Canadian Underwriter April 2015 by Annex Business Media

C A N A D A’ S I N S U R A N C E A N D R I S K M A G A Z I N E . C A N A D I A N U N D E R W R I T E R . C A

A P R IL 2 0 1 5 PM40069240

Brokers in Action BY GREG MECKBACH

Private Thoughts BY BRENDA ROSE

Mining for Treasure BY MARC-ANDRE GIGUERE

move “We’d to be closer

to our grandkids.” Greg & Ameena, 62 years old

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CANADIAN UNDERWRITER

VOL. 82, NO. 3, April 2015 Canada’s Insurance and Risk Magazine. Published by newcom business media inc.

www.canadianunderwriter.ca

Cover Story

Brokers in Action

Across Canada, insurance brokers are working to help protect their customers in the wake of a wide variety of challenges, including restrictions on sewer back-up coverage, underinsurance of earthquake risk, overland flood, auto premium cuts and plenty of competition from both traditional and non-traditional players. By Greg Meckbach

features

Saskatchewan’s proposed overhaul of its insurance legislation, the first in decades, seeks to add provisions for, among other things, fair and unfair practices, insurance intermediaries and self-evaluative audits.

Privacy Risks

Data Mining

In years past, brokers’ privacy risk may have garnered far less attention than other types of risks. But the little risk has grown and brokers are advised to adopt prevention strategies.

Today’s data-rich environment GREG MECKBACH offers insurersBYan opportunity to move toward tailored, Private ThoughtsBy Carol Lyons & Ke-Jia Chong more profitable offerings BY BRENDA ROSE based on each customer’s 28 Spear Phishing for Treasure specific usageMining and needs. Cyber criminals have BY MARC-ANDRE GIGUERE By Marc-Andre Giguere perpetrated on banks around the world a new form of phishing that has already proved expensive and should serve as a caution that all industries need to develop cyber resilience.

APRIL 2015 PM40069240

20 Saskatchewan Insurance Act

By Brenda Rose

Brokers in Action

Overland Water Coverage

Staged Collisions

The first overland water protection for residential properties, working with sewer back-up coverage, is set to soon be introduced.

The “car accident business” is big. A co-ordinated campaign by all industry players is key to driving back auto insurance fraud.

By Sharon Ludlow

By Ralph Palumbo

By Kadey B.J. Schultz & Aleksandra Zivanovic

46 Water Damage Insurers have responded to the rise in water-related events in several ways, including with higher premiums and exclusions. Consumers are encouraged to get advice from brokers to help them mitigate losses should an event occur. By Glenna Boudreau & Karen Slaunwhite

52 Cyber Attacks “While nothing is more abundant than data, nothing is more uncertain than the security of that data,” notes a 2012 report from RIMS. Three years on and concerns around the rapid acceleration in cyber attacks has grown even more pressing. By Sean van Zyl

April 2015 Canadian Underwriter

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Editor Senior Publisher Angela Stelmakowich Steve Wilson and resources from all segments of Editorto insurance professionalsSenior Publisher astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Editor Stelmakowich Senior Wilson Publisher Angela Steve Editor Senior@InsuranceMedia Publisher (416) 510-6793 the industry, providing marketers with aTwitter: range of specialized Angela Stelmakowich Steve Wilson Angela Stelmakowich astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Steve Wilson (416) 510-6800 astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca (416) 510-6793 Twitter: @InsuranceMedia Associate Editor steve@canadianunderwriter.ca and highly effective marketing communications opportunities. (416) (416)510-6793 510-6793 Twitter: @InsuranceMedia (416) 510-6800 Greg Meckbach Twitter: @InsuranceMedia Art Director Associate Editor (416) Associate Editor (416)510-6800 510-6800 gmeckbach@canadianunderwriter.ca Gerald Heydens Associate Editor Greg Meckbach Art Director Greg Meckbach Twitter: @CU_Greg Art Director Greg Meckbach Art Consultation Director gmeckbach@canadianunderwriter.ca Gerald Heydens Art gmeckbach@canadianunderwriter.ca Gerald Heydens Heydens (416) 510-6796 gmeckbach@canadianunderwriter.ca Gerald Twitter: @CU_Greg Twitter: @CU_Greg Sascha Hass ArtArt Consultation Consultation Twitter: @CU_Greg (416) 510-6796 (416) 510-6796 Online Editor ArtInsurance Consultation Sascha Hass Sascha Hass Canadian Underwriter’s Media Group is committed Production Manager (416) Editor 510-6796 Harmeet Singh Online Sascha Hass Online Editor Gary White to providing the most timely and relevant Production Manager news, information Jason Contant hsingh@canadianunderwriter.ca Production Manager Online Editor Harmeet Singh Gary WhiteManager (416) 510-6760 jcontant@canadianunderwriter.ca and resources to insurance professionals from all segments of Production Twitter: @CU_Harmeet Gary White Harmeet Singh (416) 510-6760 hsingh@canadianunderwriter.ca (416) 442-5600, Ext. 3652 Gary Whitewith a rangeService (416) 442-5600 ext. 3652 the industry, providing marketers of specialized (416) 510-6760 Subscriptions/Customer National hsingh@canadianunderwriter.ca Twitter: Subscriptions/Customer Service Associate@CU_Harmeet Publisher (416) 510-6760 Gail Page and highly effective marketing communications opportunities. Twitter: @CU_Harmeet (416) 442-5600 ext. 3652 Claims Bona Lao Associate Publisher Subscriptions/Customer Service Paul Aquino gpage@bizinfogroup.ca (416) 442-5600 ext. 3652 blao@annexnewcom.ca Subscriptions/Customer Service Paul Aquino paul@canadianunderwriter.ca Gail Page Manual Associate Publisher (416) 510-5187 (416) 442-5600, Ext. 3552 Gail Page Twitter: @InsuranceCanuk paul@canadianunderwriter.ca gpage@bizinfogroup.ca InsuranceMarketer.com Associate Publisher Paul Aquino (416) 510-6788 gpage@bizinfogroup.ca Circulation Manager Twitter: @InsuranceCanuk (416) 510-5187 Circulation Manager Paul Aquino paul@canadianunderwriter.ca Mary Garufi (416) 510-5187 Account Manager (416) 510-6788 Mary Garufi paul@canadianunderwriter.ca Twitter: @InsuranceCanuk Circulation Manager mgarufi@annexnewcom.ca Michael Wells mgarufi@bizinfogroup.ca Twitter: @InsuranceCanuk National Circulation Manager (416) 510-6788 (416) 442-5600, Ext. 3545 Account Manager Mary Garufi the insurance industry’s social network michael@canadianunderwriter.ca Claims (416) 442-5600 ext. 3545 (416)510-5122 510-6788 Mary Garufi Michael Wells (416) mgarufi@bizinfogroup.ca PrintManual Production Manager Account Manager mgarufi@bizinfogroup.ca InsuranceMarketer.com michael@canadianunderwriter.ca (416) 442-5600 3545 Phyllis Wright ext. Print Production Manager Account AccountManager Manager Michael Wells (416) 442-5600 ext. 3545 (416) 510-5122 Christine Giovis Phyllis Wright President Michael Wells michael@canadianunderwriter.ca Print Production Manager christine@canadianunderwriter.ca INSURANCE the insurance industry’s social network Jim Production Glionna michael@canadianunderwriter.ca Print (416) 510-5122 Account Manager Phyllis Wright Manager President (416) 510-5114 DIRECTORY (416) 510-5122 Vice President & General Manager Phyllis Wright Elliot Ford Creighton insBlogs Bruce Account Manager Account Manager President Joe Glionna INSURANCE eford@canadianunderwriter.ca Account Manager Elliot Ford President Elliot Ford Bruce Creighton Vice President DIRECTORY (416) eford@canadianunderwriter.ca Elliot510-5117 Ford Bruce Creighton eford@canadianunderwriter.ca Alex Papanou Insurance Blogs hosted by Canadian Underwriter (416) 510-5117 insBlogs Vice President eford@canadianunderwriter.ca (416) 510-5117 Property & Casualty Insurance Newswire Vice President Papanou Property & Casualty InsuranceAlex Newswire (416) 510-5117 Alex Papanou

Insurance Limited, James Cameron, president of Cameron &Consultants Associates was recognized by the CIP Cameron &Consultants Associates Limited, Insurance Society when hebyreceived its Insurance Consultants Limited, was the CIP 12recognized Entrepreneurial Spirit Established Leader Award. was recognized the CIPits Society when heby received For Clay Germain, managing BY ANGELA when STELMAKOWICH Society he received its Established Leader director of AC&D Award. Insurance Established Leader Award. BY ANGELA STELMAKOWICH Services and first vice BY ANGELA STELMAKOWICH president of the Insurance Brokers Association of British Columbia, a career in insurance has SPECIAL FOCUS proved a perfect fit for his SPECIAL FOCUS entrepreneurial spirit and 6SPECIAL Editorial love ofFOCUS a varied environment.

6 By Angela Editorial Stelmakowich 86 Marketplace Editorial 8 Marketplace 56 Moves & Views 8special Marketplace focus 56 Moves & Views 58 Gallery 56 Moves & Views 8 Editorial 58 Gallery 58 Gallery 10 Marketplace 56 Moves & Views 58 Gallery

4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014 4

Canadian Underwriter April 2015

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14 Leading by Example James Cameron, president of 14 Leading by Example Cameron & Associates 14 Leading by Example James Cameron, president of

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Curtain call for entries. Submit your nominations for the Annual CIP Society National Leadership Awards.

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editorial

Push and Pull

The fact that under-25s are more interested in financial security than previously thought is, ultimately, a positive. Angela Stelmakowich Editor Canadian Underwriter astelmakowich@ canadianunderwriter.ca

Canadian Underwriter April 2015

For those in the property and casualty insurance industry, be it broker, company or vendor, it is an oft-asked question that, once answered, is simply asked once again: What do customers want? In Canada’s ever-changing p&c environment — a place where data is king, analytics is queen and customer demand reigns supreme — it is necessary to be prepared to deal with new conditions and to anticipate who the new “customers” will be. One sure bet for those new customers, as time demands, will be millennials. But the group’s review of industry response to date has been a mix of good and bad. A new Towers Watson survey — involving 7,136 consumers in the United Kingdom, France, Germany, Italy, Spain, The Netherlands and Turkey — shows price-conscious buyers under 30 are driving a fundamental shift in how insurance is purchased. Technology advances are increasingly distancing the millennial generation of buyers from traditional purchase channels and sources of advice and influence. Tammy Richardson, U.K. head of insurance management consultancy at Towers Watson, notes the traditional broker role is on the decline as a new generation of buyers drive a rise in direct sales online, achieved by “pulling” information from comparison websites, smartphones and social media and responding to “pushed” communication. Richardson says the shift

may present an opportunity for insurers, if they have the right digital distribution technology to allow consumers to more easily compare and choose financial products tailored to their preferences. This may sound negative for brokers, but there are positives. One may be that surveyed under-25s are far more risk aware and interested in financial security than previously thought, underlining the need for insurers to find new methods of engaging with these younger buyers. Although survey results point to insurers, it is a caution (and an opportunity) that can and should also apply to others in the p&c space. The fact that under-25s are more interested in financial security than previously thought is, ultimately, a positive. True, they may be looking very closely at price, expecting greater flexibility in what devices they use for communicating, and demanding the right digital distribution technology be in place. But they are also looking for protection. And this is where brokers — who will need to up their games by learning even more about their customers, being available when and by what means their customers want, and using the information they have to better customize and anticipate wants and needs — can certainly play. Perhaps, it will not be as big a pool of customers as once was; perhaps it will be. But as younger customers age, accumulate more and

their circumstances change, the need for responsive service, customization and understanding will increase. There are those who argue a generation as comfortable with technology as any has ever been will, upon acquiring more things to protect, naturally seek out the guidance of a trusted advisor, knowing that not every need can be met, or every risk understood, with a single click. The future will still include a segment of the market driven by relationships, although, for brokers, these surely will need to transform to continue to inspire the label, “trusted advisor.” And there may be no better way to forge relationships with millennials — potential clients for decades — than to change with the flow of customer demands while holding firm to broker principles. For insurers, as for brokers, the survey shows it will be important to have greater transparency in product benefits and effective use of data and analytics to best understand customer behaviour. What if p&c players are not ready (or willing) to step up to meet the change in how buyers use technology to make financial decisions? They should expect other digital businesses with relevant expertise to do so. Ultimately, moves that capitalize on technology and the promise of data will be good not only for millennials, but should inspire responsiveness and innovation that are attractive to all.

WHAT DOES IT MEAN TO BE ACE INSURED?

Participant Accident Insurance | acegroup.com/ca It means my team, coaches and other members of my organization are protected by a sports accident plan that provides the benefits we need. ACE understands how to supplement our general liability programs with a separate accident and medical plan in order reduce liability and costs associated with retained claims. ACE knowing their game, means we can focus on ours.

息 2015 ACE Group. In Canada, coverages are underwritten by ACE INA Insurance and ACE INA Life Insurance. Coverages may not be available in all locations and are subject to actual policy wording. ACE速, ACE logo速, and ACE insured.速 are registered trademarks of ACE Limited.

marketplace

Canadian Market QUEBEC BROKERAGE sector A model: STUDY Quebec’s brokerage industry is the driving model for damage insurance, notes a new study, sponsored by BMO Bank of Montreal. The Regroupement des cabinets de courtage d’assurance du Québec commissioned Raymond Chabot Grant Thornton to provide an overview. Key findings include that in Quebec, the brokerage sector is the primary distribution model for damage insurance, representing 52.28% of the Quebec market, or $4.48 billion in premiums; and the annual economic benefits associated with the industry amount to $657 million and are supported by 10,356 direct and indirect jobs.

RSA TO soon OFFER TELEMATICS for AUTO INSURANCE customers RSA Canada plans to launch towards the end of 2015 telematics for auto insurance customers across the country, Donna Ince, senior vice president of personal lines, said at a company event for brokers in downtown Toronto. “At RSA, we are fortunate that our global footprint has allowed us to see first hand the benefits of telematics,” based on the experience in other markets, including the United Kingdom and the United States, Ince said. 10 Canadian Underwriter April 2015

Several Canadian insurers are already providing usagebased insurance using telematics technology. “Our overarching strategy in Canada remains unchanged,” Rowan Saunders, RSA Canada’s president and chief executive officer, said during the same broker event in early March. “We remain completely committed to the broker channel. We have no plans to exit any segments of our business and, in fact, we are seeking opportunities to build and develop more,” Saunders said.

INGENIE ROLLS OUT AUTO INSURANCE for YOUNG DRIVERS IN ONTARIO Ingenie Canada Inc.’s new auto insurance offering in Ontario, which uses telematics technology and targets drivers aged 24 and younger, allows for discounts of as much as 25%. “Young drivers insured by ingenie install a Smartbox in their car, which builds a picture of their driving style based on indicators such as speed, acceleration, braking and cornering,” the company reports. Ontario customers will receive feedback every 10 days, either through a mobile app or via the ingenie website. Underwritten by Pilot Insurance Company, part of Aviva Canada, the telematics product is being offered directly through ingenie. ca. It is also being rolled out at Ontario brokerages through Insurance Brokers Association of Ontario.

new PRIVACY, NETWORK LIABILITY COVERAGE FOR CANADIAN companieS ACE Group has announced the availability of privacy and network liability coverage for private companies in Canada. The new offering includes the option to add the same broad privacy and network liability coverage that ACE offers on a standalone basis. Highlights of the coverage include privacy liability, data breach fund, network security liability and options for network extortion, business interruption and digital assets coverage.

SUITE OF FLOOD ANALYTICS launched FOR CANADIAN INSURANCE MARKET: WILLIS Willis Re reports that it has unveiled a “new suite of flood solutions offering unprecedented analytical capabilities that will enable insurers to proactively manage Canada flood accumulations.” The new solutions include a range of tools that deliver the ability to develop and enhance underwriting and risk transfer strategy, manage and monitor portfolio accumulations, and calculate probable maximum loss estimations. “Market demand in Canada for a high-quality, highresolution flood solution has never been greater,” suggests Geoffrey Lubert, managing director of Willis Re Canada. “Insurers need to leverage the latest science and analytical methods to evaluate and manage local and regional flood exposure.”

