WWW.INSURANCEBUSINESS.CA ISSUE 2.3 | $6.95
t h g i r b s i e nc a r u s n i KERS O n R B ’S ia d ROW DTABLE a R O n a TOM A ROUN ION ON C f o RS SS e T ISCU G BROKE r N D E u M IN GE ut f RAIN ANA ANSOM T e M S h I t CRIS TAGE & R E TO y h W HOS SURANC UE IN ESC IN ALL VIEW TER ’S AN IN TRISURA O WITH BLING CE GAM
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All Sport InSurAnce lAuncheS SpecIAl event lIAbIlIty coverAge In AlbertA, SASkAtchewAn, MAnItobA And ontArIo! customized policy terms available to meet your clients’ needs – daily, multi-day, seasonal and annual. We’ve offered this in British Columbia since 1988 and now expand our successful product to our Prairie and Eastern neighbours!
Coverage includes Commercial General Liability $2,000,000 (liquor liability available), Tenant’s Legal Liability $500,000 and facility owner as Additional Insured with $500 Deductible. Higher limits offered.
Hosts and Organizers of events held at public venues are provided with protection when lawsuits are brought against them.
Find our Special Event and Sport Activities applications at: www.allsportinsurance.com/products/forms-applications.htm
Sport and Social categories include:
Email applications to: info@allsportinsurance.com
• Adult Non-contact Recreational Hockey – Seasonal, Annual, hourly, league play, pickup and tournaments
For more information contact:
• Sports Tournaments, leagues, schools (other than hockey) • Martial Arts • Beer Gardens (when insuring a sport activity) • Runs / Walks • Parades / Demonstrations / Festivals • Meetings • Anniversaries, receptions, weddings, dances • Film Shoots • Theatre events …and much more
Gina Bennett, Vice President gina@allsportinsurance.com
Helena Kwok, Underwriter helena@allsportinsurance.com
With the years of success we have realized in B.C. it makes good business sense to offer our Special Event coverage to the prairies and Ontario. Our underwriters are highly experienced in this area and practices are already in place to provide our traditional, consistent and reliable service to brokers.” gina bennett, vice president, All Sport All Sport is a Managing General Agent; there is not a requirement for a contract or premium volume. Due to the nature of this specialty business, an administration fee is charged and is written net of commission. Events held at privately owned or residential property do not qualify.
507-1367 west broadway, vancouver, bc v6h 4A7
phone: (604) 737-3018 Fax: (604) 737-3076 toll Free: 1 877 992-2288
www.allsportinsurance.com
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CONTENTS
48 | Hostage and Ransom Living 15 months as a bargaining chip at the hands of Somali kidnappers was not the vacation Amanda Lindhout had planned
SOCIAL MEDIA 4 | Insurance agents and social media – finding those customer ‘likes.’
58 | Cyber liability Broker tips on how to mitigate the risk of cyber attack
PROFILE 6 | Mike George: The president and CEO of Trisura Guarantee Insurance Company, is a gambler by nature, and he is “all in” to bring his company forward in the Canadian and North American market
INDUSTRY FEATURES 12 | You can reduce your clients’ exposure to risk and fraud through three simple steps 35 | What does leading a team of strangers onto the ice of Antarctica have to do with running a successful business? Quite a lot, actually 54 | One insurer built a loyal customer base literally in the eye of the hurricane
REGULARS
06
60 | What would you tell a client who’s just had all their electronic files stolen?
20 | How insurance is playing a key role in helping protect the victims of institutional abuse 40 | Roundtable Irreplaceable? The Boomer cohort is leaving, and so is decades of experience. Where are the future brokers, underwriters and actuaries coming from? Insurance Business and RSA Canada brought together some of the industries leaders and key players to take a close look at where Canadian insurance is headed
57 | Favourite Things Troy McDougall shares memories of his first few days in insurance 64 | Expert Advice Colette Taylor explains the evolving role of the risk manager and how brokers can play a role in shaping it
56 | Adjusting Advice Don’t focus on volume and speed – focus on people and facts
Q&A 14 | North Waterloo Farmers Mutual Insurance isn’t resting on its laurels this year, celebrating 140 years in the business, and looking beyond provincial borders to grow its business 18 | BROKER ADVICE Understanding Canada’s infrastructure crisis and future construction trends can allow brokers to gain an advantage
issue
2.3 22
COVER FEATURE Young Guns The future of insurance is here, as we take a look at the rising stars in the insurance industry
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CONTENTS
Young Guns are hitting bullseyes COPY & FEATURES
SENIOR EDITOR Vernon Clement Jones ASSOCIATE EDITOR Donald Horne CONTRIBUTORS Chinwe Akomah, Philip Kaszuba, Mike George, Chris Sekine, Colette Taylor, Maia Espejo PHOTOGRAPHIC CONTRIBUTOR Ted Chai
ART & PRODUCTION GRAPHIC DESIGNER Joenel Salvador
SALES & MARKETING NATIONAL ACCOUNT MANAGER Jesse Rumm ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER SALES John Mackenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce
CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis
Editorial enquiries tel: 416 644 8740 • Ext: 231 donald.horne@kmimedia.ca Advertising enquiries tel: 416 644 8740 • Ext: 237 jesse.rumm@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 insurancebusiness.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or in part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as IB magazine can accept no responsibility for loss.
It’s certainly not, ahem, the oldest profession in the world, but selling insurance comes pretty close. The truth is they were helping people in this country just after it was formed. But that history may be part of the problem come time to attract young players to the sector — whether P&C or life, say industry veterans. Statistics are identifying the average age of the Canadian broker at over 55 — that’s well above the 20-something target for an industry desperate to connect with the next generation of homeowners, drivers and, yes, annuity holders. But the question remains: how to convince Generation Y there are career opportunities in insurance? That dilemma has given rise to the first-ever Insurance Business Young Guns feature (pages 22-34). The list is your introduction to some of the strongest of the young professionals this industry has to offer. By the way, they’re all under 36 years old. The hope is their stories — and their take on what the industry needs to do to win more young people just like themselves — will help inspire change in the way Canadian insurance courts and manages that talent. To drive home the point, we also explore the subject with our RSA-sponsored roundtable on broker training and development. See pages 40-45. Our panellists say it’s all about doing enough to nurture potential Young Guns whatever their background.
CONNECT
Contact the editorial team:
donald.horne@keymedia.com
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JOBS Check out Insurance Business Jobs - Canada’s newest online job board where you can find the most qualified professionals and the best careers in the industry! • Broadcast your company’s job openings to over 20,000 high caliber insurance professionals • Discover and apply for the latest employment opportunities from various insurance companies across Canada • Upload your resumes and expose your expertise to the Canadian insurance industry
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INSURANCEBUSINESS.CA 02-03_EdsNote_subbed.indd 3
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brought to you by
SOCIAL MEDIA
BROKERS CONNECT WITH THE TIMES TO
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WIN CLIENTS 96% OF BROKERS USE WEBSITES TO REACH CLIENTS, BUT WHAT ELSE?
YOUR CLIENTS LIKE YOU! THEY REALLY LIKE YOU!
96
200 likes
65
(broker avg.)
Website
56 49
Email blasts
440 followers Twitter (broker avg.)
Blog
46 34 25 19 LinkedIn
CONSUMERS TALK ABOUT ‘INSURANCE’ ON TWITTER
Google AdWords
YouTube
12
Google+
48.9%
25.6%
Blogs
10.3%
Forum replies
9.5%
Comments 2.4% Forums 2.0% Videos
1.0%
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INSURANCEBUSINESS.CA
WHAT ARE AGENTS TRYING TO ACHIEVE THROUGH SOCIAL MEDIA?
CONNECTED CANADIANS
81%
Brand recognition
84%
of Canadians are connected to the Internet, owning 2.6 Internet-capable devices on average
80%
AGENCIES LACKING SOCIAL MEDIA PLANS
Leads
77%
• 68% of agencies DO NOT have a formal or documented social media plan; 32% do have a plan
Build relationships
50%
• 64% of all agencies DO NOT measure their marketing ROI
47%
of Canadian consumers conduct a broad online search prior to purchase
• Twitter and Facebook are the most frequently updated. 65% update their Facebook pages at least weekly. LinkedIn is least updated.
Improving service
2 of 3
Canadian Internet users log onto Facebook, Twitter or Linkedin every day
TOP 3 SOCIAL NETWORKS BY MEMBERSHIP CANADA
42%
66% Facebook
23% Twitter
20%
consult customer review sites before buying
Google+
Social media web demographics
72
60
89
43
72
71
of all internet users are now active on social media
usage among 18-29 year olds
usage among 30-49 year olds
usage among 50 to 60 year olds
usage among those 65 and older
of users access social media from a mobile device
Sources: B.H. Burke & Co., Inc. – Social Media and Online Marketing – What’s the real deal?
Pew Research Center BDC Study,“Mapping your future growth,” Oct. 2013 Celent, Realizing the ROI of Social Media in Insurance, 2013 Alexa.com, vincos.it
GOOGLE+
• 1.19 billion monthly active users
• 215 million monthly active users
• 359 million monthly active users
• 23% of Facebook users login at least 5 times per day
• Over 550 million registered users
• Over 1 billion Google+ enabled accounts
• 47% of Americans say Facebook is their #1 influencer of purchases • 70% of marketers use Facebook to gain new customers
• 34% of marketers use Twitter to successfully generate leads • Fastest growing network with a 44% growth from 2012-2013
• Growing at 33% per annum • 56%: increase in usage by 45- to 54-year-olds since 2012
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PROFILE / MIKE GEORGE
ALL IN
Trisura President and CEO Mike George knows when to hold ‘em and when to fold ‘em in order to win at today’s insurance game; but does the industry? Insurance Business: What is the greatest
challenge facing Canada’s insurance industry today? Mike George: There are a number of critical challenges. One of the issues that concerns me is the ongoing negative public perception towards the industry. I still think the insurance industry doesn’t get its fair shake or fair due compared to others. On a personal level, I believe it is a wonderful business, providing incredible opportunities for people, is fascinating and multi-faceted and is an underlying pillar of economic stability and growth. The industry pays our claims and helps businesses and people survive unforeseen and catastrophic events, and does so much good work from a social responsibility standpoint. There are so many positives to it, but the industry gets a really short shrift in terms of what people think about it, and certainly what the press says about it. A consequence of that perception is the challenge of attracting the best and brightest people into the business in the long run. So a looming challenge for the industry is how do we attract talent going forward? In part, I believe we must create a better image of and perception towards the business. Another challenge is the unprecedented rate of change. That change means the business is far more complicated today than it ever has been before and is certainly a lot more complicated than when I first got into it. This includes the unprecedented consolidation and number of acquisitions on both broker and company sides of the business. Further, it’s even hard to know who is who anymore – insurance com-
panies owning brokers; reinsurers owning primary insurers; insurance companies going direct; the rate of change has been unbelievable. As a result, the future is harder to predict for the industry, and strategically trying to position one’s business and get it right isn’t easy. A related challenge to the ‘rate of change’ issue lies on the technology side. I see this as a massive challenge for so many firms, especially those with antiquated systems and platforms, and competitive edges and gaps will likely grow as a result. Technology has become far more important strategically for insurers and brokers alike than ever before.
IB: Desjardins has made a decisive move in the market by acquiring State Farm Canada. Has Trisura any plans to solidify or expand?
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MG: Obviously, we are a smaller company with a specialty-lines focus so Desjardins and State Farm are in a different league from a size perspective, at least for now. However, we want to grow, and we will continue to do so organically in our current core product areas because we have the team, the expertise and support of our brokers. But we know we also need to broaden our product mix by introducing new products, and increasing our current appetite and our capacity to do larger deals over time. That will also help us get there. And for the first time we are starting to think about acquisitions. This may include books of business as well as companies – if the right deal were to come along we would be very interested. We are also starting to think about expansion on a geographic basis. We’ve done some of that with the
additions of our Halifax and Quebec City branches over the past year or so, but we also need to think about the possibilities of expanding our reach outside of Canada.
IB: Does the current state of insurance demand that companies expand or die? MG: I am not sure if companies absolutely have to expand or die. Indeed, if not done right, some companies may expand and perish, while some smaller specialist businesses will do fine, especially if they stick to their niche. However, in today’s environment, the high costs of running an insurance company, coupled with the regulatory challenges and the increased requirement for sufficient capital, the low investment return environment, and the chronic soft market – all these things make it increasingly difficult JULY 2014 | 7
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PROFILE / MIKE GEORGE
TRISURA TIMELINE December 15, 2006 Opens Montreal Branch
December 5, 2007 Enters The Canadian Media Liability Insurance Market
February 23, 2007 Introduces Comprehensive Policy for Educational Institutions
December 2, 2008 Trisura Underwriter Wins Canada Broker Network’s Underwriter of the Year Award
January 23, 2009 Introduces Kidnap & Ransom Coverage
December 12, 2011 Introduces Comprehensive Directors’ and Officers’ Liability Insurance Policy For Private Companies
November 21, 2012 Trisura sails into Halifax - New Branch Opening
September 14, 2012 A.M. Best Co. Upgrades Rating of Trisura to A(Excellent)
June 2014 Robert Landry, former CEO of Zurich Canada, joins Trisura Board of Directors
We do want to grow, but we want to do it well and we want to do it right – so that the company achieves its full potential for a smaller insurer to thrive. So there’s pressure to grow and expand for most as being bigger does have certain advantages, and for those mid-size generalist companies, I would think it’s really tough out there. While I don’t believe for a minute that Trisura has to expand or die. We’ve been doing fine the way we are (but) we do want to grow, by choice, because we believe that will help to make us even more successful in the long run.
IB: Every president and CEO started with a summer job. What was yours? MG: I grew up in Dundas, just outside of Hamilton which of course is steel town. When I was 15 and 16 my first summer jobs were working on the plant floor of a steel fabricating shop. It was a demanding, dirty job working with a bunch of really tough guys – and I was only a kid – in fact I fibbed about my age because I wasn’t really old enough to apply at first. I did all the grunt work and it was an eye-opening experience but I really enjoyed it. I learned a lot in the steel plant, but the job I learned even more from was catching chickens. While I was in high school, I worked once or twice a week at night and was paid $16 per thousand chickens I caught. What you typically have is a barn full of about 40,000 chickens that need to be harvested by hand, six or seven at a time, placed into crates and put onto several eighteen wheeler trucks in one night – and it happens to be done in the hottest, dirtiest and dustiest of conditions. We would have a team of eight or 10 guys, and believe me, everyone had to pull their weight – 600 or 700 trips into the dark barn to collect your birds then return to the trucks - you couldn’t leave until the job was done, and if one guy was slacking, you’d have to collect his chickens too. Trust me when I say he wouldn’t be invited back to the next job.
I learned the importance of teamwork, working hard, and focusing on a task and seeing it through to completion. Now when I’m looking for people to join Trisura, I’m looking for great chicken catchers – people who can pull their weight, be part of a team and get the job done. If you want to try a hard job, try and catch chickens. Trust me; insurance is a dream job by comparison!
IB: Aside from being CEO, which job as you climbed the corporate ladder have you found to be the most satisfying? Why? MG: In terms of the insurance business, I started on the ground floor as a financial analyst in surety, and soon moved to an underwriter position and worked my way up. I absolutely loved those early jobs. I really enjoyed interacting with brokers, and the presidents and CEOs of construction companies. I loved going on site tours and seeing what they were building. I also truly enjoyed underwriting the risks – trying to decide whether a risk was a good bet or a bad bet – and doing deals. I always thought about the parallel between underwriting and ‘betting’ on the companies and treated my ‘bets’ like it was my own money. Part of the trick to becoming a great underwriter is knowing when to ‘go all in’ on a risk or when to ‘fold,’ and whether the price you received for a risk was decent relative to the risk. Right or wrong, I always enjoyed putting accounts on the books and eventually knowing how my “bets” turned out. My career has taken me to almost every corner of Canada. I’ve been to the top of the parliament buildings in Ottawa; I’ve been to mines in northern Canada, the tops of skyscrapers as they are being built in Toronto and the front of the tunnel boring machines that dig subway tunnels. I can’t believe how fortunate I’ve been, and I believe insurance is an absolutely incredible industry.
