Claims Canada October/November

www.claimscanada.ca

October/November 2012

Official Journal of the Canadian Indeépendent Adjusters’ Association

The Industry Tightens the Strings on Organized Crime

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Contents OCTOBER/NOVEMBER 2012 • VOLUME 6 • NUMBER

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Cover Feature 12 Target: Fraud The insurance industry has organized crime in its crosshairs. There is today a more detailed understanding of the extent of sophisticated fraud rings and how they steal from insurers and their customers.

BY CRAIG HARRIS

Spotlight 20 Perseverance and the Pendulum Winnipeg’s J.P. Hamilton Adjusters Inc. was formed during the Great Depression and has witnessed the evolution, and the rise and fall, of many trends in the insurance industry.

BY CRAIG HARRIS

Education Forum

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40 Claiming Notice What is a claim? The answer isn’t always obvious. We present an exploration of some liability cases that raise concerns about how insurers and insureds alike can better manage claims.

News Features 22 Annual General Meeting of the CIAA 26 Defence Due Diligence A “Defence Pyramid” can help insurers and adjusters proactively manage litigation risks.

BY OWEN SMITH

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28 The Fine Line Between Custodial and On Call Care Claimants with severe brain injuries usually require custodial care, but this is not the same as “on call” care.

BY PHILIPPA SAMWORTH AND ANDREA LIM

30 Dimming the Bright Line Rule

Departments

Two experts offer an examination of the Glasgow Coma Scale and catastrophic impairment determinations.

4 First Notice

BY LINDA MATTHEWS AND LAURA HODGINS

10 President’s Message

32 Making Something Out of Nothing How do business interruption claims impact the start-up enterprise?

BY MATT MULHOLLAND

36 Expert Costs Under Scrutiny Overcharging experts beware – no longer will the courts simply rubber stamp disbursements claimable against a losing party.

42 On The Scene

Columns 40 Education Forum

BY DARCY MERKUR

38 Establishing Economic Loss “Incurred expense” has been a fruitful source of litigation and this continues with Henry v. Gore Mutual.

BY CARLIE FLYNN

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• first notice FN Oil tank spills cost $78 million in claims An Insurance Bureau of Canada (IBC) study on oil tank spills in Atlantic Canada shows the events prompted $78.58 million in claims for participating insurance companies from 2008 through 2011.

In all, there were 663 domestic oil spill insurance claims made over the four-year period. In Atlantic Canada, 42% of homes have an oil tank.

More than half of spills were caused by oil tank corrosion, notes a statement from IBC. Many of the claims involved newer tanks, including 133 claims relating to tanks between zero and five years old, and 293 tanks between six and 10 years old.

While all tank materials had reported failures, the largest number of claims involved metallic tanks as opposed to fibreglass or other materials. Outside tanks were also responsible for 500 of the total claims.

A majority of reported spills were specific to the tanks themselves, but other sources of oil escape included the filter system, fittings, the heating unit or burner and the line.

The IBC study involved 21 participating insurance companies, representing roughly 86% to 89% of the insurance market in Atlantic Canada during the four-year timeframe. The data does not include spills on uninsured property or spills on property insured by non-participating companies. ●

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Customer satisfaction with auto insurance increases Satisfaction with Canadian auto insurance carriers has improved across all regions in the country since last year, mainly because of fewer premium increases and improved policy offerings, according a new study from J.D. Power and Associates.

The 2012 Canadian Auto Insurance Satisfaction Study, released Sept. 25, measures Canadian customers’ experiences with their primary auto insurers.

The company surveyed 11,620 auto insurance policyholders in June and July 2012.

Customer satisfaction is measured across five factors: interaction; price; policy offerings; billing and payment; and claims. Insurers are ranked in three regions: Western (British Columbia; Alberta; Saskatchewan; and Manitoba); Ontario/Atlantic; and Quebec, with an overall score on a 1,000-point scale.

In the western region, the satisfaction increase from 2011 was smallest, at five points. That’s mainly because of a higher number of insurer-initiated premium increases, J.D. Power suggests. A quarter of the customers in that region reported an insurer-initiated increase in 2012, compared with only 18% in 2011.

The western region was the only area with a higher frequency of premium increases compared to last year.

In that region, Canadian Direct Insurance ranked highest in customer satisfaction, with 806 points, followed

by State Farm (778) and TD Insurance (773).

In the Ontario/Atlantic region, customer satisfaction increased by 11 points since last year, mainly because of increased satisfaction with insurer policy offerings and quality of discounts. In the region, 60% of customers received three or more discounts on their policy, a six-percentage-point increase over 2011. About 30% of customers in the region reported an insurer-initiated rate increase in 2012, a four-percentage-point decrease from last year.

In that region, Grey Power ranked highest with a score of 786, followed by the Co-Operators (774) and Belairdirect and Zenith (786 each).

Satisfaction in the Quebec region increased most, by 17 points. Satisfaction increases in billing and payment and price influenced that increase, the company said. Only 11% of customers reported an insurer-initiated rate increase in 2012, a three-percentagepoint decrease from 2011.

In that region, La Capitale ranked highest with an 850 satisfaction score, followed by The Personal (842) and Desjardins General Insurance (832). l

Analytics usage growing for insurers: survey Insurers are beginning to explore using predictive analytics in their claim operations, but few have actually yet applied it to their businesses, according to recent survey results from Towers Watson.

The September 2012 Claim Best Practice Innovations and Measuring their Impact, surveyd 41 chief claim officers (CCOs) between June 5 and July 9 at various sizes of insurance businesses.

According to the study, 63% of respondents are at least starting to use predictive analytics.

Among large carriers, 75% are beginning to explore predictive analytics use, and 58% of small and midsize carriers are as well, the survey results suggest.

However, only 17% of total respondents have been using predictive ana-

October/November 2012

lytics for more than one year.

All carriers clearly see best practices as crucial documents, but for different reasons, Towers Watson suggests.

Smaller businesses view investing in best practices and technology as a way to improve operational efficiency, while larger carriers see them more as a tool for bottom line results, likely because of responsibility to investors.

Insurers are also regularly reviewing their best practices, with nearly a quarter of respondents making major modifications within the last six months. Over the past year, 56% had made changes.

Towers Watson notes, however, that systems could take a more integrated approach for better customer service and financial results. l www.claimscanada.ca

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• first notice FN Ontario Court overturns catastrophic impairment case The Ontario Court of Appeal has found in favour of a woman claiming catastrophic impairment from her insurer, Aviva Canada, overturning a lower court decision.

In Pastore v. Aviva Canada Inc., a woman was injured after being hit by a car while walking in November 2002. Her left ankle was broken during the accident and didn’t heal properly, leading to a number of surgeries and an eventual right knee replacement.

While she was self-sufficient prior to the accident, she became “almost completely dependant on others for her most basic personal care needs,” afterward, according to the court ruling.

In May 2005, Pastore applied to Aviva Canada to have her injuries classified as “catastrophic impairment.” She was assessed by a team of medical professionals at a designated assessment centre (DAC), which found she had catastrophic impairment “due to mental or behavioural disorder.” The assessment was based on a section of the Statutory Accident Benefits Schedule (SABS), which uses American Medical Association’s Guides to the Evaluation of Permanent Impairment as its reference.

The centre claimed Pastore had class 4 or “marked impairment” in terms of her daily living and gave her an overall assessment of class 3 (“moderate impairment”), when consider-

Paul Aquino Publisher (416) 510-6788 paul@canadianunderwriter.ca

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Subscription inquiries (416) 442-5600 • 1-800-668-2374 Fax: (416)Indeépendent 442-2191 Official Journal of the Canadian Adjusters’ Association

www.claimscanada.ca Produced by the publishers of Canadian Underwriter magazine

A bi-monthly magazine (6x per year), Claims Canada is published by BIG Magazines LP, a div. of Glacier BIG Holdings Company Ltd. Business Information Group is located at: 80 Valleybrook Drive, Toronto, ON, M3B 2S9.

Claims Canada magazine is the Official Publication of the Canadian Independent Adjusters’ Association [CIAA] and through its editorial content and circulation brings together the ‘entire property & casualty insurance claims market nationally’ with information and insight into the profession, business and people of insurance claims and loss adjusting.

All key claims process stakeholders are reached as part of our readership community – including: both CIAA member and non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management

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ing the assessment’s other three categories: social functioning; concentration, persistence and pace; and deterioration or decompensation in work or work-like settings.

Aviva, however, didn’t accept the DAC assessment, leading to mediation and eventually, arbitration. A major issue was whether “marked impairment” in one category could lead to a catastrophic impairment designation, or whether all four categories need that same classification for the designation to be made.

The arbitrator and eventually the delegate for the arbitrator’s director upheld the DAC’s assessments, leading Aviva to appeal to the Divisional Court for judicial review.That court disagreed with previous decisions, saying that the Guides portion of SABS does require all four categories to be considered for a catastrophic impairment injury.

The Court of Appeal recently overturned that decision, agreeing with the arbitrator’s director that the Guides’ language did not require all four categories to be considered as marked impairments for a catastrophic impairment designation.

The court also ruled that the director’s decision-marking process in that matter had been logical and reasonable. l

Claims Canada

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October/November 2012

Gary White Production Manager (416) 510-6760

and claims adjusting personnel; corporate risk managers and loss control professionals; insurance brokers; insurance law firms; forensic engineers and accountants; appraisal, restoration, rehabilitation and collision repair professionals; Insurance Institute chapters; insurance associations, regulators and related claims market recipients.

The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent.

www.claimscanada.ca

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Message from the President La Plume du Président JOHN D. SEYLER

I am very pleased to have this opportunity to communicate with my colleagues and industry friends. My election to President in Yellowknife in August was an experience like no other. Our hosts, led by Convention Chair Karen Kuronen of Arctic West Claims and her crew, did a fabulous job in ensuring we took home many experiences and fond memories of the “true” north.

For those who have never attended a CIAA National Conference, I encourage you to participate in the future. It is a great mix of business and personal time.

Independent adjusters by nature are generally personable. Both delegates and spouses alike form bonds and friendships that last a lifetime.

I have heard the contention that money spent to be with competitors is perhaps money wasted. I find the opposite to be true. The knowledge you gain through these relationships is invaluable. I have personally developed business relationships with fellow independent adjusters from other geographic areas that have resulted in referrals and increased revenue.

The educational component is also extremely important to all adjusters, as the only products we sell are knowledge and service. I have found this to be particularly true for small member firms who may have limited access to a national education program.

Some of the special events at the most recent convention included fishing in Great Slave Lake and enjoying the unique wilderness only the Canadian north can offer, such as the Aurora Borialis experience. The convention was well attended and enjoyed by vendors and delegates alike. I urge you to seek out the vendors who support CIAA and use them whenever possible. Their support is vital to the ability of your association to advance the many causes and interests of our profession.

Our past President, Greg Merrithew, has served our association well over the past year and we will continue to rely upon him as we move forward. We should be thankful for his commitment. As the proprietor of a small member firm I know the responsibility is one that brings a great deal of satisfaction – however, it is at a cost, which is the burden to our staff and partners. I am sure that Greg can attest to the need for his staff to work 10 Claims Canada

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October/November 2012

Je suis ravi d’avoir cette occasion de communiquer avec mes collègues et amis de l’industrie. Mon élection à titre de président à Yellowknife en août a été une expérience hors du commun. Nos hôtes, sous la direction de la présidente du congrès, Karen Kuronen, de Arctic West Claims, et de son équipe, ont fait un travail formidable pour s’assurer que nous aurions tous de nombreux souvenirs et expériences mémorables du « vrai » Nord.

J’encourage fortement ceux qui n’ont jamais participé à un congrès national de l’ACEI à le faire à l’avenir. C’est une combinaison formidable d’activités professionnelles et personnelles.

Les experts indépendants sont par nature des gens généralement très agréables. Des liens et des amitiés durables se créent souvent autant entre les délégués qu’entre leurs conjoints. J’ai déjà entendu dire que le fait de dépenser de l’argent pour passer du temps en compagnie de concurrents est du gaspillage. Je trouve que c’est tout à fait l’inverse. Les connaissances que l’on acquiert grâce à ces relations sont irremplaçables. J’ai pour ma part créé des relations d’affaires avec des collègues experts indépendants provenant d’autres régions qui m’ont recommandé, entraînant ainsi une augmentation de revenus. Le volet éducationnel est de plus d’une extrême importance pour tous les experts, puisque les seuls produits que nous vendons sont en réalité nos connaissances et nos services. J’ai remarqué que c’est particulièrement vrai pour les membres de petits cabinets pour qui l’accès à des programmes de formation nationaux peut être plus difficile.