Regulation DRAFT REGULATIONS issued FOR DEMUTUALIZATION OF P&C companies Canada’s finance department has issued long-awaited draft regulations for the demutualization of Canadian property and casualty insurance companies. Available online at the Canada Gazette website as of February 27, there are two sets of draft regulations, one for insurers with only mutual policyholders and one for insurers with both mutual and non-mutual policyholders. Economical Insurance, which has been pursuing demutualization for four years, called the announcement a “significant milestone,” since the regulations are needed to allow p&c companies that wish to change their corporate structures to become companies with share capital. “With the greater access to capital that demutualization can bring, Economical could make the significant investments it needs to compete on an equal footing with other p&c companies that do not face the same constraints on financial flexibility imposed by the mutual structure,” says Gerald Hooper, chair of Economical Insurance’s Board of Directors. The draft regulations are subject to a comment period ending March 30. Once final regulations are in force, companies may formally begin the demutualization process.

marketplace

INSPECTION POWERS UNDER ONTARIO BILL in force Sections of an Ontario law aimed at reducing auto insurance claims costs, which would give inspectors power to enter premises without a search warrant and remove records for review, took effect April 1. Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, is an omnibus bill passed into law November 20. Not all provisions have taken effect, but a section changing the Consumer Protection Act to provide for the appointment of inspectors and inspection powers came into force April 1. The bill notes a provincial inspector “may, without a warrant, enter and inspect any place in order to perform an inspection to ensure this Act is being complied with.” In addition, an inspector may “require the production of a record or other thing that the inspector thinks may be relevant to the inspection” and to “remove for review and copy a record or other thing that the inspector thinks may be relevant to the inspection.”

Risk ALBERTA GOVERNMENT MUST UPDATE FLOOD MAPPING GUIDELINES Alberta’s Office of the Auditor General reports the province’s environment and sustainable resource development department produces “technically sound flood

hazard maps,” but the maps are not always up to date. The comments come almost two years after June 2013 floods in southern Alberta caused Canada’s most expensive natural disaster, approximately $1.7 billion in insured losses. The department, which is responsible for flood mitigation in Alberta, “does not have historical information on the consequences of previous floods, such as lives lost, injuries, property damage and business interruption,” notes the auditor general’s report. Although the department produces technically sound flood hazard maps, its “mapping guidelines have not been updated to deal with all types of flood hazards,” including geo-hazard events such as debris flows or debris floods or the risk that erosion and rapid channel change will cause flooding. A recent review of Canadian floodplain mapping programs estimates that Alberta requires another 770 kilometres of river mapping to document its flood hazard areas, the report adds.

MANITOBA TO INSTALL SPRINKLERS IN PERSONAL CARE HOMES The Manitoba Office of the Fire Commissioner plans to spend $7 million to install sprinklers and other fire safety improvements in 24 personal care homes and hospitals across the province. Provincial labour minister Erna Braun, who is also responsible for the Office

of the Fire Commissioner, reported in mid-March that the provincial government is accepting all the recommendations of the Fire Safety Task Force report on ways to improve fire safety in care and treatment facilities, and has started implementation on some changes. The report estimated the cost of implementing all recommendations would be approximately $125 million, with the government committing more than $70 million for fire and life-safety upgrades over 10 years.

Technology TECHNOLOGY PROVIDES UP-TO-DATE VIEW ON GLOBAL TERRORIST ATTACKS Impact Forecasting, Aon Benfield’s catastrophe model development team, is applying a new blast engineering approach to provide a more realistic understanding of the potential range of losses from a terrorist attack. The company reports that its terrorism risk experts utilize computational fluid dynamics (CFD) software developed over many years in conjunction with the United States military and government to define an explosion and how it moves within a 3D urban environment. The new approach breaks from traditional blast radius modelling by taking into account a number of nuances that are absent in current blast analysis that can have a substantial impact on losses.

“We can now apply CFD analysis to any city across the world upon client request, quantifying the effect of location and blast size uncertainties to highlight the variation of the possible impacts,” says Mark Lynch, who leads political risk model development at Impact Forecasting.

Reinsurance EXTREME COLD in NORTH AMERICA FOURTH MOST COSTLY NAT-CAT IN 2014 The unusually cold winter last year in the eastern United States and Canada was the insurance industry’s fourth costliest natural catastrophe worldwide in 2014, Munich Re reports. The winter damage both north and south of the border amounted to overall losses of US$2.5 billion and insured losses of US$1.7 billion. “Although temperatures moderated somewhat by mid-January, the persistent ridge over the northeast Pacific kept forcing Arctic air southward over eastern North America for the next three months, resulting in one of the coldest winter seasons in decades,” Munich Re notes. Among the 50 major loss events for the insurance industry in 2014, the report notes, was the hailstorm in Airdrie, Alberta, the severe storms August 7 to 8 in Alberta, and the severe floods and severe storms in Canada from June 28 through July 1. April 2015 Canadian Underwriter

Profile

Entrepreneurial Spirit Angela Stelmakowich Editor

A career in insurance has proved a perfect fit for Clay Germain’s entrepreneurial spirit and love of a varied environment. Addressing the needs of large commercial clients may not be the same as managing some high school chums as part of a start-up landscaping business, but both have been attractive to Clay Germain. “I’ve always had an entrepreneurial background. I got this from my father. I’ve always wanted to own and run various businesses,” says Germain, now managing director of Vancouver-area AC&D Insurance Services, which has five offices in British Columbia. Germain’s entrepreneurial spirit persisted as landscaping led to other things, including what developed into a keen interest in the real estate industry. That interest was transformed into knowledge when he completed a marketing management and real estate course at the British Columbia Institute of Technology, and that education 12 Canadian Underwriter April 2015

blossomed into pride when, at 19, he sold his first house. But life selling residential real estate took a turn one day while Germain, currently first vice president of the Insurance Brokers Association of British Columbia (IBABC), was buying a car and saw a mobile auto dealership insurance broker in action. “I thought the job looked really fun. I thought it looked really exciting,” he recalls, adding that the work appeared to be fast-paced and the broker had a great attitude. “I thought, ‘Hey, I should maybe explore a career in the insurance business.’” And so he did. Although an entirely different area, at its heart, insurance fed his entrepreneurial bent while also offering variety and many points of interest.

at the front counter. From there, he “learned home insurance, then commercial insurance and then I became a manager and I managed the personal lines section of their head office in Delta,” Germain says. “One of the things that I always liked about the insurance business was the various forms of ownership opportunities that were available,” he notes. So

“Our building code was designed to just minimize the loss of life. Physical damage to property resulting from an earthquake will be huge.”

GROUND UP Germain’s first job was at Atkinson & Terry Insurance Brokers’ office in New Westminster, British Columbia. Over the course of his 12 years there, he worked at a number of different locations in several different positions, securing progressively more responsible jobs over time. “I learned the business from the ground up,” he says. The first phase of building his technical knowledge began with his very first job at Atkinson & Terry Insurance Brokers, selling auto insurance

when an opportunity came along to become a partner in a brokerage in Coquitlam, where he had grown up, “this seemed like the perfect fit for me. I knew there would be opportunities to grow, so I just jumped on it.” Germain has a hand in owning or managing three locations and is partnered with Jack Meier, president and chief executive officer of The InsureBC Group, a group of general insurance brokerages with 75-plus offices in British Columbia, as well

as locations in the United States and The Netherlands. Germain says he learned a lot from the five partners at Atkinson & Terry Insurance Brokers, skills he uses to this day, and valued the experience. “I learned my management skills and the actual technical insurance knowledge needed with them,” he says, adding he thinks it is vital to know the business from the ground up. As for the partnership opportunity Meier provided him, Germain says “it is with the InsureBC Group that I have gained most of my knowledge of running a successful office, in particular, managing people.” Day to day, his activities include dealing with the largest commercial insurance accounts and managing staff, as part of a team effort. “I consider myself to be a trusted advisor just like a lawyer or an accountant. I like to think of myself on the same level so that my customer views me the same way. I want my customer to be able to call me for all things insurance and for me to give him answers and develop his trust,” Germain says. “I want my staff to hear me and see me deal with my customers so they can learn.” Learning was also among the reasons Germain decided to serve on IBABC’s board. “I guess the biggest one would be that I thought it would

Photo: Leanne Scherp

Profile

be great to work with other like-minded individuals and I thought learning other points of view and the sharing of ideas would be valuable.”

CHALLENGES AHEAD Various viewpoints will, no doubt, be of use as brokers, provincially and federally, address challenges in an ever-changing environment. In British Columbia, Germain says that one clear challenge is earthquake, about which many misconceptions persist. “A lot of people think that the damage will be minor. But, really, our building code was designed to just minimize the loss of life. Physical damage to property resulting from an earthquake will be huge.”

“Whether it’s a business or an individual, there’s the loss of use aspect,” Germain says, noting that a business could be down for a year or longer following a big quake. People may also believe the provincial government will step in to cover losses, Germain says. But disaster financial assistance programs are for uninsurable losses. “Because earthquake losses are insurable, they’re not eligible for this compensation.” The same questions arise around overland flood, a hot topic regardless of region. Noting that Aviva Canada has plans to release an overland water product — Germain commends the insurer for helping to find

a solution — that begs the question of whether or not provincial disaster assistance would apply. What does the introduction of insurance mean for those expecting to receive aid? he asks. “Now that insurance is available for it, that fund, we don’t necessarily know if it will be available,” Germain says. These are early days, of course, but it is an issue that IBABC is watching closely. Also top of mind for IBABC will be the review of how to improve the preparedness of British Columbians in the event of a major catastrophic earthquake, Germain says. The association will be among the stakeholders working with the provincial

government to implement the report recommendations. IBABC will also be looking to offer input on another big issue, the British Columbia Law Institute’s review of the Strata Property Act. The institute is expected to submit recommendations to government later this year. More generally, Germain says he would like to see process improvements to help enhance efficiency and minimize double entry for brokers. “Just about every insurer that we deal with has their own portal. These portals are really helpful, but I think there can be some improvements that can be made with integrating them with various broker management systems.” Germain also supports any efforts by both the industry and individual brokerages to help make the insurance industry, which seems to be an afterthought as a career choice, a first choice. “I think one of the ways to do this is make it more fun,” he says. So beyond industry events, individual brokers “need to bring fun into their own individual offices in a style that’s suitable to them,” he says. “We’re definitely heading into some interesting times,” Germain notes, but suggests “most of the people I talk to, I think, are excited about these changes.” April 2015 Canadian Underwriter

The Little Risk that Could

Vice President and Partner, FCA Insurance Brokers, and Technology Champion, Insurance Brokers Association of Canada

Once upon a time, not so very long ago, a diminutive risk called privacy dwelled in brokers’ offices. He was not a very large risk, at least not compared to his much more substantial siblings, including errors and omissions (E&O), and his chances to expand were limited. Over time, however, the little risk started to grow, nourished by the increasing information stores to be found in brokerages. Cleverly, too, he disguised

14 Canadian Underwriter April 2015

himself, calling himself cyber risk, and for a while deflected attention onto technology enterprises. But eventually the day arrived when brokers had to recognize that privacy risk had developed into a full-fledged hazard, a threat requiring concentrated discipline and strategy to tame.

GROWING LARGER Brokers have always had a privacy exposure regarding their customers’ information. Intermediaries must assemble vast quantities of detail, often containing clues as to clients’ identity, habits or preferences, which they share as needed with potential providers and, otherwise, protect confidentially. What has changed in recent years, though, is the magnitude of risk. With the rise of analytics and intensified computing power, the amount of collected information has exploded. Data is much more granular and individualized, and it is recognized as a valuable asset in itself, both within the insurance industry and also by other outside interests. The Internet’s rapid-fire delivery has exponentially increased the distance over which information can be dispersed in seconds, while rising litigiousness means that the likely penalties, costs

Illustration by Scot Ritchie

Brenda Rose

Brokers’ privacy risk is no longer an afterthought. In years past, privacy risk may have garnered far less attention than more commonly acknowledged risks, including errors and omissions. But the little risk has now grown large enough that brokers are well-advised to adopt both prevention and mitigation strategies.

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“You buy insurance — the key is when you actually have to make a claim.” ~ Christine Nelson Economical policyholder

Christine Nelson and her travelling companion were excited to be on a road trip to Vancouver to meet mutual friends. But one unlucky lane change later, she was left with a crumpled car and derailed plans. Unsure what to expect when she dialed the number on her insurance slip, all of her worries were alleviated when Economical’s friendly claims staff answered her call. Because their story is ours too. Watch real claims journeys at economicalinsurance.com/stories

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to manage breaches and potential thirdparty compensation are all climbing apace. The increased scope of privacy risk is apparent in the numbers from real data breach incidents. Statistics vary widely, but invariably research shows mounting costs. NetDiligence’s 2014 Cyber Claims Study, for example, which surveyed insurers on paid cyber claims, estimated a per-record cost of $956, an almost 300% increase from 2013. The figure represents a full gamut of costs, ranging from corrective technology to notification expenses, production downtime and reputational damage. All too often, business owners, including brokers, can fail to appreciate the very real dangers created by their own information exposures. This can be a serious mistake. An IBM study shows that financial and insurance organizations, not technology companies, are the most targeted by criminals, while the NetDiligence project noted that 23% of claims occurred at organizations with less than $50 million in revenue. Breaches do not result only from deliberately targeted attacks; human errors often also play a role. Brokers must recognize the significance of the personal information amassed within their systems. Protecting that data from exposure using classic risk management approaches, however, can be challenging, when both the threat and the potential damages are constantly changing. It is also important to remember that standard E&O policies are not intended to respond to claims alleging negligence in protecting privacy. Even though brokers may acquire custody of someone’s information through the course of their business activities, the definition of “professional services” rendered by them would not be deemed to include safekeeping of data. Nor, of course, does standard commercial general liability cover the kinds of loss resulting from privacy breaches. Brokers looking to manage privacy risk through insurance need separate, specific coverage. 16 Canadian Underwriter April 2015

Hugh Fardy, senior vice president at the CG&B Group, which stewards a national brokers E&O program underwritten by Swiss Re, confers regularly with brokers learning to manage their cyber risk. Observes Fardy, “Insurance brokers like other businesses are working to understand and establish their exposures related to the possession of others’ personally identifiable information. In conjunction with their E&O insurance, we have made available a minor extension for breach of data exposures subject to confirmation of basic protections being in place. A disappointing number of brokers have elected to take advantage of this offer.”

Risk reduction would seem to be a natural approach for insurance professionals such as brokers. Fardy advises that in many cases, a protection questionnaire can serve as a review of the internal protections not yet in place or missing in many broker offices.

