The Alberta Broker August – September 2017
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Gerry Baert
This engagement reinforces why we need to stop dancing I don’t want to bore you with stories on how these around and get working together on solutions and new first few months have zipped by, but I promise you strategies for so many issues and challenges. they have. Here’s one example: I’m frustrated by large brokers, I’m writing this at the end of our strategic planning whom I would consider to be leaders in our industry, who sessions in the latter part of June. We have also just sent feel they don’t need to belong to the association. What out our position on companies’ consumer facing portals. they could be bringing to the table as far as expertise, Ideally, I would like to see accessed through the broker education and opportunity for all the young brokers channel directly. We are working collaboratively with our coming up makes my head spin. As a small broker, I expect insurance partners on this issue. I would encourage each of leaders in our industry to do just that—help lead! It’s easy you to speak to your company representatives and let them to say you don’t find value or give some other excuse, but know the importance of driving your clients to your I would challenge non-members to rethink that position website to be able to interact with a broker-branded and get involved in the “conversation of possibility.” digital delivery solution. That frustration For this channel to extends to any broker work effectively and out there who uses the That frustration extends to any broker same lame excuses but efficiently, we need a out there who uses the same lame rides the coattails of renewed commitment on the association and its the company side to have excuses but rides the coattails of the members on advocacy us at the table next time association and its members on and regulatory issues. they wish to introduce Pointing fingers at our advocacy and regulatory issues. disruptive offerings into failings is easy. Driving our value proposition. We change by stepping up can offer insight into the and getting involved, that’s empowering. Until then, you’re front end operational use of emerging ideas and tools that just white noise. will ensure what is finally delivered speaks to a mutually If you think I’m just venting to increase membership, beneficial, functioning product that we can all work with. you’re wrong. In this rapidly changing environment, we Over the summer, I hope to have a chance to have had need everyone at the table driving the kind of change that some meaningful discussions with many of our members is required for brokers to flourish in this new and exciting on numerous subjects and ideas. I have already had some space. Who knows, maybe the conversation and involvement very cool things come across my email from some very sparks an idea that disrupts the industry or makes the informed and clever brokers. Considering our mandate at insurance broker the only choice for consumers. As a large IBAA to be an innovative and progressive association, this think tank, we could explore controlling our destiny with kind of communication only fuels the desire to deliver on that. our own branded offerings. I don’t know what will come For those of you who weren’t at convention and didn’t out of all of this, but I do believe that thinking you’re see my video, hear my speech or read my introduction in bullet proof in your own business silo is a strategic mistake, the last issue of The Alberta Broker, I want to let you know no matter how innovative you may be today. of my one and only mandate: Let’s talk! We are all brokers in a province that has always Brokers who were there or read the article and are encouraged free enterprise, free thinking and bountiful realizing they have a lot to say and good ideas to share, or opportunity. I’m starting the dialogue that can help evolve maybe need to vent some frustrations, are already starting our industry. Why don’t you jump in? to show a different kind of support. I can tell by the You can reach me at gerry@gobluecircle.com or directly number of emails and phone calls I am starting to receive. at 403.770.4960. Let’s talk! 4 The Alberta Broker August – September 2017
IBC Insight
Bill Adams
CYBER INSURANCE Growing Opportunity in a World Full of Risk
Frequent high-profile cyberattacks on businesses and organizations appear to be having an influence in the CEO suite where there is now a growing awareness of the damage hackers can do. In a recent survey of Canadian insurance company CEOs, KPMG found that 37% say they are fully prepared for a cyber event. While far from ideal, this is a significant jump from 2016 when only 13% said they felt ready. At the same time, 71% of CEOs in the same survey say they are 6 The Alberta Broker August – September 2017
personally comfortable that mitigating cyber risk is now part of their leadership role. This realization is a huge opportunity for brokers and insurers as businesses realize how insurance can play an instrumental part of a larger riskmanagement strategy. Growing demand is likely attributed to the astonishing number of cyberattacks during the past year alone. The attackers have used a variety of methods. The largest ransomware attack so far,
WannaCry, appeared in May 2017. In this type of operation, a hacker breaks into a network and locks it, holding the data hostage in exchange for a ransom ranging from hundreds to thousands of dollars. The WannaCry virus infected hundreds of thousands of computers worldwide including those of major communications companies, Britain’s medicare system and even insurers. Perhaps the most notorious hack ever, the Russian cyber assault on the
from the global accounting firm PwC. against breaches—attacks that steal U.S. Democratic Party and senior In its publication “Insurance 2020 officials in Hillary Clinton’s campaign or corrupt data. But some insurers are for president, happened last year. It has & Beyond: Reaping the dividends also offering identity theft protection of cyber resilience,” PwC warns that resulted in a spreading investigation for individuals. insurers “are at serious risk of missing that has created turmoil in the U.S. For these lines of business to grow in this rare market opportunity to secure capital. While there isn’t a dollar-loss a way that satisfies the demand for a high margins in a soft market. If the figure attached to the attack, it has comprehensive product, the issue of industry takes too long to innovate certainly damaged confidence in online insufficient data needs to be resolved. there is a real risk that a disruptor will security. Governments could lead in These audacious and establishing an anonymous damaging attacks are reporting system for cyber If the industry takes too long to innovate, increasing in number and incidents. Guaranteed there is a real risk that a disruptor will move scope, yet the majority of anonymity could reassure cyber incidents go unreported in and corner the cyber market. businesses that have been out of fear. Businesses are reluctant to report these concerned about reputational move in and corner the cyber market incidents. The reports could be damage if it becomes known that with aggressive pricing and more compiled in a repository that would they’ve been hacked. favourable terms.” provide data on vulnerable industries, Without reporting, insurers are faced It would be a huge loss to Canadian trends and metrics. The availability of with making decisions on cyber-breach brokers and insurers if the challenges data would also encourage research coverage without adequate data about of providing cyber insurance go unsolved. institutions to better study cyber claims, risk, vulnerabilities and PwC estimates that by 2018 the global security. safeguards—the foundation of market for cyber insurance will grow The federal government is successful business decisions in the to at least $7.5 billion. implementing mandatory reporting P&C insurance business. In Canada, insurers are primarily requirements for data breaches when This challenge of writing cyber focused on providing protection continued on page 8 insurance has prompted a warning
