editor Angela Stelmakowich astelmakowich@canadianunderwriter.ca (416) 510-6793
profile
Associate Editor Greg Meckbach gmeckbach@canadianunderwriter.ca Twitter: @CU_Greg (416) 510-6796
14 Leading by Example James Cameron, president of Cameron & Associates Insurance Consultants Limited, 20 Evolving With Customers was recognized by the CIP Michael Brattman, Society when he received its president-elect of the Established Leader Award. Insurance Brokers Association BY ANGELA STELMAKOWICH of Ontario, sees the importance of investing in the future by collaborating with a variety of partners and wants to do his part to help independent brokers “own” SPECIAL FOCUS their future. By Greg Meckbach
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56 Moves & Views 14 Editorial 58 Gallery 16 Marketplace 92 Moves & Views 94 Gallery
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editorial
Small Ripple
The network argues its business model goes against the trend of broker consolidation that has led to local mid-sized independent firms struggling to compete. Angela Stelmakowich Editor Canadian Underwriter astelmakowich@ canadianunderwriter.ca
14 Canadian Underwriter October 2014
It looks like “small” might, again, be the next big thing. There is certainly no shortage of merger and acquisition activity involving brokers these days, be they large or small. In a report released in August, consulting firm Optis Partners predicted there would be “robust” M&A activity involving insurance operations in both Canada and the United States. “From the historic high level of M&A activity in 2012, followed by a very slow start in 2013, 2014 has emerged as an extremely active period for agent-broker acquisitions,” notes the report. “The first six months of 2014 was the most active first-half period since tracking began in 2008, and second only to the 181 deals announced in the second half of 2012,” Optis adds. Of the buyers involved in the 165 transactions during the first half of 2014, 67 were firms backed by private equity, 54 were privately owned, 27 were public brokers, nine were banks and eight were other. But trumpeting the benefits of the individual — and smaller — parts of the whole seem to be getting more play. Merging and acquiring can certainly make good business sense, with this “size advantage” likely equating to more market share, economies of scale, perhaps enhanced control over distribution, and greater risk diversification. As well, a larger entity is unlikely to go unnoticed by insurers, something that is
sure to prove quite handy when brokers are trying to secure the best they can for their customers. In this sense, big is likely better, but looking small may ultimately prove most mighty. In an ever-changing environment — where technology advances have contributed to catapulting customer demand, choice and interaction to heights not previously seen — it may be that doing everything possible online or by personal device is losing some appeal. Of course, this new world of self-service is not going anywhere — and brokers would be foolish not to be prepared for what is surely part of the new normal — but having a chat with someone capable of explaining things (particularly as insurance needs grow more complicated) looks to be getting more attractive. Also receiving more play is talk of independence. Clearly, there are still plenty of independent brokers, but ongoing consolidation can change the traditional face. To combat that, consider a recent merger involving two independent insurance brokerages that came together to form a new national brokerage network, Navacord Inc. Jones DesLauriers Insurance Management Inc. and Lloyd Sadd Insurance Brokers, as well as Fairfax Financial Holdings Ltd., are looking to capitalize on the appeal of local and independent. The network argues its business model goes against the trend of broker consolidation that has led to local mid-sized
independent firms struggling to compete. Its partners remain majority broker-owned. The network “will invest in and form a nationwide partnership of entrepreneurial brokers with deep roots in local business communities,” notes a statement from the founding brokerages. “Each broker will maintain their regional focus, but will benefit from a wealth of expertise, innovation, buying power, and enhanced talent management that will help keep them in the game,” the statement continues. Service on demand is appealing, but effort should be taken to ensure it does not sacrifice a local feel that may pay dividends in terms of customer loyalty and retention down the road. Recent research from J.D. Power — based on 3,525 responses from insurance decision-makers in businesses with 50 or fewer employees — notes 63% of respondents at businesses that bought coverage from “personal lines-focused” insurers reported meeting their agents in person. “All insurers benefit from providing a highly satisfying customer experience with increased customer loyalty and advocacy,” J.D. Power notes in a statement. Beyond incorporating technology advances meant to answer customer demands and making it easy to have one-to-ones (should customers want these), brokers should also consider offering a specialized experience as part of the mix.
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marketplace
Regulation REVISED MINIMUM CAPITAL TEST TAKES EFFECT IN 2015 The Office of the Superintendent of Financial Institutions (OSFI) has released a revised Minimum Capital Test Guideline for property and casualty insurers that takes effect January 1, 2015. “The new risk-based capital framework results in a slight 2.8 percentage point decline in the capital ratio (MCT/ BAAT combined ratio) on average across the entire industry,” OSFI notes. “Although the decline in the overall capital ratio is not material, the impact may vary by individual company as the new framework better aligns each insurer’s capital requirements with its risk profile,” the statement adds. Having a three-year phasein period, OSFI reports the guideline includes new and updated risk factors and margins, and a new revised definition of available capital. “This new version of the guideline represents a more robust risk-based test that more accurately aligns capital requirements to the risks faced by the property and casualty insurance industry,” says OSFI deputy superintendent Mark Zelmer.
funding for FLOOD RISK REDUCTION IN N.S. The Government of Nova Scotia announced at the end of August that it will provide $147,500 to support five projects meant to help 16 Canadian Underwriter October 2014
communities investigate the causes of flooding and explore solutions. “These projects will contribute to our ongoing efforts to help communities and homeowners plan for the worst, and prevent excessive damage from flooding,” says environment minister Randy Delorey. The funding is through the Flood Assessment Fund, now in its second year, which provides as much as 50% of eligible costs. This fund and the Flood Risk Infrastructure Investment Program, administered by the Department of Municipal Affairs, are part of Nova Scotia’s Flood Mitigation Framework. For 2014-2015, the funding through the former is $150,000 and $700,000 for the latter. “We can’t prevent floods, but knowing which areas of the province are at greater risk will allow us to better manage their damaging effects,” Delorey has said.
BILL HIKING LIABILITY LIMITS falls short: ndp Canada’s New Democratic Party will not support Bill C-22, in which the ruling Conservatives propose increasing the absolute liability limits in the nuclear and the offshore oil and gas sectors to $1 billion, arguing that a critical element is missing. The Energy Safety and Security Act, if passed into law, would make $1 billion the limit of liability, “without proof of fault or negligence,” to which certain offshore energy producers would be “subject in the event of a spill
or damages caused by debris.” For nuclear operators, the bill would increase the amount of compensation available to address civil damage from $75 million to $1 billion. The bill “does not include the polluter pay principle on the nuclear liability side,” NDP MP Jack Harris has said. “In the oil and gas section, there is a $1 billion absolute liability, whether the operator is at fault or not, and in the case of fault on the part of an operator in the oil and gas industry, there is an unlimited liability.”
Claims AUGUST HAIL STORM IN ALBERTA TOPS $450 MILLION IN INSURED DAMAGE The Insurance Bureau of Canada (IBC), citing figures from Property Claim Services (PCS), reports a major storm that hit southern Alberta August 7 to 8 caused an estimated $450 million in insured damage. The estimated damage toll ratchets up the tally of Alberta’s insurance payments from natural catastrophes to $4 billion since 2011. The intense storm — which brought torrential rains, wind and both golf ball- and tennis ball-sized hail to southern Alberta — brushed Calgary and struck Airdrie and surrounding areas. Bill Adams, IBC’s vice president, Western and Pacific, says the storm damaged tens of thousands of cars and homes. “What’s more is that
we are not out of the woods yet. Alberta hail season traditionally runs through the end of September.”
$140 MILLION in flood losses for manitoba, saskatchewan Insured losses from flooding in southwestern Manitoba and southeastern Saskatchewan over this past Canada Day weekend are now estimated at more than $140 million, Catastrophe Indices and Quantification Inc. (CatIQ) announced in September. The estimate for the June 28 to 30 flooding includes loss adjustment expenses and is based on a recent 45day re-survey of the majority of insurers affected by the event. CatIQ pegs the flooding as the second largest Cat event to occur in Canada so far in 2014, behind the hail storms in Alberta. “The heavy rains, up to 230 millimetres in some areas, caused widespread flooding,” with the hardest hit areas being on the Saskatchewan/Manitoba border, notes Carolyn Rennie, CatIQ’s in-house meteorologist and director of catastrophic loss analysis.
ONTARIO FLOOD DAMAGE ESTIMATED AT $90 MILLION Property Claim Services (PCS) reports that an August rainstorm in Burlington, Ontario caused more than $90 million in insured damage. “During the storm, Burlington received so much rainfall that local highways had to be closed because of flooding in
marketplace
some places, as creeks and rivers throughout the city were inundated and crested at the same time,” notes the Insurance Bureau of Canada. The City of Burlington announced in late August 3,097 homes were reported to have been flooded when almost 200 millimetres of rain fell in three hours. The city has filed to receive Ontario Disaster Recovery Assistance Program funding.
Canadian Market JONES DESLAURIERS, LLOYD SADD PARTNER ON NEW BROKERAGE NETWORK Two independent insurance brokerages in Canada have joined together to create Navacord Inc., a new national brokerage network. Jones DesLauriers Insurance Management Inc. and Lloyd Sadd Insurance Brokers have partnered, along with Fairfax Financial Holdings Limited, to create the new platform. Shawn DeSantis will serve in the role of president and chief executive officer, and T. Marshall Sadd will take on duties as executive chairman. “The company will invest in and form a nationwide partnership of entrepreneurial brokers with deep roots in local business communities,” notes a statement from the founding brokerages. At present, Navacord partner firms manage about $400 million in premium volume.
Risk PRIORITIES FOR PROTECTING CANADIANS AGAINST OVERLAND FLOODING: REPORT Canada is lagging behind on the issue of overland flooding, necessitating measures to ensure greater resiliency and to guard against associated losses, suggests a new report. The report — commissioned by The Co-operators, with the research undertaken by Blair Feltmate and Jason Thistlethwaite of the University of Waterloo — reflects input received from a wide range of stakeholders, including all levels of government, banking, real estate developers and builders, insurance and reinsurance. “Canada is well behind other nations when it comes to managing the risk associated with overland flooding,” says Rob Wesseling, executive vice president at The Co-operators. Stakeholders identified three priority areas where action could most effectively reduce flood damage risk: flood plain mapping, preparedness of cities and built infrastructure. “Canada must operationalize adaptation measures,” consistent with the three priority areas, “to limit the potential for flood damage to the residential property market,” the report argues.
CARGO THEFT A HIT TO CANADIAN ECONOMY Cargo theft is not just about stolen goods — affecting an individual load or a particular company — but extends
to adversely influence the economy as a whole, Richard Dubin, vice president of investigative services for the Insurance Bureau of Canada (IBC), suggested during the Annual Toronto Fraud Forum. “We’re trying to increase the awareness of it and the seriousness of how it affects both our economy and in terms of security for Canadians,” Dubin said. “Sentencing hasn’t been very tough for this type of crime,” he said, one reason IBC lobbied for Bill S-9, an Act to Amend the Criminal Code, which at its heart, is auto theft legislation. Under the act, trafficking in property obtained by crime and possession of property obtained by crime for the purposes of trafficking are subject to imprisonment for as long as 14 years. There is also a need for greater consistency in how cargo crime is reported. “Without data analysis, you really are in the dark in terms of what trends are basically taking place,” Dubin argued.
Technology MOBILE APP AIMS TO CURB DISTRACTED DRIVING Belairdirect recently released the “bumpr” app in a bid to help curb distracted driving. The app automatically senses and responds to incoming calls and text messages when a vehicle is moving, notes a company statement. Depending on the settings selected, the
app can redirect calls to voicemail, temporarily block various kinds of alerts and notifications (such as social media notifications) and send a pre-selected response to incoming text messages, without requiring the driver to touch the phone. The app, free for Canadian drivers, is available for Android smartphones.
Reinsurance REINSURERS MAY BE UNDERESTIMATING IMPACT OF CLIMATE CHANGE: S&P A scenario from Standard & Poor’s Ratings Services that seeks to test the potential impact of climate change suggests reinsurers might be underestimating their exposures to catastrophe losses by an average of 50%. “Under this simple scenario, we estimate that on a gross basis, reinsurers may be understating both the one-in-10 and the onein-250-year loss by around 50%,” notes a company statement.“Most reinsurers do not believe that climate change is having a material quantifiable impact on their current risk exposure, nor do they think it is likely to do so in the near future.” However, Standard & Poor’s views it as “unwise to rule out the possibility that climate change has already begun to affect reinsurers’ risk exposure, especially given the number of catastrophe events recently triggered by extreme weather.” October 2014 Canadian Underwriter
17
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Profile
Evolving With Customers Greg Meckbach Associate Editor
Michael Brattman, president-elect of the Insurance Brokers Association of Ontario, emphasizes the importance of owning the future by collaborating with a variety of partners. After more than 20 years in the insurance industry, Michael Brattman, incoming president of the Insurance Brokers Association of Ontario (IBAO), wants to do his part to help independent brokers “own” their future. “My theme will be ‘Own It,’ because I really want to make sure that we, as brokers, are doing everything we can to make sure we are trying to improve things, trying new things and owning our future,” says Brattman, scheduled to take over as IBAO president from Chris Floyd January 1. “I think Chris has done a great job of laying a foundation for what we as brokers need to focus on,” notes Brattman, who by day is a partner and vice president of personal lines for Erb & Erb 20 Canadian Underwriter October 2014
Insurance Brokers Ltd. in Kitchener, Ontario. Building on Floyd’s theme in 2014 — “Get ready for tomorrow today” — the three components of Brattman’s 2015 theme are about brokers taking control of their own destiny in the areas of the evolving customer, investing in the future and collaboration. Brokers need to collaborate not only with their carriers and customers, he suggests, but also with vendors, such as information technology firms offering broker management systems. It is about working more closely with our providers “to make sure that we are building the technology that makes it easier for us to do business and serve our clients,” as well as working with task forces and similar bodies “to come up with solutions for flooding and changes in weather,” Brattman adds. “It’s really reaching out to all of the different industry partners that are involved with the consumer in any way and developing solutions in order to better serve them,” he emphasizes.
ADDRESSING both WHEN AND HOW Another component of the 2015 theme will be the evolving consumer, including the demand for extended hours and many more touch
points, Brattman reports. “As brokers, many of us are doing a more effective job at this, whether it’s using social media, or being able to respond to clients’ needs outside of traditional hours. It’s encouraging brokers to continue to evolve, develop and be able to compete in an increasingly 24-7 instantcommunication world, as well as customization,” he says. Customization is something clients have come to expect from non-insurance services, Brattman points out.
“It’s really reaching out to all of the different industry partners that are involved with the consumer in any way and developing solutions in order to better serve them.” “If you go to Starbucks, you can have your coffee or your tea any way you like it,” he says. “Customers today have an expectation of being able to have things how they want them and when they want them. It’s about being able to provide more customization opportunities.” This means it will be
important to invest in the future — the third pillar of Brattman’s 2015 theme — including investing in technology improvements. “We are challenging brokers to consider how they will invest in those areas,” Brattman says. “We need to think more like the consumer because their needs have evolved and we need to make sure we are evolving with them.”
PRESSING ISSUES One way brokers can use technology to their advantage is by providing usage-based auto insurance (UBI) through telematics. IBAO subsidiary Independent Broker Resources Inc. (IBRI) announced in 2013 that it plans to offer broker-owned telematics products in Canada. For one offering, IBRI will provide the technology infrastructure to support insurer UBI offerings. Quindell Portfolio plc — in partnership with Quindell subsidiary ingenie Services Limited — is the other offering. The ingenie offering will target drivers aged 16 to 24. Other IBAO activities include advocating on behalf of brokers to the government and regulators — on issues such as auto insurance fraud — and finding “consumerfriendly solutions that
Photo: Peter Tym
Profile
address the impact of severe weather,” says Brattman. Damage from water is “driving rates up” in property insurance, he says, pointing to aging infrastructure and flash flooding. “You could also have a flash flood like you had last August in Burlington, where you have the equivalent of two months of water come down in an hour,” he says. “A lot of these (storms) are very, very isolated and even if you have state-of-the-art sewers and drains, the volume from some of these micro storms can’t be handled even
with more modern infrastructure. It’s certainly something that the IBAO is paying attention to,” he adds. On the issue of auto fraud, Brattman says the ruling Liberals have introduced Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, which IBAO has praised as a “good step” towards reductions in auto insurance premiums. “We had some great success getting attention on the anti-fraud measures that were recommended two years ago,” Brattman says of advocacy efforts by IBAO.
Born in Montreal, Brattman’s family moved to the Kitchener-Waterloo area when he was just a year old. In 1988, he worked as a summer student at the Toronto office of insurer Crum & Forster, and attended Huron College, graduating in 1989 with an Honours Bachelor of Arts. “When I graduated from university, I applied only to insurance companies because that’s where I wanted to develop a career,” he recounts. “It seems like most people fall into insurance by chance or they are
related to family who are in the industry, but I was fortunate enough to have a mentor fairly early on when I was young,” says Brattman. That mentor was John McLennan, a Kitchenerarea broker with whom he launched The McLennan Insurance Group Inc. in 1992, after Brattman had worked at Traders General Insurance Company (now part of Aviva) and Manulife Financial. “John was going out to talk to a variety of different people about the insurance business and it was appealing because of the opportunity to learn a lot and know about various different businesses and using your connections to build a business,” he notes. ”John was an excellent mentor because of his entrepreneurial spirit and his innovative thinking. That is how all brokers should be thinking.” Brattman got involved with IBAO after he was approached in 2000 by Floyd, who also works in the Kitchener-Waterloo area, and 2007 IBAO president Steve Wagler. “It was one of those things where I felt it was time to give back,” he says. “We invest way too much time in our careers not to be fully engaged,” he adds. October 2014 Canadian Underwriter 21
Rick Rass
Independent Consultant, Commercial Insurance Analytics
Although commercial quote analytics can influence the behaviour, growth and profit of commercial business, its promise is currently not being fully explored or exploited. Brokers and insurers looking to gain a significant competitive advantage would be well-advised to leverage the historical quote data that they already possess. Commercial quote analytics, for the most part, is an unexploited opportunity to leverage the operational and tactical intelligence hidden in quote data — data that is already being collected by brokers and insurers. It provides insurers and brokers with the opportunity to anticipate and influence the future behaviour, growth and profitability of their commercial business.
22 Canadian Underwriter October 2014
To explore the opportunity within quote analytics, it is necessary to understand how commercial quoting technology is being leveraged by both insurers and brokers today. Many insurers and brokers are exploiting new technology to expedite workflows, drive efficiency and improve customer service. Progressive brokers, through the adoption of Commercial Management Systems (CMSs) such as Policy Works and Keal comXP, capture customer and risk information and use that data to prepare quote submissions for insurers and quote proposals for their clients. In doing so, a wealth of client and risk information is being captured on the broker’s CMS, but this data is not currently being leveraged for analytics. Insurers have created “self serve” web-based rating portals for simple commercial package business and more complex internal rating systems for larger commercial accounts. This enables management to track the influx of submissions, monitor service levels and deliver structure around pricing and appetite to the front-line underwriting staff. Insurers continue to promote broker use of proprietary portals, which work for brokers where
Illustration by Scot Ritchie
Analyze This, That and the Other
it fits with their workflows, although it does require the manual rekeying of the same data into multiple portals to generate multiple quotes. By capturing prospective and current client risk details in their CMSs, brokers can upload the data directly to insurer portals and rating engines, using XML data standards produced by the Centre for Study of Insurance Operations (CSIO). The quote is then completed by an underwriter or by the broker on the insurer portal. The latest data integration advances by insurers, such as Travelers Insurance Company of Canada and Coachman Insurance Company, have seen real-time data integration with CMS, returning a live quote transaction and the corresponding CSIO XML in real time, to update the broker’s CMS. What very few brokers and insurers are leveraging, however, are quote analytics based on quote data being captured by their CMSs and rating portals. Too many insurers are only focusing on the results themselves (bound premium and earned loss ratio) and only addressing quality and mix of business issues after they begin to impact the bottom line. The drivers and lead indicators that are producing those results can be found in the historical quote data, well in advance of the financial performance itself. If the lead indicators and pricing relative to appetite are correct, the desired performance will follow.