Parmi les événements spéciaux du congrès, nous sommes allés pêcher au lac Great Slave et avons pu profiter de l’environnement sauvage unique que présente le Nord canadien, comme les aurores boréales. De nombreux fournisseurs et délégués ont également participé à la convention; celle-ci a été appréciée tout autant par les deux groupes. Je vous invite fortement à faire affaire avec les fournisseurs qui soutiennent l’ACEI quand vous en avez l’occasion. Leur soutien envers votre association est vital; ils nous permettent de promouvoir les causes et les intérêts de notre profession.

Greg Merrithew, notre ancien président, a été au service de notre association avec dévouement durant la dernière année et nous continuerons de nous fier à lui à l’avenir. Son dévouement mérite toute notre gratitude. En tant que propriétaire d’un petit cabinet membre, je suis au fait de la satisfaction que cette responsabilité procure, mais aussi des lourdes obligations envers le personnel et les partenaires qu’elle représente. Je suis certain que Greg peut témoigner du travail supplémentaire que son personnel a dû effectuer durant l’année pour qu’il puisse en retour accorder autant de temps à l’association. www.claimscanada.ca

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extra hard over the year in order that he could contribute such a great amount of time to the association.

My intent this year is to work towards expanding membership and increasing benefits to large and small member firms alike. We have found it necessary to restructure the dues and this motion was passed at the annual general meeting. While the result is a small increase to all members, it brings equity to our large member firms who contribute so much in the form of volunteers and leadership across Canada.

I look forward to working with our national advisory board. which is comprised of leaders in the insurance industry who believe in our cause.

I intend to contact all our member firm principals over the year to discuss our mandate and to seek out their suggestions and concerns. While I understand there may be some trepidation about the direction of CIAA, I would hope it is accompanied by real solutions as our true strength comes when we work together to ensure that our association is more relevant than ever to our industry and profession.

In closing, I would like to mention that (unlike in my picture) when you are reading this I will be sporting a beautiful moustache in support of the Movember campaign for Prostate Cancer research. It is never too late to sponsor a furry-lipped participant. n

Durant l’année à venir, j’ai l’intention d’augmenter le nombre de membres de l’association tout en accroissant les avantages dont peuvent profiter les petits et les grands cabinets.

Nous avons réalisé qu’il est nécessaire de restructurer les droits d’adhésion, ce qui a été accepté à l’assemblée générale annuelle.

Bien que tous les membres doivent dorénavant débourser une faible somme supplémentaire, cela sera plus équitable pour nos grands cabinets membres qui participent énormément grâce aux programmes de bénévolat et à leur initiative partout au Canada.

J’ai hâte de travailler avec le comité consultatif national, constitué de nombreux chefs de file du monde de l’assurance qui soutiennent notre cause.

J’ai l’intention de communiquer avec tout les dirigeants des cabinets membres au courant de l’année afin de discuter de notre mandat, d’obtenir leurs suggestions et d’entendre leurs inquiétudes. Je comprends que la direction que prendra l’ACEI suscite de l’agitation. J’espère toutefois qu’elle sera accompagnée de solutions réelles, car notre force véritable s’exprime lorsque nous nous unissons pour faire en sorte que l’ACEI soit plus pertinente que jamais à notre industrie et à notre profession.

En terminant, j’aimerais souligner que, contrairement à ce que vous voyez sur ma photo qui apparaît ici, au moment où vous lirez ceci, je porterai fièrement une superbe moustache dans le cadre de la campagne Movember visant à soutenir la recherche sur le cancer de la prostate. Il n’est pas trop tard pour commanditer un participant moustachu. n

NATIONAL EXECUTIVE 2011-2012 2011-2011 PRESIDENT John D. Seyler, AIIC ProFormance Group Inc. 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 • Fax: (905) 238-2735 E-mail: jseyler@prospecialty.ca 1ST VICE-PRESIDENT Marie C. Gallagher, FCIP, CRM Granite Claims Solutions 71 King Street, Suite 204 St. Catharines, ON L2R 3H7 Phone: (905) 984-8282 • Fax: (905) 984-8290 E-mail: marie.gallagher@graniteclaims.com 2ND VICE-PRESIDENT E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 • Fax: (902) 468-5822 E-mail: Grant.King@crawco.ca SECRETARY Paul Hancock, B.Sc., CIP Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: Paul.Hancock@crawco.ca

www.claimscanada.ca

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TREASURER Russell Fitzgerald, CIP Kernaghan Adjusters Limited 203 – 4246 97 Street N.W. Edmonton, AB T6E 5Z9 Phone: (780) 488-2371 Fax: (780) 488-0243 E-mail: rfitzgerald@kernaghan.com

DIRECTOR James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca

PAST-PRESIDENT Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 201 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca

DIRECTOR John Jones, BA Granite Claims Solutions Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@graniteclaims.com

EXECUTIVE DIRECTOR Patricia M. Battle Canadian Independent Adjusters’ Association/ L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Avenue West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 E-mail: pbattle@ciaa-adjusters.ca

DIRECTOR Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Ave., Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com

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The insurance industry has organized crime in its crosshairs. There is today a more detailed understanding of the extent of sophisticated fraud rings and how they steal from insurers and their customers. There is also a sense that now is the time for more specific strategies to bolster regulations, cut off the flow of money and punish offenders.

BY CRAIG HARRIS

F

raud has been a persistent problem in the property and casualty industry, but there are clear signs that the scope of insurance crime is more extensive than previously thought. This is particularly true in Ontario and more specifically the Greater Toronto Area (GTA), where organized fraud rings have devised elaborate, sometimes dangerous schemes to bilk insurers – and policyholders.

“Industry data suggests that the primary increase in insurance fraud over the last five years has been in the Ontario auto accident benefit claim area, largely due to the increase involvement of organized crime,” notes Jim Eso, senior vice president, property & casualty, Crawford and Company (Canada) Inc. “The most recent changes in benefits under AB may have an impact in reduction of www.claimscanada.ca

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fraud; however, this area remains the primary focus for the insurance industry.”

Independent adjusters have a front line view of insurance fraud and are well positioned to play a key role in detection and prevention.

“Being in the field, the independent adjuster is often the first one to observe some of the initial signs of a potential fraud as we are conducting the in-person interview,” says Paul Mercer, Toronto branch manager for Granite Claims Solutions, who has taken on a coordinated fraud role with the adjusting firm. “We then work with the in-house special investigation unit (SIU) or in cases where there is no insurer investigation team, coordinate inquiries with private investigators and our internal SIU specialists.”

Two recent developments – the formation of an Ontario Auto Insurance

Anti-Fraud Task Force and an audit of the Financial Services Commission of Ontario (FSCO) by the Auditor General – have yielded greater insight into the nature of fraud.

“To us, the most important aspect about the scope and nature of fraud is its impact on Ontarians,” the task force noted in its December 2011 interim report. “Fraud can have a financial impact, through increased costs and premiums, a public safety impact, through staged accidents endangering drivers, and a health status impact, through inappropriate or excessive treatment.”

General industry estimates peg the cost of auto insurance fraud in Ontario at between 10–15% of the value of 2010 premiums, or as much as $1.3 billion. However, the task force questions just how accurate that figure truly is.

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By working together, the group takes advantage of the insurance system in multiple ways, such as staged accidents and claims under various insurance coverages.

“We have attempted to understand the basis for that calculation and have concluded that the $1.3 billion figure cannot be considered a verifiable measure of the extent of fraud at this time,” it said.

The Insurance Bureau of Canada (IBC) commissioned KPMG to study the extent of insurance fraud in Ontario. In a report released in June, the consulting firm indicated that: “Based upon our review of the available information, we estimate that auto insurance fraud in Ontario ranges between $770 million and $1.6 billion per year. This amounts to between 9% and 18% of total auto insurance premiums.”

The task force on fraud issued another report in July, which stated that Ernst & Young is reviewing the KPMG figures. Ernst & Young has indicated that KPMG may be underestimating the extent of overall auto insurance fraud in Ontario “because it does not specifically address premeditated fraud, which, as Ernst & Young noted, could range between $130 to $260 million per year.”

Alarmingly fast rate While the specific numbers are in doubt, there is no question as to whether fraud exists in Ontario auto 14 Claims Canada

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insurance. Accident benefits costs more than doubled from 2006 to 2010, increasing by 118%, according to the Task Force. Of the $3 billion increase in total claims costs, $2.4 billion or 80% came from AB. Of the $2.4 billion increase in AB costs in Ontario through this period, $2 billion occurred in the GTA. “Something is causing accident benefits costs (and therefore overall auto insurance claims costs) to grow at an alarmingly fast rate while many of the normal factors that influence these costs either decrease or increase only slightly,” the task force noted.

The Auditor General’s Report made similar findings. It noted that from 2005 to 2010, total claims costs in Ontario increased by 61%, from $5.4 billion to $8.7 billion. The primary cause for this escalating trend was increased Statutory Accident Benefits Schedule (SABS) costs, not the increase in the number of accident claims. Indeed, the injuries claim costs rose 150%, even though the number of injury claims increased by only 30% over the same period.

It’s clear that fraud – especially organized crime – is a primary component of that significant spiral in claims costs. IBC estimates that there are as many as 50 active fraud rings

October/November 2012

operating in the GTA. Some recent high-profile examples include: • In February, Toronto Police laid charges in connection with Project Whiplash, where it is alleged that a complicated insurance fraud ring has staged auto collisions, made false claims at several rehab providers across the GTA, and falsely used the identities of several medical practitioners. The alleged scam targeted numerous insurers and resulted in estimated fraudulent payouts of $4 million.

• In May, Uthayakanthan Thirunavukkarasu, also known as Max or Mano, received a three and a halfyear jail sentence and a free-standing restitution order for $375,000 for instructing the commission of offences for a criminal organization, proceeds of crime, criminal negligence causing bodily harm and fraud charges in connection with a staged collision ring, known as Project 92, across the GTA. He was personally associated with more than a dozen staged collisions. IBC estimates the impact to the industry from Project 92 could be as high as $25 million.

• Also in May, FSCO announced charges against five rehabilitation clinics and 10 individuals affiliwww.claimscanada.ca

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takes advantage of the insurance system in multiple ways, such as staged accidents and claims under various insurance coverages. This often involves a network that can extend to health care providers, tow truck operators, repair shops, paralegal firms, etc.

Premeditated insurance fraud involves the purposeful claiming of improper insurance benefits by an individual (rather than a group). For example, a service provider may submit claims for damage or treatment that did not occur and/or was not provided.

Opportunistic fraud occurs when an individual increases or “pads” a legitimate claim. For example, a policyholder may claim for the repair of damage not caused by the accident, which is the subject of the claim or may overstate the true value of some aspect of the claim (e.g., property lost).

“When you look at opportunistic fraud, this exists across Canada,” says Eso. “Adjusters are well trained to uncover this type of fraud right from the first notice of loss. We can work closely with our insurance partners on investigating suspicious losses and take a proactive approach to verifying the claim. This involves a significant amount of work, but I do not think opportunistic fraud has increased significantly in recent years.”

Padded claims are examples of crimes of opportunity; it is, however, becoming increasingly evident that organized and premeditated fraud is a growing contributor to escalating claims costs.

“The fastest-growing parts of auto insurance fraud are premeditated and organized fraud rather than opportunistic fraud,” noted the fraud task force’s interim report.

“This conclusion is based on the shape of the growth curve in the unexplained gaps from 2006 to 2010. There is little reason to believe that opportunistic fraud would have grown so quickly in such a short period of time. And there is much anecdotal evidence that premeditated and organized fraud have grown rapidly in recent years.”

With insurance fraud on the radar screen as a highly visible industry issue, insurance companies, associations and adjusters are targeting organized crime and pursuing specific strategies to break up rings. There is a growing consensus that a concerted effort is required from regulators, various facets of the insurance industry and consumers. The Ontario task force is issuing its final report in fall 2012, which will contain a number of recommendations on tackling organized fraud.

Early indications from the task force show that it will likely focus on several key areas, including regulation of health care clinics, oversight of the towing industry, increased powers for FSCO in terms of administrative penalties, broader civil immunity protection and privacy

ated with these clinics with offences under Ontario’s Insurance Act. The cases involved filing false claims.