GETTING PREPARED The Swiss Re survey suggests five initial areas for brokers to review. These are detailed below: Train staff regarding the requirements and duties under PIPEDA Maintaining the confidentiality of customers’ information is common sense and has always been essential to the role that brokers play for their clients. Further, brokerage employment agree-

ments commonly re-affirm individual staff will respect the confidentiality of the information with which they work. Nevertheless the principles laid down in Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) legislation, and other corresponding provincial statutes, can be viewed as an articulation of essential practices for protecting clients’ privacy within brokerages. Broker vigilance must extend, too, to the increasing integration with external insurer or data resource systems; insurers and vendors alike can expect brokers to request confirmation that customers’ information will be protected and not shared with any other parties, in line with PIPEDA principles. Among brokerage staff, familiarity with PIPEDA’s common standards builds awareness and sensitivity, as well as creates a formal point of reference for the professional behaviour customers expect. Those expectations are rising ever higher, with escalating media reports of data breaches and mass notifications to affected consumers. Currently in Canada, only Alberta has formal reporting requirements, but pending federal legislation will impose across Canada notification rules similar to those existing elsewhere. Canadian brokerages will need to establish internal action protocols to initiate in the event of a breach to satisfy requirements and public demands. Implement encryption and other secure mechanisms in place for both the transport and storage of personal information Because they are so easily lost or stolen, mobile devices of all sorts — phones, laptops or portable drives — can pose a real danger to brokerages. The trend to “bring your own device,” allows employees freedom of choice, but magnifies the security risk as central control decreases. Staff must learn to recognize the risks and the need to exercise extra discipline in handling these devices. A brokerage mobile device policy can lay out basic expectations, address-

ANNOUNCEMENT

The Board of Directors of CANATICS is pleased to announce that the newest tool in the fight against auto insurance fraud is now fully operational. The Board is also pleased to introduce the leadership team behind CANATICS. The auto insurance industry created CANATICS in 2013 in response to the growing problem of organized insurance crime, and following recommendations from the Ontario government’s Anti-Fraud Task Force. Ben Kosic was named President and CEO. Mr. Kosic has more than 20 years’ experience running large projects in management and information technology across a diverse range of sectors, including insurance, insurance fraud, IT, health and pensions. His past roles include: Partner and Business Intelligence Practice Lead with KPMG Canada, and Chief Information Officer and Chief Financial Officer of Chartwell IRM Inc. He is a results-oriented leader with a track record of driving growth and excellence in delivery. Ben Kosic

In early 2015, the leadership team was extended to include: Mario Silvestre, VP, Analytics and Operations Mr. Silvestre has over 20 years’ experience in auto insurance claims management, working for leading insurers such as Cooperators and RSA. He has prior experience and knowledge working with the same data analytics technology being used by CANATICS. In his most recent role with RSA, as Director of Shared Services, Mario led the implementation of their fraud detection strategy. Mario Silvestre

Alexander Adeyinka, Chief Privacy Officer and General Counsel Mr. Adeyinka has over 20 years’ experience as a lawyer in the communications industry, most recently with Rogers Communications as Associate Chief Privacy Officer & Senior Regulatory Counsel, and prior to that as Vice President, Regulatory Law & Policy. In addition to substantial privacy law work he was significantly involved in legislative and regulatory policy submissions to government and communications regulators. Alexander Adeyinka

CANATICS analyzes pooled auto insurance industry data, using the most current tools, to identify suspicious claims that individual insurers can then investigate. As of April 1, the system is up and running and sending alerts to member insurance companies. Learn more at www.canatics.ca

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ing such issues as the types of devices permitted, anti-virus and password requirements, and the use of masking or encryption programs, which scramble data so it can be accessed only by an authorized person. Encryption processes can be automated and invisible once authority is established, and applied to entire drives or individual files. Transport-Layer-Security (TLS), a means of creating email security through encryption provided it is enabled on both the sending and receiving system, has been adopted by a large number of insurers and brokers, and is recommended by the Centre for Study of Insurance Operations (CSIO) as well as broker associations. Taking the concept of secure delivery to the next stage, carriers and brokers are now working together to establish a similar electronic means of privately transmitting documents and messages to customers. Utilize passwords and other physical security measures to control access to personal data Brokerage information systems frequently encompass multiple passwords. For passwords to be effective, the brokerage culture must mandate strict confidentiality around these keys to private information, and they must be sufficiently complex and changed regularly. Brokerage systems users must appre18 Canadian Underwriter April 2015

ciate the danger posed by privacy risk, the serious consequences that would arise from sharing or losing a password and, consequently, exposing customer information. Establish monitoring processes to oversee, manage and review user access rights and roles at regular intervals Embedded within any password is authority to access various information or functions. Typically, broker management system (BMS) passwords can be customized at an individual level, to suit the various roles within a brokerage. Access should be carefully planned to tally with the tasks that each person performs, so that no information is exposed more than necessary. The menu of rights granted should be verified regularly and tested, perhaps as part of a periodic internal audit process. Finally, there must be procedures in place to immediately terminate any and all information access for anyone leaving a brokerage. Create procedures to ensure security events are identified, recorded, reviewed and responded to promptly One worrisome factor in data breach research is the fact that only detected incidents contribute to the statistics. Far more serious, perhaps, are the lapses that go unnoticed, and may continue indefinitely.

To improve their odds in detecting breaches early, brokers can monitor traffic in their networks, through configurations programmed on their own servers or through their service providers. Network tools can generate reports that identify patterns and point out access attempts, hacking incidents or other events meriting investigation. These reports generate, in themselves, a massive amount of information, surveying the activity over a firmâ&#x20AC;&#x2122;s entire network and/or website, but are invaluable in establishing baselines for normal activity as well as mapping attacks. Where specialized expertise is needed, outsourced personnel or consultants are options. For other businesses, the best solution is lodging all information with an outside hosting service that performs tasks such as TLS implementation and network monitoring. Whatever specific defences are chosen, the investment that brokers need to make to combat privacy risk is, indeed, significant. Beyond budget line items, and even when network operations themselves are outsourced, brokerage leaders must dedicate time and effort to understand and plan the essentials of their information systems and ensure that all staff appreciate and comply with security rules. The industryâ&#x20AC;&#x2122;s leveraging of data has only just begun; new technologies like telematics, geo-location and the imminent Internet of Things will ramp up potential, but also the responsibility placed on those through whose hands data passes. The test for developments and their controls will always revert to the core objective of shielding customersâ&#x20AC;&#x2122; information from threats. Brokers must nurture a culture of alertness within their offices and systematically plan the practices that all staff follow. Privacy risk can never be vanquished entirely. He will continue to lurk in brokerages, seizing on any vulnerabilities. Brokers can keep the risk chained and hungry, though, by using the available tools and maintaining consistent vigilance in their stewardship of the confidential data entrusted to them.

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In the

Works Carol Lyons

Partner and Co-chair, Insurance, Financial Services Regulatory, McMillan LLP

Ke-Jia Chong Student-at-Law, McMillan LLP

Saskatchewan’s first proposed overhaul of its insurance legislation in decades seeks to modernize requirements and harmonize provisions with those in Alberta and British Columbia. Changes revolve around, among other issues, fair and unfair practices, insurance intermediaries and self-evaluative audits. Saskatchewan is the latest province to introduce comprehensive changes to its insurance legislation, the first major overhaul in decades. In December 2014, the Minister of Justice and Attorney General, Gordon Wyant, first introduced Bill 177, The Insurance Act, reforming the insurance law in Saskatchewan. If passed, the proposed act will replace the current statute, The Saskatchewan Insurance Act. Part of the background review and preparation for the development of the new Saskatchewan

20 Canadian Underwriter April 2015

statute included a comparison of the insurance legislation of other Canadian jurisdictions, with Alberta’s Insurance Act considered the most appropriate model. The Alberta statute is, in turn, similar to the insurance legislation in British Columbia. One of the achievements of the new Saskatchewan legislation is a “move toward harmonizing insurance legislation with Alberta and B.C.,” Wyant has said. This is timely in light of the New West Partnership Trade Agreement among the governments of Saskatchewan, Alberta and British Columbia, creating Canada’s largest, barrier-free, interprovincial market. Under the accord, the three Western provinces have agreed to mutually recognize or reconcile their rules affecting trade. It is, therefore, logical and appropriate for these provinces to align their laws. Nevertheless, the proposed Saskatchewan legislation is not identical to Alberta’s legislation, so the goal of harmonization will not be completely realized. Aside from the attempt at harmonization, the substantive impetus behind Bill 177 is modernization, including strengthening consumer protection provisions.

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NEW “UNFAIR” AND “FAIR” PRACTICES Other provinces have outlawed specific activities by insurers, agents, brokers and/or adjusters on the basis that they are potentially unfair to consumers in the context of purchasing insurance. Saskatchewan is catching up in Bill 177 by including a section on unfair practices (Section 7-12). This section will specifically prohibit the following: • false or misleading statements, representations or advertisements; • tied selling practices; • unfair, misleading, deceptive, fraudulent or coercive acts or practices; and • other matters to be prohibited by regulation. These provisions are similar to the prohibitions in Alberta’s statute and Fair Practices Regulation. Bill 177 also includes an out-and-out prohibition on “inducements” (activities involving payments or gifts designed to induce customers to purchase insurance), except as permitted by regulation. Although the inducements prohibition is akin to the broadly drafted wording in the counterpart Ontario regulations, the proposed Saskatchewan provision only applies to acts and practices on the part of “insurance intermediaries.” Historically, the provinces have treated the issue of inducements in disparate ways, varying in approach not only from province to province, but also from decade to decade, depending on prevailing market practices and tone of regulatory intervention. Read literally, many wellestablished marketing practices and loyalty programs could be seen to offend the inducement prohibitions. The regulations, once drafted, will reveal the practices that will be permissible in Saskatchewan. Bill 177 also contains a division on fair practices (Part VII, Division 2) that includes a number of consumer-friendly provisions, as follows: • insurers, insurance intermediaries and adjusters must advise policyholders suffering a loss that they have the right to choose a service provider to make repairs; 22 Canadian Underwriter April 2015

• a 10-day right of rescission in favour of the consumer in the case of life, accident and sickness or specific travel insurance, and the corresponding right to return of premiums paid; • insurers in receipt of a notice of claim must notify the claimant of the applicable limitation period; and • insurers must advise policyholders of the options available to them in the event a dispute occurs regarding payment of a claim or loss, or the insurer denies the insured’s claim. Historically, the provinces have treated the issue of inducements in disparate ways, varying in approach not only from province to province, but also from decade to decade, depending on prevailing market practices and tone of regulatory intervention.

Historically, the provinces have treated the issue of inducements in disparate ways, varying in approach not only from province to province, but also from decade to decade, depending on prevailing market practices and tone of regulatory intervention. INSURANCE INTERMEDIARIES Part V, Division 1 of Bill 177 contains several distinct categories of individuals and entities that are subject to the licensing regime for an “insurance intermediary,” including “insurance agent,” “insurer’s representative,” “managing general agent” and “third-party administrator.” Part V, Division 4 of the bill contains a whole separate regime for “restricted insurance agents.” The provisions are comprehensive, potentially difficult to navigate and further-reaching than the Alberta legislation. As such, Bill 177 has created a fair bit of controversy.

Managing general agent Bill 177 creates a new licensing category for “managing general agent” (MGA). Not only must MGAs be licensed as such, they also will have authority to sponsor selling agents, and will be obligated to perform ongoing monitoring of the persons they sponsor. The regulations will determine which persons and classes of persons will not be eligible for an MGA’s licence. The books and records of MGAs will be subject to audit by the Superintendent of Insurance, and a copy of the contract between the MGA and the insurer must be filed as part of the licensing application. Employees licensed to act for an MGA may only act for that one MGA. In a letter dated February 17, 2015 (providing comments on Bill 177), the Financial Advisors Association of Canada (Advocis) strongly questioned the creation of a distinct licensing regime for MGAs. Advocis noted that this approach came as a surprise given the position paper, Strengthening the Life MGA Distribution Channel, adopted in September 2012 by the Canadian Council of Insurance Regulators (CCIR), which concluded that no specific consumer protection goals would be advanced through a discrete licensing regime for MGAs. Advocis requests a full public consultation on the whole MGA issue, arguing that matters such as the new sponsorship and monitoring duties blur the lines of responsibility between life insurers and life agencies, as delineated by the Canadian Life and Health Insurance Association (CLHIA) in its Guidelines G8, Screening Agents for Suitability and Reporting Unsuitable Agents, and G18, Insurer-MGA Relationships. These comments are relegated to MGA operations in the life sector, but MGAstyle operations are also prevalent on the non-life side. The proposed requirement to file the contract between the insurer and the MGA understandably raises concerns given the strategic confidentiality attaching to those documents.

Bringing MGAs and TPAs under the jurisdiction of the insurance regulator would add a new level of complexity to commonplace industry relationships. There is some logic, however, to making MGAs ultimately responsible for monitoring of licensed agents where the MGA, and not the insurer, appoints the agents. Third-party administrator The term, “third-party administrator” (TPA), is not defined in Bill 177, which of itself creates an area of uncertainty. The licensing requirements for this category are similar to, but less extensive than, those relating to MGAs. For example, TPAs must be licensed, and a copy of the contract between the TPA and the insurer must be filed. An employee may only be licensed to represent one TPA. In its comment letter on Bill 177, the Canadian Association of Financial Institutions in Insurance (CAFII) recommended that the provisions relating to TPAs be removed entirely on the basis that institutions engaging TPAs, i.e. banks acting as “restricted insurance agents” and insurance companies bear the risks associated with outsourcing administrative activities and, in any event, are required by the Office of the Superintendent of Financial Institutions (OSFI) Guideline B-10, Outsourcing of Business Activities, Functions and Processes, to manage those risks prudentially. CAFII cautions that additional requirements with respect to these activities are unlikely to improve consumer protection and may actually add cost and complexity to doing business in Saskatchewan, ultimately leading to increased pricing to consumers. If licensing for TPAs survives the legislative process, CAFII objects to the requirement to file a copy of the TPA agreement with the regulator on the basis that it contains proprietary and confidential information. It will be interesting to see how the Government of Saskatchewan responds to these comments. Bringing MGAs and TPAs under the jurisdiction of the insurance regulator would add a new level

of complexity to commonplace industry relationships. There is some logic, however, to making MGAs ultimately responsible for monitoring of licensed agents where the MGA, and not the insurer, appoints the agents.

SELF-EVALUATIVE AUDITS Section 9-5 of Bill 177 includes provisions based on model wording for privilege contained in CCIR’s Final Report on Privilege Model and Whistle-Blower Protection, released in May 2008. The issue of whether or not privilege should attach to certain information gathered by regulators surfaced in 2004 and 2005 after CCIR established a committee to co-ordinate a national approach to market conduct reviews. Although most provincial and territorial insurance statutes contained broad provisions allowing the regulator to collect any kind of information it wanted, some statutes were clearer than others. CCIR took on the role of requesting detailed information from insurers on behalf of all provincial and territorial regulators. The approach generally sent a shockwave throughout the industry and a number of insurers balked at providing information that might not be protected from discovery by potential thirdparty litigants. Privilege became a new hot topic and took on a larger life given the regulatory requirement that insurers must adopt their own internal practices involving self-monitoring of their compliance management. The issue of protection of information gathered through a regulator-initiated process applies equally in the case of internal compliance assessments. CCIR ultimately endorsed and published model wording with respect to “insur-

ance compliance self-evaluative audits.” Alberta and Manitoba are the only other provinces that, to date, have enacted provisions relating to privilege of self-evaluative audits based on the CCIR model language. Bill 177 goes further and includes a positive obligation on the part of insurers to conduct the audit (when requested by the Superintendent of Insurance) and contains other wording differences. Whether or not the differences in wording mean these audits apply only to Superintendent-mandated audits (and not also to internal compliance management systems) is not overtly clear at the present time. In keeping with the CCIR model language and the language adopted by both Alberta and Manitoba, privilege as set out in the section does not apply in a proceeding commenced against an insurer by the regulator. Similarly, “documents kept or prepared in the ordinary course of business” are carved out of the definition of “insurance compliance self-evaluative audit document” in Bill 177, as they are in the Alberta and Manitoba legislation. The bill also carves out “documents kept or prepared for the purpose of responding to a consumer complaint.” It appears the latter two categories of documents are outside of the scope of privilege afforded by these provisions. Bill 177 received second reading in the Legislative Assembly of Saskatchewan on March 16, 2015 and currently appears to be in committee (Intergovernmental Affairs and Justice). The committee process may involve public hearings and may involve amendment to the bill’s provisions. Bill 177 must pass third reading and receive Royal Assent before it is proclaimed in force. April 2015 Canadian Underwriter 23

Over and Above

Why is now the time for homeowner overland water protection? With Canada seeing more rain every year, this type of protection will only become more important in future. The country’s first such coverage for residential properties, working in concert with sewer back-up protection, seeks to meet that need.

President, Aviva Insurance Company of Canada

24 Canadian Underwriter April 2015

2000s and $3.7 billion in the last four years. Just shy of three-quarters (74%) of all DFAA payments since 1970 have been due to flood. Insurers are feeling the effects, too. Before 2009, payouts to policyholders as a result of severe weather were not notable. Today, annual claims payouts of $1 billion or more is the new normal — and insured severe weather-related losses in 2013 alone totalled $2.3 billion in Canada and hit US$19 billion in North America, the highest of any region in the world. Add that there is a lot more tough weather coming. Environment Canada reports severe weather events that used to happen every 40 years can now be expected to happen every six years.

WORST TIME FOR WEATHER — BEST TIME FOR PROTECTION So why is it a good idea to introduce overland water protection now, when costs are rising rapidly? There are a number of reasons.