FOR BROKERS… By capturing all of the submission and quote data for clients through their CMSs, brokers can better manage the performance of their customer service representatives (CSRs), marketers and producers, as well as hold their insurers accountable from a competitive and service perspective. Quote data can be used to track quote/ bind activity at a producer level, to ensure that the quote and new business activity is being directed to markets that have growth plans and agreed targets in place with the brokerage. The data allows brokerage principals to track the relative new business and renewal per24 Canadian Underwriter October 2014
formance of producers/CSRs, in addition to performance by insurer, and to then break down that performance as a function of premium size, class of business and geography. This allows management to identify areas of unexploited opportunity and areas requiring improvement. The data further allows brokers to monitor the relative new business performance and competitiveness of their insurers, tracking their conversion rates by class, protection and construction. This detail can help identify individual insurer’s “sweet spots” in terms of appetite and relative competitiveness,
At a conversion rate of greater than 50%, the insurer is likely “leaving money on the table” and has an opportunity to increase its pricing in a class, and then monitor the impact of the action. If there is no significant change in the conversion rate, the pricing model can be further tweaked until an optimal pricing level is attained, even if the pricing exceeds actuarial recommendations. enabling brokerage staff to market prospective new business to insurers where they know they will have the highest probability of success. This ultimately contributes to a brokerage’s growth, efficiency and conversion rates. By tracking the rating detail — building, stock, equipment and liability rates on new business quotes and renewals by insurer — brokerages can use these specifics to negotiate more competitive terms for their clients, based on past rating history by type of risk and insurer.
They can also track the historical pricing trend on renewal business, monitoring the fluctuations in rates, not just premium, which is impacted by the sums insured and revenues.
FOR INSURERS… For small/simple commercial business, quote analytics from insurer portals can focus underwriters on creating the opportunities to quote rather than on the new business targets themselves. By working backwards from their new business written premium targets, insurers can use historical seasonality of the business, average new business premiums and conversion rates to establish quote activity targets for their regional offices. Performance to quote activity targets can then be tracked daily to monitor how a region is performing against the monthly plan and corrective action can be taken early on should things start to veer off target. In situations where quote targets are being met, but not the corresponding new business premium, underwriters can investigate, identify and action the drivers that are falling short of plan, be it mix of business, average premium or conversion rates. Monitoring in real time By tracking the quote performance of individual producers and CSRs, insurers can monitor quote activity and new business commitments in real time, not just at month end when production reports are issued. As a result, corrective action can be taken early and far more effectively. Insurers can track the mix and quality of business they are being offered, relative to their underwriting appetite. By tracking the quote performance of individual brokerage staff, unexploited opportunities can be identified with specific producers and CSRs who may not be familiar with specific insurer’s portals and products. Insurers can identify and correct situations where they may have become the market of choice for less desirable classes of business. They can also track
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discretionary pricing deviation at a user level to ensure that deviations are being applied to the appropriate risks, and that pricing integrity is maintained. Insurers can share territorial conversion rates by product, industry code, protection and construction, identifying for brokers where they will have the greatest opportunities for success, leveraging his-
torical conversion data. If insurers track the incumbent market on new business quotes, they can actually identify the classes by insurer where the broker will have the highest probability for success. Insurers are always providing brokers with the same lists of targeted classes of business, but the quote conversion numbers reflect their actual appetite. Pricing for commercial package business is actuarially driven, but the amount of available premium and loss data for rate making is not as credible as that for personal lines business. Timely response to conversion rates Quote analytics can be used to monitor conversion rates geographically by product and by rating variable. Ideally, conversion rates for package business are targeted to be in the range of 30% to 50%. At less than a 30% conversion rate, brokers become frustrated with their lack of success and move on 26 Canadian Underwriter October 2014
to competitors’ portals. Where conversion rates are too low on targeted classes, underwriters can work with actuarial staff to identify opportunities to reduce pricing where warranted. They can then communicate the more competitive pricing to brokers and monitor the impact of the reduced pricing on quote activity and conversion rates. On less desirable classes of businesses, insurers can monitor conversion rates and ensure that they are maintained within targeted parameters by adjusting their pricing model. At a conversion rate of greater than 50%, the insurer is likely “leaving money on the table” and has an opportunity to increase its pricing in a class, and then monitor the impact of the action. If there is no significant change in the conversion rate, the pricing model can be further tweaked until an optimal pricing level is attained, even if the pricing exceeds actuarial recommendations. Outliers as quality control Conversion outliers, where conversion rates by producer or brokerage vary significantly from regional and national averages, warrant investigation and can serve as a quality control mechanism. If regional conversion rates on a particular class of business are consistently in the range of 35%, but one office or producer manages to bind quotes for that class at a rate in excess of 50%, it warrants further investigation. Occupancy, building construction, fire protection or insured values could be being compromised, to secure the business. Conversion outliers can also identify errors in insurer rating algorithms. Insurers could be seeing higher than anticipated conversion rates in undesirable industry codes, fire protections or construction classes. Are their conversion rates on frame unprotected buildings better than that on non-combustible hydrant protected buildings? Are the insurers’ rating algorithms unknowingly making them the market of choice for less desirable business? Conversion rates driven by quote ana-
lytics enable insurers to more objectively review conflicting anecdotal pricing feedback for specific classes of business. For larger commercial accounts, which are individually underwritten, insurers can leverage quote analytics to track underwriter productivity in terms of submissions, declinations, quotes produced, business bound and the level of pricing deviation from “book” rates. They can use analytics to compare underwriter performance to their peers, within an office or across the country. Insurers can also use the same quote analytics to track broker performance relative to mix of business, quality and conversion rates. They can identify oppor-
tunities to grow successful relationships and also rehabilitate less successful ones. In addition,insurers can more meaningfully share their appetite with brokers, by showing them where they have historically had the greatest opportunities for success, so that they can grow those relationships. Commercial quote analytics will provide a significant competitive advantage to brokers and insurers who have the foresight to leverage the historical quote data they already possess. It gives them an opportunity to shape their future growth and profitability, proactively and in real time, by impacting the behaviours that drive those results.
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Cloud
Continuity
Business continuity plans are a must to remain competitive in today’s dynamic marketplace. Brokerages would do well to build these plans and strategies, thereby enabling their businesses to quickly and smoothly return to pre-disaster operating level and capacity.
Stephane Lacasse
Vice President, Product Management for Canada and Rating Products, Applied Systems
In today’s volatile global environment, it is more important than ever for organizations to develop a business continuity plan. From political and economic uncertainty to the increased prevalence of extreme weather events, business continuity plans can help businesses remain financially and operationally viable regardless of external factors or unforeseen events such as natural disasters. A comprehensive business continuity plan entails planning for the adoption of technology, tools and processes that enable an insurance brokerage to serve its customers when they are most in need. This planning goes hand-in-hand with disaster recovery and disaster preparedness, allowing a company’s management team and employees to prepare and respond effectively by safeguarding themselves, securing a physical location, protecting critical and sensitive customer data, and continuing to service customers. To remain competitive in today’s dynamic marketplace, brokerages need to build these plans and strategies to ensure their businesses return to the operating level and capacity they had prior to the disaster in question. That means brokerages must continuously test and evaluate their business continuity plans to ensure data back-up plans work effectively before they are needed. By evolving strategies alongside
28 Canadian Underwriter October 2014
business changes and running frequent tests to confirm validity, brokerages can make sure their business continuity and disaster recovery plans are updated accordingly and will work to mitigate business risk in times of disaster. CLOUD CONNECTIVITY A.M. Best Company Inc. reports that catastrophic events in 2013 contributed to record insurable losses totalling $3.2 billion. To ensure business continuity and minimize the loss of business operations during disastrous events, independent brokerages need to implement technology strategies. From a systems standpoint, technology like the cloud and mobile can enable brokerages to protect important data in a secure online environment located outside the physical office. Cloud solutions offer hardware, networks, storage, services, applications and interfaces across the Internet, centralizing critical business intelligence and providing on-demand, remote access to information. By leveraging cloud technologies, Canadian insurance brokerages can capitalize on their benefits, including better user experiences, lower IT costs, increased business operations flexibility and stronger IT security. Cloud technologies store insurance brokerage
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information in secure, off-site data centres that deliver a high level of security and rely on redundancies for power and back-up sites. If a data centre is in a disaster location, the redundant site will take over cloud operations to ensure business continuity. In a bid to continue increasing adoption of the cloud among Canadian insurance brokerages, technology companies worldwide are providing in-country data centres, thereby minimizing concern over brokerage data crossing sensitive regional borders. Combining mobile with cloud solutions also creates an optimal platform for quick data access and provides brokerages with increased operational flexibility. Mobility allows brokerages to conduct business remotely, enabling its workforce to carry out functions more efficiently during disasters. It also offers that secondary channel necessary to gain access to brokerage data outside the office, allowing brokers to service clients when they are most in need. As consumers increasingly conduct more business online on various digital channels, insurance brokerages must adopt cloud technologies that deliver online client self-service to extend business continuity planning to the insured level. Canadian brokerages have started to deliver online client self-service webpages to provide client access to insurance information — including policy coverage, deductibles and claims processing — anywhere, anytime. By providing 24/7 online client selfservice, clients empower themselves to seek out the information needed, reducing broker time spent on support calls and increasing the value that a brokerage delivers to its clients during a disaster event. BROKERAGE EXPERIENCE The cloud has proven especially useful when a physical office or piece of equipment is damaged. Having infrastructure, tools and critical data running in the cloud can reduce a brokerage’s revenue loss from unexpected business disruptions. 30 Canadian Underwriter October 2014
Best Buy Insurance in Ajax, Ontario, for example, last year experienced an unexpected disaster in its office and leveraged the continued operational resiliency of the cloud to service customers during the crisis. In August of 2013, the brokerage’s office was forced to relocate after experiencing a flood that originated from a pipe bursting in the kitchen and causing damage throughout the office. By operating on a cloud-based brokerage management system, the business was up and running shortly after being alerted of the incident when it connected to the Internet. Had the brokerage still been operating on a LAN-based brokerage management
As consumers increasingly conduct more business online on various digital channels, insurance brokerages must adopt cloud technologies that deliver online client self-service to extend business continuity planning to the insured level. solution, its destroyed server room located next to the kitchen would have put most critical brokerage data at risk. While hardware was destroyed in the flood, the cloud supported the brokerage’s data and important infrastructure so it could continue to service insured customers. “Being on the online brokerage environment was a life-saver,” Gillian Van Kempen, managing director and executive vice president of Best Buy Insurance, says of the experience. By 9 a.m. the next morning, the brokerage’s customer service representatives were able to service any clients who called or came to the office, Van Kempen reports. “All of our data was there. Everything we needed was there. Once that Internet
connection was established, we were back online,” she notes. DATA PROTECTION VITAL Protecting customer data is vital; brokers recognize the importance of keeping critical client information on Canadian soil. Online back-ups provided by Canadian cloud environments provide online brokerages with a competitive differentiator — peace of mind. As insurance consumers become more tech-savvy and understand their rights with regard to data security and privacy laws, brokerages can confirm that their information is backed up on Canadian soil. Best Buy Insurance’s unexpected crisis in the summer of 2013 is one of many examples of independent brokers dealing with disasters. Brokerages also need to consider that in the event of larger-scale catastrophes, the business of their IT providers could also experience delays during these times. The time needed by the IT provider, such as a hardware provider, to restart business operations and begin servicing clients can have a further impact on a brokerage’s ability to service its own clients. By leveraging the immediate access to business critical information that the cloud provides, brokerages can return to business operations as soon as an Internet connection is established, and eliminate the need to rely on thirdparty vendors that may themselves be affected by a disaster. Brokerages must be able to respond and provide information rapidly in order to stay competitive and serve as a trusted resource. Providing connectivity, mobile access and continuous customer service during unexpected events is becoming increasingly important for the successful operation of an insurance brokerage. Integrating cloud solutions and emerging communication channels can help reduce downtime and bolster connectedness to both a brokerage’s internal operations and clients, enabling brokers to better service clients when they need help most.
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Contractual Interpretation Clarified Albert Wallrap
Associate, Dutton Brock LLP
A new ruling by Canada’s highest court clarifies contractual interpretation. Trial judges and arbitrators of first instance now have a more enhanced role over contractual interpretation, and one may expect fewer appeals on what a contract says and for commercial arbitration decisions to be less reviewable by courts. In a decision released August 1, 2014, the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., which involves a commercial arbitration, held that contractual interpretation is a question of mixed fact and law — and not a question of law only. There are “rare” circumstances, nonetheless, where questions of law can be extricated from the factual matrix and have importance beyond the particular dispute. Questions of mixed fact and law are subject to the reasonableness stan-
32 Canadian Underwriter October 2014
dard for appellate review, which is more stringent than the correctness standard for questions of law. The findings in Sattva are consistent with a larger cultural shift recognized earlier this year by the high court in Hryniak v. Mauldin, as reported in the March 2014 edition of Canadian Underwriter, where trial judges are expected to have wider discretion and enhanced powers to summarily decide cases in the interests of justice. The Sattva decision will have far-reaching effects on legal culture and civil actions across Canada, other than in Quebec where the Civil Code applies.
THE FACTS Sattva Capital entered into a finder’s fee agreement with Creston Moly regarding the purchase of a molybdenum mining property. Sattva Capital located a suitable mining property, subsequently purchased by Creston Moly, and the former then sought to be paid its finder’s fee. The agreement provided for a maximum payment of $1.5 million, or a number of shares worth the same amount. Upon the news of its prospective purchase, Creston Moly’s shares increased significantly in value. At issue between the parties was the date of valuation for the shares. The parties went to binding arbitration under
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Since words in the contract are not immutable or have absolute meaning, they are considered in context. The contract is read as a whole and the words are given their plain and ordinary meaning, consistent with the surrounding circumstances in the formation of a contract, or the “factual matrix.”
Section 31(2) of British Columbia’s Arbitration Act, which allows appeals on questions of law, subject to the leave requirements that the result is important to the parties and the determination may prevent a miscarriage of justice. Under the act, the court may yet exercise discretion and deny leave after consideration of the following factors: the conduct of the parties; alternative remedies; undue delay; and the urgent need for a final answer. Sattva Capital argued that the share price was determined by the “market price” definition for shares in the agreement, and, therefore, the share price of 15 cents on the day before the announcement of the acquisition applied for a total of about 11.5 million shares. On the other hand, Creston Moly argued a share price of 70 cents applied based upon the end of the fiveday period stipulated in the agreement for the election of either the maximum amount to be paid ($1.5 million) or the equivalent number of shares, for a total of approximately 2.5 million shares. Sattva Capital’s election was also subject to the regulatory approval of the TSX Venture Exchange. The arbitrator interpreted the finder’s fee agreement in favour of Sattva Capital, and found that Creston Moly failed to take reasonable, timely steps in seeking regulatory approval for the agreement. The arbitrator determined the value lost to Sattva Capital, based on an average price over a minimum period and dis34 Canadian Underwriter October 2014
counting the amount of shares by the risk of 15% that regulatory approval would not be received, and the company was awarded more than $4 million in damages. Creston Moly appealed the arbitrator’s decision to the Supreme Court of British Columbia, but leave was denied. The Court of Appeal then granted leave and the matter was then sent back to the supreme court, which subsequently affirmed the arbitrator’s decision on the merits. Creston Moly then appealed to British Columbia’s high court, which held it was bound by its earlier decision on the leave application and, as such, reversed the trial findings and the arbitrator’s award. Sattva Capital then further appealed on the merits and leave application. The Supreme Court of Canada overturned the Court of Appeal decision and reinstated the arbitrator’s decision.
SUPREME COURT OF CANADA DECISION In Sattva, Justice Marshall Rothstein for the unanimous Supreme Court of Canada dismissed as anachronistic the historical concerns that jurors tried civil cases, but were often illiterate, and that only a judge had capacity to read and understand a contract. Justice Rothstein embraced a contextual approach, stating the following: “With respect for the contrary view, I am of the opinion that the historical approach should be abandoned.
Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.” The goal of contractual interpretation is to determine the objective intentions of the parties — a fact-specific exercise of applying legal principles of interpretation. It requires consideration of the meaning of each word, the parties’ relationship, the purpose of the contract, and the surrounding circumstances. Since words in the contract are not immutable or have absolute meaning, they are considered in context. The contract is read as a whole and the words are given their plain and ordinary meaning, consistent with the surrounding circumstances in the formation of a contract, or the “factual matrix.” Evidence of the factual matrix will vary depending upon each case. Justice Rothstein notes the Supreme Court of Canada defines the factual matrix as including “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable [person].” The factual matrix should involve only objective evidence of background facts at the time of execution of the contract and which concerns “knowledge that was or reasonably ought to have been within the knowledge of both par-
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ties at or before the date of contracting.” However, this evidence should not contradict the words of the contract itself. While it may be possible to extricate a pure question of law in contractual interpretation, the circumstances will be “rare” and courts should exercise caution. For example, questions of law may include application of an incorrect principle, failure to consider an element in a legal test, or failure to consider relevant factors. As Justice Rothstein explains, citing the supreme court’s earlier decision in Canada (Director of Investigation and Research) v. Southam Inc.: “the degree of generality (or “precedential value”) [is] the key difference between a question of law and a question of mixed fact and law. The more narrow the rule, the less useful will be the intervention of the court of appeal.” The central purpose of these two different questions is to limit appellate intervention to cases expected to have an impact beyond the parties to the particular dispute. The extent of “rare circumstances” for extricating a question of law remains unclear. There may be competing goals of avoiding uncertainty from varying interpretations of the same contractual language over different cases by different judges and arbitrators at first instance, and from those between court levels on the same case, like in Sattva. It remains uncertain whether or not an exception applies to interpretation of standard form or regulated contracts in commercial cases, which may impact future transactions. For these cases, the introduction of the factual matrix into the analysis may be considered more of a “legal fiction.” For commercial arbitration in British Columbia, at least, the standard of review is reasonableness unless the question attracts the correctness standard, such as “constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator’s expertise,” the decision notes. Arbitrators are typically selected because of their expertise in the subject matter, 36 Canadian Underwriter October 2014
and there should be deference to their fact finding and “finality” in the arbitration process. The Supreme Court of Canada drew upon similarities to judicial review of administrative tribunal decisions, finding that the arbitrator’s decision must satisfy the reasonableness threshold of justifiability, transparency and intelligibility. For civil actions, in contrast, the “reasonableness” standard refers to a palpable and overriding error where the findings of fact or inferences drawn are clearly wrong and not properly and reasonably supported by the evidence. Since its release two months ago, Sattva has been applied to contract cases by various courts across Canada. In one case, Vallieres v. Vozniak, Manitoba’s Court of Appeal ruled the standard
The Sattva decision is significant for three reasons: it emphasizes the surrounding circumstances or factual matrix in making the contract; it clarifies limits to appellate review of contractual issues; and it restricts the reviewability of commercial arbitration awards. of review set forth in Sattva did not apply to standard form real estate contracts concerning restrictive covenants. The appeal court held the interpretation of the latter covenant was subject to the standard of review of correctness, not reasonableness, since the interpretation had significant implications for real estate transactions in the future, and since it was the intention of the Real Estate Association committee that formed the contract, not those of the parties involved in executing the contract, that are at issue. The recent decision in Vozniak raises flags and Canadian courts will likely be
wary of interpreting contracts and establishing those “rare exceptions.”
IMPLICATIONS FOR THE INSURANCE INDUSTRY The Sattva decision is significant for three reasons: it emphasizes the surrounding circumstances or factual matrix in making the contract; it clarifies limits to appellate review of contractual issues; and it restricts the reviewability of commercial arbitration awards. The Sattva decision confirms the modern contextual approach and provides a road map for appeals involving contractual interpretation — while warning courts about the need to exercise caution in determining exceptions in “rare circumstances.” For the insurance industry, the investigation and adjusting of claims should also encompass the factual matrix for the formation of the contract, including industry practices. Insurers will also want to keep in mind that legal costs up front may increase to support fact-finding at first instance. They will wish to avoid relying on contractual interpretation as potential grounds on appeal, but instead focus on fact-finding at trial or arbitration. The aforementioned points also apply to summary judgment motions. Insurers may also wish to reconsider arbitration for commercial disputes, keeping in mind that the results are more likely binding and “final.” In this regard, the selection of arbitrators becomes even more important, and their expertise and experience should be carefully reviewed. Alternatively, insurers may also draft or modify any arbitration agreement to include rights of appeal for questions of mixed fact and law, where so permitted under the applicable statute. In summary, trial judges and arbitrators of first instance have a more enhanced role over contractual interpretation. The standard for appellate review of these contractual issues is more stringent now, except in rare circumstances where questions of law can be extricated and shown to have importance beyond the particular dispute.
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Playing Post Office
Brenda Rose
Vice President and Partner, FCA Insurance Brokers and Technology Champion, Insurance Brokers Association of Canada
Canada Post has done a big favour for property and casualty insurance. The recent steep increase in ground postage rates has demanded the attention of all industry stakeholders. There is nothing like a direct hit to the expense line to motivate searches for other, less expensive and perhaps more effective means of sending messages, documents and information. But the challenge — and most critical requirement for any alternative delivery service — is ensuring that consumers are not disadvantaged as the industry scrambles to control costs. Increasingly, both businesses and individuals receive electronic communications that previously used to arrive on paper. Various new delivery mechanisms exist, with differing security levels. The methods range in sophistication from simple e-mail or even texts, to elaborate sequences of encrypted messages barricaded within repositories accessible only to specific individuals during finite timeframes. While there are, of course, costs associated with designing and implementing such processes, the social benefits of reduced paper consumption are clear and immediate. Further advantages can be literally embedded in electronic communications. A printed page imposes its own limitations, its content bound by
38 Canadian Underwriter October 2014
the physical dimensions, in the fixed format and order that text and images are presented to the reader. Electronically, however, there is a selection of possible formats, which are not restricted to particular dimensions or linear structure. Even more intriguing is the potential in “smart documents” with enriched content, which can link or expand at the viewer’s option into layers of information. For the insurance industry, always challenged to communicate effectively about a complex and sometimes uninviting subject, new approaches to presenting information could prove revolutionary. Imagine an electronic “cover letter” that displays on a customer’s mobile device of choice, with embedded hyper links to policy documents or wordings, to drill-down definitions, or to additional elements, such as an endorsement to be signed, information on alternate proposals or additional details about the contract the client might want to access later — all contained within one message package. In the Canadian insurance world, the success of eDocs for personal lines has many looking for further successes. Broker copies of documents now move directly from insurers into broker systems electronically, with minimal human intervention.
