October/November 2013

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October/November 2013

Taking Care of Business Business Continuity Planning moves to a “must have” for independent adjusters

Official Journal of the Canadian Indeépendent Adjusters’ Association

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Contents

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OCTOBER/NOVEMBER 2013 • VOLUME 7 • NUMBER 5

Cover Feature 12 Taking Care of Business Business continuity planning has moved from a “nice to have” to a “must have” for independent adjusters of all sizes across Canada. Clients are increasingly asking questions about a firm’s BC plan and its steps to ensure continuity of mission critical operations. The response may be the difference between staying in business – or being out of the loop.

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BY CRAIG HARRIS

Spotlight 18 No Substitute for Experience Expertise is not a commodity, according to Bob Phipps and John Powell of Hamilton-based Bannatyne & Company General Adjusters.

BY CRAIG HARRIS

Education Forum 38 Best Foot Forward What is the interplay between stakeholder relationships and a firm’s brand and reputation?

News Features 24 Understanding Lloyd’s II The second part of this article on the Lloyd’s of London market explores the claims handling approach and philosophy of this insurance market – and how Canadian adjusters can tap into it.

BY FRED PLANT

28 Host Liability’s Legacy

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Raising a glass to the 40th anniversary of commercial host liability.

BY TODD DAVIES and SCOTT HARCUS

30 A Weighty Decision For heavy truck and vehicle accident investigations, are Electronic Control Modules worth the time and money?

BY RUSS COLOSI

34 Quebec’s New Culture of Law How the province has moved to a revised code of civil procedure.

BY LEILA JANANJI

36 Spoiling for a Fight Spoilation allegations in pleadings can raise some thorny issues.

BY DANIEL DOOLEY

4 First Notice 40 On The Scene

Columns 10 President’s Message

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Departments

38 Education Forum

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• first notice FN Ontario government announces rate reduction plan The Ontario government announced in late August the next steps in its plan that it says will reduce auto insurance rates by an average of 15%, a measure it included in this year’s budget.

The government said it’s aiming to make the average reduction within two years, with an average 8% reduction target by August 2014.

According to the government’s statement, its steps to make the reduction include: • Providing the Superintendent of Financial Services with authority to require insurers to re-file rates • Continuing to crack down on fraud, including licensing health clinics that invoice auto insurance companies • Reducing unexpected costs by making the Superintendent’s Guidelines on accident benefits binding • Exploring other cost reduction initiatives, including provincial oversight of the towing industry and addressing collision repair practices • Continuing to require insurers to offer discounts for consumers with safe driving records • Helping ensure that all regions of Ontario benefit fairly from cost savings.

The government will take further action “as necessary,” its statement said.

In a statement, the Insurance Bureau of Canada said that the government’s plan does nothing to address costs in the system before insurers are expected to lower premiums “The Ontario government’s commitment to combatting fraud, such as licensing health care clinics and providing clear direction around the 2010 reforms, is a good first step; however, it will still be some time before these measures are in place producing savings,” IBC said.

“On a positive note, the government has signaled its intent to implement further reforms in order to resolve long-standing problems that plague the current auto insurance product.

That is a welcome development.”

Also, the Insurance Brokers Association of Ontario reiterated its position that changes to auto rate reductions must be made in a “responsible fashion” or run the risk of having insurers leave the segment entirely.

“Our expectation of today’s announcement was that we would see progress made in identified cost reductions resulting from fraud but what we heard were more promises of change and not enough action,” said IBAO CEO Randy Carroll. l

Climate change linked to increased wildfires: Lloyd’s Insurance carriers can expect to see an increase in losses from wildfires, as average temperatures increase wordwide, while Canada ranked third in economic losses due to wildfires over the past 23 years, a recent Lloyd’s report warns.

“The combination of predicted increase in global temperature and extreme climatic conditions, coupled with a growing world population and land use changes is expected potentially to lead, overall, to increased fire occurrence, area burned and probably also more severe and therefore damaging wildfires,” states the report, titled Wildfire: A Burning

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Issue for Insurers? “An overall increase in losses might therefore be expected.”