Illustration by Scot Ritchie

Sharon Ludlow

Weather patterns vary from year to year, so it is difficult for anyone to perceive permanent change. Still, for those who get the sense that the current weather in Canada is different than it was before, they get full marks for their perception. Here are the facts: Canada is wetter, warmer and stormier than it has ever been, and there is no “reverse course” in sight. Weather patterns are changing worldwide, a trend that is affecting Canada directly. Over the past 60 years, consider the following developments: • average temperatures have increased by 1.3 degrees Celsius; • average rainfall has increased by 12%; and • Canadians now experience an additional 20 days of rain each year. The end result is staggering: Since 1970, the average number of events that qualify for federal financial assistance under Disaster Financial Assistance Arrangements (DFAA) programs has increased threefold — from three disasters per year in the early 1970s to nine disasters per year in the first four years of this decade. In fact, the DFAA costs for flood have more than quadrupled in 40 years, from a cumulative $300 million in the 1970s to $1.2 billion in the

. y t l a u s a c t e g We

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Meet the need With the increase in severe weather events, the need has never been greater — and the catastrophic flooding that occurred in Alberta and Ontario in 2013 has brought awareness of this need to the forefront. Research conducted on Aviva Canada’s behalf in 2014 revealed that few brokers reported being very satisfied with the coverage in place for water loss in Canada. In fact, 40% of surveyed brokers said they are dissatisfied. When asked if they would offer overland water protection to their customers, 90% of brokers responded they would likely or very likely offer it. Close the knowledge gap The research showed that 43% of polled Canadians do not know if their home insurance covers them for any type of overland water damage. And of those who claimed to know, 37% incorrectly stated that they were, indeed, covered. The fact is that while many recent flood claims were actually paid based on sewer back-up coverage provisions, true overland water coverage has never been available to consumers. The onus is on insurers to clarify this misinformation — and provide options for the coverage that many Canadians will increasingly need as the number of severe weather events rises. Leverage new data Aviva Canada now has improved mapping technology and data to model the severity and frequency of flood losses, providing a greater possibility of developing a sustainable product that is based on the risk transfer principles of insurance. Based on these factors, the company set out to prove it is possible to price and underwrite sustainable overland water coverage for a majority of Canadians, purely on a risk transfer basis. Extensive research was conducted, collaborating with experts from all parts of the property and casualty industry. This included consultations with Insurance Bureau of Canada (IBC), the Institute for Catastrophic Loss Reduction and municipal, provincial and federal governments. 26 Canadian Underwriter April 2015

Sophisticated flood mapping technology was used and, partnering with a third-party flood modelling expert, modelling was developed that helps to predict the frequency and severity of flood losses. This model was used to develop national Overland Water Risk Zones now being used by Aviva Canada.

Research conducted on Aviva Canada’s behalf in 2014 revealed that few brokers reported being very satisfied with the coverage in place for water loss in Canada. In fact, 40% of surveyed brokers said they are dissatisfied. Fifteen zones were established — 1 represents the lowest risk and 15 the highest — and for simplicity, these were grouped as Low, Medium, High and Very High. Every postal code in Canada has a rating under this system. From there, the overland water endorsement, the first of its kind in Canada, was developed. The endorsement provides coverage for loss or damage caused by overland water to the exterior of the insured property, as well as the interior when overland water has entered the

property. It responds to losses that result from the accumulation or run-off of surface waters, including torrential rainfall and spring thaw.

ROLLING OUT THE COVERAGE While the product will not be available in the highest risk zones — typically riverfront homes with risks that cannot be cost-effectively insured — it is estimated the coverage will be available to 94% of Aviva Canada’s customers. Work will continue with IBC and governments to explore solutions for the outstanding homes. To address the greatest need first, the overland water coverage will be available beginning this May in the two provinces hardest hit by recent flooding: Alberta and Ontario. From there, the plan is to roll out coverage across Canada through 2015 and the early part of 2016. The coverage — for owners or tenants of houses, condos, rental properties, seasonal properties or secondary properties — is available as an endorsement to personal property policies where sewer back-up protection is in place. The prerequisite that sewer back-up protection be in place is crucial, as these two coverages work together. Sewer back-up and overland flood events are often concurrent, with loss assessment extremely difficult in terms of the order of events and how damage was caused. By requiring that sewer back-up be in place — something the commissioned research indicates more than 90% of home policies have — this avoids critical gaps in coverage.

THE ROAD AHEAD The property and casualty industry in Canada currently does not have the capability to adequately assess and predict coastal flooding — which means a product and pricing cannot be developed for saltwater damage that occurs as a result of events such as tsunamis or tidal waves. It is believed, however, that overland water coverage is a key step forward in addressing a growing insurance need — and one that other insurers will soon add to their coverage options.

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Cyber criminals have perpetrated — and continue to perpetrate — on banks around the world a spin on the classic bait-and-switch manoeuvre. The new form of phishing has already proved very costly and should serve as a caution that all industries, not just financial institutions, need to develop cyber resilience to avoid getting hooked in. Governments and businesses are increasingly more vulnerable to cyber attacks that can cause damages disproportionate to the cost of launching the attack. More to the point, the problem facing insurers is greater and even more complicated than assessing risk and crafting cyber risk policies and/or exclusions. The most vexing problem is in designing and implementing cyber risk resilience

28 Canadian Underwriter April 2015

infrastructures for an insurer’s own corporate integrity and that of its clients that leaves many still scratching their heads. The growing complexity of cyber systems and cyber threats has made it clear that the type and calibre of cyber breaches are increasingly more difficult to anticipate and, subsequently, prevent. Insurers are aware that it is not feasible to prevent all possible attacks on infrastructure systems — be it their own or those of their clients. They are increasingly more aware as well that risk-based approaches to cyber threats do not necessarily create a cyber-resilient infrastructure. Cyber resilience can be defined as an infrastructure’s ability to recover from or adjust to a breach. It would be the infrastructure system that provides the means within which an entity seeks to reduce potential damages while also enhancing its ability to recover from the attack.

NEW KIND OF ATTACK To date, no other cyber breach reveals how frustratingly complex it has become to develop and implement cyber resilience management — both for insurers and the businesses they insure — as the cyber bank heist reported in the New York Times on February 14, 2015.

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Yet, insurers are well-positioned to rigorously develop the models and empirical data to quantitatively determine cyber resilience metrics. In doing so, they would serve a dual purpose: to develop more robust institutions, and to play a pivotal role in improving the resilience to cyber crimes within society.

The attack reads like no spy novel before: So far, over US$1 billion has been stolen in about two years from banks worldwide. Shockingly, this attack is not over. The hackers continue to remove money despite the crime having been uncovered, leaving the financial institutions to adjust to this ongoing loss while determining how best to enhance a fast recovery from the attack. Reports indicate that the heist was discovered late in 2013, when, in Kiev, an A.T.M. machine began dispensing money without the customer inserting a card or touching a button. From the video footage, it appeared bank customers were taking “free” money. It was thought the A.T.M. had malfunctioned and these “customers” were simply at the right place at the right time. As reported in the New York Times, the robbery seemed to start simply enough — a modern “bait and switch” referred to in the cyber world as “spear phishing.” The criminals sent emails to targeted bank employees responsible for financial daily transfers and bookkeeping. These emails appeared to be sent from colleagues, but, when the emails were opened, unbeknownst to the reader, they would download the infectious Carbanak malware — a software containing a code used by the hackers to access the bank’s networking system. The hackers were then able to search and find the employees responsible for administering cash transfer systems, or remotely connected A.T.M.s. But the heist does not stop there. 30 Canadian Underwriter April 2015

Once these employees were located, Sergey Golovanov of Kaspersky Lab, one of the organizations involved in the investigation, explained to the New York Times that the hackers then installed a “RAT” — remote access tool — to capture video and screenshots of the employees’ computers. The purpose was to recreate a platform to mimic the actions taken by these employees. In doing so, the employees would remain unaware of having been hacked. This infiltration allowed the hackers, through the exercise of patience and focus, to learn the unique systems of each bank. As such, they were able to see and record everything that happened on the screens of staff who service the cash transfer systems. In this way, the hackers got to know every last detail of the bank clerks’ work and were able to mimic staff activity. This allowed the hackers to set up, entirely undetected, their own fake bank accounts to serve as destinations for transfers. As stated by Golovanov on Kaspersky Lab’s website, “These bank heists were surprising because it made no difference to the criminals what software the banks were using. So, even if its software is unique, a bank cannot get complacent. The attackers didn’t even need to hack into the banks’ services: once they got into the network, they learned how to hide their malicious plot behind legitimate actions. It was a very slick and professional cyber robbery.”

CHANGE OF TARGET The Carbanak attack evidenced the degree and variability of cyber-related threats that are beyond unauthorized access to sensitive data, such as credit card information, medical records and business trade secrets more commonly reported in the Sony Corporation and Target hacks. The future of cyber risk will impact more directly on the operation of a business, resulting in a series of costs to do business, as well as on increasing concern, prompting the realization that the tools and expertise needed to assess that risk are still in their infancy. Simply put, despite the sophisticated tools and skills in place within all of these banks, it could be argued that these very same systems effectively exploited vulnerabilities and allowed cyber hackers to manipulate them. The Carbanak attack speaks to the very real issue of how a cyber loss is to be assessed on a real-time basis. When a cyber hack is still persisting despite its detection, how are the potential costs quantified? How is that business expected to determine its projected exposure following a cyber attack? If the loss for these financial institutions in the Carbanak heist is now estimated to be over US$1 billion, how much will it be when this hack is over? Perhaps, the most frightening question is this: How will it be determined that the Carbanak hack has ended and the loss can be quantified and finalized? There are no simple answers. But these

types of cyber threats serve as a call to focus on resilience. Too often, cyber resilience leaves most with an unsatisfactory understanding, which is not surprising. This area remains poorly understood, especially since risk is arguably a more studied concept by insurers than resiliency. Yet, insurers are well-positioned to rigorously develop the models and empirical data to quantitatively determine cyber resilience metrics. In doing so, they would serve a dual purpose: to develop more robust institutions, and to play a pivotal role in improving the resilience to cyber crimes within society.

SYSTEMIC APPROACH NEEDED The goal of a cyber-resilient infrastructure is not a â&#x20AC;&#x153;one-size-fits-allâ&#x20AC;? model. The sheer dynamic nature of cyber risk requires a systemic approach that is broken down by risk and contextualized by need.

The matrix of a cyber resilience framework would serve to determine and qualify the cyber protection needs of a particular business within an industry. A cyber resilience management platform must be a highly specialized system of management. It would serve to allow an insurer to manage its own internal exposures to cyber risk as well as delivering integrated approaches to identifying risks within various industries for which insurance products are developed. Most particularly, the matrix of a cyber resilience framework would serve to determine and qualify the cyber protection needs of a particular business

within an industry. Despite the global importance, cyber resilience metrics is only at its early stages of development. The Carbanak attack demonstrates the level of collaboration required not only within an industry, but across various real-world networks comprised of technological, sociological, political and economic components. Beyond that, these metrics require communication with an integrated whole of physical elements, communication devices, humans and environmental forces to form an entire system that must be flexible and in place prior to an attack. The Carbanak heist, in particular, serves to show that the resilience of a system relies heavily on the effectiveness of cross-domain communication and co-ordination at each stage of the event management cycle. In the end, it must be subject to review and reassessment as, otherwise, another hack is only a binary away.

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Brokers in Action As ever, insurance brokers across the country are grappling with a wide variety of issues. Some issues are ongoing while some are emerging; some are regional while others are country-wide. The one constant is the need for brokers to continue to act as trusted advisors and to provide sound advice so that customers know the risks, understand coverage and have access to a wide choice of products. GREG MECKBACH

32 Canadian Underwriter April 2015

cross Canada, insurance brokers are currently facing many issues, challenges and changes. These conditions include new restrictions on sewer back-up coverage in Nova Scotia, the Ontario governmentâ&#x20AC;&#x2122;s mandated reduction in auto premiums, auto dealers in Quebec selling replacement insurance and competition â&#x20AC;&#x201D; everywhere â&#x20AC;&#x201D; from banks and direct writers, as well as from non-traditional players seeking to carve out a piece of the pie by selling insurance directly to consumers.

April 2015 Canadian Underwriter 33

COVER STORY

Brokers in Action ISSUES ABOUND

WATER… AND MORE WATER

Independent insurance brokers in Canada need to advise customers on a wide range of risks and coverage, such as water damage, earthquake, flood and auto. Beyond these issues are mandatory pension contributions in Ontario, the prospect of newly elected federal politicians who are unfamiliar with the Bank Act, a new contract with Saskatchewan’s government auto insurer and changes to sewer back-up coverage. On the last point, consider what is unfolding in Nova Scotia. “For the past year, we have been coping with the restrictions of sewer back-up coverage in Nova Scotia,” says Glenna Boudreau, president of the Insurance Brokers Association of Nova Scotia (IBANS). “For us, there haven’t been a whole lot of restrictions up until this past year,” Boudreau notes. “Depending on where they live and what their postal code is — either the coverage for sewer backup has been eliminated, or it has been drastically reduced, with, in some cases premiums increasing by 100%.” Water-related risk to property, especially from overland flood, is an issue for brokers across Canada, says Steve Masnyk, manager of public affairs for the Insurance Brokers Association of Canada (IBAC). “We set up a flood task force to study the issue,” Masnyk says of overland flood, adding the group was scheduled to meet in early April. “We realized over the last year or two that because this is such a complex issue, probably the smartest thing for us to do is study and find out what the issue is because it’s so complex. This has led to the creation of a study group or task force to really look at all the participants’ and all the stakeholders’ interests,” he reports. Masnyk suggests that brokers can address water risk by advising their clients on preventive measures. “A lot of homes don’t have sump pumps in the basement,” he points out. “A lot of people aren’t aware that a sump pump or a sewer back-up valve might actually prevent a flood should there be major water around the home,” he adds.

Aviva Insurance Company of Canada announced in February that it will offer an overland water endorsement on personal property policies covering “losses that result from the accumulation or run-off of surface waters, including torrential rainfall when water enters the property.” Starting this May in Ontario and Alberta, the insurer plans to offer the endorsement to clients who have sewer back-up protection in place.

34 Canadian Underwriter April 2015

Affordability will, no doubt, be a topic of discussion. But the fact that there has been some movement on what has proved to be a challenging issue offers some optimism.“Aviva is exciting for us because it’s showing the initiative of the insurance industry stepping up to find a solution, so I imagine there will be other carriers to follow with offerings shortly,” says Michael Brattman, president of the Insurance Brokers Association of Ontario (IBAO).

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“Depending on where they live and what their postal code is — either the coverage for sewer back-up has been eliminated, or it has been drastically reduced, with, in some cases, premiums increasing by 100%,” says the Insurance Brokers Association of Nova Scotia’s Glenna Boudreau. The Insurance Brokers Association of Alberta (IBAA) “is looking forward to seeing what Aviva is going to be bringing forward in their flood coverage,” says IBAA past president Gord Enders. Boudreau is also waiting in anticipation to see just how the Aviva Canada coverage will work. “We are all very excited about the coverage, and we hope it’s going to be affordable,” she says.