Illustration by Scot Ritchie
For the insurance industry, new approaches to presenting information through e-delivery could prove revolutionary. However, the challenge for brokers is to determine how best to ensure consumers remain protected while cost control measures unfold.
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In addition to the obvious expense reductions and environmental benefits from the elimination of printing and transporting millions of pages each year, insurers and brokers alike also gain significantly through the time saved in not handling, sorting and searching for that paper. Many insurers are now also beginning to roll out eDocs for commercial lines, in at least a portion of their commercial operations For its communications with consumers, however, the insurance industry still relies heavily on paper, leaving great potential for realizing similar efficiencies. Brokers distribute the lion’s share of the mail, though insurers also may send paperwork directly to clients in direct-bill situations. A typical renewal package sent to a client could contain such diverse elements as the following: • policy documents, with or without wordings included; • a corresponding invoice or billing statement; • a cover letter, discussing the client’s particular needs and circumstances, and perhaps referencing previous exchanges, or explanations of coverage changes from previous terms; • premium finance contract or payment plan forms; • an outline of recommendations, additional options with the incumbent insurer or suggestions for alternative protection with other carriers; • summarized results of a market survey conducted for the client; • outlines of coverage limitations or exclusions, and reminders of key coverage points; • additional documents such as endorsements requiring the insured’s signature; and • additional marketing, general interest or risk management materials. THE BEST DECISIONS Any equivalent electronic package directed to a consumer might need to incorporate any or all of these components; none can be sacrificed if the client is to remain well-informed and equipped to 40 Canadian Underwriter October 2014
make his or her own best decisions. As a result, the requirements for any system to deliver insurance information electronically are complex, although brokerages’ internal broker management systems (BMSs) do already capture all the required elements. For distribution to clients, many service vendors, such as Canada Post’s EPost™, have initially geared efforts towards organizations that send large mass mailings with limited individualization. Adaptations to suit the needs of the thousands of smaller Canadian businesses are the next stage. Another question to be resolved is how access to sensitive, private information for individuals, families and businesses
or organizations will be managed. Security is essential, and must be balanced with convenience. A key concern for Canadians is that data centres and their back-up facilities should be in Canada to avoid possible conflicts with legislation in other host countries. Some e-delivery mechanisms may also offer ongoing storage of messages, which, in turn, triggers consideration of what safeguards and retention policies will apply to those records. Also outstanding is the issue of auto identification cards, the “pink slips” commonly stashed in vehicle glove compartments. While the courts now generally recognize electronic documents, with a few exceptions, there is still a significant
variation and uncertainty among jurisdictions across Canada regarding the acceptance of electronic proof of insurance for automobile liability. Consensus among regulators and law enforcement bodies is needed before consumers can confidently accept an electronic version that they print themselves or download to their mobile devices or smartphones. TAILORED TO SUIT NEEDS Whatever e-delivery solution is ultimately adopted by the property and casualty insurance industry, the mechanism must allow for the message package to be tailored to the individual customer’s situation, and be able to address his or her needs for objective advice and unfettered choice. The element of the broker’s input to client communications is critical. The broker is the client’s advisor, but that role is diluted if the information clients receive about their policies emanates from the insurer who is a party to the insurance contract. There is a risk that the customer’s own interests may not be the primary objective of the messaging, and certainly the client’s potential full options, including those offered by other insurers, are unlikely to be explored. Going forward, as for almost all business sectors, it is customers who will determine how they wish to send and receive information. No client who still prefers to receive hard copies will accept an imposed alternative. In their interests, brokers must maintain the capacity to offer all the delivery options. Further, consumers today have a shrinking tolerance for complicated or timeconsuming processes and, no doubt, will expect a single means of retrieving their insurance material. Not every client communication contains documents from the insurer; there must be a means of delivering both communications that include only information from the client’s broker representative, as well as those that incorporate policy documents. The Insurance Brokers Association of Canada (IBAC), representing more than 35,000 brokers across Canada through 11 provincial and regional associations,
recently published the following principles as fundamental requirements for any consumer e-delivery process: • Consumers must have choice regarding how they receive communications and documents from their selected professional advisor. • Regardless of the avenue(s) of communication they choose, consumers must be assured of the on-going privacy and security of their personal information. • Consumers must not be burdened by additional costs nor onerous, unique, or proprietary processes in order to receive communications. Documents must be provided in standard, commonly-used formats to ensure longterm accessibility.
Whatever e-delivery solution is ultimately adopted by the property and casualty insurance industry, the mechanism must allow for the message package to be tailored to the individual customer’s situation, and be able to address his or her needs for objective advice and unfettered choice.
Regulating Oil Tank
both ofLetter coverage and of communicaThe components are in place, and to the is maintained. tions methods, great efficiencies could be gained by the Michael that we reduce WithEditor the use of eDocs well-established, industry by Freill’s seizingproposal the opportunities oil spills by offering homeowners premium the technological backbone needed to also encompassed in e-delivery. reductions on their insurance policies deliver electronic customer copies to broStill undecided is the service’s design rather than through government regulation kers already exists. BMSs are building the and whom it will benefit most. The big sounds theory. (‘Oil Change,’ functionality needed to package policy question is:good Will in insurance stakeholders Underwriter, Michael Freill, Canadian Billcommunications Adams documents and broker execute e-delivery to best serve clients 2009)right The reality, unfortunately, Atlantic, and August together and exportVice-President, them in the formats allow their to choice to reInsurance of Canada that the math just doesn’t add up for required by electronic deliveryBureau systems. mainisparamount?
On Target Together Since 1981, RIBO has worked closely with brokers to help serve and protect the public. With more than 1,200 brokerage firms registered, employing approximately 16,000 individual registered brokers – RIBO’s mission has never been stronger.
• Brokers, as consumers’ representatives, must have authority over the content and mode of transactions and communication with customers. • Insurers must respect broker-consumer relationships and, other than in claims situations, communicate directly with a consumer only when specific consent has been provided by that consumer’s broker. CONSUMER PROTECTION ESSENTIAL These principles are intended to protect consumers, even as the industry streamlines processes and expense, ensuring that their best interests are protected and the greatest access to all available choice,
Registered Insurance Brokers of Ontario
401 Bay Street, Suite 1200, P.O. Box 45, Toronto, ON M5H 2Y4 (416) 365-1900 Or 1-800-265-3097 Fax: (416) 365-7664 www.ribo.com
44 Canadian Underwriter October 2009
October 2014 Canadian Underwriter
41
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Jurisdictional
Considerations in Class Proceedings While class proceedings are now a well-entrenched part of the legal landscape in Canada, national and multi-jurisdictional class proceedings are becoming the new norm. Absent legislative intervention — or a more co-operative, but less deferential approach — related problems and challenges will unlikely abate.
Donald J. McGarvey
Partner McLennan Ross LLP
Kate Whittleton Associate McLennan Ross LLP
McLennan Ross is a member of The ARC Group of Canada, a network of independent insurance law firms across Canada.
Class proceedings are now a well-entrenched part of the legal landscape in Canada, but the issue of jurisdiction and the appropriate forum in which to conduct class proceedings often presents complex issues. Moreover, national and multi-jurisdictional class proceedings are becoming the new norm. These issues continue to cause difficulties for all parties, their counsel and the judges who hear these cases. To understand and appreciate some of these issues and the complexities that can arise, two general issues of jurisdiction and forum that often present themselves in class proceedings will be examined: forum non conveniens, including not only whether a particular forum has jurisdiction, but also whether another jurisdiction is forum conveniens; and developments in the area of multi-jurisdictional class proceedings.
FORUM NON-CONVENIENS ANALYSIS IN CLASS ACTIONS Forum selection is an important issue in class proceedings. Class proceedings legislation in some provinces mandates, upon certification, that a class includes “a person who meets the criteria to be a class member… unless the person opts out of the class proceeding.” In other jurisdictions, the legislation indicates that members of the class
42 Canadian Underwriter October 2014
who are residents of the province in which certification is granted must specifically opt out of the class, whereas those who are not residents of that province must specifically opt in if they want their claims to be considered. These distinctions in class proceedings legislation can cause counsel to “forum shop” for the most favourable jurisdiction in which to commence the action. That gives rise to questions of whether the province in which the action has been brought has jurisdiction and, further, if it does, whether there is a more convenient forum that should hear the action. When considering the forum non-conveniens analysis, one must immediately be conscious of the 2012 Supreme Court of Canada decision, Club Resorts Ltd. v. Van Breda. While the Club Resorts case was not a class proceeding, it nevertheless provides useful guidance on the topic. The first step in the Club Resorts analysis is to determine whether or not a court has simple jurisdiction over the claim. In addressing that question, the court must consider presumptive connecting factors. It must also assess the link between the subject matter of the litigation and the forum, but separate consideration must be given to values of fairness and efficiency and the principle of comity.
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If a defendant challenging jurisdiction can establish that there is no presumptive connecting factor between the subject matter of the litigation and the forum selected by the plaintiff, the court will have no jurisdiction simpliciter and must decline to hear the dispute. If the court determines it does have jurisdiction by virtue of one or more presumptive connecting factors, the second branch of the test must be considered. In the second branch of the test, the court considers the distinction between the existence and the exercise of jurisdiction. In order to be successful on this second branch of the test, the Supreme Court of Canada noted the following: The defendant must show, using the same analytical approach the court followed to establish the existence of a real and substantial connection with the local forum, what connections this alternative forum has with the subject matter of the litigation. Finally, the party asking for a stay on the basis of forum nonconveniens must demonstrate why the proposed alternative forum should be preferred and considered to be more appropriate. Regarding the burden imposed on a party seeking a stay on the basis of forum non-conveniens, the court indicated the alternative forum must be “clearly more appropriate,” a well-established test.
MULTI-JURISDICTIONAL CLASS PROCEEDINGS Several superior courts across Canada are now willing to certify national classes and it is now commonplace that multiple, overlapping proceedings are being commenced in different jurisdictions. This is complicated further by the fact the legislation differs among certain provinces as to whether, upon certification, putative class members are required to “opt in” to be part of the class or whether they are automatically part of the class upon certification. Provincial legislation is currently illequipped to address the jurisdictional problems and inefficiencies created by multi-jurisdictional class actions. To bring clarity to these complex ju44 Canadian Underwriter October 2014
risdictional issues, legislative change will be needed. Various jurists across Canada have called for some form of protocol to solve these complexities resulting from what are essentially the same claims brought in different jurisdictions. In the 2008 decision, Tiboni v. Merck Frosst Canada, Justice Maurice Charles Cullity called for the development of a court-tocourt agreement or protocol to address the complexities: If decisions of provincial courts on carriage motions are not to be respected throughout Canada, this merely underlines — and makes even more urgent — the need for an agreement or protocol among superior courts that will provide for nationally accepted carriage motions and determine the jurisdiction in which such motions will be heard. More recently, the 2009 Supreme Court of Canada decision, Canada Post v. Lépine, called on provincial legislators to pay more attention to the framework for national class actions, and recommended establishing more effective methods for managing jurisdictional disputes: … the provincial legislatures should pay more attention to the framework for national class actions and the problems they present. More effective methods for managing jurisdictional disputes should be established in the spirit of mutual comity that is required between the courts of different provinces in the Canadian legal space. It is not this court’s role to define the necessary solution. (emphasis added) Five years later, we are still waiting for some form of legislative reform to solve these difficulties. The friction that can arise between courts of different provinces in multijurisdictional class proceedings was made evident in the 2014 British Columbia Court of Appeal’s decision, Endean v. British Columbia. The decision in Endean arose out of multi-jurisdictional class proceedings filed in Ontario, Quebec and British Columbia arising over tainted blood through which people were said to have contracted Hepatitis C. All three actions
were certified as parallel class proceedings, which were ultimately settled. In order to administer the settlement, the courts assumed a supervisory role requiring all three courts to issue identical orders for any order to be effective. In administering the settlement, class counsel proposed that judges of all three jurisdictions hear parallel motions in one location. British Columbia refused to allow British Columbia Superior Court judges to sit outside of the territorial boundaries of British Columbia unless there was a direct link to a British Columbia courtroom so citizens of British Columbia could observe the proceedings, via video link or teleconference.
If a defendant challenging jurisdiction can establish that there is no presumptive connecting factor between the subject matter of the litigation and the forum selected by the plaintiff, the court will have no jurisdiction simpliciter and must decline to hear the dispute. Issues become even more complex when proceedings are filed not only in Canada, but in other countries over the same dispute or cause of action. This was the situation in the 2014 decision, Kaynes v. B.P., PLC. The Kaynes case dealt with misrepresentations allegedly made by B.P. in documents sent to its shareholders. Shares of B.P. were sold on various exchanges, including the Toronto Stock Exchange, the New York Stock Exchange and on the London Stock Exchange. The plaintiff in Kaynes purchased his shares over the New York Stock Exchange, but brought the action in Canada seeking to define the proposed class as including all residents of Canada who acquired B.P. securities between certain specific dates.
The court in Kaynes was faced with the issue of whether Ontario has or should assert jurisdiction over the claim of proposed class members who purchased B.P. shares on foreign exchanges. Ultimately, the court denied certification and found: Order and fairness will be achieved by adhering to the prevailing international standard of tying jurisdiction to the place where the securities were traded. Faced with numerous instances of overlapping national class actions and issues over forum selection, Canadian superior courts have, in some cases, adopted what could be called a “subclass deference model.” Under this model, any court in which a national class action is brought will generally “defer” to the superior court of another province in respect of the subclass of persons residing in that other province. This deferential approach is frequently justified on the basis of judicial comity.
To date, Canadian courts have not, generally speaking, been prepared to stay or enjoin class proceedings on the grounds that there is a competing national class action in a more appropriate forum. On the contrary, it has become commonplace for Canadian courts to tolerate multiple overlapping national class actions. This judicial tolerance for duplicative class proceedings lies in contrast to the judicial attitudes towards duplicative proceedings generally. Outside of the class context, Canadian courts have shown an aversion to duplicative lawsuits, and with good reason. A multiplicity of proceedings is problematic because, among other things, it creates a risk of conflicting decisions. It appears that those courts that condone duplicative class proceedings in multiple provinces commonly propose that the risk of conflicting or confusing decisions can be overcome through “comity” between judges in different provinces.
The expectation is that the court of every province will engage in a form of “ongoing deference” to the courts of other provinces in respect of certification of any class that includes residents of those provinces.
CONCLUSION Unless and until there is legislative intervention or a more co-operative, but at the same time less deferential, approach to multi-jurisdictional class proceedings, these problems will continue. An agreed-upon framework and an efficient structure to such claims are long overdue. In the meantime, class counsel and the judges they appear before will have to continue to pay close attention to the legislation in place in the forum in which the action is being heard and be attentive to differences between that legislation and the legislation of other jurisdictions in which claims for the same wrongdoing may have been brought.
October 2014 Canadian Underwriter
45
Risk Data to Risk Intelligence The challenge of enterprise risk management programs for many organizations has always been how to quantify “value” and effectively harness data across the enterprise. Risk management consultants believe there is now a solution in emerging data mining and analytic modelling technology that effectively turns “data” into true risk intelligence. Sean van Zyl
Freelance Writer
The Risk and Insurance Management Society (RIMS) defines enterprise risk management (ERM) as “a strategic business discipline that supports the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio.” Still, many risk managers agree the cost and unpredictability in results associated with ERM have, thus far, been a “tough sell” in getting the support from the Board of Directors of their respective enterprises. Quantifying results, whether in “dollars and cents” or strategic market value, has thwarted risk manager efforts in implementing ERM programs. “How do you quantify the cost of taking action to eliminate a potential risk exposure if that exposure had never occurred — either as a result of actions taken or by pure chance,” asks Mohamed Ismail, principle risk advisor for the Toronto Transit Commission (TTC). That question, Ismail expects, will make new technologies in data mining — and specifically analytic risk modelling tools — a significant means of measuring risk reduction as part of ERM. In fact, using risk intelligence to drive performance metrics and business critical processes
46 Canadian Underwriter October 2014
through new data mining and risk modelling tools will ultimately separate the “haves” and “have-nots” in an increasingly competitive global marketplace, says Gaurav Kapoor, chief operating officer of risk technology provider, MetricStream — a provider of enterprise and cloud application for governance, risk management and compliance — as quoted in GARP, a publication of the Global Association of Risk Professionals, based in the United States. Kapoor is reported as saying harnessing enterprise risk intelligence has been the topic at board levels for several years past — the problem being how to gather data, determine what is relevant in terms of risk and then how to leverage this information as intelligence. Another challenge for enterprises has been how to store the growing mass of operational data as companies adapt to a changing global marketplace.
BIG DATA In the article, Kapoor notes that new data and analytics technology solutions for what is commonly referred to as “big data”, will change the risk management landscape of the future. “There is no doubt that the current volume, variety and velocity of big data is unprecedented.
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Big Data and Big Challenges What are your organization’s two biggest challenges in extracting value data? We have too much data and too few resources to manage them
43%
We do not have the right skills within the organization to manage data effectively
33%
We don’t have the right analytical skills to know how to use the data effectively
22%
We cannot get data to the right people within the organisation
21%
Source: Economist Intelligence Unit, Big data: Harnessing a game-changing asset, September 2011 (graph shows only financial services responses)
Big data remains one of the most elusive, but also one of the most promising avenues for risk management, organizational growth and competitive differentiation in the year ahead,” he added. The term “big data” is used to describe the handling of massive volumes of structured and unstructured data that is impossible to process using traditional database and software tools. As a result, big data analytics (BDA) — comprising of specialized technology tools and processes that adopt a holistic approach to the handling of information across an enterprise or the chain of an industry/sector — is gathering significant attention in the U.S. and Europe (see chart above). Christina Kite, a big data expert formerly employed at the Federal Reserve Bank of New York and now corporate senior vice president at Susquehanna Bancshares Inc., points out that the biggest problem with past ERM programs is that enterprises mostly adopted a “silo approach,” where each unit of the organization has been responsible for its risk exposure and data handling. This approach, Kite notes, leaves many cracks within the enterprise where valuable data in terms of risk intelligence is lost or not communicated to a strategic level.
ERM and BDA Much of the cost issue associated with BDA relates to how companies can adapt new technology to their legacy-based 48 Canadian Underwriter October 2014
technology platforms. However, Kite observes: “Organizations are beginning to differentiate themselves in using information and technology [like BDA] to create value across the enterprise — the role of the risk manager is becoming multi-purpose as a result.” Kite says she expects that the real momentum driving organizations to adopt ERM and BDA-type technology on an enterprise-wide basis will come from increased regulation and disclosure requirements. “The important value for risk managers is to drive this vision.” Indeed, the “burst housing bubble” in the U.S., followed by the collapse of global financial markets in late 2008, changed the perception of regulators — at national, international and regional levels — resulting in a slew of new reporting requirements specifically related to an enterprise’s overall risk exposure and not just financial. This regulatory onslaught, as noted in a MetricStream-commissioned global survey report released earlier this year involving more than 100 financial institutions, saw a significant jump in the number of companies adopting ERM programs as a result of regulatory compliance, post-2008. “There have been tremendous losses in shareholder value over the last decade. Many of those losses occurred due to failures in recognizing and managing risk. Today, ERM is a critical [chief executive officer] and board initiative, as regula-
tory authorities, government and regulatory agencies, insurers and credit rating agencies view a company’s ERM practice as a leading indicator of management’s ability to execute its business objectives,” says Susan Palm, vice president of industry solutions at MetricStream.
