Canadian Underwriter January 2015 by Annex Business Media

C A N A D Aâ&#x20AC;&#x2122; 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

j an u a ry 2 0 1 5 A Business Information Group Publication #40069240

Transformative Time By Angela Stelmakowich

Tow Story By Craig Harris

Storm Chaser By Scott Stransky

CANADIAN UNDERWRITER

VOL. 82, NO. 1, January 2015 Canada’s Insurance and Risk Magazine. Published by Business Information Group

www.canadianunderwriter.ca

Cover Story

Transformative Time

While the concept of claims transformation is hardly new — the goal being efficient, effective and timely use of technology and work processes — today’s higher profile and buy-in opens the door to a transformative time. By Angela Stelmakowich

features

20 Anti-Fraud Strategies

Lightning Claims

Despite the progress to date, more needs to be done with detection, prevention and deterrence in the fight against insurance fraud.

While the frequency of lightning-related homeowner claims is low, these bolts from the blue can lead to losses from fire and electrical surge.

By Gordon Rasbach

By Greg Meckbach

y 201 5

mation group Publication #40069240

A recent ruling by an Ontario court, revolving around a personal injury claim, demonstrates that determining costs before trial is not only difficult, but can also be expensive and risky.

By Scott Stransky

By Richard Horak

32 Habitational Property Claims

64 Water Damage Claims

In Atlantic Canada, depending on the province, habitational property claims have doubled to quadrupled over the last two decades, prompting to take By AngelAinsurers STelmAkowich steps to address the losses.

36crAig Computer-Based By hArriS Ontario Towing Rules

An Alberta ruling makes clear that insurers there are not required to provide notice of limitation periods for claims with which they became aware prior to July 2012.

Ontario’s new auto insurance rules include strengthened transparency rules for tow truck operators meant to enhance both consumer protection and road safety.

By David Tupper & Keith Marlowe

By Craig Harris

A survey of tenants and homeowners in Alberta and British Columbia shows that water damage, the most common claim, continues to be overlooked and underestimated.

Transformative Time By Amanda Dean

Limitation Periods

Canadian Underwriter January 2015

56 Cost Estimates

The risk to insurers posed by severe thunderstorms in Canada, largely the result of an accumulation of losses from multiple events, can be better understood through the use of reanalysis data.

Tow Story

24 Thunderstorm Risks

Exams

Computer-based exams offer a level of flexibility that is not STrAnSky only welcomed in By ScoTT today’s insurance learning environment, but perhaps even expected.

Storm chaser

By Peter Hohman

By Karen Hopkins-Lee

property

auto

business

Because their story is ours too. When our policyholders feel good about their claims experience, so do we. That’s why we’re committed to providing quick, reliable and caring service, earning a reputation our broker partners have counted on since 1871. Watch real claims journeys at economicalinsurance.com/stories

The Economical brand includes the following property and casualty insurance companies: Economical Mutual Insurance Company, Perth Insurance Company, Waterloo Insurance Company, The Missisquoi Insurance Company, Federation Insurance Company of Canada. ©2015 Economical Insurance. All rights reserved. Economical® and related trademarks, names and logos are the property of Economical Mutual Insurance Company and are registered and/or used in Canada. All other trademarks are the property of their respective owners.

VOL. 81, NO. 2, FEBRUARY 2014 VOL. 81, NO. 2, FEBRUARY 2014 VOL. 82, NO. 1, January 2015 PROFILE PROFILE

Editor Angela Editor Stelmakowich Editor astelmakowich@canadianunderwriter.ca Angela Stelmakowich Angela Stelmakowich (416) 510-6793 astelmakowich@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca (416) (416)510-6793 510-6793

profile

Associate Editor

James Cameron, president of Cameron & Associates Cameron &Consultants Associates Limited, Insurance Insurance Consultants Limited, was by the CIP 18recognized Auto Adjust was recognized the CIPits Society when heby received Alf Strudwick, who has Society when he received Established Leader Award.its been in the business for Established Leader Award. BY ANGELA STELMAKOWICH five decades and now BY ANGELA STELMAKOWICH serves as president of the Ontario Insurance Adjusters Association, believed in the value of the organization when his career began in SPECIAL 1966FOCUS and still does. SPECIAL FOCUS By Greg Meckbach

6 Editorial 6 Editorial 8 Marketplace 8 special Marketplace focus 56 Moves & Views 5614 Moves & Views Editorial 58 Gallery 5816 Marketplace Gallery 68 Moves & Views 70 Gallery

(416) 510-6796 Online OnlineEditor Editor Harmeet Singh Online Editor Harmeet Singh hsingh@canadianunderwriter.ca hsingh@canadianunderwriter.ca Harmeet Singh Twitter: @CU_Harmeet Twitter: @CU_Harmeet hsingh@canadianunderwriter.ca (416) 442-5600, Ext. 3652 (416) 442-5600 ext. 3652 Twitter: @CU_Harmeet

Photo: Patrick Thompson

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

Thompson Photo:Photo: PatrickPatrick Thompson

Associate Editor Associate Editor Greg Meckbach Greg Meckbach gmeckbach@canadianunderwriter.ca Greg Meckbach gmeckbach@canadianunderwriter.ca Twitter: @CU_Greg gmeckbach@canadianunderwriter.ca Twitter: @CU_Greg (416) 510-6796 Twitter: @CU_Greg (416) 510-6796

Associate Publisher (416)Aquino 442-5600 ext. 3652 Paul Associate Publisher paul@canadianunderwriter.ca Associate Publisher Paul Aquino Twitter: @InsuranceCanuk paul@canadianunderwriter.ca Paul510-6788 Aquino (416)

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editorial

Old and New

When it comes to claims, for example, maintaining a level of human contact that fits the needs and expectations of the insured is highly recommended. Angela Stelmakowich Editor Canadian Underwriter astelmakowich@ canadianunderwriter.ca

14 Canadian Underwriter January 2015

Change can be exciting, it can be progressive and, as the saying goes, it can be good. But the head-over-heels love affair with change occasionally needs to be tempered by feet-on-the-ground reminders that change also comes with potential risks. The current view of technology is one such example. Information technology research and advisory company Gartner notes that IT spending worldwide is on pace to grow 2.4%, bringing the total to US$3.8 trillion, in 2015. A lot of support is needed for, among other things, the ongoing use of things like computers, mobile phones and tablets. In the property and casualty space, the promise that technology holds with regard to how much more efficient it can make processes — reporting incidents, sharing claims information, upping timely communications — is remarkable. Pair that with the associated data that can be collected, stored and used as an assessment or preventive tool, and the possibilities are truly mind-boggling. The caution, though, is to ensure the best of the “old” process is retained and incorporated into the “new.” When it comes to claims, for example, maintaining a level of human contact that fits the needs and expectations of the insured — the individual insured, plus the “insured” as a group — is highly recommended. Never is customer experience more important than at the

point of claim. Moving forward with change — even change that ultimately is applauded and adopted — initially demands considering the support that must go along with that progress. Gartner further recently reported that weak mobile customer service is harming customer engagement and that by 2017, a third of all customer service interactions will still require the support of a human intermediary. Overall impressions, it seems, do matter. Gartner notes that translating the general and departmental customer engagement concept into operational components across the enterprise “is transforming the definition of customer service from an isolated function into an enterprise objective delivered across all points where the customer ‘touches’ the business.” Although the findings relate to mobile customer service in general, for insurance, it is nonetheless telling that the pace of introduction channel choice and the focus on personalized customer experiences will require companies in most industries to retain a highly trained core of customer service professionals. A Towers Watson survey last year made clear just how important customer service is to chief claims officers (CCOs) south of the border. Loss cost containment was ranked as either the primary or secondary claim operational goal of 89% of polled CCOs, while delivering superior

customer service was the primary or secondary claim operational goal for 71%. In addition, 83% of those surveyed indicated proactive claims handling is the most important tactic to achieving both those objectives. Innovation will surely come into play. Celent reports that its recent poll shows that, overwhelmingly, respondents cited innovation as important or critical to achieving company strategy. That said, when efforts in innovation — defined as fundamental changes to products, services or business models that break existing trade-offs and result in value to the customer — in Canadian insurers was examined, respondents were dissatisfied. “Insurers need to innovate to meet consumer expectations,” says Mike Fitgerald, a senior analyst with Celent’s insurance practice and report author. When the Towers Watson respondents were asked about challenges in delivering superior claim outcomes, they cited insufficient understanding of leading indicators and metrics (46%), high levels of inventories/caseloads (43%), and lack of sufficient technical expertise (40%). That final point makes clear it is key to embrace technology to improve processes, but there must also be investment in education and training for staff (in claims, as elsewhere) dealing with that technology to ensure customer experience remains the central objective.

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marketplace

Claims VEHICLE THIEVES IN CANADA KEEP ON TRUCKIN’ Organized criminals in Canada are increasingly targeting Ford F-series trucks, with these vehicles occupying seven of the top 10 spots on the most frequently stolen vehicle list for 2014, note figures from Insurance Bureau of Canada (IBC). Rick Dubin, vice president of investigative services for IBC, says it is believed most of the stolen F-series vehicles were most likely re-vinned — given a false vehicle identification number — and sold to unsuspecting consumers. Although the incidence of auto theft in Canada has decreased — it dropped 8% from 2012 to 2013 — there were still 72,804 vehicles stolen last year, IBC reports. The bureau points out that most provinces are seeing auto theft go down, but there were a few exceptions: Newfoundland and Labrador had a 2% increase; Alberta had an 11% increase; and Yukon had a 29% increase.

CONVICTION MADE IN sTAGED COLLISION RING: IBC Vishnukanthan Sabapathy — who pleaded guilty to two counts of fraud over $5,000 for his involvement in false billings from health clinics and for making false insurance claims — was recently sentenced to two years less a day in jail, notes Insurance Bureau of Canada (IBC). Sabapathy must also pay 16 Canadian Underwriter January 2015

$1.3 million in restitution for his role in the scam (he paid $500,000 up front and was ordered to pay $800,000 more), IBC reports. The bureau notes the ring submitted auto insurance claims they purported to have been signed or authorized by several Ontario registered health practitioners when, in fact, they had not been. The fraudsters further staged several auto collisions, made accident reports to police and filed false injury claims. It is hoped the “significant” sentence will “act as a strong deterrent, the IBC notes, pointing out that Ontario auto insurance fraud adds $200 to $300 to everyone’s rate.

high CLAIM PAYOUT FOR CYBER BREACHES: SURVEY The average claim payout following a cyber breach for surveyed insurers in the United States amounted to US$733,109, notes a recent study by NetDiligence. The average claim payout for a large company was US$2.9 million, while the average in the healthcare sector was US$1.3 million. Findings are based on a sampling of 117 data breach insurance claims. The smallest claim payout was US$1,000 while the largest was US$13.7 million. Of the total payouts, 48% was spent on crisis services, 15% on legal defence, 10% on legal settlements, 10% on regulatory defence, 6% on regulatory fines, and 11% on payment card information fines.

Risk most RISK TOLERANCE FOR INNOVATION FITS ABILITY TO ABSORB LOSSES Only a tenth of polled Canadian businesses are truly risk averse, with the majority’s risk appetite for innovation matching their ability to withstand potential financial losses, notes the Conference Board of Canada. Based on a phone survey — conducted this spring and involving 1,000-plus responses — results indicate more than 70% of polled Canadian businesses have a risk tolerance in line with their financial capacity to withstand losses from those risks. About 15% of businesses have both the willingness and financial capacity to take significant risks and absorb potential losses. That said, roughly 10% of businesses are “truly risk averse in that their financial capacity exceeds their willingness to take risks,” while about 5% are considered the opposite, or “wishful thinkers,” the board reports.

RISK MANAGERS RESPONSIBLE FOR ERM UNDERSERVED: survey Surveyed risk professionals who are not responsible for enterprise risk management (ERM) report they are “generally more satisfied” with their organizations’ commercial insurance carriers and brokers than those professionals who hold ERM responsibilities. Findings in the 2014

Large Commercial Insurance Report, issued by the Risk and Insurance Management Society Inc. (RIMS) and J.D. Power, are based on responses from almost 1,000 risk professionals or employees of organizations that provide oversight or are members of their organizations’ risk management teams. “There is an opportunity for insurers and brokers to provide greater support and resources to customers in organizations that use ERM practices,” says Timothy Bebout, commercial insurance practice leader at J.D. Power.

Regulation SASKATCHEWAN UNVEILS INSURANCE REG changes The Saskatchewan government is introducing the first major revision to legislation governing insurance in five decades, a move meant to modernize requirements and bring provincial law in line with Alberta and British Columbia. Proposed changes include the following: permit insurance agents to adjust insurance claims to a prescribed amount; require insurers to point to specific clauses in a policy where there are limits on the amount payable; and update licensing categories and requirements.

PIPELINE OPERATORS WOULD FACE ABSOLUTE LIABILITY OF $1 BILLION FOR SPILLS Ottawa tabled proposed legislation in early December intended to impose on major

marketplace

oil pipeline operators absolute liability of as much as $1 billion in cases, including spills, and to require operators to have the financial resources to pay the limit of liability, such as insurance, bonds or guarantees. “The company is responsible for that $1 billion regardless. If a company is found negligent or at fault, there will be no limit on liability,” federal natural resources minister Greg Rickford said during a press conference after Bill C-46, the Pipeline Safety Act, was tabled. The absolute liability of $1 billion applies to major crude oil pipeline operators, defined by Natural Resources Canada as those with “the capacity to transport at least 250,000 barrels of oil per day” and regulated by the National Energy Board. “Provisions apply over the entire life cycle of the pipeline, up to and including its abandonment,” Rickford said.

Technology FUNDING TO SUPPORT TECHNOLOGY TO FORECAST SEVERE WEATHER EVENTS The Government of Canada, through the Canadian Space Agency (CSA), will invest $650,000 to support cutting-edge severe weather forecasting technology being developed at the National Optics Institute (INO). The contract was awarded to INO to further develop and test a new thermal imaging sensor — far infrared

radiometer — that requires no cooling and is compact enough to fly on a very small satellite, notes a statement from Industry Canada. The instrument will detect ice clouds forming at high latitudes that contribute to the cold, dry air masses feeding mid-latitude winter storms, Industry Canada reports. Satellite measurements of these clouds and their impacts on atmospheric cooling will improve the ability to forecast severe weather like unusual winter storms. The technology will be tested in 2015 and 2016.

INSURANCE, CONSTRUCTION INDUSTRY GROUP TO FOCUS ON DRONE USE EagleView Technology Inc., based in the United States, has formed a new group to look at the use of drones in the insurance and construction industries. The consortium — members of which include insurance carriers, construction industry representatives and the Insurance Institute for Business and Home Safety — seeks to “promote research, development and the establishment of regulations for the use of Unmanned Aerial System technology across the insurance and construction industries,” notes EagleView Technologies. The idea is the consortium will provide information and education to drive regulatory change and development of use of drones for data collection in the insurance and construction industries.

Canadian Market ONTARIO AUTO INSURANCE REFORMS COULD IMPACT CANADIAN P&C MARKET What else happens with Ontario auto insurance in the wake of recent reforms meant to combat fraud and protect consumers could influence the Canadian property and casualty market as a whole, A.M. Best suggests. “Given the size of the Ontario auto market [Ontario auto accounts for slightly more than 25% of Canada’s overall p&c industry direct premiums], how events play out will have meaningful implications for the overall Canadian P/C market,” notes a recent briefing from A.M. Best. Overall, Ontario accounted for 48.0% of total direct insurance premiums in 2013, Alberta for 16.8%, Quebec for 16.1%, British Columbia for 8.2%, Saskatchewan and Nova Scotia, each for 2.4%, and the “remainder” for 6.1%. Although insurance companies in the space have proved resilient, impacts of recent provisions “on both the industry and each individual company are yet to be fully determined.” Companies with significant scale, robust segmentation capabilities and/or a niche focus are expected to be better-positioned to absorb the impacts of the challenges from recent reforms, the A.M. Best report notes.

HUB FINANCIAL ACQUIRES Ontario’s MGA partners Hub Financial Inc. has acquired the shares of Ontariobased MGA Partners Inc. Hub Financial will now operate 16 locations with more than 200 employees throughout Canada. “The acquisition broadens Hub’s footprint in Canada’s eastern provinces, and its reach to financial advisors and insurance brokers seeking multi-fund insurance and risk solutions while maintaining their independence.” MGA Partners’ six locations in Ontario, and its offices in Prince Edward Island and Nova Scotia, will remain in operation. Peter Lamarche, president of MGA Partners, Patrick Kelly, vice president, and Miklos Valsamas, vice president and chief compliance officer, will join Hub Financial with their staff and continue in their roles.