Quoting from a 2005 article in Climatic Change, Lloyd’s stated that in Canada, an increase — by 74% to 118% by 2100 — in area burned “has been suggested.”

“In California, where a high population density in the Wildland Urban Interface puts lives and property at a particularly high risk, estimated future changes in area burned range from a 41% increase for the San Francisco Bay area and the Sierra Nevada to an 8% decrease for the north coast of California,” according to the report, released Sept. 24.

While property is the insurance line “most exposed” to wildfires, there is also an exposure for liability and business interruption writers.

“Commercial property policies with business interruption coverage vary widely with regard to coverage of business income loss due to order of civil authorities,” Lloyd’s stated. “Some policies require direct physical damage to the property before business interruption coverage is triggered. Generally, under these types of policies, where the order of civil authority (and not physical damage) causes the business interruption loss, coverage is not triggered.” l www.claimscanada.ca

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• first notice FN Workforce management key challenge for claims officers Workforce management tops the list of challenges for chief claims officers at leading property and casualty insurance firms, according to a new survey from Towers Watson.

In its survey of 41 chief claims officers from a range of company sizes, 76% cited workforce management as a top three business issue. That was followed by “achieving financial results,” with 56% citing that as a top three challenge, and 54% ranking “effectively integrating and leveraging technology innovations” as a main concern.

In terms of workforce, two-thirds said that attracting and developing critical-skill workers was their top challenge and 59% cited maintaining employee morale.

“Insurers are responding to this dynamic in a number of different ways, most notably by revising claim processes, modifying job functions and leveraging technology innovations, where feasible,” noted Brian Stoll, director of the P&C practice at Towers Watson.

Respondents reported several benefits from claim technology innovation, including leveraging automation to revis claim

processes (68%) and improving execution of best practices using operations metrics (61%).

“Experienced and effective claim personnel are critical both to the organization’s financial success and franchise value to policy owners,” noted John Gayley, director and North American Insurance Industry leader for Executive Compensation at Towers Watson.

“This underlines the importance of providing market-competitive total rewards, ongoing development opportunities and a compelling value proposition to attract and keep the best performers,” he added.

The vast majority (93%) of those surveyed indicated that they handle more than three-quarters of their claims internally. l

Industry needs to address earthquake risk: IBC A major earthquake is the most significant threat that the property and casualty insurance industry in Canada faces, and creating a dialogue with governments and consumers is critical for the industry’s continued solvency, the Insurance Bureau of Canada says.

At the National Insurance Conference of Canada in Gatineau, Que. in September, IBC’s senior vice president of policy and chief economist Gregor Robinson gave the highlights of a study commissioned by the organization on how Canada could stand up to major events on both sides of the country.

Modeler AIR Worldwide created two scenarios for the study - one Western and one Eastern. The study is based on a one in 500 year return period, the regulatory standard for which insurers in Canada must be capitalized to handle.

In the Western scenario, a magnitude-9.0 quake would strike 75 km off the coast of British Columbia in the Cascadia subduction zone in late July. That quake would be felt as far as 400 km, or throughout most of B.C. and Washington state, creating long, seismic waves that would be especially damaging to tall buildings.

In the Eastern scenario, a 7.1-magnitude earthquake would occur 10 km beneath the St. Lawrence River, about

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Claims Canada

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100 km from Quebec City in December. It would be largely felt throughout Quebec, Ontario, New Brunswick and New England in the United States.

Shake would account for 98% of total direct losses, and telecommunications and electrical infrastructure would be majorly affected.

While major, the two scenarios included in the study wouldn’t be enough to bring the industry to its knees. “We can take comfort from the fact that our industry is capitalized and financially prepared to withstand earthquakes of the size modeled,” Robinson said.

Still, the industry can’t just do nothing, IBC says. In a separate presentation during NICC, Don Forgeron, the organization’s president and CEO, said that having an institutional framework, aside from private insurance alone, will be critical for addressing the risk.

“These are just scenarios, but the real earthquake of the right magnitude in the right place presents the greatest existing risk to our industry and perhaps the country,” he said. “It presents as a catastrophe that could destroy our communities and segments of our industry, and yet, we’re not ready.”