KEY CHALLENGES However, Palm reports that realization is starting to take hold at the board level with regard to risks interconnected across multiple divisions within an organization. “There are some organizations that are way ahead of the curve, and others who are just starting to think about this,” she points out. “In my point of view, there are three key challenges here, all are related, but all critical to harnessing risk information and making it actionable. The first challenge lies in being able to quickly and accurately collect the data. The second challenge lies in validating the quality of the data, and then analyzing it to extract meaningful insights. The third challenge lies in actually getting those meaningful insights to the right people, at the right time, in the right format so that the information is able to support decision-making,” Palm concludes. Notably, the MetricStream financial institutional survey report indicates approximately 29% of polled global entities now have an ERM framework in place, while a further 64% are in the process of building an ERM framework. Less encouraging is that more than half of companies surveyed have adopted a “silo approach” to their ERM programs. Betty Clarke, manager of corporate risk and recovery for the City of St. John’s, and a former chair of the RIMS Canada Council, expects that risk managementrelated software is becoming more costeffective. One problem with emerging technology like BDA is the cost associated with something that is yet to be proven. However, Clarke says she does believe that new technology application in ERM will enhance the effectiveness of programs and assist risk managers in quantifying at board level the advantages of ERM, “something that we [risk managers] have been saying all along.”
TOO SOON? However, not every risk manager is a stout supporter of technology application such as BDA. Rob Quail, former director of risk management at Hydro One, and now vice president of customer care, sees BDA as overkill in terms of cost in implementing and training personnel to effectively utilizing the end benefit. Hydro One focuses on “asset risk analytics,” basically risk modelling seeking a specific purpose. “It worries me when people start talking about quantifying risk based on past data, as we all know risk events seldom occur in an ordered pattern identified by broad data analysis,” Quail notes. The most effective approach to ERM, he argues, is introducing discipline across the business processes.
Craig Rowe, chief executive officer and founder of the Canadian-based risk technology vendor, ClearRisk Inc., says his company is sometimes approached with queries about BDA solutions, but at the moment, costs associated are inhibitive. As such, ClearRisk is currently not involved with BDA because of limited demand. “There is a big [capital] gulf between the very large organizations and the mainstream. In the longer term, when there are more successful cases where value has been achieved through BDA, and when we see a reduction in the cost, then I think there will be more interest from mainstream companies,” Rowe says.
EDUCATION AND TRAINING Perhaps the greatest challenge for enterprises and risk managers in adopting
new technology is to keep up with the training and hiring of staff to ensure that the effectiveness of risk intelligence, suggests Emily Cummins, former chair of RIMS’ technology advisory council and director of tax and risk management at the National Rifle Association in the U.S. “Technology innovation is both the greatest advantage and the worst exposure. Tech leaps far ahead of training as people race to adopt a new tech. Insider
threats, including unintentional errors, continue to be a top source of costly data breaches,” Cummins comments. Palm concurs, further suggesting that “ERM is as much about people as it is about business processes and the information systems that are needed.” Developing the right risk management talent remains a critical challenge for every organization, she emphasizes.
Turb ulent
Stability
A.M. Best Company’s 2014 Insurance Market Briefing – Canada Toronto
Angela Stelmakowich Editor
The outlook for Canada’s property and casualty insurance industry may be stable, as has been the case for the last few years, but that does not mean things are standing still. Changes are afoot for both the country’s p&c and reinsurance sectors that demand notice and response. Experts once again gathered in downtown Toronto as part of A.M. Best Company’s 2014 Insurance Market Briefing - Canada on September 3. Attendees of the half-day, three-session event — addressing developments and goings-on of note in the property and casualty, life and reinsurance segments of Canada’s insurance industry — received both recent information to provide context for current trends and some expectations of how conditions may develop moving forward.
FREQUENCY VERSUS SEVERITY 2013 and 2014 reflect tales of severity versus frequency for the p&c industry in Canada, Joel Silverthorn, a senior financial analyst for A.M. Best Company, suggested during its 2014 Insurance Market Briefing – Canada in downtown Toronto this September. Frequency has “crept in below retentions” in light of events that include ice damming, frequent storms and continued water events, Silverthorn told attendees. Unlike what was seen when the combined ra-
50 Canadian Underwriter October 2014
tio was about 99 at the end of 2013, the more recent ratio of about 103 means that “this is all being kept. It’s not going off to the reinsurers,” he explained. “This is all part of what’s happening at this moment, because the industry itself is taking on this burden, because it’s a frequency event, not a severity event.” Also emerging is the prominence of water as a peril, he said, noting that two of the largest-ever Cat losses in Canada took place last year. The reaction of p&c companies to this development has taken different forms, including measures to exclude part of the risk, Silverthorn pointed out. This has been done by, among other things, raising rates, bringing back endorsements for those who want to buy back in to that coverage and looking at limits. “Do they have the right data for the flood plains? Are they getting the right data? Is the modelling there? All of these are questions that actually will continue moving forward,” Silverthorn said of queries revolving around water and available data. Though personal property net loss ratios looked
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to be going down in 2014 Q1, they began moving up again in 2014 Q2, he reported. “This is because more hail and weather events did happen in the second quarter. And with these happenings, they’re all events that are going below retention. So, again, frequency events are driving up property loss ratios,” Silverthorn added. On the positive side — despite record insurance losses in 2013 — the Canadian p&c industry produced a “number that reflects an industry that had learned over the past few years. It had taken rate when it needed to, especially on the property side, and it had been learning from things that had been happening to it throughout the prior years,” he said. That performance “says a lot to the strength of the industry, where they have come from where they were, and what they were able to do with probably the worst catastrophic year on record,” Silverthorn suggested.
STABLE, BUT WEATHER-BEATEN The outlook for Canadian insurers remains stable in the wake of a recent turbulent period, but although insurers appear well-positioned to manage ongoing and upcoming challenges, they must guard against becoming complacent, A.M. Best notes in a new report. “The Canadian P/C market proved to be very resilient in the face of financial and operational pressures from the events of 2013,” states a special report released in advance of the A.M. Best Company 2014 Insurance Market Briefing – Canada. The industry “still managed to eke out an underwriting profit, produce a respectable return on equity and grow its equity base” despite a year that saw insurable losses reach a record $3.2 billion, notes the report. Those losses were the result of a string of catastrophe losses in 2013. “Although catastrophe events negatively impacted 2013 earnings, A.M. Best believes core performance will continue to benefit from ongoing profitability initiatives, and the industry will maintain its strong risk-adjusted capitalization,” it adds. “In our opinion, on the p&c side, we 52 Canadian Underwriter October 2014
believe the Canadian p&c market is wellpositioned and we are still maintaining a stable outlook,” Jacqalene Lentz, a senior financial analyst with A.M. Best, said at the briefing in downtown Toronto. “Stable by our definition is an indication that there’s a low likelihood that there will be significant rating changes over the near term,” Lentz explained. “The market remains stable despite influences such as investment pressures with the low interest rate environment, and the market remains stable despite consolidation among the carriers,” she noted, although added a caution. “With these types of pressures, the p&c industry cannot afford to underwrite unprofitable business,” Lentz said. “We have to adapt; that’s the bottom line,” she emphasized, further suggesting that p&c companies “must continue to build on their underwriting initiatives, advancements in technology and work on getting dynamic and ever-changing enterprise risk management plans.” The report notes there are challenges for the Canadian p&c industry, including the following: • Risk management and underwriting: Given the prolonged nature of the low interest yield investment environment, the importance of better differentiating underwriting risks has increased. • Ontario auto: The industry appears to have the capacity to absorb the impact of the mandated 15% rate reduction over two years, but each company’s results will continue to be monitored. • Consolidation: In 2007, about 58% of the p&c market was concentrated within the Top 10 insurers; by 2013, the Top 10 cornered 69% of the market. Given overall market dynamics, more consolidation remains distinctly possible. • Demutualization: Now that regulations governing demutualization have been passed into law, the government can move forward with writing and releasing the long-delayed draft. “The deficiencies exposed by the travails of 2013 need to be addressed so the industry will be well-positioned to respond to any challenges that emerge in 2014 and beyond,” the report adds.
challenging times “These are exciting and challenging times for reinsurers, and actually primary insurers as well,” Gale Guerra, a senior financial analyst with A.M. Best Company, said at the Canada briefing. What is happening in the market today is being heavily influenced by the global leaders, Guerra noted. “In the reinsurance market, it still remains fragmented with many competing players. The Top 10 players in the market make up 70% of the market capacity, so that’s significant,” she reported. Reinsurers were helped by conditions in 2013, Guerra said. “Given the lack of any major events in 2013, most reinsurers actually produced very good combined ratios for the year and solid earnings and underwriting profits,” she pointed out. “2013 and to date in 2014 have been benign Cat years, which has benefited the companies in terms of their financial strength and their ability to build surplus,” she said. As well, “companies are also taking advantage of the low interest rate environments by refinancing debt.” Combined ratios, for the most part, were below 100%, Guerra pointed out. This, she noted, was “driven, in part, by reserve releases and companies having very well-diversified books of business.” Although return on equity (ROE) looks favourable, she cautioned that even low double-digit ROEs “will continue to take optimal conditions, including a lack of catastrophes, continued flow of net favourable reserve development for companies and financial markets that are stable.” Guerra said mergers and acquisitions could continue, but this may take the form of reinsurance companies “trying to diversify and get into more specialty lines of business.” She added, “we may see more M&A activity, not necessarily between reinsurers, but overall.” Citing capital market and reinsurance convergence, Guerra noted that reinsurers have had limited losses to date. “What I think is going to be interesting is in a scenario where we have a significant event. Then we’ll see how these new reinsurers really hold up and if they’re really in it for the long term.”
速
Things Connected The Internet of Things is a bridge between the old economy of bricks, mortar and physical objects and the new economy of mobile devices, data networks and analytic engines. It is estimated that billions of “things� will be linked to the Internet within the next five years through sensors located in cars, homes and businesses. How will this connectivity and data affect insurance companies, brokers and consumers? CRAIG HARRIS
54 Canadian Underwriter October 2014
T
he frenetic pace of technological change often begs the question of the “next big thing” in IT: Is it merely a futuristic vision or imminent reality? In the case of the Internet of Things (IoT), the answer is both. There are already plentiful examples of IoT in action, defined in a recent report by research firm, Celent, as the integration of three components: physical objects with networked sensors; transmission of information to data stores; and analytic engines that examine the data and provide a feedback loop. Industries ranging from agriculture to automotive to appliance manufacturing have installed devices that continuously monitor the functioning of equipment and send data to a source for analysis and action. However, the insurance industry tends to rely on actuarial data and static information gathered at the policy-application stage for risk profiling, underwriting, pricing and claims management. When it comes to IoT and capitalizing on the real-time data created by sensors and networks, there is a sense that insurers are still in the infancy of evolution. “Only a small minority of insurers are investing the resources to do the appropriate due diligence on IoT with respect to the underwriting,” says Kevin Kalinich, global practice leader, network risk/cyber insurance for Aon Risk Solutions. “The majority of insurers base their rates on actuarial data. But you will never have 20 years of actuarial data with IoT because it changes dramatically and in real time,” Kalinich points out. The property and casualty industry insures a lot of “things.” Gartner estimates that IoT will include 26 billion units installed by 2020, and by that time, IoT product and service suppliers will generate revenue exceeding US$300 billion. Research from Cisco notes that more than 50 billion devices will be connected to the Internet by 2020. Whatever the number, all of those devices will be generating various forms of data — numerical, text, audio, video. One of the key questions: Will any of this help insurers in underwriting or pricing risk?
October 2014 Canadian Underwriter 55
COVER STORY
Things Connected WORLD OF OPPORTUNITY “For insurance, the parts of the puzzle are just slowly falling into place,” says Donald Light, an insurance analyst and author of the Celent study, The Internet of Things and Property/Casualty Insurance: Can an Old Industry Learn New Tricks? “There have to be sensors, there has to be a network, it has to be secure. Ten years ago, nobody would have dreamed of this. Now, people are talking about the collection and analysis of this data,” Light says. In an increasingly gadget-oriented society, where personal and commercial lines consumers demand mobility, remote access and interaction between devices, the connectivity push will only continue. This trend will be compounded by the relatively new capacity to monitor virtually anything — checking a person’s heartbeat or temperature with wearable technology, unlocking doors with mobile devices, tracking (or controlling) car movement with sensors, remotely monitoring complex building systems for heating, ventilation and air conditioning (HVAC), security, and smoke detection/fire. “One opportunity is how insurance is going to leverage data for more precise, customized, one-to-one underwriting,” notes Denise Garth, a partner and chief digital officer for technology research firm, Strategy Meets Action (SMA). “The bigger issue is how insurers can figure out how to get in the game of IoT,” Gartner suggests. The space-age predictions of the connected home, driverless car, smart cities, self-monitoring commercial buildings or machinery suddenly do not seem that far off. The IoT opens up a world of opportunities, and a potentially disruptive environment, for the insurance industry. “If insurers can access this big data information, they would really be able to understand products and pricing around it,” observes Michael Petersen, managing director and national leader, communications, media and technology for Marsh Canada. “I think we all understand there is a great opportunity here — if you get it right, there can be a huge payoff.” 56 Canadian Underwriter October 2014
A tangible example of IoT in the insurance world is vehicle telematics. Towers Watson reports the pace of adoption of usage-based insurance (UBI) telematics has accelerated exponentially in Canada in the last year. A survey released in April by the consulting company showed that 56% of polled Canadians expressed a “strong interest” in buying a UBI policy.
“The real question is when insurance companies will have enough confidence in their analysis of the data generated for underwriting and pricing,” says Celent’s Donald Light. “I think IoT will slowly revolutionize how risks are priced and underwritten for property insurance.” “The IoT example that is the furthest along in the insurance industry is telematics in vehicles, in both personal auto and commercial fleets,” notes Light, who in his report divides “things” into four categories — living, moving, stationary and transmitting. “In fact, there is some evidence that commercial vehicles may be better candidates for telematics adoption,” he suggests. Vehicle sensor devices have vast potential in providing services other than just insurance, some sources say. “Telematics will expand beyond… just car insurance,” predicts Randy Carroll, chief executive officer of the Insurance Brokers Association of Ontario (IBAO).
“A telematics device that is used for insurance purposes could also be used as an anti-fraud measure or theft deterrent, a roadside assist device or vehicle maintenance diagnostic tool. Vehicle tracking, vehicle recovery and accident reporting could all be enhanced if the proper telematics device is used,” Carroll says. Garth asserts that telematics and UBI are only scratching the surface of what this technology can do, in terms of business assumptions and revenue models. “Interestingly, UBI is no longer limited to vehicles, but is now being considered for home, medical and life insurance products,” notes a research brief Garth authored for SMA, The Internet of Things: Creating a Connected World. “Sensors like telematics are all about the connected car, the connected home, and the connected life. UBI is the precursor to a broader impact of sensors and the Internet of Things that will allow us to connect the dots between the data for new customer products, services, outcomes and experiences,” the study adds.
CLOSE TO HOME The “connected home” has also seen a spate of recent activity, with some suggesting this is an area ripe with opportunity for personal property insurers. In June, American Family Insurance and Microsoft launched a “business accelerator” for tech start-up firms focused on home automation. American Family Insurance, the eighth largest homeowners’ insurer in the United States, will provide industry experience, consumer insights and homeowner knowledge to companies focused on building safer and smarter homes, notes a press release from the company. Last January, Google purchased Nest Labs, a maker of “smart” thermostats and smoke alarms, for a reported US$3.2 billion. Analysts noted the acquisition — the second biggest by Google since buying Motorola Mobility — marked the Internet firm’s foray into the next generation of smart home devices, including sensors and networks for remotely controlled appliances, door locks and other everyday objects.
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COVER STORY
Things Connected Lost in the shuffle of the recent iPhone 6 release and the wearable technology of the iWatch, Apple also unveiled HomeKit, its iOS-based protocol for hooking up connected gadgets in the home. Other software companies have jumped on board, including August Smart Lock, an electronic lock that provides keyless entry into the home through Apple mobile devices. What does this mean for personal property insurers? Light notes that the information coming from the next generation of Internet-connected devices will provide a slew of data to insurance companies. Is the home well-maintained? Is it secure? Is there a consistent temperature level? Are there moisture detection devices in basements and around washing machines and dishwashers? Are there advanced smoke and carbon dioxide detectors? “The real question is when insurance companies will have enough confidence in their analysis of the data generated for underwriting and pricing,” Light suggests. “I think IoT will slowly revolutionize how risks are priced and underwritten for property insurance,” he comments. “The implications are quite interesting when it comes to information and monitoring and what that could mean for loss and risk,” Petersen says. “For example, something like a sewer back-up system could be set up to notify someone on a mobile device, but who is going to be notified? Who will ensure it is turned on and functioning properly?” he asks. “There may be a benefit, but that data has to be useable; it has to be collected back and used by the insurance company to tailor products that fit consumer needs,” Peterson points out.
COMMERCIAL VENTURE The potential of IoT may be even greater in a commercial lines for property, machinery and equipment. Many larger buildings already have sophisticated operational systems in place that monitor HVAC, security, fire/smoke detection 58 Canadian Underwriter October 2014
and sprinkler systems. In most cases, that data is already being collected and examined, at least by the owners or building management companies. Light explains that there is no technical reason that information could not be made available, “either directly or in meta form,” to insurers.
“Insurance companies will have to wake up; they cannot focus only on actuarial data,” argues Kevin Kalinich from Aon Risk Solutions. “There has to be a combination of actuarial experts with technology, privacy and legal experts to understand these risks. The impact of this is going to be felt everywhere — in engineering, design, architecture, commercial devices.” “Insurance companies don’t necessarily want to hire an HVAC expert to parse the data for all the clients they insure,“ he says. “However, if you have data aggregators outside of the insurance industry, they could, in effect, create safety scores or loss control scores that provide valuable data. This could factor into pricing, risk analysis and underwriting.” The examples of industries and commercial sectors to which IoT could apply are virtually endless. Aon Risk Solutions’
Kevin Kalinich cites the case of mining in Canada and the real possibility of using robotics and driverless trucks on remote sites in northern regions. “This is already being discussed in the industry,” Kalinich reports. “I think where the IoT will really change things is in the industrial Internet. Huge machinery, huge operations will benefit from this,” he predicts. Loss prevention and risk management represent additional areas of potential advantage for commercial clients. “By definition, you have hard-headed business people who may be risk managers or have a financial interest in lowering risk costs,” says Light. “The IoT value proposition for buildings, operations, general liability, security — these are all areas that companies are very receptive to in terms of improved loss control,” he adds.
DIVIDENDS IN DATA Several sources contend, however, that the prime opportunity for insurers in IoT is in information not objects. And that data must be tied to risks, hazards or exposures. “The big money is less in the devices and more in the acquisition and processing of data,” Light notes. “The devices in most cases are pretty cheap already. However, putting the data in the proper form for obtaining insight is where the real value is going to be. You have to be measuring things that have a pretty clear relationship to loss or hazard,” he explains. One of the key questions is how far along insurance companies are in incorporating IoT and big data into their underwriting, rating, risk analysis and claims management/loss prevention systems. “Insurance companies will have to wake up; they cannot focus only on actuarial data,” Kalinich argues. “There has to be a combination of actuarial experts with technology, privacy and legal experts to understand these risks. The impact of this is going to be felt everywhere — in engineering, design, architecture, commercial devices,” he says.
COVER STORY
Things Connected “It costs an insurance company an awful lot of money to get it wrong,” Petersen comments. “You can spend a lot of money on the software and hardware, but the data could be useless or doesn’t help the product.” Garth points out that much of the data coming from IoT is from other industries — automotive, manufacturing and industrial. It is also hitting insurers with the velocity, volume and variability of big data. “I think insurers are very much beginning to understand the importance of big data from the Internet of Things,” Garth says. “But, frankly, there is still a lot of work to do in terms of their systems, common data models and definitions internally. They still have to achieve a level of data mastery,” she adds. “Mastering” the big data emanating from the IoT is not only an opportunity and challenge for insurers, but also for brokers. “Brokers embracing data will see a positive return on their investment,” Carroll expects. “The more brokers know about their customer, the easier it will be to meet the ever-changing expectations of today’s consumer. The challenge is understanding what data can do and the risk is not keeping up,” he adds.
PROMOTING BUY-IN To get the data in the first place, insurers and brokers will need to encourage the use of interconnected devices in the homes, cars and businesses of customers for insurance purposes. Much like earlier experiments with vehicle telematics, there is a need to establish a comfort level with clients, as well as address potential issues of invasiveness and privacy. “Insurance companies will want to know this information, not just about commercial, but personal clients,” notes Kalinich. “IoT can tell who has a carbon monoxide detector in their homes, but it can also track what kind of food is in your refrigerator. These can be positives, but they can also be invasive,” he cautions. 60 Canadian Underwriter October 2014
“People need incentives,” Light suggests. ”You have those who are gadgetoriented and get excited about new connected devices. Others are going to say, ‘I am paying X dollars per year for my insurance, and I could get 20% discount if I install some of these devices.’ That might be worth it for some people to be early-adopters,” he notes.
“Brokers embracing data will see a positive return on their investment,” says Randy Carroll of the Insurance Brokers Association of Ontario. “The more brokers know about their customer, the easier it will be to meet the ever-changing expectations of today’s consumer. The challenge is understanding what data can do and the risk is not keeping up.” The quid pro quo for discounts is data. And some brokers are concerned about who owns that data and how it will be used in the new world of IoT. “You have to balance premium discounts with the fact that the company owns your data, your profile,” says Kat Macaulay, a digital communications specialist with Rogers Insurance. “What will happen with that data?