INTEGRO ACQUIRES WESTERN CANADA BROKER Integro Insurance Brokers has acquired Vancouver’s Finning Insurance Services. Finning Insurance Services, which has staff in Edmonton and Kamloops, offers heavy equipment insurance solutions to commercial clients. Led by Kris Halldorson, Todd Getz and Charlene Almic, the company’s team has now joined Integro Canada. With offices in Montreal, Toronto and Vancouver, Integro Canada’s specialties include mining, manufacturing, construction, marine, real estate and recreational. January 2015 Canadian Underwriter

Profile

Auto Adjust Greg Meckbach Associate Editor

Alf Strudwick, now president of the Ontario Insurance Adjusters Association, believed in the organization’s value when his insurance career began 49 years ago and still does. When Alf Strudwick began his insurance claims career in 1966, his colleagues at the time were supporters of the Ontario Insurance Adjusters Association (OIAA). Strudwick, now OIAA president, saw the value of the association all those years ago and still does today. With his one-year term as OIAA president ending in June, Strudwick recalls being hired almost 49 years ago by a firm then known as Marine Office-Appleton and Cox Corporation (MOAC), now part of CNA Financial Corporation “As a 17-year-old, it became very clear to me... it was very important to get out there and network with the OIAA,” Strudwick says of his early days at the company, which he joined 18 Canadian Underwriter January 2015

right out of high school. OIAA’s Professional Development and Claims Conference, scheduled for February 4 in Toronto, is one such event designed to foster networking and education. “It generally involves every aspect of the all-lines business, so you have accident benefits, you have property, you’ve got liability, you’ve got investigative — whatever tools you need to do your job,” he says. Strudwick originally got active with OIAA as the president of the association’s Barrie, Ontario chapter during the 1980s, and remains in the area today, where he manages the Barrie office of Matrix Loss Adjusters Inc. (He has also held various other roles with the OIAA, including chapter delegate for Georgian Bay, secretary, treasurer and 1st vice president, before assuming his role as president last June.) Born and raised in the Beaches area of Toronto, he recalls how during his final year at Monarch Park Collegiate, business managers came to the school and spoke to students. “They had a banker come in and an insurance person come in, both very receptive to hiring anybody in the class,” he says. “I had interviews with the bank and then the insurance company. I listened to the banking (presentation) and I thought,

‘Ah, gee, that sounds a little boring,’ and then when I listened to the insurance presentation, I thought, ‘Gee, that sounds kind of interesting.’” And so it was that Strudwick was interviewed on a Friday in 1966 and accepted an offer to start working the following Monday. His first job at MOAC was in the mailroom, after which he spent three years doing claims examining and marine survey. “Probably one of the highlights of my entire life was being a young kid at 17, and going down to the docks in Toronto and inspecting damaged cargo shipments,” Strudwick says. “It was very, very cool for a young guy to be doing that stuff. I fell in love with it pretty early.” After three years at MOAC, Strudwick worked more than a decade as a staff adjuster, first at Prudential Assurance Company from 1969 through 1971, before heading to Central Mutual Insurance Company from 1971 until 1974, and then landing in Barrie at The Dominion of Canada General Insurance Company (acquired by The Travelers Companies Inc. in 2013) from 1974 to 1980. He remained in the area, later opening and managing the Barrie office of Ronald F. Thompson Insurance Adjusters Ltd., before moving

to the local office of Matrix Loss Adjusters, which he has managed since 1998. Today, he handles a variety of personal and commercial claims, including slips and falls, bodily injury and fires.

Fast lane The business of claims was instrumental in cementing another of Strudwick’s interests: cars. He has spent much of his spare time fixing

“I listened to the banking (presentation) and I thought, ‘Ah, gee, that sounds a little boring,’ and then when I listened to the insurance presentation, I thought, ‘Gee, that sounds kind of interesting.’” and racing cars, relaying that when he moved to Barrie in 1973, he owned a 1936 Ford. “Because of the business I was in, I started seeing a lot of wreckers and body shop people,” he says. Strudwick has updated somewhat since then. Currently the owner of a 1956 Pontiac Pathfinder, he says that he bought the

Profile

says. “As an eight-year-old, I would hop on the streetcar and go down to the CNE, all by myself, stand underneath the bleachers with a hot chocolate, and watch the cars go around the track.” As an adult, Strudwick has worked on cars, and driven them in races. He showed up one day to work on a claim at a garage which had burned down in nearby Orillia, Ontario. “I personally hadn’t (raced) for a good 20 to 25 years,” he says. “I walked in there and I said, ‘I’m Alf Strudwick, an adjuster,’ and he said, ‘I know exactly who you are. You drove the green and white ’68 car,’ and I said, ‘Oh, okay, you’re a racing fan.’”

Photo: Patrick Thompson

Gearing up

vehicle for $150 in 1980 and rebuilt it. “My race car shop at home, I had it geared up,” he says. “I could pull engines by myself and pull (transmissions) regularly.” Strudwick’s knowledge of vehicles “always helped immensely” in working on auto claims, he suggests. “When they know you’ve got a car interest, it is always a lot easier to talk to them, because they know that you know what you are talking

about,” he says of auto firms, such as body shops. “I have been involved in some sort of motor sports all my life and probably always will be to some extent,” Strudwick says. In the 1950s, for example, stock car races were held twice at year at the Canadian National Exhibition (CNE) grounds in Toronto. “I am old enough now that I can tell people this and they won’t believe it,” he

These days, Strudwick and other independent adjusters are gearing up for other challenges, including when different carriers have different policy wordings. Because of the competitive market, most carriers have personalized their policies so much, and this has created some challenges, he suggests. In the past, “you could handle a claim a little more from start to finish on your own, but now with everything so personalized... it’s a little tougher to help people as easily as you could before.” Expectations from some clients for such things as

service outside of traditional working hours is also creating some challenges, Strudwick suggests. “We, as an industry, have promoted 24-7 service handling, which is certainly not a bad thing,” he says, but adds it is “just a little tougher nowadays, I think, to satisfy somebody.” As well, there tends to be more claims professionals handling one file, especially for auto claims involving both injuries and vehicle damage. By the time a claim gets to him, there has already been five or six different people handling the file, he points out. It is important to explain to the claimant, even if that person has talked to a few other people, and inform that person in writing that the adjuster is “acting for your insurance company.” While many things have changed over his five decades in property and casualty insurance, one thing that has not is the value of OIAA to claims professionals, Strudwick contends. “As a 17-year-old trying to get into the business, and getting involved in the claims department and with these examiners that attracted me into the examining position, they were all heavy supporters of the OIAA,” he says. “If you want a career you have to invest in yourself,” Strudwick emphasizes. January 2015 Canadian Underwriter

A Firm Stand

Gordon Rasbach

Vice President, Anti-Fraud Management, Aviva Canada

Canada’s insurance industry is making strides in the fight against fraud, but more needs to be done with regard to detection, prevention and deterrence. A strong strategy of deterrence, coupled with a clear and defined anti-fraud philosophy, must become more prevalent. Fraud has been an ongoing issue for the property and casualty insurance industry. Realistically, it will continue to be a source of frustration for individual insurers and the sector as a whole. But that does not mean the insurance industry cannot do a better job of detection, prevention and deterrence. Fraud is not just the “cost of doing business” — openly deceitful, deliberate and criminal activity is, in fact, costing all stakeholders in terms of money, trust and public safety.

20 Canadian Underwriter January 2015

STEPS TO COMBATTING FRAUD Anti-fraud philosophy At an individual insurance company level, several things can be done to enhance fraud-fighting capabilities. The first and arguably most important step is a visible corporate anti-fraud philosophy. Many insurers have generic policies to fight fraud, but these are usually not well-publicized to employees or business partners, such as brokers. How can they respond if they do not know the rules of the game? A specific anti-fraud philosophy could contain various sections and declarations about a company’s approach. For example, it should define the fraud environment (types of fraud, cost and perpetrators). This is not always as simple or straightforward as it sounds. What the p&c industry has defined as “insurance fraud” in the past 20 years has largely been claim fraud. What Aviva has seen in the past few years is a more integrated model of fraud that involves underwriting, claims and suppliers. The company defines insurance fraud as exhibiting any or all of these three fraud classifications.

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Anti-fraud management In addition to defining the scope of the problem, a public anti-fraud statement should outline a corporate strategy that extends to responsibility, level of tolerance, intervention and deterrence. This can be spelled out in an anti-fraud management program that, preferably, establishes dedicated teams to the multipronged issue of fraud. At Aviva Canada, in actual cases of claims fraud involving a full or partial denial of that claim, more than 50% were found to also involve underwriting fraud. Corporate responsibility pledge “Zero tolerance” is a term thrown around a lot these days, but what does it really mean? It should involve a specific pledge of corporate responsibility and duty to report crimes to the police or other investigatory bodies. This is not a “nice-to-have,” but a “must-have” for all employees, especially those in underwriting and claims management. It instills a culture of awareness and reporting obligation, while demonstrating corporate leadership in the fight against fraud. That culture of awareness should also extend to other business partners, including brokers. It is important in an anti-fraud philosophy to iterate a sound approach to customer relations. Clarity is vital when it comes to acknowledging that the vast majority of policyholders and suppliers are honest and legitimate. Fraud only pertains to a relatively small proportion of policyholders or suppliers. There is a potential danger of overzealous techniques that tar all clients with the same brush of suspicion. One cannot overemphasize key concepts, such as that claims are initially treated with a full “presumption of validity” and that customers or suppliers are “innocent unless proven guilty.”

EMBRACING TECHNOLOGY Technology tools are becoming increasingly prevalent in fraud prevention among insurance companies. In the last five years, insurance companies have embraced a wide range of data analytics 22 Canadian Underwriter January 2015

for fraud detection, including among others, anomaly detection, predictive modelling and fraud network analysis. The next wave of resource allocation by insurers has been bringing in analysts to sift through the massive data output of these technology tools. How an insurance company uses technology should be clear in any corporate anti-fraud policy. While sophisticated,

bodies. This is critical given the frequency of co-ordinated, ring-type activity endemic to insurance fraud. With the formation of CANATICS, set to go live in early 2015, sharing of depersonalized data among companies will become a new way of doing business. CANATICS now has nine member insurance companies representing 70% of all auto insurance direct written premiums (DWP) in Ontario, or about 40% of market share on a national basis. As a consortium for industry-wide fraud network analysis, it will provide “alerts” of suspicious patterns or activity to insurance companies. These technology tools come with a certain proviso. As more data around suspicious activity becomes available, there is a corresponding need for investigation, meaning investment in investigative resources must keep pace with the data analytics and alerts generated of potential fraud.

FOSTERING CO-ORDINATION

How an insurance company uses technology should be clear in any corporate anti-fraud policy. While sophisticated, technology should never be used as the only source of fraud detection. It is not a substitute for sound underwriting and claims judgment. technology should never be used as the only source of fraud detection. It is not a substitute for sound underwriting and claims judgment. An anti-fraud philosophy should also spell out guidelines for co-operation with insurance companies and other groups, including law enforcement agencies, regulators and professional supervisory

When it comes to notification of law enforcement agencies, the unfortunate aspect of past insurer anti-fraud efforts is that they have occurred on an ad hoc basis — sometimes cases get reported, sometimes they do not. A well-crafted anti-fraud philosophy should contain a responsibility to report every potential criminal activity that an insurer comes across during its course of business. Reporting to police or other agencies has to become a pillar of any real deterrent strategy, especially when it involves supplier fraud. A key component of notifying law enforcement is the follow-up stage of accountability. Once an insurance company suspects criminal action and responds with a formal report to police, there is an obligation to pursue any action that particular agency has taken. The response from police agencies and chiefs across the country to insurance fraud has been excellent in recent years. However, there are occasions when specific agencies must be held accountable through the solicitor-general or other authorities when they are not tak-

ing insurance fraud seriously. Insurance companies do not just report to police, but also to regulators (or self-regulators) such as the Financial Services Commission of Ontario and the Registered Insurance Brokers of Ontario and supervisory governing bodies, such as health colleges. Again, a specific anti-fraud policy has to involve transparent practices for reporting complaints and procedures for follow-up and accountability. A complaint is not picking up the phone and calling the relevant body; all cases should be recorded and documented, accompanied by evidence. When it comes to fraud deterrence, there is no penalty without publicity. For far too long, fraudsters have operated under a cloak of silence. Insurers must be committed to putting convictions in the public domain if they want to see true results in deterrence. The more fraudsters are appropriately punished, the more the industry as a whole will see a decline in fraudulent activity. Jail terms, restitution payments and other hefty penalties are critical to deterring future staged thefts and accidents.

ADVANCING EFFORTS While a clear philosophy and industry co-operation are prime parts of an antifraud strategy, there are big-picture issues that also must be considered. Ontario’s recently passed Bill 15 auto insurance legislation contains helpful provisions for fighting fraud, but these alone do not fully address the enormity of the task. The insurance industry must seriously examine funding of police resources or a provincial agency that has the authority to act on fraud cases. This type of funding for specialized detectives and/or prosecutors exists in certain jurisdictions in the United States and in England. It is the most effective means of stopping the biggest leaks in the insurance industry when it comes to underwriting, claims and supplier fraud. While not a new idea, it has taken on a higher profile in recent months. The insurance industry is making progress in the fight against fraud, but

insBlogs

it cannot be fought in isolation or with dollars or fraud comprising 5% to 10% good intentions. It has to be document- of premiums. But there is another more ed in an accessible anti-fraud policy, important number: home and car insurwith attention to detail and a commit- ance amounts to roughly 5% of peoples’ ment to action when it comes to inves- disposable income. If fraud starts to run tigation, reporting and deterrence. If rampant, that increases the amount legitnot, fraudsters will continue to hit the imate customers must pay for insurance. insurance industry — and its customers. In any similar set of circumstances — When people talk about insurance fraud, or in any other industry — there would they often cite numbers inBlogs the billions be a Underwriter harsh deterrent in place. Insurance hosted byofCanadian

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Insurance Blogs hosted by Canadian Underwriter Meeting regulatory requirements: Sometimes size matters by Peter Morris – December 22

Retrofit home highlights actions homeowners can take to reduce the risk of basement flooding by Glenn McGillivray – December 16 Are insurance customers less loyal? And why? by Christian Bieck – December 15 On Diversity and Inclusion in the Insurance Industry by Roger Bickmore – December 9 Are Auto Insurers Using Cost Control Tools Properly? by Willie Handler – December 5 Ontario Auto Insurance: Time for a Change by William Star – December 5 A Look at New Auto Insurance Regulations in Ontario by Willie Handler – December 2 Where does Security Fit in the Connected Home? by Catherine Smola – December 1 Chief Digital Officer: The next big thing? by Peter Morris – November 27

January 2015 Canadian Underwriter 23

Thunder

Scott Stransky Manager and Principal Scientist, AIR Worldwide

The risk to insurers posed by severe thunderstorms in Canada is largely the result of an accumulation of losses from multiple events. Historical data on thunderstorm risk is available, but gaining a clear picture of the peril can be advanced through the use of reanalysis data. Summertime in Canada can bring hot and sometimes humid weather to many of the country’s most developed areas in the south central and southeastern regions. The jet stream tends to migrate toward Canada at that time of year, flowing across many of the country’s major cities. It often combines with unstable weather systems that form near the Rocky Mountains or the Great Lakes, or are carried north and east from the Gulf of Mexico across the United States. This interaction can result in severe thunderstorms that bring damaging hail, tornadoes and straight-line winds. The risk that severe thunderstorms in Canada pose to insurers is, as in the United States, largely the result of the accumulation of losses from

24 Canadian Underwriter January 2015

Struck multiple events, contributing to a higher annual aggregate loss. However, several historical events stand out as causing significant loss in Canada on their own, many producing significant losses from a combination of perils.

PERILS OF HAIL, TORNADOES AND STRAIGHT-LINE WINDS Most costly thunderstorm peril To date, the costliest peril associated with severe thunderstorm events is hail — and Alberta is the site of one of North America’s most volatile hail zones. Hail damage in this region is so great that some companies have used the controversial (and scientifically unproven) practice of seeding clouds with crystalline silver iodide in the hopes of reducing the amount of hail in high-exposure areas. Hailstones — which can be as small as a pea or as large as a softball — are capable of causing significant damage to buildings, automobiles and crops in Canada. The July 12, 2010, hailstorm in Calgary, for example, caused insurable damage of approximately $450 million to buildings alone. Canada has the world’s second highest frequency of tornado events, with about 80 to 100 reported tornadoes each year. (The United States ranks first, with an average of 1,000 to 1,200 annually.) Recent research by scientists at Environment Canada indicates that approximately 100 additional unreported tornadoes may occur annually

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Damage from the 2011 Goderich tornado

Source: Eric Van Lochem from Wikimedia Commons

in Canada; population bias is a crucial consideration when analyzing the severe thunderstorm reports. Most intense thunderstorm peril One of Canada’s most significant tornado events occurred on June 22, 2007, when the country’s only F5 tornado on record — F5 is the highest level of intensity on the Fujita scale, which is based on the damage from a tornado, a rare event in any part of the world — touched down 40 kilometres outside of Winnipeg. The intense twister, measuring 300 metres wide, left a 5.5-kilometre trail of destruction as it tore homes from their foundations and sent cars and trucks spinning off highways. That year, eight tornadoes occurred in Manitoba, including an F3 just south of Baldur, a small community about 200 kilometres southwest of Winnipeg. And on August 21, 2011, an F3 tornado with a width of 1,500 metres formed over the Great Lakes and, accompanied by hail and violent straight-line winds, tore through the picturesque and historic town of Goderich, Ontario, causing more than $130 million of damage. Although tornadoes are capable of producing damage and losses far greater than hail, they usually do not because they generally have narrower swaths than hailstorms. Most frequent thunderstorm peril Often, damage attributed to a tornado appears to be spread in one direction. In 26 Canadian Underwriter January 2015

these cases, the true culprit of the damage is, in fact, straight-line wind, which is the most frequent peril associated with severe thunderstorms. While they lack the dramatic appearance of tornadoes, straight-line winds can cause a similar amount of damage that can stretch across hundreds of kilometres.