IB: This is our ‘Young Guns’ issue. How has Trisura traditionally brought in new staff? MG: Finding good, talented underwriters and analysts is a big challenge. Part of the difficulty is that our underwriters not only do the risk analysis and assessment, but they have to produce the business, and they are expected to grow that book of business. So they have to be both technically skilled and marketing savvy. Our business is also more than underwriting and we need talented staff in all facets of our business including claims and finance and systems.
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The first 20 or so people who joined Trisura were well known to us, and were either people we had worked with before or that we knew from the industry. So that made it easy, because they were all tried and true. But as we grew, we now have 90 people, it became trickier, because we hadn’t worked with the newer staff before. One smart move we made a number of years ago was we hired an excellent head of human resources, Cindy Grant, and she does a fantastic job in terms of a rigorous screening process. She also introduced the idea of behavioural assessments, because in our shop, the ‘fit’ with our culture and our team is critical. We have no room for egos or for politics.
IB: Should insurers develop a framework for apprenticeships? Should the industry demand specific skills from these new professionals entering insurance?
MG: We do a lot of co-op placements, with programs in place with a number of universities, both on the undergraduate and graduate level. That has been incredibly successful for us. We’ve done that in Ontario, Alberta and British Columbia, both at the Bachelor of Commerce and the Master of Business and Administration levels. We bring these students in for four months at a time, we get to know them, they get to know us – and if it works out and we have a need, we hire them full-time. We are also big on employee referrals and pay a bonus to staff who refer us to a qualified candidate who we hire. I have to tell you, one of the things that has changed in the business are the credentials these “young guns” come to us with are really impressive. That has been a big change, a big shift in the industry. They are much better educated today, and almost all continue their education after graduation, taking courses and
®
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PROFILE / MIKE GEORGE
obtaining designations, they are continuing to improve their skills. We want people who are intelligent, focused and hungry. Everything else we can teach. We have built an apprentice-style framework whereby our newer recruits learn at the hand of a seasoned veteran in a team environment. I think most insurers do a pretty good job in teaching the technical side of the business, and the universities have instilled a thirst for knowledge in their graduates. What I have found, though, is that the universities could do a better in the softer skills training – social skills development including presentation, sales, business writing, networking, negotiation, public speaking; all those sort of things. So we’ve developed our own program in house and call it Mentoring our Values and Principles (the MVP). It is not only designed to “teach” the softer skills which are incredibly important for success in the insurance game, but also helps acclimatize these people into our culture.
IB: Trisura was founded on relying on the independent broker network. Is that still true today? MG: Very true. Brokers are our lifeblood; we wouldn’t be here without their support. We are a broker company and we recognize that they bring us their business. So much of what we do is to try and help our brokers achieve success. In fact the ‘Tri’ in Trisura represents the three-party relationship between our brokers, their clients and ourselves. So we’re totally focused on the broker channel. Now as for being “independent,” I really do admire brokerages that have retained their independence, and are owned and operated by the principals of the firm. But at the same time, there are many examples of excellent brokerages that are now owned by insurance companies , or have grown or dealt with succession or other issues by borrowing from insurance companies. I think for me, as long as the broker continues to act in the best interest of their clients and doesn’t favour that insurance company over others, then that is fine with me.
I also truly enjoyed underwriting the risks – trying to decide whether a risk was a good bet or a bad bet – and doing deals
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INDUSTRY / FRAUD MITIGATION
THREE STEPS TO REDUCING
RISK AND FRAUD EXPOSURE Fact: Insurance-related crimes are costing insurers, policyholders and Canadians over $1 billion a year. Insurance companies must protect themselves by improving their risk management and fraud mitigation models. Indeed, recent survey results indicate that 35 per cent of insurers estimated that insurance fraud costs represent 5 to 10 per cent of their total claims, while 31 per cent said that cost is as high as 20 per cent. But fraudulent claims are not the only concern for insurance providers. While more frequent natural disasters such as the Alberta flood, estimated at $1.9 billion in insured losses, and catastrophes like the Lac Megantic derailment, inundate insurers. The Property and Casualty Insurance Compensation Corporation (PCICC) indicates that they need to brace for more. It estimates that “catastrophes resulting in damage claims of $15 billion to $25 billion, may overwhelm some insurance companies, and could cause some insures to fail.� Starting with the basics in most cases is key to
immediate results. It is not surprising that insurance companies rely on accurate customer information. In fact, accurate customer information such as an address, name and phone number is the backbone of all industry and departmental operations. Fraudulent customer information combined with organic data degradation, which occurs at a rate of 3-6 per cent per month, can have crippling effects and may lead to overexposure, due to distribution of multiple policies in high risk areas, increases the probability of fraudulent claims and can skew premium evaluations. To minimize exposure associated with risk and fraud let’s examine three steps on how location information providers, like DMTI Spatial, can equip insurers with the right solutions to prevent unexpected negative and costly impacts. STEP ONE: Today, insurance companies accumulate vast quantities of data on customer information and assets. The challenge becomes identifying the accuracy of the information. Integrating real-time highly accurate, location solutions into daily operations, at data entry, ensures that the correct and valid location data has been entered. Insurers can now assess the existence and validity of a property. Having precise information upfront reduces further verification costs and additional overhead associated with employing third party vendors. STEP TWO: Proximity analysis is an important part of business operations. It determines where your customers are located with respect to company assets, perils and risk associated areas, such as flood zones. This plays a vital role in the insurance industry. Using proximity to identifying where a customer is located with respect to perils such as industrial zones, gas stations and potential hazards like underground oil tanks enables insurers to make decisions about policies and premiums that are specific to the defined area of interests. This allows insurance companies to assess risk exposure on their books of business prior to underwriting a property. Furthermore, being equipped with location information enables insurance
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INSURANCEBUSINESS.CA
companies to determine proximity of a new customer to existing customers in a particular area to measure accumulation and ensure you’re not over-committing from a risk perspective. Having this valuable information accessible reduces the amounts of fraudulent claims and claims that are above the value of the actual property. Alternatively, this information also helps to automate the claims process and as a result speeds up the response to client. STEP THREE: Location information tools further permit insurers to perform fraud detection and risk modeling. Using tools to visualize claims or conduct spatial analysis make it possible to geographically identify patterns and trends that would otherwise not be apparent in a spreadsheet, table or database. Accurate location data and analysis provides a cornucopia of information that enriches an insurer’s decision making process. Accurate location
information allows for granular analysis at the address level, providing insights that aren’t possible when using boundaries such as postal codes or census areas. Combined with information specific to each customer, there is increased confidence that the insurer will have the information needed to prevent and reduce fraudulent claims and properly mitigate risk associated with perils or accumulation. Consequently, being able to verify information provided by the customer, gain additional property insights and visualize it to determine if it is in a high risk region will enable insurance companies to improve time to decision, reduce costs associated with manual intervention and onsite appraisals, improve concentration and accumulation analysis and minimize claims fraud. Location information becomes your invaluable tool and your advantage to combating risk and fraud and removing data uncertainty.
Philip Kaszuba, President of DMTI Spatial, a Neopost Company
Because employee #658 forgot the bolts.
Open minds. Better casualty. SovereignGeneral.com
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FEATURE / PROFILE
THE GOOD EARTH
North Waterloo Farmers Mutual Insurance is celebrating a milestone – 140 years in business. But it is also a year of change for the traditional Ontario farm insurer, as president and CEO Carlos Rodrigues has big plans beyond provincial borders Insurance is evolving at light speed, and one company has been witness to a transformation from the simple typewriter and humble keypunch operator to mobile apps and e-signature approvals
Insurance Business: Your insurance company is entering its 140th year – what is Farmer’s Mutual planning for the next 140 years? Carlos Rodrigues: We will continue to build this organization as one that we can all be proud of. Our goal is to become known as the best customerfocused organization in the property and casualty
insurance industry in Canada. In doing so, we must not only meet but exceed our customers’ expectations beyond the competition’s reach. To do so, we will need to expand outside of Ontario at some point. As you know, over the past 140 years we’ve only been an Ontario-domiciled insurance company.
IB: This is quite a step. Is expanding outside of the province crucial to your growth? CR: Not crucial; important. Because we are a farm insurer primarily, we will need to get outside of Ontario to write more farms at some point in time.
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There are only so many farms in the province, and although they are getting larger, they are also getting smaller in number.
IB: What changes have you seen in the industry since you started? CR: The greatest change is technology; technology has surpassed everything. When I started, we had typists and keypunch operators. And I would say from 2008, there’ve been greater governance requirements on all financial institutions, and this governance has taken up a lot of my time. Thirdly, I find the expectation of customers is greater than 30 or 40 years ago. They expect more; customers demand more than before – and rightfully so. You must have enhanced customer service to succeed today.
IB: Are the clients better educated today, or has the Internet contributed to this? CR: It is a combination of both. We’re definitely dealing with a more informed customer. Our brokers are providing greater guidance and service as well.
IB: Where did you get your start? CR: I was in my early 20s when I started. I started at Royal Insurance as an underwriter, and I worked my way up. Back in those days, we were told to get a job and fall in love with it. The new generation today is looking for the job that they love.
IB: Are you are currently expanding in North Waterloo? CR: We are expanding the building. The construction started in October and we will be doubling the size of our building. The new building will be ready in August of this year, to celebrate our 140th anniversary. We ran out of room, and our claims department is in another building right now. This will allow us to have all of our staff in the same location. The tremendous success we have enjoyed has resulted in the organization doubling in size in the last five years.
IB: The federal government has been discussing demutualization for years. Do you see this ever happening? CR: I think they will, because they promised. The
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FEATURE / PROFILE
We have a great story to tell, a rich history and a shared purpose. And we have mutual values with our policyholders federal government promised regulations for demutualization. I think they will keep their promise; it is just a matter of when. I want to be clear that our desire is that any mutual demutualization regulations must not provide unwarranted short-term financial incentives to demutualize that are not in the long-term best interests of policyholders. The life mutuals demutualized a number of years ago, and the difference between then and now is that all of the life mutuals wanted to demutualize. Of the property and casualty mutuals, only The Economical expressed a desire to demutualize. (Look in last year’s December issue, Demutualization: Hurry up and wait)
IB: What do mutuals have as an advantage over other insurers? CR: We have a great story to tell, a rich history and a shared purpose. And we have mutual values with our policy holders. Mutuals are accountable to policyholders, not shareholders. We’ve always taken the longer-term view being well aware that as mutuals, we can all look back at more than a century of history and can proudly say that while competition, products, technology have all changed. We as mutuals still manage our companies according to the fundamental principle of the mutuals insurance industry – a singular focus on policyholders.
IB: What products are hot today? CR: Our vision is to be the dominant farm insurer. And we have been growing in the farm line of busi-
ness. To specifically answer the question, business interruption coverage; when faced with loss of income; this coverage insures against such a loss. Our farm policies and farm products are very flexible, and can accommodate a diversified client that is involved in a variety of businesses.
IB: Where should struggling brokers direct their focus to succeed today? CR: Personally I don’t think that our brokers are struggling. This is a very competitive business. Our brokers have consistently outperformed the direct writers in results, with significantly superior service to customers than the direct writers, despite all of the marketing dollars that the banks are putting into securing business. With personalized service, our brokers get to know their customers better, and be their advisor, because after all, the product is still very technical and legal in nature. The client wants to know why you are recommending a particular product or insurer over another. Brokers know the best fit for each individual client.
IB: What is the greatest threat facing the independent broker channel today? CR: I think the banks using their rich database to select clients based on their financial history. The direct writers are able to deliver their products more economically, but they lack the personalized customer service that the brokers are able to provide.
IB: What is the greatest innovation to come to the broker channel? CR: Real-time selling. This enhances the customer experience, and gets the sale done with one-stop shopping. The ideal environment is like selling an airline ticket; they give it to you at the same time of purchase. If I go to book a flight, I go to a travel agency, I pay for my flight, and I get my ticket. That’s the innovation that the property and casualty insurance has gone to in personal lines. It has gone to that
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CHANGING FARM MARKET FOR BROKERS
NUMBER OF FARMS IN CANADA
10.3%
205,730 (2011) 229,373 (2006)
6.9%
AVERAGE SIZE OF A FARM 778 ACRES (2011) 728 ACRES (2006)
level. I can tell you, 25 years ago, you had to wait days or weeks to get your policy. Everything is done in real time now.
IB: Have you learned more from your successes or your failures? CR: I would say failures, because I reflect every day on what I could have done better. Even the successes can be accomplished in perhaps a more efficient manner. We are always better from the experience. I always ask myself, ‘How can being a part of this organization make me feel better about myself?’ We should all ask ourselves this question. I feel at North Waterloo we are building an organization that we can all be proud of and say that ‘we work here, and I helped build it.’ For me, I am living my deep, personal values at work, which is to say: to be human first and a manager second. My philosophy is that family comes first, and then our job. It should always be this way. I live by it.
IB: Is your family a large part of your life? CR: I have three children and one grandchild. My wife and I just celebrated our 40th wedding anni-
The North Waterloo Farmers Mutual Insurance executive
To be human first and a manager second. My philosophy is that family comes first, and then our job. It should always be this way. I live by it versary. I have been very fortunate to have a caring family.
IB: What piece of advice would you give a newcomer just entering the insurance business? CR: Live those life values and be professional in whatever you do. Try to be a student of the business; hard work has never killed anyone. Family and integrity; these are our critical success factors. I’ve reminded our staff many times – don’t compromise on our values, because at the end of the day it is all that we have. This is your one and your own precious life – live it the right way, live it your way. JULY 2014 | 17
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FEATURE / BROKER ADVICE
HIGHWAY TO
SUCCESS
Understanding Canada’s infrastructure crisis and construction trends can help insurers and brokers gain an advantage
Infrastructure is the physical backbone of Canada’s economy and society. Our roads, bridges, transportation systems, sewer and water systems, power generation, energy distribution and communication systems, hospitals, schools and recreational facilities – these public and private projects provide the physical framework that bind our communities together. Economic research consistently shows that robust infrastructure is fundamental to economic growth as it helps attract investment, increases productivity, creates jobs and enhances competitive ability. Put simply, investing in infrastructure has significant economic benefits, while failing to invest has serious negative economic and social consequences. Canada’s infrastructure has aged. Much of our current infrastructure was built in the 1950s and 1960s and, on average, across the country, Canada’s infrastructure is about 70 percent through its useful life and is in need of significant upgrade. The Canadian Federation of Municipalities estimates that Canada requires an immediate investment of more than $250 billion just to bring our infrastructure up to acceptable standards, while others estimate that figure is closer to $500 billion. This is in addition to the billions required for new infrastructure to meet the needs of our growing country, and the billions spent each year on simply maintaining what we have. Our infrastructure shortfall has a real impact on our communities and the real economic costs are manifested in a variety of instances: • Commuting and gridlock delays in Canada’s major cities; • Purified drinking water leaking into the ground due to breaks and fissures in water mains (estimated to be some 40 per cent in Toronto); • inability of Canada’s oil and gas sector to transport product to key markets • Deficiencies contributed to the severity of the recent catastrophic floods in Alberta and Ontario; and • Accidents and vehicle damage due to poor road conditions. A recent report in The Economist stated, on a global basis, spending on infrastructure is currently approximately $2.7 trillion annually, while at least $3.7 trillion is required. Canada is not alone in its
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infrastructure deficit.