Could it be sold? That is what consumers need to be aware of when we have this data gathering. Who owns the data, and will my privacy be protected?” Garth suggests that IoT may usher in a new era of data ownership and stewardship guided by consumers. “There is a view that a lot of this data is going to be owned and managed in a digital environment by the customer, and the customer will authorize access and use of that data,” she says. “They will expect something in return, whether it is a discount or service.” That represents a dramatically different equation for insurers in the status quo of data collection. “We are going to have to rethink the purchasing of all these data sources from third-party providers that have aggregated lots of information,” Garth suggests. “We may actually have to consider how we will have to get realtime data from our customers, not just at the policy-application stage.”
SECURITY-CONSCIOUS Another major obstacle for the widespread adoption of IoT in insurance is the security issue of sharing information across multiple devices and networks. A Hewlett-Packard study released in July found that 70% of the “most commonly used IoT devices contain serious vulnerabilities.” The survey did a scan of 10 of the most popular IoT devices, such as televisions, webcams, thermostats, remote power outlets, sprinklers, door locks, home alarms, scales and garage openers. On average, 25 vulnerabilities were found by researchers — with a total of 250 security concerns discovered. “There is a great quote about three simple laws — ‘law one, everything on the Internet can be hacked. Law two, everything is being connected to the Internet. Law three, everything else follows from the first two laws,’” says Petersen. “The interconnectivity that is going to take place presents a very interesting situation. It’s the whole: ‘Do you know who your fridge is talking to?’” he says.
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“If, in fact, the devices can be attached to things in the home, car, business, we can begin to create new services and product offerings that actually provide real value,” observes Denise Garth of Strategy Meets Action. “I think it is an opportunity to re-imagine the product and the business model for insurance.” “The fact is that any devices can fail, and any networked process can be hacked,” Light comments. “These risks are probably more acute on the commercial side because the systems, sensors and data they already have were not designed to be secure; they were not designed to be shared. Today, we live in a different world,” he suggests.
RE-IMAGINING INSURANCE’S BUSINESS MODEL For Garth, the greater risk may be that insurers are missing the boat on IoT or merely using the big data from interconnected devices to tweak existing insurance products. “If, in fact, the devices can be attached to things in the home, car, business, we can begin to create new services and product offerings that actually provide real value,” Garth observes. “They can help you reduce your risk and potentially even eliminate your risk. Those services can become a driver of the relationship for insurance, so the product becomes more of an add-on. I think it is an opportunity to re-imagine the product and the business model for insurance.” The potential threat from other industries or sectors that have widely em62 Canadian Underwriter October 2014
braced IoT is whether these companies will be competitors or collaborators with insurers. “In this new world, businesses are going to begin to offer solutions that have the IoT connected and services tied to that,” says Garth. “I think it opens up an opportunity for other entities to manage the customer relationship, the customer loyalty, the customer experience. Insurance may be just a piece of the bigger picture, a spoke on a hub.” Garth notes that surveys done by SMA show insurance companies are dipping their toes into IoT waters. In a recent study of emerging technologies, the firm found 20% of insurers surveyed were currently piloting, testing or deploying IoT projects. That number rose to 50% over a three-year future timeframe. “I put the tipping point at 30%,” notes Garth. “I think there are a lot of insurers doing stuff quietly. But when you have one-third of the market doing something, it becomes very significant.” (Major p&c insurers in Canada contacted for this article did not provide comment at press time). Others argue that the evolution of IoT within the p&c insurance environment will be a slower process. How long it takes for sensor-equipped devices to be
widely installed in homes, cars and businesses, and whether the ensuing data will be useful for underwriting, pricing and claims/loss control, remain unanswered questions. “I think the analysis of data for pricing and risk outside of telematics in vehicles is really at an early stage,” Light says. “It is kind of like, ‘Oh, we can get this data, what do we think this could mean in terms of losses?’ There are some experiments and early initiatives going on at some insurance companies,” he reports. “The reality is there are a lot of things that will have to happen before this takes place,” Petersen points out. “It has to involve new economy firms working with old economy firms. The insurance industry doesn’t have the money to do it itself; they may be able to buy access to big data to understand the information. They can then decide if they can use it for things like finding the better customers and building better risk profiles,” he suggests. “I believe we are at the infancy of this, but you can’t just throw up your hands and say, ‘We don’t have all the answers, so there is nothing we can do,’” Kalinich concludes. “You have to think about it. The insurance industry will have to figure out the implications.”
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Enabled by the rapid increase of worldwide digital integration, cyber crime is growing quickly and costing the global economy billions of dollars. The current situation necessitates that efforts to combat cyber crime must include incorporating post-attack and risk transfer strategies. Technologically sophisticated criminals remain one step ahead of the IT systems designed to protect even the largest multi-national companies. That said, organizations that include post-attack response measures and appropriate risk transfer strategies in their cyber security plans are wellpositioned to weather even the most insidious data breach.
64 Canadian Underwriter October 2014
THREAT PROFILE Cyber crime and data breaches now take a roughly US$445-billion bite out of the global economy annually, notes Net Losses: Estimating the Global Cost of Cybercrime, research released this past June by the Center for Strategic and International Studies (CSIS). The Ponemon Institute reported that in 2013, the average cost to a company for a major data breach was US$5.4 million. Additionally, 56% of Canadian respondents said that their organizations are not protected from advanced cyber attacks, and 59% said they do not believe their companies have sufficient security to prevent criminals from stealing corporate information, note results from Exposing the Cybersecurity Cracks: Canada, released in June. Most cyber attacks are the result of direct hacking (56%) or malware (30%), and larger corporations and governmental institutions make attractive targets, accounting for 50% of all cyber assaults, Privacy Rights Clearinghouse reports. Still, small companies, which often operate with more vulnerable security systems in place, are increasingly
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victimized and now make up 31% of all attacks. This is largely because smaller organizations are not only easy profit centres for online criminals, but can also unwittingly serve as gateways to larger partners and clients. Both companies involved in such “piggy-back” attacks could have a resulting claim, while both companies should have a cyber policy that could be triggered. CYBER SECURITY Cyber attacks will happen — it is just a matter of when and how well-prepared a company is to deal with the related fallout. While nobody is ever fully protected, there are plenty of steps that every business — big or small — can take to respond to an attack, to make life more difficult for cyber criminals and to be prepared for recovery following a security breach. The most successful cyber risk management practices begin at the boardroom level. Buy-in from senior leadership is key to the development and implementation of company-wide information security policies and protocols. Basic information risk management, as outlined below, can stop as much as 80% of the cyber attacks directed at any company, regardless of size. Companies should implement an effective governance structure, maintain the board’s engagement and produce appropriate information security policies. Said policies and procedures relate to, among other things, the following: • user education and awareness training; • monitoring for all networks and systems; • incident management, including response and disaster recovery; • network security; • management and control of user privileges; • secure configuration guidance; • malware protection; • removable media usage controls; and • monitoring for both mobile and home working. It is critically important, however, that cyber security plans include a sharp focus on post-attack recovery that equals, 66 Canadian Underwriter October 2014
or better still exceeds, pre-attack IT preparations. Having the correct expertise is vital, yet most companies — surprisingly even large organizations — simply do not have the in-house know-how to conduct proper post-attack investigations, notifications and public relations campaigns. The longer the problem is unresolved, the more costly it becomes. And not just from an insurance perspective, but also from a reputational point of view.
While nobody is ever fully protected, there are plenty of steps that every business — big or small — can take to respond to an attack, to make life more difficult for cyber criminals and to be prepared for recovery following a security breach. RECOVERY AND RISK TRANSFER Business interruption costs can increase at alarming rates during the time it takes for an attack to be rooted out and neutralized. As such, clients should be able to choose from a range of business interruption covers to tailor a solution to their specific needs. Additionally, without proper notifica-
tion capabilities (in the event that personal information is stolen), companies can be left vulnerable to lawsuits and even regulatory actions in some jurisdictions. This demands that any insurance solution include immediate access to an IT crisis response team that will work to resolve the incident by providing a full range of services. These include such things as IT forensic services, media crisis management services and specialized legal services. However, even companies with wellstaffed communications, IT and legal departments may not be as well-prepared to deal with cyber attacks as they might think. For example, some companies have very good IT people, but do not keep forensic specialists in-house. In addition, telecommunications and media companies often feel that they are well-prepared to handle a communications crisis, but still might not have the very specific, niche area of expertise that is available through insurers. One need only look at the events surrounding the highly publicized attacks on Sony and Target, to name just two, to understand the possible scope of the expertise required following a major security breach. All of these aforementioned concerns should be addressed during the underwriting process. The development of a robust post-attack response plan starts with close co-operation between the insurance provider’s risk engineers and the client. Look for an insurance company that takes a collaborative approach to underwriting to identify and shore up vulnerabilities. This is also the stage at which clients and providers do the necessary legwork to quantify the worst-case scenario before deciding how much coverage to purchase and how much exposure is appropriate. Additionally, worldwide coverage is absolutely necessary because a company might never identify where an attack came from, or the attack might originate in multiple jurisdictions and target several others.
Attacks can come from anywhere and target a location, making it pointless to limit a cyber attack policy to one country or territory since the modern world is far too interconnected for such a narrow protection. CHANGING REGULATORY LANDSCAPE Many jurisdictions are taking a close look at beefing up the legal protections for personal data and increasing company obligations for notifying individuals in the event of a security breach and mitigating the damage. The Canadian government, for example, is reviewing legislation — the Digital Privacy Act, which modifies the Protection of Personal Information and Electronics Documents Act (PIPEDA) — that would require mandatory breach notification, new penalties and other provisions to improve compliance with existing legislation and increase protection for consumers. Most states in the United States require notification and crisis response
— such as credit monitoring and the changing of bank account details — in the event of a cyber attack, notes the National Conference of State Legislatures, and U.S. federal law allows class action lawsuits arising from privacy breaches. The European Union, for its part, is considering a significant expansion to existing law that would place a considerable financial burden on companies with regard to both compliance and remediation requirements. In the private sector, there are more and more contractual requirements focused on cyber insurance. Companies are beginning to realize that partners, vendors and clients can be unintentional conduits for attacks, and are taking precautions to ensure that they are properly protected. In this sense, cyber insurance is very much like any relatively new insurance solution, in that it is initially embraced by a narrow sector, but gradually will find
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relevance throughout the business world, much like the market drivers for errors and omissions insurance 20 years ago. Regardless of the impetus for developing a cyber security response plan and purchasing an appropriate cyber attack insurance solution, 62% of respondents surveyed by Ponemon Institute in 2013 reported that the insurance made their company better prepared to deal with security threats. Headlines announcing yet another major hacking event seem ubiquitous. From Target to Sony to Neiman Marcus, catastrophic security breaches have caused enormous damage, resulted in major business interruptions and delivered body blows to corporate reputations. With related threats growing, it has become clear that what a company does to respond to an attack and mitigate the damage as quickly as possible is just as important as what it does to prevent the attack in the first place. Maybe more so.
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Ensuring that coverage is available when it is needed most — when there is a claim — requires careful consideration of both Errors and Omissions (E&O) and Commercial General Liability (CGL) policies beforehand. What E&O and CGL policies cover separately and in conjunction with each other can make all the difference. The broker faces many challenges in today’s competitive insurance market, with price and coverage being important concerns. Price, however, should not be the deciding factor, especially when it comes to placing Errors and Omissions (E&O) policies. While most insurance coverages are devised for a specific purpose with their own terms or cover-related exposures in a class, the relationship between E&O and Commercial General Li-
68 Canadian Underwriter October 2014
ability (CGL) policies should be considered carefully in the insurance placement process.
DIFFERENTIATING THE POLICIES E&O and CGL policies are both liability policies, but provide coverage for different exposures. E&O policies provide coverage (generally on a claims made and reported basis) for financial loss for alleged negligent acts, errors or omissions arising out of the insured’s professional services. Defence costs are typically inside the liability limits. CGL policies, for their part, provide coverage (on an occurrence basis) for bodily injury and property damage arising out of the insured’s business operations. Defence expenses are customarily outside the liability limits. Claims arising from professional services are typically excluded under a CGL policy as a result of a professional services exclusion. The scope of this exclusion and the definition of professional services often vary by insurer: insurers are not obligated to follow the latest Insurance Bureau of Canada (IBC) CGL wording (IBC 2100). The trend, however, has been to expand the professional services exclusion to exclude more classes of business and more types of services. Brokers should carefully review the exclusion to
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Given the expansion of the exclusion, and the rise of new professions, brokers and underwriters must re-evaluate their traditional approach to a risk to determine whether or not a CGL policy can adequately respond to the needs of an insured and whether or not an E&O policy is required.
determine exactly what occupations are not covered. The Supreme Court of Canada has provided some guidance on how CGL policies respond to claims involving professional services. In the 1977 case, Foundation of Canada Engineering Corporation v. Canadian Indemnity Corporation, the court noted that, “a general liability policy is not basically a professional liability one,” but recognized that this statement was made “without attempting to cast a mould meant to shape all future possibilities.” As such, the court suggested that while the CGL is not intended to cover professional liability, coverage may be possible. The wordings, facts, claim demand and intent will all play a part in how the policy and the courts will respond.
INSURING A PROFESSIONAL RISK The expansion of the professional service exclusion in the CGL coincides with an increase in new professions that differ from the traditionally recognized professionals, such as doctors, lawyers and engineers. Given the expansion of the exclusion, and the rise of new professions, brokers and underwriters must re-evaluate their traditional approach to a risk to determine whether or not a CGL policy can adequately respond to the needs of an insured and whether or not an E&O policy is required. Canadian courts (and most in the United States) have provided some guidance as to whether or not certain exposures will be caught by a professional services exclusion, thus suggesting the need for 70 Canadian Underwriter October 2014
an E&O policy. The courts, on both sides of the border, have established some principles for E&O exposures and what constitutes a professional exposure: • professional services are those that involve specialized knowledge, skill or labour, which are primarily mental or intellectual as opposed to physical or manual; and • the nature of the act is determinative of the professional service as opposed to the insured’s occupation or title (for example, mopping a floor does not become a professional service merely because a doctor does the mopping). The application of these principles can be challenging. For example, while it is readily understood that doctors, lawyers and engineers should be insured under an E&O policy, what about electricians? They have specialized knowledge with a recognized course of study and also need to be licensed in most jurisdictions. Do their services meet the concept of a specialized skill such that they are providing professional services? Notwithstanding the specialized skill, it is likely the services provided by an electrician would be primarily physical or hands-on in the completion of their work, and as such, not fall into the intellectual component. These insurance exposures would be better covered under a CGL policy, especially under the products and completed operations sections. What about a technician working in a health clinic? In the 2009 case, Ayana v. The Skin Klinic, before Ontario’s Superior Court of Justice, a patient filed a claim after being burned during laser hair
removal. Although the procedure was performed by a technician in a health clinic, it was done without a doctor’s supervision. The court concluded that the activity engaged in was not a professional one, that the technician was not a nurse or health professional, and had not received any recognized, specialized training. This being the case, the plaintiff’s damages did not arise from professional services. (Note that this exposure has been recognized by some insurers and some treatment services, i.e. barbers or beauticians, can be covered under a CGL policy with an amendment to the professional liability exclusion.) Similarly, not all acts of a recognized professional will be covered under an E&O policy. A defamation claim against a lawyer for comments made outside of work, may be excluded under the E&O policy due to a personal injury exclusion. In addition, the defamatory act may not constitute a professional act even if performed by a recognized professional. In contrast, personal injury coverage is customarily covered under a CGL policy. The need for both an E&O policy and a CGL policy is evident in situations for businesses operated by professionals. Insurance brokers are service providers whose services will be considered to be professional services. Claims against such insureds for losses occasioned by their advice will be excluded under their CGL policy due to the professional services exclusion, and there is a clear need for an E&O policy.
Yet if a kitchen sink in an insurance broker’s office overflows and damages an adjacent office, it is the CGL policy that will respond to the resulting property damage claim. Consider a situation where a dental patient is drowsy from general anesthesia and trips while exiting the office. If the dentist failed to warn the patient of the aftereffects of the anesthesia, does the claim arise as a result of professional services? Does the CGL or E&O policy respond? Or both?
PLACING WITH THE SAME CARRIER An insured can be exposed to a number of different types or risks, demanding the need for both E&O and CGL coverage. E&O and CGL policies can work together to ensure there are no coverage gaps. The best way to maximize the co-ordinated coverage and avoid coverage disputes is to place both policies with the same insurer. Policies issued by the same insurer are more likely to have common terms and similar definitions that eliminate coverage gaps. Potential coverage consideration such
E&O and CGL policies complement one another, but it is critically important that brokers and underwriters understand both policy wordings to ensure complete coverage. That, and using a single insurer, allows for the best result when it counts most… if there is a claim. as policy periods, insured entities or “other insurance” clauses, are less likely to be in conflict. If a claim triggers both policies, the claims-handling procedures and the insured’s claim experience will be consolidated; allocation of claims expenses, including adjusting and defence expenses, can be streamlined and minimized; potential disputes between separate insurers as to where coverage lies and who should be leading the claim will be eliminated; and placing the policies with different insurers has the potential to foster conflict and delays in handling claims effectively. Claims are increasingly costly and time-consuming. They can also wreak havoc on a business’ reputation and its ability to conduct business. E&O and CGL policies complement one another, but it is critically important that brokers and underwriters understand both policy wordings to ensure complete coverage. That, and using a single insurer, allows for the best result when it counts most… if there is a claim. October 2014 Canadian Underwriter
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dale rempel Award of Excellence
The Long Run “I like solving problems for people,” Hancock says, calling it not only fun, but also rewarding, when “someone comes to you with an insurance problem and you figure it out for them and give them what they need.” Angela Stelmakowich Editor
What is the phrase? It is a marathon, not a sprint. Rodney Hancock, an avid distance runner, has learned quite a bit about the value of putting in the time to get things right. And the recipient of the inaugural Dale Rempel Award of Excellence — presented in September at the Insurance Brokers Association of Canada’s (IBAC) Annual General Meeting in Saskatoon — has got quite a few things right over his more than three decades in insurance. The annual award is meant to recognize someone who has made a significant difference in the professional development of insurance brokers and to honour Rempel’s tireless commitment to advancing and promoting broker education. Having known Rempel, IBAC’s highly regarded former president who passed away in 2012, personally and professionally makes the honour all the more heart-felt. “Dale was a close friend of mine,” says Hancock, senior partner, president and chief executive officer of McFarlan Rowlands Insurance, which is based in London, Ontario and maintains 14 offices across the province. “Dale was hard-working and he really was a strong believer in the broker being the main conduit for selling insurance,” he says. It is an idea Hancock — who has served with broker associations at the local, provincial and national levels — has no problem getting behind, having dedicated significant time over the years in the name of broker education. Achieving his Canadian Certified Insurance Broker (CCIB) designation in 1993, Hancock has delivered, among other things, CAIB (Canadian Accredited Insurance Broker) and CPIB (Canadian
72 Canadian Underwriter October 2014
Professional Insurance Broker) programs, as well as reviewed IBAC courses. More recently, he was involved in a forwardlooking venture that marries broker education and professional development, serving on the committee responsible for finding a university post-graduate program for brokers. Hancock was instrumental in selecting Laurentian University’s online MBA program, and has participated in negotiations with university representatives to secure an agreement enabling brokers to earn advanced standing credit for CAIB and CPIB, in pursuit of an MBA degree through the university. The program was designed to train people to become managers within the brokerage business, he says. “As insurance brokers, the one thing that we need to do better, as we get larger, is become better at our business,” he emphasizes. “You can be a wonderful sales person and you can attract people to you, but at some point, you have to know how to manage a business. You can’t really do that by the seat of your pants as you get larger,” he adds.
a learned man Hancock would never argue against education, seeing its value regardless of the form it may take. Born in the southwestern Ontario community of Galt, Hancock did not venture far for his own post-secondary education — although certainly far enough to meet his demand to be able to live away from home — attending the University of Western Ontario. He received a PhD in psychology and later be-
Photo by David Raposo
dale rempel Award of Excellence
came a professor and researcher in social psychology. In 1979, though, his course changed when he opted to continue teaching, but also began working at Rowlands Insurance Brokers Limited. By 1984, he was president and, after acquisitions and mergers from the mid-1980s through the late-1990s, McFarlan Rowlands Insurance came into being in 1998. “I like solving problems for people,” Hancock says, calling it not only fun, but also rewarding when “someone comes to you with an insurance problem and you figure it out for them and give them what they need.” Hancock has had those opportunities, both in business and as part of his volunteer positions, not least of which include serving as president and chairman of the Insurance Brokers Association of Ontario, and as an IBAC director and co-chair of its professional development committee. Also rewarding is building a business — but building it in a way that upholds broker traditions and fosters independence. “We started out with a few offices and kept buying more, but never really
lost a sense of smallness,” Hancock says of McFarlan Rowlands Insurance, which today is among the largest independent insurance brokerages in Ontario. “I find it rewarding to have built something that I think is going to go on and it’s a big part of what I’ve done lately — to try to make sure the independent model, the independent brokerage that we’ve developed here, continues on.” The brokerage, the roots of which date back to 1896, got big by steadfastly remaining small. “We buy the brokerages in the small towns and we leave them in the small towns. They get the advantage of being big, but being small,” he says.