UNDERSTANDING SEVERE THUNDERSTORM POTENTIAL Insurers and reinsurers concerned with the exposure of their portfolios to severe thunderstorms need to understand where future storms are likely to occur, how strong they may be and the potential damage that could result. In the U.S., the Storm Prediction Center collects point reports of historical storm data — containing the time of the storm, both its location and intensity, and information on damage and other observations — from the public, the media and trained weather spotters. Currently, storm reports in Canada are not very comprehensive or consistent, although efforts are under way by scientists at Environment Canada to create a comprehensive database, starting with the tornado subperil. An alternate method of analyzing severe thunderstorm risk that supplements the historical data is the use of reanalysis data. The National Centers for Environmental Prediction, an organization within the U.S. National Oceanic and Atmospheric Administration, initiated a project to provide atmospheric data,

at high spatial and temporal resolution, for climate studies. The result of this project is the Climate Forecast Systems Reanalysis (CFSR), which is a worldwide dataset that represents a “best estimate” of the state of the atmosphere through time. CFSR is based on a type of atmospheric simulation model known as a numerical weather prediction (NWP) model. Available observational data from surfacebased weather stations, ocean buoys, weather satellites, precipitation gauges and weather balloons are input into the model. This detailed information allows an NWP model to estimate data values in locations where observational data is not available, thereby providing complete and seamless spatial coverage. CFSR data, which include records as far back as 1979, provide key information about the state of the atmosphere at the time of past severe thunderstorm events. Conditions that are conducive to severe thunderstorm formation — including moisture, instability, rotation and lift — can be used to determine where events of each type of peril were likely to have occurred. For example, reanalysis data from July 12, 2010 was used to indicate regions of high potential for hail formation (see Figure on page 27) and these results match well with areas where actual hail events were noted.

CLOSING THOUGHTS Damage footprints of severe thunderstorms can be small, and given Canada’s vast land mass, observational data and damage claims from historical events do not provide a complete view of the risk across the country (or even within a province). Using reanalysis data, a comprehensive view of risk in Canada can be achieved even without a large database of historical storm data. And since reanalysis data are not based on human-reported events, the information is unbiased by both population growth and population distribution,

which is a major advantage when analyzing storm risk in Canada. Studies that incorporate both observations and CFSR reanalysis data indicate that severe thunderstorm risk exists to some degree in all of the Canadian provinces. The atmosphere is less conducive to severe thunderstorm risk in the far northern areas, which are sparsely populated, as well as in the Maritimes, although the latter is susceptible to tropical cyclones. As Canada’s population is concentrated in some areas and sparse in others, the risk varies a great deal depending on the location. A worst-case scenario could result from either a single large tornado in a major city, or an extended outbreak that affects large regions. Effective management of severe thunderstorm risk, therefore, requires a robust view that takes account of a full range of scenarios that reflect the true risk in all areas of the country.

Regions With High Potential for Damaging Hail Formation

Source: AIR, Regions with high potential for damaging hail formation — based on reanalysis data on July 12, 2010 — correspond well with the actual major hail event in Alberta

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January 2015 Canadian Underwriter 27

Rethinking Limits Insurers in Alberta and British Columbia are obligated to provide notice of limitation periods to claimants. But a recent ruling out of Alberta makes reasonably clear that insurers in the province are not under an obligation to provide notice of limitation periods for claims with which they became aware prior to July 2012.

Partner, Blake, Cassels & Graydon LLP

Keith Marlowe

Litigation Associate, Blake, Cassels & Graydon LLP

28 Canadian Underwriter January 2015

APPLICABLE LEGISLATION Alberta In Alberta, Section 5.3 of the Fair Practices Regulation, effective July 1, 2012, imposes an obligation on insurers to notify claimants of the limitation period set out in Section 3 of Alberta’s Limitations Act. In Alberta, the limitation period, in most instances, will be two years from the date on which the claimant first knew, or in the circumstances ought to have known, that it had an injury that was attributable to the conduct of the defendant, and which warranted bringing a proceeding against the defendant. It is noteworthy that the definition of “claimant” in Section 5.3 of the Fair Practices Regulation includes more than just the insured. Pursuant to Section 5.3(1), “claimant” includes the following: a beneficiary, an insured, a person who has a claim against an insured who has initiated a claim for indemnity under an insurance policy, and certain creditors referred to in Section 579 of Alberta’s Insurance Act. Section 5.3(2) of the Fair Practices Regulation re-

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David Tupper

A ruling this past October by Alberta’s Court of Queen’s Bench raises some questions about the applicability of Alberta’s Fair Practices Regulation and British Columbia’s Insurance Act to corporations and commercial insurance contracts. Although there is no case law in either province holding that the regulation or act applies, until there is, insurers in both provinces would be well-advised to adopt best practices. Insurers in Alberta and B.C. are statutorily obligated to notify claimants of potentially applicable limitation periods. An insurer’s failure to give the required notice in Alberta may result in an order from the court extending the applicable limitation period; in B.C., the result is an automatic suspension of the applicable limitation period. In addition, given the wording of the legislation in Alberta and B.C., it is very reasonable to assume that certain enactments apply to all manner of insureds, including corporations, and all types of insurance contracts, including commercial insurance contracts.

quires insurers to give written notice, with specific reference to the Limitations Act, to claimants of the applicable limitation period within 60 days from the date a claimant notifies the insurer of a claim, or within five business days from the date the insurer denies the claimant’s claim. Pursuant to Section 5.3(7), if an insurer fails to give the claimant the notice required by Section 5.3(2), the court may, on application by the claimant, order that the applicable limitation period be extended. British Columbia In B.C., Section 4 of the Insurance Regulation, effective December 19, 2012, imposes a similar obligation on insurers to notify claimants of the applicable limitation period. However, in the province, the applicable limitation period refers to a limitation period established by Sections 23 (general insurance provisions), 76 (life insurance), or 104 (accident and sickness insurance) of B.C.’s Insurance Act. As with Alberta, insurers in B.C. must give written notice, with specific reference to the provincial Insurance Act, to claimants of the applicable limitation period

The court concluded that in the absence of specific language to the contrary, the court was entitled to presume the Fair Practices Regulation was not intended to apply retroactively. Accordingly, the plaintiff’s action was dismissed.

at the time or within five business days after an insurer denies liability for all or part of the claimant’s claim. Section 4(2) also requires insurers to give written notice to claimants of the applicable limitation period at or within 10 business days after the first anniversary of the date the insurer received notice of a claim, or of a third-party action, unless the insurer has either already provided the claimant with notice or already adjusted the loss acceptably to the claimant or settled the claim. Unlike Alberta where the court may extend the applicable limitation period, Section 4(6) of the British Columbia act requires an insurer to provide the required notice, failing which the applicable limitation period is automatically suspended, starting on the date the insurer was required to give notice to the claimant and ending on the earlier of the date that an insurer gives notice of the limitation period to the claimant or six years after the date a claimant’s cause of action against the insurer arose.

JUDICIAL TREATMENT The only reported decision on either Alberta’s Fair Practices Regulation or B.C.’s Insurance Regulation was issued in the January 2015 Canadian Underwriter 29

October 3, 2014 ruling by Master Andrew Robertson of the Court of Queen’s Bench of Alberta in Dhillon v. Anderson. In Dhillon, the parties were involved in a motor vehicle accident in March 2011, the defendants’ insurer became aware of the claim in May 2011 (prior to the coming into force of the Fair Practices Regulation), and delivered a settlement offer to the plaintiff shortly thereafter. The settlement offer was not immediately accepted, and the defendants’ insurer engaged in further communication with the plaintiff, including making several requests for information. The limitation period for commencing an action against the defendants would normally have expired two years after the date of the motor vehicle accident (i.e., March 24, 2011). However, the plaintiff did not sue the defendants until October 2, 2013, after the expiry of the limitation period. The plaintiff alleged that because he was a “claimant,” the defendants’ insurer

was required to give him notice of the applicable limitation period, and that it had failed to do so. In response, the defendants’ insurer indicated its adjusters

lation is more than a mere procedural regulation, as it may “fundamentally affect a substantial defence that a defendant may have,” namely the expiry of a limitation period. As such, Master Robertson concluded that in the absence of specific language to the contrary, the court was entitled to presume the Fair Practices Regulation was not intended to apply retroactively. Accordingly, the plaintiff’s action was dismissed.

PRACTICAL IMPLICATIONS

specifically told the plaintiff there was a limitation period, albeit not in writing as required by the Fair Practices Regulation. Master Robertson held that that regu-

It is reasonably clear from Dhillon that Alberta insurers are not under an obligation to provide notice of limitation periods for claims that they became aware of prior to July 1, 2012. However, apart from that issue, Alberta’s Fair Practices Regulation and B.C.’s Insurance Regulation both have broad implications for the insurance industry. Although both regulations are intended to protect consumers, a close reading of the legislation suggests that these

A catastrophic event

enactments will apply to all manner of insureds and all types of insurance contracts, including corporations and commercial insurance contracts. Section 5.3(1)(a) of Alberta’s Fair Practices Regulation defines “claimant” as “an insured” and Section 5.3(1)(b) defines an “insured” as a “person insured by a contract of insurance, whether named in the contract or not.” Although “person” is not further defined in the regulation, Section 1 of the provincial Insurance Act, includes corporations in the definition of “person.” Similarly, Section 1 of B.C.’s Insurance Act, includes corporations, unincorporated societies, and associations in its definition of “person.” Although no case law in either Alberta or B.C. has held that Alberta’s Fair Practices Regulation and B.C.’s Insurance Regulation apply to corporations and commercial insurance contracts, there is a reasonable argument that they do. Until the scope of these regulations are further addressed by the courts, Alberta

and B.C. insurers should develop their own best practices to ensure compliance with the applicable legislation. These best practices may include the following:

• provide notice in writing to the claimant of the applicable limitation period (either pursuant to Alberta’s Limitation Act or pursuant to B.C.’s Insurance

Act), both when a claim is first made and again when the claim is denied in part or in whole (retain a copy of the notice on file); • notices must make specific reference to the applicable legislation and operative limitation period; • notices should be provided to all claimants, whether or not the claimant is the insured under the insurance policy, and whether or not the claimant is a natural person, a corporation or other entity; and • although both Alberta’s Fair Practices Regulation and B.C.’s Insurance Regulation provide that notices of limitation periods need not be sent to claimants who are represented by legal counsel, as a matter of good practice, insurers should send the notices to all claimants without regard for whether or not they are represented by legal counsel. The authors acknowledge the contributions of students-at-law, Liam Kelly and Ian Clarke.

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Atlantic

Perspective Amanda Dean Vice President, Atlantic, Insurance Bureau of Canada

Property damage claims are on the rise in Atlantic Canada. Depending on the specific province, habitational property claims have doubled to quadrupled over the last two decades. As of mid-December, Atlantic Canada had managed to escape the large-scale, severe weather events that have caused billion-dollar losses in other regions of the country recently. But that hardly means the eastern coasts are clear. To the contrary, data analysis shows that total habitational property claims have skyrocketed in the last two decades in the four Atlantic provinces. In New Brunswick and Nova Scotia, for example, claims have doubled; in Prince Edward Island, they have tripled; and in Newfoundland and Labrador, they have quadrupled. The charts on pages 26 and 27 — all in 2013 dollars — clearly demonstrate a mostly consistent upward trend in average claims incurred over the last 20 years. Looking at direct claims incurred by region (based on data from MSA Research Inc.), Insurance Bureau of Canada (IBC) considered three different periods: 1994-1998, 1999-2003, 20042008 and 2009-2013. For those periods, New Brunswick witnessed percentage increases of 119.6%, 69.7% and 40.8%, respectively; Nova Scotia saw percentage increases

32 Canadian Underwriter January 2015

of 103.8%, 24.3% and 33.4%; Prince Edward Island experienced percentage increases of 175.6%, 26.5% and 23.7%; and Newfoundland and Labrador witnessed percentage increases of 311.0%, 117.0% and 104.9%. Considering each specific period by province, the average costs for personal property direct claims incurred (in 2013 dollars) generally consistently increased, except for a few exceptions. The data notes the following: • New Brunswick — $60.3 million for 19941998, $78.1 million for 1999-2003, $94.1 million for 2004-2008, and $132.5 million for 2009-2013. • Nova Scotia — $72.0 million for 1994-1998, $118.0 million for 1999-2003, $109.9 million for 2004-2008, and $146.6 million for 2009-2013. • PEI — $6.1 million for 1994-1998, $13.4 million for 1999-2003, $13.7 million for 20042008, and $16.9 million for 2009-2013. • Newfoundland and Labrador — $18.8 million for 1994-1998, $55.5 million for 19992003, $41.5 million for 2004-2008, and $77.1 million for 2009-2013.

BIG IMPACT OF SMALLER EVENTS What the Atlantic region is experiencing is an increase in small severe weather events rather than large events that qualify as “catastrophic losses” or losses exceeding $25 million. Typically, property catastrophic analytic and modelling services only report losses of $25 million or more, but that certainly does not mean that those smaller

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losses do not add up quickly. The last two Cat losses in the region occurred in 2010 — Hurricane Igor slammed into Newfoundland and Labrador in September, causing more than $70 million in insured losses, and a major winter storm struck in December, resulting in more than $50 million in insured losses. More recently, however, many small events in any given year have added up to a number of years where bad weather was the theme overall. Last year was one such example, with Atlantic Canada experiencing the following: • a heavy snowstorm across the region in February; • a tornado in Grand Lake, New Brunswick in July; • record rainfall and flooding in St. Stephen, New Brunswick and Digby, Nova Scotia in July; and • also in July, all of Atlantic Canada dealt with the aftermath of Hurricane Arthur, which led to widespread power outages. INDUSTRY FACING COST PRESSURES This huge increase in habitational property claims has put intense cost pressure on the insurance industry. Private property and casualty insurance companies operate in a highly competitive marketplace in which each insurer chooses its own strategy to deal with increases in claims costs.

34 Canadian Underwriter January 2015

Source: IBC, with data from MSA Research Inc. Note: Adjusted for Inflation, 2013 dollars

In Atlantic Canada, as elsewhere in the country, each insurer has reviewed its premiums and deductibles, coverage, terms and limits. Pressures are being seen in all four Atlantic provinces — not one is singled out. Insurers are looking for ways to remain competitive and to continue to serve customers with available and affordable products. Raising deductibles is one way some insurers are looking to do that. If consumers have questions about increased deductibles, they are encouraged to go back to their brokers or agents to ask for deductibles with which they are more comfortable. It is important to note, however, that this may translate to higher premiums. Simply raising premiums is one option. Increased deductibles and looking at the home insurance product more closely is another. Consumers are encouraged to discuss their needs with trained insurance professionals to find the best pricing and coverage for their respective situations, including considering alternatives like reviewing coverage and deductible levels. It is also important for consumers to consider how best to protect their homes and personal property from the effects of severe weather to help prevent losses. These measures are important, but the insurance industry also has a larger responsibility to help the country as a whole deal with the global reality of the

weather effects of a changing climate. Experts report that all regions of Canada will experience higher winds and more precipitation more often, meaning greater potential for water damage, flooding and wildfires.

Insurers are looking for ways to remain competitive and to continue to serve customers with available and affordable products. An IBC-commissioned research report by Canadian climatologist Gordon McBean describes severe weather trends in each region of the country that include more hail, storm and wildfire events anticipated over the coming decades. In Atlantic Canada, in particular, the study projects more intense precipitation, more frequent hurricanes and winter storms, and more significant storm and coastal surges by 2050. Mitigation demands having industry work with all levels of governments to share expertise and develop tools. In November 2013, for example, IBC launched the Municipal Risk Assessment Tool (MRAT) — a statistical, web-based tool to help communities evaluate the impact of current and future climate change on their municipal sewer and stormwater infrastructures — in three

Source: IBC, with data from MSA Research Inc. Note: Adjusted for Inflation, 2013 dollars

cities, including in Fredericton. The tool seeks to aid municipalities, which have few, and often outdated, tools to quantify the susceptibility of urban drainage systems to severe weather events. MRAT is also designed to promote better allocation of limited municipal

Source: IBC, with data from MSA Research Inc. Note: Adjusted for Inflation, 2013 dollars

resources to answer the most pressing sewer and stormwater infrastructure demands and alleviate basement flooding in areas that are most vulnerable. IBC also supports increased investments in upgraded infrastructure — especially sewer and stormwater systems

— by all levels of government, as well as land zoning restrictions in floodprone areas. Such measures are key in light of increasing severe weather that may affect everyone’s future, including homeowners and businesses in Atlantic Canada.

g n i t o Rebo

Education Computer-based exams offer a level of flexibility that is not only welcomed in today’s learning environment, but perhaps even expected. Those in the insurance industry looking to advance their education and contribute to their companies are no different.