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continued from page 7 personal information is lost or stolen. In the U.S., federal and state privacy and data-protection laws that make it mandatory to notify individuals of security breaches led to the exponential growth of cyber security insurance. Since 2003, 48 states and the District of Columbia have enacted legislation requiring both government and private entities to notify affected individuals of security breaches containing personally identifiable information. Another challenge lies in one of the Internet’s greatest strengths, the seamless interconnectivity of businesses and individuals. From a cyber criminal’s point-of-view, attacking a highly integrated sector or industry is like shooting fish in a barrel. By successfully penetrating one network, the virus is able to spread throughout interconnected systems. For instance, the 2013 breach of Target discount stores began as an intrusion into a third-party vendor’s system using stolen network credentials. By the time it was stopped, the hack had cost the retailer an estimated $252 million. For small businesses, surviving the attack can prove challenging. One study by the U.S National Cyber Security Alliance estimates that 60% of small companies in the U.S. are out of business six months after a cyberattack. With those odds, the stakes are high. Insurance is just one aspect of preparing for cybercrime. Cyber insurance coverage costs are often based on the other risk-management measures taken by companies and organizations to reduce the likelihood of, or losses associated with, cyberattacks. Serious, constant and sophisticated vigilance against cyber threats is required by all stakeholders—businesses, insurers and government. Certainly there is no turning back on the use of cyberspace for commerce and communication. Promoting safe practices and standards for emerging threats is a role the insurance 8 The Alberta Broker August – September 2017
community has played for centuries, being champions of fire prevention, road safety and crime deterrence. Brokers have been instrumental in educating those at risk in understanding their exposure and insuring against it. They can likewise play a crucial role in promoting risk mitigation in the new cyber frontier. Growing cyber threats necessitate a coordinated response from governments and stakeholders, including the insurer and broker communities. This
coordinated response goes with the need to put cyber insurance on a more sound footing so that insurers can offer coverage that is comprehensive, useful and scalable to growing demand.
BILL ADAMS Vice President, Western & Pacific , Insurance Bureau of Canada
The Alberta Broker August – September 2017
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The How (and Why) of Selling Travel Insurance 10 The Alberta Broker August – September 2017
It’s no secret—Canada’s travel health insurance market is growing, with 2018 projections reaching upwards of $865 million1, offering great potential for insurance brokers to increase sales. Whether you’re looking to expand your customer base, retain existing customers or simply increase your revenue, adding travel insurance to your portfolio can help you achieve success. By Kristina Van Ameyde
The Alberta Broker August – September 2017
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Get to know your customers Travel insurance is a great way to get your foot in the door. Travel is an easy conversation starter and gives you the chance to get to know your customers on a deeper level. Not only will you build stronger relationships, but you’ll also be able to offer products that complement their existing coverage, like home or commercial insurance policies, which increase your bottom line. Travellers typically have disposable income and tend to travel in couples and/or groups, so there’s potential to bring you new customers, too—if you make the right first impression. When it comes time to seek business, travellers—seniors in particular— should be one of your top priorities; after all, they have both time and money to travel, so they make ideal candidates for travel insurance. Today, four in 10 baby boomers are grandparents; with longer distance between families on the rise, mature travellers want to spend as much time with their children and grandchildren as possible. If this is the case for your customers, family plans are always the most economical option! If grandparents are travelling with their grandchildren and leaving the parents at home, they too can take advantage of family plans, so long as they’re under 59. If they’re 60 or over, they won’t be able to take advantage of a family plan, but there are many ways
to economize their travel insurance, even if they have pre-existing medical conditions: • If they’re frequent fliers, multi-trip annual plans are the way to go! • If they’re not travelling to the U.S., emergency medical excluding USA plans can save them some money. • Deductible options make it easy to save some money too, especially if they don’t feel there’s a risk to travelling. For snowbirds who love to escape for extended vacations, keep in mind that most provinces require Canadians to stay in their home province for at least six months out of the year to maintain provincial healthcare benefits. If they stay out of their province beyond that, they will likely have to deal with a waiting period to re-establish their residency. For snowbirds 60 and over, their travel insurance policies should cover them sufficiently for the six-month period; they shouldn’t have to worry about coverage. (For instance, at TuGo, our travel insurance will cover Albertans for 212 days.) In addition to seniors, millennials are also ideal candidates for travel insurance, as they tend to find
excitement in seeking new experiences versus material possessions. With new experiences may come high-risk activities, giving more reason for millennials to buy travel insurance! Walk them through their options based on the sports or activities they’re planning on doing on their trip. Are they planning to scuba dive or maybe mountain climb? Travel insurance products aren’t created equally, so be sure to offer the right coverage for their individual needs. It’s what they expect.
With new experiences may come high-risk activities, giving more reason for millennials to buy travel insurance.