For brokers everywhere, mergers and acquisitions involving brokerages has become a real issue. “The lines of what constitute an independent broker are so blurred now,” Boudreau says. “There are very few brokers out there, truth be told, that do not have some investment by an insurance company. For the most part, the consumer is very unaware of who they are buying insurance from and what the implications are.” C.J. Nolan, president of the Insurance Brokers Association of Newfoundland (IBAN), suggests that in Newfoundland and Labrador, “consumer choice for personal lines automobile insurance has certainly become more difficult.” Nolan notes that personal lines auto insurance concentration has formed with four major insurance company markets for brokers, in part, the result of some insurance companies leaving the province. Beyond choice is the need for any advice received to be from an insurance professional. Every consumer should receive advice from a qualified professional when buying insurance, argues Vincent Gaudreau, chair of Regroupement des cabinets de courtage d’assurance du Quebec (RCCAQ). Consider, as one example, selling insurance over the Internet. Gaudreau points out that the Autorité des marchés financiers (AMF) — which regulates financial markets in Quebec — does not have related guidelines. When a customer is buying insurance, it is important to “have somebody who is responsible, if the coverage is not right, or the person made a mistake,” he comments. “We (should not) just say,

Coming Soon

(Because water happens.) Aviva Canada is launching an industry first â&#x20AC;&#x201C; overland water protection for residential property owners and tenants across Canada. The coverage â&#x20AC;&#x201C; available as an endorsement to personal property insurance policies that have sewer back-up protection in place â&#x20AC;&#x201C; will be launched first in Alberta and Ontario in May, and then rolled out to other provinces throughout 2015. Stay tuned. avivacanada.com

COVER STORY

Brokers in Action ‘It was the website algorithm, there was nobody involved and it’s a robot’s fault.’” RCCAQ’s view is that Quebec should have a new regulation to address selling insurance on the Internet. “Our position is that we need to have a certified representative involved in the transaction, not necessarily at the buying moment, but... in the few days before or after the transaction, there should be a certified representative involved in the transaction.” Professional assistance is also an issue in Quebec when it comes to the longtime broker concern around automotive dealerships and the types of insurance they can sell (replacement insurance) or cannot sell. This past February, AMF reported it had launched proceedings for sanctions against the commercial practices of nine automobile dealers and one damage insurance firm. AMF noted that some customers were offered civil liability insurance from auto dealers, even though such coverage can only be offered by agents and brokers registered in Quebec with AMF. “Some of the dealers also failed to adequately describe the replacement insurance offered to customers and specify what was covered, or they offered a lower financing rate if the customer took out replacement insurance through the dealer,” notes an AMP press release. “The way (the auto dealers) were doing it was a problem because the way they were forcing customers to purchase specific insurance in order to give them (auto financing) rates,” Gaudreau says. “They put lots of pressure on the consumer,” he contends. Though Gaudreau supports steps taken by the AMF, he adds that “the root of the problem is (brokers) have a licence to sell insurance, and we are selling the same product as somebody who doesn’t have any licence, who doesn’t have the same disciplinary committee that we do. We are highly regulated and they are not. What we want is a level playing field.” In Newfoundland and Labrador, “IBAN has discussed the idea of allowing electronic proof of auto insurance” with government and opposition representatives, Nolan notes. “This would 36 Canadian Underwriter April 2015

allow drivers to display their insurance information via their cellphone, laptop, tablet or other device,” he says, adding that almost 30 states in the United States are reported to have passed similar laws as a convenience to drivers.

PROMISE IN TELEMATICS Of course, there are other changes unfolding. Gaudreau says RCCAQ is “following what’s happening in Ontario very

“The root of the problem is (brokers) have a licence to sell insurance, and we are selling the same product as somebody who doesn’t have any licence, who doesn’t have the same disciplinary committee that we do,” cautions Vincent Gaudreau of the Regroupement des cabinets de courtage d’assurance du Quebec. closely” with regard to the increased use of telematics — whereby insurers base their premiums on vehicle behaviour, such as time of day, speed, acceleration and hard braking. Telematics is “a bit less attractive” in Quebec, even with a possible 20% discount, because the average premium in the province is less than $500. (KANETIX.ca recently reported the average auto pre-

mium in Ontario is $1,538). In Ontario, telematics is available from several carriers, while IBAO subsidiary Independent Broker Resources Inc. (IBRI) has partnered with technology vendor Quindell plc to offer telematics-based auto coverage through IBAO members. IBAO officials have previously suggested brokers should have access to telematics data so they can give proper advice to auto policyholders. Just this March, Quindell subsidiary Ingenie Canada Inc. announced that it is offering usage-based insurance — using telematics — to drivers 24 and younger. Ontario vehicle owners can buy the insurance directly through Ingenie.ca and from brokerages, coverage for which is underwritten by Aviva Canada subsidiary Pilot Insurance Company. Aviva Canada previously reported that the insurer has plans to write auto using telematics in partnership with IBRI. For commercial customers, IBRI announced Fleetadvisor this past January. Then in March, Unica Insurance Inc. noted it is endorsing Fleetadvisor, which the insurer suggests will allow brokers to “solidify client/broker relationships by putting brokers in a position of a true fleet risk management advisor.” Telematics “is not an area of the market where we have had a lot of success competing with the direct writers, so this certainly gives us a new tool for our members to go after that market,” Brattman comments. Another auto issue on IBAO’s radar screen is Ontario’s mandated reduction in auto premiums, he notes. In August 2013, the Ontario Automobile Insurance Rate Stabilization Act established an “industrywide target reduction” of 15% over two years of the average private passenger auto premium. Since then, Ontario insurers have had to “propose rates and a risk classification system that contribute adequately” to achieving that target. “What we want to see is that the government takes their time and is prudent about the way they continue to require the 15% rate rollback,” Brattman says. “We are for lower rates, as long as they could be achieved responsibly. At some

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Brokers in Action point, you can’t force an insurance company to lose money, so that’s why we are worried about availability of coverage.” Auto is also an issue in Saskatchewan, but for a different reason. The Insurance Brokers Association of Saskatchewan (IBAS) is currently involved in negotiations with Crown corporation Saskatchewan Government Insurance (SGI) over the terms of SGI’s contract with brokers, says IBAS president Dave Nussbaumer. All vehicle owners buying Saskatchewan plates must purchase basic liability and injury coverage from the Auto Fund, written by SGI. Consumers are free to buy additional coverage — such as extra liability, collision or comprehensive — from SGI or the private sector. Brokers can choose whatever companies are “best for the customer, and that’s where competition becomes an issue,” Nussbaumer suggests. In Saskatchewan, brokers have contracts to market SGI products and renew and service existing SGI policies. SGI’s broker contract “has everything to do with our remuneration, our terms, services, how they deal with customers via the Internet, what channels the customers link to SGI, whether (brokers) are involved or not,” he says. IBAS is in negotiations with SGI over a draft contract update, he points out. Nussbaumer reports SGI recently sent a draft copy of the contract to brokers. “Some of the bigger issues are the (draft) contract is better suited to an agent business model versus a broker business model and we are brokers,” he says. “Someone who walks through my door, writes me a cheque to find an insurance product for them — I consider to be my customer.” Saskatchewan’s brokers need SGI, acknowledges Nussbaumer. “We get that. But now we feel we are maybe being forced into a contract situation that is not in the best interest of us as business owners,” he emphasizes.

EARTHQUAKE EXPOSURE British Columbia also has a governmentowned auto insurer, but earthquake risk is more of an issue in that province, 38 Canadian Underwriter April 2015

says Kevin McIntyre, president of the Insurance Brokers Association of British Columbia (IBABC). “Earthquake is the biggest issue that we deal with on an ongoing basis, and it’s certainly one that I’m passionate about,” McIntyre says. “We have half of condominium owners not buying any insurance at all and lots of people who don’t carry earthquake coverage.” Still, he notes some condo complexes “have massive earthquake deductibles”

“We are for lower (auto) rates, as long as they could be achieved responsibly. At some point you can’t force an insurance company to lose money, so that’s why we are worried about availability of coverage,” argues the Insurance Brokers Association of Ontario’s Michael Brattman. and brokers need to advise those clients on the risk. “If you have a $40 million complex that you are part of that’s got a 10% deductible, that is a $4 million deductible in the event of an earthquake,” McIntyre points out. “Individuals living in them will be called upon to kick in their share, which might be tens to hundreds of thousands of dollars. We need to get more and more

of those people to understand insurance and earthquake insurance better and be better prepared for it,” he emphasizes. Condominiums are also an issue for brokers in Quebec, Gaudreau explains, noting that water damage claims are increasing. “Loss ratios are really, really bad with condo associations,” he suggests, adding that water damage claims associated with condensation in walls are covered by the association’s policies. Deductibles are increasing and, in some cases, premiums are increasing by as much as 30%, even for associations without claims, Gaudreau reports. “We are setting up a task force and a committee to discuss some potential solutions,” he says, reporting that RCCAQ plans to work with condominium associations and insurers in the province “to try to evaluate some potential solutions to this problem.”

EXTERNAL PRESSURES Beyond specific perils, there are broader issues that can affect insurance brokers regardless of province. For example, one the biggest issues for the Insurance Brokers Association of Manitoba (IBAM) is low interest rates because insurers need to rely more on underwriting income to make money, says Dave Schioler, chief executive officer of IBAM. “Profits have to come from underwriting performance... so that becomes the key,” he says. “Brokers have to continue to provide the kinds of professional service that people expect,” he adds. Schioler reports competition from direct writers is also an issue, suggesting that large insurance companies selling through brokers “have to work hard to become household brands.” Although Manitoba has a compulsory auto insurance coverage product provided by the Crown corporation, Manitoba Public Insurance, Schioler says brokers can compete by providing advice to auto customers on all of the options that are available beyond basic Autopac coverage. “When a broker’s there and talks to the client about what their needs are and what products are available” — such

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Brokers in Action

“Individuals living in (condo complexes) will be called upon to kick in their share, which might be tens to hundreds of thousands of dollars. We need to get more and more of those people to understand insurance and earthquake insurance better,” says Kevin McIntyre of the Insurance Brokers Association of British Columbia. as loss of use coverage, liability coverage, tinted glass coverage — “the broker who’s doing that and the companies that are providing the right products to fit are going to win at the end of the day.” Brokers have been, and will continue to be, involved as changes in Ontario auto unfold. The Ontario government is promising to take measures to reduce insurers’ costs so that premiums can come down. Bill 15, the Fighting Fraud and Reducing Automobile Insurance Rates Act, “was a good first step,” Brattman says of the omnibus legislation passed last November. “But they need to look at some further measures to help lower rates, including implementing a catastrophic loss definition and limiting contingency fees for legal representation,” he argues. Bill 15 will be one of three issues IBAO officials expect to discuss with Ontario politicians at Queen’s Park Awareness Day in April, reports Brattman. The other two issues will be a five-year review of the Credit Unions and Caisses Populaires Act and the Ontario Retirement Pension Plan (ORPP). The ORPP — which the province is set to implement in 2017 — will require equal contributions, not exceeding 1.9% each, from employers and employees, on earnings up to a maximum annual earnings threshold of $90,000. “We are opposed to it,” Brattman says of the ORPP. “We understand the good intentions behind the rationale to enhance retirement incomes, but our members 40 Canadian Underwriter April 2015

have expressed quite loudly and clearly they cannot support the planned ORPP. The additional cost to the brokerage business in Ontario will be particularly onerous, given the combined 15% auto rate reduction, the full effect of which is just now hitting the market,” he says. IBAO is also asking the province to prohibit credit unions from promoting home and auto insurance online. IBAO is “looking for harmonization” with the federal Bank Act, Brattman reports. Currently, Ontario law prohibits the promotion or sale of unauthorized insurance products. Despite the ban being in place, the websites of some Ontario credit unions include sections marketing insurance. Prohibiting the online promotion of insurance protects consumers “who are vulnerable at the point of lending from an obligation to purchase an important insurance product under duress,” notes a 2014 IBAO press release. In addition, it “protects consumers from cross-selling tactics from persons not properly trained to provide insurance advice.” The Bank Act is also a priority this year for IBAC in light of the next federal election, widely expected this fall, Masnyk says. “A significant number of MPs will be new, after the election, and most of them will not be aware of the whole bank insurance issue,” he explains. “Our role every year is to continue educating and reminding MPs of what the issue is,” Masnyk says. “Our role with this new batch of MPs after the election

will be to educate them... that creditgranting institutions ought not to be selling insurance at the point of credit and explaining why this makes sense for consumers,” he adds.

FACING THE COMPETITION While competition from direct writers such as banks is on the rise, brokers are confident in the advantages of their channel. “Direct writers are a concern to a certain point, but there are a large number of consumers that do want to get professional advice, have the choice, understand what they have, and then deal with someone when they have an actual insurance problem,” Nussbaumer says. “In our province in the last number of years, with the amount of water claims and wind and hail — trust me, we field enough calls and I’m not as worried about direct writers as I am about some of the other things going on out there.” In Alberta, IBAA’s members “are entrepreneurs by nature, whether they are large or whether they are small brokers, and we always view competition as a good thing,” says Enders. “We always want to make sure that it is a level playing field. Having said that, we do believe that for consumers, the broker choice is the first route to go — for advice, for service, for advocacy and, of course, for competitive premiums,” Enders says. “We really are the only line of business that can provide choice for the consumer, and advocacy, because we are independently owned.”

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Custom Output In today’s data-rich environment, property and casualty insurers have an unprecedented opportunity to move beyond a one-size-fits-all approach, and tailor newer, more profitable offerings based on each customer’s usage and needs. The key to future profits may lie buried in the data that insurers already have.

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42 Canadian Underwriter April 2015

In cars, for example, telematics allows insurance companies to track and evaluate their customers’ driving habits. Telematics plays a big role in allowing for usage-based pricing and is a quickly growing trend in Canada. Usage-based pricing would allow a low-risk driver to pay lower insurance premiums than someone who is a higher-risk driver, for example.

ADVANCING CUSTOMIZATION The ability to integrate new data streams into current and traditional data sources is the key to building products and premiums customized to each customer’s specific behaviours and personal risk profiles. And it is in these customized services where critical competitive difference lies. Integration unlocks the true value of analytics While a huge force on its own, analytics delivers more value when integrated with all facets of operations and service. Predictive analytics and modelling methods are powerful tools that can help achieve growth, profitability and sustainability objectives. However, unlocking their most valuable impact means integrating them into all facets of operations, including segmentation and market acquisition, risk-based pricing, customer

Illustration by Scot Ritchie

Marc-Andre Giguere

In today’s highly networked, data-rich environment, consumers increasingly prefer — and, indeed, expect — to find offerings customized to their unique needs and usage profiles. From an on-demand movie night to a marriage courtesy of online dating, customization is changing every corner of 21st-century life and business. But Canadian property and casualty insurers have been slow to embrace its potential. Data mining, or the ability to connect and use multiple streams of digital information to design customized offerings, can identify new hidden revenue opportunities and improve customer satisfaction. EY’s recently released report, 2015 Canada propertycasualty insurance outlook, shows companies already have large amounts of both structured and unstructured data traditionally collected in the p&c insurance business.This rich, yet largely untapped, data ranges from information about customers’ lifestyles to their online habits and experiences. However, beyond the traditional sources of data to which insurers have access, there is now a new source. Telematics — or the transmission of data through telecommunications devices — opens the door for Canadian insurers to build even more precise and custom profiles of their customers’ activities.

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lifetime value, underwriting, distribution strategy, customer experience and claims optimization. Building an enterprise data excellence infrastructure Synthesizing this amount of data requires a new approach, and it has an enormous impact on operations, staffing and brand. To develop strong analytical capabilities that achieve anticipated returns, significant investments in people, hardware, software and technology are needed. Not surprisingly, the most in-demand skill set in the insurance sector is talent with target market analysis, customer data analysis and predictive modelling capabilities. Analytics can also be leveraged to develop strategies to retain highest-value customers through custom incentives. The same strategies can be used to recognize and reward employees and brokers, as well as to pinpoint hidden revenue opportunities within the existing customer base. With the right analytic tools, insurers can identify new growth opportunities while protecting and optimizing bottom-line results.

PUTTING CUSTOMERS AT THE OPERATIONAL CORE The 2015 p&c insurance outlook indicates that most top-tier Canadian insurers have shifted from a “wait-and-see” mindset to a more aggressive, action-oriented approach. One area is usage-based insurance (UBI). Early results show that consumers are increasingly ready to embrace UBI offerings, and insurers seeking market growth are moving swiftly to ensure they are ready to fill that demand. A strategic imperative for insurers across all product classifications, geographies and operating models is the need to strengthen customer relationships. Insurers need to align with customers’ expectations based on their experiences with other industries. The goal is to create a consistent customer experience by integrating both distribution and communication channels and providing enhanced transparency of information. The latter is critical, as 44 Canadian Underwriter April 2015

A strategic imperative for insurers across all product classifications, geographies and operating models is the need to strengthen customer relationships. Insurers need to align with customers’ expectations based on their experiences with other industries. only 56% of polled Canadian consumers report that they trust their respective property-casualty insurance company. Results detailed in EY’s Global Consumer Insurance Survey 2014 show the industry’s trust level is lower than that of banks, online retailers, supermarkets, automotive manufacturers and pharmaceutical companies (see graphic below). These results also compare unfavourably to global and United States results, as well as to Canada’s life insurance industry.