Peter Hohman President & Chief Executive Officer, Insurance Institute of Canada

Students taking C40 Business Interruption Insurance, an elective course in the Insurance Institute of Canada’s (IIC) Chartered Insurance Professional (CIP) designation program, will notice something new when they take their final exam in December 2015. The exam centres will feature computers, not paper exams, representing not only a milestone event in insurance education, but also launching IIC’s plan to phase out paper-based exams gradually over two years. By 2017, all CIP and GIE courses will offer computer-based exams (CBEs). While CBE may represent a sea change for some, IIC has long recognized the emergence of computer technology in the contemporary learning experience. Its first online tutorial for the CIP program was launched in 1998, and the first virtual class offered 11 years later (see infographic timeline on pages 38 and 39). Since then, virtual class registrations have expanded to 1,500, with most virtual class mid-terms being conducted online. Then in 2010, the executive committee of IIC’s Board of Governors first approved the conceptual development of what are now CBEs.

WHY COMPUTER EXAMS? WHY NOW? One major benefit of CBE for employers and students alike is a new, flexible exam schedule.

36 Canadian Underwriter January 2015

Benefits for employers CBE exam scheduling harmonizes education with the practical reality of running a contemporary insurance business. Currently, all CIP final exams are paper-based and must be written during a one-week exam session immediately following the course. Examination sessions for all CIP courses are held three times a year — in April, July and December. Compare that to three-week-long exam sessions for CBE courses. Students will have an opportunity to organize their CIP exam dates within that window, subject to certain timeframes and availability of resources. Offering longer exam sessions will make a big difference to insurance organizations employing CIP students, Chad Shurnaik, vice president of underwriting and marketing at Peace Hills Insurance in Edmonton, suggests, adding that CBEs are a huge benefit. “Because of the pace of business today, having an exam on a specific day doesn’t always work. The company’s work needs to be done, and you have to have people on staff to complete the job,” Shurnaik says. Managers are responsible for staffing and making sure service levels are consistent and reliable throughout the organization. A challenge arises when staff members are writing multiple CIP exams. Depending on the number of paper-based

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exams they are writing, CIP students could be out of the office for as long as a week, including time off for preparation and taking the exams. Juggling staff schedules is not easy. What does a line manager do, for example, when five out of 14 members of the team are writing paper-based CIP exams during a single week? The smaller the organization, the greater the difficulty in finding people to cover for students who are writing their exams. “We want our students to succeed,” Shurnaik emphasizes. “We give them half a day off to study, and they have a day off to write the exam. That means our company may not have a student for up to two days during the paper-based exam period. Unexpected things can happen at work and, with the three-week CBE exam window, the timing can be managed better if something pops up.” CBE’s flexibility will also allow employees who travel to, or work in, multiple job sites to schedule exams to suit their preferred locations. Benefits for CIP students CIP students have participated in several tests of CBE and have provided valuable feedback. Students who took part in testing last July reported they found CBE to be fast, convenient and comfortable, and the longer exam sessions allowed more time to prepare between exams.

38 Canadian Underwriter January 2015

“It takes a lot of the pressure off, because now you are able to spread the exams out,” says Ontario CIP student Kylie Pemberton, who remembers taking four paper-based exams within a one-

Juggling staff schedules is not easy. What does a line manager do, for example, when five out of 14 members of the team are writing paper-based CIP exams during a single week? The smaller the organization, the greater the difficulty in finding people to cover for students who are writing their exams. week exam session. “We were writing back-to-back-to-back-to-back, whereas with the new CBE method of scheduling, you have time in between the four exams to refresh your memory on different subjects.” Students involved in early testing suggested that CBE will help make the exam experience itself more comfortable and intuitive. “I was done CBE earlier because of the comfort of typing. I think a

lot of people in this industry who work in an office type quicker than they can physically write something out,” notes CIP student Alexandra Polianskaia, who participated in early testing. It is expected the quality of exam responses may also improve since the time saved by typing rather than writing will give students more time to reflect on and refine their answers. Whether CBEs or paper exams, students will have three hours to complete the tests. “I felt I had more time to formulate a better answer in a computer-based exam than in the written format,” CIP student Brett Logan says of her experience testing CBE. “I was able to think my answers through, see my answers and be able to edit them.” CBE students will also receive their grades sooner, with the time between writing exams and receiving results expected to be cut about in half from the about five weeks for paper exams. Faster grading will benefit students anxious to know their results, but will also benefit employers’ human resources personnel, who will be able to make more timely decisions related to promotions and performance reviews based on CIP results and feedback.

THE SPEED OF THOUGHT In a digital age dominated by the use of desktops, laptops, tablets and mobile

devices — and people constantly using keyboards in both their business and personal lives — the same option should be available to those who are writing CIP exams. “I think the benefit of doing exams

on computers is that quite a few people nowadays are so used to typing all day, they are a lot faster typing than writing,” says CIP student Carly Buchanon, who took part in the CBE testing. With computer exams, “you can keep up with

your train of thought,” Buchanon says. CIP students taking computer exams will also be able to keep up with the pace of their business, contributing to both their personal success and that of their companies.

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January 2015 Canadian Underwriter 39

e v i t a m r o f s n Tra Time Talk of â&#x20AC;&#x153;claims transformationâ&#x20AC;? in the property and casualty insurance industry is hardly new. Talk has already turned to action for some, businesses that have updated people, process and technology to answer the evolving and inevitable demands being fuelled by customer experience. However, is transformation now a business imperative to be relevant in the future? Angela Stelmakowich

40 Canadian Underwriter January 2015

sk those in the property and casualty insurance industry if there is a need for claims transformation, and the answer invariably is “yes.” Rocco Neglia, vice president of claims for Economical Insurance, says the claims process is now a relatively linear, sequential one, but it appears that the industry is at the beginning of the end of that process. “Because of the way technology is exponentially evolving, particularly in the area of automobile,” Neglia points out, claims organizations will need to reinvent themselves to be able to respond to the technological change currently unfolding. Facing a highly fragmented and highly competitive environment, Daniel Shum, partner and national insurance leader for Deloitte in Canada, notes that this is creating pressure on p&c insurers to lower their expenses. That being the case, most insurers have been looking at claims in some way to determine how they can reduce indemnity costs and stem the flow of fraud, Shum reports. Insurers launch transformation projects, perhaps when they are looking at a technology change or there is a new component they want to incorporate in their process, says Louis Régimbal, partner, advisory services at KPMG in Canada, who also leads the insurance practice for Quebec. Régimbal advises, however, that claims transformation is best viewed not as a project, but as an ongoing need. When it comes to claims, part of that need will, no doubt, relate to customers wants and demands. “Society is moving towards huge changes in personal habits and an increased use and dependency on technology,” says Patti Kernaghan, president and chief executive officer of Kernaghan Adjusters. “Claimants expect to be communicated with any time of day, and to have their claims resolved faster and faster. As an industry, our ability to communicate quickly and effectively is critical; timelines for completing the claims process are fast becoming the obvious service standard that sets competitors apart,” Kernaghan contends. Some say meeting that standard demands preserving current key contact points. “There are a lot of points today where the broker can become less relevant,” notes Jeff Purdy, senior vice president of international operations for Applied Systems. “There is a need for the broker to remain relevant when their client needs them most, and their client really needs them the most when they’re having a claim.”

January 2015 Canadian Underwriter 41

COVER STORY

Transformative Time gathering speed “The race for technology changed the process for all facets of the industry,” suggests Bruce Martin, vice president of account management at Cunningham Lindsey (Canada). “Technology has driven a lot of those expectations specific to information turnaround, management reports, KPI (key performance indicators) measurements, accountabilities and expense control,” Martin says. Notes Pat Van Bakel, president and chief executive officer of Crawford & Company (Canada), “Speed of service and claim resolution are taking greater precedence in the value chain — a trend that will likely not subside.” In concert with efforts to meet customer demands for speed, though, must be measures to foster individual customer experience. As an industry, the tendency is to look upon and treat customers as a homogenous group, Van Bakel notes, but adds it is necessary for the industry “to identify and design products that cater to the various customer segments. This involves being able to identify the desired experiences and needs of our customers from an individual perspective, as opposed to a broad group.” Michael Costonis, managing director of Accenture Property and Casualty Insurance Services, says customers have become used to high-quality, personalized service from online giants such as Amazon.com. “The claims process, which is sometimes unnecessarily cumbersome and overly reliant on manual activities, can seem out of date in a digital environment,” Costonis maintains. “Investment in IT needs to continue if we are to take full advantage of the availability of data and the availability of responding more appropriately to that customer as an individual,” Neglia says. “Brokers need to take advantage of tools and capabilities that exist today to have their services represented when their clients need them, to have their brand recognized at that point of need,” says Purdy. There should be a retentive effect if a broker can provide good, quality, consistent experience regardless of insurer, he says. 42 Canadian Underwriter January 2015

An individualized response — regardless of which claims partner is targeting and which is targeted — is all meant to enhance communication and improve relationships, some of which can certainly use some work.

“As an industry, our ability to communicate quickly and effectively is critical; timelines for completing the claims process are fast becoming the obvious service standard that sets competitors apart,” says Patti Kernaghan of Kernaghan Adjusters. “There are challenges in the relationship between consumers and insurance companies. We believe that companies will transform several aspects of their operations in order to improve that relationship,” says Marc-Andre Giguere, partner and national insurance leader for Ernst & Young LLP (EY) in Canada. Insurers and others are investing in systems to answer those needs. That said, “the insurance industry, and especially in Canada, is still in the early stages of the transformation effort, but it is now being discussed at the senior levels of almost all companies,” Giguere reports.

finding a NATURAL FIT Claims is naturally an area that attracts transformation attention and effort. “With claims being the largest drain on insurer dollars, and with premium income stifled by market conditions, reining in claims-related outflow, for both indemnity and expense, is a natural consequence,” says Fred Plant, president of Plant Hope Adjusters Ltd. “Anything that can be done to bring down these costs — by reducing the incidence of fraud, by helping customers manage risks and preventing reportable events, or by making claims operations more efficient — will have an immediate bottom line impact,” says Costonis. “Claims is the ‘moment of truth’ when insurers deliver on their promise to customers,” he points out. James Colaço, senior manager of Monitor Deloitte, and senior sector specialist for insurance at Deloitte, would likely agree. “Insurers have quickly come to recognize that the claims experience is a moment of truth in the overall customer life cycle in insurers. It’s a moment that matters; it’s a moment that insurers should care about.” Accenture research “shows the very act of filing a claim makes customers twice as likely to switch insurers. This indicates that the claims process is not the kind of experience that customers want to go through if they can help it,” Costonis reports. In general, Colaço says research reveals four common themes with regard to what customers need when it comes to claims: responsiveness at first notice of loss (FNOL); speed of settlement; fairness of settlement; and interaction with the insurance company over the course of the claim. “Insurance companies need to address these four big buckets around the customer experience to really think about how they approach their claims transformation.”

driving forward While objectives of individual organizations will undoubtedly vary, says Giguere, there are some common drivers:

COVER STORY

Transformative Time • a desire to improve customer interactions by expanding communication channels (web, mobile, email) and provide more responsive service (including faster response times); • a need to reduce operating costs; • aging legacy claims systems with decreasing resources available to support older technology; • the push to reduce claims leakage and operational costs; and • all of the above are impediments to staying competitive and maintaining agility in comparison to competitors. Costonis’s view is that claims transformation takes place on three levels: • first, there is the move to full automation, freeing up claims professionals to concentrate on value-added activities rather than routine processing; • second, there is the move to a digital experience, where customers can report and track claims via the channels of their choosing, whether online, mobile app or direct phone contact; and • third, there is the change in mindset from processing claims as they occur to thinking about claims before they happen. This involves the use of telematics in automobiles and connected devices in the home, along with better customer education and involvement through social media and other channels.

moving from old to new Addressing customer needs can likely only be advanced (perhaps, only achieved) through enhanced use of technology and data. “Most legacy systems that are currently out there are fairly limited in respect to being conducive to real-time needs, both from a claims process standpoint, as well as from a data standpoint,” says Neglia. A recently released KPMG report notes that, globally, some insurers are focusing on rolling out seamless, integrated multi-channel options for claims reporting, mirroring their efforts to integrate other points along the customer sales and service chain. Others are concentrating on accelerating the speed of claims handling, information gathering, investigation and payment for a number of product classes, the report notes. 44 Canadian Underwriter January 2015

KPMG further found insurers in some markets are experimenting with sentiment analysis tools to improve overall service quality offered by call centre staff. Through automated analysis of voice recordings of customer conversations against key words, phrases and business rules, they can monitor handlers and compare claims data, to determine whether positive or negative sentiment scripts impact settlement costs, it found.

Customers have become used to high-quality, personalized service, says Accenture’s Michael Costonis. “The claims process, which is sometimes unnecessarily cumbersome and overly reliant on manual activities, can seem out of date in a digital environment.” The report makes recommendations for those looking to advance claims transformation, including the following: • pilot radical initiatives in a controlled environment across a sample number of claims to test, learn and refine how to embed the innovation, and more important, have a clear vision of what needs to be put in place to execute before making significant investments; and

• introduce fresh thinking from outside the insurance sector by looking to industries — such as fast-moving consumer goods, gaming and telecommunications — that are adopting innovation as matter of course.

making a business case A company’s business case for claims transformation should include immediate and measurable benefits, as well as a plan to realize longer-term goals, says Giguere. “In many ways, claims transformation can be a catalyst for transformation across the business, including policy administration, underwriting, billing, and business intelligence,” he says. However, any efforts around claims transformation must include both technology and business components, he advises. “Doing one without the other increases the risk of failure and can end up negating many of the benefits desired,” he points out. “For example, replacing an aging legacy claims system, but retaining the old business processes, won’t provide anywhere near the same level of benefit as tackling both at the same time.” Shum notes Deloitte research indicates the business case for claims transformation is compelling. “You get expense ratio benefits in the single digits; if you’re lucky, you get loss ratio benefits in the single digits as well, which actually makes up for millions of dollars in savings depending on how big your premium size is,” he reports. Costonis, for his part, does not regard cost as a stumbling block to claims transformation, pointing out that companies appear willing to invest in these initiatives. “It’s not really about cost, but about investing the money where the (return on investment) is both significant and measurable,” he explains. “With modern claim systems, there’s often immediate benefits from reduced claims leakage, better data capture that yields improved claims adjusting and enhanced fraud detection,” Giguere says. “Leakage is usually associated with delays in getting the reparation done. So any delay in getting the car repaired or

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Transformative Time getting the basement repaired or whatever is both an aggravation to the policyholder and an extra cost for the insurance company,” says Régimbal. As insurance companies “become more sophisticated with data analytics around things that are not analyzing risk, but are analyzing data in general, they’ll probably enhance their ability to do claims segmentation, and make sure that a given event is receiving the appropriate level of attention,” he says. Colaço also cites claims segmentation — simply defined as treating certain claims differently because they can be processed more quickly, like a windshield repair — as a key theme in claims transformation. “A lot of insurers in Canada are looking to find ways to settle those claims at first notice of loss.” Giguere agrees that there are specific types of claims and procedures that can benefit from almost immediate processing times. Citing windshield damage only claims — claims that can be processed with minimal handling — these would benefit by connecting a customer to a preferred vendor for repair or remediation, in many cases in a completely automated fashion, he says. As well, measures meant to answer customer wants and needs are being seen in how insurance companies are creating networks around their vendors, Colaço says. This includes certifying the vendors in a way that is consistent with how the insurance company wants its customers to be treated, and setting standards around service level agreements, he reports. Shum notes that there is also now more movement toward insurers creating digital portals. “We can see in the future that what can happen is when a consumer does an FNOL, it goes into the system, the consumer can actually go into the portal and then potentially select preferred vendors, and direct where they want to have their repairs made or where they want their claims settled.” Asked where this would leave brokers, Shum says the broker would continue to play a valuable role as an advisor and intermediary. Also, it is not “unfeasible 46 Canadian Underwriter January 2015

to say the insurer could also offer this technology to their brokers,”he adds. Plant says that he would agree certain types of claims could be “processed.” However, he emphasizes that “not all claim situations are the same; not all customers are the same. Empower welltrained claim professionals to make decisions and move matters along rather than forcing everything into a tightly defined process.”