One positive step forward would be a government backstop program for earthquake damage. One way to fund it could be through a levy supported by the insurance industry, Forgeron said. l

www.claimscanada.ca

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• first notice FN Alberta floods costliest insured disaster in Canada The Insurance Bureau of Canada (IBC) reported in September that insured property damage in the wake of the Alberta flooding this June is estimated to now exceed $1.7 billion, making the former the costliest insured natural disaster ever in Canada.

For more than a decade, the 1998 ice storm held the record as the country’s most expensive natural catastrophe. Insured losses have been estimated at about $1.3 billion (not adjusted for inflation) and approximately $1.5 billion (adjusted for inflation).

The preliminary figures reflect the latest estimate of insured losses calculated by Property Claim Services Canada (PCS-Canada), a service that investigates reported catastrophic events in Canada and determines the extent and type of damage, dates of occurrence and geographic areas affected.

Torrential rains hammered Alberta from June 20 to 24,

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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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claiming the lives of four people, forcing an estimated 100,000 individuals from their homes and prompting the Alberta government to declare a state of emergency for a number of communities in southern Alberta, IBC notes in a statement.

PCS-Canada reports that well in excess of 25,000 related claims have been filed following the floods.

PCS-Canada will update both insured loss estimates and the number of claims in 60 days, the statement adds.

“It’s a staggering number that we expect will go even higher,” Bill Adams, IBC’s vice president, Western and Pacific, says of the $1.7 billion estimate. “While the monetary cost of the floods is huge, the emotional toll on Albertans is incalculable.

Insurers and IBC are committed to helping Albertans through the claims process as they clean up and rebuild their lives and communities,” Adams adds. l

Claims Canada

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October/November 2013

Mike Wells Account Manager • (416) 510-5122 mike@canadianunderwriter.ca

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.

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13-10-22 8:48 AM

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Message from the President La Plume du Président MARIE GALLAGHER My CIAA membership began 28 years ago when I joined the company I still work for today. It was in 1993 while attending my first Annual Conference that I experienced the unique camaraderie that exists between CIAA members. In the 20 years that have followed, my husband Ian and I have formed many close bonds with members and their spouses from coast to coast and I have grown both professionally and personally from my many years of involvement with CIAA. Having been involved on the organizing committee of several Annual Conferences, I know first-hand the immense work involved in the planning of such a first rate event and this year’s annual conference held at the beautiful and historical Banff Springs hotel was no exception. President John Seyler, his wife Lana, the convention committee under the chair of Dave Riddell and CIAA Executive Director Pat Battle all did an absolutely spectacular job in the organizing and execution of the event.

From the Thursday evening’s Welcome Reception and Tradeshow, supported by our many sponsors (a big thank you to all of you as these events could not be possible without your attendance), to our Friday morning key note speaker Jeff Mowatt who enlightened and inspired us with his seemingly simple but very effective customer service tips, followed by the excellent education sessions, it was evident from the beginning that the committee had worked very hard to create such a fantastic program.

The highlight of the conference for me came during our AGM when I was elected to the position of President. It was a truly humbling experience considering all those past presidents who have previously served this great association. I am honoured by the confidence the membership have bestowed in me and I pledge my utmost in furthering the aims of CIAA. During our time in Banff, we learned the Banff Springs hotel is celebrating its 125th anniversary and that in 1953, Marilyn Monroe had stayed there while filming a movie. But that is not the only thing that was happening in 1953. On December 1, 1953, a group of independent insurance adjusters representing 10 different adjusting firms gathered at the King Edward hotel in Toronto to hold an organizational meeting to form the Canadian Independent Adjusters’ Conference (becoming the Canadian Independent Adjusters’ Association in 1985). By the time this inaugural meeting was held, there had been over 100 affirmative responses from firms invited to become charter members. Firms represented at that fateful first meeting included Morden and Helwig Limited, Vern Walker and Company and F.C. Maltman and Company.

Of interest is the fact that two of our members in attendance at this year’s AGM, Past President Craig Walker (son of Past President Vern Walker) and newly elected 2nd Vice President Albert Poon are both direct descendants of these founding member firms. Also in attendance and noteworthy from a historical point of view; Allan Hart, son of Past President David Hart; Past President Fred R. Plant, son 10 Claims Canada

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Il y a 28 ans, je suis devenue membre de l’ACEI lorsque j’ai commencé à travailler pour la société pour laquelle je travaille encore aujourd’hui.