Start with existing customers Talking about financial investments or life insurance can be intimidating, but talking about travel isn’t. Travel insurance provides several opportunities to sell to your existing customers. If they’re asking about the number of days they’re allowed to be away based on their home insurance plan, find out where they’re going. They’ll likely need travel insurance even if they’re just crossing the border for a short trip. Pick up on cues during your conversations and think of every customers’ situation as a new sales opportunity. Ask yourself the following questions about your current customer base:
• Do they ask about U.S. or out-ofprovince coverage for their vehicle or boat? • Do they have a vacation trailer or motor home? • Do they reduce their auto coverage in the winter? • Do they have a summer cabin? • Do they have children who travel with sports teams? • Do they have relatives who live elsewhere? Do those relatives plan on visiting them in Canada this year? Congratulations—you’ve just identified six groups of potential travel insurance customers. Where are they currently buying their travel insurance? 12 The Alberta Broker August – September 2017
The reality is that almost 76% percent of your customers are insured when they travel1, and they’re either buying it from other financial institutions, online, travel agencies or from your competition. Prevent them from talking to the competition (and save them from multiple insurance appointments) by offering travel insurance on their next visit. Cross-selling opportunities are everywhere According to a Harvard Business Review study2, by reducing customer defections by as little as 5%, cross-selling can easily translate into an increase in sales by 25% or more. Continue working on building relationships with your existing customers; they already trust you and are likely to look to you for other insurance needs. Here are a few suggestions: • Add a short personal message at the end of all renewal letters reminding them to purchase travel insurance. You could also include this type of message in your email signature. • Add buck slips into out-going mail • Make sure you have sales brochures readily available throughout your office • Offer an easy-to-use sales portal to gain additional revenue • Provide engaging online content and/or an electronic newsletter (Note: be sure you understand Canada’s anti-spam legislation before sending out electronic communications) Expand your market potential In the world of travel insurance, expanding your market is easier than you think. Canada is multicultural; many immigrants and new residents take trips back home or have relatives visiting them here in Canada. It’s situations like these where a simple conversation can reveal whether your customer is interested in visitors-toCanada coverage for their loved ones. Once you get to know your customers and their travel habits better, demonstrate the value of annual plans for easy repeat business. If they’re frequent travellers, the best bang for their buck is to have travel insurance
that covers them for the entire year— no matter where they’re travelling. Once their annual travel insurance expires, you can easily renew their annual plans; and just like that, you’ll have repeat customers who’ll likely come back year after year. Up-selling can increase revenues up to 50% So now you’ve got customers interested; but what’s next? Start with emergency medical insurance, which everybody needs, then move
on to value-added travel insurance products. Introduce them to extras like trip cancellation, baggage, rental car and high-risk sports and activities coverage, and increase your revenue upwards of 50%—without having to sell to any new customers! For a small extra cost, your clients will have access to benefits they may not have thought of. Here’s an extra tip: if customers are certain they don’t
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Calgary .......................... 403-294-0005 Cold Lake ...................... 780-639-3477 Edmonton ...................... 780-488-8854 Grande Prairie ............... 780-568-4402 Lethbridge ..................... 403-331-0001 Lloydminster/Lakeland .. 780-874-1000 Medicine Hat/Brooks ..... 403-548-7737 Red Deer ....................... 403-986-9627
95 SERVICE LOCATIONS ACROSS CANADA The Alberta Broker August – September 2017
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like any insurance policy, its purpose is to provide financial protection need trip cancellation coverage, offer against emergencies. With travel trip interruption only. It’s an economical medical insurance, clients can trust alternative for them, while still offering that access to emergency medical care compensation for you. is available without having to worry about their home assets. In the U.S., Understand customers’ needs the number one cause for personal to overcome objections bankruptcy is the high cost of medical Some customers might not see a expenses incurred. One uninsured need to buy travel insurance, leaning trip could cost you their money and on their credit card coverage or trust, and you don’t want to put employee group plan benefits. Talking about financial investments your customers’ financial goals in Little do they know that both jeopardy, so go out of your way to coverage options usually won’t or life insurance can be intimidating, protect their assets. Don’t jeopardize cover them to the full extent; there your business; make sure your are conditions and exclusions clients are protected! but talking about travel isn’t! that can easily be missed in the fine print. To prevent confusion, • Is there a maximum number of days 1 “Travel Market Report,” Conference educate your customers on the Board of Canada, 2016 for any one trip? ins-and-outs of their policies. 2 • Will they still be covered if they Frederick F. Reichheld and Phil Be your customers’ trusted advisor; Schefter, “E-Loyalty – Your Secret extend their trip? they’re looking to you for guidance Weapon on the Web,” Harvard • Will the coverage apply to travel on coverage, so listen closely to their Business Review, July-August 2000 companions and/or immediate needs and find out what works best family? for them. In the event of a medical • Are they covered if they participate emergency on an out-of-province trip, in sports and activities while on Kristina Van Ameyde is TuGo’s your customers should know exactly vacation? regional account manager what they’d be covered for, including • Are they covered for pre-existing —Alberta and can be doctor’s visits, medical services, conditions, and is coverage based on age? reached at ambulance rides, prescriptions and Protect your business 1.866.912.2437 or more. You’re not just selling a product; Travel insurance may seem different you’re providing them with peace of visit tugo.com. from home and auto insurance, but mind, too! 14 The Alberta Broker August – September 2017
Safety and protection is the number one concern, so to ensure your customers understand what is truly covered by their credit card and employee group plans, ask them the following questions, for a quick comparison: • What is their maximum amount of travel coverage? They may only be covered for the maximum spend amount on their credit card.