“With modern claim systems, there’s often immediate benefits from reduced claims leakage, better data capture that yields improved claims adjusting and enhanced fraud detection,” says Ernst & Young’s Marc-Andre Giguere. applying THE HUMAN TOUCH Sources emphasize the need to guard against having human response doused by the technology wave. “I believe that of the three things insurers want from adjusters — faster, better and cheaper — it is possible to only ever deliver on two of those at a time,” Plant contends. He argues that those insurers driving claims transformation for the true benefit of customers, as opposed to for

meeting short-term financial goals, “will meet the financial goals this year, next year and every year.” Adds Van Bakel, “We cannot expect technology to replace the empathetic counsel that policyholders require after suffering a traumatic loss.” Any discussion about transformation, “should also encompass the transformation of people and corporate culture, through training, development and finding ways to continue to attract leading talent to our industry by providing rewarding career opportunities,” he emphasizes. “Shedding legacy systems, former programs and processes will also require us, as an industry, to shed ‘legacy thinking’ in order to fully optimize the benefits that these new advancements in technology can deliver,” Van Bakel says. “One of the biggest stumbling blocks is the claims workforce, which is skilled and professional, but is also aging,” says Costonis. “As companies invest in technology, they also have to invest in training to develop a claims workforce that is comfortable with new technologies and is focused not just on processing claims, but on interacting in positive ways with the customer,” he emphasizes.

DATA TROVE That comfort is likely to be key in light of the data wave that has formed and will only grow larger over time. Advancements in technology are the catalyst that will enable the industry to move forward swiftly, believes Van Bakel. “Such developments are resulting in an increased ability to collect and analyze loss data, and assist in the interaction between various programs used by carriers, brokers and independent adjusting firms. New application tools are enabling us to collect on-scene scope of loss, and prepare and transmit reports and information with greater ease.” Beyond ease, though, is the promise of everything from identifying fraud to preventing claims. “It all comes down to numbers, data,” says Plant. “With more data comes the ability to make better predictions, which leads to more efficient management and processes,” he says.

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COVER STORY

Transformative Time “The amount of data that brokers have at their disposal is kind of incredible,” Purdy says, but adds that many brokers do not leverage the data to make better decisions around risk selection. “If you think about analyzing your books of business and analyzing your claims results as a broker, you can then make sure that when your sales people are selling and your producers are selling, that they’re selling to the risks that you want to sell to, so almost get in front of the claim by more loss prevention work within the brokerage,” he says. Costonis notes that there are huge quantities of data, both structured (from internal sources) and unstructured (from outside sources like social media and third-party databases) that can be used to identify claims that do not fit within normal ranges of experience. “Aggregating and organizing this data and using it for mapping and modelling can yield very significant returns,” he explains. “For example, analytics can be used to spot crime rings using the same garages or the same medical groups to submit fraudulent claims.” The KPMG report notes, for example, that “data analytics of structured data can improve fraud scoring, text and voice analytics of unstructured data from client interviews, and external source and social media analytics can result in better fraud detection rules, workflows and accurate high-risk flags.” Data may also help with improving the accuracy of damage estimates, Neglia says. Citing automobiles, connectivity — vehicle to infrastructure, vehicle to vehicle and vehicle to everything else — will be greatly enhanced in the not-sodistant future, perhaps five years or so, he contends. “You will have the increased intensification of connected vehicles as well as the start of the next phase, which is going to be connected and autonomous vehicles,” Neglia says. This will change the dynamics of today’s linear process, even to the point where the vehicle itself is reporting a claim, he notes. “This will happen real time and simultaneously, not in a linear way, but it’s 48 Canadian Underwriter January 2015

going to happen in a much more multifaceted way,” Neglia says. “The claims process is going to have to adapt to that multi-faceted, real-time environment.” Add to this the telematics devices likely to be embedded in most vehicles. “What that will do, eventually, is that data will form part of the analytics that’s going to be used to analyze the crash data resulting from motor vehicle accidents,”

This will change the dynamics of the current linear process, says Rocco Neglia of Economical Insurance. “This will happen real time and simultaneously, not in a linear way, but it’s going to happen in a much more multi-faceted way.”

are plaguing home ownership today from an insurance standpoint,” he says, such as water damage. “If you follow the logic that’s occurring on the automobile side, it’s quite conceivable, in fact, it’s quite likely, that a similar occurrence is going to happen on the property side,” Neglia adds. With regard to prevention, KPMG notes in a recent press release that emerging technologies potentially offer value with respect to helping insurers better respond to catastrophes, including morefrequent weather and natural disasterrelated losses. “Pre-disaster, better event forecasting systems and prediction models can help insurers analyze probable policyholder impact and prepare strategies for loss minimization,” it notes. Such tools could help insurers rapidly mobilize adjusters and other resources for post-event claims handling and customer support. Suggests Régimbal, “From the insurance company’s point of view, down the road, there may be an opportunity to have an automated signal that an event has occurred and allow them to either plan for it, or reach out and try and help the claimant deal with it, and/or depending on the nature of the message, maybe even prevent something from happening.” Giguere points out that improved catastrophe identification would allow insurers to reach out to customers who may be affected by a catastrophe event.

LOOKING AHEAD Neglia says. With all of the technology and the connectivity built into vehicles, “you’re going to probably end up with a fairly accurate assessment of damagability, almost at point of impact, and then with certain programs and components in place, that will lead to an agreed indemnity process as well.” And what is happening with telematics in auto is certainly also possible on the property side, says Neglia. Through smart home technology — monitoring basic safety components, like fire, carbon monoxide and burglar alarms and expanding those — this “could help mitigate some of the circumstances that

“We are using technology effectively in the field,” Kernaghan suggests. “Where we fall down is the time it takes to move information back and forth, and the length of time it takes to make decisions. We need a more effective way to communicate the information,” she argues. “Technology can change that process if we all used ‘like’ platforms with realtime sharing of pertinent information, i.e. change the model of communication and the methods,” Kernaghan says. Purdy, for his part, suggests there must be collaboration among the insured, the broker and the insurer. For example, an insured would report a claim via his or

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Transformative Time

“Shedding legacy systems, former programs and processes will also require us, as an industry, to shed ‘legacy thinking’ in order to fully optimize the benefits that these new advancements in technology can deliver,” argues Pat Van Bakel of Crawford & Company. her phone; both the broker and the insurer would be notified; whenever the claim status changed, that information would be sent by the insurer to the broker electronically; and information would be automatically passed to a portal where the consumer could access it, he says. “Are we at claims nirvana where customers get great service and insurers are satisfied they are paying all that needs to be paid (indemnity and allocated loss adjustment expense)?” Plant asks. “No,” he says, answering his own question. One issue to watch for on the technology front, Régimbal notes, is that there appears to be a distinction emerging between Tier 1 and the Tier 2 players in the insurance space. “One of the clear delineators between the Tier 1 and the Tier 2 is the ability to invest in technology, the capability in terms of having access to funds and capital,” he says. “Tier 2 players may find it challenging going forward to invest,” Régimbal says, suggesting that this is “true elsewhere in the organization, but true on the claims side as well.” Over time, “especially as the digital and the web components start to become more and more intrinsic in how some of these processes are thought of or handled, that will become a challenge for some of the smaller, more modest organization,” he contends. In the MarketScope report issued in 2013 — which considered the overall market for p&c claims management modules in North America — research and analysis firm Gartner noted that while overall 50 Canadian Underwriter January 2015

demand for new claims management modules is strong, vendors moving toward suite offerings are poised for more new customer wins than those without such offerings. “Packaged software has emerged in the marketplace where it makes installing new claims systems substantially easier than before and allow for a great deal more flexibility, and also improves the data that is coming in and out of the system,” Shum says. The view a few years ago may have been that only very large insurance companies could afford to move forward with transforming their claims systems. But with packaged-based systems — socalled out of the box — coupled with different business models to make it more accessible, there is now the same sort of movement downstream, he says. Régimbal, for his part, suggests that smaller businesses looking to keep pace may consider co-operating with a third party around some of the technology capabilities or outsourcing some processes or requirements in a bid to get access to more modern processes. “I think more and more players are looking at that (outsourcing),” he reports. Of course, other challenges lie ahead. Citing data that is (and could be) available through telematics in vehicles, Neglia says that regulators are currently limiting “the useability of the data derived from telematics for purposes of pricing and discounting,” meaning that insurers are unable to use the data to its full potential.

“At some point, regulators are going to have to come up to speed and tap into the full potential of data availability in regards to automobiles,” he argues. Emphasizing there will always be a push to deliver “faster, better and cheaper,” continual tweaking will be required to get all three in balance, says Plant. “If the management of files is such that files get the investigation and assessment they need and the processes are focused on the proper handling of claims rather than meeting prescribed objectives, the files will not be open any longer than necessary. The tail has started wagging the dog,” he maintains. “When claims transformation projects are initiated for positive reasons — because there’s a new capability or a new technology that we want to incorporate and we want to take a step forward — it’s always a more attractive scenario,” Régimbal says. “The increased capabilities that are available to insurance companies on the digital side and the opportunity to perform data analytics at a higher level is really a positive reason to launch into a claims transformation project.” It would be Shum’s recommendation that steps be taken to capitalize on technology advancement. “Those who have not done anything probably, down the road, could be at a competitive disadvantage because now most of your competitors have transformed their organizations,” he says.

Electrical Potential

Greg Meckbach Associate Editor

Insured losses to homeowners from lightningrelated claims make up only a small portion of total weather-related residential claims in Canada. That said, the cost of one such infrequent claim could exceed $1 million, prompting experts to occasionally remind insureds that losses may result from both fires and electrical surges that can damage contents. “Approximately 5,000 insurance claims are estimated to be filed in Canada for lightning-related property damage (excluding fires) each year,” reports John Bordignon, a spokesperson for State Farm Canada, now owned by Desjardins Group. “In our experience, the overall frequency of lighting claims is relatively low,” notes Spencer Bailey, property and casualty supervisor for Toronto West at Crawford & Company (Canada) Inc. “However, the severity associated with such claims can be rather significant,” Bailey points out. Lightning “can lead to losses that are quite substantial,” agrees Jason Forogulo, Allstate Insurance Company of Canada’s agency manager for Courtice-Oshawa in Ontario. Across the country

52 Canadian Underwriter January 2015

in 2014, Forogulo reports, Allstate Canada had “upwards of 40 losses” related to lightning. Lightning is a very small portion of “the impact of water intrusion, wind, sewer back-up and some of the other more common perils that can occur to a Canadian home,” he says. As the numbers of lightning claims are so low, these are “negligible in terms of the impact on coverage and pricing,” Forogulo explains. Still, lightning “is covered under almost all basic property policies,” says Alex Walker, director of national claims relationships for RSA Canada. “Typically, an all-risk property policy, either personal or commercial, will cover lightning strikes and resulting damage,” Walker reports. “Unless a risk was specifically written on a manuscript wording, and lightning was written in as an excluded peril, or there was an endorsement added in excluding lightning, it would be a covered claim,” he points out. Over the last three years, RSA Canada has tracked 470 lightning damage only claims for its clients/policyholders, specific to Canada, Walk-

Illustration by Dave Whamond

Lightning strikes somewhere in Canada more than two million times each and every year. While the frequency of homeowner claims for lightning-related damage is low, occasionally, these bolts from the blue cause large losses as a result of fire and electrical surge.

Insurance Brokers Association of Ontario Elects New President

er reports. “Typically, we see more residential strikes than commercial strikes,” he notes, mainly because “there are more residences than there are businesses.”

IN A FLASH In Canada, lightning flashes occur approximately 2.34 million times a year — about once every three seconds during the summer months, Environment Canada reports. In its map of lightning “hot spots,” Environment Canada plots the average number of lightning flashes per square kilometre per year. “Southwestern Ontario sees some of the highest lightning flash densities in the country,” notes information from the federal agency. Other regions with relatively high lightning activity include southern Saskatchewan and Manitoba, and the Rocky Mountain foothills of western Alberta, it adds. However, global warming could result in an increase in lightning. Using climate models, researchers south of the border recently predicted that there will be about a 12% increase — in cloud-to-ground lightning strikes — per degree Celsius of warming in the contiguous United States, notes a press release issued by the University of California Berkeley. The research findings were published in the November 14, 2014 issue of Science.

On average, “the value of damages associated with lightning claims range anywhere from $7,000 to more than $10,000. Instances of total losses resulting from lightning-induced fires can span into the millions.”

Michael Brattman

The Insurance Brokers Association of Ontario (IBAO) is proud to announce that Mr. Michael Brattman has been elected as IBAO’s 72nd President. Michael was officially inducted at the recent IBAO Convention held at the Ottawa Convention Centre in Ottawa, ON, and formally assumed his role as President on January 1, 2015. Michael is a partner and Vice President of Personal Insurance at Erb and Erb Insurance Brokers Ltd. in Kitchener-Waterloo and has over 25 years of experience in the insurance industry on both the company and brokerage side. In addition to IBAO, Michael is also involved with a number of other industry associations and committees including the Insurance Brokers Association of Canada (IBAC) and the Facility Association. He has both his RIBO and life licenses as well as a Chartered Insurance Professional (CIP) designation - obtaining the second highest marks in Canada when he completed this designation. He holds his Honours BA from Huron University College, at University of Western Ontario.

“The risk of a lightning strike varies depending on the dwelling’s proximity to ‘hot spots’ mapped by Environment Canada, as well as the home’s surrounding environment, such as a low-lying dense neighbourhood versus an isolated hilltop location,” Bailey explains. “The structural composition of the home is another factor to take into consideration. Homes built with metal roofing and framing, and older, more highly flammable building materials are at a higher risk,” he adds.

“It is a privilege to serve as President of this Provincial association,” says Michael Brattman. “IBAO is working hard to address important issues like insurance fraud, auto benefits, telematics and severe weather. More than ever, clients should work with a professional broker who will help them understand how these issues impact them. I am proud to represent our 12,000+ members and their clients, when collaborating with the Provincial and Federal Government as well as insurance companies, in finding solutions to industry issues.”

DAMAGE TALLIES

“It is an honour to welcome Michael as our new President,” said IBAO Chairman Chris Floyd. “His wealth of knowledge of the industry is remarkable and his thoughtful insight has brought immeasurable value and perspective to the Board of Directors. Michael is focused, dedicated and inquisitive. We look forward to the exciting year ahead with Michael at the helm of our association.”

The damage resulting from lightning “can generally be classified into two segments: direct lightning strikes and indirect lightning strikes,” says Bailey. For its part, The Co-operators Group Limited divides lightning claims into two major categories: fires caused by lightning and lightning surge claims. The Guelph, Ontario-based insurer had 38 lightning fire claims (most involve “a direct hit” on the roof of a home)

As President of IBAO, Michael’s duties will include implementing strategies for the national insurance broker brand and working with politicians, particularly on the subjects of insurance fraud and how to meet the future challenges of the insurance industry.

#OWNit January 2015 Canadian Underwriter 53

and 498 lightning surge claims from 2010 through 2014, reports Leonard Sharman, senior advisor for media relations at The Co-operators. The numbers do not include farm or business claims. For its 38 lightning fire claims over five years, The Co-operators paid “just over $3 million for an average claim of around $72,000,” Sharman notes. For the 498 lightning surge claims during the same period, the total payout was nearly $7.695 million “for an average of $15,451,” he says. “The effects associated with a direct lightning strike include fire damage, power surge damage, and/or shockwave damage,” says Bailey. On average, he points out that “the value of damages associated with lightning claims range anywhere from $7,000 to more than $10,000. Instances of total losses resulting from lightning-induced fires can span into the millions.” For Allstate Canada, the average lightning loss in 2014 was “just a little over

$6,000 on average,” Forogulo says, adding that the company has “had three large losses (of) over $100,000.” As for RSA Canada, Walker reports that the insurer’s average cost per claim “was as low as $1,200, but we have had a few that have exceeded $100,000 for commercial losses.”

HITTING THE MARK The Co-operators breaks down its claims by region. Of the lightning fire claims from 2010 through 2014, 27 were in Ontario, nine were in Alberta, and there were one each in Saskatchewan and New Brunswick. Of the lightning surge claims, 359 were in Ontario, 48 were in Alberta, 20 54 Canadian Underwriter January 2015

were in Nova Scotia, 15 apiece were in New Brunswick, Quebec and Saskatchewan, nine apiece were in Manitoba and British Columbia, and eight were in Newfoundland and Labrador. “Damage is most often to contents, particularly electronics, but we also get damage to the building, e.g., garage door openers, alarm systems, electrical system, cable and phone lines, etc.,” Sharman notes of lightning surge claims. Walker recalls hearing about one residential loss — which was not an RSA Canada claim — in which lightning struck a solar panel at a recreation property. “The solar panel exploded, the solar batteries exploded, the explosion propelled rocks upwards of 50 yards away from the actual solar panel, and there was damage done to the building,” he

reports. “The total of that claim was probably about $80,000 for the solar panelling system,” he expects. On the positive side, Sharman reports that total lightning claims reported to The Co-operators have actually dropped since 2011. Of the 38 lightning-related fires since 2010, four were in 2010, 13 were in 2011, 10 were in 2012, eight were in 2013 and three were in 2014, he says. Of the 498 claims from lightning surge, 95 were in 2010, 152 were in 2011, 89 were in 2012, 82 were in 2013 and 80 were in 2014, he adds. Allstate Canada’s claims are also down. “Because the loss counts are so low, it’s difficult to actually say why we are seeing a decrease in those numbers over a five-year period,” Forogulo says.