Dès 1993, j’ai fait l’expérience de l’esprit de camaraderie unique qui règne entre les membres de l’ACEI, quand j’ai participé pour la première fois au congrès annuel. Au cours des 20 années suivantes, Ian, mon époux, et moi avons tissé des liens serrés avec les membres d’un océan à l’autre et leur conjoint ou conjointe. Plusieurs années d’engagement avec l’ACEI ont également contribué à mon épanouissement tant sur le plan professionnel que personnel.

Ayant fait partie du comité organisateur de plusieurs congrès annuels, je suis au fait de l’énorme travail qu’exige la planification d’un tel évènement de grande qualité. Le congrès annuel de cette année, qui a eu lieu dans le bel hôtel historique Banff Springs, ne fait pas exception à la règle. Le président John Seyler, son épouse, Lana, le comité du congrès sous la présidence de Dave Riddell et le directeur général de l’ACEI, Pat Battle, ont tous accompli un travail absolument spectaculaire dans l’organisation et la tenue de cet évènement.

De la réception d’accueil, jeudi soir, au salon professionnel, soutenu par nos nombreux commanditaires (un grand merci à vous tous, car ces évènements ne pourraient pas avoir lieu sans votre participation), en passant par le discours vendredi matin de notre conférencier d’honneur Jeff Mowatt, qui nous a éclairés et inspirés avec ses conseils simples mais très efficaces sur le service à la clientèle, suivi des excellentes séances de formation, tout révélait dès le début que le comité a travaillé très fort pour élaborer un programme aussi fantastique.

De mon point de vue, le point saillant du congrès a été mon élection comme présidente lors de l’assemblée générale annuelle. Cela a été une expérience d’humilité réelle pour moi, compte tenu de tous ces anciens présidents qui ont servi cette remarquable association dans le passé. Je suis honorée de la confiance que les membres m’ont accordée et je m’engage à faire tout mon possible pour poursuivre les objectifs de l’ACEI. Pendant notre séjour à Banff, nous avons appris que l’hôtel célébrait son 125e anniversaire et que Marilyn Monroe y a séjourné en 1953 lors du tournage d’un film. Ce ne sont toutefois pas les seuls évènements qui se sont produits en 1953. Le 1er décembre 1953, un groupe d’experts en sinistres indépendants représentant 10 cabinets différents s’est réuni en assemblée constitutive à l’hôtel King Edward, à Toronto, pour former la Conférence canadienne des ajusteurs indépendants (qui est devenue l’Association canadienne des experts indépendants en 1985). Au moment de la séance inaugurale, on avait reçu plus de 100 réponses positives de cabinets invités à devenir membres fondateurs. Entre autres cabinets représentés à cette réunion décisive, mentionnons Morden and Helwig Limited, Vern Walker and Company et F.C. Maltman and Company.

Il est intéressant de noter le fait que deux de nos membres présents à l’assemblée générale annuelle cette année sont l’ancien président Craig Walker (le fils de l’ancien président Vern Walker) et le 2e vice-président nouvellement élu Albert Poon, deux descendants directs de représentants de ces cabinets membres fondateurs. D’un point de vue historique et digne de mention, Allan Hart, fils de l’ancien président David Hart, Fred R. Plant, ancien président et fils de l’ancien président G. Fred Plant, ainsi que Jay Sutherland, ami de longue date, collègue de l’ACEI et fils de l’ancien président Skip Sutherland, étaient également présents. www.claimscanada.ca

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of Past President G. Fred Plant and longtime colleague and friend of CIAA Jay Sutherland, son of Past President Skip Sutherland.

Congratulations to this year’s elected executive. Along with our committee members, we have a lot of work ahead of us to push forward our objectives, including but not limited to obtaining a successful outcome with regard to a more harmonized insurance regulatory system and finalizing our new CLA designation program. I know as a team with a roll up our sleeves attitude that we can do it and I look forward to working with all of you as well as our National Insurance Industry Advisory Board in the upcoming year.