building independence At the heart of the model is independence, Hancock suggests, reporting that the brokerage has 14 like-minded shareholders, each of which maintains local operations. If a shareholder leaves, the shares are bought back by the brokerage. Maintenance of that local feel is key. “People, in the end, I still believe, will want to have a conversation with someone they know about something that’s
important to them,” Hancock contends. “I totally get why people who are young shop online,” he says, “but as you acquire more stuff, it becomes more complicated and that is where brokers have a big advantage, especially outside of the large metropolitan areas.” Hancock says he was surprised to recently learn how much younger people value a conversation, not simply being “contacted” or doing everything online. The one-on-one conversation was something he more frequently associated with an older demographic. “Something has changed. I’m not sure what. Maybe it’s this constant exposure to (online) and finding out it’s great for getting information, but if you can’t understand what they’re saying to you, you have to find somebody to talk to,” he says. “Talking to someone who is not going to give you pat answers is much more satisfying and rewarding and comfortable.” Hancock regards it as key to strike a balance between traditional and modern approaches. “As brokers, we have to accept and find a way to keep up with all the technology changes,” he says. “We can be as warm and friendly and whatever as we like, but we have to not bury our heads and think that’s enough. We have to give people the opportunity to buy insurance the way they want to.” But it is also important to choose people who are best-suited to meeting current and future demands of running a business. At McFarlan Rowlands Insurance, “what we try to do is identify those people who are good with people. We can teach them insurance; we can’t teach them to be personable.” Hancock still keeps his hand in teaching, but does so a little closer to home, with employees at the brokerage. “I can get just as excited about teaching them because it’s wonderful when they figure it out,” he says. “I like that feeling when they have that, ‘Oh, I get it,’ moment. That’s still fun to me.” Rempel would likely agree. October 2014 Canadian Underwriter
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UBI Taking Hold
Global Leader, UBI Product Delivery, Towers Watson
Nathalie Bégin Senior Consultant, Risk Consulting and Software, Towers Watson
Canadian drivers are being given more opportunities to purchase auto insurance policies based on their driving behaviour and they appear to be quite open to the concept. With several of the major insurers now offering usage-based insurance (UBI) policies in Ontario and Quebec, consumer interest is increasing. Earlier this year, Towers Watson conducted a survey of more than a thousand Canadian consumers and recently updated the same survey for consumers in the United States and Brazil. The results demonstrate the openness of consumers in major markets and the increasing acceptance of these UBI policies, or “pay-as-you-drive”
74 Canadian Underwriter October 2014
insurance (see infographic on page 76). The UBI Consumer Survey results are fairly consistent across other global markets and offer a clear indication that UBI is gaining even more momentum. Significantly, well over half (56%) of polled Canadian drivers reported that they have a strong interest in buying a UBI policy. Drivers’ appeal to UBI programs deepens when they are asked to consider the possibility of enrolling in UBI programs. An overwhelming majority (85%) said they would be open to such programs. This compares to acceptance of 79% in the U.S. and 92% in Brazil. The comparisons are interesting because UBI policies have been available for several years in the U.S., but just began to be offered in Brazil.
NEW ENTRANTS ON THE SCENE The Canadian UBI market has quickly developed into a rapidly changing landscape. Until recently, UBI in Canada was limited to just a few programs, but over the past year new entrants have entered the marketplace and increased the range of products available. Canadian insurers should be very pleased to know that drivers are so amenable to participating in UBI programs, and that the acceptance is as high or higher than in other countries with very developed UBI products.
Illustration by Scot Ritchie
Robin Harbage
A new consumer survey from Towers Watson shows the Canadian market is ready for widespread adoption of usage-based insurance. But with the range of related products now available and consumer acceptance high, Canada could be a prime market for expansion of UBI.
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ulation of UBI policies in Ontario and the Alberta Insurance Rate Board (AIRB) having sponsored seminars to improve the understanding of UBI in Alberta. These actions are much more proactive measures than regulation in most countries, where regulators have been open to UBI, but have largely taken a wait-and-see approach.
IMPORTANT SIGNAL TO INSURERS
The percentage of interested consumers in Canada increases from 85% to 94% should insurers guarantee that drivers’ premiums will not rise. This is a very important statistic that insurers in most markets, including Canada, have taken to heart. The vast majority of UBI products are based on discounts from standard rates for insureds who demonstrate better than average driving behaviour. Insurers understand the value of attracting these very safe drivers who self-identify by accepting a policy that requires them to provide a record of their vehicle operation to the insurer. This is not an average insured. Insureds understand they have something to gain by proving they are good drivers. These consumers are clearly not prone to fraud and feel they have nothing to hide. The self-selection alone has led to lower than average loss costs in markets where UBI programs are widely available. Three countries — Italy, South Africa and the U.S. — have led the way in the penetration of UBI policies among consumers, but the accelerating availability 76 Canadian Underwriter October 2014
and high consumer acceptance indicate Canada will be a prime market for the expansion of UBI.
Canadian drivers’ indication that they acknowledge the usefulness in purchasing UBI-related value-added services is an important signal to insurers. These services can really benefit insurers in a number of ways, such as differentiating and de-commoditizing their products. Even regulation in Canada is on the leading edge with the Financial Services Commission of Ontario (FSCO) already having published guidelines for the reg-
Towers Watson’s survey also assessed consumers’ take on value-added services, which can be bundled with a UBI policy, and enabled by the underlying technology. Nearly two-thirds (65%) of those interested in UBI (i.e., those saying they definitely or probably would buy a UBI policy) indicated they are willing to pay for these services. When asked which services appealed to them most, polled drivers chose vehicle theft tracking (86%), automated emergency call (85%) and vehicle wellness reports (79%). More than half (56%) of those interested in UBI reported that they are prepared to pay between $3.75 and $7.50 a month for those services. Canadian drivers’ indication that they acknowledge the usefulness in purchasing UBI-related value-added services is an important signal to insurers. These services can really benefit insurers in a number of ways, such as differentiating and de-commoditizing their products. Insurers globally have introduced a multitude of value-added services through the telematics technology that enables UBI policies. These services include theft tracking, emergency response to a known vehicle location, geo-fencing parameters for teen drivers, vehicle wellness reports and vehicle breakdown response, among other popular options.
DRIVING SAFETY A leading interest among insurers, consumers and regulators is the potential to reduce accidents through improved driving behaviour. The ability of drivers to improve their driving through feedback and coaching is attractive to all stakeholders.
Notably, almost half (48%) of survey respondents reported that they would be willing to change their driving behaviour if UBI technology was installed in their cars. When asked how they would do so, sticking to the speed limit (55%), keeping a safe distance from other vehicles (52%), and driving more considerately (49%) were the top changes. Surveyed consumers said that their primary concern with UBI centred on their finances, while nearly half (47%)
voiced worries their premiums would go up. Privacy issues were another leading uncertainty, with specific misgivings about the sharing of consumer data (46%) and apprehensions around using data to invalidate claims (46%). These concerns are similar to those expressed by consumers in other countries, though the percentage of consumers in the U.S. who indicated privacy as a major concern declined by 15% in just the last 17 months. These concerns, while understandable, are not really significant enough to hinder the many benefits that UBI offers Canadian drivers — and all indications are that concerns decline rapidly once
consumers are introduced to the benefits. This is especially true if insurers are very transparent with consumers regarding what data is collected, how the data will be used, and with whom the data will be shared. Clear communication about these three key issues is critical to high consumer acceptance. The clear opportunity for insurers to improve their auto insurance products is made only more obvious when consid-
ered in the light of the high consumer interest and acceptance of these products. Towers Watson has estimated that roughly 200,000 customers in North America will buy a UBI policy each month in 2014, and the interest continues to increase. The benefit to innovative insurers who are early-adopters of UBI is obvious if this pace of policy acquisition for better than average insureds continues.
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October 2014 Canadian Underwriter
77
40th Annual Risk and Insurance Management Society (RIMS) Canada Conference Winnipeg
Resilience Attendees of the 40th Annual RIMS Canada Conference heard views on the many risks currently facing Canadian organizations. These range from cyber crime to business interruption, pollution coverage in directors’ and officers’ liability insurance policies and even the possibility of active shooters. Greg Meckbach Associate Editor
Delegates to the 40th Annual RIMS Canada Conference — the theme of which was Crossroads 2014: Changing Landscapes — gathered in Winnipeg September 14 through 17 to learn more about how the business landscape is constantly evolving and how today’s risk practitioners can best manage the risk and opportunity crossroads on a daily basis.
POLLUTION LIABILITY AND D&O POLICIES Contracts in which one party agrees to hold another “harmless” from pollution liability deserve special scrutiny, an environment expert for a commercial brokerage suggested during the 40th Annual RIMS Canada Conference. “Hazardous substance is a term that’s thrown around, like dangerous goods,” said Justin Perry, vice president and national practice leader for Aon Risk Solutions’ environmental services group. “The only difference is, ‘dangerous goods’ is actually defined at a federal level. ‘Hazardous substances’ is not,” Perry pointed out.
78 Canadian Underwriter October 2014
“Hazardous substance is a catch-all term” that needs to be defined in agreements, such as landlord-tenant or service provider contracts, Perry told session attendees. Perry’s co-panelist, Brian Rosenbaum, national director, legal and research practice at Aon Reed Stenhouse Inc., pointed to a recent case as an example. Thirteen former directors (including Neil Baker) of Northstar Aerospace Inc. were ordered by Ontario’s then Ministry of the Environment to personally pay to remediate a contaminated site. Northstar had court protection under the Companies’ Creditors’ Arrangement Act. Rosenbaum said the directors ended up paying $4.75 million, personally, as a result of a settlement with the Environmental Review Tribunal (Baker et al v. the Director, Ministry of the Environment). “There was no indemnification for these directors and officers because Northstar was gone,” Rosenbaum explained. “There was no insurance because they didn’t buy an environmental impairment liability policy, and their (directors and
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officers) D&O policy had an exclusion in their definition of loss, dealing with remediation costs.” A D&O liability policy is “technically not designed to deal with environmental liability, in and of itself,” Rosenbaum warned. He noted, though, some carriers have removed limitations (such as pollution, property damage and costs to comply with government orders) that used to be common in D&O liability policies. “There is a movement afoot by a couple of carriers right now to provide Baker-type coverage, so cost to remediate and legal costs associated to set aside a Ministry of the Environment order, on their primary D&O forms,” he reported, but added that some of the forms he has reviewed need work. “They haven’t dealt with the property damage and bodily injury exclusion properly and there are a number of other problems, but they are trying.”
ACTIVE SHOOTERS AND OCCUPIER LIABILITY Current occupier liability laws may not cover events, including the liability exposure for a property owner or occupier when there is an incident of an active shooter entering the premises and shooting people, attendees of the 40th Annual RIMS Canada Conference heard. “We are starting with basic legal principles that were not really devised for a shooter situation, and we have to apply them to a situation that they were not really designed for,” Howard Borlack, a founding partner of McCague Borlack LLP, said of occupiers’ liability laws. “If you invite someone into your premises, you have a duty to keep them safe,” Borlack said. The “real liability” for property occupiers depends, in part, on what staff do after a criminal starts shooting, he noted.“If you don’t have procedures in place, if you haven’t trained your staff, if you don’t have... some sort of warning system, some area to take people, some way to identify that this is the danger area and everyone should go to another area, someone to escort people out,” Borlack noted, “that’s where real liability can come from.” 80 Canadian Underwriter October 2014
Most lawsuits arising from active shooters are being settled out of court and the law in occupiers’ liability is evolving, he said. “The more this happens, the more you can argue that it becomes foreseeable,” he explained. “You are not immune from this in Canada,” Lance Ewing, industry practice group leader for real estate and hospitality and leisure at American International Group (AIG) Inc., said in reference to active shooter incidents. Speaking at the same session, Ewing cited examples of active shooters in Canada, such as the 1989 murders of 14 female students at the University of Montreal and the 1992 murders of four engineering professors at Corcordia University. Ewing showed a video produced by the City of Houston that offered emergency response tips, everything from leaving the area to hiding and ensuring cellphones are silenced, and fighting the active shooter (as a last resort) with improvised weapons such as chairs or fire extinguishers. “Getting a training plan together is simply not enough anymore,” he said. “You’ve got to practise and train, and every member in your company should be trained at least once a year. You do them for fire drills in your businesses, don’t you?”
COMPUTER SECURITY RISK TOUGH TO UNDERWRITE “The behaviour of employees can often be sudden and unforeseen, so I think we do see clearly an increased exposure in cyber,” Michael Kerner, chief executive officer for general insurance of Zurich Insurance Group Ltd., said in an exclusive interview with Canadian Underwriter at the 2014 RIMS Canada Conference. “We see the well-publicized events around increased hacking and the possibility of personal data being compromised in the course of the events,” said Kerner, adding that this exposure has increased with the growth in computer networks, especially the public Internet. A lot of the cyber exposures come from outside of a company, Kerner cautioned. “They come from supply chains, they come from other vendors, and those
create exposure for a company.” Kerner suggested that regardless of what information technology security practices are in place, it is difficult to defend a computer network from a determined miscreant. “It’s very challenging to have a good, strong fool-proof defence on cyber, because, essentially, when you are on the defence side of the cyber issue, you have to defend every single weakness, every single portal 24 hours a day, seven days a week,” he said. “If you are trying to be on the offensive and trying to get in, you just need to find one weakness in one portal once and you are able to get in,” he noted.
BI COVERED DURING GAMES? What might big events — such as the 2015 American/Parapan American Games next July — potentially mean in terms of business interruption (BI) and what is covered by BI insurance? It is a question some companies are asking, Mark Aiello, senior vice president of organizational risk and resilience for Marsh Canada, said of the games during a session at the 40th Annual RIMS Canada Conference. Most venues for the games next July 10 through 26 are in the Greater Toronto Area. “Right now, there is a lot of talk going on... with respect to the traffic congestion and back-ups,” Aiello told attendees. “The same thing happened a few years ago with the G20 (summit). The ability for businesses in downtown Toronto or in that region to be able to conduct business on a regular basis is going to be challenging. You could have a disruption because of something that happens at the Pan Am Games that may not be a covered loss,” he added. BI insurance “is really to cover the reduction in income when operations are interrupted by a covered loss” and is intended to provide money in case there is an interruption, Aiello said. “You have different offerings that will cover expenses, lost revenue, lost profits and provide you with that liquidity upon having a loss, but it’s limited to covered perils,” he cautioned during his presentation.
Congratulations TO CAIW AWARD WINNERS
Insurance Information Campaign Award Sponsored by Aviva Canada Winners:
1st place: 2nd place:
Nova Scotia Insurance Women’s Association Manitoba Association of Insurance Professionals
Essay Contest Sponsored by Wawanesa Mutual Insurance Company Winners:
1st place: 2nd place:
Tracy Fata, BSc FCIP CRM (Edmonton Insurance Association) Amber McInnis, BA CIP IICRC (Nova Scotia Insurance Women’s Association)
Intact Insurance Public Speaking Contest Sponsored by Intact Insurance Company Winners:
1st place: 2nd place: 3rd place:
Catherine DuPont, LL.B., J.D. (Montreal Association of Insurance Women) Katherine Lewis, B.A.H., J.D. (New Brunswick Insurance Women’s Association) Megan Henry (Manitoba Association of Insurance Professionals)
Impact Auto Auction Education Award Sponsored by Impact Auto Auction Winners:
1st place (West): 1st place (East): 2nd place (East):
Manitoba Association of Insurance Professionals Montreal Association of Insurance Women Nova Scotia Insurance Women’s Association
First General Award Sponsored by First General Winner:
Manitoba Association of Insurance Professionals
Insurance Women of the Year Award Sponsored by Canadian Association of Insurance Women Winner:
Gilberte Theriault, Nova Scotia Insurance Women’s Association
SPONSORS
THANK YOU to our generous Sponsors, Donors and Participants of our 2014 Convention held June 11-15, 2014 in London, Ontario. Our convention would not have been the success it was without you! Your contributions are truly appreciated by all CAIW members! Applied Systems Canada Inc. Belfor Property Restoration Belron Canada Inc. Bill Blaney Insurance Brokers Ltd. Caradoc Delaware Mutual Fire Insurance Company Carstar Auto Body Repair Experts Discount Car and Truck Rentals Economical Insurance Edmonton Insurance Association Elaine Blaney, LIPA Farm Mutual Reinsurance Plan Inc. First General Firstonsite Restoration Gloria Balls, LIPA Hay Mutual Insurance Company Insurance Institute of Canada Intact Insurance Company
ISB Canada June Guay, LIPA Kent & Essex Mutual Insurance Lyons & Mulhern Insurance Manitoba Association of Insurance Professionals Middlesex Mutual Insurance Co. Montreal Association of Insurance Women Nova Scotia Insurance Women’s Association Omni Insurance Brokers Ontario Egg Farmers Ontario Mutual Insurance Association Ontario Mutuals Oxford Mutual Insurance Company Pacific Marine Underwriting Managers Ltd. Paul Davis Systems Preferred Insurance Portage Mutual Insurance
Rosemary Kennedy, LIPA Royal & Sun Alliance Insurance Company of Canada Ruth Johnson, LIPA South Easthope Mutual Insurance Company Sovereign General Insurance Company Tim Wade, Agent, LIPA Thompsons Limited Toronto Insurance Women’s Association Town & Country Mutual Insurance Tradition Mutual Insurance Company Usborne & Hibbert Mutual Fire Insurance Company West Elgin Mutual Insurance Westminster Mutual Insurance Company Winmar Yarmouth Mutual
Front Row: L to R Laura Greening, BA CIP CRM Tracy Fata, BSc FCIP CRM Back Row: L to R Lori Penner, CIP Cheryl Morton, BA CAIB CIP Diane Penney Sheila Slowe, CAIB (Hons) Donna Payne, CIP CAIB CRM Katherine Toner, BA LL.B
Panagiota Kalantzis, LL.L, LL.B, LL.M Brenda Miller, CAIB CIP Mary Hooper, CAIB CIP Dawn Mercier, BA FCIP CRM Lynn Kelly, CIP CRM
We look forward to seeing you June 10 to June 14, 2015 in Brandon, Manitoba
www.caiw-acfa.com
Evolving
Opinion/Analysis
Peter Höppe
Head, Geo Risks Research/ Corporate Climate Centre, Munich Re
Geo-risk Research Climate change and new severe-weather patterns pose challenges for insurers, reinsurers and society itself. The need to understand and respond to the risks ahead places increasing importance on the evolving discipline of geo-risk research. Throughout history, people have strived to better understand natural catastrophes. Yet significant improvements in prediction remained elusive until the advent of technological advances in the 20th century. Meteorologists, for example, began using aerial observation and satellite imagery to forecast weather, while seismologists developed sophisticated instruments for measuring the earth’s movements. Today, more than ever, growing frequency and severity of weather-related loss events highlight the need for geo-risk research. The insurance industry, of course, has a vested interest in the topic. Costly events, such as the 1906 earthquake and subsequent fires in San Francisco, made the significance of geological risks painfully clear to insurers and reinsurers, who began early on to use retrospective analysis in estimating natural catastrophe risk.
82 Canadian Underwriter October 2014
However, a string of outlier natural catastrophes at the beginning of the 1970s suggested a change in dynamics, which — if borne out — would render purely retrospective modelling obsolete. At about the same time, the scientific community began pointing to the rising temperature of the earth’s atmosphere and its effects on ocean temperatures, polar ice caps and glaciers, as well as an increasing level of carbon dioxide (CO2) in the atmosphere and its effects on absorption of the sun’s energy. In light of those developments, the insurance industry needed a deeper scientific understanding and better analytical tools to model nat-cat risks in a changing climate. Recognizing that need, Munich Re’s efforts starting in the 1970s eventually culminated in its Geo Risks Research unit. Established 40 years ago, the unit’s two initial focuses were to determine whether or not natural catastrophes were, indeed, on the rise — and, if so, which types of events were increasing — and to develop more sophisticated risk modelling to calculate the cost and capacity of insurance products. Early on, geo-risk researchers concluded that while seismic events exhibited no long-term increase, weather-related events had, in fact, grown in frequency and intensity. With the combination of continuously increasing computer influence and growing databases, geo-risk expertise within the insurance industry and in the global scientific community developed dynamically over the years. By the late 1980s, probabilistic risk modelling — which goes beyond retrospective analysis and extrapolation to include theoretically possible
WICC Announces a New National Sponsor at the Platinum Level
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WICC is delighted to announce a recent addition at the Platinum Level to its National Sponsorship Program.