PREVENTIVE MEASURES On the home front, a residential lightning strike “almost always” results in

surge damage to contents such as televisions, DVD players, computers, gaming consoles and microwave ovens, Walker says. “We have seen claims where air conditioning units get blown,” he notes. A direct lightning strike can generate surges of 6,000 volts or more, “producing an intense electronic surge on the home’s power grid/electric panel, which can cause damage to equipment that is connected to the grid,” Bailey explains. “This type of lightning strike can also spark a fire in a home. Additionally, the sheer impact of the hit can cause damage to the exterior brick, masonry and

other structural components, (although uncommonly reported),” notes Bailey. Indirect strikes “are more frequently the cause of a loss as they can generate surges on both external-based utility lines and data communication lines (i.e., computers, appliances, phone systems and interior electrical systems),” Bailey says. “A lightning strike to a conductor can generate a large electromagnetic pulse of energy that can be picked up by nearby cables and cause significant damage,” he explains. To reduce losses, Walker advises that homeowners should consider purchasing good surge protectors. “You get what you pay for,” he cautions. “If you’ve got a cheap surge protector, it’s not really going to do much. But if you have invested in one that’s pretty heavy duty, then you may (be able to) protect your computer equipment,” he adds. Allstate’s Forogulo also recommends that homeowners keep large, tall trees around their homes trimmed to ensure there are no overhanging branches.

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Getting Personal

Richard Horak Partner, Hughes Amys LLP

Hughes Amys is a member of The ARC Group of Canada, a network of independent insurance law firms across Canada.

A ruling last fall by Ontario’s Superior Court of Justice, revolving around a personal injury claim, clearly demonstrates that making a determination with respect to costs before trial is not only difficult, it could prove both an expensive and risky proposition. In the recent decision, Hoang v.Vicentini, Justice Darla Wilson of the Superior Court of Justice provided detailed reasons related to the issue of costs in a fiercely contested action. The trial commenced with a jury, following two mistrials, and lasted approximately seven weeks. Justice Wilson awarded costs to the successful plaintiffs, but for a sum significantly reduced from what had been sought. Significantly, costs were also awarded to the successful defendants, to be paid by the plaintiffs.

56 Canadian Underwriter January 2015

FACTS The plaintiffs sought damages for personal injuries sustained by the infant plaintiff, Christopher Hoang, who was six years old at the time of the motor vehicle accident. After being dropped off at an intersection with other children by his father, defendant Can Hoang, the child’s hat blew off as he was crossing the street. While trying to retrieve the hat, he was struck by a vehicle driven by defendant Adriano Vicentini. Although defendant Hoang was represented at trial by counsel appointed by his automobile insurer, it was understood that the insurer had taken an off-coverage position. Subsequent to the trial of the personal injury action, a separate action was instituted by Hoang to determine the coverage issue, the ruling for which is pending. The jury submission by plaintiffs’ counsel sought a future loss of income award ranging from $2.5 million to $3 million, and a future care costs award of $10 million. The jury awarded nothing for the former (and nothing for loss of interdependent relationship) and only $672,000 for the latter.

The total award was as follows: general damages, $150,000; FLA claim of the injured plaintiff’s mother, $35,000; FLA claim of the injured plaintiff’s sister, $10,000; future loss of income, $0; loss of interdependent relationship, $0; and future care costs (including housekeeping and home maintenance), $684,228.22. The jury found liability on defendant Hoang, with no finding of liability against the other defendants (Vicentini, and Ford Credit Canada Leasing Company, owner of the Vicentini vehicle).

Mass Group of Insurance Brokerages Announce New President and CEO

OFFERS TO SETTLE The plaintiffs had served a number of Offers to Settle, ranging from $2.1 million to just under $5 million, with the last being a Rule 49 offer of $4,950,000, plus costs. Defendant Vicentini had made an offer to settle for $250,000, plus a pro rata share of costs, while defendant Ford Credit Canada had served an offer to dismiss the action against it without costs. Defendant Hoang, for his part, made an offer to settle for $100,000, plus costs, net of Statutory Accident Benefits entitlement.

POSITIONS ON COSTS The plaintiffs argued that defendant Hoang should pay fees on a partial indemnity scale of just over $967,000, plus taxes, plus slightly more than $429,000 in disbursements, plus an additional amount of a little more than $131,000 plus taxes for fees related to the accident benefits claims. Defendant Vicentini sought fees of just over $447,000, inclusive of taxes, plus disbursements of a little more than $85,000. While it was conceded the fees should be reduced by 20% to 25% to reflect the partial indemnity scale, defendant Vicentini sought an order that the counsel for the plaintiffs pay costs because of “the aggressive manner in which it handled the case and the conduct of counsel at trial.” Defendant Ford Credit Canada sought fees of just over $155,000, plus disbursements in excess of $43,000. Defendant Hoang argued that the plaintiffs should be paid costs on a partial indemnity scale to the date of the defence offers in the fall of 2011 (the trial proceeded in January 2012) but that defendant Hoang should be entitled to partial indemnity costs from that date forward because the jury verdict was “an acceptance of the defence theory of the case and a clear rejection of the case put forward by the plaintiffs.” This defendant also submitted that resolution of the matter was impossible, and an expensive trial was inevitable as a result of the “aggressive manner in which plaintiffs’ counsel” advanced the case. Defendant Hoang asked for fees of slightly more than $137,000, plus disbursements of just under $32,000.

Greg Dunn

Randy McGlynn and Larry Smith on behalf of the Board of Directors of the Mass Group of Insurance Brokerages are pleased to announce the appointment of Greg Dunn to the role of President and CEO effective January 1, 2015. Mr. Dunn has extensive experience in senior leadership roles in the property and casualty insurance industry, including increasingly senior roles at Aviva Canada Inc. which he joined in 2004 and was most recently Executive Vice President, National Claims. Greg was previously Senior Vice President, Sales – Specialty Distribution at Aviva Canada where he was responsible for national sales development of the affinity and group business through the independent broker network in Canada. “I look forward to working as an independent broker at Mass, building on the momentum and working to establish the Mass Group of Insurance Brokerages as the leading national broker for group, affinity and retail business in Canada.” Mr. Dunn holds a Bachelor of Science in Mathematics from the University of Waterloo, and is a Fellow of the Casualty Actuarial Society (FCAS) and the Canadian Institute of Actuaries (FCIA). By leveraging their digital infrastructure and Greg’s strong leadership, Mass will evolve into a national broker/aggregator leader in group, affinity and retail home and auto insurance. Along with adapting to change in consumer buying habits through their digital strategy, Mass will continue to maintain its strong ties in the Milton, Markham and Mississauga communities.

www.massinsure.com

ANALYSIS In considering the provisions of Rule 49 regarding Offers to Settle (under Ontario’s Court of Justice Act), Justice Wilson January 2015 Canadian Underwriter 57

noted that in Ontario, the “normative approach” is that costs follow the event (loser pays) and that costs are awarded on a partial indemnity basis. Relying on the principles set forth by the Court of Appeal for Ontario in the 2004 ruling, Boucher v. Public Accountants Council for the Province of Ontario, Justice Wilson noted the “overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.” In her view, the “overarching principle… is that of reasonableness.” Costs of defendants Vicentini, Ford Credit As Vicentini was the “target” defendant, facing a claim well in excess of policy limits, Justice Wilson noted the trial result could only be considered “excellent.” Taking into account the factors enumerated under Rule 57 (Costs of Proceedings), as well as the complexity of the liability issues, and considering that counsel was “economical” in his use of the court’s time, fees were fixed at $350,000 (virtually what had been requested by counsel). Describing the role of counsel for Ford Credit Canada as “batting clean-up,” Justice Wilson awarded fees of $130,000 (slightly less than requested by counsel). Cost of the plaintiffs Justice Wilson noted that, given that the quantum awarded by the jury was significantly less than what had been sought by the plaintiffs, it was clear the jury preferred the damages evidence put forward by the defendants. However, the result achieved by the plaintiff exceeded the offer to settle of defendant Hoang by a significant amount of money. Taking into account Rule 57 factors and all offers to settle, Justice Wilson concluded that the plaintiffs’ formal offer to settle was “an unrealistic expectation based on the evidence and does not represent a reasonable compromise. The costs being sought now by the Plaintiffs are not proportional to the outcome of the trial. ... I agree that the 58 Canadian Underwriter January 2015

unrealistic expectations of the Plaintiffs drove this matter on to a lengthy, very expensive trial.” Justice Wilson stated the number of hours claimed (lead counsel for the plaintiffs was assisted by two other lawyers) was excessive given the facts of the case. While she acknowledged it was reasonable for plaintiffs’ counsel to spend more hours than the defendants, she found it “astonishing” that the plaintiffs would need to spend approximately four times the number of hours that defence counsel did. In her view, the amounts being sought were beyond “what an unsuccessful Defendant could reasonably have expected to pay if it was unsuccessful at trial.” Applying the principle of proportionality, she fixed the plaintiffs’ costs at $575,000. The plaintiffs had claimed more than $429,000 in disbursements. Noting that many items claimed were excessive, she reduced the award to $250,000.

In her view, the issue of whether or not a tort defendant ought to pay some amount of costs incurred by plaintiffs’ counsel for an accident benefits claim was fact-driven and depended on the particular circumstances of the case. Justice Wilson also rejected the plaintiffs’ claim for payment of slightly more than $131,000 for fees related to pursuit of accident benefits. In her view, the issue of whether or not a tort defendant ought to pay some amount of costs incurred by plaintiffs’ counsel for an accident benefits claim was fact-driven and depended on the particular circumstances of the case. She concluded it was “neither appropriate nor fair” to include a claim in excess of 600 hours of time relating to the accident benefits claim.

Costs of defendant Hoang Justice Wilson saw no reason why the plaintiffs should not recover costs against defendant Hoang, who was unsuccessful at trial. This was not a case where the offer to settle made by the defendant was so close to the recovery at trial that some exception to the cost consequences of the aforementioned rules should be made. Payment of costs to the successful defendants Justice Wilson noted the general rule in multi-defendant litigation is that the plaintiff is entitled to costs from the unsuccessful defendant, and the successful defendant is entitled to costs from the plaintiff. In determining whether a Sanderson Order (unsuccessful defendant pays the costs of the successful defendant directly) or a Bullock Order (unsuccessful defendant reimburses the plaintiff for costs paid to the successful defendant) should be made, Justice Wilson relied on the 2008 ruling, Moore v. Wienecke, by the Court of Appeal for Ontario. The decision outlined four factors: 1. Did the unsuccessful defendant try to shift responsibility to the successful defendant? 2. Did the unsuccessful defendant cause the successful defendant to be added as a party? 3. Are the causes of action independent of each other? 4. Who has the ability to pay costs? Taking into account these factors and the overarching concern of “fairness,” Justice Wilson concluded that there was no reason to depart from the usual order of costs.

COMMENTARY The case makes clear that counsel must carefully consider costs issues before taking a matter to trial. While the principal factors outlined by Justice Wilson — fairness, reasonableness and proportionality — are clearly appropriate, making a determination prior to trial as to how these factors will come into play is an exceedingly difficult task.

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Craig Harris Freelance Writer

Bill 15, Ontario’s recently passed auto insurance legislation, includes strengthened transparency rules for tow truck operators in the province. The big question is whether or not these measures will clean up an industry with a tarnished reputation. One does not have to look hard to find consumer horror stories about getting into an accident on a major highway only to have tow truck “chasers” arrive on the scene with aggressive tactics. In fact, in a May 2013 legislative committee hearing on auto insurance, Liberal MPP Laurie Scott shared her story of being involved in a fenderbender on the Gardiner Expressway in Toronto. “I had a very intimidating tow truck driver who said he was going to tow me,” Scott recalled during the hearing. “I said, ‘No. My wheel

60 Canadian Underwriter January 2015

is still moving; you’re not going to tow me.’ So I phoned my dealership, and a policeman was walking by, and I said, ‘Are you going to let him talk to all these people like that?’ and it was very much, ‘Lady, I can’t get involved with that.’ He just kind of walked by. Anyway, I won that battle. But the intimidation for other people is extreme out there,” she said. When one factors in higher-than-average accident rates for towing operators — often as a result of chasing or racing to the scene — and a patchwork system of municipal licensing, it adds up to an industry that has slipped through the cracks of regulatory oversight. “We need to change public perception of the towing industry because the reputation is awful,” says Doug Nelson, executive director of the Provincial Towing Association (Ontario), or PTAO, who notes that there are roughly 1,200 “legitimate” tow operators in the province. “The industry is one that needs to be straightened out in the interests of consumer protection,” Nelson contends. “Thirty-three per cent of our claims costs are paid for cars, to fix cars, to tow cars, to repair

Illustration by Dave Whamond

A Tighter Grip on Towing

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them, for rentals and to store them,” Aviva Canada’s senior vice president of regulatory and government regulations, Karen Ots, reported at a standing committee legislative hearing on Bill 15 in November 2014. “For our customers, this should be a really simple process: get your car fixed and get back on with your life. Often, however, the process is stressful, complicated and dragged out,” Ots noted. “There is no question that there are many reputable tow operators, repair shops and storage facilities, but there are also a few bad apples that are making this a really bad experience for everybody,” she pointed out. BROADLY SPEAKING Tow truck concerns are hardly a new issue. The Ontario Automobile Insurance AntiFraud Task Force, which highlighted the towing industry as a particularly visible gateway to insurance fraud in October 2012, sought, among other things, to “establish a new licensing framework for the regulation of the towing industry, based upon province-wide standards that would increase road safety, enhance consumer protection, and ‘break the chain’ linking some tow truck operators to auto insurance fraud.” Following the release of the task force report in late 2012, the Towing and Storage Advisory Group provided recommendations to the Ministry of Consumer Services this past March. That report, produced by KPMG, proposed a province-wide towing oversight model that would regulate everything from standards to licensing, monitoring, enforcement, consumer awareness and complaints. While towing and storage measures are included in the recently passed Bill 15, Ontario’s Liberal government did not go quite that far. Instead, the new legislation requires tow truck operators to, among other things, do the following: • obtain permission from a consumer before charging for towing services; • publicly post prices and information such as the operator’s name and contact information; 62 Canadian Underwriter January 2015

• accept credit card payments; and • provide an itemized invoice of costs and services. Bill 15 also plans to include tow trucks in Ontario’s existing Commercial Vehicle Operator’s Registration (CVOR) system. The system will “improve road safety through government monitoring and enforcement measures,” the government notes.