The Auditor General’s report observed that insurance companies are Padded claims are increasingly dealing with fraud in civil rather than criminal court. In 2010, examples of crimes several insurers sued select health of opportunity; it is, clinics over alleged fraud related to however, becoming auto insurance claims. One insurance company alleged it paid out at least increasingly evident $1.2 million to three clinics owned by that organized and the same individual for medical serpremeditated fraud vices that were never provided. Other legal action alleged that invoices were is a growing submitted from health-care clinics tocontributor to Claims Canada 1/4 page, black &for red treatment (195C) | Sept 17 | version 1 tallingadover $1 million allegedly provided by persons who did escalating claims not work at the clinic or who had left costs. prior to the treatment being billed.

Organized, premeditated and opportunistic fraud Insurance fraud falls into three broad categories—organized, premeditated and opportunistic. Organized fraud is undertaken by a group of individuals working in concert. By working together, the group

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sharing provisions for insurance companies. Technology, in the form of predictive analytics and advanced link analysis, and consumer awareness are also critical factors in the detection of fraud.

The Role of Regulation “We have made it very clear that the big problem is the medical-rehabilitation clinics,” says Ralph Palumbo, vice president, Ontario region for IBC. “The fact is that anyone can start up a clinic right now. There are over 8,900 health care facilities using the Health Claims for Auto Insurance (HCAI) system, yet on average we are seeing about 62,000 accidents over the course of a year. So, the question is where are they making their money?

We think a big part of it is in fraud.”

There are several potential avenues to more closely monitor health care clinics, some of which have been floated by both IBC and the task force.

These include placing restrictions on ownership of clinics, designating a regulated health practitioner to be responsible for the integrity of the clinic and its business practices and imposing appropriate sanctions for unethical or fraudulent behaviour. The task force cited the example of Hillsborough County, Florida, which passed in September 2011 an ordinance requiring the licensing of any medical clinic that provides treatment or therapy to patients claiming injury due to an automobile accident.

“I think the most effective route to deal with fraud is to cut off the money,” says Willie Handler, a consultant and former senior manager of auto insurance policy for FSCO, who is participating in developing the task force report. “If you properly license and regulate health care facilities, you will screen out those who are not fit to be working in this sector and take away their ability to bill insurers.”

Regulation of the towing industry may pose a more daunting challenge.

The task force noted in its preliminary report that allegations of paid referrals and improper billing practices have surfaced regarding tow truck operators. However, it is unwww.claimscanada.ca

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clear which agency of the provincial government would regulate practices in the towing industry or if municipalities, who often license operators, would be involved.

Palumbo notes that granting insurers broader civil immunity protection is a relatively easy measure that could be done by the government. Insurers are pursuing civil actions and trying to hit fraud rings where it hurts the most: their wallets. However, they are vulnerable to counter lawsuits

and allegations of bad faith if an investigation goes wrong.

“We think there is a ‘whistle-blower’ risk that can hinder the success of an investigation,” Palumbo says. “But with these broader immunity measures, insurers and others would be protected as long as the reporting is done in good faith to law enforcement officials or designated industry bodies.”

A related topic for the insurance industry is information sharing in the context of federal privacy legislation.

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While insurers are subject to PIPEDA, there are concerns that this may restrict information gathering, data sharing and investigative techniques involved in fraud detection. Bill C-12 was introduced in Parliament last year as legislation designed to update PIPEDA, but it has not moved to the order paper.

The Ontario task force on fraud is looking at other options, such as “whether the consent provisions embedded in applications for auto insurance and applications for benefits in the event of a collision might be amended in a way that would be consistent with privacy legislation, but provide greater certainty about the ability to share information for the purpose of detecting and preventing fraud.” Palumbo says insurers would welcome a clarification of information sharing practices.

IBC is also recommending a dedicated insurance fraud unit or dedicated prosecutor, with the potential for a pilot project in the GTA. “Given the complicated nature of some of these fraud rings, it makes sense to have someone with expertise in auto insurance fraud handling these cases,” Palumbo says.

The main obstacle with fraud fighting efforts on the regulatory side is finding the resources – where will the money come from? It’s an issue the task force acknowledges in its interim report.

“It is necessary that FSCO be provided with the requisite staff and expertise to assume these new regulatory activities,” it noted. “In this regard we suggest that the government consider allowing FSCO to hire new staff as necessary, particularly since the insurance sector would be absorbing the additional costs associated with new resources.”

Palumbo concurs that FSCO has a “lot on its plate. That is a concern and some of these measures would require more resources. As insurers, we don’t want to have to end up paying for things like a licensing regulatory system for health clinics.”

Handler says that the approach to fraud prevention in Ontario may not 18 Claims Canada

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In particular, data analytics and predictive modeling are allowing insurers to uncover complex or organized fraud activities using both structured and unstructured data.

involve concrete measures, such as a dedicated insurance fraud unit or prosecutor. “I think there is a philosophical difference between Canada and some U.S. states, ” he notes.

“There is reluctance here to earmark resources for a specific program, such as insurance fraud. If down the road the (fraud) problem is curtailed, the funding is still pre-allocated for that purpose.”

When the task force releases its final report on insurance fraud, the ball will be in the government’s court.

“I think the government is engaged on auto insurance fraud,” Palumbo notes. “But politics, as usual, is in play with a minority government.”

Technology and communication tools While regulation is not directly in the hands of insurers, other factors such as technology are starting to make an impact on fraud detection.

In particular, data analytics and predictive modeling are allowing insurers to uncover complex or organized fraud activities using both structured and unstructured data.

Mercer says that advanced data analytics represents a significant enhancement to previous “red flag” fraud indicators, which tended to produce a “large percentage” of false

October/November 2012

positives. “Just recently, insurers have turned to predictive analytics data,” he observes. “Predictive modeling allows fraud likelihood now to be ranked and, in conjunction with the red flags, will make the best use of time and resources. This resource is directed toward organized fraud groups.”

“I think the insurance industry has the tools it needs to investigate, analyze and attack fraud,” adds Eso. “However, we need insurance companies to support one version of a data solution. In this way, adjusters can access this data and tie in their own files to detect fraud patterns. I think data analytics is critical now and for the future – it’s all about the data. More insurance companies are making the investment in these types of data collection and analysis tools and that is encouraging.”

Palumbo notes that IBC did a pilot project using advanced data analytics with IBM on a sample of claims.

“While this was only a relatively small number of claims, we wanted to see if it could identify suspicious patterns and potential fraud,” he says. “It worked.” Palumbo adds that the next step is to encourage more sharing of data across insurance companies to identify large fraud rings and multiple claimants/incidents.

According to the task force’s interim report, this is already beginning to take shape. “Tests this year using three different software programs have led insurers for the majority of Ontario drivers to agree to form a new company,” it stated. “This company would charge its owners for the cost of operation and employ state-ofthe-art software to do a rapid analysis of new claims that would highlight the most suspicious among them.

This would trigger further research by insurance adjusters and investigators, while allowing efficient processing of claims that are not suspicious.

The most suspicious claims could be handed over to regulators or other investigative authorities.”

Mercer notes that technology will have to go hand in hand with human resources. “Analytics have been shown to provide considerable data www.claimscanada.ca

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that was not previously available,” he says. “The next big step is to use this information we have been presented with and this will require qualified personnel to make the project worthwhile.”

Eso says that adjusting firms are well positioned to integrate technology with expertise. “If you have access to the data and the right analytic tools, you have a much better chance of spotting some of these rings and breaking them up,” he observes. ”At Crawford, we handle thousand of claims that involve a significant amount of data. We are looking to work closely with insurance companies to access their data and compare it to ours.”

Technology may also help in another anti-fraud initiative: increased consumer awareness. Palumbo explains that IBC is focusing resources on educating consumers about the impact of fraud on insurance rates and public safety. “Our message is that fraud is out there and it directly affects all of our premiums,” he says.

“More than that, organized crime and staged accidents are a serious danger and a threat to innocent drivers.”

Through web sites, social media and road shows, Palumbo says that IBC will be raising awareness amongst consumers regarding what to look for in terms of fraudulent activity at a claim scene (such as the amount of damage in an accident and the number of passengers in other vehicles), treatment procedures at a health care clinic and how to report suspicious activity through its confidential 1-877 IBC TIPS line. “This is all information we have to get out to the public,” he notes.

The fraud task force observed there are “learning moments” for consumers when it comes to insurance fraud that may aid in detection.

“Insurers, regulators and law enforcement agencies could all benefit from consumers being better informed and more alert to the potential for fraud within the auto insurance system,” it noted. “To that end, our working group on consumer education and engagement has identiwww.claimscanada.ca

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fied a number of timely occasions for providing consumers with key messages. We are proposing that an entire website be devoted to informing those injured in vehicle collisions about the benefits available for different types of injuries, how to claim benefits and how to detect and report suspicious or inappropriate behaviour at collision scenes, clinics and offices of legal representatives.”

Bringing in consumers to help in the fight against fraud is another example of how detection and prevention efforts have to include more than just the usual sources, according to Palumbo.

“In the end, it is not just up to insurers, adjusters or government agencies to address this threat,” he concludes. “All of us have a role to play in combating fraud.” 

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• spotlight S

Perseverance and the

Pendulum Winnipeg’s J.P. Hamilton Adjusters Inc. was formed during the Great Depression and has witnessed the evolution, and the rise and fall, of many trends in the insurance industry. The firm continues today with a commitment to quality service at a fair rate.

BY CRAIG HARRIS

A

sk Larry French about the qualities that make up a successful independent adjuster and he doesn’t hesitate with his oneword answer: perseverance.

“In this line of business, you have to have a strong personality, and it doesn’t hurt to be a bit stubborn,” he declares in his straight-talk style. “You walk the line in the middle between the claimant and the carrier; if you’re not strong, you can get beaten down.”

Few would hold that French, president of J.P. Hamilton Adjusters Inc. of Winnipeg, is guilty of being a shrinking violet. As the head of the boutique firm, he commands a wealth of industry experience and adjusting expertise amassed over more than 40 years in the business.

“I have seen the pendulum swing in this industry from trend to trend,” notes French, who started with J.P. Hamilton in 1964. “We have gone from small independents representing half of the adjusters across Canada to insurance companies trying in-house adjusting staff to national contracts for large adjusting firms. And I’m sure we will see it go back. This is a very cyclical industry.”

J.P Hamilton Adjusters was formed by a lawyer named Penny Hamilton in 1933 at the height of the Great Depression. “Lawyers weren’t the same then as they are now,” French observes wryly. It thrived in the Winnipeg area and became known as a reliable adjusting 20 Claims Canada

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firm that could handle all types of claims.

Today, J.P. Hamilton has three adjusters, including French (FCIP, CLA), Tim Bromley and Mike Lucas. Bromley has been an independent adjuster since 1994, having previously worked as company examiner and field adjuster with Canadian Surety and Prudential/General Accident from 1989-1994.

Lucas graduated from the University of Winnipeg with a Bachelor of Arts Degree in the field of Criminal Justice.

He is currently working towards his CIP designation.

With complete Internet reporting services and a modern telecommunications infrastructure in place, the firm is able to handle virtually all lines of personal and corporate claims.

“I have the advantage of experience, so, in some cases, people come to me when they have a problem or a question,” French notes. “I am willing to share my talent.”

This diversified book of adjusting business helped J.P. Hamilton in 1971 when the Manitoba NDP government brought in public-run auto insurance. “Autopac used independents for awhile, but they moved fairly quickly to staff adjusters,” he says. “At first, MPI was offering zero deductibles for comprehensive coverage. We were handling claims for broken antennas.

That didn’t last for long.”

French notes that his firm sill does some valuation work for MPI to this

October/November 2012

day, mainly for customized and exotic vehicles.

The creation of a government auto insurer in the province in the early 1970s was a challenging time for independent adjusters, French recalls. He notes that a colleague adjusting firm, J.G. Conklin & Co., which started roughly the same time as J.P. Hamilton, went out of business.

French’s firm, however, persevered and picked up the slack with a focus on personal property and corporate business. Over the years, the firm has handled such diverse accounts as personal lines programs for Manitoba Hydro, Manitoba Telephone System, Manitoba Government Employees association, the University of Manitoba and University of Winnipeg. It also has working agreements with adjusters in Manitoba to handle claims in remote areas of the province.

Flooding is, of course, a prominent concern in Manitoba. “We have seen some big ones,” French notes, citing 1997, 2006 and 2009 as particularly challenging years for flooding along the Red River. He, like many Manitobans, points with pride to “Duff’s Ditch” – a 47 km long channel which, during flood periods, takes part of the Red River’s flow around the city of Winnipeg.