Sincere thanks to Immediate Past President, John Seyler, for his invaluable contribution and service to our association. John, as a result of your enthusiasm and hard work, you have certainly left an indelible mark on our association and I thank you for that.

CIAC was formed with the motto “Experience, Service, Integrity”.

As professional independent adjusters, for the past 60 years members have united to protect and defend their values, demonstrate their merits and work together for solutions. It is all about the industry, its future and the valuable role independent adjusters will play in that future. CIAA is the voice of the independent adjuster.

My “President’s” office door is always open and I invite you to contact me anytime you have any questions/suggestions/comments.

Before we know it, the holiday season and all its merriment will soon be upon us and in that vein I would like to wish everyone a safe and joyful December. In the meantime, keep an eye open for the upcoming December/January edition of Claims Canada, featuring CIAA‘s 60th anniversary and a bit of a walk down memory lane.

I look forward to serving you and congratulate all past and present CIAC/CIAA members on our 60th Anniversary! n

Je tiens à féliciter les membres de l’équipe de direction élus cette année. De concert avec nos membres des comités, nous avons beaucoup de travail à accomplir pour poursuivre nos objectifs, y compris réussir à harmoniser davantage le système réglementaire de l’assurance et finaliser notre nouveau programme d’attestation d’expert en sinistre. Avec une équipe prête à se retrousser les manches, je sais que c’est réalisable et j’ai hâte de travailler avec vous tous et avec notre Conseil consultatif national de l’industrie de l’assurance au cours de la prochaine année.

J’adresse mes sincères remerciements au président sortant, John Seyler, pour sa contribution inestimable et ce qu’il a fait pour notre association. John, grâce à votre enthousiasme et au travail considérable que vous avez accompli, vous avez certainement laissé une marque indélébile sur notre association et je vous en remercie.

La Conférence canadienne des ajusteurs indépendants a été formée en ayant « Expérience, service, intégrité » comme devise. Experts en sinistres indépendants professionnels, nos membres se sont associés pour protéger et défendre leurs valeurs et montrer leur mérite et ils ont travaillé ensemble à trouver des solutions depuis 60 ans. Tout gravite autour de notre industrie, de son avenir et du rôle important que les experts en sinistres indépendants joueront dans le futur. L’ACEI est le porte-parole des experts indépendants.

La porte de mon bureau de « présidente » est toujours ouverte et je vous invite à communiquer avec moi en tout temps pour poser des questions, présenter des suggestions ou faire des commentaires.

La période des Fêtes et des réjouissances approche à grands pas.

Aussi, je désire vous souhaiter à tous un mois de décembre sûr et joyeux.

Entre-temps, surveillez la publication prochaine de l’édition de décembre/janvier de Claims Canada dans laquelle nous soulignerons le 60e anniversaire de l’ACEI et nous remémorerons quelques souvenirs.

Je suis impatiente de vous servir et je félicite tous les membres passés et actuels de la CCAI et de l’ACEI à l’occasion de notre 60e anniversaire! n

NATIONAL EXECUTIVE 2012-2013 2011-2011 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 1ST VICE-PRESIDENT 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 2ND VICE-PRESIDENT Albert Poon, CIP Cunningham Lindsey Canada 1102 – 50 Burnhamthorpe Rd. W., Mississauga, ON L5B 3C2 Phone: (905) 896-8181 • Fax: (905) 896-3485 E-mail: apoon@cl-na.com SECRETARY Dara Banga, FCIP, CFEI DSB Claims Solutions Inc. 204 Main Street North, Brampton, ON L6V 1P1 Phone: (416) 400-8933 • Fax: (905) 915-4685 E-mail: dara.banga@dsbclaims.com

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 PAST-PRESIDENT John D. Seyler, CIP 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 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 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 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 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 DIRECTOR Albert Poon, CIP Cunningham Lindsey Canada 1102 – 50 Burnhamthorpe Rd. W., Mississauga, ON L5B 3C2 Phone: (905) 896-8181 • Fax: (905) 896-3485 E-mail: apoon@cl-na.com

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CS

• cover story

TAKING CARE OF BUSINESS Business continuity (BC) planning has shifted from a “nice to have” to a “must have” for independent adjusters. Increasingly, clients are asking for details of BC plans and demanding to know steps that adjusting firms have taken to ensure continuity of service for mission critical operations. As events this year, such as flooding and rail disasters, have shown, a well tested, functional BC plan may be the difference between staying in business – or being out of the loop.