While most travellers will be coming home with great memories, others will be dealing with medical bills and claims forms. To ensure a positive claims experience, share these tips with your customers before they leave: Take some time to review the process. When travellers aren’t familiar with the claims process, delays happen. Avoid this frustration and make sure you and your clients know the ins-and-outs of filing a claim. Don’t delay! Make sure to recommend they open the claim as soon as possible. Also, communicate the importance of completing and returning the original forms for review, because claims can’t be processed until everything is provided on their end. Keep things organized. It’s important to remind customers to return forms with all of the original bills. Also, provincial healthcare plans require original signatures and original bills, so be sure to suggest printing and mailing completed forms back as soon as possible. Sign, sign, sign! At TuGo, when we send the forms back to travellers, they must fill in all the information, including signatures where indicated. People often forget to: • Sign the medical authority section of the claimSign the assignment of payment section for any extended health plans • Provide details and information on any extended health plans • Complete the provincial health form required by the government If all these tips are taken into consideration, your customers should anticipate a speedy claims process!
The Alberta Broker August – September 2017
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PYIB Perspective Lori Wells
Tenant Insurance Is Too Often Overlooked!
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hile watching the tragic news of the horrific June 15th Grenfell apartment fire in London, England, my heart went out to the victims’ families. The loss of life is insurmountable and the loss of personal belongings, difficult, but what happens after the flames have been put out? What do all these people who used to have homes do now? The public often forgets this displacement; that is the main reason why I advocate that all renters have tenants insurance. Whether in an apartment, a mobile home, a house or a duplex, accidents do happen. They are not foreseen or planned (which is why they are called “accidents”). Many questions arose in the Grenfell fire about the hazardous building and fire codes. While firefighters and other community members voiced many warnings about these hazards, the building met the existing codes, so the disaster was still an unpredictable accident.
Who can’t afford 63 cents a day for the peace of mind in knowing that their belongings would be covered if something was to occur? I’ve heard every excuse in the book as to why people don’t think they need tenants insurance such as “My stuff is not worth anything,” “I can’t afford tenants insurance” or “Nothing will ever happen to my belongings.” Many refuse to believe they will be victims of a burglary, sewer backup or fire loss, but it happens all the time. Sometimes explaining to clients the premium cost on a small scale helps to show them the value, such as $18.75/ month or 63 cents a day, rather $225/ year. Who can’t afford 63 cents a day for the peace of mind in knowing that their belongings would be covered if something was to occur? While most causes of fire such as the use of stoves, freezers, wiring and cigarettes are not subject to strict liability, someone can injure or kill innocent people through negligence, 16 18 The Alberta Broker August – September 2017
just like drivers on the roads. The most conscientious driver can be hit by one driver who is not paying attention. The same goes with fire. All it takes is one negligent person, such as in a fire that happened in my town back in 2011. The fire that burnt down a large portion of the building was started by a tenant putting out a cigarette butt in a potted plant on the deck. The peat soil started to burn, then burned the deck chair and spread throughout the building. Explaining to clients the additional tenant coverage, on top of coverage for just their belongings, is hugely important.
on the tenant’s property. Since liability is not considered, the money to help the injured party is quickly reimbursed. Voluntary property damage provides a similar type of reimbursement for the tenant’s accidental damage to another’s property. Identity theft Identity theft coverage on most policies is not a lot ($10,000–$20,000) but can be a reassuring added coverage in such a digitally powered world.
That simple 63 cents a day could one day mean the difference between having to start over with nothing or having the assurance that your insurance will help you rebuild your life one pillow at a time.
LORI WELLS, PYIB Director lori@whitecourtinsurance.ca
Additional living expense Tenant policies usually include 20% of the contents limit for these items. If something made your dwelling uninhabitable right after you paid the rent, what do you do? Most people live paycheque to paycheque. Renting a hotel room at an average rate of $120 a night is almost always out the question and coming up with another $800–$1,000 plus damage deposit for another rental is nearly impossible for most people. Additional living expense will pay for a temporary residence until clients can return to their own place, as well as kenneling costs for pets and other expenses that normally would not have occurred if this peril had not changed living conditions. Personal liability Tenants can be sued under the Occupier’s Act. If a letter carrier, a guest or even a trespasser slipped on the tenant’s sidewalk in winter or was injured due to some other peril, the tenant may well be liable. The peace of mind that liability coverage provides is priceless. Voluntary medical payments and voluntary property damage Under voluntary medical payments, the insurer will reimburse the tenant for limited expenses (usually under $1,000) incurred for medical care when a visitor is accidentally injured
The Alberta Broker August – September 2017 17
Legal-Ease
Sara Hart and Adam Ollenberger
DAMAGED Supreme Court Affirms New Threshold for Damages for Psychological Injuries
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hen a person is injured in an accident, it is no surprise that serious psychological distress or injuries may arise. Historically, it was impossible for an injured person to recover damages for psychological injuries at all unless they were accompanied by physical injuries.
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Over the span of six years, Mr. Saadati was involved in five motor vehicle accidents. In the second accident, the vehicle driven by Mr. Moorhead struck Mr. Saadati’s truck, causing significant damage to the truck. Mr. Saadati attended at the hospital following the accident, but appeared to be physically uninjured so he was sent home. Mr. Saadati sued Mr. Moorhead for damages arising out of the accident. Mr. Moorhead defended on the basis that Mr. Saadati suffered no injury. The British Columbia Supreme Court held that, while Mr. Saadati had not been physically injured in the accident, he had suffered psychological injuries, including changes to his personality and cognitive difficulties. The judge’s conclusion was based on testimony from friends and family, not expert medical evidence. Mr. Saadati was awarded $100,000 in damages for his injuries. The British Columbia Court of Appeal overturned the trial judge’s decision. It held that, without expert medical evidence proving that Mr. Saadati suffered a medically recognized psychiatric or psychological condition, the trial judge was not allowed to award damages for psychological injury. Justice Brown, writing for the Supreme Court, overturned the Court of Appeal and reinstated the trial judge’s decision. To paraphrase Justice Brown’s ruling: The requirement to prove a recognized psychiatric or psychological injury was based on unjustified skepticism by the justice system about the reality and severity of psychological injury and illness. People that are psychologically injured are genuinely harmed, and the law should not perpetuate prejudice or stereotyping against people who suffer
from psychological injury or illness. Mental health is significant to a person’s ability to make choices and live the life they want to live.