EXPANDING ACCESS AND INTERACTION ACROSS MULTIPLE DIGITAL PLATFORMS Ensuring that customers are informed, connected and empowered by the variety of ways in which they can shop for

insurance requires a comprehensive approach. Websites, blogs and social media must assist customers in comparing insurers and their respective products and services. These tools increasingly must be mobile and accessible on a constant basis. Technologies such as cloud computing, smartphones and business collaboration software are making the ability to receive digital information on any device — safely, securely and efficiently — a basic customer expectation. Customers now conduct extensive research before purchasing an insurance policy, putting the competitive onus on insurers to present a clear and differentiated brand image, transparent pricing terms, accessible customer service, product offering, claims settlement information and billing options. All of these changes, of course, need to complement improvements in core operations. That includes improving operational agility and speed, as well as making policy administration much more efficient and accessible. In addition, companies moving to multiple digital platforms and enhanced market segmentation will need to become even more disciplined with operational oversight.

IMPROVING CYBER SECURITY As p&c firms gear up for enhanced data mining, analytics and digital customer service and communication, cyber security

The EY Global Consumer Insurance Survey 2014 Canada property and casualty findings

K ey

Finding

High turnover and low trust signal serious relationship issues.

Insurers are not as trusted as other types of businesses

87%

73%

Supermarkets

Banks

70%

68%

59%

Online Car Pharmaceutical shopping sites manufacturers companies

56% Insurance companies

has become a pressing strategic issue. And in the wake of numerous recent data breaches, much more sophisticated security and privacy measures will be needed. Insurers are exposed to growing risks of cyber theft, either from external criminals who seek to steal customers’ personal information or from internal security breaches that compromise corporate strategy and could feed corporate espionage. Unfortunately, insurers in Canada may not have much insight into their cyber liabilities involving digital assets. There also seems to be a gap between the nature of new threats and the capa-

and a comprehensive, customized relationship. Increasingly, they seek both to be known and served as individuals, as well as to have ubiquitous and immediate access to their insurers via such options as web chat, video and mobile.

Consequently, the development of a comprehensive data mining and analytics strategy, coupled with more customized options, consistent multi-channel communications and strong branding, are the baseline requirements for insurers to thrive amidst the challenging conditions that characterize the market ahead in 2015.

Market Outlook 2015

bilities of companies to monitor, detect and thwart cyber hacks, security leaks and digital attacks. The integrity of electronic data is another key concern. Insurers must think beyond simply defending themselves against leaks and attacks; they need to also consider how and where the data is stored, how to identify the cause of security incidents and assess the impact, exposure and liability of data incidents. Increased regulatory oversight also has amplified the need for enhanced data security. Data security issues have arisen for internationally active companies in Canada as well. While data may be stored on servers physically located in one country, customers may reside in a different jurisdiction with more stringent data security rules.

INDIVIDUAL TOUCH Today’s customers want more personal interactions via digital channels, more tailored offerings geared to their needs,

EY’s newly released 2015 Canada property-casualty insurance outlook suggests that economic and marketplace developments in Canada will set the stage for a continually challenging and highly competitive property and casualty insurance marketplace. Some of the factors shaping this fast-changing landscape include the following: • historic low interest rates, volatile investment returns and low gross domestic product (GDP) growth, forecasted to persist in 2015, may adversely affect the industry’s profit margins and premium growth; • regulatory and accounting changes continue to add pressure to bottom lines, from the call to implement risk management processes to jurisdictional changes such as Ontario’s 2014 legislation to reduce automobile insurance rates; • recent catastrophes have hit the industry hard, from natural incidents such as

severe flooding in Calgary and the Greater Toronto Area, tornadoes in southwestern Ontario and ice storms in central Canada, to human-caused disasters such as the Lac-Mégantic explosion, train derailments and oil pipeline ruptures; • the trend of industry consolidation continues, with further consolidation anticipated in the face of difficult market conditions (in each of the past five years, the market has experienced at least one major transaction and as of year-end 2014, the market share of the top five Canadian p&c insurers had increased to 45% of premium volume); and • along the insurance value chain, major transactions also were recorded between independent brokers and service providers, meaning both insurers and the firms that deal with them are getting bigger.

April 2015 Canadian Underwriter 45

Flood of Options With the increase in water-related events, insurers have responded in a number of ways, including by introducing higher premiums and exclusions. Consumers must take steps to ensure they are prepared and to seek out advice that will help them mitigate losses should an adverse event occur. Glenna Boudreau

President, Insurance Brokers Association of Nova Scotia

Karen Slaunwhite

Executive Director, Insurance Brokers Association of Nova Scotia

“Be prepared,” is more than a Girl Guide motto. The best way for a consumer to be prepared is to be engaged with his or her broker in conversations regarding any change to insurable property. These are challenging times with people living very busy lives, but the investment in time upfront will reap rewards in the event of a claim because the consumer will understand what is covered and what is not. Whether buying a new car, conducting home renovations or making a significant purchase, dialogue is essential to ensuring the things that a person has worked hard for are properly covered. Without proper coverage, those losses could make a difference to that person’s financial future. Prevention and risk management are areas where brokers can provide advice on how to prevent losses from occurring. These conversations should be ongoing as each individual’s circumstances change.

46 Canadian Underwriter April 2015

WATER WORRIES One of the hottest topics in the insurance industry at the moment is water. There are many changes taking place at the insurance company level and the product is evolving. It is important for brokers to talk to their clients about these changes and for consumers to ask questions where there is uncertainty. Sewer back-up endorsement The sewer back-up endorsement was introduced in Nova Scotia about 25 years ago and, in some instances, covered losses resulting from flooding. Each individual company would make decisions based on its respective wordings. During this period, brokers who had clients living along waterways or low-lying areas were quick to add this endorsement to their clients’ policies. Depending on the insurer, the coverage was included in the policy with a limit of

s u n i o j e s a ple

$10,000 and for the full limit, the premium was $25. If the risk was to a business, insurers would include flood and quake for a nominal premium. To coincide with the sewer back-up offering, brokers would advise customers to purchase the full limit available if a home had a below-grade family room. In addition, brokers would advise clients of the need to purchase a dehumidifier for the basement. During the early stages of offering the coverage, there was not much discussion about sump pumps and back-water valves. This changed, most notably in 2003, when the southwestern region of Nova Scotia experienced a significant waterrelated event. The Tusket River flooded its banks, requiring that the small village of Quinan be evacuated. This occurred again in 2010, although it included other communities along the Tusket River system, resulting in the collapse of the Tusket Bridge. Historically, consumers have been advised that if water came into their homes via drains, their loss would be covered; if the water came in through windows and doors, this would be flood and not covered. Brokers were pleasantly surprised when homeowners had most damages repaired under the sewer back-up coverage, despite the fact that consumers were receiving mixed messages. This is an example of competition in the industry paying dividends to the consumer. Automatic coverage As a result of the uncertainty surrounding whether or not water damage would be covered, many brokers requested that insurers add the coverage automatically to their property portfolios to ensure all homeowners and business owners were covered. Negative billing was still allowed in Nova Scotia and the cost to the consumer was manageable. As with other endorsements, such as guaranteed replacement cost and the single-limit endorsement, brokers knew the importance of these coverages and would routinely have their entire portfolio endorsed at renewal. Unfortunately for both insurers and 48 Canadian Underwriter April 2015

consumers, water-related events are occurring in both frequency and severity, resulting in more claims and, inevitably, higher premiums. In Nova Scotia, the trends towards fancy living areas below ground continue and insurers have taken measures to limit or eliminate coverage.

PREPARATION ALL AROUND Brokers are very focused on conversations with clients relating to these changes and how housing construction is affected, as well as the importance of installing sump pumps and back-water valves. As a result, consumers should educate themselves and be prepared to speak with their contractors when constructing a new home or making renovations.

Consumers in Nova Scotia have had the benefit of full-limit sewer and broad, far-reaching water losses paid under sewer back-up. But times are changing and the industry has to adapt to severe weather. It is important that stakeholders also keep abreast of changes taking place in the industry based on climate change and severe weather events to ensure that consumers are protected. To this end, the Insurance Brokers Association of Nova Scotia has partnered with the Clean Foundation in an effort to educate consumers on how best to mitigate water losses.

TIMES ARE CHANGING Until recently, consumers in Nova Scotia have had the benefit of full-limit sewer and broad, far-reaching water losses paid under sewer back-up. But times are changing and the industry has to adapt to the severe weather that is also being experienced throughout the country. In response to the increased water losses, one insurer has already reduced coverage and increased premiums sig-

nificantly based on the postal codes of the consumer. These areas historically had a frequency issue and a predictive model suggested the area was â&#x20AC;&#x153;trendingâ&#x20AC;? to have a water-related event. For Nova Scotia brokers, the first step in assisting clients with these changes was to identify customers who had completed basements and to determine an appropriate limit of coverage, since full limit was no longer available. In these cases, insurance brokers looked to other insurers who had not restricted or eliminated coverage. However, this was not always the solution for a number of underwriting reasons, including that the premium was simply too high. In other cases, the consumer is looking to his or her broker for assistance with determining an appropriate limit. This, however, is no easy task. There are limited tools available to calculate appropriate limits and many variables must be considered. One of the variables is being able to determine remediation costs that can be expensive and use a large portion of the available coverage. A second variable is premium, which grows more expensive as the limit of coverage increases, sometimes becoming a barrier for the consumer. The most reliable option available to consumers to determine the cost of rebuilding is to contact a contractor and complete a replacement cost appraisal. That said, consumers generally do not choose this option based on the time and effort involved. It is important to remember, though, that not all insurers in Nova Scotia have reduced sewer back-up availability. One company, for example, has recently announced it plans to introduce flood coverage that, depending on the province, could be available to consumers over the next year. With the introduction of new products, brokers will be at the heart of the conversations with clients, educating them about the options that are available and providing consumers with good advice so that they can make informed decisions.

Recent Insurance Press Releases featured on insPRESS.ca “Bermuda Captive 101” webinar explains island’s appeal to Canadian business by Bermuda Business Development Agency – Mar 31 EagleView Announces Joint Drone Research Project by Pictometry, NUAIR and NYSEARCH/Northeast Gas Association by EagleView Technologies, Inc. – Mar 31 EagleView Teams with ABC Supply to Empower Real-time Pricing by EagleView Technologies, Inc. – Mar 31 Creechurch International Underwriters JOB POSTING: Assistant Vice President, Eastern Region by Creechurch International Undewriters – Mar 31 SIAdvisers Consulting & Solutions Inc. acquires Toronto based subrogation recovery firm SubroGateway Inc. by SIAdvisers Consulting & Solutions Inc. – Mar 31 Creechurch Introduces Legal Expense Insurance and Legal Hotline Service by Creechurch International Undewriters – Mar 26 Sad News From Highland Restoration DKI by DKI Canada – Mar 25 Blouin Dunn & Giffin Koerth’s Big Mingle 2015 a Success Thanks to Our Sponsors and Guests by Giffin Koerth Forensic Engineering – Mar 24 Accident Support Services to present at ACE Conference in Austin, Texas by Accident Support Services – Mar 24 Calgary Hail and Wind Expert Training by CRU - Catastrophe Response Unit – Mar 23 DMTI Spatial and Intact Financial Win the Prestigious ICTA Technology Implementation of the Year Award by DMTI Spatial – Mar 20 SPECS Limited – New Regina SK Office by SPECS (Specialized Property Evaluation Control Services) – Mar 20 Canadian Independent Adjusters’ Association (CIAA) Members Now Have Further Opportunity to Raise Their Professional Status by Canadian Independent Adjusters’ Association (CIAA) – Mar 19

Jones DesLauriers Insurance Management Inc. Recognized as one of Canada’s Top Small & Medium Employers by Jones DesLauriers Insurance Management Inc. (JDIMI) – Mar 19 Xactimate Exterior Estimating and HAAG Certification in one Calgary Location by CRU - Catastrophe Response Unit – Mar 19 SIMAC Strengthens Executive Team with Addition of Liz Pia - Adding new depth to both quality and customer service! by SIMAC – Mar 18 AssessMed Announces New Vice President of Operations and Media Relations by AssessMed Inc. – Mar 18 ACE Offers Privacy and Network Liability Coverage for Private Companies in Canada, Addresses Growing Demand for Cyber Insurance and Services by ACE Canada – Mar 17 Hamilton Township Mutual Insurance Company (HTM) has partnered with Mutual Concept Computer Group Inc. (MCCG) to develop and implement an Online Quoting Solution by Mutual Concept Computer Group Inc. – Mar 13 Large Carrier Sees ROI Using Technology for Siding Claims by EagleView Technologies, Inc. – Mar 13 Pario Engineering & Environmental Sciences extends its services to Southwestern Ontario by launching Brantford office by SCM Insurance Services – Mar 11 Wynward Insurance Group named one of Canada’s Top Small & Medium Employers by Wynward Insurance Group – Mar 11 Meet Maltman Group International by CRU - Catastrophe Response Unit – Mar 10 Economical Insurance policyholders share their incredible claims journeys by Economical Insurance – Mar 10 It’s a Hat Trick! STRONE Named One of Canada’s Best Managed Companies for Third Year in a Row by STRONE-Itech – Mar 10

Read the Full Story for Each Press Release

The War on Staged Collisions The “car accident business” is not only big and expensive, it is ever-changing and ever-evolving. A co-ordinated campaign by all players in the property and casualty industry is critically important to gain ground and drive back auto insurance fraud estimated to cost more than $1 billion a year in Ontario.

Vice President, Ontario, Insurance Bureau of Canada

50 Canadian Underwriter April 2015

How does the insurance industry fight a problem so far-reaching and sophisticated? It does so by being even more far-reaching and sophisticated. With help from governments, police and prosecutors, industry stakeholders need to be increasingly diligent and organized in identifying and shutting down these ever-evolving rings. They move fast, and the industry response must be equally fast. It is necessary to also make consumers — honest policyholders — equally intolerant so that they can help in the cause.

RECRUITING CONSUMERS IN THE FIGHT In the area of consumer education, IBC released the SafetyMobile app in March as part of Fraud Prevention Month. The aim is to help drivers recognize some of the different types of staged collisions so that they can help to detect and report these crimes. The app is, to use the lingo, edutainment. It is fun because it is like playing a video driving game on a phone. At the same time, it shows the various types of staged collisions that innocent drivers can get pulled into. These are as follows: The swoop and squat A “swoop” car belonging to a fraudster suddenly

Illustration by Scot Ritchie

Ralph Palumbo

In February, Ontarians learned of a police officer in the province’s Peel Region who had just been convicted of participating in an organized auto insurance fraud ring. The officer had been providing accident reports to make staged collisions look like real collisions, resulting in more than $1 million in fraudulent claims being paid out. He was found guilty of more than 40 charges of fraud, breach of trust and obstructing justice. For anyone who may still doubt how farreaching and sophisticated these organized fraud rings can be, this story should put the matter to rest. Not only do these rings routinely involve auto body shops, tow truck operators and medical facilities — the entire service supplier chain — now one of them has even managed to recruit a police officer. The “car accident business” is big. In a report issued in 2012, KPMG estimated that auto insurance fraud costs as much $1.6 billion a year in Ontario. The Insurance Bureau of Canada’s (IBC) Investigative Services unit currently has more than 60 fraud ring investigations under way, many of which involve dozens of staged collisions. And statistics show that a single collision, even a fender bender, can result in well over $100,000 in fraudulent claims.

cuts off a “squat” car with an innocent driver. Unable to stop in time, the squat car rear-ends the fraudster’s car. The drive down The fraudster pretends to yield, waving an innocent driver to proceed with a lane change or to pull out of a parking spot. As the victim makes his or her move, the fraudster drives into the victim, and later denies having waved him or her on. The left-turn bullet (sideswipe) The fraudster targets an innocent driver and purposely collides with the side of the victim’s vehicle. Typically, this is a left-turn situation where the fraudster waves the victim to make a left turn, then ploughs into his or her vehicle. These are some of the more common types of staged collisions currently seen. Crime rings are expected to continue to develop new tricks to add to their arsenal, but the app goes a long way toward raising consumers’ understanding of the fundamentals of how these rings work. The idea for the app came from IBC’s SafetyMobile, a simulator that the bureau takes to towns and cities around Ontario as part of the Safety Zone tour. The simulator has all the same features of a real car and takes drivers through scenarios to increase awareness about staged collisions. It also demonstrates the dangers of distracted driving. Raising consumers’ awareness of fraud and what to look for is an important first step toward the critical next step — investigating and busting the bad guys.