BY CRAIG HARRIS

T

here is mounting evidence that business continuity (BC) planning has become firmly entrenched at a wide range of independent adjusting firms, from small to larger companies. Given the increased demands of clients in the Request for Proposal (RFP) process and the ever-rising number of significant weather events, it is little wonder that a sound, well-tested BC plan has 12 Claims Canada

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become a key part of operations for many adjusters.

“Our business continuity and disaster recovery plan is important not just for the RFP process but for our work with Lloyd’s, third party administrators (TPAs) and even larger selfinsured clients,” says David Riddell, president of Calgary-based regional adjusting firm Canadian Claims Services. “Increasingly, people are asking

October/November 2013

to see details of our BC plan. We went through a very involved audit process with a TPA recently, where I would say about 25-30% of the time was spent on our BC planning.”

“Our clients quite often require that we show we have done due diligence in preparing for situations where our operations are impacted by local or regional disasters,” Blair McGregor, British Columbia regional manager www.claimscanada.ca

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for Kernaghan Adjusters, concurs. ”We are routinely asked to provide a copy of our BC plan to potential clients.”

“All our clients, be they insurers, corporations, municipalities, have a keen eye to all forms of risk,” notes Michael Holden, president and CEO of Granite Claims Solutions. “This includes their own BC plan to ensure they keep delivering their product or service to their customers. As part of their service offering, independent adjusters need to be prepared in the very same way. Thus, BC plans are a very important part of the procurement and contract development process.”

In fact, BC planning is a doubleedged sword for adjusters, who have to look after their own affairs at a time when clients are expecting them to ramp up and handle high claims volumes.

“BC planning is especially important because of the fact that in many circumstances the independent adjuster is the cornerstone of the client’s internal plan,” says Greg Smith, senior

vice president, key account management, Crawford & Company (Canada) Inc. “This role means that within minutes of an adverse event occurring, our call centres may see a dramatic influx of incoming calls, followed by an increase in the new claims associated with those calls.”

Riddell, who was on the front lines of the historic flooding that took place in Southern Alberta in late June, says adjusters have to be prepared for more of these kinds of extreme events.

“We are seeing more frequent severe weather,” he says. “Whether or not you believe in climate change models, the fact is we, as adjusters, have to be ready to handle claims. That is what we are supposed to do; that is what our clients rely on us for.”

“With the seeming increasing severity of weather-related disasters, it’s going to press our BC plans to become more resilient going forward,” Holden notes. “Technology will help, but it’s really about building a flexible solution that works and developing

the right skills and attitudes in your people.”

In Canada, natural disasters have come in the form of recent flooding in Alberta and Ontario and, the LacMégantic train explosion. Going back, the Slave Lake wildfire in Alberta in 2011, the SARS crisis in Toronto in 2002-2003, wildfires in Kelowna, B.C. in 2003 and the power blackout in northeastern Canada and the United States in 2003 are other examples of business interruption. Many say these events have sharpened awareness in the independent adjuster community, with larger firms refining plans that have been in place for decades, while smaller to mid-sized firms increasingly realize the need for preparedness.

Smith notes that a massive power shutdown, such as that experienced in 2003, demonstrates why adjusters “require a high level” of readiness.

“In the (summer of 2003), the massive loss of hydro impacted all parties at the same time,” Smith recalls.

“However, the BC plan that was in

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place at that time worked flawlessly with no disruption of service including a spike in call volume to Crawford’s Claims Alert Call Center when clients redirected large portions of their inbound claims call to Crawford.

The centre was able to remain operational on emergency generator power for a number of days until power in the area was restored.”