Psychological and physical injuries should be considered under the same legal framework. What matters, from a legal perspective, is whether the plaintiff has suffered serious and prolonged psychological harm that is more severe than the ordinary stresses of life, and whether the defendant caused that harm by violating a duty of care toward the plaintiff. Psychological and physical injuries should be considered under the same legal framework, and must be proven in the same way—there is no need for a plaintiff to prove, with expert medical evidence, that they suffer a recognized psychiatric illness. The law is concerned with compensating people who have been injured, not with whether a plaintiff shows symptoms that meet diagnostic criteria set out in psychological standards like the Diagnostic and Statistical Manual of Mental Disorders. Whether or not a person has been injured and deserves compensation is a separate issue from the way in which psychiatrists classify mental illnesses, which changes over time and is a matter for debate amongst psychiatric professionals. This does not mean that expert evidence will never be required to prove
a psychological injury. Rather, it is one tool that is available to prove (or rebut) the existence of a psychological injury. Non-expert evidence may be sufficient to prove that a compensable injury exists if it is shown that a person has suffered a long-standing impairment.Whether this is proven in any given case depends on the facts for and against the claim. While it is too early to tell how the Saadati 1 decision will be applied in the case law, brokers and insurers who provide policies that cover bodily or personal injury should be aware that Saadati 1 has removed one of the legal impediments to a plaintiff seeking damages for psychological injuries. Saadati may have opened the door to plaintiffs receiving compensation for psychological injuries more readily, which changes the nature of the risks to which a policy of bodily or personal injury liability insurance may be called upon to respond. This is most obviously applicable to policies of automobile liability insurance, but should also be considered by providers of commercial general liability policies, fleet insurance, and policies that respond to claims where emotional distress is often implicated (for example, employers responding to human rights complaints or wrongful dismissal actions). A lawyer may be able to help interpret coverage issues in those circumstances. 1
2017 SCC 28 [Saadati]
SARA E. HART and ADAM L. OLLENBERGER are lawyers with Dentons Canada LLP and practice in the professional liability insurance area. adam.ollenberger@dentons.com sara.hart@dentons.com The Alberta Broker August – September 2017 19
The Advocate
George Hodgson
Have You Heard the Buzz? Let’s Talk and Get Active
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oon there will be an unmistakable chill in the evening air and the changing colour of leaves signals autumn is on its way. Combines will soon be going full out, gardens are already starting to be harvested and the IBAA office is starting to buzz with activity. So what is in store for the fall at the IBAA? President Gerry Baert will have been in his post for four months, but the real work starts in September with the first full executive and board meetings since the May convention. Top of the agendas will be a new strategic plan to cover the next three years, as well as more detailed planning for Gerry’s presidential year. The theme this year will be “Let’s Talk!” In all member associations, both in our industry and elsewhere, apathy
is the greatest enemy of a strong organization. Above all, the best cure for apathy is meaningful conversation. Join the Conversation In the “Let’s Talk” initiative, President Baert plans to develop meaningful conversations within the industry. Look for him to reach out to members, insurers, vendors and others. He’ll want to talk not only about what the association does and offers but also, more importantly, about what the association needs to do and offer. While the IBAA board and office are key players in the association’s direction and activities, a crucial point will be what association members have to offer. IBAA will be stronger the more members it has and the more members who are engaged.
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Members will also be hearing from more people than president Baert. Look for IBAA producer Karen Bushie, who will be out visiting members and non-members. In addition to marketing our products and services, Karen will be gathering crucial feedback for improvement. Tell her what works, what does not work and what you’d like to see. She will be calling many of you soon to set up meetings, but don’t wait for her to call you—feel free to call the IBAA office to set up meetings! An important topic for conversation will be the professional development courses we offer. For many brokers and soon to be brokers, fall will be back to school time. The IBAA fall PD calendar is full, with everything from licensing to CAIB classroom and online courses; licensing, designation and certification self-study courses; and countless webinars and short online self-study courses. IBAA is the premier provider of professional development for brokers in the province. The raison d’être for our PD, like everything else the association does, is to strengthen the broker channel. Check out some of our offerings to
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The Alberta Broker August – September 2017 21
continued from page 20 know how we are doing. Vote with your registration or by talking to us. “Let’s Talk” is not limited to conversations between IBAA’s executive, office and members, but also includes conversations between the executive and our insurer partners. Every November for the past few years, the executive has held one-onone meetings with our top sponsoring partners. These meetings are designed to allow our partners and the executive to discuss the plans and the latest trends in our industry and have been very popular with all parties. On another front, IBAC’s AGM in September will be held in Nanaimo B.C. IBAA’s own past-president Scott Treasure will be IBAC president this year! Be sure to call or email congrats to him. I know that IBAC will be very fortunate and well served with Scott’s leadership! Take Action Aside from “back to school,” the arrival of fall is also the time when numerous volunteer opportunities arise. While church groups, service groups, sports and political organizations and campaigns may need your service, the strength of the broker profession in the public eye depends on the visibility of brokers volunteering in our communities. Such volunteer work, whether raising funds for charity or attending community events, showcases the insurance broker profession, its values and community connections. IBAA has many volunteer opportunities. Some require a fair amount of time, others very little—but all are important. Let me highlight a few for you. IBAA local councils throughout Alberta always have volunteer needs— some more critical than others. Brokers who have volunteered at any level in the association, particularly at the local level, all tell me that they have received far more than they have given. Contact your local council chair or the IBAA office to volunteer in your local council. 22 The Alberta Broker August – September 2017
Every year, IBAA holds elections for board members, including directors at large and the executive. Next year the board structure will change, dropping the position of local council chairs but increasing the number of directors at large. Starting in January, IBAA sends out a call for nominations each year, so watch your emails. We need you. Over the next couple years, the IBAA board will also be expanding its committees to include association members who are not board members. Along with your valuable contributions, you can “test-drive” volunteering on the board. Stay tuned. Industry blogs are an important source of news in today’s digital world. Each of you has significant experiences and interactions that could enlighten others, whether the topic be client interactions, volunteering at a brokercommunity event or industry issues. Thom Young has been publishing an insurance blog on the IBAA website for several years. We’d like to hear what others have to say as well—many voices offer a collective breadth of experience. Go to “Your Network” at ibaa.ca to comment on existing blogs or post your own.