GOVERNMENT FUNDING PROGRAMS In 1955, the federal government owned 44 per cent of all Canadian public infrastructure, while the provinces owned 34 per cent and municipalities owned 22 per cent. Today the numbers have reversed with the feds owning 13 per cent, the provinces 35 per cent and municipalities 52 per cent. This has happened despite the fact that the federal government has the most robust revenue source while the municipalities have the least. The burden of capital investment has followed a similar course, with the municipalities now contributing the lions’ share, despite the fact that transfer payments to them have declined. Governments at all levels – federal, provincial and municipal – have wrestled with how to fund infrastructure given competing priorities such as health care, education and an ageing demographic. The good news is that, after decades of neglect and underinvestment, particularly at the federal level, commitments from both the feds and provinces are increasing. The Government of Canada recently pledged to spend $70 billion on public infrastructure over the next decade, including a new 10-year Building Canada Plan of some $53 billion to assist in funding provincial, territorial and municipal needs (note critics say this is not nearly enough). While the cost is high, investment in infrastructure is an absolute necessity that will yield significant economic benefits for Canada. With dependable, world-class infrastructure, businesses and investors throughout the world will continue to select Canada as a preferred place to do business. Without adequate investment in our infrastructure, Canada’s ability to compete globally will be seriously impaired. Doing nothing is not an option; doing more is imperative.
TRENDS IN CANADA’S CONSTRUCTION INDUSTRY Increased infrastructure spending and the strong pace of immigration have contributed to growth in the Canadian construction industry. Canada is the 11th largest national economy in the world, but has recently become the fifth largest construction economy. This imbalance is due in part to approx-
imately 25 per cent of construction spending in Canada taking place in the oil and gas and mining industries. The Canadian construction industry currently employs over 1.2 million people, over 7 percent of all working Canadians, and drives some 6 per cent of GDP.
Canada’s infrastructure has aged… it is some 70% through its useful life and in need of significant upgrade KEY TRENDS EMERGING IN THE INDUSTRY Construction project sizes are increasing, and bundling of projects has become common. Small to mid-size construction firms risk being shut out of these and so are under pressure to get bigger in order to thrive and survive. This creates significant challenges for these firms. Public Private Partnerships (P3s) have emerged as a prevalent delivery method whereby “private” enterprises are involved in the ownership, funding, operation and maintenance of projects. Governments now prefer “leasing” or paying for a project over the life of the project, rather than paying for the entire amount today, even if at a premium to the taxpayer as private enterprise typically cannot borrow as cheaply as government. The cost of financing a project has become a major factor in project award and drives the ultimate cost to Canadians. Contracts have become more onerous and complicated and risk is being downloaded from owners to contractors.
Mike George and Chris Sekine, SVP Surety, Trisura Insurance
CONCLUSIONS It is imperative that all construction industry stakeholders give adequate attention to the growth and evolving procurement and delivery needs of the construction industry going forward. This includes insurance companies and their brokers, sureties, and lenders who will all have to “up their game” in providing guidance and advice to their construction customers. JULY 2014 | 19
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FEATURE/ INDUSTRY NEWS
PROTECTING THE
VULNERABLE
Institutional abuse is a delicate topic and one which is rarely linked with insurance. However, the industry is playing a key role in helping protect the vulnerable. Chinwe Akomah investigates Over the last few years reports of abuse of vulnerable people in faith, care, community and education sectors – both nationally and internationally – have reached a fever pitch, with the stigma and silence attached to the topic waning. However, given the sensitivity of the issue, it is not always clear what impact it is having on the insurance industry, how it affects brokers, and how they can protect themselves, their clients and the vulnerable people their clients work with.
IMPACT ON INSURANCE Deirdre Blythe, acting CEO, CFO and executive director of Ansvar, specialist insurance provider to the care, community, education, faith and heritage sectors, said the diminishing stigma attached to the “painful” issue has increased the likelihood of a claim. “It has prompted clients to look at their policies more closely to establish whether they have appropriate cover,” she added, “and has raised awareness that policies do have limitations and clients may not be fully protected for claims of this nature. “Further, it has also prompted insurers to raise claim reserves in attempts to best cater for greater numbers of claims that may be on the horizon as a result of more public awareness of personal rights.” Some insurance classes are more likely to be impacted by cases of institutional abuse than others. Public liability and professional indemnity covers are most likely to be activated in these cases, explained Blythe, and directors’ and officers’ policies may also be affected if cover is provided for breaches of individual directors’ or officers’ duty of care. Employers’ liability insurance may be activated as public awareness of rights associated with employee harassment, bullying or abuse grows. John Van de Poll, partner at Holman Webb Lawyers’ Insurance Group, said the inquiries into abuse cases have changed how readily companies can call upon their insurance policies in the event of a claim. He noted that insurers have been “quick to exclude defence costs cover in particular for insureds with any exposure [to sectors which work with vulnerable people]” due to the inquiries that have taken place
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and the publicity surrounding them. Most policies will also exclude molestation entirely in respect of liability for damages but coverage will often be able to be negotiated for defence costs cover. The impact institutional molestation has on insurance premiums is less clear. While specific exposure and cover may attract an additional premium, it does not necessarily set in motion premium hikes. Ansvar’s premiums, for example, have remained stable. They say that they have not yet seen an influx of claims to justify an increase.
VIGILANCE AND ADVICE Brokers are often at the coalface of insurance and are therefore the first port of call for an organisation with the aforementioned exposures. It is crucial that they protect themselves. Van de Poll said the best way to do that is by brokers doing what they do best – giving thorough advice. “Diligent advice to their clients about exclusions from cover [is the best way brokers can protect themselves], especially when changing insurers. Although a cheaper premium might be achievable, this may often be at the expense of important coverage for the insured.” Blythe advised brokers to study up on their customers’ business models and be vigilant for any contact with vulnerable people. “Watch for any circumstances where one-to-one meetings are common,” she added. “Be mindful of policy conditions and ensure necessary endorsements are requested to prevent any gaps in cover.” Brokers can also play a key role in the risk management practices of their clients. Organisations that work closely with vulnerable people are now more than ever required to provide greater detail about the activities and programs they undertake; and rigorous reference checks, criminal record checks – and further investigation if they work with children – are a must for insurers like Ansvar. “We will not offer cover for sexual abuse to organisations that do not have solid risk management practices in place or where the protection of those who are potentially vulnerable is secondary,” Blythe said. However, she concedes it is not without its challenges as it is not always possible to be entirely sure that companies are carrying out risk management practices to the fullest. Insurers are increasingly educating their clients on risk management. Ansvar provides free on-site risk surveys and follow-up reports, as well as
providing instruction guides and templates. There are concerns that brokers are not fully aware of the issues surrounding such cover. For example, Ansvar noted, some insurers will offer sexual abuse cover to large organisations but not to smaller community groups. Additionally, some cover is made on a claims-made or occurrence basis. With a claims-made policy, the insured will only have protection if they maintain their claims-made policy with an adequate retroactive date. Brokers also risk coming undone if they fail to check that their client’s cover is continuous and that there is no molestation exclusion for defence costs. “Insureds should be notified of that gap in cover,” said Van de Poll. “This is particularly important when changing insurers to make sure that retroactive dates and other terms and conditions remain consistent so that there are no gaps in cover. Regard should be had for example to defence costs cover where policies will often limit their operation to events that occur after the retroactive date.”
Overall we think the impact of the inquiries will be very positive – it brings this issue to the forefront and forces organizations to focus on it as being a real risk that can no longer be ignored GOVERNMENT INTERVENTION Blythe said the governmental inquiries have served to raise public awareness, and could encourage organisations to ensure they are adequately protected. The inquires could also influence the insurance industry: insurers may further change their underwriting approaches such as tightening up guidelines. There could also be some rate movement; and higher claims notification as members of the public come forward with past offences. She added: “Overall we think the impact of the inquiries will be very positive – it brings this issue to the forefront and forces organizations to focus on it as being a real risk that can no longer be ignored.” JULY 2014 | 21
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SPECIAL REPORT / YOUNG GUNS
These rising stars and award-winning individuals are among those leading the industry in the 21st century
22 | JULY 2014
Young Guns. The expression conjures up big-screen images of the Sheen brothers riding in to save the day despite desperate odds. For us at Insurance Business, the term is a celebration of some of the best and brightest rising stars in the industry. We reached out across the country to brokerages, insurers and those closely associated with the insurance industry, and you responded with a strong list of young, exciting candidates who look to lead the industry in the decades to come. Be they brokers or underwriters, they represent the new face of insurance – a mix of the traditional work ethic that has been the backbone of the industry for years, and a solid grasp of the technology that has become the new way to do business.
INSURANCEBUSINESS.CA
AGE:
30
YEARS IN THE BUSINESS:
7
MARTIN CRAIG
Agent, Ai1 The Co-operators
industry, we have great and bad people, and this reflects on our reputation.
Who had the greatest impact on shaping your career path? Phil Ryan and Alicia Leblanc, both of whom are successful agents. My DM Bobby Lemay and ADM Miguel Belisle were very helpful also.
Why a ‘Young Gun’ Quebec has always been a difficult market to crack for a new insurer on the block – let alone for a new kid on the block. Having just turned 30 years old, Martin Craig has helped build a successful agency from scratch in a province where nobody had heard of the Co-operators only a scant few years ago. And that can be attributed in part to participating in community programs like Buckle-up Bears, bringing the message of safety in both English and French.
What is your ultimate career goal? I see myself right here as an Agent with The Co-operators but of course, with a lot more success. I am really happy to be part of this and I feel like I am really making a difference in our clients’ life. We are protecting them and their families, and I am really proud of this.
What do you like about the insurance industry? If you had the power, what would you change? I never thought I would like it until I really understood what this is all about. I never sell insurance to my clients. I recommend them protections available when I think they need it and when they see a necessity, they buy it. I just want to help them by doing my job the best I can. This is what I like (doing). I would like to change the way some people think about insurance and financial services. Like every
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? They need to see how exciting and rewarding these careers can be, even if they are not attracted to the product in the first place. They might discover a passion, just like I did.
What is the most important thing you learned from insurance veterans? To never give up. The easiest thing is to get discouraged; it happens but it does not last long. You have to bounce back.
Have you taught any ‘old dogs’ some of your ‘new tricks?’ Not really, because I did not have a chance to work with ‘old dogs.’
Looking forward, which products will grow in the coming decades? As a multiproduct agency, hopefully everything will continue growing. However, I think that the critical illness coverage will become increasingly popular over the next decades.
What new technologies have you embraced as part of your daily life and business? Having mobile technologies is very helpful in our industry, as we can answer clients’ needs everywhere, anytime. JULY 2014 | 23
SPECIAL REPORT / YOUNG GUNS
SEAN MURRAY
Business Development Manager, WCL Bauld Insurance AGE:
27
YEARS IN THE BUSINESS:
5
Why a ‘Young Gun’ Serving as chair of the Young Broker Network, in Nova Scotia, Murray is on the frontline in the fight to attract youth to an aging industry. He has not only created stronger ties between his association and secondary educational institutions in an effort to grow industry numbers, but also created a bursary program offered through a leading community college. Forward-thinking in terms of finding new and lucrative industry segments to target, Murray, for example, has identified the IT sector as a growing insurance market and is leading the charge into that wellspring of opportunity. He has also completed both the CAIB and AIPC. To receive the latter designation, Murray completed the Elite Force Producer academy, which is a specialized sales training program using best practices to give producers the tools to be top performers in their respected brokerages. He is also past recipient of the Insurance Brokers Association of Nova Scotia Young Broker of the Year award in 2012 and way promoted to Business Development Manager at his brokerage after only four years working.
What is your ultimate career goal? To grow and manage our commercial business here in Nova Scotia, and help re-brand our commercial department to become a large regional player. Ultimately, I would like to have ownership within the firm.
What do you like about the insurance industry? If you had the power, what would you change? I enjoy the fact that I get to work with a cross-section of all major industries. I get to learn about all different sorts of business from IT to manufacturing. One thing I would change locally is that I would like to see 24 | JULY 2014
brokers take continuing education credits as part of keeping their licensing. The best tool a broker has is their knowledge of the insurance product and professionalism towards customers and suppliers. In order to maintain a high level of proficiency, I think continuing education would help serve that purpose.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? As I mentioned earlier I believe the only way truly to get new blood into the industry is by reaching out and partnering with the secondary educational institutions. This was my main focus while I was chair of the YBN. I feel we need to educate young professionals about the industry and its advantages to working in.
What is the most important thing you have learned from insurance veterans? Don’t sweat the little things! We can all get very consumed with problems, whether they be client issues or performance issues. They weigh heavily on your mind and may further impact your performance. If you are able to learn from your mistakes and always strive to make yourself better, then the small mistakes or issues don’t have to turn into larger issues.
Looking forward, which products will grow in the coming decades? I see the most growth within the IT sector. It’s a product that is rapidly becoming a staple of any businesses insurance portfolio. The product still remains as a ‘specialty type of coverage,’ but in the future, I see this being part of any standard business policy, as any business with a website has a level of exposure.
Which new technologies have you embraced as part of your daily life and business? Utilizing mobile technologies have been a great help. The ability to send submissions on the road via my iPad has greatly increased productivity. Programs that allow you the mobility to work on the road are key technologies for any outside sales job.
INSURANCEBUSINESS.CA
SARAH MACKINNON
Regional Commercial Manager, Archway Insurance AGE:
34
YEARS IN THE BUSINESS:
10
Why a ‘Young Gun’ There is a common theme among these Young Guns: constant self-improvement. MacKinnon is winning industry attention as the poster girl for professional development as she scales the corporate ladder of commercial insurance. For the regional manager at leading player Archway, she has already obtained the necessary designations to ready policy wordings, and she dismisses any excuse for brokers failing to improve their knowledge in a market where information is readily available online and through free webinars and, even, YouTube.
Where do you see yourself in the next five to 10 years? What is your ultimate career goal? In five years, I’d like to see our book of commercial business double through organic growth. I’d also like to see our department grow in size by targeting our areas of speciality. It is hard to predict what will happen in the next 10 years. This industry is changing so quickly that I don’t know if our existing system of companies and brokers will still exist. It would be neat to experience this industry from another perspective. My ultimate career goal is to always be trying something new and always keep learning; I never want to be bored. I think I’m a good fit for this industry.
Who had the greatest impact on shaping your career path? On a personal level, my family; specifically my aunt, Pam Brown. After staying home for much of her life to raise three children, she now has a great career going with a local accounting firm. She has done so with a great amount of integrity and perserverance. She has shown me that you don’t need to be born with a silver spoon in your mouth to do well in life. My uncle, Gordon MacKinnon, also deserves a nod. From a very young age, he gave me lessons in how to give great customer service while running a profitable business, which he practises today at his retail store in Medicine Hat, Alta. On a professional level, I’ve been so fortunate to be surrounded by such wonderful people. I have to say that the brokerage’s former owner, Stewart Hay,
was someone I looked up to. He is someone that I emulate, in all facets of his life. He’s taught me to never take my clients for granted; it’s ok to admit if you don’t know the answer and to nurture relationships with your company contacts. He is definitely one of my biggest cheerleaders.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? We need to recognize our industry as a profession and to treat our insurer partners, competitors and clients with respect. In so doing, I think that we will raise the profile of our business so that new grads look to an insurance company or brokerage much as they do a large bank. Those of us that are in the industry need to be proud of what we do. After all, without the insurance industry, houses wouldn’t be rebuilt after a fire, no one would lend developers millions of dollars to build an office building and vehicles would remain damaged following an accident.
What is the most important thing you have learned from insurance veterans? Giving great customer service means developing a relationship with the client and tailoring what you do to their needs. Some customers want to use fax machines, some want a phone call while others want a text. You have to be flexible. Don’t be afraid to say, ‘I’m not sure. Let me check and I’ll get back to you as soon as I can.’ Then do it. Underwriters and insurers aren’t the enemy. They are partners., but it’s clients that signs the paycheque. JUNE 2014 | 25
SPECIAL REPORT / YOUNG GUNS
RICHARD A. GRANT
Manager, Vice President, Surety, Trisura Guarantee Insurance Company
AGE:
34
YEARS IN THE BUSINESS:
12
Why a ‘Young Gun’ A chair of the western committee for the Surety Association of Canada from 2004-2006, Grant has used his in-depth knowledge of the Canadian surety market to position himself today as the vice president of surety responsible for broker relationships and underwriting in the Prairie provinces. Although never having been comfortable with nicknames - like being a ‘Young Gun’ - he does acknowledge that hitting his career bullseyes wouldn’t have been possible without the help of great people around him, allowing him to be his best.