“That has likely saved us billions of dollars, although it was not very popular at the time,” he says. “I think that shows the value of foresight and perseverance.” www.claimscanada.ca

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J.P. Hamilton Adjusters’ team (from left): Mike Lucas, Larry French and Tim Bromley.

More recently, flooding in Manitoba in 2011 resulted in a high claims volume. Through CIAA’s Catastrophe Response Program, a variety of member firms handled about 400 of the most severe claims (J.P. Hamilton stepped in on 79 of those). The Manitoba Agricultural Crop Insurance Corporation took the remaining assessments in-house.

“We certainly didn’t get all of them, but we got our fair share,” French says.

“That is one of the benefits of belonging to a national association.”

The ability to move nimbly and source new claims is a distinct advantage for J.P. Hamilton, especially given the impact of ongoing mergers in the insurance company arena. French says recent acquisitions of AXA and Jevco

by Intact Insurance caused a direct loss of business for his firm in some key areas.

“You realize there is nothing you can do about it,“ he notes. “You could be doing an excellent job, but the decision gets made elsewhere – in Toronto, Montreal or London, England. It does leave you scrambling a bit.”

Another competitive issue for smaller firms like J.P. Hamilton is the threat posed from national adjusters, www.claimscanada.ca

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particularly in the form of flat fee adjusting programs.

“My thought on that is you get what you pay for,” French comments. “You could be handling all $20,000 losses with a individual fee cap of $600. The adjuster will bill the hours and then he is done. Of course, it costs more down the road in terms of claims that go wrong. Higher loss ratios are passed along to consumers through higher premiums – it’s not the insurance companies that are paying for it.”

With his more than four decades of experience in the adjusting profession, French is philosophical about the cycles and rhythms of the insurance marketplace.

“There is quite a bit of business out there; you just have to get out and knock on doors,” he observes. “One of the benefits of competing with the nationals is that their local adjusters tend to leave marketing to the head office.

We can use that as an opportunity to build up our local presence and increase our business.”

French also notes that he has seen other types of pendulums in the insurance industry. “I remember when Canadian Surety offered full coverage sewer back-up in the early 1970s,”

he says. “Then in 1974, we got severe flooding and they got absolutely killed.

Sure enough, insurers put limitations on sewer back-up. Today, what am I seeing? Some insurance companies are offering full replacement cost coverage on sewer back-up. The trends come and go.”

So, where is the pendulum now for the smaller independent adjuster? “It is a difficult time, no doubt. Whereas once, it was likely about half of adjusters who worked for smaller firms, I think today that number is closer to 20%. I think where we are going is that the boutique firms will be coming back. There will be smaller adjusters who look at a certain region or line of business and say, ‘I can compete on that.’“ French says his firm will continue to be one of those adjusters able to spot opportunities, move quickly and capitalize on them with attention to detail.

“I think if you offer that quality service at a reasonable rate, the business will always be there. It doesn’t mean you can grow complacent; quite the opposite. But if you apply your skills and knock on some doors, you will continue to succeed.”

In other words: perseverance. 

October/November 2012

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CIAA 28th Annual General Meeting and Gala, Yellowknife, NWT

At the 28th Annual Canadian Independent Adjusters Association (CIAA) General Meeting and Conference, the President’s Banquet & Ball was held at the Department of National Defence building. John Seyler took over the reins as president of CIAA for 2012-2013 year. He succeeds outgoing president Greg Merrithew. l

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www.claimscanada.ca

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CIAA 28th Annual General Meeting and Gala, Yellowknife, NWT

The Canadian Independent Adjusters Association (CIAA) held its 28th Annual General Meeting and Conference “under the Aurora� at the Explorer Hotel in Yellowknife Northwest Territories from Aug. 23-26. With Yellowknife being the hometown of CIAA president Greg Merrithew, more than 60 attendees joined together for a trade show, a day of education, social events and the member meeting.l

24 Claims Canada

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17/04/12 3:35 PM

Due Diligence

Defence

BY OWEN SMITH

After more than 40 years of defending insurance claims, I can observe that the insurance industry in general spends entirely too much time and effort building reactive defences to whatever the plaintiff has claimed.

Quite simply, we tend to fight on the plaintiffs’ chosen field of battle.

If we look at commercial coverages, it is much better to take a proactive stance and combat the claim on the strength of the honest efforts and procedures that insureds have put in place to “do the right thing” and prevent harmful incidents.

In my view, the insurance industry needs to integrate its underwriting practices with the risk management efforts of brokers and insureds – and tie those efforts in with what is needed in court.

This is when insureds become “Trial Ready” and have an excellent chance of preventing or defeating claims.

26 Claims Canada

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The Defence Pyramid depicts the types of defences that are and can be used to combat claims.

DUE DILIGENCE We Can Prove We Did Nothing Wrong

PROACTIVE We Can Prove We Did Nothing Wrong

STANDARD Prove We Did Something Wrong

THE DEFENCE PYRAMID™ The Standard Defence is the most commonly used approach and it says “prove we did something wrong.”

With respect, it is totally reactive and simply sets out to make the plaintiffs prove their case. It costs comparatively little for investigation and preparation and is easiest to utilize. However,

October/November 2012

it does not take risk management into account and often has inferior results.

Juries don’t like it.

The Proactive Defence is somewhat better in that it adopts the premise that “we did nothing wrong.” It requires more investigation and more work in general, is more expensive and is usually a “proactive reaction” to the plaintiff’s claim. In other words, it does not take risk management into account but deals with the specific incident, often with the support of an expert.

It works better than The Standard Defence, but is still being fought on the battlefield of the plaintiff’s choosing and is weakened because of that.

The Due Diligence Defence is, as depicted in the Pyramid, the highest form of defence and can deal a knockout blow to any general liability claim.

It requires focused investigation and integrates risk management and underwriting efforts with what is needed to fight an action. It is an absolute defence to a GL claim. www.claimscanada.ca

12-10-30 1:21 PM

Historically, Due Diligence had its origin when those who defended regulatory charges were required to combat the concept of absolute liability. An absolute liability offence, such as environmental degradation, means that if an incident takes place in certain circumstances, there is an automatic conviction – whether standard criminal intent was established or not.

The only way defendants could defeat the charge was to argue that they took “reasonable steps” to prevent the event.

This meant that, if the accused could prove the reasonable steps, there would be a finding that Due Diligence had been exercised and acquittal would result.

In civil cases, the onus is on the plaintiff to prove negligence or a failure to take reasonable steps. Accordingly, if the defendant can prove that reasonable steps were taken, Due Diligence is positively established and that will amount to an absolute defence. It is important to note that the onus for this will be on the defendant.

At a minimum, to establish Due Diligence a defendant has to prove The Three P’s – a Policy concerning the risk, Procedures to adequately control the risk and Proof that there has been compliance with the standards and procedures.

This can sometimes be a daunting task. What is set up for risk management purposes often does not meet what is required for the courtroom.

Risk management procedures may be useful for prevention of incidents and safety, but they are not packaged for dealing with claims, particularly at trial.

Also, there is a well-recognized gap (or wall) between the efforts of risk managers and underwriters and the requirements of claims personnel, adjusters and lawyers. Until this gap is bridged, it is very difficult to prove Due Diligence.

One step that can help the insured address unmeritorious claims is to become Trial Ready. Simply put, risk management must be packaged for use in the courtroom. There must be a common language and complete integration of efforts at the front end of the process, which includes the requirements for preventing and defending claims.

While the concept is relatively simple, the requirements are stringent. www.claimscanada.ca

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Components such as standards, inspections, education, audits, compliance enforcement and management review are usually not put together in a framework that is useful in the courtroom.

This demands a coordinated effort between risk managers, underwriters, brokers, claims personnel and defence lawyers.

Several of our self-insured retention (SIR) clients understand this model and are putting Trial Ready programs

in place. Once insurers start to integrate and coordinate, there will be far fewer successful claims. Their insureds will be Trial Ready.  Owen Smith is a trial lawyer who has been involved in defending insurers for over 40 years. He is the founder and CEO of Strategic Risk Control Ltd and the creator of The Due Diligence Solution™, The Fourteen Point Formula for Controlling Risk™ and The Trial Ready Concept™.

October/November 2012

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The Fine Line Between Custodial and “On Call” Care

BY PHILIPPA G. SAMWORTH AND ANDREA R. LIM

In cases involving severe brain injuries, the Assessment of Attendant Care Needs (Form 1) certainly allows for custodial care under Level II attendant care. However, the Form 1 may not necessarily allow for a situation where an insured requires noncustodial attendant care assistance such as a “life line” or “on call” care.

Unfortunately, the recent decision of T.N. and The Personal Insurance Company of Canada does not draw a distinguishing line between custodial care and “on call” care or care on a case-by-case basis. As a result, we are left with a confusing precedent regarding the definition of “custodial care,” how it should be interpreted within the Form 1 and how it should be applied to other cases involving severe brain injuries.

Level II attendant care, within the Form 1, relates to basic supervisory functions and does not indicate a re28 Claims Canada

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quirement for highly skilled supervisory care. Further, there is a category in Level II for severe brain injuries, which is defined under basic supervisory care as “client lacks ability to respond to an emergency or needs custodial care due to changes in behaviour.”

In T.N., Arbitrator Bayefsky determined that the applicant, who sustained a severe brain injury as a result of a motor vehicle accident on October 29, 2000, was entitled to 24-hour attendant care in order to maintain her “safety, security and emotional support.” The applicant, in this case, claimed almost exclusively under Level II attendant care within the Form 1 where “the client lacks ability to respond to an emergency or needs custodial care due to changes in behaviour.”

However, the type of care needed by the applicant, as described by the applicant herself, her treating medical professionals, by her service providers and assessors was that of “on call” and not in person supervision, and need for access to a “life line” in emergency situations. In addition, it was proposed by the insurer that the applicant

October/November 2012

had available to her several resources to protect her in the event of an emergency, such as smoke detectors, a lifeline call button and cell phone.

The applicant was capable of responding to emergency situations, even in one instance recalling that when her mother suffered a heart attack in 2002, she assisted in seeking medical attention. Despite the applicant’s ability to respond to emergency situations appropriately, Arbitrator Bayefsky determined that she still required “constant monitoring and assistance to ensure that she neither harms herself nor is harmed by others.”

Although Arbitrator Bayefsky acknowledged that the applicant was not always physically with someone at all times as they have other responsibilities to attend, and was regularly left alone during the day and evenings, such facts were not properly taken into consideration when interpreting and applying whether the applicant would qualify for attendant care within the parameters of Level II attendant care within the Form 1 and, in particular, with respect to needing “custodial care due to changes in behaviour.” www.claimscanada.ca

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“Custodial care” is not defined by the Statutory Accident Benefits Schedule. The insurer in T.N. provided a medical definition for “custodial care” as obtained from various online sources, all of which defined custodial care as meaning care provided primarily for maintenance of the patient and designed to assist in meeting the patient’s daily activities, including help in walking, bathing, dressing, eating, preparation of special diets, and supervision over self-administration of medication not requiring the constant attention of a trained medical personnel. The applicant in T.N. did not require such services of activities of daily living and mainly needed someone to speak with on a case-by-case basis.

However, Arbitrator Bayefsky concluded that the medical definitions of “custodial care” were not binding, and that “custodial care could well include the type of access to support and monitoring sought by the applicant, given that it is in relation to changes in behaviour due to severe brain injury.”

T.N. is problematic because despite the clear medical definition of “custodial care,” there is no distinction between what services ought to properly be classified as custodial and those of an “on call” variety. Custodial type of care relates to assistance with performing activities of daily living. In the applicant’s case she was able to perform such activities of daily living, but simply needed someone to check in with her from time to time on the telephone or otherwise. She did not need someone with her 24 hours per day, and in fact she was regularly left alone during the course of the day and evening since the motor vehicle accident – despite receiving ongoing attendant care as paid by the insurer during this period.

Therefore, in the context of the Form 1, an applicant who “needs custodial care due to changes in behaviour” must be distinguished between an applicant who needs on-call care due to changes in behaviour. On-call care and custodial care are two separate entities.

Moving forward, assuming there continues to be no distinction between “custodial care” and “on-call care,” the Form 1 may very well be interpreted in www.claimscanada.ca

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an overly broad manner as applying to any and all severe brain injured individuals regardless of their independent capabilities. This could be problematic.

Since every case is different with respect to the level and nature of brain injury, the level or need for attendant care would in turn vary.

T.N. is currently under appeal, but in the interim we are faced with a precarious interpretation of “custodial care” as it applies to the Form 1. 