Last but not least, IBAA needs association volunteers to attend the many political events for all political parties at both the provincial and federal levels. This work is crucial given that the primary reason that IBAA exists is advocacy, particularly with our politicians. Most of these events are held in local and regional locations. IBAA never has enough volunteers to fill all of the events we would like to attend. The range of events is wide, with premier’s dinners, leaders’ dinners, MLA and candidate fundraisers, golf tournaments and who knows what else to peak your interest. These events usually feature good food and good fellowship. Contact the IBAA office to get on the list of people to call—it really is a lot of fun! Many more volunteer opportunities will arise over the year. Stay tuned! “Let’s talk” and get involved with the IBAA. What such talk entails can only evolve as we come together.
GEORGE HODGSON CEO, IB AA ghodgson@ibaa.ca
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The Insurance Consumer is Changing— Are Brokers? “The last, best experience that anyone has anywhere becomes the minimum expectation for the experience they want everywhere.” Bridget van Kranlingen, Senior Vice President, IBM Global Industry Platforms
T
hat powerful quote above sums up the opportunity, and challenge, of customer service in today’s insurance world. For the broker channel, the complexity of data exchange between broker management systems and a universe of different insurance company systems is a fact of life. How can brokers compete with the simplicity of Amazon and Uber offerings? Will the broker model be upended by new entrants such as Lemonade, an online American platform that offers quote and bind in minutes and can pay a claim in three seconds flat? In short, no. But there is a lot of work to do. And it begins with understanding today’s consumer. What Do Consumers Want? Recent market research shows the following: • 90% of consumers want to use messaging (SMS, Facebook, WhatsApp, etc.) to engage with
24 The Alberta Broker August – September 2017
brands. Sixty-six per cent of consumers would prefer to use messaging over any other means. • 45% of Canadian consumers want to use electronic proof of auto insurance. Seven per cent already do, even without regulatory approval. • Consumer desire for eSignatures is on the rise. Such transactions have increased globally by 53% each year since 2011. • Adoption of a mobile device among Canadian consumers has increased from 50% in 2013 to 70% in 2016. Sixty-one per cent of consumers on a mobile device will abandon a non mobile website instantly. What do these statistics show? Consumers will almost always do what is easiest, even if they have to pay for it. Look what happened when Apple had the audacity to launch iTunes in 2001. The online music store sold a product that millions of consumers were downloading for free. Apple reinvented the user experience to make downloading music legally easier,
safer and more reliable than doing so illegally. Consumers responded by opening their wallets. What Is the Ideal Consumer Experience? Consumers respond emotionally to a sales experience, even when interacting with a website or other piece of technology instead of a human being. Recent Forrester marketing data shows the emotional tone of brand interactions hovers around 60% positive regardless of whether that interaction takes place via self-serve, a live salesperson, an automated phone system or instant chat. The difference is in the execution, or how “robotic” the experience feels. Consumers often feel most valued, an important emotion in driving loyalty, when the consumer experience is less than 100% automated, Forrester data shows. This fact is apparent when viewing trends in banking transactions. Even though approximately 70% of millennials will use a mobile device
for day-to-day banking, over 50% report conducting the same transactions at a branch with a teller as well. Requiring some form of interaction with a salesperson is an opportunity to ensure that consumer feels valued and understood. What matters is that interacting with a salesperson is easy and convenient, rather than a chore. Making Sense of It All Consumers want digital interactions and they value interpersonal ones. They will gravitate towards the easiest, fastest solution. At the same time, they will show loyalty to brands that take the time to understand them during the purchase process. During a recent panel discussion at a 2016 industry convention, one millennial shared her experience of attempting to purchase motorcycle insurance. Among her frustrations: L Unfriendly websites
L Non-mobile websites L Quoting engines that wasted her L time, forcing her to complete an L entire questionnaire before informing L her that the broker did not even L sell motorcycle insurance L Complicated information about L seasonal vs. annual coverage and rates L Restrictive business hours that L made it difficult to contact advisors L for advice
How can brokers compete with the simplicity of Amazon and Uber offerings? This consumer wanted a blend of digital and personal. She wanted to learn about and obtain quotes for insurance on her own, with the flexibility to obtain direct advice when needed. The service she received inspired her to buy an e-bike instead, eliminating the need for coverage in the first place. The lesson for insurance brokers is not to invest in technology at the
expense of a personal interaction, but to innovate and find ways to deliver both in harmony with one another. Always seeking a competitive edge, brokers should strive towards a culture of innovation, unafraid to test new technologies and processes. The opportunity is there. What will our industry do with it? Next Steps CSIO provides resources on a variety of consumer-friendly technologies, available to all of our broker members on CSIO.com. Brokers are encouraged to visit the CSIO technology scorecard (www.csio.com/scorecard-tool) to see if they qualify as a “Technology Leader,” joining more than 100 CSIO tech leaders in Canada. MICHAEL SPIAR Broker Relations & Communications Specialist, CSIO mspiar@csio.com
The Alberta Broker August – September 2017 25
Know E&O
Claims Claims Made VS. Made & Reported What’s the Difference and Does It Matter? When it comes to coverage provided, the differences between claims-made policies and claims-made and reported policies are extremely significant. Professional liability policies for insurance professionals are typically written on one of these forms. It is critical to understand the two when purchasing professional liability insurance to protect yourself and your business.