RMC is honoured to be able to support the Women in Insurance Cancer Crusade (WICC) as a newly appointed National Platinum Sponsor. As a national association of law firms working with the insurance industry, we could not think of a more suitable partner organization. Indeed, many of our firms have been actively involved with WICC regionally, as sponsors and volunteers for years.
RMC applauds WICC’s accomplishments in raising funds to find a cure for cancer. WICC’s events and efforts are exceptional and we look forward to helping support the cause for years to come.
RMC is now a part of a very special group of WICC National Sponsors at the Platinum Level. WICC is extremely thankful to this group of organizations which share the vision and desire to put an end to cancer! WICC National Sponsors at the Platinum Level also include:
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events based on known physical parameters — was introduced. This has proven useful in preparedness for extremely low-frequency, high-loss occurrences, such as the 2011 Tohoku, Japan earthquake and tsunami.
GEO-RISK RESEARCH TODAY Major reinsurers, including Munich Re, have dedicated considerable resources to geo-risk research. For example, the Geo Risks Research unit maintains the world’s largest natural catastrophe database, containing more than 35,000 data sets, and its modelling instruments are used by stakeholders in the public and private sectors, primary insurers and Munich Re itself. The unit’s most recent addition is a high-resolution, floodmapping tool introduced in 2013. Insurers can now use risk models for natural hazards with return intervals ranging from once in a year to once in thousands of years. Geo-risk experts are also continuously learning from largescale events and how they unfold. For example, financial impact calculations take into account the demand surge that drives up the costs of materials and labour related to relief and reconstruction in the wake of a major catastrophe, as was the case during Hurricane Katrina and the subsequent flooding that devastated New Orleans in 2005. Lessons learned in recent years also include the potential scope of cumulative losses, for instance, through business interruption as a result of a natural catastrophe, as occurred during the severe flooding in Thailand from mid-2011 through early 2012. Still, the quality of nat-cat risk modelling varies widely from one type of event to another. Hurricanes, for example, rely on a number of measurable data points for formation and sustenance, including sea surface temperature and high-level winds. Based on these criteria, researchers are able to reach conclusions on future frequency and severity. However, severe convective storms (tornadoes, strong straight-line winds, hailstorms, intense precipitation) with multiple and variable contributing factors are much more difficult to model with 84 Canadian Underwriter October 2014
a reasonable degree of accuracy. In addition, tornadoes and hailstorms tend to strike in random and chaotic patterns, compounding the challenge of predicting which assets are at risk. Severe convective storms produce damage from large hailstones, powerful straight-line wind gusts, lightning strikes, torrential downpours and tornadoes. The devastation from flying objects, including branches and uprooted trees or even vehicles, can be extreme. Typically, homes take the brunt of the damage, but no assets are entirely immune when severe convective storms strike.
PUTTING KNOWLEDGE TO WORK With the frequency and intensity of weather-related natural catastrophes increasing, the insurance industry and society as a whole must adapt. Here, the challenge is to keep the big picture in view and avoid distraction by short-term trends. For example, Munich Re recently reported there were comparatively few major natural catastrophe losses worldwide during the first half of 2014. As of the end of June, overall economic losses were US$42 billion and insured losses were US$17 billion, considerably below the 10-year averages of US$95 billion and US$25 billion, respectively. But as Torsten Jeworrek, Munich Re’s board member responsible for global reinsurance business, cautioned: “There has been no change in the overall risk situation. Loss minimization measures must remain at the forefront of our considerations.” In Canada, a country historically known for comparatively low natural hazard risk, the upward trend in frequency and intensity of weather-related natural catastrophes has been felt sharply. Five of the costliest events since 1990 occurred within the four-year period from 2010 to 2013, including the heavy flooding and severe storms that hit southern Alberta and southern Ontario last year, causing more than $7 billion in total economic losses, around $2.5 billion of this insured. 2013 has been by far the most expensive natural catastrophe year in Canada’s history. The Disaster Financial Assistance Ar-
rangement (DFAA), the cost-sharing program between the federal government and Canada’s provinces and territories, has made 96% of all payments in its 45-year existence within the past 18 years. While DFAA averaged nine payouts annually between 2000 and 2010, it made 26 in 2011 alone. Whether or not this trend is related to climate change has become less the issue than the pressing need for preparedness. Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction (ICLR), shares the view that climate change is affecting extreme weather in Canada, but points to a number of potentially avoidable factors that are proving the biggest drivers in the increase in storm-related damage, including aging infrastructure, growing populations and development in at-risk areas. Accordingly, ICLR — which identifies the actions and people who can contribute to loss reduction in terms of infrastructure, land use, building codes and general public awareness — is dedicated to providing decision-makers with the information and tools they need to better understand hazards and reduce vulnerability. One of ICLR’s co-operation partners in this task is the Institute for Building and Home Safety, a U.S.-based independent organization that works with the construction industry and building authorities to improve weather readiness. “You can’t prevent extreme rainfall, storms and flooding. But if you’re ready, you can prevent them from becoming disasters,” Kovacs says. In Canada, where flooding is expected to remain the number one driver of nat-cat losses, much can be achieved by zoning construction and development out of harm’s way. Recent advances in flood mapping are also a key asset. Convective storms will clearly require much more research before a comparable level of risk modelling can be reached. Climate change and new severe weather patterns may represent one of the biggest challenges facing humankind. Whatever responses it demands, the insurance industry and geo-risk researchers have an important role to play.
Recent Insurance Press Releases featured on insPRESS.ca Leverage FIRST Canada’s expanded offering for Marketing-Leading Success by FIRST Insurance Funding of Canada – Oct 2
ClaimsPro Announces its Operational Senior Leadership Team by SCM Insurance Services – Sep 12
Dean Gough Appointed President of Itech by STRONE-Itech – Oct 1
Opta Information Intelligence Welcomes Jeff Sutton as Senior Vice President, National Sales by SCM Insurance Services – Sep 12
Understanding Earthquake Planning and Compliance by CRU - Catastrophe Response Unit – Sep 30 Three Appointed At Elliott Special Risks by Elliott Special Risks Ltd. – Sep 30 SCM Risk Management Services Welcomes Roslyn Kozak CIP, CAIB as Business Development Manager, Atlantic Region by SCM Insurance Services – Sep 29 Get a taste of FIRST Canada’s new payment solutions offering at the Atlantic Broker Conference by FIRST Insurance Funding of Canada – Sep 26 ClaimsPro Announces National Sales Team by SCM Insurance Services – Sep 25
Have you experienced it? by Zurich Global – Sep 11 Norfolk Mutual Insurance Company and Mutual Concept Computer Group Inc. have successfully completed their deployment of the Insurance Business Solution (IBS®) at Norfolk Mutual Insurance Company by Mutual Concept Computer Group Inc. – Sep 11 Rochon Engineering Announces Appointment of Marijan (Mario) Smolej B.A.Sc., P.Eng. as Senior Forensic Engineer by SCM Insurance Services – Sep 9 AssessMed is proud to present the 1st Annual Brain Injury Conference in support of OBIA by AssessMed Inc. – Sep 9
ProFormance and Xchanging partner to offer unparalleled TPA Services by ProFormance Group Inc. – Sep 23 CRU USA first responder to 2014 Napa Earthquake by CRU - Catastrophe Response Unit – Sep 18
Halifax Collision Reporting Centre to open on September 10th by Accident Support Services – Sep 8
Lance Buffitt, NEW St. John’s On Side Restoration Branch Manager by On Side Restoration Services Ltd. – Sep 18
CEP Forensic Engineering Continues to Strengthen its Team with the Appointment of Jean-François Goulet, M.A.Sc., P. Eng. by CEP Forensic Engineering Inc. – Sep 4
Enhanced GUARANTEE GOLD® Policy Protects its Customers from Nursery School to Nursing Home by The Guarantee Company of North America – Sep 15
Crawford & Company (Canada) Inc. Looking to Expand Talent Networks by Crawford & Company (Canada) Inc. – Sep 4
Is your Company ready for the Big Shake? by CRU - Catastrophe Response Unit – Sep 12
To Read the Full Story for Each Press Release visit insPRESS.ca
Mark Attley President, Receivables Insurance Association of Canada
Receivables insurance could spell the difference between protecting a company’s cash flow and threatening its very existence. Still, it is estimated that Canada’s market penetration with companies that could buy receivables insurance is less than 10%. In the early 1990s, there was one major underwriter of receivables insurance (also known as trade credit or accounts receivable insurance) and two minor insurers based in the United States with insignificant activity in the Canadian market. Fast forward to 2014 and there are seven insurers — all with significant Canadian offices and all aggressively competing for growth. In just over 20 years, gross written premium has grown from approximately $15 million to $20 million to in excess of $200 million.
86 Canadian Underwriter October 2014
The upward trend for receivables insurance continues in 2014. To the end of June 2014, the value of premiums in Q2 compared to Q1 rose 87.5% to $105.3 million. The number of receivables insurance polices in effect increased quarter over quarter by 5.9% to 6,833. The figures are provided by the Office of the Superintendent of Financial Institutions and Export Development Canada. Still, it is estimated that Canada’s market penetration with companies that could buy receivables insurance is less than 10%, and this segment still remains relatively unknown, especially to commercial insurance brokers. In European countries where receivables insurance has been heavily sold for 40 or more years, however, penetration rates are in the range of 30% to 40%. Accounts receivable often account for upwards of 40% of a company’s assets. Other assets — such as plant and equipment, and inventory — are always part of the basket of assets that are insured, and yet receivables are the most liquid asset, often posing the biggest threat to a company’s existence should a loss occur. There is a mystique to this product, but there
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Canadian Independent Adjusters' Association (CIAA) "The voice of Independent Adjusters in Canada" www.ciaa-adjusters.ca Honourable Order of the Blue Goose—Ontario Pond Dedicated to fellowship and charity. 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
Crawford & Company (Canada) Inc. Enhancing the customer experience, every day. www.crawfordandcompany.com Cunningham Lindsey International independent claims services. www.cunninghamlindsey.com
Granite Claims Solutions Global Adjusters and Marine Surveyors www.graniteclaims.com PCA Adjusters Limited Adjusting to Meet your needs™ www.pca-adj.com Quelmec Loss Adjusters Identifying, Investigating, Resolving... for over a quarter century! www.quelmec.ca
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
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GRAPHIC COMMUNICATIONS Informco Inc. Integrated Graphic Communications Specialists. www.informco.com
INSURANCE COMPANIES
Aviva Canada Inc. Home Auto and Business Assurance. www.avivacanada.com Catlin Canada Underwriting Ambition. www.catlincanada.com
Wawanesa Insurance Earning your trust since 1896. www.wawanesa.com
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REINSURANCE
FM Global The leader in property loss prevention. www.fmglobal.com National Bank Insurance Auto | Home Home and Auto Insurance in Quebec. www.nbc-insurance.ca 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
Guy Carpenter & Company The world’s leading reinsurance intermediary. www.guycarp.com Swiss Reinsurance Company Canada The leading P&C reinsurer in Canada. www.swissre.com Transatlantic Reinsurance Company For all your reinsurance needs. www.transre.com
RESTORATION SERVICES Winmar Property Restoration Specialists Coming Through For You! www.winmar.on.ca
RISK MANAGEMENT
The ARC Group Canada Inc. Your Partner in Insurance Law and Risk Management. www.thearcgroup.ca
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www.cgbgroup.com • 800.267.6670 88 Canadian Underwriter August October2014 2014 82 88 CanadianUnderwriter UnderwriterOctober March 2014 2014 72 Canadian
viduals (i.e. business to consumer, or B2C); • late interest or penalties to which the supplier may be entitled; • banking costs (unless it is contractually agreed the buyer is liable); and • losses caused by nuclear disasters.
COMBATING BAD DEBTS
should not be. Its premise is simple and the benefits tangible and measurable.
COMPETITION ON CREDIT Most products and services are sold on what are called open account terms. That is, the supplier extends credit to the buyer of the goods by offering a defined period of time to pay for the goods. This time period could be 30, 60 or 90 days. Credit is important because it is a competitive tool for trading companies. Competition takes place as much on the basis of credit as it does on price. This is because for most companies, cash flow is crucial. A company will always look for a period of credit from its suppliers to help improve cash flow. However, this will, in itself, affect the cash flow of that supplier. Credit is, therefore, simply a business necessity. The problem comes when the payment does not arrive when agreed. The company that has given the credit will have made the assumption that the sale has been made, or the service provided, and, therefore, payment will be made. In fact, it may have borrowed money from a lender on that basis. If that payment is late, or is never
made, the company will suffer, and potentially could go out of business. To avoid that, there are two basic commercial risks covered by receivables insurance: • Late payment — Late payment is a growing business risk. Not only does it affect the company’s finances and balance sheet, it also affects it in terms of the time spent chasing the payment. • Insolvency — Insolvency of a buyer is even more devastating for companies. In such an event, it may prove impossible to recover any, or a substantial part, of the debt, meaning the debt will have to be written off. This is money that the company has already assumed it had, and it will, therefore, have to create considerable new business in order to make up for the bad debt. The receivables insurance policy also excludes certain risks and losses. In general, these are as follows: • non-payment related to a dispute between the buyer and the seller; • non-payment caused by the supplier’s own failure to meet its obligations under the contract or to comply with the law; • inter-company trade transactions; • trade transactions with private indi-
Bad debts can have a snowball effect and their effect can grow out of all proportion to its size. As such, for brokers and credit and risk managers, it is a relatively simple proposition: Do we insure one of our biggest and most important assets? The benefits of receivables insurance are where brokers and buyers of insurance should really be focused. There are a number of benefits with the most obvious being the financial protection that cover can provide. Receivables insurance will cover the unpaid debts of insolvent companies, and will cover any unpaid debts after a certain period. Receivables insurance will, therefore, protect a company’s cash flow. Beyond protecting cash flow, there are other benefits that apply to all buyers of receivables insurance regardless of industry sector, and regardless of whether or not companies export. These can include the following four areas:
1. Financing of loans Banks and other lenders are concerned that they should only lend to companies that are secure and not in any danger of becoming insolvent and, therefore, defaulting on their loans. Banks are becoming more and more interested in receivables insurance, a policy for which can be assigned as collateral to a bank or other lender. Banks want to lend more, but there are certain rules concerning lending that require companies to meet certain criteria. Receivables insurance can help companies meet those criteria, and banks, therefore, increasingly regard receivables insurance as a useful tool to help them increase their lending. Basically, receivables insurance helps banks to lend more on a secure basis. October 2014 Canadian Underwriter
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2. Balance sheet protection Many companies today are concerned with balance sheet protection. This is becoming a major driver in all areas of insurance, as companies reduce the amount of insurance they buy at the lower levels. Self-insurance is becoming popular, but there is still concern over the possibility of a major incident causing a hole in the balance sheet that would have to be explained to either the parent company or to shareholders. As such, catastrophe cover is purchased in order to protect the balance sheet.
The benefits of receivables insurance are where brokers and buyers of insurance should really be focused. Receivables insurance will cover the unpaid debts of insolvent companies, and will cover any unpaid debts after a certain period.
3. Improved credit control Credit information services can act as a credit management department for a company, providing information on trading partners. With this information, the company can then decide whether or not to trade with a company, and whether or not to offer credit. This can be an invaluable service, providing up-to-the-minute financial information on companies worldwide.
4. Increased sales Receivables insurance can allow the credit manager or credit management department to provide positive benefits for the sales team, and can increase sales by using it to offer better credit terms and, thereby, win business. Even before any orders are made, the credit manager will be able to show the sales people the areas that should be
insBlogs
explored because the risk-reward po- in 2008, the global receivables insurtential is greater, because these compa- ance industry had annual gross written nies are more secure and more able to premiums in the $7.5-billion range, and pay. A company can then offer to open for some of those years, loss ratios were credit to a buyer rather than having to in the 100%-plus range. demand letters of credit or the like. Receivables insurance makes a vital A reasonable question to ask of any re- contribution to trade, protects a valuceivables insurance policy is, do claims able asset class, can be leveraged to enget paid? hance cash flow and helps companies During the Great Recession starting grow. Insurance Blogs hosted by Canadian Underwriter
insBlogs
Recent Blog Posts Featured on
insBlogs.com
Insurance Blogs hosted by Canadian Underwriter Z-Codes, a technical name for bad data by Ted Harman – October 2 Ontario Ministry of Finance Intends to Change Interest Rate On Disputed SABS Claims by Willie Handler – October 1 Factoring groundwater into flood risk by Glenn McGillivray – September 30 Loss Transfer Limitation Rolls Along by Daniel Strigberger – September 15 First person: The August 4 Burlington storm by Glenn McGillivray – September 10 How many of your clients are on the same cloud? by Carol Kreiling – September 5 More merger and acquisition activity may be on the horizon by Peter Morris – September 5 Technology and the Integrated Consumer by Catherine Smola – September 5 HCAI Data: Assessments Continue to Be a Significant Proportion of Medical and Rehabilitation Expenses by Willie Handler – September 2
October 2014 Canadian Underwriter
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MOVES & VIEWS upcoming events: for a complete list visit
www.canadianunderwriter.ca
and click ‘my events calendar’ on the home page
1
The Canadian Independent Adjusters’ Association (CIAA) has announced that Albert Poon [1a] has replaced David Porter [1b] as CIAA president. Poon, who had been CIAA’s 1st vice president, is director of operations at Cunningham Lindsey Canada Claims Services Ltd. “We wish to extend our sincere appreciation to David for his many years of dedicated service to our association,” notes a CIAA statement. Porter had taken over, from Marie Gallagher, as CIAA president at the association’s annual general meeting in August. At the time, Porter had been vice president, western region for Granite Claims Solutions, the property and casualty operations of which have since been acquired by SCM Insurance Services. CIAA’s constitution stipulates that its executives must be employed by CIAA member firms. Porter, who is no longer with the firm, resigned as CIAA president effective September 19.
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Kellee Irwin [2] is RSA Canada’s new vice president of western region, personal and commercial insurance. Having more than 25 years of experience in the industry, Irwin has worked for the Insurance Corporation of British Columbia as vice president, insurance transformation and
92 Canadian Underwriter October 2014
1a
1b
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personal insurance, RSA Canada reports. She has also worked for Allianz, GE Insurance, Markel and Safeco.
3
SCM Insurance Services’ ClaimsPro unit recently welcomed three new executives. Lorri Frederick [3a] is ClaimsPro’s new chief operating officer, Suzie Godmer [3b] is the company’s new senior vice president for the Quebec region, and Greig Boyle [3c] is the company’s new senior vice president operations for the central region, the company announced in August. Frederick is a former executive vice president of operations at ClaimsPro and previously worked at Cunningham Lindsey Canada; Godmer has been with
ClaimsPro for 13 years; and Boyle is a former branch manager, vice president of operations and executive vice president, national operations for Granite Claims.
4
The Co-operators Group Limited announced in September that TIC Travel Insurance Coordinators, as well as its SelectCare Worldwide subsidiary, will merge its travel insurance operations in Canada with those of Allianz Global Assistance Canada. The combined entity, employing more than 600 people, will operate as Allianz Global Assistance, The Co-operators reports. The new entity will be 45%-owned by AZGA Service Canada Inc. Co-operators Life Insurance Company and 55%-owned by
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5 Allianz Worldwide Partners S.A.S. It “will benefit from TIC’s extensive distribution network of more than 8,000 brokers and travel agencies throughout Canada,” notes The Co-operators. The financial terms of the deal were not disclosed. The lead underwriter for the new entity will be a subsidiary of The Co-operators. AZGA Service Canada’s new chief executive officer will be Daniel Wichels [4], chief financial officer of Allianz Global Assistance for the Americas.
5
The Insurance Institute of British Columbia (IIBC) has announced the members of its 2014-2015 Governing Council. Mark Francis [5], manager of provincial vehicle
MOVES&&VIEWS VIEWS MOVES
of Calgary; Gordon Adams; Robert Jr.; of Ltd., is Cartwright, this year’s winner Al Gorski; Lamb; John the DonaldLeslie M. Stuart Award Phelps; Michael Phillipus; in recognition of her outstandFrederick Savage;inand ing contributions theLori risk Seidenberg. management profession. The
3 3a
5 3b Insurance Company); Sharon Craver, chair, education (ICBC); Sarah Tung, chair, events (Intact); and Terry Leibel, chair, Okanagan (Capri Insurance Services).