WAR IN THE TRENCHES Front-line claims staff at member insurance companies are increasingly becoming knowledgeable about identifying the red flags in a claim, and moving the file toward company investigators. Likewise, expertise among police is also rising. To help educate these essential soldiers in the war on fraud, IBC makes presentations to police and member companies, training them on how to recognize fraudulent activity. Efforts to date are focused primarily

in Ontario and, specifically, in the Greater Toronto Area (GTA), which holds the dubious distinction of being the fraud capital of Canada. The numbers make it clear where the auto insurance woes lie in Canada. The average accident benefits (AB) claim in Alberta and Atlantic Canada is well under $10,000; the average AB claim in Ontario is more than $30,000. This discrepancy cannot just be chalked up to “more drivers on the road in Ontario.”

look at pooled industry data and make connections and linkages about unusual behaviour that individual insurers cannot make on their own. If the tool sees something potentially suspicious, it sends an alert to the affected member company. It is then up to the insurer to decide whether or not to investigate further. Data analytics is a proven technique for fighting fraud and has been used successfully in the United States and the United Kingdom. Because organized fraud rings target multiple insurers, it is not always easy for individual insurers to pick up all the red flags. But a tool that can see multiple claims with multiple insurers can. It should be emphasized the industry data is pooled, not shared, and there is adherence to strict privacy standards.

A CO-ORDINATED APPROACH

Front-line claims staff at member insurance companies are increasingly becoming knowledgeable about identifying the red flags in a claim, and moving the file toward company investigators. Likewise, expertise among police is also rising. Clearly, most claimants in Ontario are not fraudsters, but something else is going on.

A NEW TOOL Another positive development in the fraud fight came earlier this month with the launch of CANATICS. CANATICS uses a sophisticated data analytics tool to

The crime rings are sophisticated and organized, so the fight to bring them down must also be sophisticated and organized. Consumers need to know what is happening, how to recognize fraudulent behaviour and what to do if they see it. Through the new app and a host of other ongoing education efforts, progress is being made. Further, insurers and police are increasingly knowledgeable and diligent in identifying and investigating organized insurance fraud. Fraud, in general, is as old as insurance, but these organized staged collision rings, along with shady medical clinics, are a relatively new breed — and they are still evolving. The techniques for fighting them must evolve, too. This includes adopting a co-ordinated approach. Taken as a whole, efforts by consumers, IBC, insurers, police and CANATICS are telling fraudsters that their days of threatening road safety and driving up insurance costs for everyone are numbered. Industry players know the game that fraudsters are playing, and are developing a growing arsenal of tools with which to come after them. April 2015 Canadian Underwriter 51

In the Shadows A 2012 report from RIMS, the risk management society, notes that “while nothing is more abundant than data, nothing is more uncertain than the security of that data.” Three years on and concerns around the rapid acceleration in the number and types of attacks has grown even more pressing. Sean van Zyl

Freelance Writer

Cyber risk, clearly, is top of mind for many businesses. The Allianz Risk Barometer 2015, conducted by Allianz Global Corporate & Specialty (AGCS), shows that cyber-related risks have jumped by 37% year over year to rank fifth compared with the previous year’s eight-position jump from 2013’s ranking of 15. The latest barometer, based on corporate and insurance industry responses from a total of 500 enterprises located in 44 different countries, places cyber risk in second place in Canada versus the overall North American ranking of fifth place, observes Terri Mason, head of professional indemnity at AGCS Canada. Mason notes that a significant number of insurance companies are currently investing and researching specific product development pertaining to cyber attacks, and exposures they might find themselves in should a major loss occur. “Insurers definitely need to stay on top of this [development of cyber risks] growing risk,” she recommends. Comparing the United States to Canada, Mason says she does not believe there is a lower cyber risk exposure here at home, if only due to the close proximity of the two countries. She also points out that with the U.S. being Canada’s big-

52 Canadian Underwriter April 2015

gest trade partner, cyber attack-related losses on either side of the border resulting from business interruption, or breakdown of supply chain, could have significant economic consequences. Matthew Davies, director of professional, media and cyber liability at Chubb Insurance Company of Canada, says industry-wide cyber terrorism and cyber attacks continue to be a top emerging risk from a cyber security perspective. “The motivation for a cyber terrorism attack can range from political, ideological and religious reasons to financial and business competition desires.” A recent survey of 111 insurance and reinsurance attendees of the 2014 Property Casualty Insurers Association of America Annual Meeting, conducted by reinsurance broker Guy Carpenter, projected cyber exposure/risk in terms of attacks, combined with cyber terrorism, as being the leading reinsurance risk exposure likely to emerge in 2015. “We would not, especially in North America, call it [cyber risk] an ‘emerging risk’,” says Andreas Schlayer, senior underwriter, property at reinsurer Munich Re. Cyber liability insurance is a well-established line of business, Schlayer notes, with Munich Re’s annual premium volume in the U.S. market having grown to about US$2 billion.

Percentage of Companies with Capital or Surplus Affected by Cyber Attack By capital size 50% 42.3%

40% 30% 22.2% 20% 11.5%

12.9%

10% 2.6% 0%

< US$20 Million US$20 Million - US$100 Million - US$500 Million - > US$1 Billion US$100 Million US$500 Million US$1 Billion

Source: A.M. Best data and research

Overall, there are currently approximately 40 U.S. insurers who sell products covering the financial costs of a hacker attack, he reports. “One of the biggest challenges for reinsurers will be the management of aggregation exposures tied to present and new products.”

CYBER WHAT? Determining a definition, or what form of a “cyber attack” incurred, can have significant ramifications for insurers and insureds related to coverage wordings, clauses and exclusions, note risk managers and insurance industry commentators. For instance, insurers typically exclude “acts of terrorism” from standard commercial coverages as well as standalone cyber policies. “Insurers are still trying to avoid risk exposure from terrorism by implementing specific clauses/wordings in their policies. It remains to be seen how this will develop going forward,” says Mason. But based on numerous international reports and surveys, a definition of cyber risk would likely fall into the following five categories: • individual hackers with the intent of causing disruption and loss to organizations and public services as a way of expressing their “prowess”; • groups of hackers working together and known as “anonymous” who look

to bring about disruption and loss to a specific entity as a means of making a “social statement”; • so-called “Jihad cyber attackers,” who mainly focus their attention on causing loss within a country’s critical public and private services (this could range from electricity outages, water services, nuclear and other power plants to capital market exchanges); • criminal enterprises looking for financial gain; and • professional hackers who make their skills available for a fee without personal objectives — this often involves intelligence agencies and criminal organizations (a report released by Munich Re, Cyber Risks, Challenges, Strategies and Solutions for Insurers, notes many cyber crimes/attacks are not committed by particularly tech-savvy groups, but they have bought or rented access to online tools such as malware, robobots, worms and viruses). “It’s extremely difficult to determine whether a cyber-related loss is criminal, social or terrorism-driven,” says Steve Pottle, a member of the Board of Directors for RIMS, the risk management society (RIMS), and director of risk management services at York University in Toronto. “Most cyber terrorists don’t say, ‘Hey, that was me!’ Cyber attackers generally prefer to keep in the shadows,” Pottle says.

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Putting the pieces together.

Events and Seminars Calendar You work hard to protect your clients’ property. Now, it’s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.

CIP Society Events & Seminars:

Professional Development Curriculum

Toronto – Annual Fellows’ Reception ................................................May 20 Toronto – Golf Tournament ..................................................................June 8 Webinar – ADVANTAGE LIVE: Future of claims ................................... April 8 Webinar – ADVANTAGE LIVE: Urban flooding ................................... May 13 Toronto – Annual Fellows’ Reception ................................................May 20 Ottawa – Trivia Night .........................................................................May 21 Webinar – ADVANTAGE LIVE: Being social online ................................June 2

Toronto – Building Better Relationships at Work .............................. April 23 Conestoga – Essential Management Skills....................................... May 5-7 Vancouver – Essential Management Skills....................................May 12-14 Halifax – Think on Your Feet® ...................................................... May 20-21 Edmonton – Essential Management Skills..................................... June 9-11 Conestoga – Building Better Relationships at Work ...................... October 1 Edmonton – Think on Your Feet® ...........................................October 20-21

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

Carol Fox, director of strategic and enterprise risk practice at RIMS, concurs that there is a great deal of confusion among risk management professionals with regard to “cyber terrorism” and what impact this might have on existing liability and property coverages. “We really need to get clarity to what hacking, or a security system breach, is, as defined under different policy terms,” Fox says. Furthermore, she points out data is regarded as intellectual property, so the potential for property- versus liabilityrelated exposures within an enterprise are about equal. “You [risk managers] have to look at all your policies to what is covered,” she advises. Pottle agrees, emphasizing that risk managers must look at all general policies as well as specific coverages such as directors and officers, and errors and omissions. A lot of companies assume that their general liability or property policies will cover losses caused by a cyber attack, but wake up to a nasty surprise when submitting a claim, he says. “It’s important to evaluate an insurance policy’s exclusions, in particular the breadth of the ‘war’ exclusion. Some insurance companies may choose to define cyber terrorism coverage and modify the policy’s war exclusion with an affirmative exception for cyber terrorism,” Davies reports.

REGULATORY LANDSCAPE With 47 U.S. states having adopted privacy and protection of data regulations, in addition to federal laws, the legal and regulatory pond has become increasingly murky — particularly for enterprises that operate globally or in multiple regions, Fox says. There is a definite need for greater clarity and standardization with regard to regulations and laws across countries pertaining to cyber breach/ attack risk, she contends. Davies says that he believes there will be further and ongoing development of regulations globally as the extent of cyber risk grows. “Without uniformity of data security and privacy requirements globally, organizations will have to navigate through various regulatory expec-

tations carefully,” he suggests. The Munich Re report observes that, based on the current inconsistency in international laws and regulations relating to data privacy and protection, there remains legal uncertainty for companies operating globally, despite efforts to comply with partly contradictory regulations. In fact, it states, “The basic legal conditions in the U.S. and Europe, in particular, can diverge so widely that companies are left with no other option than to decide which of the legal requirements they will violate.” The report also points out that the differing national regulatory frameworks also affect insurers and their coverage concepts for IT risks. “Since a uniform worldwide approach is impossible, products must be individually adapted.” Schlayer adopts a slightly different perspective to the mushrooming growth of international cyber risk regulations in that he sees opportunity for insurers to “expand their product landscape” and develop new business. But he acknowledges that the evolving regulatory environment also introduces challenges for insurers as underwriting cyber liability insurance will become more complex.

ter indicates that 51 medical/healthcare data breaches occurred during the first two months of 2014, observes Fred Eslami, author of the A.M. Best report (see graph on page 53). Despite the heightened scrutiny of cyber exposures in the healthcare sector, the recent data breach involving U.S.-based healthcare insurer Anthem, (which was revealed in early February despite having been initiated almost a month earlier) created a furor south of the border. As of mid-February, the breach had exposed information of almost 80 million of the insurer’s customers. Anthem notes in a statement that “these attackers gained unauthorized access to Anthem’s IT system and have obtained personal information from our current and former members, such as their names, birthdays, medical IDs, social security numbers, street addresses, email addresses and employment information, including income data.” In addition to loss of reputation, the insurer faces costs that could run into millions of dollars in providing free credit monitoring and identity protection service fees, regulatory fines and, perhaps, longer-term fallout of liability class actions.

HEALTHCARE EXPOSURE

FINANCIAL SERVICES

Various cyber surveys suggest healthcare providers in the U.S. seem to be particularly attractive targets for cyber hackers. An A.M. Best report released in December notes cyber liability risk is far greater in the healthcare sector as a result of privacy laws and regulations represented by the Health Insurance Portability and Accountability Act and the Health Information Technology for Economic Clinical Health Act. “These laws mandate strict compliance around preventing privacy violations, and are coupled with state and federal notification regulations surrounding privacy protection. These laws not only pertain to larger hospitals and healthcare networks, but are also relevant to smaller physician groups and solo practitioners.” Yet, despite the heightened awareness of cyber loss exposure in the healthcare sector, the Identity Theft Resource Cen-

When broken down into industry-specific responses, cyber terrorism/risk emerges as the top concern of financial service organizations (stock markets and other capital market exchanges have been cited as prime targets for cyber attackers). In this respect, Canadian banks and financial institutions are acutely aware of the potential exposure of cyber attacks, says Craig Alexander, senior vice president and chief economist at TD Bank Group. Alexander reports the item of greatest value to a bank is its reputation. Should a bank’s customers be unable to access their funds as a result of a cyber breach, the reputational cost would be enormous. “Canadian banks are spending a remarkable amount of money investing in technology to prevent cyber attacks — you could say this is the one area where there is no budget limit.” April 2015 Canadian Underwriter

MOVES & VIEWS

upcoming events: for a complete list visit

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Totten Insurance Group Inc. has announced it has acquired the shares of Montreal-based National Brokerage Services S.C.N. Inc., a commercial insurance wholesaler. Totten Insurance Group, a subsidiary of Hub International Ltd., reports that its acquisition of NBS complements the company’s areas of focus predominantly in the business segments of construction, contracting, hospitality, agriculture, restoration and remediation, errors and omissions, directors and officers and hot works roofing. NBS has offices in Alberta, Manitoba, Ontario and Quebec, all of which will remain in operation. Guy Boissé [1a], NBS president and founder, will join Totten Insurance Group, reporting to president and chief executive officer Heather Masterson [1b].

Willis Group Holdings plc has named Scott Saddington [2] as Willis Canada’s new senior vice president and Canadian practice leader for FINEX North America. Saddington previously worked for American International Group, Liberty and Munich Re, and has established two Lloyd’s-backed managing general agents. The FINEX division of Willis Group has experts in financial, executive and professional who provide advice and services to clients.

56 Canadian Underwriter April 2015

placements and overall risk management programs crafted to meet client needs.”

Triton Claims has opened an office in Toronto. “The primary focus of the Toronto business will be commercial claims handling (financial lines, property and casualty) and audit services.” The Canadian operation will be led by Krystyna Kouri [3a], vice president of Triton Claims Canada, while Dino Zenarosa [3b] will serve as assistant vice president. Kouri previously was complex claims director at AIG Canada and has also served as claims counsel for Liberty International and Encon Inc. Previously claims manager for Cott Corporation, Zenarosa has also worked for Catlin Canada, Premiere Insurance Underwriting Services and Zurich Insurance.

David Black [4] has been appointed vice president of business development for Ontario at Cowan Insurance Group. Black, who holds the Chartered Insurance Professional designation and is licensed with the Registered Insurance Brokers of Ontario, has 20-plus years of experience in property and casualty insurance. These include “12 years as an underwriter with a focus on traditional manufacturing, information and network technology, and the life sciences segments,” notes a statement from Cowan Insurance. Black “possesses specialized knowledge in global property and liability programs, including admitted local

Two Western Ontario insurers — North Waterloo Farmers Mutual Insurance Company (NWFM) and Oxford Mutual Insurance Company — are planning to merge. The merger, which is subject to approval by regulators and by mutual policyholders, would create Heartland Farm Mutual Insurance Inc. Both NWFM and Oxford Mutual write farm, commercial, home and auto insurance, while in commercial lines, NWFM’s target markets include retail, office, contractors, churches and apartment buildings, notes the merger announcement.

MOVES & VIEWS MOVES & VIEWS

of Calgary; Gordon Adams; Robert Cartwright, Jr.; Al Gorski; Leslie Lamb; John Phelps; Michael Phillipus; Frederick Savage; and Lori Seidenberg.

positions have included gen8b eral adjuster, branch manager, vice president of operations Justin Kelly has and Lloyd’s Division leader. been named Zurich Canada’s new assistant vice president Macdonald Chisholm and national underwriting Trask Insurance (MCT) director, international, while announced in early Benoit Lamontagne haspropJanuary that it will join beenand appointed vice erty casualtyregional brokerage president, Québec, for Zurich BrokerLink. The terms of the Canada Commercial. Kelly, transaction were not diswho has 15 years of experience closed, notes a statement with Zurich Canada, previously from BrokerLink. BrokerLink worked in Ireland as technical companies, subsidiaries of underwriting manager Intact Financial Corp., for Zurich Europe. Lamontagne, include 84 offices serving who hasin31 years ofCanada, experience clients Atlantic in the industry, “assumes Alberta and Ontario. Dating Montreal manager back morebranch than 60 years, responsibilities, including MCT has more than 110 inleading business development surance professionals in 18 and overseeing market-facing offices. Michael Brien, who underwriters and underwriting has led MCT over the last 12 managers are part as of the years, joinswho BrokerLink Commercial Markets regional head of its Atlantic operations.