“The benefit of having the CVOR applied to tow truck operators is it gives the Ministry of Transportation some ability to mandate things like consistent levels of driver training to ensure tow truck drivers and consumers are safe on the side of the road.” The Ministry of Consumer Services reports that in 2010, tow truck operators in Ontario had a 19.7% collision rate compared to only 1.1% for drivers of other commercial vehicles. “There is a lot going on today that does not provide any clear-cut oversight or consumer protection,” notes Peter Karageorgos, Insurance Bureau of Canada’s director of industry and consumer

relations for Ontario. “Hopefully, the transparency measures that are included in (Bill 15) will help provide that.” GETTING SPECIFIC The meat of the legislative bones will have to come in regulations, expected in early 2015. As is typically the case, the devil will be in the details. “The benefit of having the CVOR applied to tow truck operators is it gives the Ministry of Transportation some ability to mandate things like consistent levels of driver training to ensure tow truck drivers and consumers are safe on the side of the road,” says Karageorgos. However, some disagree with the CVOR classification for tow truck drivers, particularly the limitation on hours/ work that a commercial vehicle can be operated. Nelson says the main concern is that a number of towing operators will simply shut their doors, especially in rural Ontario. “I think the CVOR is bad for the towing industry,” he contends. “A tow truck is not a commercial vehicle; it is an emergency vehicle, like it or lump it. If we have to limit our hours and shut our phones off, what would happen if we’re not available in a snow storm at 11 p.m.?” he asks. Nelson is not alone in questioning the applicability of the CVOR. “Having tow trucks subject to CVOR’s hours of work requirement would drastically and negatively change how the towing industry functions,” Elliott Silverstein, manager of government relations for CAA South Central Ontario, noted during the Bill 15 legislative hearing in November. “Unlike trucking, there are often significant gaps of time between calls for a tow operator. By following CVOR requirements in full, tow truck operators would not be able to provide the same levels of service they currently do for Ontario motorists.” Karageorgos acknowledges there are substantial differences between tow operators and long-haul commercial truck carriers. “In terms of the hours, we recognize that the nature of the towing business is different,” he says. “However,

we think there (can be) regulations created that will support the industry, but still provide consistency of training and oversight to vehicles and operators.” INCONSISTENCY A CONCERN Inconsistent rules and processes have plagued towing oversight across Ontario in recent years. Of the 444 municipalities in Ontario, only 18 currently have regulations for towing. Certain cities, such as Toronto, have towing bylaws and police award contracts to a standardized roster of towing companies. However, that does not apply to provincial 400-series highways — which are regulated by the provincial transportation ministry and traverse multiple regions — or to the majority of municipalities without towing bylaws. Nelson characterizes municipal regulation of tow operators as a “big disappointment. One major concern I have is that municipal licensing will not go away, and then we will have two systems in place. How well do you think that will go over?” he asks. “The provincial government has to address the issue of the role of municipalities,” Karageorgos argues. “Will they be enforcing these measures, or will they just regulate the business aspect of towing? That is one of the reasons the regulations will take time,” he suggests. Beyond the municipal licensing issue, there is a distinct rural-urban divide in towing challenges across the province. In research that Nelson conducted, he cites the example of the state of Ohio, which has 1,700 towing companies covering a jurisdiction of slightly more than 40,000 square miles. In Ontario, 1,200 tow operators are expected to cover an area 10 times that size — 443,000 square miles. “There are areas in Ontario where you could be 200 to 300 kilometres from the nearest tow operator,” Nelson observes. “That is a concern for the safety of the public.” It is in larger cities, such as the Greater Toronto Area (GTA), where the main problem of questionable tow truck practices exist, Nelson contends. “It is the GTA that is the cause of the

(fraud) problem and that is where the chasing takes place,” he reports. “The guys with pick-up trucks as self-professed tow operators are part of the problem. These people have nothing invested in the actual towing industry at all. And they get their favourite body shops, lawyers and doctors together,” he notes. Karageorgos says the issue of chasing is something “that, without a doubt,

“To qualify for that licence, you must operate a proper tow company, have a storage yard, have proper training (and) equipment, offer 24-hour service and post registered pricing within industry standards. That way, not only have you protected the consumer even before there is an accident, but you also get rid of the chasers.” has to be dealt with. Right now, we have a system created where the first person on the scene tries to get that business, rather than using technology or a rotational process that exists in other areas.” “Something needs to be done to better manage the incident scenes so that

you can minimize the ‘Wild West’ environment of racing to the accident,” Karageorgos comments. Nelson uses the example of towing practices in Calgary as a possible solution. “Police need someone on the scene of an accident very quickly because of traffic issues,” he explains. “In Calgary, the police pay half a dozen towing companies on major highways to patrol. If there is an incident, and no one is hurt, they tow them to the next exit or staging area, where they can call their own tow truck. That is what needs to happen in Toronto,” he argues. In fact, the broader issue of traffic incident management — in which police, tow truck operators and provincial transportation regulators co-operate on accident scenes — needs a rethink, Nelson suggests. “Our plan is, if a tow operator is going to be involved in highway incident management, with the police, it should have a special licence,” he points out. “To qualify for that licence, you must operate a proper tow company, have a storage yard, have proper training (and) equipment, offer 24-hour service and post registered pricing within industry standards. That way, not only have you protected the consumer even before there is an accident, but you also get rid of the chasers,” Nelson notes. “We have been pushing for this for some time, but no one seems to be listening.” Most sources agree there is a need for standards, training and consumer protection in the towing and storage industry. Bill 15 broadly outlines some of those measures. But how the associated regulations are drafted and enforced, whether by a delegated administrative authority or municipal or provincial regulatory oversight, is a challenge that the Liberal government will face in the coming months. “There are a lot of regulations that have to be worked out and this is an important, but time-consuming process,” says Karageorgos. “They want to get it right the first time.” January 2015 Canadian Underwriter

Karen Hopkins-Lee

Chief Underwriter, Canadian Direct Insurance

Water damage has become the most common insurance claim in Western Canada. Despite the number of such claims, a recent survey of tenants and homeowners in Alberta and British Columbia shows that water is a peril that continues to be underestimated and overlooked. Fire may rank as the top concern for tenants and homeowners in both Alberta and British Columbia, but it is water that tops the list in terms of insurable damage. That said, water damage, the most commonly claimed peril, was often overlooked when surveyed Albertans and British Columbians were asked to think about risks to their homes. Results of an online survey undertaken by Canadian Direct Insurance (CDI), which oper-

64 Canadian Underwriter January 2015

ates throughout B.C. and Alberta, indicates that while fire ranks as the top concern for tenants and homeowners, fewer than one in five people worry about water damage. In all, 1,011 people took part â&#x20AC;&#x201D; 506 in Alberta and 505 in B.C. Based on claims data from CDI customers, survey results show that burst indoor pipes are the top cause of loss by water damage. Other common causes of water damage are sewer and storm drain back-up, domestic appliances, toilet and hot water tanks, and roofs. Water damage resulting from sudden or accidental events is typically covered by home insurance policies, although there are certainly exceptions that insurers and brokers should discuss with customers. Leaking roofs and clogged eaves, which are a common source of outside water damage, may not be covered if the problem resulted because of a lack of maintenance. With the extensive flooding in 2013 in Alberta, which forced many Calgarians to evacuate, survey respondents in the province voiced understandably more concern over water damage than their B.C. neighbours. Consider, for example how the top three concerns for polled tenants and homeowners differ in the two provinces.

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In Alberta, fire was cited by 33% of respondents, water damage by 23%, and theft by 18%. Compare that to British Columbia, where fire was noted by 30% of respondents, theft by 19%, and water by 17%.

AVOIDING DAMAGE Away from home Approximately half of respondents in both provinces arrange to have someone check their homes for water leaks when travelling for longer than a weekend. Doing so is important because many policies have limitations or conditions around water damage caused by freezing if insureds are away from their homes for a certain period of time. Customers should be encouraged to read their policies to understand any limitations. Flooded basements Flooded basements are another common problem during any rainy season, and though residential damage from overland flooding is not usually insured in Canada, customers may have coverage for water back-up from sewers, storm drains or sump tanks. It is important for customers to understand what their policies cover, and ask insurance advisors or brokers what coverage they have for sewer or water back-up — as well as whether or not there are separate limitations or deductibles for a sewer back-up claim. Loss as a result of mould or pollution is typically not insured. Like any other maintenance issue, mould should be addressed immediately so that the problem is not exacerbated. Noticeably absent from the “top three” lists for both provinces is earthquake, which occupies the fourth spot among respondents in B.C. (The survey found that when B.C. tenants and homeowners were asked about potential damage to personal property in their homes, just 10% cited earthquake as the top concern.) Based on historical customer data (excluding catastrophic events) for CDI customers, the most commonly filed 66 Canadian Underwriter January 2015

claims are as follows: water damage (which includes sudden and accidental water escape, back-up or rupture, such as a pipe burst, sewer or storm drain back-up, domestic appliances such as washing machines, dishwashers and refrigerator water dispenses, and hot water tanks); theft (which includes burglary both on and off the insured premises) and mysterious disappearance (for example, lost jewellery pieces).

ON THE RISE Both the frequency and value of water damage claims are on the rise, attributable to extreme weather events and the growing trend of well-appointed basements containing expensive furniture and high-end electronics.

Increasingly, companies look to be moving to a model in which perils are covered as part of a “menu” of add-ons — each with its own deductible. This approach puts more emphasis on the need for customers to understand their policies, and their limitations. While policies differ among providers, the general guideline is that most damage from sudden or accidental events is covered — with some noted exceptions, such as flood — but damage from lack of maintenance (such as neglected roof repairs) is not. Value calculations Calculating the value of personal belongings is a key measure for protection against loss, yet the survey found that only about one-third of respondents in both provinces have taken that preventive step. Both tenants and homeowners are urged to document their belongings

— including basics like kitchen items and linens — by taking photos and shooting video. While the majority of tenants who participated in the poll correctly realize their personal property is not covered by their landlord’s insurance, a quarter of renters do not realize that. Uninsured tenants also lack liability coverage, which protects them from being sued if they accidentally damage someone’s property, or injure another person. Model changes under way Unpredictable and extreme weather — think ‘hail alley’ in Alberta — is changing the way Canada’s insurance industry provides coverage. Increasingly, companies look to be moving to a model in which perils are covered as part of a “menu” of add-ons — each with its own deductible. This approach puts more emphasis on the need for customers to understand their policies, and their limitations. Deductibles, for their part, are set at a peril level. Insurers and brokers need to communicate with customers to make sure that coverages and options are well-understood.

TENANT/HOMEOWNER DIVIDE Looking at the prevalence of home insurance claims among the surveyed owners and tenants, almost a third of homeowners in both provinces have made a claim compared to only eight per cent of tenants. Older homeowners (defined as those aged 55 or older) are about twice as likely as younger homeowners (defined as those aged 35 and 54) to have made a claim. Older respondents are also most likely to have undertaken preventive maintenance, such as gutter cleaning, roof repairs and appliance inspections. With the new season — be that featuring either rain or snow — customers should be urged to familiarize themselves with their home insurance policies to ensure that they understand how best to protect themselves from this most frequently claimed peril.

Recent Insurance Press Releases featured on insPRESS.ca Crawford & Company (Canada) Inc. Strengthens Ontario Team by Crawford & Company (Canada) Inc. – Jan 15

Greg Dunn appointed as President and CEO of Mass Group of Insurance Brokerages by Mass Insurance Brokers Limited – Dec 15

International Conflict Tops List of Global Risks in 2015 by Zurich Global – Jan 15

CRU Adjusters Announce Strategic New Hire by CRU - Catastrophe Response Unit – Dec 15

SIMAC Awarded Highest Level of CARF Accreditation – Demonstrates Outstanding Compliance on First Survey! by SIMAC – Jan 15

David Robillard Joins Itech Environmental Services by STRONE-Itech – Dec 12

Register Your Team for the 34th Ontario General Insurance Hockey Tournament to Support Big Brothers Big Sisters & Camp McGovern by Ontario General Insurance Hockey Tournament – Jan 13 Nancy Costa Appointed National Account Executive with Crawford & Company (Canada) Inc. by Crawford & Company (Canada) Inc. – Jan 12 CNA Expands Its Specialty Lines Business To Serve Canada by CNA Canada – Jan 5 AssessMed Introduces New Senior Director of Business Development by AssessMed Inc. – Dec 29 SPECS Limited – New Appraiser – Halifax, Nova Scotia by SPECS (Specialized Property Evaluation Control Services) – Dec 17 SPECS Limited – New Appraiser – Edmonton, Alberta by SPECS (Specialized Property Evaluation Control Services) – Dec 16 Norman Black Foundation Donates $4,750 to the Kelly Shires Breast Cancer Foundation at the GroupOne Client Holiday Open House by GroupOne Insurance Services – Dec 16 On Side, St. John’s Branch is now registered for Asbestos Remediation Abatement in Newfoundland by On Side Restoration Services Ltd. – Dec 16

Cunningham Lindsey Announces Key Appoints To Leadership Team by Cunningham Lindsey Canada Claims Services Ltd. – Dec 10 $3,340 Raised by Team STRONE-Itech During Movember 2014 by STRONE-Itech – Dec 10 DKI Canada Ltd. Appoints New Chief Operating Officer by DKI Canada – Dec 9 AssessMed’s Dr. Max Kleinman receives recertification with unique distinction as a Certified Independent Medical Examiner (CIME) by the American Board of Independent Medical Examiners (ABIME) by AssessMed Inc. – Dec 4 ProFormance Group is in need of a Theme Designer! by ProFormance Group Inc. – Dec 4 On Side Restoration Saves Property Managers Time with Project Software and Unique Answering Service by On Side Restoration Services Ltd. – Dec 2 Paul Davis Systems Partners with Raising the Roof to Tackle Homelessness by Paul Davis Systems – Dec 2 Angela Veri Appointed Vice President, National Account Executive with Crawford & Company (Canada) Inc. by Crawford & Company (Canada) Inc. – Nov 28

To Read the Full Story for Each Press Release visit insPRESS.ca

INSPRESS COLUMN AD JAN 2015.indd 1

15-01-15 2:24 PM

MOVES & VIEWS

upcoming events: for a complete list visit

www.canadianunderwriter.ca

and click ‘my events calendar’ on the home page

Greg Dunn [1] is the new president and chief executive officer of the Mass Group of Insurance Brokerages, effective January 1. Dunn most recently was executive vice president of national claims at Aviva Canada, which he joined in 2005, and has also served as the company’s senior vice president of sales for specialty distribution. He is a fellow of the Casualty Actuarial Society, as well as the Canadian Institute of Actuaries. The Mass Group includes Mass Insurance Brokers Ltd. and Carson & Weeks in Markham, Ontario, and McCuaig Insurance Ltd. in Milton, Ontario.

The Insurance Brokers Association of Ontario (IBAO) has appointed Colin Simpson [2a] as its interim chief executive officer (CEO), replacing Randy Carroll [2b]. Simpson, a former CEO of Kingsway Financial Services Inc. and past president and CEO of Intrinsync Insurance Solutions Inc., most recently served as CEO of Independent Broker Resources Inc. “We wish to thank Mr. Carroll for his significant contributions to the association, and the industry as a whole, over his career with the IBAO and wish him well going forward,” says IBAO chairman Chris Floyd.

68 Canadian Underwriter January 2015

Red River Mutual — which is based in Altona, Manitoba, and writes home, commercial and farm insurance — has announced the appointment of two new senior executives. Geoff Branson [3a] is now senior vice president and chief financial officer, while Richard Meertens [3b] is now chief information officer (CIO). Meertens, most recently vice president of technology and process improvement for Arch Insurance Canada Ltd., also filled the CIO role at Gore Mutual Insurance Company for 11 years, notes Red River Mutual. Branson, for his part, joined Red River Mutual in 2010 as the company’s vice president of finance.

The Institute for Catastrophic Loss Reduction (ICLR) has released a new book, the lead author of which is ICLR founder and executive director Paul Kovacs. The book describes 20 municipal projects in Canada that seek to address the risk of extreme rainfall. Entitled Cities adapt to extreme rainfall: Celebrating local leadership, the book profiles eight communities in Ontario, four in British Columbia, two apiece in Alberta and Quebec, and one apiece in Saskatchewan, Manitoba, New Brunswick and Nova Scotia. Some preventive actions detailed in the book include mandating that backwater valves be installed in new homes, and

providing incentives for at-risk homeowners to disconnect weeping tiles from the municipal sewer system.