Philippa G. Samworth is a partner at Dutton Brock and her area of practice is exclusively insurance defence with a specialty in Accident Benefits. Ms. Samworth also offers mediation and arbitration services. Andrea R. Lim is an associate with Dutton Brock and is developing her practice in a variety of insuranc defence work, with a focus on first party accident benefits claims.

October/November 2012

Claims Canada 29

12-10-30 1:18 PM

Dimming the “Bright Line” Rule

An examination of The Glasgow Coma Scale and Catastrophic Impairment

BY LINDA MATTHEWS AND LAURA HODGINS

A recent Financial Services Commission of Ontario (FSCO) decision has once again called into question the utility of the Glasgow Coma Scale (GCS) for determining catastrophic impairment.

In Security National v. Hodges, the arbitrator accepted that not all GCS scores of 9 and below are equal when it comes to determining catastrophic impairment following a brain injury.

Arbitrator Renahan held that GCS scores of 9 or below that were taken while the applicant was intubated “meant that his GCS score was not testable”. He concluded that a score recorded while the level of consciousness is untestable cannot satisfy the test for catastrophic impairment.

His decision runs counter to a line of FSCO decisions that have held that sedation and intubation do not invalidate GCS scores for the purposes of satisfying the test for catastrophic impairment. By accepting that GCS scores must be interpreted with some medical context, this decision could have a significant impact on future cases where an applicant seeks a finding of catastrophic impairment on the basis of a GCS score of 9 or less.

When the definition of catastrophic impairment was developed in Ontario, the GCS was incorporated into the legislation by reference. Section 2(1.2)(e)(i) of Ontario’s Statutory Accident Benefits Schedule (Schedule) defines catastrophic impairment in cases of brain injury, in part, as a score on the GCS of 9 or less.

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October/November 2012

Originally designed in 1974 as a simple numerical tool that could be used by front-line healthcare workers to score a patient’s level of consciousness and gauge the severity of the potential brain injury, the GCS requires that doctors, nurses and paramedics numerically score patients by assigning grades for each of three domains: eye opening, motor response, and verbal response. A combined score of 15 represents full consciousness, while anything under 15 represents a reduced level of consciousness.

Of the multitude of GCS scores recorded by various healthcare practitioners on patients following an accident, it takes only a single GCS of 9 or less within a reasonable period to satisfy the definition of catastrophic impairment under the Schedule. What constitutes a reasonable period is undefined in the legislation and has been held to be a caseby-case determination, ranging from mere hours to days.

Despite the availability of more reliable prognostic tools, such as MRIs, and increasing concern over the past 20 years that the GCS is not very effective at predicting long-term outcomes, it is still being used to determine catastrophic impairment in the case of acquired brain injuries.

Why is such a relatively simple and arguably outdated test being used to assess benefit entitlement for such complex injuries? As the Court of Appeal explained in Liu v.

Ontario, by incorporating this numerical test into the legislation, the legislature intended to “create a bright line rule which is relatively easy to apply.”

But as adjusters, insurers and medical practitioners have asked, at what point does the application of this rule create a medical absurdity in pursuit of legal simplicity?

www.claimscanada.ca

12-10-30 12:01 PM

The use of GCS scores to determine catastrophic impair- a catastrophic designation on the basis that the Applicant’s ment brings to the fore the uneasy relationship between GCS scores were recorded after sedation and intubation and medical tools and legal tests and highlights the challenges therefore were invalid. Arbitrator Miller found that notthat emerge when a medical tool is converted into a “bright withstanding the applicant was intubated and/or sedated at line” legal test. the time the scores were recorded, the applicant met the test It is well identified in the medical community that the under clause 2(1.2)(e)(i) of the Schedule. increased use of intubation, ventilation and sedation of paBoth Arbitrators Miller and Kominar rely on the use of tients in emergency settings has complicated the scoring of the GCS as a legal rather than medical test in finding that the GCS in patients with serious injuries and potentially factors such as intubation, which are not mentioned in the impaired levels of consciousness. As Drs. Jennett and Teas- legislation, are not relevant to the analysis. According to dale, the developers of the GCS explain in their text, The this reasoning, if a score of 9 or less is recorded within a reaManagement of Head Injuries, if a patient cannot speak due sonable period of time following the accident, the analysis to a tube, the verbal domain cannot be tested. When one ends there. domain is untestable, the three scores cannot be combined The problem with this “bright line rule” is obvious. Pato produce the aggregate score refertients are routinely intubated in trauma enced in the legislation. centres for reasons unrelated to a brain In their April 22, 2011 Report to injury; in many cases, they are sedated FSCO, the Catastrophic Impairment in order to facilitate treatment of inExpert Panel voted to eliminate the ternal or orthopaedic injuries. If GCS GCS from the Schedule, on the basis scores recorded while a patient is intuthat its prognostic value is questionbated and sedated are accepted as valid, able. In their research, they relied on it would mean that intubation and sevarious peer-reviewed studies that asdation to induce anaesthesia following sessed the prognostic value of GCS an accident almost automatically lescores in predicting patient’s future gally renders an individual catastrophioutcomes following traumatic brain cally impaired, regardless of the actual injuries. Notably, the studies they reseverity of the brain impairment. This lied upon omitted from consideration outcome is hardly in keeping with the those patients whose scores were relegislative intent behind the catastrophDespite what appears corded while they were intubated or ic impairment designation, which is to be consensus in the sedated. to provide enhanced benefits to those Despite what appears to be consenwhose medical conditions require them. medical community as sus in the medical community as to the In Security National v. Hodges, Arto the invalidity of GCS bitrator Renahan accepted that a GCS invalidity of GCS scores when a patient is intubated and sedated, arbitrators scores when a patient is score cannot be taken in isolation. have been reluctant to even consider intubated and sedated, Though he did not go so far as to find that a GCS score can be invalid. Unthat intubation will always invalidate arbitrators have been til recently, it appeared that notwitha GCS score, he did conclude that GCS standing an applicant was intubated or reluctant to even consider scores recorded while all three domains sedated for treatment of other injuries, of response are “untestable” - due to that a GCS score can the mere fact that a GCS score of 9 or medical interventions such as intubabe invalid. below was recorded allowed that applition - cannot satisfy the test for catacant to successfully meet the definition strophic impairment. A GCS score of 3 of catastrophically impaired under the legislation. recorded while an applicant is in a medically induced coma In Tournay and Dominion of Canada General Insurance as a result of intubation is not the same as a GCS score of Co., Arbitrator Kominar directly considered the impact of 3 recorded while the applicant is unconscious as a result of intubation on the validity of GCS scores and found that head trauma.

As we await more fundamental legislative change to the they ought to be considered valid regardless of the fact that one domain of response could not be tested. Arbitrator definition of catastrophic impairment following a brain inKominar held that although intubation may mean certain jury, Arbitrator Renihan’s decision is a small but important domains of response are “untestable”, this does not mean step towards reconciling the science of the GCS test with its legal implications. the scores are “confounded” or “invalid”.

More recently, in Mallet v. The Personal, Arbitrator Miller Linda Matthews is a partner at Matthews Abogado LLP, considered the impact of intubation and sedating medication on an applicant who registered two GCS scores below 8 where she specializes in insurance defence litigation, includfollowing surgical procedures to repair serious orthopaedic ing the defence of statutory accident benefits claims. Laura injuries. The Personal denied the applicant’s application for Hodgins is an associate at Matthews Abogado LLP.  www.claimscanada.ca

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Claims Canada 31

12-10-30 12:02 PM

MAKING

SOMETHING NOTHING OUT OF

Business Interruption Claims and the Start-up Enterprise

BY MATT MULHOLLAND

Measurement of business interruption losses, under normal circumstances, is mathematics combined with fact gathering to establish proper assumptions in measuring the loss. Historical records can be analyzed to determine the experience of the business had the insured loss not occurred.

We can examine the historical revenues of the business and identify specific revenue trends which are then utilized to project going forward during the indemnity period.

However, what is to be done when the insured business has only recently commenced operations, or in some cases, had not yet commenced operations? No historical records or limited historical records would be available in order to develop projections during the period of indemnity. This necessitates a different approach in the loss measurement process.

Given the current financial climate, it is unlikely that a business would be able to obtain start-up financing without the aid of a business plan. The business plan should contain the projections of the business for a period of several years 32 Claims Canada

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following the start-up of the business and may also contain monthly projections in the first year.

It is important to ensure that the business plan provided by the insured is one that has been developed and reviewed for financing purposes. Therefore, one approach in measuring an economic loss of a new business is to inquire if the company prepared a business plan complete with financial projections. If verification cannot be provided that the business plan provided was reviewed by the lender, then appropriate caution should be taken when relying on the information.

It may be that the business had commenced operations prior to the loss, and although it may only represent a small window of time, the actual results of the business in this period prior to the loss can be compared to the projected results per the business plan. This comparison allows for an understanding of the reliability of the business plan as a predictor of the results of the insured’s business during the indemnity period.

Furthermore, if the insured has revised their business plan following the inception of the business, this may give further www.claimscanada.ca

12-10-30 12:05 PM

Canadian Insurance Claims Managers’ Association / Canadian Independent Adjusters’ Association United & Committed Leadership through - Education • Professionalism • Communication

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Stephen Scullion,

Director Professional Development, Crawford & Company (Canada) Inc.

Keynote Speaker: Carl Van, President and CEO,

International Insurance Institute, Inc.

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12-10-30 10:20 AM

indication as to the future results. At all times, the business • Failure rates can vary substantially by province. For explan and revisions should be discussed with the insured’s ample in the “Accommodation, Food and Beverage Serrepresentative to understand the assumptions included in vice Industry”, only 66% of new businesses will survive the plan and to determine why any changes have occurred. to their second year in the Atlantic Provinces whereas in Appropriate caution should be taken in not assuming that Ontario 79% of new businesses will survive to their secthe results immediately after the business commenced operaond year. tions will be indicative of results that would have been expe- • Failure rates can vary substantially by type of business. rienced throughout the indemnity period. Depending on a For example, in British Columbia only 69% of businesses variety of factors, it is not uncommon for certain business in the “Fishing and Trapping Industry” survive to their to experience slow growth while marketing plans are put in second year versus 82% of businesses in wholesale trade. place or sales are slower than expected due to seasonality isIt may be prudent to consider a failure rate with a new sues. Similarly, a business may open with strong revenues business if you are facing a lengthy indemnity period, howbased on the initial “buzz” of the new ever, for shorter periods, the applicabusiness, that may eventually decline tion of such a contingency may not be if the business fails to grasp the loyalty appropriate unless the business was of potential customers. As an example already experiencing financial uncerwithin Canada, Krispy Kreme Donuts tainty at the time of the loss. opened with much fanfare only to have The above steps will assist in evalusales dwindle and stores close as market ating the business interruption loss penetration could not be sustained. but should always be undertaken in In addition to the business plan and conjunction with a detailed interview another opportunity to gain insight into of the insured’s representative. The ina start-up business, it would be prudent sured may be able to provide guidance to review the any available industry stawith respect to the future results of the tistics. As an example, Industry Canada business which can then be examined in As in any business has developed the SME (small and mefurther detail. Typical situations would dium-sized enterprises) Benchmarking be the retention of new customers with interruption loss and Tool. This reference database contains the promises of future orders or events irrespective of the age that have been booked in the future and average income statements for specific of the business, it is email communication may be readily businesses by province and differentiavailable to support this opportunity. ates by revenue range as the expenses of important to focus on Assertions such as this, which can be a business can be substantially differthe basic principles of documented, will speak to the revenue ent depending on revenue levels. This growth and opportunity of the business. tool is helpful in developing a gross business interruption Furthermore, the insured will likely be profit/gross earnings/business income loss measurement: in a position to shed light as to why acrate where no historical financial stateunderstanding the tual results may not have reached expecments are available and is a strong tool tations if they are falling short of busito benchmark against the financial proinsured’s business, and ness plans and/or revenue projections. jections understanding the As in any business interruption loss Statistics Canada also publishes a wide variety of monthly statistics by insured’s business sector. and irrespective of the age of the business, it is important to focus on the business sector detailing revenues and number of businesses operating. These statistics are also basic principles of business interruption loss measurement: valuable in assessing the reasonability of projections and understanding the insured’s business, and understanding expectations. If industry revenues were on the decline or the the insured’s business sector. New businesses will also be number on entrants in a particular sector was increasing, impacted by the same economic forces that impact estabthese circumstances may forecast that the new business may lished businesses in the same industry.