6 6

Carolyn Snow [7] will organization in Québec,” lead RIMS as president Zurich Canada reports. for the 2014 term,

which took effect January 1. Engineering Snow,Pario who has been on the & Environmental RIMS Board of Directors for now has diseven Sciences years, is currently arector new branch location in for of risk management Brantford, Ontario, appointHumana Inc. She previously ing Edward Poon [7a] as served as RIMS’s treasurer, director. Poon will receive secretary and director of support Ryan externalfrom affairs. TheCockle RIMS [7b] and David Giles [7c], board for 2014 also includes reports Pario Engineering, vice president Richard formerly Engineering. Roberts, Rochon Jr.; treasurer Julie Among others, Poon’s areas Pemberton; corporate secreof expertise structural tary Nowellinclude Seaman, director failure cause and for of global risk analysis management building envelope deficiencies. Potash Corporation of Cockle, a forensic engineer Saskatchewan Inc.; Gloria and mechanical engineer, Brosius; Steve Pottle, director has expertise in residential, of risk management services commercial and vehicle fires. at York University; Jennifer Giles, a senior Santiago; Janetenvironmental Stein, directechnologist, has been and tor of risk management providing insuranceenvironmental at the University

As of January 8, Toronto insurance broker Jones DesLauriers 4 Insurance Management Inc. (JDIMI) had acquired Whitley Insurance and Financial Services. Whitley Insurance has offices in Belleville, Ontario and the nearby communities of Trenton, Deseronto and Stirling. “The acquisition is expected to build a solid presence for JDIMI in Eastern Ontario 8d and position the firm to better service their clients, consulting and contracting with strengthened commerservices to the insurance cial and personal insurance industry offeringssince in the2006. region and a new financial services diviLindsey sion,” Cunningham notes a statement from Canada Claims JDIMI. President and CEO ShawnServices DeSantisLtd. willrecently lead the made appointments teamsfour fromnew both companies. to theClarke environmental services Loris [8] has been team of its EGI Global unit. named successor to Paul Based in Hamilton, Ontario, Whitley, president of Whitley Ian Mendeswho [8a]will hasremain joined Insurance, EGI Global as environmental during a transition period. team leader/senior project engineer and will oversee the Hamilton/Greater Ken Rayner [9]Toronto has Area environmental group. joined Anderson Kerry Moules [8b], a project McTague & Associates manager in Sydney, Nova Ltd. as its director of busiScotia, will be responsible ness development, Central for consulting Region. “Ken environmental brings a wealth losses and bringing new of experience to ourincomclients and geography. pany, having held various Working as a senior project senior management positions manager out and of Montreal, with insurers other MGAs,”

8 9

says Chuck McTague, president of Anderson McTague & Associates, a familyowned MGA based in New Brunswick. In January, Anderson McTague & Associates announced it was expanding, adding an office in Toronto to service the brokers of Ontario and Manitoba. Rayner’s appointment confirms the 7a company’s “commitment to the Ontario/Manitoba marketplace, and to the building of Jean-Marc Barbera [8c] a local support team to assist has beenwith sitetheir construction brokers surplus supervisor with Cirque Du lines and difficult to place Soleil. And Robert Foote [8d], business,” McTague adds. a senior project manager working out of the company’s office in Kingston, Ontario, The Guarantee has responded to numerous Company of home heatingNorth oil and America transportation-related spills. has announced that Tara

Wishart [10] became vice Unica Insurance is president of claims for the endorsing Fleetadvisor, insurer’s Toronto branch on a telematics-based December 2, 2013. Having commercial auto productin The 21 years of experience from Independent Broker Guarantee’s claims Resources Inc. With the department, Wishart will be fleet manager’s consent, responsible for the operations both Insurance of theUnica Toronto Branch and Claims. brokers will have viewing She first joined The Guaranaccess to theasdrivers’ data. tee in 1995 an adjuster “Fleetadvisor is a tool that and has held roles of increaswill enable (brokers) to ing seniority with the comsolidify client/broker pany, including, mostrelationships by putting brokers infor recently, claims manager aspecialty positionlines. of a true fleetisrisk Wishart a management advisor,” Dave member of both the Surety Smiley, vice of president Association Canada of and operations at Unica Insurance, the Canadian Association of says in ainstatement. Women Construction. Follow @CdnUnderwriter on http://twitter.com/CdnUnderwriter

April 2015 Canadian Underwriter February 2014 Canadian Underwriter

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APPOINTMENT

GALLERY

Darren Berg

Mike Alwyn, Vice President, Major Loss Services, a Division of Cunningham Lindsey, is pleased to announce the appointment of Darren Berg, EGA as the new Director, Quality Assurance & Training. Darren recently joined Cunningham Lindsey and is based out of our Vancouver office. Darren is well known by his clients for providing first rate service. He also holds the position of Executive General Adjuster with expertise in handling large losses. With 28 years of adjusting and managerial experience, Darren possesses extensive knowledge and great capability of handling claims that are complex and technical in nature. Darren is currently an Auxiliary Constable for the Royal Canadian Mounted Police and has been for the past 23 years. He is the recipient of the Queens Diamond Jubilee medal as well as the Police Officers exemplary service medal (RCMP Auxiliary long service medal). Major Loss Services offers adjusting expertise on multiple lines of business for losses that are significant or complex in nature. Our staff of highly trained individuals are located strategically across Canada and around the world with our global network of over 450 specialists. We can provide the right adjuster for the particular needs and size of a loss. For more information on Major Loss Services, please contact Mike Alwyn at (905) 896-8181 x 8200, or visit: http://www.cunninghamlindsey.com/ en-GB/ca/Page/MajorLossServices

58 Canadian Underwriter April 2015

About 300 members of the insurance community in Calgary gathered on 54th floor of The Bow for the holiday party hosted December 4 by the Southern Alberta Chapter of RIMS (SARIMS). Risk managers, underwriters, brokers and service providers had a chance to enjoy good times, good food and good company during the festivities.

GALLERY

Constr uc tio n Totten Insurance Group is a national leader for project specific insurance with highly technical underwriters and a full suite of products including: Wrap Up Liability, COC, Project Specific Pollution, and Project Specific E&O. Totten Group’s risk appetite includes (but is not limited to) a broad range of Residential, Commercial and Civil Engineering projects, large and small, as well as owner and contractor controlled.

inquiries@tottengroup.com

1.888.868.8367

www.tottengroup.com April 2015 Canadian Underwriter

APPOINTMENT

GALLERY

Zofia Vorontsova Claude Blouin and Jamie Dunn, Partners at Blouin, Dunn LLP, are extremely pleased to announce that Zofia Vorontsova has joined the firm as an associate. Zofia received her Bachelor of Arts (Honours) degree in Psychology from the University of Saskatchewan in 2006. She went on to study behavioural and cognitive neuroscience at the University of Waterloo, after which she obtained dual law degrees from the University of Ottawa in both common and civil law in 2012. She was called to the Bar in 2013. Zofia is trilingual in French, English, and Russian and prior to joining Blouin Dunn, she articled and practiced with two Toronto insurance defence boutiques. Zofia practices solely in the areas of insurance defence litigation and has advised major insurers on all aspects of insurance claims, including Occupiers’ Liability, motor vehicle tort and Accident Benefit claims, and insurance coverage. Zofia appears regularly at the Ontario Superior Court of Justice on contested motions and represents insurers at the Financial Services Commission of Ontario. A confident advocate and strong writer, Zofia also has jury trial experience. In October of 2014, following a 12 day trial with her cocounsel, Zofia achieved a zero liability verdict for her client in a complex motor vehicle case. Zofia is a member in good standing with the Law Society of Upper Canada and is a member of the Canadian Defence Lawyers, Toronto Lawyers Association, The Advocates’ Society and Young Women in Law. zvorontsova@blouindunn.com (416) 365-7888 ext. 124 Blouin Dunn is one of Ontario’s leading insurance defence firms whose members have been providing quality legal support to the insurance community for over 30 years. We offer services in Ontario to property and casualty insurers throughout North America, at all levels of experience, at appropriate and competitive rates.

www.blouindunn.com 60 Canadian Underwriter April 2015

To celebrate its official brand launch, Xpera Risk Mitigation and Investigation hosted clients, stakeholders and staff to an evening of food, drink, and mingling in Toronto’s February 2 (see CU March 2015 issue Gallery). The event celebrated the official unveiling of the new brand name Xpera, following the merger of CKR Global and Forensic Investigations Canada (FIC). The launch celebrations continued across Canada (pictured here) with events held in Calgary on February 11 at Petroleum Club and in Vancouver on February 12 at the Vancouver Art Museum.

APPOINTMENT

GALLERY

CNA Canada hosted a Specialty Products Launch event in Toronto on January 5 at the Shangri-La Hotel in downtown Toronto (see CU March 2015 issue Gallery). The company’s Specialty Products Launch took to the road in February hosting the same event in the following cities/ venues across Canada (pictured here): Vancouver – February 2, Brix Restaurant and Wine Bar,Yaletown; Calgary – February 4, The Bank & Baron Public Urban Bar; Montreal – February 10, Hôtel Le Crystal; Winnipeg – February 26, Fairmont Winnipeg.

Younes Bounafaa Jeff Somerville, President of Strategic Underwriting Managers Inc. (SUM) is pleased to announce that Younes Bounafaa, BEng, MBA, CIP, has joined the company as Assistant Vice President, Montreal. Prior to joining SUM Insurances’ growing EIL and Professional Lines practice, Younes was Assistant Vice President, Manager and National Environmental Product Line leader for an International Insurer. A civil engineer prior to entering insurance, Younes has 15 years of international insurance experience, working both in Canada and Europe, in EIL , GL and Property lines. He holds a Bachelor in Civil Engineering, an MBA from McGill University and is a Chartered Insurance Professional. SUM Insurance is an independent and 100%

Canadian Managing General

Agent. Serving Canada coast to coast with offices in Toronto and Montreal, SUM Insurance works collaboratively with first class insurers and reinsurers to design, underwrite and deliver commercial insurance products to its customers insurance brokers. For information about SUM please see www.suminsurance.ca.

April 2015 Canadian Underwriter

APPOINTMENT

General Insurance OmbudService The General Insurance OmbudService (GIO) is pleased to announce the appointment of Mr. Bernard Richard to the organization’s Board of Directors as Independent Director, Atlantic Region. Bernard brings a wealth of experience working in the legal and political fields, having held positions in the New Brunswick public service as an MLA, Cabinet Minister, the province’s sixth Ombudsman and first Child and Youth Advocate. He is also the recipient of the Queen Elizabeth II Diamond Jubilee Medal. Bernard’s expertise and knowledge will contribute greatly to GIO’s regional and national success. GIO is an independent organization for consumer dispute resolution of Canadian home, car and business insurance. GIO assists consumers and their insurance companies resolve differences cost-free in a fair, independent and impartial environment. For more information please call toll free 1-877-225-0446 or visit www.giocanada.org

www.giocanada.org 62 Canadian Underwriter April 2015

GALLERY

On Monday February 23, the Ontario Risk & Insurance Management Society (ORIMS) hosted the Annual Edward C. Ricketts Memorial Curling Bonspiel, held at St. George’s Golf & Country Club. Despite the continued fight through flu season and the bitter winter elements, 85 curlers came out to participate in this year’s event. A good time was had by all and the event raised $3,000 for Women in Insurance Cancer Crusade (WICC). The ACE Canada team took top spot this year. Congratulations to: Skip – Lilia Fernandes ; Vice – Cameron Brady; Second – Wayne Briggs; Lead – Felix Buhociu.

APPOINTMENT

GALLERY

RSA Canada held a presentation and reception for brokers March 5 at The Fermenting Cellar in Toronto’s distillery district. Rowan Saunders, president and chief executive officer of RSA Canada, discussed the insurer’s overall vision in Canada for 2015, while Donne Ince, senior vice president for personal lines, told attendees how RSA plans to expand broker financing in Canada. Martin Thompson, senior vice president for commercial insurance and global specialty lines at RSA Canada, discussed the carrier’s strategy in the Canadian commercial market.

In recognition of their outstanding achievements and professional standing, Eckler Ltd. is pleased to congratulate the following individuals who have recently been appointed as Principals of the firm.

Blair Manktelow FCIA, FCAS

Geneviève Pigeon ASA

Eckler Ltd. is a leading consulting and actuarial firm with offices across Canada and the Caribbean. Owned and operated by its active Principals, the company – since its founding over 85 years ago – has earned a reputation for service continuity and high professional standards. Our select group of advisers offers excellence in a wide range of areas, including financial services, pensions, benefits, communications, investment management, pension administration, change management, and technology. Eckler Ltd. is also a founding member of Abelica Global – an international alliance of independent actuarial and consulting firms operating in over 20 countries.

www.eckler.ca April 2015 Canadian Underwriter ECKLER APPT NOTICE.indd 1

15-03-12 11:16 AM

GALLERY

The 6th Annual St. Patrick’s Day Charity Social was held March 12 at Grace O’Malley’s Irish Pub in Toronto. The event was sponsored by SCM Insurance Services, which includes Xpera Risk Mitigation and Investigation, ClaimsPro, CIRA and OPTA. More than 400 insurance industry professionals enjoyed live music, refreshments and appetizers at the sold-out event. More than $6,000 was raised for the Juvenile Diabetes Research Foundation over the course of the evening.

64 Canadian Underwriter April 2015

GALLERY

insBlogs insBlogs Insurance Blogs hosted by Canadian Underwriter

Recent Blog Posts Featured on

insBlogs.com

Insurance Blogs hosted by Canadian Underwriter Google Compare – A Goliath Among Davids? by Catherine Smola – April 2 Highest frequency ever for global catastrophes in 2014: Swiss Re by Glenn McGillivray – April 1 Is There a Devolutionary Detour on the Digital Drive? by Patrick Vice – April 1 Demutualization: Proposed regulations don’t please everyone by Peter Morris – March 30 New Inspection Powers Will Address Auto Insurance Fraud by Willie Handler – March 28 Uber Drivers, Consumers at Risk by Willie Handler – March 23 Random Thoughts: Insurance and Bitcoin by Christian Bieck – March 23

How will Google Compare change the insurance aggregator game? by Christian Bieck – March 16 On Digital Transformation by Roger Bickmore – March 12 Ontario government launches FSCO mandate review by Willie Handler – March 5

April 2015 Canadian Underwriter

GALLERY

The Ontario Mutual Insurance Association (OMIA) held its annual convention and annual general meeting in downtown Toronto on March 25 to 27. In addition to the AGM, delegates enjoyed a program that included education sessions on a variety of current industry topics, as well as keynote speaker, Colonel Chris Hadfield who shared his experiences as an astronaut and as Commander of the International Space Station.

66 Canadian Underwriter April 2015

ACCEPT THE BATON.

Join WICC Ontario at Relay For Life WHAT IT’S ABOUT: What: Canadian Cancer Society’s Relay For Life – the largest WICC fundraising event in Ontario. All-night, non-competitive team relay. Fun. Inspiring. Lots of activities. You don’t have to spend the night, but you’ll be glad you did. Why: To celebrate cancer survivors, commemorate those we’ve lost, and raise money for life-saving research. Where: Garrison Commons (at Fort York), new exclusive WICC location. When: Friday night on June 12th, from 7pm. Who: You – be a captain and sign up your team right away. It’s easy – we’ll show you how. WHAT YOU DO: Build your team: Friends, family, colleagues, clients. Teams are often 10 people, but more or less is great too. Register: go to www.relayforlife.ca/wicc Choose your WICC Relay For Life event, either Garrison Commons or any other Relay event around the province. Pick WICC! Select WICC under “Team Company” to make sure your funds count for the industry campaign.

Questions? Go to www.wicc.ca Design compliments of

READY. SET. WALK. 27440_RelayAd_Magazine.indd 1

4/8/15 9:06 AM

Contractor’s Choice Insurance for good measure Introducing our new Contractor’s Choice packages, customized and enhanced to fit contractors of every size. Contact your Wawanesa Insurance representative to learn about our innovative solutions.

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