Bruce Martin [5a] has recently been named Cunningham Lindsey Canada Claims Services Ltd.’s vice president of account management, Laurie Walker [5b] has been appointed as senior vice president of inTrust, a global third-party administration service, and John Jones [5c] has been named the new vice president of business development, and will lead the firm’s national sales team. Martin has previously worked at Underwriters Adjustment Bureau and Unifund Assurance and Claimspro

MOVES&&VIEWS VIEWS MOVES

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

9 positions have included gen8 eral adjuster, branch manager, vice of operations Inc.;president Walker has served as and Lloyd’s Divisionaccident leader. director of Ontario benefits at McLarens Canada, later known as Macdonald Chisholm Granite Claims; and Jones, Trask Insurance who has more than 30(MCT) years announced in early experience in insurance, is January will join propa formerthat viceitpresident of erty and casualty brokerage business development at BrokerLink. TheSolutions. terms of the Granite Claims transaction were not disclosed, notes a statement from BrokerLink. BrokerLink Calgary-based brokerage companies, subsidiaries of Godfrey-Morrow Intact Financial InsuranceCorp., has include 84InsureMy offices serving launched Ltd., clients in Atlantic Canada, a brokerage and website Alberta Ontario. Dating focusedand on auto insurance back more than 60 years, telematics products in MCT hasand more than 110 inOntario Alberta. InsureMy surance professionals into 18 is currently established offices. Michael Brien, who offer Intact Insurance’s telehas led MCT over the last matics service in Ontario. 12 years, joins BrokerLink as The company reported last head of its Atlantic operations. November that it was in talks

10 9

Carolyn Snow [7] will lead RIMS Broker as president with Independent for the term, Resources Inc.2014 to offer the which took effect January usage-based insurance that1. Snow, who has been on the the organization will have RIMS Board ofwith Directors for in partnership Ingenie seven years, Services Ltd. is Incurrently Alberta, director of risk management for InsureMy notes that the Humana Inc. She previously brokerage is working on a served as RIMS’s treasurer, “time-based insurance” secretaryalso andusing director of offering, telematics external affairs. The RIMS technology, for commercial boardinsurance for 2014customers. also includes auto vice president Richard Roberts, Jr.; treasurer Julie Pemberton; Angelacorporate Veri [7] issecretary Nowell Seaman, director Crawford & Company of global risk management (Canada) Inc.’s new for Potash Corporation of vice president, national Saskatchewan Inc.;Veri Gloria account executive. was Brosius; Steve director previously seniorPottle, vice president of sales risk management services of for Granite Global at York University; Jennifer Solutions and Granite Health Santiago; Janet Stein, direcSolutions (formerly known as tor of risk management and Sibley & Associates), Granite insurance at the notes University Global Solutions on its

As of January 8, Toronto insurance broker Jones DesLauriers Insurance Management Inc. 5a (JDIMI) had acquired Whitley Insurance“Veri and has Financial Serwebsite. more than vices. Whitley Insurance 20 years of experience inhas the offices in Belleville, Ontario insurance industry, working and the nearby communities in the casualty, long-term of Trenton,employer Deseronto and disability, and legal Stirling. “The acquisition markets,” notes Crawford is & expected to build aher solid Company. “During career, presence for JDIMI in Eastern Veri has also developed joint Ontario and position the firm initiatives for a diverse group to better service their clients, of service offerings, including with strengthened commerclaims, engineering, investicial andand personal insurance gations finance.” offerings in the region and a new financial services division,” Economical notes a statement from Insurance JDIMI.has President CEO namedand Chris Van ShawnKooten DeSantis lead the [8]will as its teams from both companies. senior vice president and Loris underwriting Clarke [8] hasofficer. been chief named successor to Paul Part of the executive team Whitley, president of Whitley since 2008, Van Kooten’s Insurance, who will remain new role includes accountduring for a transition period. ability both personal and

commercial insurance, as well as continuing to increase Ken [9] has in the level of Rayner sophistication joined Anderson Economical’s pricing and McTague & president Associates analytics. A former Ltd. its director of busiof theasOntario Conference ness development, Central of Casualty Actuaries, he Region. brings a wealth has held“Ken various executive of experience to ourwith comroles at the insurer, pany, having held various accountability for corporate senior management positions actuarial, pricing, analytics with insurers and other MGAs,” and personal insurance.

says Chuck McTague, president of Anderson McTague & Associates, a familyowned MGA based in New Brunswick. In January, An- of The Centre for Study dersonInsurance McTague & Associates Operations announced it was expanding, (CSIO) announced in adding an office in November that JanetToronto Rodgerto service brokersofofnational Ontario [9], vicethe president and Manitoba. operations and Rayner’s PMO (project appointment confirms management officer) atthe RSA company’s to Canada, has“commitment been appointed theitsOntario/Manitoba marketto Board of Directors. place, and to several the building “Having built best of a local support team to assist practices for project delivery brokers with their surplus and productivity, I understand linesimportance and difficult to place the of standards business,” McTague adds. implementation and look

forward to working with CSIO and its Board of Directors on The Guarantee realizing the many efficiencies Company that exist for the brokerof Northsays. America channel,” Rodger has announced that Tara Wishart [10] became vice president ofCatastrophe claims for the insurer’s Toronto branch on Response Unit December 2, 2013. Having (CRU) Adjusters 21 years of experience in The Inc. has hired Mike Laberge Guarantee’s claims as senior vice president of department, Wishart will be corporate development. responsible for the operations Laberge, who previously of the Toronto Branch Claims. worked for Rochon She first joined GuaranEngineering, willThe work tee inall1995 as anofadjuster with members the and has held of increasCRU group of roles companies ingCanada seniority with comin and thethe United pany, including, most States. This will include the recently, claims manager for catastrophe response units, specialty lines. Wishart is the Academy of Insurance a member ofand both Surety Adjusters thethe company’s Association of Canada environmental services and the Canadian Association of teams, CRU reports. Women in Construction.

Follow @CdnUnderwriter on http://twitter.com/CdnUnderwriter

January 2015 Canadian Underwriter February 2014 Canadian Underwriter

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Andy Brand Tribute

Tribute Andries ‘Andy’ Brand

Well known risk management, insurance and claims professional Andy Brand suffered a heart attack and very sadly passed away on November 11, 2014, at the age of 53. Andy was Risk and Claims Analyst for the City of Kitchener, Ontario. Andy received his Bachelor’s Degree from Western, his Teachers Degree from Brock and Risk Management from University of Waterloo. The staff of Canadian Underwriter magazine had the pleasure of connecting with Andy at many industry

70 Canadian Underwriter January 2015

events. Andy was one of the nicest people you could come across – always friendly, inclusive, personal and genuine. His smile and laugh would brighten any room and conversation and he left everyone he talked to feeling they had just spent time with a close, longtime friend. Below are just a few photos with Andy from Canadian Underwriter magazine over the years (taken at various RIMS Canada Conferences or ORIMS events). Andy will be missed and thought of often.

APPOINTMENT

GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

The North Waterloo Farmers Mutual Insurance Company celebrated its 140th anniversary with an open house at the company’s newly expanded headquarters, still situated near its original location in Waterloo, Ontario. On October 2, 2014, 300 guests, including brokers, business partners, vendors, industry associates and local community officials gathered for the momentous event. During the ceremony, a $20,000 donation was presented to the Waterloo Region Food Bank.

Amir Fazel Claude Blouin and Jamie Dunn, Partners at Blouin, Dunn LLP, are extremely pleased to announce that Amir Fazel has joined the firm as an associate. Amir holds Honours Bachelor degrees in the Arts (Philosophy and Economics) and Sciences (Biology) from the University of Toronto. He placed second in his first-year law class before obtaining his Juris Doctor at the University of Toronto in 2008. He was called to the Ontario Bar in 2009. Amir’s practice is restricted to insurance litigation and includes personal injury, motor vehicle liability, statutory accident benefits, occupiers’ liability, property loss and liability, commercial general liability, subrogation and collection matters. Amir has represented clients in the Court of Appeal, the Superior Court of Justice, Small Claims Court and at various tribunals. He has also successfully conducted trials in the Superior Court of Justice and Small Claims Court. Amir is a member of the Canadian Defense Lawyers and The Advocates’ Society. He is also a member in good standing with the Law Society of Upper Canada. When not practicing law, Amir enjoys spending time with his wife and young daughter. Outside of family, he enjoys camping and fishing, listening to the Blues and collecting vintage fountain pens. Amir’s contact information is: afazel@blouindunn.com (416) 365-7888 ext. 122 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 January 2015 Canadian Underwriter

CU Seminar ad January 2015 14-12-12 8:36 AM Page 1

Putting the pieces together.

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

CIP Society Events:

CIP Society PROedge Seminars:

IIO – Hamilton Convocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 18

Edmonton – Business Interruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 28

Ottawa – Third Annual Winter Pool Party . . . . . . . . . . . . . . . . . . . . . . February 26

Ajax, ON – Off the Grid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 6

IIO – Conestoga Convocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 26

Ottawa – Advanced D&O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 10

Toronto – Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 4

Edmonton – Understanding Fire Grades . . . . . . . . . . . . . . . . . . . . . . February 11

Vancouver – Sixth Annual Battle of the Insurance Bands . . . . . . . . . . . . March 5

Calgary – E&O and Your Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 23

IADQ – Montreal Convocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 20

Calgary – E&O and You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 23

Toronto – Annual Fellows’ Reception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 20 Keeping you at the forefront of the P&C industry. The CIP Society. MEMBERS BENEFIT. www.insuranceinstitute.ca/cipsociety

GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

RRI hosted a reception in celebration of the launch of its new Toronto office on October 15, 2014. Guests were welcomed to Mirto Restaurant in downtown Toronto to meet the entire RRI team and to get familiarized with the RRI Canadian contingent. Attendees from various segments of the insurance industry enjoyed cocktails and hors dâ&#x20AC;&#x2122;oeuvres throughout the evening.

January 2015 Canadian Underwriter

GALLERY

WICC Ottawa held its 5th Annual Wine & Cheese Event on October 29, 2014 at the National Gallery of Canada. Approximately 220 guests gathered to enjoy delicious food, including a fresh oyster bar. Wine from two local wineries, coupled with a “red carpet” entrance, created some memorable photos of the evening’s festivities. This year’s event raised $16,000, all of which will go towards research carried out by Dr. Andrew Makrigiannis from the University of Ottawa. WICC Ottawa/Ontario has committed to supporting a two-year, $185,000 Canada Cancer Society Innovation Grant to this inspirational doctor, whose work involves studying whether or not the immune system has a role in breast cancer development. Supporting Dr. Makrigiannis’s important studies has provided WICC Ottawa with renewed energy to continue its mission: to support colleagues and their families in the fight against cancer, raise funds for cancer research and provide educational forums for the Canadian Insurance Industry.

74 Canadian Underwriter January 2015

GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

January 2015 Canadian Underwriter

GALLERY

The Young Insurance Professionals of Toronto (YIPT) hosted a One-Year Anniversary Reception at The Rum Exchange in downtown Toronto on November 5, 2014. The free event was open to young insurance professionals looking to build their networks and connect with others in the industry. Food and drink was enjoyed by all over the course of the evening, which culminated with a draw for various prizes. The not-for-profit, Torontobased YIPT brings together young professionals within the insurance industry. Its mission is to build, connect and inform Torontoâ&#x20AC;&#x2122;s young insurance community through networking functions and social events.

76 Canadian Underwriter January 2015

GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

January 2015 Canadian Underwriter

GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

The Registered Insurance Brokers of Ontario (RIBO), the self-regulatory body for general insurance brokers in the province, once again held its annual general meeting (AGM) at The Arcadian Loft in downtown Toronto on November 6, 2014. Guests gathered for a chance to catch up with old friends and make news ones before enjoying a lovely lunch and attending the AGM, led by Doug Grahlman, immediate past president and now chairman of RIBO.

78 Canadian Underwriter January 2015

APPOINTMENT GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

A.R.S. held an Open House reception and 15 Year Anniversary Party at its head office in North York, Ontario on November 20, 2014. Guests joining in the milestone celebration included clients, assessors, staff and friends.

André Paradis Assistant Vice President, Quebec Region Herb Cline, Vice President Finance and Commercial Operations for Sovereign General Insurance is pleased to announce the appointment of André Paradis as Assistant Vice President, Quebec Region. André brings twenty-five years of insurance industry experience with major insurers. He has held Eastern Region leadership positions overseeing Quebec, the Maritimes and Ontario throughout his career. Please join me in welcoming André to the Sovereign Team! Sovereign General is a Canadian owned and operated property and casualty insurer headquartered in Calgary, Alberta with 270 staff operating in eight regional and services offices from coast to coast. Sovereign provides solutions for the specialized and complex insurance needs of Canadian businesses through a national independent brokerage network. To learn more visit SovereignGeneral.com.

www.SovereignGeneral.com

January 2015 Canadian Underwriter

GALLERY

WICC Ontario Chapter held its Annual Breakfast for Cancer at the Fairmont Royal York in Toronto on November 13, 2014. More than 440 insurance industry supporters attended the event. Sharing her inspirational story was guest speaker Libby Znaimer, prominent Canadian journalist and author. After beating breast cancer and a couple of years later, again beating the odds and defying a grim prognosis related to pancreatic cancer, Znaimer says she remembers feeling as if, suddenly, all the time in the world opened up to her: “One of the things that you find, when you’re finished treatment, is ‘I have all this time, now, what am I going to do?’” Znaimer, vice president of news and information at Classical 96.3 FM and AM740, as well as host of The Zoomer Report, says that surviving cancer has encouraged her to act in the here and now. VisionTV’s Znews videographer Darrin Maharaj was on hand and has the details in this Znews coverage: http://bit.ly/wiccbreak14

80 Canadian Underwriter January 2015

GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

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January 2015 Canadian Underwriter

GALLERY

Indemnipro (the name for ClaimsPro in Quebec) welcomed approximately 130 clients and partners from across the insurance and claims industries on November 26, 2014 at the Hotel Gault in Old Montreal for a festive evening of holiday cheer. The company is looking forward to beginning a new annual tradition, as this was its first event following the Granite Claims acquisition. The event provided a great opportunity for the company to present its newly integrated team.

82 Canadian Underwriter January 2015

ANNOUNCEMENT GALLERY

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The Canadian Association of Insurance Women is pleased to announce the 2014 Insurance women of the year has been awarded to Gilberte Theriault of the Nova Scotia Insurance Women’s Association. Gilberte has been a member of the Nova Scotia Insurance Women’s Association for the past 42 years during which time she has served as President and has chaired many committees and is currently it’s Parliamentarian.. For the past eighteen years she has chaired the Cancer Crusade committee during which time the Association raised close to $200,000.00 for breast cancer research. Gilberte has been retired for the past twelve years following a forty one year career with Royal SunAlliance. She has been a mentor to many insurance professionals from the company, brokerage and adjusting ranks. Gilberte is a well respected Insurance Professional not only in Nova Scotia, but also throughout the Maritime Provinces. Nationally she has been an Automobile Resource and Specialist for her employer. Her expertise in the automobile area was evident and acknowledged through her involvement in the Facility Association of Nova Scotia, the Insurance Institute of Canada textbook Audit Committee and as a teacher of the IIC Automobile course for the Insurance Institute of Nova Scotia. The Insurance Women of the year award is the highest honour given. Each nominee is judged on her dedication to the Association [ both CAIW and her local Association] the Insurance Industry and the public.

www.caiw-acfa.com January 2015 Canadian Underwriter

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Puroclean Canada held its 2014 Canadian Conference on December 4-6, 2014 at the Hilton Hotel in Niagara Falls, Ontario. More than 200 attendees gathered for the annual event, including Purocleanâ&#x20AC;&#x2122;s Canadian network of owners/operators, suppliers and customers from across the country.

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“Get all the riGht connections!”

2015

Ontario Insurance Directory This outstanding directory is your personal address and telephone book dedicated solely to the Ontario Insurance Industry… find the company contacts you need immediately! Used on a daily basis by all segments of the Industry — the O.I.D. is the Undisputed Source for Insurance professionals to make contact with companies quickly and easily.

The coil bound O.I.D. contains: • 400+ pages of information • 2,200+ company listings • 130+ advertisers • 10 key industry sections: • Insurance Companies / Wholesalers • Brokers • Independent Adjusters • Appraisers • Bodyshops / Collision Repair

• Insurance Industry Associations • Rehabilitation Services • Restoration Services • Lawyers / Dispute Resolution • Engineers / Accountants

2015 Ontario Insurance Directory: $59.00 each

(plus $5.00 Shipping & Handling plus applicable taxes)

Call now to order

1-800-668-2374 Or order online @ www.bit.ly/oidorder

Completely Updated for 2015– over 10,000 changes!

January 2015 Canadian Underwriter

GALLERY

The Ontario Chapter of the Risk & Insurance Management Society (ORIMS) held its Christmas Luncheon on December 11, 2014 at the Westin Harbour Castle in Toronto. With more than 700 people in attendance, ORIMS continued with the spirit of giving by raising funds for The Daily Bread Food Bank. In all, $10,000 and more than 200 pounds of food was collected to help the food bank in its fight to eliminate hunger in and around Toronto.

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Ontario Chapter of the Risk & Insurance Management Society (ORIMS) held its Christmas Luncheon, December 11, 2014, Westin Harbour Castle in Toronto.

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January 2015 Canadian Underwriter

GALLERY

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SCOR held its annual cocktail celebration of the Beaujolais Nouveau Wines release on November 20, 2014 at Stratus Restaurant in Toronto. While enjoying the company of industry colleagues, guests sampled both a selection of the 2014 Beaujolais Nouveau wines and gourmet offerings prepared by the Stratus.

90 Canadian Underwriter January 2015

2015 Symposium Bigger and Better: Growth in a Finite Industry

Thursday, April 16, 2015 Toronto Board of Trade First Canadian Place, 4th Floor, Toronto

BREAKFAST KEYNOTE SPEAKER

Dr. Nick Bontis Leading Strategy and Management Expert

Now in its 11th year, the CIP Society’s Symposium is viewed as the insurance industry’s premier event for established and emerging insurance leaders. INDUSTRY LEADERS: Up Close and Personal Back for its second year, up close and personal sessions with executive leaders are sure to be an event highlight. Camille Alexander

Dr. Nick Bontis is an internationally recognized, award-winning strategy and management guru. His dynamic and engaging presentations empower individuals, teams and organizations to maximize their performance and achieve a sustainable and competitive advantage. LUNCH KEYNOTE SPEAKER

Director, Canadian Operations, Gallagher Bassett Canada Inc

Sylvie Paquette

Brooke Hunter

President and Chief Operating Officer of Desjardins General Insurance Group Inc.

President , Hunters International Insurance

Tom Reikman

Chief Operating Officer, Economical Insurance

“Always an impressive line-up and an outstanding event…” —Symposium 2014 Attendee

Ms. Paquette has overseen DGIG’s rapid growth in sales and profitability, culminated by Desjardins’ announced acquisition of State Farm’s Canadian operations early in 2014. DGIG will soon double in size and become Canada’s second largest P&C insurance provider.

Sponsors:

www.insuranceinstitute.ca/symposium2015

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