Claims-Made Coverage A claims-made policy provides coverage for an injury or loss if a claim, such as receipt of a demand letter or service of a lawsuit, is first made during the policy period. Claims-made policies provide broader coverage and contain more liberal reporting requirements than claimsmade and reported policies. The major distinction between the claims-made and the claims-made and reported forms is that under a claims-made policy form, the insured typically need only report the claim “as soon as practicable” or promptly, but not necessarily during the policy term. On the other hand, claims-made
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and reported policies, as the name suggests, require that the claim be made and reported during the same policy period. This wording under a claims-made policy may read: “This is a claims-made policy which applies to ‘claims’ first made during the policy period or any extended reporting period.” Sample insuring language: “We will pay on behalf of the insured ‘loss’ for which the insured is legally liable caused by a ‘wrongful act’ committed by an insured arising out of ‘professional services’ rendered to others.” This type of insurance applies to “potential claims’ and ‘claims’ first made against the insured during the ‘policy period’ arising out of a ‘wrongful act’ taking place on or after the retroactive date.” Claims-Made and Reported Coverage A claims-made and reported policy also requires that the claim be made during the policy period. However, this policy form also requires that the claim be reported to the carrier during the same policy period in force at the time the claim was made. While
often less expensive, claims-made and reported coverage is much more restrictive. Sample wording under a claimsmade and reported policy: “We agree to pay on behalf of the insured such ‘loss’ to which this insurance applies sustained by the insured by reason of liability imposed by law for ‘loss’ caused by any ‘wrongful acts’ committed by the insured, arising out of the conduct of the business of the insured in rendering services for others …” This insurance applies to ”wrongful acts” only if: 1. The “wrongful acts” did not occur before the Retroactive Date, if any, shown in the Declarations or after the end of the policy period, and 2. “Loss” because of the “wrongful act” results in a “claim first made and reported to us” during the policy period.
How do these differences play out in real life? Case Study An insurance broker is insured by Carrier A for policy period July 1, 2016, through July 1, 2017. On June 27, 2017, the broker is served with a
lawsuit alleging that the broker failed to procure the appropriate coverage for her client. On July 1, 2017, the broker changes carriers and moves her coverage to Carrier B. On August 4, 2017, the broker reports the claim to Carrier A. What Is the Result? If the broker was insured by Carrier A on a claims-made and reported policy form, there is no coverage. The claim was made during the policy period but not reported during the same policy period. What will Carrier B’s position be if its policy is written on a claims-made and reported form as well? No coverage. Due to the fact that the claim was made during Carrier A’s policy period, the claim was not made and reported during carrier B’s policy period. What if the broker had renewed its claimsmade and reported coverage with Carrier A? No coverage. Claims-made and reported forms do not typically provide continuous coverage and the reporting requirement is typically strictly enforced (i.e., that the claim be reported during the policy period in which the claim was made). If the broker’s coverage through Carrier A was provided on a claimsmade basis, the claim is covered. There is coverage under the policy issued by Carrier A because the claim was made during that policy period and, for the purpose of this article, was reported promptly.
If the broker was insured by Carrier A on a claims-made and reported policy form, there is no coverage. The distinctions between claimsmade and claims-made and reported policies do make a difference. While a claims-made and reported policy may cost less than a claims-made policy in the short run, it is because the claims-made and reported is a more restrictive form of coverage. It’s important to keep this in mind the next time you recommend or buy professional liability coverage, as the claims-made and reported form could end up costing you in the end.
This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders. Copyright 2010 Westport Insurance Corporation
Lesson Learned While the broker was continuously insured, there is still a gap in coverage under the claims-made and reported form. Because of the less onerous reporting requirements under the claims-made policy form, the claim can be reported after the policy period has ended without jeopardizing coverage as long as the claim was made within the policy period and reported promptly. The Alberta Broker August – September 2017 27
Who? What? Where? Michele Hammel
Broker News • Suzanne MacPherson formerly of Intact Insurance joined Westland Insurance Brokers as its Alberta regional manager. • Westland Insurance Brokers acquired Cowan Agencies Ltd. • Link Insurance Agency opened a new Auburn Bay location. • Braeside Insurance & Mortgage, Rutz Agencies and Hanna Insurance Services will now operate under the name of Central Insurance Group. • Blue Insurance will now operate under the name ClearCut Insurance. • InsureLine Brokers of B.C. opened two new Calgary offices located on Richard Rd. SW and 17 Ave. SW. • Asset Insurance Brokers set up a new location in Calgary, located on Westwinds Dr. NE. • Chris Sikorski and Brian Jardine left Arthur J. Gallagher to pursue a new business opportunity. • Manulea Spyrka moved from Marsh Canada to Arthur J. Gallagher. • Tanya Burton is now a branch manager at BrokerLink.
Ontario where she was responsible for acquisition and integration activities. • Economical Insurance will move Assurance Economical, Economical Select, Perth and Western General under one legal entity: Economical Mutual Insurance Company. • Congratulations to Julia Carr of RSA on her new position as VP of marketing. Succession Planning • Congratulations to Colin Toole of Toole Peet & Company on the birth of his daughter, Madelyn Jean Toole. Partners, Charities & Professional Organizations • Congratulations to Paul Holden the new senior VP sales & marketing at Paul Davis Calgary. • Lethbridge City Council voted to amend its city bylaw to allow ridesharing. Uber hopes to start recruiting drivers in the fall.