Where do you see yourself in the next five to 10 years? What is your ultimate career goal? In the next five years, I see myself learning from the younger generation and applying what they teach me to the business practices of Trisura. I remember first joining the insurance industry thinking “this can be done better.” Several years later, I now work at Trisura where that statement is part of our noble purpose. Honestly, I believe that the industry is changing so quickly that looking beyond five years is tough. I can tell you that we are attracting smarter people with stronger skill sets all the time so I am excited for whatever the future holds!
What do you like about the insurance industry? If you had the power, what would you change? I like the people and the ability to influence change. I remember coming out of university and working for a large financial institution that had a very rigid structure. Within that organization, it did not matter what ideas you had, if you had not put in your time, you were not important. I have found that the opposite applies within insurance. People are collaborative and open to new ideas for products and improved processes. If I could change anything, it would be the amount of email that I receive!
Who had the greatest impact on shaping your career path? There have been three people that I can immediately list as having had a direct impact on shaping my career path. 26 | JULY 2014
My wife Kimberley works very hard every day within her human resources position in a non-insurance related industry, and then works twice as hard coaching me at home. Kimberley is the only reason that I applied for a position within insurance when she forced me to read the job descriptions and not simply the position titles! After getting my first position in insurance, the person that has shaped my career path the most has been Donna Anderson. Donna has been my coach through my entire insurance career and is the most selfless person that I have ever known. Putting aside work and career, I am a better person for having Donna Anderson in my life. The last impactful relationship that I can point to is a fellow name Marvin Weiler. I met Marvin through construction industry functions and it was during a late night conversation with Marvin while I was contemplating leaving the surety industry that I realized how much I truly love this business. Marvin and I have remained in contact, and he is still my friend (and guidance counselor) today.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? I believe that the insurance industry has a lot to offer young and old. Most of the people that I know within the insurance industry at traditional retirement age want to work longer, which I see as a testament to the industry. In addition, I recently attended a management seminar where it was stated that it is my generation (Gen X) that is getting passed over for senior positions in favor of the young millennial generation. As I noted earlier, everything seems to be in flux these days from the way we communicate to the products that we offer so if a young person is looking for a place to make a difference, the insurance industry is where it is at. I have also found that young people within Trisura have been drawn to the collaborative culture and the flexibility of the organization in general.
INSURANCEBUSINESS.CA
MATT BAYNTON
Vice President, Surety (National) Trisura Guarantee Insurance Company
Why a ‘Young Gun’ In seven short years, he has helped steer start-up Trisura from small player to one of the leading surety writers in Canada.
What is your ultimate career goal? We are not short on goals here at Trisura. We’ve got a lot of runway ahead of us and some lofty ambitions. I see myself working hard to contribute to the achievement of those goals. In a fast-growing, ambitious company, there is no shortage of opportunity.
What do you like about the insurance industry? Surety is a unique corner of the insurance industry that I was fortunate enough to stumble upon early in my career. Every day is an adventure, and you really need a well-rounded skill set to excel. One minute you need to think like a contractor, and the next like a lawyer or an accountant. You are always learning something new. The surety product has not really changed in the last few decades, and certainly not in the 11 years that I have been in the industry. Meanwhile, the construction industry – the largest user of surety bonds – has changed dramatically in recent years. It is incumbent on the industry to ensure that the surety product is meeting the needs of our buyers. Otherwise, we run the risk of the product becoming marginalized or replaced with alternate security.
Who had the greatest impact on shaping your career path? The senior management team at Trisura has been phenomenal in my career development. They recognize talent and hard work and are willing to empower their staff. I am learning something new from someone every day, and I fully expect this to continue as my career moves forward.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? I think there is a perception in Canada that insurance is not the sexiest of the financial pillars. I was in
London shortly after I graduated university, and walking through the financial district, you actually heard businesspeople talk shop about insurance. It was great. Insurance is a very important piece for economic development, and for society as a whole. I think the industry needs to be proud of this and recognize and promote the vital role it plays.
What is the most important thing you learned from insurance veterans? I consider myself very lucky to have landed at Trisura and have learned so much from the vets here. The team really knows their stuff. When in doubt or unsure of something, there is no shortage of people to talk to or bounce ideas off of. I think the biggest thing I have learned is to be passionate about your job. If you do not find it challenging and rewarding,find something else that you are passionate about.
Which new technologies have you embraced as part of your daily life and business?
AGE:
34
YEARS IN THE BUSINESS:
11
When I started working, cell phones were given to managers so they could stay in touch when they were out of the office. Now, the whole office is mobile. I can access anything I need with an Internet connection. You have to embrace mobility, instant access and responsiveness. That is what society and businesses are demanding. JULY 2014 | 27
SPECIAL REPORT / YOUNG GUNS
MARK JACKSON
President, The Insurance Market Why a ‘Young Gun?’ At 33, has built a sizeable book of business, acquiring a respected brokerage, in business since 1981, and doubling revenue for The Insurance Market. within a year.
Where do you see yourself in the next five to 10 years? What is your ultimate career goal?
AGE:
33
YEARS IN THE BUSINESS:
11
To continue to serve as the president of The Insurance Market. Over the next five to 10 years, our goal is to continue to build on the success that we have had and work to establish solid, long-term relationships with our clients. At our company, we define success in many ways, one of them being attracting and retaining the best employees. We strive to build a solid team of brokers, who are passionate about our business and serving our clients.
What do you like about the insurance industry? The ability to play an unlimited amount of golf throughout the year. No, truthfully, what I enjoy most about our industry is that it gives us the opportunity to meet so many great people and build lifelong relationships. I like the challenges our industry presents to us and the ability to continuously learn, grow and overcome these obstacles.
Who had the greatest impact on shaping your career path? I had a sales mentor early in my career that I am forever grateful to. My father also had a big impact in my success. He showed me with determination and hard work, anything is possible. My wife has
28 | JULY 2014
also given me tremendous amount of support and I have to say, she does an amazing job raising our three wonderful children.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? Some excitement. Our industry has a reputation of being boring. We need to find more innovative ways to make it fun, while maintaining our professional image.
What is the most important thing you learned from insurance veterans? Over the last 11 years, I have watched carefully the habits of the successful and not-so-successful veterans of our industry. I have learned a lot, but the recurring takeaway that I always come across is how people are treated – our associates, suppliers, and customers. The importance of maintaining a positive attitude and treating people with respect is something that I will always remember.
Have you taught any ‘old dogs’ some of your ‘new tricks?’ Not sure, but I would like to think so.
Looking forward, which products will grow in the coming decades? As our reliance on technology grows, I think the threat of cyber attacks will also grow. Having said that, I would have to say that cyber liability would be up there as a product we will see a lot of over the next few years.
Which new technologies have you embraced as part of your daily life and business? Cloud technology. I am not an IT guy, so I am a strong believer in outsourcing this part of our business. Our BMS plays a big role in our daily lives and we are constantly looking for ways we can use our system more efficiently. I have also embraced VOIP technology, which has worked well for us.
INSURANCEBUSINESS.CA
JESSICA JAREMCHUK Manager, Risk Management Consulting Services
Why a ‘Young Gun?’ In two and a half years at Frank Cowan, techie Jaremchuk is credited for helping spearhead the develop and implement of its Risk Management Centre of Excellence. That online resource library sports everything from checklists to claim case studies and videos and has served as a platform for Snowman – a weather monitoring tool we developed with Operasoft. In the past two years, she has also taken on the very public role of brand champion for the industry as a keynote speaker for various municipal and specialty programs associations and conferences in Ontario and Atlantic Canada. They include the OASIS, AMO, UMNB and many more.
What is your ultimate career goal? I see myself continuing to work on exciting and innovative ways for our insureds to better manage their risk and then getting that message out there. In the future, I would like to run a department, and ultimately run a company. I am fortunate to work for a family of organizations where there are great opportunities to learn and grow.
What do you like about the insurance industry?
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? I think a lot of young people would be surprised about the different types of jobs and the different career paths that all fall under the heading of “insurance.” I never thought I would work in the insurance industry, but here I am!
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YEARS IN THE BUSINESS:
2.5
What is the most important thing you learned from insurance veterans? I am fortunate to have a great group of veterans at Frank Cowan Company that are amazing sources of feedback and knowledge. One thing in particular that has been engrained in me is that this is still a relationship business. New technology and innovations are amazing – and necessary. However, in our rush to automate we can’t lose sight of the people and the relationships.
Have you taught any ‘old dogs’ some of your ‘new tricks?’
My favorite part of what I do is getting to meet people from all over Canada. Right now I am at the FCM conference launching our new $10,000 Risk Management award. It is so exciting to be able to share this great new initiative with people, and in turn, learn something about their community. There are even people here from the Northwest Territories.
The ‘old dogs’ at Frank Cowan have been inundated with new technology. I suppose I have helped them navigate through some of that learning curve.
Who had the greatest impact on shaping your career path?
Cyber products. With new security threats being developed at a faster rate than solutions, organizations and government are in a continuous game of catch-up. There will always be that gap, and insurance is what can fill in that gap.
Barb Szychta is the Vice President of the Risk Management Department. Barb was the one who hired me and I have been working closely with her ever since. It is with her guidance that I have been navigating my way through the insurance industry – a new industry for me. She is always there to answer my questions and discuss any concerns. However, she has also let me have the freedom that is necessary for some of the best learning experiences.
AGE:
Looking forward, which products will grow in the coming decades?
Which new technologies have you embraced as part of your daily life and business? I have Twitter now. I love following our insureds to see what is going on in their communities. There are also some great insurance industry tweeters out there. JULY 2014 | 29
SPECIAL REPORT / YOUNG GUNS
CHAD MACKENZIE
Owner, Insurance and Financial Advisor, MacKenzie Insurance Group Inc., The Co-operators
Why a ‘Young Gun?’
AGE:
28
YEARS IN THE BUSINESS:
8
Mackenzie is the past recipient of the prestigious The Co-operators award for Region Builders Status — a primer for this past year, at the age of 28, finishing first in the Edmonton North District and attaining the status of Executive Builder. He began this career travelling across Western Canada working on what is called a ‘catastrophe or storm’ team by The Co-operators. At the age of 26 he was head of his own office.
What do you like about the insurance industry? If you had the power, what would you change? It may sound cliché, but I truly love how we are able to make such a profound difference on the lives of
people when they are going through such a difficult time. This could be through the life insurance cheque that a family receives when a parent passes away, and because of that cheque the surviving spouse and children can still afford to keep their home and get an education. It may also be a small business owner who is able to afford to rebuild his family restaurant in the event of a devastating fire, no matter the incident and even though it can be heart-wrenching to see clients go through that heartache, it is rewarding to know that we are able to help them though these difficult times. If I had the power to change one thing, it would be the negative perception some people have on the insurance industry. Although this has gotten much better since I first started in the industry, I still feel as though we have work to do. We need to ensure we are helping our clients truly understand their insurance policies through annual reviews and by taking the time to explain the coverage options they have available when they call for a quote. If we take this time to educate our clients they will see us as insurance advisors and not insurance salesmen.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? The problem is that not enough students come out of high school or post-secondary education even remotely pondering a career in the insurance industry. Insurance just seems to be this thing that everyone has to pay for in order to own a house and drive a car. Most don’t realize how critical insurance is to the overall function of our society. We need to target grade 11 and 12 students as well as first-year university students with funny and interesting educational seminars about the different roles available in our industry. I would like to see the Insurance Bureau of Canada and the provincial licensing bodies work together with the appropriate levels of government to implement this. Once this is implemented we will then see more students looking to insurance as a serious option. 30 | JULY 2014
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CHRISTINA SALVATORE Vice President, Salvatore Insurance Brokers Ltd. Why a ‘Young Gun?’ Rising through the ranks to become vice president, Salvatore has seized the wheel and taken the brokerage down the road to success within the niche segment of trucking insurance. Playing a key leadership role in furthering growth and development, she is in for the long haul, determined, she says, to take the company to the next level.
Where do you see yourself in 5 years? In 10? My number one goal is to grow our brokerage into one of the leading commercial insurance providers in Atlantic Canada, while providing profitable results for our insurance companies. What do you like about the insurance industry? If you had the power, what would you change? As a broker, my job is to know and understand my clients’ business. This allows me to work with many different people and learn about many different businesses. My job is never the same and I am constantly exposed to new things every day. My job is always evolving and it challenges me to always keep ahead of the curve. I believe strongly in the brokerage channel where we are advocates’ for the consumer. Therefore, it seems imbalanced for an insurance company to have an ownership position in a brokerage. It takes away from the core belief system of what a broker’s role is.
Who was a mentor or influential person/people in your life, shaping your career path? My father has played a very impactful role in mentoring me and helping me in my career. He started our company 15 years ago and I never really had a full appreciation for what he did until I came into this business. He also made sure that I worked from the bottom up in every step of my career to ensure that I earned it. In insurance, he has taught me that it is always important to lead by example, go that extra mile for your customers and to be honest and transparent with both your customers and insurance
companies.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? Educating the public about the opportunities that are available in insurance is very important to draw ‘new blood’ into our industry. Many young people don’t realize the opportunities and different career paths that insurance offers. Insurance is often seen in a negative context and some people don’t get to see the positive work we do and how important our job becomes when a crisis hits. It is also incredibly rewarding to be thanked for supporting a client through a tough time. This is why the Young Broker Network is so important to the broker industry in developing new talent and giving young people an avenue to network from.
AGE:
32
YEARS IN THE BUSINESS:
8
What is the biggest thing you have learned from insurance veterans? “Keep digging until you find the solution.” The insurance industry is vast and you can find insurance for just about anything. Sometimes that solution might not be what your client wants to hear but if you do find the right solution to your problem that is when you get the most reward. JUNE 2014 | 31
SPECIAL REPORT / YOUNG GUNS
ADRIAN VANELLI Manager, Contract Surety, The Guarantee Company of North America AGE:
30
YEARS IN THE BUSINESS:
8
Why a ‘Young Gun?’ Hard work and developing strong relationships are themes for success for this manager, who has risen through the ranks by taking pride in a job well done. Getting his start as a financial analyst with CAN Insurance in May of 2007, Vanelli pursued his passion of contract surety as an underwriter, then senior underwriter until reaching the summit at The Guarantee Company of North America as manager in less than four years. Reluctant to take credit for his own success, Vanelli points to family, managers and colleagues for nurturing his rise within the industry. It is perhaps the example of his grandfather who provides this zeal for success, a man who came to Canada with only the clothes on his back and no English – but an indomitable will to survive and thrive.
What is your ultimate career goal? Ultimately, I hope to continue to advance within The Guarantee. I love the strategic side of our business, which was a motivating factor in my decision to complete the CMA designation. I would be excited at the opportunity to one day to be one of the leaders at The Guarantee, working with the other capable members of our Leadership Team, establishing and implementing the overall strategic direction of our company.
Two people were most influential in the development and shaping of my career. First, my grandfather, who immigrated to Canada from Italy with literally nothing but the clothes he was wearing and his family alongside. He taught me the value of hard work and determination. Without speaking a word of English when he arrived in Canada, he was able to find a job. He worked for over 25 years until his retirement, all as a result of his work ethic. My second influencer was the former Canadian division president of a U.S. insurance company that I worked for. He set the bar and example for the type of leader I want to become. He had a great personality and sense of humour and at the same time was a solid business leader. He took a personal interest in every person that worked for him – taking the time to learn what was important in the lives outside of work of all his employees. As a young employee just starting in my career, it was motivating to feel valued by the person at the top.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? As an industry, we have to show the new blood that this is an industry with great people, where you can earn a good living, and have a lot of fun while doing it. Although our industry is not initially the most attractive to someone coming out of post-secondary school, if we are able to get young people to try a career in insurance, we are bound to keep them. Encouraging people you know to try working in our industry is a good way to get someone interested. It worked for me.