While measuring business interruption losses for a new have had difficulty growing or that the market was expandbusiness does present unique challenges, the above tools ing and new opportunities existed.

Unfortunately, not all attempts at new businesses are and approaches will allow you to focus a little more on the successful and therefore, the average success rates of new math and strengthen the assumptions made in projecting business should be factored in, especially when dealing with where a business may be heading.  lengthy indemnity periods. Statistics Canada, in its publiMatt Mulholland is a senior manager with Matson, Driscoll cation “Failure Rates for New Canadian Firms: New Perspectives on Entry and Exit”, examines the failure rates of & Damico Ltd. (MDD) in Toronto, Ontario. Matt has been businesses and the reasons for such failures. In the context involved in a wide variety of commercial insurance and litiof a business interruption insurance claim, the following gation matters and has testified before the Superior Court of Ontario. He can be reached at mmulholland@mdd.com. considerations are important: 34 Claims Canada

October/November 2012

p32,34 BUSINESS INTERRUPTION.indd 34

www.claimscanada.ca

12-10-30 12:05 PM

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19/06/12 11:51 AM

Expert

osts C Under Scrutiny

BY DARCY MERKUR

Overcharging experts beware – no longer will the courts simply rubber stamp disbursements claimable against a losing party.

While the courts have historically been relatively assertive in assessing legal fees, and in making sure that the time spent and the fees charged by counsel were reasonable; they have historically been relatively passive in their approach to assessable disbursements. Presumably the courts avoided challenging disbursements since the disbursements claimed were reimbursement for the amounts actually spent in good faith, and the courts were reluctant to second guess the benefiter of a successful lawyer’s expenses.

In Hamfler v. 1682787 Ontario Inc. (2011 ONSC 3331), a decision that has recently gained popularity with defence counsel, Justice Mark Edwards of the Ontario Superior Court of Justice, took issue with the magnitude of disbursements incurred by plaintiff’s counsel in a personal injury claim where a jury awarded the plaintiff just under $200,000 for damages and where the disbursements claimed were approximately $100,000.

While stating that the fundamental question for the court is whether the amount claimed in disbursements is fair and reasonable, Justice Edwards outlined some questions that the court may consider in assessing disbursements, namely: 1. Did the evidence of the expert make a contribution to the case, and was it relevant to the issues?

2. Was the evidence of marginal value or was it crucial to the ultimate outcome at trial?

3. Was the cost of the expert or experts disproportionate to the economic value of the issue at risk?

4. Was the evidence of the expert duplicated by other experts called by the same party? Was the report of the expert overkill or did it provide the court with the necessary tools to properly conduct its assessment of a material issue?

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October/November 2012

The Hamfler decision raises major challenges for plaintiffs’ personal injury counsel. The impact of an overcharging expert may be felt by personal injury plaintiffs and their counsel since the retaining lawyer remains responsible for all for the bills sent by his or her experts.

Counsel has historically had little input into the amount charged by an expert on a file, other than being able to avoid using that expert again in the future. Moreover, in the face of the still fairly new expert report rules in Ontario requiring expert reports to be extremely comprehensive; experts have been encouraged by counsel to spend the necessary time to write comprehensive reports, and will certainly argue that they should not now be criticized for spending too much time doing their work.

One challenge for counsel arising from Justice Edwards’ decision in Hamfler has to do with establishing the reasonableness of the amounts charged by the expert. Specifically, Justice Edwards expressed his view that www.claimscanada.ca

12-10-30 12:38 PM

Justice Edwards further mentions that it would be usecounsel has an obligation to put before the court information to allow the court to assess the fairness and rea- ful to know whether the expert had to cancel part or all of their patient appointments to atsonableness of a disbursement, such tend in court, presumably to compare as the amount of time spent by the the fee charged to the lost revenue expert in preparing the report and in associated with attending in court. attending at trial, and the hourly rate Again, establishing these facts can of the expert. be a challenge for plaintiff ’s counsel, When it comes to the issue of time especially when trying to do so withspent by an expert, the primary means out incurring even further disbursefor counsel to establish the time spent ments. by an expert is to require and produce When it comes to the The Hamfler decision raises the detailed invoicing by their experts. bar on how to properly establish the While many experts already do so, issue of time spent by reasonableness of assessable disbursesome important experts, like treating an expert, the primary ments and raises challenges for plainexpert physicians, aren’t accustomed tiff’s counsel trying to manage expert to doing so and may well rebel against means for counsel the concept of documenting their costs, while, at the same time, complyto establish the time time. ing with the new onerous rules manspent by an expert is Justice Edwards also makes it clear dating comprehensive expert reports. that the court should not just rubto require and produce In the end, personal injury claimants ber stamp the expert’s hourly rate. may end up paying the price for costs detailed invoicing by Instead, Justice Edwards encourages that are no longer recoverable from the their experts. counsel to provide the court with any insurer. available information from an exDarcy Merkur is a partner at Thomson, Rogers in Toronto pert’s governing body as to appropriate hourly rates, or providing comparable hourly rates of other experts in the practicing plaintiff personal injury litigation, including plaintiff motor vehicle litigation.  same field.

24HR

www.claimscanada.ca

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Claims Canada 37

12-10-30 12:39 PM

Establishing Economic Loss Is it a Threshold Question Only?

BY CARLIE FLYNN

Attendant care benefits have always been intended to indemnify insured persons for losses incurred for the services of an attendant or aide as a result of an accident. However, under the previous statutory accident benefits legislation, the importance of the concept of “indemnity” seemed to be eroded by a series of legal decisions to the point where in some cases it was not necessary to establish that the services were paid for or even provided in order to be entitled to benefits.

In what seems to be a response to the concerns of the insurance industry over expanding and increasing attendant care claims, the legislature 38 Claims Canada

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included a definition of “incurred expense” in the most recent amendments. At s. 3(7)(e) of the Statutory Accident Benefits Schedule – Effective September 1, 2010 an “incurred expense” is defined to require that the insured person has “paid the expense, has promised to pay the expense, or is otherwise legally obligated to pay the expense.”

As part of the Five Year Review of Automobile Insurance, the insurance industry also raised concerns in respect of the credibility of claims, particularly in cases where a family member is identified as the service provider but it is not clear services are being provided or compensation paid.

In what appears to be a response to those concerns, the legislature

October/November 2012

also added requirements for the service provider to the definition of “incurred” at s. 3(7)(e) of the SABS-2010.

In order for an expense to be considered incurred under the new SABS, the person providing the service must have done so “in the course of his of her regular occupation or profession” or have “sustained an economic loss as a result of providing the goods or services.”

From the outset, the inclusion of a definition of “incurred expense” promised to be a fruitful source of litigation. It is now 2012 and the much anticipated first decision of an Ontario Court dealing with the SABS-2010 definition was released recently.

Henry v. Gore Mutual came before the court on Application on a queswww.claimscanada.ca

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tion of law. The facts of the case were undisputed. Tyrone Henry was catastrophically injured in a motor vehicle accident on September 28, 2010 at the age of 16. Attendant care needs were initially assessed in excess of $9,500 per month and the maximum entitlement was agreed to be $6,000 per month to a maximum of $1,000,000.

Following the accident, Mary Ann Henry, Tyrone Henry’s mother, took a leave of absence from her full-time employment in a retail sales job in order to provide attendant care to her son – thereby sustaining an “economic loss.”

On careful reading of section 3(7) (e), the Insurer took the position that the service provider in this case “sustained an economic loss” only during those periods of time where she was providing care and was unable to perform her regular employment. For the hours that Mary Ann Henry gave up her employment (eight hours a day, five days a week), the Insurer agreed to pay attendant care expenses. In the absence of detailed expense forms, the Form 1 was pro-rated into an eight hour day, five days a week and the insured was paid accordingly. For the hours Mary Ann Henry could not establish an economic loss in exchange for her attendant care services, the Insurer took the position that she did not meet the requirements in s.

3(7)(e).

On the Application, the court noted that “economic loss” was not defined in the SABS-2010. While in this case the economic loss was clearly definable in terms of foregone employment income, the court considered that in other cases the loss might be less quantifiable.

As a result, the court concluded that requirement for “economic loss” must operate as a threshold rather than a means of calculating the quantum of the incurred expense. In other words, once the insured can establish his or her service provider sustained an economic loss, the test has been met and the Insurer must pay reasonable and necessary expenses.

Although the issue determined was a very narrow one, the decision has the www.claimscanada.ca

potential to create some problematic results, particularly as it seems to ignore the question of duration. Must a service provider continue to meet the threshold of sustaining an economic loss throughout the claim, or is it sufficient to satisfy it once? For example, if the service provider misses only the first week of work to provide attendant care, then would the insured be able to claim attendant care provided by the same service provider in the second week?

The decision has been appealed and should be heard by the Court of Appeal in early 2013. In the meantime, disputes about the interpretation of “incurred” and “economic loss” seem unlikely to abate any time soon.  Carlie J. Flynn is an associate with Dutton Brock LLP who practices a variety of insurance defence work, with a particular focus on first party accident benefit claims.

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Claims Canada 39

Official Journal of the Canadian Indeépendent Adjusters’ Association

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EF

• education forum

A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA

Claiming Notice

W

hat is a claim? The answer isn’t always obvious. Some liability cases raise concerns about how insurers and insureds alike can better manage claims arising from allegations about the past.

Many insurance disputes rest on differing interpretations of policy language. Most policies have no definition of “claim”, so interpretation may rest on common law rules. Where a policy does define the term, the definition may help or hinder a given party, depending on the circumstances.

According to the contract doctrine of contra proferentem, if any wording is vague, then the ambiguous term should be construed against the party that drafted or imposed it. In insurance cases, the wording in question has usually been introduced by the insurer, so this approach tends to favour the insured.

At the same time, the complementary legal principle of reasonable expectations holds that the provisions of a contract are to be interpreted according to how a rational person – someone who is not trained in the law – would understand them. Under this principle, it is assumed that both parties intended to create a rational business relationship.

Claims made vs. claims incurred Liability policies may provide coverage on a claims-made basis or (more commonly) on a claims-incurred basis.

For coverage provided on a claimsmade basis, the policy that is in force when a claim is made pays for losses, no matter when they occurred (unless there is a restriction on the retroactive inception date). With occurrencebased coverage, the policy that was in force when the damage or injury allegedly happened pays the claim – even if the policy has since expired.

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In an occurrence policy, the triggering event for coverage is usually clear. But in a claims-made policy, pinning down the triggering event can be more challenging.

Does there have to be a concrete demand for compensation from a third party, or does the simple knowledge of circumstances that might give rise to a claim actually constitute a claim?

One claim vs. many The case Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, [2006] 1 S.C.R. 744, explored the issue of what does and does not constitute a claim.

The Jesuit Fathers of Upper Canada operated the Garnier Residential School for Aboriginal boys in Ontario from 1913 until 1958. In January 1994, the Fathers received a letter from a lawyer on behalf a former student, Peter Cooper, advising that he intended to hold the Jesuits accountable for mistreatment he had suffered during his years at Garnier. In March 1994, counsel on behalf of the order reported the Cooper claim to the Jesuits’ insurer, also noting that internal investigations suggested that other similar claims for compensation could be forthcoming. Nine potential victims were mentioned.

The Jesuits had purchased a comprehensive occurrence-based general liability policy in 1988 from Guardian Insurance Co. of Canada. The hybrid policy also provided claims-made errors and omissions coverage for professional services. It was possible to acquire claims-made coverage that allowed an insured to report circumstances during the policy period so as to engage coverage for a claim made later, but the particular coverage the Jesuits had chosen did not have that enhancement.

The policy was for a one-year term, renewable annually. In September

October/November 2012

2004, Guardian declined to renew the coverage.

After the policy expired, approximately 100 additional claims were lodged against the order, which accepted responsibility for how the school had been managed and acknowledged negligence. The insurer refused to defend and indemnify except in the initial case, Cooper.

At court, the Jesuits argued that that all requests for compensation for the alleged abuse were essentially one claim. The case ultimately reached the Supreme Court of Canada, which decided that while Guardian had a duty to defend the Jesuits against the Cooper claim, it had no such obligation regarding any other claims. In rejecting the Jesuits’ case, the Court found that, although the policy did not clearly define what constituted a “claim,” it did refer to “claims first made,” a clause that limited the scope of coverage.