The embrace of BC planning by adjusters is backed up by the findings of recent surveys. A 2012 AT&T study indicates that a vast majority (85%) of Toronto-area companies have developed business continuity plans to help identify, prevent and respond to adverse conditions, a third of whom are saying it has become a priority in recent years due to natural disasters and security issues. This number is close to AT&T’s 2013 national survey, which showed that 87% of executives indicate their organizations have a business continuity plan in place in case of a disaster or threat – a slight increase from last year (86%).

The results also mirror a 2006 KPMG poll of 254 senior executives involved in Canadian business or IT management. That survey discovered that 83% of respondents had a business continuity plan in place. The results led KPMG to conclude in a report called Building a Continuity Culture that “the awareness of the need for effective business continuity planning is well entrenched in Canadian companies.”

Still there are lingering concerns that some small to medium-sized adjusters don’t have the time, money or resources to create anything more than a rudimentary working plan.

Surveys have also shown that smallto-medium sized enterprises (SMEs) often don’t have a functioning plan in place and face a harder time recovering from disasters.

Insurer Aviva, in a recent SME Pulse survey, says that smaller companies that don’t take the time to prepare disaster recovery and business continuity plans (BCPs) are more likely to close in the first two years of business. In addition, a recent report from Small Business Majority (SBM) and the American 14 Claims Canada

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Sustainable Business Council (ASBC) found that 57% of small businesses have no disaster recovery plan, and for those small businesses that do have continuity, or risk management plans, 90% spend less than one day a month preparing and maintaining them.

So what does an effective BC plan entail? And what are some of the lessons from those who have implemented a sound plan? A BC plan seeks to identify an organization’s current service levels. It requires a risk assessment identifying the key threats to the business, puts in place a plan to manage any incident, and includes business recovery planning, as well as tests/exercises and maintenance planning.

Organizations with effective BC plans tend to have such features as mass notification systems, “mirror” or redundant Web sites, fully outsourced data recovery and/or call centre services, clear lines of managerial accountability, staff call-tree/contact lists and identifiable employee safety procedures.

Experts tend to agree that a BC plan should have, at a minimum, six basic steps: knowing the risks, knowing the potential effects of an exposure, developing risk mitigation strategies, completing a plan, coming up with ways to secure communications in the event of an emergency and reviewing and exercising the plan.

According to adjusters, these types of BC plans were put to the test this year in a number of events. The most obvious was the flooding in Alberta and Ontario.

Riddell, who notes that his firm invested in a revamped BC plan two years ago, says he was satisfied with the results of his company’s plan. “One thing that really stood out (with the flooding) was the importance of BC planning,” he says. “As adjusters, we are on the front lines of disasters. I was pleased to see that our plan responded well.”

In fact, Riddell says he was surprised to discover that some brokers and insurance companies did not have effective BC plans in place for extreme events. “A lot of firms did not seem to have a functioning plan after

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the flooding – and we are not talking about small companies here,” Riddell notes.

If a workplace is inaccessible or employees cannot physically come into the office, this can throw a major loop into how adjusters (and others) respond to claims in severe situations.

“The fact is that insurance companies are handling hundreds upon hundreds of claims after these kinds of events,” Riddell says. “And they expect adjusters to acknowledge and respond with a centralized on-line or email system. If you can’t access your systems or servers, don’t expect to ask them to just fax the claims over or call you. The insurance company will turn to someone who can process those claims.”

At Crawford & Company, Smith notes that this is a balancing act his firm regularly handles. “Not only does our BC planning process need to ensure the smooth continuation of dayto-day operations, it must do so with the anticipation of a large influx of work being transferred over from our insurer, broker and corporate clients,” Smith comments.

Crawford& Company’s chief information officer in Canada Dale Avis notes that some of the events this year did have an impact on the company’s BC planning capabilities. ”While none of Crawford’s physical locations suffered direct physical damage during the most recent series of natural and man-made disasters, some surrounding infrastructure was impacted and backup power supplies and redundant network connections worked successfully in the locations where they were required,” Avis observes. ”In cases where travel was difficult or access was restricted, Crawford’s workforce was able to work remotely form home based offices or on the road using mobile technology.”

Other adjusting firms indicate their physical operations were also relatively untouched from extreme weather events in Canada this year – but they nonetheless had to kick in their BC plans.