What do you like about the insurance industry? The insurance industry has great people, in addition to affording a balanced lifestyle. I can honestly say that as a result of the people I work with (internally and externally), I get up every morning wanting to come to work. I think it is rare to work for a company and industry where you can have a career while having fun at the same time.
Who had the greatest impact on shaping your career path? 32 | JULY 2014
What are the most important things you learned from insurance veterans? The two biggest things I learned from industry veterans are how important relationships are in our business, and the value of a personalized conversation rather than email, particularly when it comes to delivering bad news. People respect and generally react more positively if you take the time to call or speak to them face-to-face rather than hiding behind an email.
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SCOTT BEITEL Surety Leader, Ontario, HUB International HKMB Limited Why a ‘Young Gun?’ It’s a position few have achieved before their 40th birthday, but at 32 Beitel is already Ontario surety leader and for HUB International HKMB. He is also among the industry’s leading adopters of technical and educational advancement. He is credited with embracing use of HUB’s corporate social media platform to further develop its brand and enhance his teams ability to communicate with consumers.
What is your ultimate career goal? My overall goal is to continue advancing in a leadership capacity. From a technical standpoint, I ultimately desire to be regarded as one of the foremost experts in my field.
What do you like about the insurance industry? The insurance industry is extremely dynamic. I thoroughly enjoy the interaction with clients, underwriters, and other peers or industry stakeholders. Our industry is evolving, and I am confident this will continue to accelerate given time, enhanced technology, and the diverse strategies of future leaders.
AGE:
32
YEARS IN THE BUSINESS:
10
What is the most important thing you have learned from insurance veterans? Persistence and confidence in your abilities will make you successful over the long term. Like many other industries, we operate in a high pressure environment. Ensuring that you remain positive and resilient is the key to success the insurance industry.
Have you taught any ‘old dogs’ some of your ‘new tricks? I believe that we all have something to teach and that you should never stop learning. I know that I have shared some of my own perspectives over the years, but feel I’ve certainly learned more from those around me.
Who had the greatest impact on shaping your career path?
Looking forward, which products will grow in the coming decades?
I have been fortunate to have some key mentors to this point in my career. One of my previous managers actually brought me into the surety industry and has been instrumental in my professional development. He was extremely supportive of my educational advancement, significantly contributing to the successful completion of my ACSB and CPA (CMA) designations. We still communicate regularly in relation to mentoring and strategy.
Our industry is primed for innovation. The coming decades will see unexpected and complex risks which will need to be addressed through product development. Having a forward thinking team and the proper technology will be crucial to being on the leading edge of this development.
Many in the industry are reaching retirement age. What is needed to do to draw ‘new blood’ into insurance? In general, we are all responsible to promote the opportunities, advantages, and stability of the insurance industry. We also need to adapt to generational nuances and adjust our recruitment and retention strategies accordingly.
Which new technologies have you embraced as part of your daily life and business? We have embraced new user-driven technology which allows our clients and business partners increased flexibility, improved service, and ability to customize their approach to business transactions. At HUB, we have expanded our corporate social media platform to further develop our brand. Within my team, we have embraced this platform, enhancing our ability and distribution methods to communicate with consumers. JULY 2014 | 33
SPECIAL REPORT / YOUNG GUNS
FORWARD-LOOKERS ADAM MITCHELL
Adam Mitchell had no interest in insurance. He had been making a living kiteboarding in North Carolina and was travelling in the Caribbean when he received a call informing him that his father – the second-generation Mitchell to run the insurance brokerage that his grandfather AGE: 27 founded – was sick. Mitchell rushed home and was helping his mother sell the business when, at the 11th hour, he decided to become the third Mitchell to head Mitchell & Whale Insurance Brokers (the Whale comes from a takeover in the 1990s). Since making that decision in 2008, Mitchell became licensed by the Registered Insurance Brokers of Ontario and now leads his team of enthusiastic insurance brokers who have helped to keep some 96 per cent of clients returning year after year. In the end, a sentimental and somewhat impulsive decision has turned into a thriving and engaging career – one that Mitchell says he’s proud to have followed his grandfather, uncle and father into. AGE: 29
GREG RAYMOND
Greg Raymond is at the cutting edge of the insurance industry. He developed and spearheaded the online division at the family-owned Raymond Insurance, working to develop the brokerage’s online business. But his breaking into the industry didn’t start there. After graduating from Laurentian University, Raymond attended the IBAO School of Insurance where he earned his CAIB designation and completed programs like the Future Leaders program and the Beyond Best in Class program. A lifelong learner, Raymond then attended the prestigious Schulich School of Business at York University. All that while, Raymond’s efforts to build the online arm of Raymond Insurance paid off and in 2011 the branch rebranded as InsuranceHero.ca, a completely virtual insurance brokerage. InsuranceHero.ca provides insurance products via phone, online or through email, and binds coverage with the use of electronic signatures. 34 | JULY 2014
ANDREW CLARK
Andrew Clark’s experience with the insurance industry started in 2001 when he was involved in a car accident that left him with a severely damaged pick-up truck, a $2.2 million Statement of Claim and an incredible sense of gratitude to the insurance company that compensated those who were injured in the accident. Then, in March 2014, Clark made the AGE: jump to his own firm, ALIGNED Insurance, 34 where he currently works as president and CEO. The company specializes in insurance and risk management for Canadian businesses.
DAVID ELLIOTT
A family business
As a father and husband, David Elliott is a family man. And as a family man, he recognized the importance of the nearly 100-year history that three previous generations of his family had amassed with Elliott Insurance Services in Port Hope, Ont., which Elliott’s great-grandfather started in 1919, and passed down to his grandfather and father. He’s since built that business with a keen eye AGE: 33 toward keeping his clients happy, and happy they are; Elliott Insurance has maintained a 98 per cent retention rate since 2011.
MICHAEL ABRAHAM
It’s been barely a decade since Michael Abraham graduated from high school, but in those 10 short years, the insurance broker with Paisely Manor Insurance Brokers in Toronto has already made his mark on the industry. In 2013, Abraham was named one of IB’s top 30 elite brokers for the personal and confidential customer service that he provides to his clients – and he hasn’t slowed down since. He received his CAIB designation in 2013 and is experienced in many facets of insurance, from disability and benefits, to life insurance and commercial/ AGE: business insurance, and brings that experience 28 to every portion of the business.
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LEADING Strange as it may seem, there are correlations between leading a team of 18 strangers into the wilderness of Antarctica for a year and heading a successful business. Rachael Robertson reveals the leadership lessons she’s taking to the business community
Antarctica is just like any other workplace in the world – except we lived together, around the clock, for a year. So the interpersonal pressure was intense. We had a very diverse team from various backgrounds – engineers, scientists, IT, trades – and my job was to shape these individuals into a highperforming team because our lives depended on our teamwork. I didn’t recruit the team; in fact, I first met them in pre-departure training. Because of the incredible diversity of this expedition and the enormous pressure of living together for so long in such extreme conditions, it was unrealistic to think we’d live in perfect harmony.
Photo: Peter Nink
ON THIN ICE
I didn’t expect everyone to love each other or, for that matter, to even necessarily like all 17 other people, but I did expect they’d show respect towards each other. Respect trumps harmony. We treated each other with the utmost professionalism, acknowledged very honestly and publicly that we were all different, and showed respect – for professional ability, personal space, individual opinions and idiosyncrasies. In high-pressure environments that rely on collaboration, you need a strong foundation of mutual respect. Harmony will follow. Like most workplaces, we also had business cycles. Summer [November to February] was a time of extraordinary activity, with 120 people living JULY 2014 | 35
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FEATURE
True leadership is about creating more leaders, not more followers. It’s about inspiring people to take up a challenge, to keep going when things are tough and to know exactly how they contribute to business outcomes on station, delivering 22 science projects and a comprehensive construction and maintenance program. Project reporting, risk management and compliance were front of mind. When things are frenetic and major goals are achieved, it usually means working long hours, but it’s easier for people to stay energized and motivated. When things quieten down, it’s a lot more challenging for leaders to inspire. From February to November, the 18 of us were on our own, with no sense of urgency or burning platform, but we still had work to do. Every workplace has small, seemingly irrelevant issues that impact morale and productivity. In Antarctica, it was a bacon war – should it be cooked soft or crispy? In some offices it’s dirty tea rooms, or people arriving late for meetings, or texting while someone is presenting. They appear to be small things but they are nearly always a sign of a deeper issue around respect. Managers need to deal with these behaviours expediently. Our bacon war turned out to be a dispute between two teams whose relationship had broken down due to a lack of respect being shown; it manifested itself in the bacon war. Take care of the little things.
TRUE LEADERSHIP True leadership is about creating more leaders, not more followers. It’s about inspiring people to take up a challenge, to keep going when things are tough and to know exactly how they contribute to business outcomes.
I’ve worked with many incredible leaders, but most recently one person who really inspired me was Guy Russo, CEO at Kmart. Guy has a great strategic mind and, importantly, he can articulate and communicate the steps needed to implement the strategy. It’s no good coming up with the best action plan in the world if you can’t engender support for it and your people don’t understand it. At the start of the Kmart turnaround I watched Guy address 400 store managers and tell them: “This is who we are, this is who we are not.” His clarity around the brand was very strong, and it showed courage to address these key staff, in person, and tell them – very clearly, with no ambiguity – “This is the future of Kmart”. Tough decisions were made to delete certain product lines, but Guy stood front and centre and explained the rationale very simply and professionally.
SETTING THE EXAMPLE Leading in Antarctica was a stark reminder of the scrutiny of leadership. We are being watched the whole time, and everything a leader says carries extra volume and gravitas by virtue of their authority. For an entire year, I was under intense scrutiny – where I sat for meals, who I greeted in the morning, what time I left the party, even when I chose to wear a hairclip because my hair was hanging in my eyes (no hairdressers for a year!). It was all noticed. It came home to me that, as leaders, our behaviour is often interpreted in ways we cannot imagine. I was very conscious of this and relied on my self-awareness to monitor and manage my own behaviour at all times. I also made sure my decisionmaking was consistent and transparent. I would also never deride or ridicule the staff at head office, my peers at the other stations or other members of our expedition team, as this type of contempt is unprofessional and breeds dysfunction. Any organisation that has silos needs to take a long, hard look at the behaviour of their senior management. I’ve seen contagion in teams where one person spreads their negativity and dysfunction to the rest of the team. These people can be demoralizing and exhausting. But the most important thing a leader can do is manage this behaviour before it spreads.
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INSURANCEBUSINESS.CA
YOUR OWN ANTARCTIC WINTER Every business has periods of time where work is just work. Capital expenditure is curtailed, there are no big projects on the horizon – it’s all just business as usual. This is the Antarctic winter. Similarly, many projects have long lead times, years and years. The launch is exciting, the project completion or product launch is fantastic, but often the time in between is plain hard work with incremental progress. Just like Antarctica, the leaders need to keep people inspired through this period. I used three simple tools to keep us motivated, connected and effective:
1
The rule of no triangles The practice of only having direct conversations built respect within my team and resulted in very high performance. We had a simple rule that went: “I don’t speak to you about him, you don’t speak to me about her.” No triangles – go directly to the source. It’s a powerful tool that reduces conflict and clarifies accountability. It also shuts down ‘answer shopping’; that is, people who keep asking the same question and go over people’s heads, or around people, until they get the answer they want. During the Antarctic winter, when interpersonal pressure increases and the focus turns from the work to the people, it’s even more crucial to have no triangles. Personal conflicts are magnified in quieter periods, unlike the heady times where we often overlook or put aside another person’s annoying behaviour. During these times, open and direct conversations are even more critical.
2
Find a reason to celebrate Recognize milestones and important moments. If you don’t have one readily apparent, create one. Find a reason. In Antarctica, we celebrated big events but also the smaller successes, such as a month without a power blackout, significant scientific data collection or uninterrupted internet access with a fully functioning
These people try to gather numbers, and you ignore this behaviour at your peril.
EXPERIENTIAL LEARNING People have told me this expedition was like 20 years of CEO experience truncated into 12 months. I dealt with every issue you could imagine – and some you can’t – but the difference was, I had no choice. I simply couldn’t ignore emerging issues, or delegate to someone else, or even take the weekend to consider my options. The buck stopped with me and I had to find ways to deal with things. Sometimes I got it right, other times I got it wrong. The value of experiential learning comes in the reflection; that is, what did I learn there? What worked? What didn’t? Because I had no one to talk to or discuss options with, I decided to keep a journal. The journal became
server. Usually it was just a notice on the whiteboard in the dining hall, but it was important to find the time to stop and celebrate, because these moments create momentum. They give a sense of progress, moving forward and getting closer to our outcomes. During long projects, or even times when it’s business as usual, an inspiring leader will find a reason to stop and salute even small accomplishments. Whether it’s with an event, a reward or a simple thank you, the acknowledgement and recognition will reaffirm their purpose and demonstrate progress – two of the most important motivational domains.
3
Check in on people As you receive reports and updates on projects, take a moment to check in on people and ask: “Are you OK?” Not the project, not the tasks, but you – the person. People respond with commitment and loyalty when they know both they and their contribution are valued. To show people they are valued, check how they are travelling. Make it spontaneous and often. These moments will also create momentum. As Maya Angelou put it so succinctly: “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
the best leadership development I’ve ever had. As each new challenge presented itself, I’d capture my thoughts and ideas and decide what to do. Afterwards, I’d go back to the journal and reflect on how things panned out. The discipline of reflecting on your performance and behaviour as the leader builds self-awareness. It’s like standing on a balcony, looking down and watching yourself. The best way leaders can develop their ability is to honestly and critically evaluate themselves and their performance, every single day. We learn by doing new things. New experiences – secondments, higher duties, relocations – are opportunities to learn and add new skills to your leadership toolbox. I’d take on almost any opportunity to develop my leadership, even if it didn’t turn out, because I would rather regret what I did do than regret what I didn’t.
Rachael Robertson is the author of Leading on the Edge
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Are you among the elite?
Entries for the second annual Insurance Business Elite Broker Ranking are now open Insurance brokering is one part confidence and two parts perseverance. It’s also the focus of the next issue of Insurance Business magazine, highlighting the accomplishments of elite insurers who took on the challenges of 2013 and overcame them. Insurance Business is once again searching for Canada’s Elite 30 Brokers – your chance to gain recognition for your hard work throughout the year, and your contribution to the insurance industry. And it all starts by applying online to the Elite Brokers Survey, on www.insurancebusiness.ca. The Insurance Business Elite Brokers survey is a great opportunity to give your business a boost and make sure all the major insurers and underwriters know who you are. Being recognized as an Elite Broker will not only raise your profile within the industry, it will serve as a valuable independent third-party endorsement that will be beneficial when marketing to new and existing clients. Despite stiff competition in the insurance industry, there are many success stories that need to be told – and brokers deserving of praise from their peers. Entries are now being taken for this prestigious award, where Insurance Business will recognize Canada’s Elite Brokers. WHO IS ELIGIBLE? • Any Insurance Broker practicing in Canada • Authorized Representatives and/or Licensees WHY SHOULD YOU ENTER? • Enhance your reputation and credibility within the market • Win clear recognition of your professional standing as a leading insurance broker • Gain significant endorsement from an independent source, supporting your individual efforts to attract and retain customers • See your name published in Insurance Business Magazine giving you recognition amongst fellow industry professionals HOW TO ENTER Simply visit www.insurancebusiness.ca today to complete the form by supplying some performance metrics about yourself. All financial information provided is confidential and will not be disclosed within the magazine or shared with any third parties. However, those who finish in the top five will have their total revenue numbers published in the September issue of the magazine, and in the online version. Admittedly, what the numbers don’t capture are those deals that got away, or the hours brokers spend on files that simply failed to cross the finish line or just missed the Dec. 31, 2013, cut-off date. The Top 30 Brokers measures and recognizes the leading insurance brokers in Canada. Those that make it into the Top 30 will join an elite group of insurers, with the rankings appearing in the December issue of Insurance Business magazine. A place in the Insurance Business Top 30 Broker rankings is clear recognition of your professional standing as an elite in the insurance market.