Company News • Brian Fortier, formerly of RSA, joined Aviva as a senior P&C underwriter. • Benita Jariwala left CNA to join Aviva’s P&C underwriting division. • Glean Gonsalves left Co-operators to join Aviva’s P&C underwriting division. • Yoomi Wynveen replaces Michael Martino as the VP of finance for Intact Insurance, west division. Yoomi previously worked for BrokerLink in 28 The Alberta Broker August – September 2017
Condolences We are saddened by the passing of industry veteran Bill Thibault. Bill started work as an adjuster in the eighties after serving as an RCMP officer and carpenter. He worked for Intact Insurance for five years in its Red Deer office and most recently worked for Paul Davis Red Deer. Remembered by friends as someone who would ask what you were doing on the weekend and then show up to help out, he will be missed. Thank you to all who provided information for this edition of “Chinook Country Report.” Keep it coming! MICHELE HAMMEL Regional Operations Director Intact Insurance Company
STAND OUT
michele.hammel@intact.net
with Alberta’s brokers by advertising in
Call Michele Schuldaus: T: 780.910.2601 E: michele@LinkPR.ca
Did You Know...
A company called Tractable, an insurtech startup, is using artificial intelligence to assess images and repair estimate accuracy in auto insurance? This technology is blending the world of AI and image assessment into the insurance world. Will this be new tech that we will be seeing utilized by claims adjusters in the near future to assess the accuracy of damage assessments? Who knows, this same technology may end up being adaptable to property insurance soon. PYIB will be hosting event nights around the province in the fall? IBAA and PYIB are bringing the event to you! You will have the opportunity to come out, network, learn and become a better broker closer to home this year. Due to our member feedback we will be holding some edu-taining events focused on brokers in the fall time. Details will be posted on the IBAA website towards the end of the summer. Join us! As of August 1st any insurance risks located in Saskatchewan will need to be charged 6% PST? The Saskatchewan government released legislation that states that insurance will be subject to provincial sales tax (PST) as of August 1st, 2017. Alberta brokers who have risks (or portion of risks) in Saskatchewan will need to be charging PST on the Saskatchewan portion of the risk and remitting the PST to the Saskatchewan government. For every human on earth there are 1.6 million ants? Some natural products repel ants, won’t harm the environment and are non-toxic solutions safe for both pets and children. Ground coffee has been found successful here in Alberta, in my backyard to be specific. Just make sure that your coffee barrier forms an unbroken line around the ants you want to contain. Splenda, raw cornmeal and raw cream of wheat have all been reported to kill ants as well.
“Did You Know” is compiled by IBAA’s Rikki McBride using information sources from IBAA, Tractable.ai, NationalGeographic.com and Wikihow.com.
The Alberta Broker August – September 2017 29
Professional Development Janis Losie
Live Long and Prosper
L
ifelong learning should never be seen as a chore or a last-minute duty. Yet, every year starting May 15, IBAA gets a veritable stampede of insurance brokers scrambling for last minute CE credits. I mean, they are desperate—as if their licences depended on it! LOL. This is particularly true of this year. Perhaps brokers heard that AIC would be auditing those who enter all their credits or take all their courses after June 15. AIC revealed that tidbit in the May stakeholders’ meeting. Oddly, folks will watch the news every day to learn what’s going on in the world, but they won’t put that same effort into learning more at work. Huh … I can think of ten reasons right off the top of my head in support of learning more at work every day. Luckily, I am a lifelong learner, so I know these are mostly statistically true (well, okay, Google results helped):
1 People who learn more, make more money. 2 People who learn more, live longer. 3 People who engage in learning at work are better at their job. 4 People view those who spend time learning as trusted sources of information. 5 People who keep abreast of relevant education are more valuable employees. 6 Continuous education is humbling —You realize that you don’t know everything there is to know. 7 Number six above makes you want to learn more because you realize that you don’t know all there is to know (okay, these last two points are really off the top of my head, but I believe them to be true). 8 People who learn constantly at work are better mentors, teachers and leaders. 9 People who continually learn more are happier (at least I am because I hate looking dumb at social occasions when everyone else is better informed than I am). 10 People who keep their brains active through learning maintain better brain function in later years than those who do not. (If this fact is not important to you now, it will be someday —trust me!) If you don’t invest time, energy, or money in your own learning, who will? Why am I telling you this? To encourage you to take a proactive interest in life-long learning, of course! Choose courses that hold value for you and your career, not just courses that give you the required 15 credit hours.
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Hours are not education, especially if they are not meaningful, or don’t make you a better broker. As everyone who has crammed for a final exam knows, leaving your education until the last minute (or, in this case, the last month and a half ) leads to panic, anxiety and potential failure. Do you really want to put yourself through that every year? If you look at the IBAA courses offered throughout the year, you should find something to spark your interest and fit your needs. The same may not be true if you wait until the last minute. You may be stuck taking a course that adds little value to your expertise. Please don’t wait until the last minute every year. • Got your level one licence? Why not go for level two? • Got your CAIB? Why not take your CPIB, the next step on the road to insurance broker nirvana? • Got your CPIB? Why not go for your CCIB and become an insurance broker brainiac? IBAA Professional Development exists to make you an insurance broker superstar, an expert adviser par excellence. The association as a whole exists to ensure the insurance broker is still around to be a superstar, but the two goals go hand in hand. Remember, most of our education is developed by brokers. After all, who knows us better than we do? Check out our fall course line-up and start planning to learn more, make more money and live longer. JANIS LOSIE Director, Member Relations, Marketing & Communications, IB AA jlosie@ibaa.ca