Claim vs. incident report The Supreme Court decision in the Jesuits case distinguished between notice of circumstances – the report of an incident – and notice of claim. The Court essentially held that circumstances that could potentially give rise to a claim are not sufficient on their own to constitute a claim; actual notice of claim or a suit from a third party has to be made, expressly communicating an intention to hold the insured responsible for damages. This position is consistent with the common law principle that a claim can only be initiated with the claimant’s full knowledge and agreement.

Reasonable inference An earlier case, Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252, www.claimscanada.ca

12-10-30 12:48 PM

looked at whether successive claims for damages arising out of the same negligent act constitute separate claims.

While the decision in the Jesuits case limited coverage to claims made and identified while a policy is in force, the ruling in Reid Crowther had effectively expanded coverage to include known contingent liability.

In 1974, the Manitoba Water Services Board contracted the engineering firm Reid Crowther to design and supervise the construction of a sewage collection and water distribution system in the town of Stonewall. The resulting system had several problems, and Reid Crowther carried out remedial work at its own expense in 1978.

At the time, the firm had third-party liability coverage from Simcoe & Erie on a claims-made basis. The insurer settled Reid Crowther’s claim for indemnity for the 1978 work.

Problems with the system persisted, however, and town representatives showed Reid Crowther representatives further damage in September 1981, shortly before the firm’s policy expired.

Reid Crowther notified its insurer of the

town’s communication. After the policy expired, the engineering firm eventually settled a suit filed by the province and undertook more remedial work at its own expense. The insurer refused to indemnify the firm for these later developments on the grounds that they didn’t relate to the claim made prior to the expiry of the claims-made policy.

The Supreme Court of Canada dismissed the insurer’s appeal in 1993.

It held that when the town employee phoned the engineering company to survey the further damage, it was reasonable for Reid Crowther to infer that a claim was made against it, partly because the notification came from a party that had already made a claim against it. Therefore, the claim was within the policy period. This conclusion has been construed to mean that a claim can be found to exist even where there is no formal demand for accountability from a third party.

Demand for dollars Over the years, courts have taken varying approaches to determining when a claim exists. Some have simply required

“Thanks for coming Winmar guy”.

“The smell, the spots, the mould, and when you’re finished with the dog, can you take care of the walls too?”

that the insured become aware of circumstances resulting in a cause of action during the policy period. However, following the Jesuit case, it appears that simply becoming aware of a situation is not sufficient; there must be a demand for compensation from a third party.

The Jesuit decision raises the possibility of gaps in coverage: once notice of circumstances has been given, some insureds may have difficulty finding or renewing coverage. Provisions such as prior acts coverage, notice of circumstance coverage, tail coverage, extended reporting periods and discovery periods can address these gaps if they are available.  This article is based on excerpts from ADVANTAGE Monthly, a series of topical papers on emerging trends and issues provided to members of the CIP Society.

The Chartered Insurance Professionals’ (CIP) Society is the professional organization representing more than 16,000 graduates of the Insurance Institute’s Fellow Chartered Insurance Professional (FCIP) and Chartered Insurance Professional (CIP) programs.

CAPTION CONTEST Congratulations to our winner:

Nancy Valeri AM Fredericks

Thank you for all of your submissions.

Watch for next issue’s contest Debby Matz

Winmar Property Restoration Specialists with over 60 locations across Canada www.winmar.ca

24 HOUR ASSIGNMENT/EMERGENCY RESPONSE • TOLL FREE 1-866-4-WINMAR (494-6627) www.claimscanada.ca

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• on the scene OTS Kernaghan Adjusters recently opened its newest office in Revelstoke, British Columbia. The office will service the following areas: Mica Creek, Golden, Radium, Invermere, Field, Rogers Pass, Nakusp, Kaslo, New Denver, Malakwa, Mara Lake, Sicamous and Salmon Arm. Eric Godfreyson joined Kernaghan Adjusters as a Senior Multi-Line Eric Godfreyson Adjuster based out of the new Revelstoke branch. Eric has over 40 years of claims handling experience, both on the company side, and as an independent adjuster. Mason Norman joined Kernaghan Adjusters in July 2012 as one of the opening adjusters in the new Revelstoke branch. Mason’s areas of expertise include personal property and liability claims of varying complexities, inMason Norman cluding marine claims on pleasurecrafts; and, commercial property and liability claims. l Tammie Norn, CEO of ProFormance Adjusting Solutions and John Seyler, President of ProFormance Specialty Claims are pleased to welcome Simone Cybulski to the ProFormance team. Working from her Kingston office Simone will service the Eastern Ontario Region from Belleville to Cornwall. Simone brings with her over 18 years of experience Simone Cybulski in the insurance industry and will be directly involved in the handling of accident benefits, bodily injury, casualty and transportation claims. l

Don Brown

Paul Davis Systems Canada, Ltd. (PDSC) announces the addition of Donald (Don) Brown to the team. In the Director, National Sales & Marketing role, Don will be responsible for new business initiatives in the insurance and corporate/commercial market sectors, as well as management of the Paul Davis Systems network marketing plan and national account administration. l

Michael Holden, President & CEO of Granite Claims Solutions, is pleased to announce the appointment of Kurt Johnston to the role of Vice President, Sales and Marketing. As the current VP of Granite’s Marketing Department, Kurt has assumed the Sales leadership role as of August 1st, 2012. With years of experience in the technology field and business-to-business world, Kurt brings an innovative, grass-roots approach to the sales role, focusing on utilizing the wealth of talent throughout the company. l 42 Claims Canada

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Jay Strano, CMA, has been appointed accounting leader for Crawford & Company (Canada) Inc.’s Global Technical Services (GTS) division. Reporting to Paul Hancock, national director, GTS, Strano will act as a direct liaison for insurance and legal professionals in the quantification of damages as a result of insured losses. He will also be providing forensic consulting, loss analysis, and valuation in the following areas of operation: business interruption, extra expense, business personal property, builder’s risk/ soft costs, third party and product liability, wrongful death/ injury, employee dishonesty, and other property and casualty claims. l FirstOnSite Restoration is proud to announce the appointment of Kevin Skauge to District Regional Manager, Saskatoon. Mr. Skauge brings over twenty years of international business experience to the position. He most recently served as CEO of the Australian Institute of Building Surveyors for six years, where he managed the operations of the nation-wide, 2,500-member organization. He has also served as Trade Commissioner to the Canadian Consulate General in Sydney, Australia, where he represented Canadian business interests in the area. l Crawford & Company (NYSE: CRDA; CRDB), the world’s largest independent provider of claims management solutions, has ranked 108th on this year’s InformationWeek 500, an annual listing of the nation’s most innovative users of business technology. This marks the fourth year in a row Crawford has placed in the rankings. The annual list was revealed last night at a gala awards ceremony at the InformationWeek 500 Conference at the St. Regis Monarch Beach Resort, Dana Point, Calif. “We are very pleased to be recognized for the fourth consecutive year by InformationWeek,” said Crawford President and Chief Executive Officer Jeffrey T. Bowman. “Placing among the 500 top technology innovators validates our investment in our global strategic IT plan and improved systems. It says that we can develop a vision and implement solutions that better serve our clients, which is our ultimate goal.” l The Lethbridge Regional Police Service, in partnership with Accident Support Services International, is pleased to announce the new Collision Reporting Centre is open as of September 13. The CRC is the first of its kind in Alberta and will enable LRPS to enhance the level of service to Lethbridge citizens by providing a faster and safer response to property damage collisions. In addition, the Centre will also help free-up officer time that can be re-allocated to other investigations and crime prevention initiatives. l

Correction A sentence in Michael Teitelbaum’s article “A ‘Twist’ to Allocation of Defence Costs” (August/September 2012 Claims Canada) was inadvertently edited to read “We believe the decision is helpful to insurers, as it may raise more questions than it answers.” It should read: “We believe the decision is helpful to insurers, but it may raise more questions than it answers.” Claims Canada regrets the error. l

www.claimscanada.ca

12-10-30 1:15 PM

Frank Cowan Company, a provider of Canadian municipal, healthcare, education and community service insurance solutions, is pleased to announce the launch of two new specialty insurance programs called Community Services and Disability Support. Frank Cowan Company strongly believes in protecting those who are dedicated to helping others with products that respond to their specific needs.“Frank Cowan Company is known as a leader in the specialty insurance business. We continue to diversify our product line in response to demands from areas that are underserved in the market. Not only do we offer solutions for specialty segments, our coverages respond to the needs of those sectors appropriately. Community Services and Disability Support rounds out our offering to this niche area,” says Michael Lough, Vice President, Programs, Frank Cowan Company. l

SPECS Limited, a provider of independent property damage valuations and construction management services, has opened new offices in St. John’s, NL and Winnipeg, MB. SPECS is pleased to announce the appointment of Clifford Rose to the position of Branch Manager, St. John’s. Cliff has 18 years of experience in both new construction and the restoration industry performing Project Management and Administration. SPECS is pleased to announce the appointment of Ryan Duncan to the position of Branch Manager, Winnipeg. Ryan has extensive experience as a Project Manager in both commercial and residential construction. l CSN Collision & Glass welcomed two new members in September – Dundas Valley Collision Centre–CSN and Independent Auto Collision–CSN of Toronto. Dundas Valley Collision Centre–CSN, founded by Alex Szabo, is an 11,000 square foot state of the art facility championed by a dedicated staff of collision repair experts and equipped with the latest in collision repair technology. Independent Auto Collision–CSN, founded by Bruno Muzzi, is a facility equipped with all the necessary tools and technology to fit the picture perfect image of a modern day collision repair facility. l Impact Auto Auctions is pleased to announce the opening date for the new Impact Toronto facility located at 535 Wentworth Street in Oshawa, Ontario. The new location will be open and accepting assignments on October 9, 2012 with auction sales beginning in mid-November. Auction sale dates will be announced in the near future. l CNA, a global business insurer, announced that they are using CargoNet and the National Equipment Register (NER) — two national information sharing systems designed to help policyholders combat the growing problems of cargo and heavy equipment theft. CargoNet and NER are divisions of Verisk Crime Analytics.By using CargoNet and NER’s products and services, CNA leads the insurance industry in a national initiative centered on secure information sharing, loss prevention services, education and training, and investigative support. CNA Canada also offers benefits and savings directly to insureds, including preferential pricing and a deductible waiver of up to $10,000 per loss resulting from the theft. l

OTS www.claimscanada.ca

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Claims Canada Wants You!

1

Claims Canada magazine wants you to send us your company news, appointments and event photos for possible inclusion within our ‘On the Scene’ department. Please help us share your items with the claims industry across the country. For more information, please email: craig@editinsight.com

INSURANCE COUNCIL OF BRITISH COLUMBIA

David Porter is Vice Presiden and nominee of Granite Claim Currently, he is President of Independent Adjusters’ Asso Region, and an instructor wit The Insurance Council of British Columbia (“Council”) is pleased to announce the election of C. David Porter, LLB, FCIP, CRM as its Chairperson for 2012-2013.

Institute of British Columbia.

Porter served as an executiv president of the Insurance In David Porter is vice-president, Western Region, and Columbia. nominee of Granite Claims Solutions LP. Currently, he is President of the Canadian Independent Adjusters’ Association, Pacific Region, and an instructor with the Insurance Institute of British Columbia. In the past, Mr. Porter served as an executive member and president of the Insurance Institute of British Columbia. Active in the community, he is vice-chair of the Capilano Community Services Society and unit leader with the 21st Capilano Scouts. He coaches for the North Vancouver Football Club and Forest Hills Little League.

Active in the community, he i Capilano Community Service st Leader with the 21 Capilano for the North Vancouver Foo Hills Little League.

Council is a regulatory body Financial Institutions Act, res licensing and professional co insurance agents, adjusters a David Porter doing business in British Colu Council is a regulatory body established under the Financial Institutions Act, responsible to uphold the public interest i Insurance Britishagents, adjusters for the licensing andThe professional conductCouncil of 28,900 of insurance and insurance salespersons doing Columbia business in British Columbia. mandate to is to uphold the public licensees by prom (“Council”) is Its pleased competent behaviour. Coun interest in dealingsannounce with insurance licensees by promoting ethical and competent the election of C. David voting members with represe behaviour. Council consists of 11 voting members with representation from the life and Porter, LL.B., FCIP, CRM as its and P&C insurance industrie P&C insurance industries, adjusters and non-industry persons. chairperson for 2012-2013.

Industry persons.