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Elite The Search is on for Canada’s
Top Brokers Entries for the second annual Insurance Business Elite Broker Ranking are now open A place in the Insurance Business Elite Broker Ranking is a clear recognition of your professional standing as one of the leading brokers in the Canadian insurance market, and by making a submission you are giving yourself a chance to be included in the rankings.
Submit your profile now! Visit www.insurancebusiness.ca Deadline for submissions is on July 27, 2014
TOP 30
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SPECIAL REPORT / BROKER TRAINING ROUNDTABLE
INSURANCE BUSINESS EXCLUSIVE
IRREPLAC brought to you by
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EABLE? Industry boomers are leaving, and taking decades of experience with them. Where are the future brokers, underwriters and actuaries coming from? Our Insurance Business roundtable sponsored by RSA takes up the question
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SPECIAL REPORT /BROKER TRAINING ROUNDTABLE
It’s a phenomenon by no means unique to the insurance business: as boomers march towards retirement, an increasing number of younger players are needed to fill their shoes. The same applies to underwriting and other sector positions. But how does the industry go about attracting those new people and then, of course, retaining them? Traditionally, brokerages have tried to identify “natural salespeople” and then provide them with the kind of on-the-job training needed to clinch deals. But the intricacies of increasingly complex product and the need for a whole new set of skills to satisfy client demands have spurred calls for a higher barrier to entry. As one broker asks, “Is it time to rethink who exactly qualifies as an insurance professional?” This Insurance Business roundtable, sponsored by RSA, is focused on capturing that debate on how the industry can attract not only young blood, but young, talented blood willing to stick around. Listen in on the conversation. SOURCING PROSPECTIVE PRODUCERS John Walters: We tend to not hire from within the industry. Our experience has been that it’s more difficult to train people, and then you get yourself into a lot of litigation and unfortunate issues around the business with your current salespeople. Our preference in the last five years has been to hire people who are new to the industry. They come from a variety of backgrounds. We have a number of psychometric tests that we use and a pretty good interviewing process, but we tend to look for that sales aptitude as best as we can. It’s their inclination. It’s people who think quickly on their feet. It’s the ability to respond quickly to new questions or objectives. These are skills that are very INDUSTRY’S BOOMERS STILL ON THE JOB, BUT FOR HOW LONG?
difficult to learn. Michael Paisley: There’s two different ways of looking at it. You can either have an employee that you are going to be giving leads or a book of business to manage and a base to work from. Or, you’ll bring someone in and tell them, “Eat what you kill.” They’ll go and find clients and bring them in. A number of brokerages have relied upon the low-hanging fruit, house and car insurance. They’ll get books of business, and from there, they may get lucky and may have some clients. Margaret Parent: Within the broker community, especially the areas you’re insuring, is there much swapping of staff? Do you compete with each other on the sales? John Walters: There are a lot of brokers out there who are trying to raid salespeople. But I don’t even think it’s that sophisticated. The firm is looking for the book of business, and they accept or will tolerate the individuals and their leads. That’s the problem. The debris often floats around in the industry. The people are moving because they have to. ARE TODAY’S AGENTS DIFFERENT? Margaret Parent: The number of college programs has increased in the past eight years from the two colleges that were in Ontario to now eight across the country. Laurier University and University of Calgary have been in place for a while, and Laval has a program as well. The output of grads from those programs has obviously exponentially increased, which is excellent for the industry. BCIT and Alberta have a 100 per cent placement rate to a combination of insurance companies and brokerages. It’s also a function of the employment situation in the West. BCIT has a wonderful career
THE INDUSTY WILL LOSE 24% OF ITS WORKERS TO BOOMER RETIREMENTS, BUT MANAGEMENT WILL BEAR THE BRUNT
23% 24% 1 year 2 years
Management
16%
31% 5 years
Industry
6%
24%
3 years
43%
of the industy’s 24% loss, almost half will be in management
4 years
Source: Insurance institute of Canada (2012)
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fair where the various employers all have their booths out, and it’s a 100 per cent placement rate for all of these colleges. Michael Paisley: I think that you’re talking to entrepreneurs here, who basically fly in the face of any organized attempts to work in a box. Margaret Parent: Career Connections has certainly expanded its outreach through to all the universities over the past eight years. The level of conversations we are having now are far more engaged. We get an awful lot more interest from students and graduates across the country. We’re having conversations where people are saying, “I think I’m interested in insurance; tell me a little bit more.” Michael Paisley: There is a hunger for a job or career. They’re not coming in because they want to be in insurance. I have yet to meet a principal insurance broker who said, “That’s what I wanted to be when I grew up.” And what I find is that people are getting excited about the industry because this is a stable, solid industry that people can have a job or career in for the rest of their lives. Margaret Parent: That’s part of our selling point as well. Not only do we milk the stability, we promote the variety as well and the capacity to enter, move, try different things, have different types of clients, do different roles, be able to build a career that does have the capacity to be varied, ongoing, different and changing. SHORTAGE ON MANUFACTURER OR PRODUCER SIDE? Michael Paisley: If you go into an account like Petro Canada, a national broker is going to write an account
The Panelists
Michael Paisley, President, The Paisley-Manor Insurance Group
John Walters, President, Hallmark Group Insurance
Margaret Wasserman, Insurance Institute of Canada
Martin Thompson, Senior Vice President, Global Specialty Lines,
Stacey Shepherd, Vice President, Talent & Change, Human Resources, RSA
Margaret Parent, Insurance Institute of
RSA
Canada
PERCENTAGE GROWTH IN MANAGERS AND ACTUARIALS LEAD INDUSTRY EXPANSION OVER 5 YEARS
87 Actuarial
Sales & service
35
52 51
Senior management
Management
Source: Insurance institute of Canada (2012)
Broker/ agent
Underwriter
7
Risk management
N/A
33
Information technology
13
Other 34 management Claims
Middle management
24
103
Log on to insurancebusiness.ca for a mini documentary about training and developing tomorrow’s talent today.
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You’re talking to entrepreneurs here, who basically fly in the face of any organized attempts to work in a box
they’re factory workers. They’re suited to working on the manufacturing side of insurance companies. But that’s a different animal than what’s needed on the brokerage side. John Walters: The majority of the new placements are going into insurance companies, assuming that that’s what you’re saying , (and) there isn’t much migration to the producer side from people who are on the manufacturing
like this. They have thousands of locations, there are contracts, and they’ve got an army of people just doing Michael Paisley certificates of insurance for everyone they’re doing business with. You’re in the insurance business, you’re doing certificates. But that’s not what we do. There’s a place for that, and people have to be trained for that. There have to be underwriters who will sit down and do these things. Have you ever seen what’s involved in doing a car application? It’s 75 pages long to write a car policy. There are people who do this all day long, and
side. Michael Paisley: But, I think there’s a more important question that I’d like to ask: How important is it to have more salespeople? Quite frankly, I don’t think there is a lack of good quality producers. That’s not where the issue is. I don’t want to be tripping over 200 people chasing after one client. That’s not what I’m in this business for. Martin Thompson: I do think that the major challenge for the industry is on the marketing and manufacturing side.
STUCK ON THE 21ST CENTURY ESCALATOR
The industry’s 30- and 40-somethings may find their progress is blocked by baby boomers and ‘a broken escalator’ Margaret Parent, director, Professionals Division, at Insurance Institute of Canada, offers this analogy for the predicament “manufacturers” face in trying to retain developing talent as baby boomers remain on the job and at the top of the corporate ladder – or in her scenario, at the top of “a broken escalator.” Margaret Parent:We’re working with a consultant, and she uses this analogy that normally you would put workers on a talent escalator. You might have them start as a junior underwriter, and then move up to a senior underwriter – for example they would have some level of professional development and career trajectory within your organization. What’s happening is we have all of the boomers at the top of the escalator, using it like a treadmill. They’re doing their jobs, and they’re deciding on whether or not they want to retire anytime soon. If we did bring in new entrants into the industry – and we have done well with this – they’re at the bottom of the escalator. 44 | JULY 2014
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There are fewer and fewer people who I believe have a robust understanding of what we manufacture and what we sell. And the quality of the conversations around that are not as strong as they were in the past because it takes time to get people up to that level of knowledge. Looking at RSA data, we see a lot of people approaching the twilight of their careers, what we find is that the quantity and the quality of the knowledge further down to replace that is not on the same level. And part of it is the industry’s fault because we’ve kind of started to automate things. We try and make everything a process, and we’re not teaching people the fundamentals of the business. I see every day with our underwriters that they’re great with (handling the) processes, but when you get to the end of the day, you wonder, was it a good underwriting decision? Michael Paisley: When we got into this business, there were rates. I hap-
pened to ensure a building, in 1964 and I’ve got the underwriting notes, and it was a 4-cent rate. It’s still a 4-cent rate. The construction has not changed; it’s still poured concrete. The only difference is that it’s now worth $300 a foot instead of $30 a foot. I don’t think the industry is particularly viewed as attractive. Most people stumble into the industry rather than making it their career.
Michael Paisley: That is so contrary to all the statistics you’re showing me. You’re looking at this wave of boomers at the top, who are going to be falling off, and all these 30- and 40-year-olds are looking at this huge opening gap, and you’re saying they’re leaving? Martin Thompson: They’re not falling off right now. If you look at the stats, there’s a window of five to seven years. Margaret Parent: If they’re senior underwriters and the person above them (leaves), the opening is VP, which is a huge gap for them. You haven’t actually enabled them to perform at the next level, something they would normally need in order to be ready for that opening. So it slows down the momentum and ends up with this backlog. Michael Paisley: So we have to fire everyone over the age of 60 so that the 40-year-olds can move up? Margaret Parent: For that middle, you’ve got cross-functional (training). There are companies that try to explain this squiggle line, which is not exactly the norm or expected. It might be that you have to
take a step down to learn something about claims, and that in the end makes you a better manager. Michael Paisley: But that doesn’t answer the problem of a large corporation with people that have been around a long time. How do the middle people get up there? Margaret Parent: It helps, and it gives them broader skill development that in the meantime helps with them move into the next level. Michael Paisley: So this gives the ones in the middle the opportunity to go across, so as (the mature workers) come off, (those in the middle) will be able to fill in Margaret Parent: So now you’ve got all of these boomers at the top, and they’re on this treadmill, waiting to retire or really good at what they do but you’re afraid to lose them. There’s a little bit of phased retirement, which is something that the industry really needs to look at, so that you take someone who is going to retire in two years, and in the next six months, they’re (working) four days per week, and it decreases to three, two and one day.
The commercial insurance business is phenomenally exciting Martin Thompson
Margaret Parent, Director, Professionals Division, Insurance Institute of Canada
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SPECIAL REPORT / BROKER TRAINING ROUNDTABLE
5 SECRETS FOR RECRUITING AND RETAINING YOUNG PRODUCERS Whether we like it or not, we’ve still got this impression that’s created because of people’s experiences buying home and auto (insurance). When they hear about the insurance industry, that’s what they equate it with. But the commercial insurance business is phenomenally exciting. Martin Thompson: I hear a lot of brokers complaining about the point we were making earlier on. What’s happening is you’re getting a lot of brokers paying a lot of money to salespeople who don’t cut the mustard, and a lot of brokers are starting to lose faith and patience with it. HOW IS TRAINING BEING IMPROVED? John Walters: If I look at the recruitment we’ve done, the development costs are extremely high. If you look at what it takes to pay someone a salary and then wait, it takes a four-year development. The RSA was a big investor in terms of financing broker acquisitions; they won’t do that for a producer development. But if there were some means of validation for the program, I would support that. I would do more of them. Martin Thompson: One of the things we currently do is a program called Making Partners, but I think that’s targeted more towards those who want a succession plan. Michael Paisley: You’re looking for people who have the same values as you do, and I think that every broker out there has a slightly different culture. The success of the individual producer is based upon their ability to fit the culture of that organization. What RSA or any other company could do for me is to take my raw talent, give them an understanding of the manufacturing side and the basic technical skills.
Principal brokers are not only facing the challenge of attracting the kind of new talent with natural sales abillity but also those with the market connections and know-how to produce. But there are six secrets to winning that battle, writes industry veteran Jim Schubert 1. Fish in their pond • Post your job openings on social media. Especially LinkedIn, Twitter and Facebook. • Contact local universities that have Risk Management programs and ask them to let you give a guest seminar on what it’s like working in an independent insurance brokerage • Craigslist. (No, I’m not kidding!) We have found and hired several young producers over the past couple of years by advertising on Craigslist.org. 2. Use your existing young brokers to attract them Your brokerage’s own youngsters make better bait than your more “seasoned” producers. Let the magic of social similarity work for you. Don’t be shy about including your existing young brokers in the interview process. 3. Give them the right tools to succeed How many of your carriers offer sales training? Probably most, to some degree. Use it! Or if you can’t wait until the next sales seminar, buy them some books like Randy Schwantz’s perennial The Wedge. We make all of our new agents, young and (lightly) seasoned read this one during their first week with us. 4. Provide a mentor who is committed to their success I can’t overstate this concept. The small handful of young producers who ended up leaving us in the past were not mentored, and it was obvious they were craving it. Make sure you team your young bucks up with someone who still has a bit of the fire left in them. Don’t just dump them on someone who’s about to retire. 5. Incentivize them to win! There seems to be an alarming trend of agent and brokerowners stiffing their people (young and old) when it comes to commission. Jim Schubert is president of Southern States Insurance. He is a passionate advocate for small business leaders and independent insurance agents. Jim loves sharing ideas about digital marketing, sales, recruiting and the lost art of human interaction.
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24/06/2014 4:04:333:36:33 AM 22/04/2014 AM
FEATURE/ HOSTAGE & RANSOM
15
months of hell
Brokers were all ears when kidnap-survivor Amanda Lindhout shared her story with them in Toronto. The account is highlighting the need to better acquaint and so protect clients with kidnap and ransom insurance. Donald Horne reports “I had lost a lot of my hair; I was missing seven teeth that my captors had knocked out, and I was missing toenails due to malnourishment. Those were my days living in what I called ‘The Dark House’; forbidden to speak, wondering if I could survive the next 10 minutes.” Those are the powerful words of Alberta-born Amanda Lindhout, describing days when she and another man were taken hostage for 15 months by Islamic militants on a hot and dusty day in August of 2008 near Mogadishu, Somalia. “I remember thinking to myself, ‘I’m only 27 years old, what have I done to deserve this?’” she told a hushed group gathered at the Chubb Canada offices in Toronto, Ont., her trembling voice betraying those months of torture and anguish. “My faith in human decency was lost — what had led me to travel around the world was lost. I became consumed by anger and self-pity.” Lindhout’s story begins as a wideeyed 19-year-old. “Growing up, travelling was not something I did,” she says. “I kept a
stack of National Geographic (magazines) by my bed, dreaming of faraway, exotic places. Then one day, I bought a ticket to Venezuela for a sixweek trip.” It was over the next seven years that she travelled to more than 50 countries, “with a backpack on a shoestring budget,” she smiles. While in India, she helped out at a clinic where Mother Theresa once worked, and went on
INTRODUCTION TO JOURNALISM It was in 2004 that she met Nigel Brennan, a handsome bearded man who hailed from Australia. “He was a journalist, and it was Nigel who piqued my journalistic interest,” she remembers. “I bought a camera and a ticket to Afghanistan. And it was hard going.” The following year she set her sights on another international hot spot,
“I went to many places that are considered ‘off-limits,’ like Lebanon, Pakistan and Ethiopia,” she says. “It is easy to believe nothing bad is going to happen until it does” numerous safaris in Africa. “I went to many places that are considered ‘off-limits,’ like Lebanon, Pakistan and Ethiopia,” she says. “It is easy to believe nothing bad is going to happen until it does.”