97 positions have included general adjuster,and branch manager, registration licensing at vice president of operations the Insurance Corporation of and Lloyd’s Division leader. British Columbia (ICBC), will serve as president. The other council members for 2014Chisholm 2015 Macdonald include Jennifer Perry, Trask Insurance (MCT) 1st vice president, academic announced in early division (Hub International January that it will propInsurance Brokers);join Kerry erty and casualty brokerage McLaughlin, 2nd vice BrokerLink. The terms of the president, professional transaction were Manjit not disdivision (ICBC); closed, a statement Biring, notes secretary-treasurer from BrokerLink. (Intact InsuranceBrokerLink Company); companies, subsidiaries of Jan Brownridge, past president Intact Financial Corp., (Munich Reinsurance include 84ofoffices serving Company Canada); Wayne clients in Atlantic Canada, Coates, Vancouver Island Alberta Ontario. Dating chapterand president (ICBC); back than 60 years, Debramore Copeland, chair, MCT has more 110 inmarketing and than communicasurance professionals 18 tions (Intact); Sharon in Knotts, offices. Michael Brien, who chair, future directions (The has led MCTCompany over the of last 12 Guarantee North years, joins BrokerLink as America); Lianne Crawford, head its Atlantic operations. chair,ofseminars (Gore Mutual
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10 Brokerage firm Hub International Limited has selected Applied Snow [7] will SystemsCarolyn Inc.’s Epic technology, lead RIMS as president which allows agencies and for the 2014 brokerages to be on aterm, single which took effect January 1. system to manage customer Snow, who haspolicy been on the relationships, RIMS Board ofand Directors for administration financial seven years,processes, is currently di- a accounting notes rector of risk for statement frommanagement the companies. Humana Inc. She previously “Applied Epic will enable served as RIMS’s treasurer, us to manage our rapidly secretary and director of as expanding global footprint external affairs. The RIMS we acquire new businesses board for 2014our alsoposition includes and strengthen to vice president Richard serve more clients worldwide Roberts, treasurerinsurance Julie in today’s Jr.; competitive Pemberton; corporate secremarketplace,” says Martin tary Nowell Seaman, Hughes, chairman anddirector chief of global risk management executive officer of Chicago-for PotashHub Corporation of based International. Saskatchewan Inc.; Gloria Brosius; Steve Pottle, director of riskAnne management Chalmersservices [7], at Yorkvice University; presidentJennifer of Santiago; Stein, direcrisk Janet and security for tor of risk management Vancouver-based miningand and insurance firm at the University resources Teck Resources
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RIMS Ontario Chapter, which began handing out the award As presented of Januarythe 8, award in 1979, Toronto insurance17 broto Chalmers September at ker Canada Jones DesLauriers the RIMS Conference. Insurance Inc. In her role Management at Teck Resources, (JDIMI) had acquired Whitley Chalmers leads the firm’s risk Insurance and Financial Sergroup, which is responsible vices. Whitleyrisk Insurance has for its global management offices in Belleville, Ontario program, oversees loss control, and the nearby communities emergency services and of Trenton, Deseronto and the commercial insurance Stirling. “The acquisition program, co-ordinates the is expected to build ateam solid for crisis management presence for JDIMI in Eastern the company’s operations and Ontario and position the firm its partnerships, and chairs to better service their clients, the materials stewardship with strengthened commercommittee. Chalmers has cial and personal been a member ofinsurance RIMS offerings the region and a since the in mid-1980s. new financial services division,” notes a statement from JDIMI.At President and CEO Elliott Special ShawnRisks, DeSantis will lead the Clive Fernandes teams is from both companies. the new vice Loris Clarke has region, been president of [8] central named successor to Paul Tony Picciano is the new Whitley, president of eastern Whitley vice president of the Insurance, willChau remain region, and who Marisa has during as a transition period.with joined an underwriter
8
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the central region’s environment impairment liability Ken Rayner [9] leader has team. As the regional joined Anderson in Toronto, Fernandes — who McTague Associates previously served&as vice Ltd. as itsofdirector of busipresident mid markets, ness development, business insurance Central for Region. “Ken brings a wealth Travelers Canada — will lead of experience to our comthe underwriting teams, pany, having held be responsible for various all lines senior management positions of business within the with insurers and other central region, and be MGAs,” the
9
says Chuck McTague, presidentline of Anderson Mcproduct manager for Tague & liability. Associates, general He ahasfamilyalso owned MGA based in New worked for ACE, Integro Brunswick.Brokers In January, AnInsurance and Aon derson McTague & Associates Reed Stenhouse. Picciano, announced was“manage expanding, for his part, itwill adding an office in Toronto to and lead the underwriting serviceinthe brokersand of Ontario teams Montreal will andresponsible Manitoba. for Rayner’s be all lines of appointment confirms the business within the region,” company’s “commitment to Elliott Special Risks notes. the Ontario/Manitoba marketA former vice president, place, and to theand building of Eastern Canada a local support team to assist Montreal branch manager brokers with their surplus for Zurich Canada, Picciano linesalso andworked difficult place has fortoACE business,” McTague adds. and American International Group. Chau has previously worked at both Travelers and The Guarantee Chubb Insurance. Company of North America has announced that Tara Marijan (Mario) WishartSmolej [10] became vice is Rochon president of claims for the Engineering’s new insurer’s Torontoengineer, branch on senior forensic December 2,in2013. Having specializing accident 21 years of experience in The reconstruction. Smolej “has Guarantee’s claims 29 years of experience department, Wishart will be investigating and analyzing responsible for the operations over 1,500 motor vehicle of the Toronto Branchand Claims. collisions in Canada the She first joined GuaranUnited States for The the insurance, tee in and 1995 as an adjuster legal, trucking industries has held roles of notes increasand municipalities,” seniority from with the comaing statement Rochon pany, including, mosthas a Engineering. Smolej recently, claims manager mechanical engineering for specialtyislines. Wishart is a degree, a licensed member of both the Surety professional engineer and Association of Canada and is a designated consulting the Canadian Association of engineer. Women in Construction.
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October 2014 Canadian Underwriter February 2014 Canadian Underwriter
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GALLERY
More than 120 risk managers, adjusters, brokers, insurers and salvage companies’ representatives from Quebec & Ontario hit the links August 11 at the Whitlock Golf & Country Club in Hudson for the 36th Annual Golf Tournament of the Quebec Risk & Insurance Management Association (QRIMA). The longrunning tournament was won this year by the team of Marc Major of Marsh, Keith Jones of Westcliff, Pierre-Alexandre Lussier of Marsh and Glenn Lucas of PharmaScience. Golfers enjoyed a great day on the greens and helped QRIMA raise $1,015, which will be donated to the Centraide Organization of the Greater Montreal.
94 Canadian Underwriter October 2014
GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery
October 2014 Canadian Underwriter
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Food Fight! The Insurance Can Count Challenge between Worden Insurance Brokers of Oshawa and Gifford Associates Insurance Brokers of Ottawa once again successfully raised food donations for The Salvation Army of Oshawa
and The Ottawa Food Bank, respectively. This good-natured rivalry underlines the importance of community involvement and both brokerages performed well in raising donations during summer, which is generally a slow period
for food banks. Worden’s team collected 172 cans/food items and Gifford’s team collected 550 items. The duelling brokers acknowledge the important role that social media played in promoting the cause and con-
necting the insurance industry with the community at large. Both brokerages would like to thank all their staff members, clients and colleagues who helped out, and remind everyone to stay tuned for next year’s rematch!
Get the job. Done. TM
FOUND MY JOB AT
GALLERY
See all photos from this event at www.canadianunderwriter.ca/gallery
A.M. Best Company’s 2014 Insurance Market Briefing - Canada was held in Toronto on September 3. More than 250 insurance executives attended to hear A.M. Best rating analysts discuss the impact of current economic conditions and rating trends on members of the insurance industry in Canada. Attendees heard panelists discuss Canadian life, property and casualty and reinsurance.
VALUE. In today’s challenging insurance market, too many confuse value with price. At GroupOne, our personalized service, along with access to the best domestic and Lloyd’s markets, provides program options that protect your clients based on their specialized risks. With a 45-year history, unprecedented client retention and competitive rates, GroupOne is the Broker’s Source for vALue in standard, substandard, specialty and hard-to-place insurance. GroupOne Insurance Services 888-489-2234 www.grouponeis.com
“Now Serving…You”
Service Excellence. Delivered One Policy at a Time™ October 2014 Canadian Underwriter
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GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery
Catlin Canada hosted its Seaview, Sustainability and Family event on September 3 at Ripley’s Aquarium Canada. Industry associates and their families had the aquarium to themselves for the evening, which offered five different food stations throughout the venue and a live feeding of the rays at “Ray Bay.” The Catlin Seaview Survey, working with some of the world’s leading scientific institutions, is a unique global study that is dedicated to monitoring this change and communicating it to the world.
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GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery
Hannover Re hosted its End of Summer Boat Cruise on September 4. Industry partners were welcomed onboard the Oriole for a phenomenal day on Lake Ontario. Weather conditions were ideal as guests soaked up the sun and enjoyed a beautiful view of the Toronto islands and the city’s downtown core. Lunch and refreshments were served throughout the afternoon.
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG See all photos from this event at www.canadianunderwriter.ca/gallery
To help kick off the 2014 RIMS Canada Conference, Winnipeg, SCM Insurance Services hosted its annual RIMS Canada Cocktail Party at the Delta Winnipeg on September 13. SCM invited Canadian Women’s Curling Olympic Gold medalist (and Winnipeg resident) Jill Officer to speak on her experiences competing at the highest level.
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
See all photos from this event at www.canadianunderwriter.ca/gallery
As a warm-up for the 2014 RIMS Canada Conference, Winnipeg, Crawford and Company (Canada) Inc. held its annual RIMS Canada Conference dinner on September 13 at Hermanos Restaurant & Wine Bar in downtown Winnipeg.
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG See all photos from this event at www.canadianunderwriter.ca/gallery
The RIMS Canada Conference Winnipeg: ‘Crossroads: 2014’, September 14-17, kicked off the event with a Welcome Reception on September 14 at the Canadian Museum for Human Rights, sponsored by Allianz and RIMS Canada Council. The Canadian Museum for Human Rights is the first museum solely dedicated to the evolution,
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celebration and future of human rights. Their aim is to build not only a national hub for human rights learning and discovery, but a new era of global human rights leadership. The official opening of the CMHR was slated for September 20, 2014 but RIMS Canada delegates received a special sneak-peak at the welcome reception.
GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
The RIMS Ontario Chapter (ORIMS) presented the Donald M. Stuart Award to Anne Chalmers, vice president of risk and security for Teck Resources at the RIMS Canada Conference Winnipeg: ‘Crossroads: 2014’, on September 17. In her role at Teck Resources, Canada’s largest diversified mining, mineral processing and metallurgical company, Chalmers leads Teck’s Risk Group, a team responsible for its global risk management program. In addition to her responsibilities of risk management and corporate security, she oversees loss control, emergency services, the commercial insurance program, coordinates the Crisis Management Team for the operations of Teck Resources and its partnerships and chairs the Materials Stewardship Committee.
The award is widely considered Canada’s highest honour within the risk management field. The Donald M. Stuart Award has been bestowed annually since 1979 by the RIMS Ontario Chapter (ORIMS) to celebrate Canadians who have made outstanding contributions in the risk management profession. “Anne Chalmers brings a palpable passion to her work that has allowed her to successfully manage and elevate the global risk management program for one of the world’s largest mining companies,” Paul Provis, chair of the Donald Stuart Nominating Committee and vice president of ORIMS commented. ”Beyond her professional accomplishments, Anne continues to demonstrate a profound commitment to the future of risk management as an educator, lecturer, author
Donald M. Stuart Award recipient Ann Chalmers, Vice President of Risk and Security for Teck Resources
and, most importantly, a RIMS volunteer. It is with great honour that ORIMS presents the Donald M. Stuart Award to this most deserving individual.” Chalmers joined RIMS in the mid-1980’s and is a member of the Society’s British Columbia Chapter based in Vancouver. She is a member of RIMS Annual Conference Programming Committee, director on the Board of OIL Casualty Insurance Company in Bermuda, a director of Mining Insurance Group; a member of FM Global Risk Management Council, and is a director of STAND Foundation, a not for profit public foundation whose purpose is to support the enhancement of skills, knowledge and livelihoods of marginalized young adults in the Greater Vancouver area. “Every day the risk manage-
ment profession allows us to take on new challenges, interact with new people and departments and, collaboratively, develop and implement solutions that have a direct impact on our organization’s success,” Chalmers added. “Sharing my experiences has been extremely rewarding and I encourage others to get involved in this thriving risk management community and do the same. I am humbled and honoured to be recognized by my peers as this year’s Donald M. Stuart recipient.” Also presented at this year’s conference was the Fred H. Bossons Award, which annually honours the risk management professional who earns the highest marks on the three courses required to receive the CRM designation. This year’s winner is Joanne Chow, senior financial analyst for Brookfield Asset Management in Toronto.
(From Left to Right): RIMS President Carolyn Snow, Paul Provis of ORIMS, RIMS Ontario Chapter and Anne Chalmers
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
More than 60 companies and organizations providing products and services filled the Exhibit Hall at the 2014 RIMS Canada Conference in Winnipeg, September 14-16.
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG See all photos from this event at www.canadianunderwriter.ca/gallery
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
…Continued from Page 106… Exhibit hall at the 2014 RIMS Canada Conference Winnipeg, September 14-16.
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APPOINTMENT
GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
See all photos from this event at www.canadianunderwriter.ca/gallery
Alan Kennedy Assistant Vice President, Central Region Rod Bresciani, Vice President of Regional Operations & Broker Relations for Sovereign General Insurance is pleased to announce the appointment of Alan Kennedy as Assistant Vice President, Central Region. In this role, Alan will concentrate on leading a team of highly seasoned professionals in the Central Region while promoting our brand and furthering relations with our broker partners. Alan’s career spans over 20 years in the P&C Industry. With strong technical skills focussing on specialty risks and extensive marketing and business development, Alan will continue to expand on the successes in this region. Please join us in welcoming Alan to the Sovereign leadership team. Sovereign General is a Canadian owned and operated property and casualty insurer headquartered in Calgary, Alberta with 270 staff operating in eight regional and service offices from coast to coast. Sovereign provides solutions for the specialized and complex insurance needs of Canadian businesses through a national independent brokerage network. To learn more visit SovereignGeneral.com.
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APPOINTMENT GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG See all photos from this event at www.canadianunderwriter.ca/gallery
A.R.S. Assessment Rehabilitation Services held its RIMS Canada Conference cocktail reception on September 14 at the Earls Kitchen + Bar in Winnipeg.
Tracy Fata, BSc, FCIP, CRM CAIW President 2014 – 2015 The Canadian Association of Insurance Women (CAIW) is pleased to announce the appointment of Tracy Fata as President for the 2014 – 2015 term. Tracy is currently employed by the Portage Mutual Insurance Company in Edmonton, Alberta as the Regional Manager of Branch Operations. Tracy has been in the insurance industry since 1987 having worked with both Brokers and Insurers. Tracy is a Past President of the Edmonton Insurance Association (EIA) and has been an active member since 2004. She has served on the Board of Directors of CAIW from 2007 to 2009 and on the Executive Board since 2010. Tracy coordinates the annual EIA Food bank drive. She is also a volunteer on the board for the Zorianka Ukrainian Dancers and the Bent Broom Curling Club. In her spare time Tracy enjoys curling and golfing. CAIW is made up of 11 Chapters across Canada and provides excellent opportunities for their members to better themselves both professionally and personally through networking and continuing education.
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AIG hosted its annual RIMS Canada Conference cocktail reception on September15 on the Terrace Floor of the Radisson Hotel Winnipeg Downtown.
The ARC Group Canada hosted a reception at the RIMS Canada Conference in Victoria at Tavern United in downtown Winnipeg on September 15.
GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG See all photos from this event at www.canadianunderwriter.ca/gallery
Zurich Canada hosted its annual RIMS Canada Conference dinner on September14 at the historic Fort Gibraltar in St. Boniface, Manitoba. St. Boniface – sometimes called the French Quarter of Winnipeg – boasts the largest French speaking community West of the Province of Quebec. Today, the major purpose of Fort Gibraltar is to reflect key elements of life in the Red River valley from 1815 to 1821. The themes at the venue provide witness not only to the importance of the fur trade as an economic development factor in Manitoba’s history, but also to the lifestyle of the settlement and the roles played by the Metis, the settlers, the explorers, the Aboriginal peoples, the companies and the Voyageurs.
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Service Excellence.
Delivered One Policy at a Time™ With a 45-year history and an unprecedented client retention rate, GroupOne is the Broker’s Source for standard, substandard, specialty and hardto-place insurance programs. Our personalized service, along with access to the best domestic and Lloyd’s markets, provides you with best-in-class programs to suit your clients’ needs. Please contact us and let us introduce you to the standard in service. GroupOne Insurance Services 888-489-2234 www.grouponeis.com
“Now Serving…You”
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
See all photos from this event at www.canadianunderwriter.ca/gallery
Catstrophe Response Unit (CRU) hosted a cocktail reception including live entertainment at the RIMS Canada Conference on September15 at the the Radisson Hotel Winnipeg Downtown.
APPOINTMENT
GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
See all photos from this event at www.canadianunderwriter.ca/gallery
FirstOnSite Restoration hosted annual RIMS Canada Cocktail Luncheon at the RIMS Canada Conference on September 16 at 295 York (formally “Lobby on York”) in downtown Winnipeg.
Lawrie Savage The Property and Casualty Insurance Compensation Corporation (PACICC) is pleased to announce the election of Lawrie Savage as Chair of the Company’s Board of Directors Lawrie Savage joined the Canada Department of Insurance in Ottawa in 1966 and from 1977 until 1985, he headed up the division responsible for regulation of federal property and casualty insurance companies. He has been a senior executive in the Canadian insurance industry and, from 1990 until 1995, served as Superintendent of Insurance for the province of Ontario. Over the past 20 years Lawrie has been providing consulting services in financial regulation. He is a director of ICICI Bank of Canada and a Program Leader and member of the Insurance Advisory Board of the Toronto Centre. Lawrie is also an Executive Fellow of The School of Public Policy at the University of Calgary, where he is involved with the newly established Financial Markets Regulatory Program. He holds a BSc in mathematics from the University of Calgary and an MBA from the Ivey Business School in London, Ontario. Established in 1989, PACICC is a non-profit corporation serving as the P&C insurance industry’s financial guarantee fund in Canada. PACICC’s mission is to protect eligible policyholders across Canada from undue financial loss in the event a member insurer becomes insolvent. PACICC is funded entirely by its member insurance companies. For more information about PACICC visit www.pacicc.ca
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG
The 2014 RIMS Canada Conference Winnipeg featured ‘The Crossroads FORKS GALA’ on September 16 at the RBC Convention Centre. The evening included a cocktail reception followed by a sit down dinner then dance to the live music of entertainment group Alter Ego.
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GALLERY – 2014 RIMS CANADA CONFERENCE WINNIPEG See all photos from this event at www.canadianunderwriter.ca/gallery
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GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery
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The Canadian Broker Network’s Annual Presidents’ Dinner was held in downtown Toronto on September 7 at St. Lawrence Market in The Market Kitchen, with chefs provided by My Place for Dinner. The broker members of Canadian Broker Network, along with Steve Frye and Eric Walker of CW Group, were joined by a dozen or so presidents of major insurers for an evening of cooking, dining and networking. A good time was had by all!
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(Photos courtesy of Andrew Frye)
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1 Mike Robinson, Principal – PBL Insurance; Daryn McLean, Principal – Moore McLean Insurance Group; Ellen Moore, President & CEO – Chubb Insurance; Harold Morrison, Executive Vice President, Chief Global Field Officer – Chubb Insurance (USA) 2 Robin Durrant, Principal – Capri Insurance; Silvy Wright, President – Northbridge; Andrew Kemp, Principal – CMW Insurance Brokers 3 Steve Frye, Partner – CW Group; My Place for Dinner Chef; John Hennessy, President & COO – CNA Canada; Brian Scott, Principal – Smith Petrie Carr & Scott Insurance; Sharon Ludlow, President – Aviva Canada; Harold Morrison, Executive Vice President, Chief Global Field Officer – Chubb Insurance (USA)
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4 John Barclay, President – South Western Group; Ellen Moore, President & CEO – Chubb Insurance; Daryn McLean, Principal – Moore McLean Insurance Group; Andrew Kemp, Principal – CMW Insurance Brokers; Dan Lawrie, Principal – Dan Lawrie Insurance Brokers; Eric Walker, Partner – CW Group 5 Foreground: Greg Somerville, President & CEO – Aviva Canada; Jean-Francois Blais, President – Intact Insurance Background: Silvy Wright, President – Northbridge; Pierre Vézina, Principal – Vézina Assurances 6 John Hennessy, President & COO – CNA Canada; Sharon Ludlow, President – Aviva Canada; Tim Miller, Principal – Capri Insurance 7 Harold Morrison, Executive Vice President, Chief Global Field Officer – Chubb Insurance (USA) 8 Andrew Kemp, Principal – CMW Insurance Brokers 9 Enjoying the fruits of their labour!
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10 Hard at work preparing the feast under the supervision of the My Place for Dinner Chefs
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