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• on the scene OTS The Insurance Institute of Canada has introduced a new course based on emerging issues, such as climate change, as part of the Fellow Chartered Insurance Professional (FCIP) program. Launching in January 2013, “Emerging Issues: Implications for the P&C Insurance Leader” is a project-based course. The course “provides an opportunity for students to focus on an emerging issue that is important to them, to research current material, and identify concrete solutions,” according to Paul Kovacs, executive director of the Institute for Catastrophic Loss Reduction and CEO of Property and Casualty Insurance Compensation Corporation. Through the course, candidates can learn how to identify key emerging issues and assess their impact on day-to-day business, notes a release from the institute. The FCIP program is based on input from several industry leaders. The six courses that make up the new FCIP program are: • Strategy in the P&C Insurance Sector (offered Winter 2013) • Leading in the Insurance World (offered Winter 2013) • Financial Management for Insurance Leaders (offered Winter 2013) • Enterprise Risk Management (ERM) in the Insurance Sector (offered Winter 2013) • Emerging Issues: Implications for the P&C Insurance Leader (launching Winter 2013) • Integrative Learning for the P&C Insurance Sector l

CIAA New Members — October 2012 ASSOCIATE MEMBERSHIP Midland Claims Service — Billings, MT, USA CORPORATE MEMBERSHIP Compass Insurance Adjusters — Winnipeg, MB Nor-Sask Adjusting Services Ltd. — Prince Albert, SK INDIVIDUAL MEMBERSHIP Compass Insurance Adjusters David Drummond Winnipeg, MB

Level 3

Colonial Adjusting & Appraisal Services Carol-Ann Ashford St. John’s, NL Harold Bowls St. John’s, NL

Level 1 Level 3

Kernaghan Adjusters Limited Mason Norman Revelstoke, BC

Level 1

Maltman Group International James Ivers Toronto, ON

Level 3

Nor-Sask Adjusting Services Ltd. Mervin Rocheleau Prince Albert, SK

Level 3

NWO Claims Services Inc. Kelsey Wayne

Level 1

Kenora, ON

Townsend & Leedham Adjusters Ltd. Tammy Borowicz Edmonton, AB Dale Mah Edmonton, AB

Level 1 Level 2

More than 220 guests boarded the Yankee Lady III on Aug. 23 for the 4th Annual WINMAR Toronto/Brampton Boat Cruise. This year the fundraiser saw more than $5,000 donated to the Lions Foundation of Canada Dog Guides. From guiding their handlers through their daily lives to getting help when it’s needed, most Dog Guides play a crucial role in the lives of Canadians with disabilities. l

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National Standing Committees 2012-2013 ADVISORY Marie C. Gallagher, FCIP, CRM Granite Claims Solutions 71 King Street, Suite 204 St. Catharines, ON L2R 3H7 Phone: (905) 984-8282 Fax: (905) 984-8290 E-mail: marie.gallagher@graniteclaims.com E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Grant.King@crawco.ca

John M. Sharoun, FIIC, CFE, FCIAA Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: John.Sharoun@crawco.ca Dennis N. Schembri, CIP, CFEI Granite Global Solutions 133 King Street East, 3rd Floor Toronto, ON M5C 1G6 Phone: (647) 789-2438 Fax: (647) 789-2449 E-mail: dennis.schembri@graniteglobalsolutions.com

CONVENTION Kelly Stevens, BA (Hons), CIP Crawford & Company (Canada) Inc. 1400 – 185 The West Mall Toronto, ON M9C 5L5 Phone: (416) 620-7700 Fax: (416) 620-7511 E-mail: Kelly.Stevens@crawco.ca

IBC: LIAISON, LEGISLATIVE & FORMS Paul Hancock, B.Sc., CIP Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: Paul.Hancock@crawco.ca

DESIGNATION Paul W. Greening, CLA, FCIAA Greening Aviation Claims Inc. 26C Palliser Park, Box 190 Riverhurst, SK S0H 3P0 Phone: (306) 353-2000 Fax: (306) 353-2200 E-mail: pgreening@sasktel.net

LICENSING J. Miles O. Barber, B.Comm. (Hons.), FCIP, CRM Network Adjusters Ltd. 67 Folkestone Blvd.

Winnipeg, MB R3P 0B4 Phone: (204) 897-5793 Fax: (204) 897-5797 E-mail: mbarber@mts.net

Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 201 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca

Jo-Ann Eccleston, CIP Aviva Canada Inc. 2206 Eglinton Ave. East Toronto, ON M1L 4S8 Phone: (416) 689-3328 Fax: 1-866-805-8585 E-mail: jo-ann_eccleston@avivacanada.com

E. Brian Gough, FCIP, CLA, FCIAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: ebgough@marshadj.com

James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca

Bob Grouchy, BA, FCIP, CRM Allianz Global 1600 – 130 Adelaide Street West Toronto, ON M5H 3P5 Phone: (416) 915-4247 Fax: (416) 849-4555 E-mail: bob.grouchy@agr.allianz.ca

Robert V. Pearson, CLA, FCIAA LSW & Associates Ltd. 2424 4 Street S.W., Suite 600 Calgary, AB T2S 2T4 Phone: (403) 452-2195 Fax: (403) 452-3568 E-mail: rvp@lswadjusters.com

John Jones, BA Granite Claims Solutions Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@graniteclaims.com

Carol Jardine, FCIP, CRM TD Insurance 2161 Yonge Street, 4th Floor Toronto, ON M4S 3A6 Phone: (416) 486-2507 Fax: (416) 545-6022 E-mail: Carol.Jardine@tdinsurance.com

Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Ave., Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com

Justin J. MacGregor Martin Merry & Reid Limited 3 Church Street, Suite 404 Toronto, ON M5E 1M2 Phone: (416) 366-3333 Fax: (416) 366-0730 E-mail: jmacgregor@mmr.ca

CIAA NATIONAL INSURANCE INDUSTRY ADVISORY BOARD Patti M. Kernaghan, FCIP, CRM Kernaghan Adjusters Limited 300 - 1575 West Georgia Street Vancouver, BC V6G 2V3 Phone: 1-800-387-5677 Fax: 1-800-387-5644 E-mail: pkernaghan@kernaghan.com

Mark Stewardson, FCIP Royal & SunAlliance 2225 Erin Mills Parkway, Suite 1000 Mississauga, ON L5K 2S9 Phone: (905) 403-2333 Fax: (905) 403-2326 E-mail: Mark.Stewardson@rsagroup.ca

John D. Seyler, AIIC ProFormance Group 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@prospecialty.ca Marie C. Gallagher, FCIP, CRM Granite Claims Solutions 71 King Street, Suite 204 St. Catharines, ON L2R 3H7 Phone: (905) 984-8282 Fax: (905) 984-8290 E-mail: marie.gallagher@graniteclaims.com Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 201 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Ave., Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com Patricia M. Battle Canadian Independent Adjusters’ Association/L’Association Canadienne des Experts Indépendants 5401 Eglinton Ave. West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 E-mail: pbattle@ciaa-adjusters.ca

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Mark Weir Intact Financial Corporation 700 University Avenue, 13th Floor Toronto, ON M5G 0A1 Phone: (416) 341-1464 Fax: (416) 217-0562 E-mail: mark.weir@intact.net Peggy Wong, CIP The Economical Insurance Group 111 Westmount Road South Waterloo, ON N2J 4S4 Phone: (519) 570-8500 Fax: (519) 570-8690 E-mail: Peggy.Wong@teig.com CAREER RECRUITMENT PLANNING Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3 P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail: Richard@azclaims.ca COMMUNICATIONS Teresa Mitchell, FCIP, CRM, FCLA, FCIAA, FIFAA Crawford & Company (Canada) Inc. 14 – 431 Bayview Drive Barrie, ON L4N 8Y2 Phone: (705) 728-5597 Fax: (705) 728-2167 E-mail: Teresa.Mitchell@crawco.ca CONSTITUTION & RULES John Jones, BA Granite Claims Solutions Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@graniteclaims.com

DISCIPLINE Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 201 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca EDITORIAL Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca John M. Sharoun, FIIC, CFE, FCIAA Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: John.Sharoun@crawco.ca EDUCATION Santo Carbone, CRM, FCIAA Crawford & Company (Canada) Inc. 300-123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 364-6341 Fax: (416) 435-0546 E-mail: Santo.Carbone@crawco.ca EMERGENCY MEASURES Richard Van Horne Action Investigations Inc. 2 Catelina Court Dartmouth, NS B2X 3G9 Phone: (902) 462- 1222 Fax: (902) 462-3688 E-mail: richardvanhorne@actioninvestigations.ca FINANCE Russell Fitzgerald, CIP Kernaghan Adjusters Limited 203 – 4246 97 Street N.W. Edmonton, AB T6E 5Z9 Phone: (780) 488-2371 Fax: (780) 488-0243 E-mail: rfitzgerald@kernaghan.com John D. Seyler, AIIC ProFormance Group Inc. 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@prospecialty.ca Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 201 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca

MEMBERSHIP & QUALIFICATIONS Georgiana Chen, CIP ProFormance Group Inc. 1101 Kingston Rd., Suite 280 Pickering, ON L1V 1B5 Phone: (877) 539-3111 Fax: (905) 554-3776 E-mail: gchen@proadjusting.ca NOMINATING Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 201 – 5204 – 50 Ave. Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca John D. Seyler, AIIC ProFormance Group Inc. 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@prospecialty.ca James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca Craig J. Walker, CIP, FCIAA, FIFAA Maltman Group International 3550 Victoria Park Ave., Suite 301 Toronto, ON M2H 2N5 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com PRIVACY James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Jim.Eso@crawco.ca Keith P. Edwards, FCILA, CLA, FUEDI-ELAE CIAA Honorary Life Member c/o CIAA National Office 5401 Eglinton Ave. W., Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Fax: (416) 621-7776 E-mail: info@ciaa-adjusters.ca

CIAA REGIONAL PRESIDENTS 2011 – 2012 NEWFOUNDLAND & LABRADOR Marcel Pitcher, CIP, CRM Crawford & Company (Canada) Inc. 300 – 44 Torbay Road St. John’s, NL AlA 2G4 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Marcel.Pitcher@crawco.ca NOVA SCOTIA

E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Grant.King@crawco.ca NEW BRUNSWICK & PRINCE EDWARD ISLAND Luc Aucoin, BBA, FCIP Plant Hope Adjusters Ltd. 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: laucoin@planthope.com QUEBEC/AESIQ

Charles A. Berthiaume Reclamations C. Berthiaume 44, Chemin d’Oka Saint-Eustache, QC J7R 1K5 Phone: (450) 491-6165 Fax: (450) 491-6230 E-mail: rcb@reclamationscberthiaume.ca ONTARIO

Teresa Mitchell, FCIP, CRM, FCLA, FCIAA, FIFAA Crawford & Company (Canada) Inc. 14 – 431 Bayview Drive Barrie, ON L4N 8Y2 Phone: (705) 728-5597 Fax: (705) 728-2167 E-mail: Teresa.Mitchell@crawco.ca MANITOBA Timothy W. Bromley J.P. Hamilton Adjusters Ltd. 125 Enfield Crescent Winnipeg, MB R2H 1A8 Phone: (204) 944-1057 Fax: (204) 944-1606 E-mail: tbromley@mts.net SASKATCHEWAN Lee Dixon Midwest Claims Services Box 37006 North Park PO Saskatoon, SK S4P 2R6 Phone: (306) 361-5285 Fax: (306) 249-4114 E-mail: lee@midwestclaims.ca WESTERN Russell Fitzgerald, CIP Kernaghan Adjusters Limited 203 – 4246 97 Street N.W. Edmonton, AB T6E 5Z9 Phone: (780) 488-2371 Fax: (780) 488-0243 E-mail: rfitzgerald@kernaghan.com PACIFIC David Porter, LL.B., FCIP, CRM Granite Claims Solutions 400-4370 Dominion Street Burnaby, BC V5G 4L7 Phone: (604) 699-6550 Fax: (604) 659-6570 E-mail: david.porter@graniteclaims.com

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• on the scene OTS The ARC Group Canada held it 2012 Annual Seminar & Cocktail Reception at the St. Andrews Club & Conference Centre in Toronto on Sept 27. Individuals from ARC Group member law firms played their respective roles during a mock trail, based on the Rothwell v. Zenith case that offered a “real-life” view of insurers’ exposure to bad faith claims. Attendees also had the chance to network and discuss the activities of the day during the cocktail reception after the event. l

Friends, colleagues and guests recently gathered in Toronto to help Dutton Brock, one of Canada’s top insurance defence law firms, celebrate more than three decades of legal excellence. Held at One King West Hotel, one and all gathered together to celebrate this milestone by enjoying a great evening of wine, food and song. l

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