Baghdad, Iraq – but soon her attention was diverted to the displacement refugee camps in Somalia. “I wanted to tell their story,” she says, brushing back her , “it was to be a oneweek work plan, with the rest of my time
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spent on the beach. Kidnapping was always a possibility – but I did not give it enough thought.” Upon arriving in Somalia with Brennan, she immediately felt the difference. “This was a war zone, different from Baghdad,” she says. “The markets in Mogadishu were empty; the streets were absolutely desolate.” It was on the third day of her stay that the two of them decided to travel through the countryside to see one of the displacement camps for themselves. And Lindhout wants to stress that it wasn’t through a lack of planning or precaution that she and Brennan were taken hostage, either. “We set out with the three security personnel we had hired, leaving the
relative safety of Mogadishu,” says Lindhout, as the countryside was under the control of various tribal warlords. “At one checkpoint, we had to leave our security behind and cross a stretch of noman’s land before we could get our next security detail. That is when we saw a car pulled over at the side of the road.” And that is where her descent into hell began.
concrete room. “They demanded to know our families’ contact information, and they demanded $1.5 million from my father,” she says. “I was told that I was rich, because I am Canadian.” Both Canada and Australia have a no-pay policy when it comes to international kidnapping and ransom situations. Instead, the federal government will offer to build a school or help pay for a hospital in return for the release of citizens held against their will abroad. But the hostage takers were in business for themselves. They weren’t associated with the Somali government, and certainly weren’t interested in building a school, says Lindhout. “The days became weeks, then became
TAKEN HOSTAGE, RANSOM DEMANDED Dragged out of the vehicle and forced to lie spread-eagled on the ground, the dozen or so men – really teenagers – armed with AK-47s quickly threw the pair into another vehicle and drove them to a house, where they were placed in a
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months, and we were always moved from house to house,” she says. “They told us they would behead us.” Lindhout now travels with kidnap and ransom insurance wherever she goes – and it is an important coverage that is driven home with audiences when she explains that she would have been freed within days or weeks, had there been insurance to pay out to the kidnappers. “My parents didn’t have that kind of money,” she says. “After 10 months of working with Ottawa, the government finally recommended that they explore ‘other options,’ meaning to hire a private company to negotiate with the kidnappers.” That company, AKE Group, eventually secured the deal that freed Lindhout for a quarter of the amount of ransom that the kidnappers had been asking.
SEPARATION, FLIGHT AND MURDER Back in captivity, Lindhout and Brennan were had been separated and were forbidden to speak to one another after a few months. But that didn’t stop them. “We took great risks to communicate – usually in whispers in the hallway,” she says. “Then one day, we talked of escape.” Brennan had a background in construction, and had noticed that the mortar around the bathroom window was crumbling. With a pair of nail clippers provided by his captors, he loosened the bars on the window. And one day, they made their dash for freedom. “We ran to a mosque, and we were chased all the way,” she says. “Then our captors started to fire at us – it was complete chaos.” Instead of finding sanctuary inside the mosque, they only found more men with weapons that were all too eager to ransom them too. “Right in the middle of it all, a woman in full niqab enters the mosque, makes her way through the men and in English called me ‘her sister,’” remembers
Lindhout, brushing back tears as the moment becomes real once again for her. But it wasn’t to be a Hollywood ending; in fact, it was only the first chapter of her 15-month ordeal. “Eventually our captors dragged us back to a waiting truck, while the woman threw herself onto of me, hanging on, shouting ‘Sister! Sister!’ But they pulled her off and ripped the niqab from her face,” she says. “She looked like she was my mother’s age, and there were tears streaming down her face. But three men with guns surrounded her.” As Lindhout was loaded onto the truck, she heard a gunshot from within the mosque, where the woman had been dragged into. “I still don’t know what happened to her,” says Lindhout. “And I still think of her courage on that day.” After the failed flight to the mosque, she never saw Brennan again – and her 10 months in ‘The Dark House’ began. “Everything was punishment from that day forward,” she says.
THE DARK HOUSE Ten months of total darkness, forbidden to speak or have contact with another human being. Ten months with a thick metal chain around her ankles. “I had lost the sky; I had lost laughter,” she says. “At any moment, I knew this ‘snap’ was going to come eventually. My snap from reality, from sanity.” The only human contact she had was with a man named Abdullah, who would bring her food and daily beatings. It was during one of those beatings that Lindhout experienced that “snap.” “Abdullah was hurting me, and I had my hands pressed up against his chest. I wanted him to die,” she says. “Time had stopped, and I felt detached from the excruciating pain – I had become an observer in the room.” It was at this point that Lindhout went back in her mind to the days and weeks before the Dark House and the daily torture – when Abdullah and the other
BROKER TAKEAWAYS: Who to sell this to: - Clients who travel on business frequently, regardless of destination; - Clients who work in foreign countries for extended periods. Also, foreign workers hired by Canadian companies, who want protection from compensation claims, employee theft or robbery of corporate assets; - Ordinary people who travel to hot spots for terrorism and kidnapping. How to sell it: - Share the kidnapping statistics with clients, from websites like Havocscope, or recent headlines on kidnapping cases; - For corporate clients, have an expert speak to the executives on his/her experience in the field of hostage taking and negotiation – a ‘tough love’ seminar; - Include it as an ad-on product for travellers, as part of the overseas medical coverage. Who covers it: - Chubb Insurance - Travelers Canada - Global Underwriters - Travel Insurance Services
captors would share their stories of childhood tragedy, all orphans of war. “I remember Abdullah telling me of when he was a little boy, finding his aunt’s leg, and hiding behind a truck after an explosion, living his days on the streets as an orphan,” she says. “He was driven to make someone hurt more than he had been hurt. That was my snap. But it was a snap that gave me the power to forgive.” Lindhout made a vow to herself, allowing a tiny seed of compassion to grow for these young people who were hurting her. “No matter what they do to me, I am going to choose forgiveness.”
DELIVERANCE AND FORGIVENESS While being held in an animal shed, one of her captors entered with a small saw, cutting off her rusty chain. She began to cry. JULY 2014 | 51
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FEATURE/ HOSTAGE & RANSOM
HOSTAGE HOT SPOTS AROUND THE WORLD
SYRIA & IRAQ MEXICO
AFGHANISTAN PAKISTAN & INDIA
LIBYA & EGYPT YEMEN
GUATEMALA NIGERIA
COLOMBIA
MAL
KENYA
ECUADOR
BRAZIL
“This wasn’t a good sign. I thought they were going to sell me to another group; or they were taking me out to die,” she says. Instead she was taken to a vehicle, then driven out into the desert to rendezvous with another vehicle. “We were surrounded by 40 armed Somali men, and I started sobbing again,”
she says. “I didn’t want to know what was going to happen. Then I was handed a phone. It was my mother, telling me ‘You are free.’” Now living in Canmore, Alta,, Lindhout has written a book on her experience, A House in the Sky: A Memoir, which made the New York Times bestseller list in 2013, and was named a
Globe Books 100 Best Canadian nonfiction book by the Globe and Mail. “Over the last few years, I’ve talked a lot about forgiveness,” says Lindhout. “I’ve chosen not only to forgive those teenage boys who kidnapped and tortured me, but myself – which hasn’t been easy.” Aside from a very harsh lesson in
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PROTECTING YOUR CLIENTS
PHILIPPINES MALAYSIA
learning to take out hostage and ransom insurance coverage, Lindhout does feel that those 15 months in captivity have made her appreciate some of life’s simpler pleasures. “I can experience those moments when the sun lights up the mountains near my home,” she says. “There is much beauty to behold.”
Amanda Lindhout’s harrowing story highlights the often-missed opportunity for brokers to service niche areas of their client base but also to grow their corporate customer numbers, say experts. In fact, a recent survey shows that terrorism needs to be given a higher insurance priority. “We’re not just talking about presidents and CEOs anymore,” says Mike Ackerman, president and CEO of The Ackerman Group. “We are seeing plant managers, plant foremen in Mexico, being kidnapped and held for ransom. These aren’t rich people – they are ordinary, everyday people.” A recent survey of captive directors, released by Aon Risk Solutions, shows that as the Terrorism Risk Insurance Act (TRIA) expiration approaches, the majority of respondents agree terrorism should be ranked higher. Aon Risk Solutions, the global risk management business of Aon plc, notes the findings, detailed in the 2014 Underrated Threats report, highlight concerns over the top 50 key risk ranking in Aon’s 2013 Global Risk Management Survey (GRMS). More than half of respondents to underrated threat survey said a ranking of 46 was too low for terrorism risk, given the pending expiration of TRIA. “Sadly, it is a growth area of insurance,” says Roberta Zurrer, a commercial lines broker with McDougall Insurance & Financial in Belleville, Ontario. “With more employees travelling abroad, kidnappings are becoming more prevalent.” The survey gathered input from 1,415 respondents – including risk managers, chief financial officers and CEOs – from 70 countries and from companies of all sizes. GRMS ranks the top five risk as follows: • economic slowdown/slow recovery; • regulatory/legislative changes; • increasing competition; • damage to reputation/brand; • failure to attract or retain top talent; Terrorism/sabotage was ranked 46. “It is barely conceivable that a little over a decade after one of the most impactful risk events in recent world history, the ranking for terrorism is so low,” states the
report. “The sad truth is that terrorism attacks are not confined to politically or economically unstable regions. They can happen anywhere, anytime and without reason, but their horrible commonality is that the results are almost always devastating.” Asked if respondents are surprised terrorism/sabotage is ranked at 46, 52 per cent said yes, absolutely; 40 per cent said no, not really; and 7 per cent were unsure. According to the website Havocscope, the kidnapping statistics show average ransom demands in 2012 of $2 million, with a total of $1.5 billion extorted. In Mexico, a favourite vacation destination for many Canadians, the average kidnapper earnings comes to $50 million per year. Havocscope is a website that collects and analyzes data from around the world on black market activities, and has supplied information to the World Economic Forum for the 2011 Global Risks Report. Mining operations in central and South America, as well as companies with interests in Africa, Asia or the Middle East, are all vulnerable to kidnapping and extortion, with particular hot spots including Mexico, Nigeria Venezuela and Pakistan. “We are seeing more cases of kidnapping and ransom demands,” says Zurrer. “Just look at the news. We offer coverage in the event of kidnapping or ransom for our commercial clients, which can be part of the Business Continuity Planning package.” It is a conversation brokers need to have with clients who travel, or those who’s work takes them to countries like Mexico that pose a security risk. One way to start the conversation with a client would be to suggest a training seminar, suggests Ackerman. “We do a lot of training seminars. Training is the most cost-effective way of dealing with risk. It stays with people,” Ackerman told Insurance Business. “Unfortunately we are in a society today that is very taken with technology – technology has its place, but it doesn’t replace training. And if you do end up being taken hostage, ransom insurance is absolutely essential.”
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FEATURE
In the eye of the
HURRICANE
In the aftermath of hurricane Katrina and Superstorm Sandy, AXA Art Insurance showed how a proactive, humanistic approach created a loyal community of customers Having partnered with Intact Insurance since its inception, AXA Art recently began operating as a licensed carrier in Canada this year, having sold its P&C business, striking out on their own and opening new offices on King Street West in Toronto, Ont. Christiane Fischer, president and CEO AXA Art Americas Corporation, sat down with Insurance Business and shared a few of the stories of how AXA Art found its place in the sun in the eye of the hurricane.
THE FIRST TEST: HURRICANE KATRINA, NEW ORLEANS, 2005 It was the second day of my vacation with my family, we saw the footage on television and I said to my husband, ‘Sorry, we have to head back to the city. This is the end of my vacation.’ As I was driving back to the city I called the office and said, ‘We have a problem here. Here’s the first thing we need to do: hire a helicopter; hire an amphibious vehicle; and get your hands on as many generators as you can. And get in contact with some disaster recovery teams.’ That all happened in one day. We hired a helicopter
and bought an amphibious vehicle – we called it the ‘AXAmobile.’ We hired the services of a security firm, and we got our hands on some rental generators. Our biggest client was the New Orleans Museum. It was a $200 million policy, and a lot of the items were in storage in the basement. They experienced no flooding, but they had no power. Since New Orleans is below sea level, we knew eventually we would need a working sump pump, not to mention security from looting. We gave a list of all of our New Orleans clients to the security firm and they dispatched their people and reported back to us what they saw. With the museum, we just needed to get in there and get the stuff out of the basement, and get a generator in there to power the place. At the time, this security firm had excellent ties to the National Guard, so they were able to get clearance to go in where no one was allowed; more importantly, they were able to get into the museum. We had daily calls with the director of the museum and received updates from the security team. They were able to tell us that the museum was secure, and that they were in the process of moving things out of the basement.
WHAT WILL 2014 HOLD? Weather forecasters are predicting a below-average Atlantic hurricane season for this year - and this comes on the heels of one of the quietest hurricane seasons in decades for 2013.
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During one of the conference calls, the museum director at one point asked, ‘How did you get the keys?’ and the security team leader said, ‘We shot the lock.’ That was the reality of the situation.
THE ON-SITE VISIT We got a generator and enough fuel to supply power to the museum for 12 weeks. When I first visited after two weeks in, I walked into the museum and our security guards were all there with machine guns. There were boxes and boxes of art and museum pieces everywhere. And then I wondered, ‘What is this? Where has it all come from?’ What had happened is that everyone in New Orleans who didn’t have power had brought their things to the museum. Being in the insurance business, I would be responsible for looking after these items. I had to say, ‘We’re not insuring all this stuff! We have a problem here!’ Every private collector had brought their valuables
to the museum, and I was saying ‘No! No! This can’t happen!’ Because you see, it was now covered under the AXA Art policy, as we had assumed responsibility by taking it in. But it all worked out fine and it was a great story for us, because we had been so proactive and had been so engaged with our clients. It gave us a huge amount of credibility in the market, coming in without a lot of bureaucracy.
HURRICANE SANDY, NEW YORK CITY, 2012 When Sandy happened, I was living in a flood zone in New York City. I saw the water rise – the lobby of my building had three feet of water. Amazingly our office, which is located at 35th Street and 5th Avenue, never lost power. Most of the team showed up the next day in their boots. Some even walked five miles to work. The benefits of a small team: we’re all very hands-on. Our grid was in Chelsea, where all the galleries are. We insure about $1.6 billion worth of art, between
Christiane Fischer, President and CEO of AXA Art Americas Corporation
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FEATURE
the liabilities of the various galleries and the fine art warehouses. We laid out the map of the grid and we said, ‘You go to this plot, and we will take this plot.’ We literally went from gallery client to gallery client to assess what the damage was. It was the best way to do it, because I knew that Paris (France) would be asking just how bad the damage was, and I needed to get a feel for the number. We would walk into a gallery and say ‘Show me your top 10 items. How much are they worth? How much is affected?’ From that we could start assessing how bad it was going to be. But we were also giving support to the galleries, with four trucks we had on hand that day. We had ordered them before with shippers, handlers and conservators to help get the damaged items out of the galleries. We had rented storage in two places in New York City where we brought the items to get them triaged for damage.
SOMETIMES, THERE IS A FREE LUNCH With no power in the area, we knew all those gallery people were coming to work each day and there was nowhere to get lunch. So for 10 days we had ordered food trucks from New Jersey to come to Chelsea and we gave out coupons for free lunches. And it was different each day – from pizza to dumplings to sandwiches. We fed Chelsea for 10 days – that is what made people really love us. At the end of the day it really wasn’t that much money, but it was the gesture – we’re part of the community, we’re here to help you. It made a difference, and people were really appreciative.
THE PERSONAL TOUCH I’m not in the philanthropic business; I’m in the forprofit business. But the best way to do business is to be completely involved in the community you are doing business in. And it is good business practice to give back to the community that you are in. It is what we are trying to do here in Canada. We don’t want to be the ‘big insurance company.’ We’re very focused on our niche market, so for us we can easily involve ourselves in the community. For example, I’m at the Canadian Art Foundation’s opening night screening, and I’m meeting people that are a part of our clients’ community. It is a good business practice to me, because people like to do business with people they know and trust – to be able to put a face to it. It’s like Facebook in the sense of ‘here’s my face.’ People do not buy from companies, they buy from
people. Especially for the people who have collections, because that is where their passion is; that is where their heart is. That is the beauty of a niche market, because you can allow yourself and your team to be passionate about what you do, and drive the engagement with your clients.
TROPICAL STORM ERIN, HOUSTON, 2007 There was this collector who had my cell phone number, and he calls me this one Saturday morning and says, ‘Oh my God, there is no power in my house, and I can only get 1-800 numbers from my insurers, can you help me?’ Although he had no art loss, we sent in people to help him remove the rot and the carpet mould – because he was something like number 22,000 in line on the 1-800 number with his broker, and that mould would have eventually affected the collection, had it not been removed immediately. But the most important thing to him was this: ‘I have a 90-year-old mother, can you help?’ he asked. ‘I need to bring her to a climate-controlled hotel. Can you find a hotel room for her?’ We’re an insurance company; not a booking agent. But we found him that hotel room for his 90-year-old mother. That was more important than anything else that we could have done for him; his mother was of the greatest value. Now, he tells everyone that we are the best insurance company. You can’t buy that kind of advertising – well, we did; we paid for the hotel room! We don’t have that mentality of having a 1-800 number. As long as we remain that company that does these things, I think that is what will make us strong and different – and no one can take that away from us.
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Favourite things...
Vacation spot: New Brunswick, New Hampshire and Maine
Troy McDougall, Commercial Account Executive, Darling Insurance Favourite food: Dominos or Papa John’s Pizza. I have simple tastes.
My first day in insurance: I was pretty nervous and wondered how I got here, as it was a huge culture shock from my previous work life. I shadowed a couple of the sales guys in the office. In my second week, I started quoting home and autos. I stuck with that for my first few years, and graduated to commercial in 2009. My best day in insurance: Writing my first auto dealership. It was a big deal to me at the time and really boosted my confidence. I am a car nut, and I wanted this line of business to be my primary focus. My weirdest-ever coverage: Has to be Kidnap and Ransom coverage that is included in the auto dealer package that I sell. It’s $1 million worth of coverage that’s automatically included. It’s hard to picture anyone being kidnapped, as it isn’t very common in this part of the world, but it is worldwide coverage, so I guess anything is possible. Best thing about working in insurance: Building relationships, helping people understand what they are purchasing and also getting them the most for their money. You meet lots of great people. Book: Too many favorites to list, but almost anything by John Grisham.
Movie: The Shawshank Redemption. I still love this movie, as it is one of the best illustrated examples of poetic justice you will ever see. The narrative by Morgan Freeman is timeless.
Favourite sport or pastime: Riding my ATV, year round and attending car shows. I am also an avid reader.
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ADVERTORIAL
THERE IS A SOLUTION TO EVERY PROBLEM
Most adjusting firms focus on volume and speed, says Dara Banga, the president of DSB Claims Solutions. ‘We focus on people and the facts’ The world of insurance claims adjusting can be fastpaced and dollar-driven – but for Dara Banga and his team at DSB Claims Solutions, they prefer to define themselves by their focus on service and quality “Most adjusting firms focus on volume and speed. We focus on people and the facts,” says Banga, the president and executive adjuster. “When a policyholder’s claim is well-managed, the likelihood of renewal is high. We want to be the firm that inspires business retention.” The journey to his founding DSB Claims Solutions begins in the family business – of another kind. Banga didn’t start his 14-year career in the insurance industry, instead, growing up in family furniture business. But it wasn’t long until he was “bitten by the entrepreneurial bug” and spearheaded the launch of three independent retail furniture companies. Unfortunately, one of his furniture businesses burned, imparting an early lesson on value of good insurance. “It was during that insurance encounter that I first learned about the field of independent adjusting,” says Banga. “The adjuster assigned to my claim was impressive.”
He took note that someday he might like to work as an independent adjuster. Banga eventually sold his furniture businesses, obtained his insurance license and took his first step into the industry, accepting a position as an account executive for a brokerage. “All the while, my long-term goal was to become an adjuster,” he says. Finally in 2000, Banga began working as a claims analyst. “You might say it was destiny,” he says. He quickly discovered that his personal strengths which included attention to detail, curiosity, communication, empathy and time management – perfect for an adjuster. “I soon achieved top producer status, continuously raising the bar and uncovering new ways to innovate and enhance service,” he says. “I believe you should be passionate and love what you do. When people love their jobs, it becomes obvious to everyone around them. Throughout my career, I’ve enthusiastically done the best job possible in every circumstance.” Specializing in transportation and property claims, Banga’s company is also frequently called upon to rehabilitate “claims gone wrong” under the
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supervision of other adjusters. “When Canada’s most costly natural disaster, the Toronto Flood, struck in 2013, many carriers turned to DSB Claims Solutions,” says Banga. “Policyholders gave us an A+ rating for service and said they planned to renew their policies.” When he isn’t busy running the company, Banga serves as the Toronto delegate for the Ontario Independent Adjusters Association (OIAA) and as the Secretary of the Canadian Independent Adjusters Association (CIAA). A strong believer in education and continuing education, Banga holds business management certificates 1 and 2 from Ryerson University, and is a certified Fire and Explosion Investigator as well as a Water, Fire and Smoke Damage Restoration and Applied Microbial Remediation Technician.
I believe you should be passionate and love what you do. When people love their jobs, it becomes obvious to everyone around them. Throughout my career, I’ve enthusiastically done the best job possible in every circumstance JULY 2014 | 59
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FEATURE/ CYBER LIABILITY
The digital threat:
HOW TO MITIGATE CYBER LIABILITY
With an increasing number of Canadian organizations being affected by cybercrime, the time to take action is now. Maia Espejo offers these tips to help mitigate the risk of cyber attack
Maia Espejo, is the senior professional liability manager of D&O/E&O for Burns & Wilcox Canada
Cyber attacks resulting in theft are a growing risk for organizations. According to a recent report, cybercrime has become one of the four most common crimes in Canada, with 22 per cent of Canadian organizations having experienced digital attacks. In early 2014, Bell Canada also found themselves on the list of big-name companies who had become ensnared in a hacking incident, announcing that a cyber attack on a third-party supplier compromised the confidential account information of more than 22,000 of its small business customers. These frauds can end up costing businesses big money. During the 2013 holiday season, Target saw the personal information, credit and debit card records of tens of millions of customers stolen. That security breach cost the organization an estimated $61 million, offset by $44 million in insurance payouts. Cybercrime can be an issue for any sized organization that has care, custody or control of any confidential information, whether in electronic or paper format, as well as any company with a computer system or website. In the new normal of the online world, companies need to take steps to protect themselves against the financial loss that can result from online attacks. The cost of recouping the damages of an attack and the cost of investigation can build and result in significant
financial loss for an organization. However, there are important steps organizations can take to reduce the risk of cyber losses. Here are some tips to mitigate the risk of cyber attacks.
1 2 3
Any company with web-based servers should be tested frequently. Have the IT department perform automated scans of the web servers on a monthly to semi-monthly basis. Smaller companies should enlist the help of an external IT firm to assist with the testing. Increase awareness and educate senior management and employees by subscribing to newsletters, magazines, blogs, Twitter feeds and Facebook groups with information on protecting your network from cybercrime. Educate and train employees every few months on the risks of cyber attacks and data breaches. Remind them by sending monthly emails or have monthly discussions or seminars about the damage that can be done by opening unsolicited emails or attachments, loading software programs brought in from the outside and not protecting their passwords. Passwords should be changed on a monthly basis by the company. Monitor anti-virus software and ensure it is always up to date.Â
4 5
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6 7 8 9
Company devices such as smartphones, tablets, laptops on which corporate resources, email, applications and file sharing place sensitive information at huge exposure. Procedures should be in place for when the devices are stolen or when an employee leaves the company. Institute procedures to document the types of data collected by the company and where it is stored. Determine what the cost would be should the organization lose data. Set aside a budget dedicated to recouping the loss. Conduct a risk analysis, either in-house or through a third-party company, to determine how susceptible the organization is to data loss and in which areas. The organization may be at greater risk in a specific area, such as cyber theft, accidental deletion, hardware failures or other risks. Institute loss prevention measures, such as backing up all your data at an off-site location or cloud server. Provide employee training and assess which employees have access to sensitive data. If the employees have access to personal data, ensure they are properly trained on data protection protocol.
10 11
CYBER LIABILITY INSURANCE Even with the proper precautions in place, human error, accidents and malicious attacks are still a possibility. Therefore, it is important to ensure your clients are properly covered with a comprehensive insurance product. Cyber liability insurance provides both third-party liability and first-party computer security coverage for emerging data security and privacy exposures facing Insurers today. As evident through the Bell Canada incident, third-party liability is an important element to a comprehensive product. Standard policies generally include a include broad form policy wording offering coverage for security failure or privacy breach by paying the cost for privacy notifications, public relations and other services to assist in managing existing and preventing future breaches. Additionally, policies can offer coverage for regulatory defences and penalties, cyber extortion, first-party data corruption, first party business in-
terruption and crisis management. Some insurance companies provide a hotline with the purchase of a cyber policy where the insured would have 24/7 access to a call centre for claims reporting as well as any guidance or questions with respect to data breaches. Other markets may provide consultation with a breach coach and breach response team to prepare for cyber attacks. As cybercrime has grown to be one of the four most common crimes in Canada, it is increasingly apparent that organizations must protect their assets and the assets of their customers against attack. Instituting organizational policies related to data security and ensuring organizations have comprehensive insurance coverage are the first steps towards mitigating the potential costs of cybercrime. Insurance brokers would serve their clients well by providing helpful tips to reduce risk and introducing packages that would mitigate damages in the event of an attack. JULY 2014 | 61  
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FEATURE/ CYBER LIABILITY
What will you tell your client
WHEN THE PHONE RINGS? Flood, auto accident, fallen tree on the roof – those are the calls insurers are accustomed to getting. But what do you do when a client calls to say all of their electronic files have been stolen?
The phone rings and you cordially pick it up, only to hear the panicked voice of one of your clients on the other end. It’s a call that you’ve come to expect – an auto accident to report, a burglary or a flood. This time, the message is slightly different. Your client, who operates a local family health team, says that all of their electronic patient files are missing. Their system is wiped clean and they don’t know what to do. The clinic can’t even call the patients who have appointments today to tell them not to come in because every bit of information is missing. The clinic’s IT technician has reported back saying it looks like someone may have compromised their network and taken information such as patient names, addresses, payment information, health card numbers, benefits details and maybe more. It’s going to take time to realize the extent of the breach. Your client has a lot of questions, which they rhyme off in rapid fire: • They can’t access information and therefore can’t see patients. Do they have business interruption coverage while their business is closed? • Will the clinic have to contact each of their clients so they can call their bank and benefits carrier or is there coverage to help with notifications? • Can patients sue the clinic because their information was breached? • How does the clinic get their information back – are forensics available as part of their coverage?
WHAT IS YOUR RESPONSE? This situation doesn’t have to be as ominous as it sounds. With some planning and an understanding of how cyber risk insurance can protect your clients, your response to this call can be handled with the same precision as an automobile or property claim.
If your client, as result of your proactive advice, purchased a cyber policy, you can simply call and report the claim to the insurer. The adjuster will help you deal with the claim. If your client does not have a cyber policy, some additional questions may cross your mind. For example: • Did I take the time to review their cyber exposures? • Did I advise them about the risks they face and offer ways to mitigate the risks? • Did I explain the cyber or data exclusions in their current policies to them? • Did I tell them about their cyber liability policy options that provide coverage for third-party liability suits as a result of the breach and other associated costs, fees and fines? • Did I discuss whether or not they had corporate plan in place if they had a cyber/data breach and did I review it with them? • Do I have an E&O exposure? Cyber breach incidents are making Canadian news headlines on a daily basis. This coverage is one that demands a conversation between you and your client. There is a gross underestimation on the behalf of organizations of all sizes that they are not a target. Trends and statistics seem to say otherwise. You have the opportunity to educate and inform your clients about the risks associated with cyber incidents. It will only prove beneficial when, not if, you get the call. It’s true that some business segments have a higher degree of probability when it comes to experiencing a cyber breach. Municipalities, schools, health-related enterprises and specialized organizations like Children’s Aid Societies are particularly at risk because they use and store concentrated amounts of
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highly sensitive information which is of higher value to a cyber criminal. Social insurance numbers, health card numbers, benefit details, names, addresses, birthdates and credit card numbers are worth money and can translate into a sizable payday for the right criminal. While the impact of a cyber breach is scalable to the type of information and number of records taken as well as the kind of organization, even the smallest attack can have a detrimental impact. Consider the loss of client trust, credit monitoring, forensic recovery, lost business, regulatory fines and in some cases media attention that can paralyze businesses if the breach is not reported and corrected properly. Frank Cowan Company offers cyber risk insurance coverage to municipalities, speciality organizations and non profits across Canada. An example of those coverages within a policy include: • Media services liability • Network security liability
• Privacy liability • Privacy notification costs • Regulatory proceedings • Extortion threats • Crisis management expense • Business interruption It’s important to note that cyber risk insurance isn’t reserved exclusively for hacking incidents. A lost laptop, rogue employee or inadequate documentation disposal can trigger this same gap in coverage. Human error is an exposure that is often overlooked in organizations of all sizes. Typically referred to as data breach, the same cyber attack coverage is applied as notification costs, regulatory issues and media services are required. We’ve seen countless examples of businesses adversely affected by cyber attacks. It’s an indiscriminative risk, but one that can be mitigated with the appropriate insurance policy and proper planning.
Barb Szychta, Vice President, Risk Management Services Frank Cowan Company
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EXPERT ADVICE
The Evolving Role of
THE RISK MANAGER Colette Taylor, Vice President of Underwriting for Global Specialty Lines, RSA Canada takes a look at how the role of risk manager has evolved, and how brokers can help shape that
Colette Taylor, Vice president of underwriting for GSL RSA Canada
Risk managers, accustomed to the spotlight only when disaster strikes, are receiving sustained attention lately due to an increase in natural catastrophes and a myriad of global risks that gained momentum in recent years. Over the last decade, they have emerged from behind the scenes to become more closely tied to central projects and growth initiatives within their industries and organizations. And while this team of experts was always deemed important, there is currently a distinct shift taking place that is fueling the department’s progression. This evolution is in conjunction with swift international growth, as well as a number of mergers and acquisitions that have generated opportunities across all continents. To manage these developments successfully, effective risk specialists are spending more time on preventative maintenance by devoting time at the onset to educating and training their colleagues. Part of this practice now includes the integration of social networking, which affords risk managers the tools to gain insights and opinions directly from the public. An invaluable technological advancement, social networking aids in providing a 360-degree view of an organization’s stability and is now crucial to a thorough risk assessment. Since the economic downturn, however, the need to get everyone more involved in this process has amplified. Business now tends to grow more organically than before, as many insureds have cut back on maintenance. As such, it is important for risk managers to work with their clients for the
best cost-effective solutions, especially given that there is more pressure than ever to demonstrate conservative spending. Naturally, spending is more easily justified when the return on investment is made evident, so it is imperative to get the attention of the C-suite by sharing the true cost of the claim, its surrounding expenses and demonstrating the ultimate impact on profitability. Because the effect of disaster has far-reaching ramifications, risk specialists rely on strong partnerships for successful management. Brokers are a fundamental part of this equation, as the variety of claims stories to which they have access can later serve as examples that offer valuable lessons. The most valued brokers have an in-depth understanding of their clients’ business needs and differentiators, and with those insights are able to proactively suggest the best course of action in any given situation. Ultimately, a harmonious partnership is rooted in the understanding that everyone must work together to keep the organization stable, as well as in the commitment to develop the creative solutions best suited for the company’s operations. With increased integration in operations, the role of the risk manager is steadily gaining recognition and value. It will be important to continue having conversations with clients about risk improvement to further open their eyes to this vital aspect of their operations and deepen their appreciation of the broker’s role within it.
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