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tional, though we had our two backup sites for call centre services (which were critical at that time) on standby,” notes Granite Claims’ Holden. “The real test for these two events was the resources we had in place, due to a large influx of claims from day-to-day clients, as well as from personal situations related to the floods, were just barely keeping up with the excess assignments.”

Holden says that Granite Claims was able to ramp up quickly to meet the demand for claims capacity. “Our BC plan, along with our Catastrophe Plan, has a contingency for immediate mobilization of available resources from other areas of the country,” he notes. “In both circumstances, we had feet on the ground within 24 hours of the event and were easily able to handle the capacity.”

The same holds true for Kernaghan Adjusters, McGregor observes.

“Luckily, (we) had not been impacted directly by any recent disasters,” he notes. “We have responded to situations such as the Alberta floods by deploying teams of adjusters and we must therefore maintain a ‘Cat Team’ of identified immediately deployable personnel so we can respond quickly to needs wherever they may arise across Canada. For this purpose, our adjusting system is web-based and all of our deployable adjusters are ready to move with minimum notice (normally within 24-48 hours of a call).”

Larger adjusting firms have the obvious advantage of mobilizing other offices across the country and deploying additional adjusters to the scene of a disaster. But smaller adjusters can also take advantage of technology to ensure their operations – and employees – are up and running in extreme conditions. In particular, several BC planning experts have remarked on the advantages of such developments as cloud computing, IT outsourcing and social media as potential tools for operations of all sizes.

“The costs of outsourcing much of this technology has come down a lot in the last few years,” notes Riddell.

“We made a decision to outsource 16 Claims Canada

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some of our technology, so we have an IT firm that is responsible for redundancy (triple redundancy for certain things) and fail safes. It was well worth the investment.”

Changes in the IT world hold a great deal of promise for adjusting firms, according to McGregor. “With increasing reliance on technology and increasing use of smart phones and light mobile computing devices, BC plans should become more robust and flexible,” McGregor observes. “Cloud computing and other transformation of data sharing and storage will allow for greater dispersion and therefore less risk to the overall organization.”

Technology, particularly in the form of mobile devices, is a key part of any BC plan, but the irony is that the more reliant we become on networks and servers, the more challenging it is to operate when “systems” are down.

“There is no doubt technology has helped our organization connect its employees more easily than ever before – our network and telephony systems allow employees to have complete access to their work environment from virtually anywhere with a computer connection,” notes Avis.

“However, the daily reliance on that technology increases the risks associated with the failure of that technology. Ten years ago, if an office completely lost its network connection for a few hours the impact would have been relatively modest. Today, the same situation would have a significant impact that needs to be mitigated through careful BC plan.“ Others agree that technology can cut both ways when it comes to BC planning.

“Interestingly, some of the same devices that have made us dependent on mobile technology (smartphones, laptops) have also allowed business to continue uninterrupted in the wake of disasters,” says Evan Morgan, IT director, Granite Claims Solutions.

“Mobile technology allows people to work from anywhere, so if a physical location is unavailable due to a flood, windstorm, or fire, our adjusters can continue receiving assignments and handling claims. Of course, these

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types of technology are more at risk when there are cyber attacks or other technology-crippling events, but we have processes in place for those as well.”

While technology is vital in BC planning, it has to be integrated into the nature of the organization, in terms of its employees, communication practices and its structure, according to adjuster sources.

“An overarching theme we have learned is (that) good BC planning is not about technology; It’s about people,” Holden says. “Disasters require the mobilization of people, messages to be sent, and plans to be executed.

Unfortunately, these circumstances often prevent the conveniences of technology, and there needs to be a plan for that as well.”

A similarly consistent theme of BC planning is that any plan has to be flexible and easy to deploy according to the situation at hand. For BC plans in general, the idea of a 200-page, three-ring binder gathering dust on the shelf may be of comfort to a company, but it is not necessarily effective when disaster strikes. A serious business interruption is no time to be flipping through manuals or adding more layers to the response process, according to sources.

“A BC plan should not be overly complex or convoluted, but instead contain some basic steps for senior managers and employees to take in a defined event,” Riddell says. ”The last thing you want to be doing is adding more confusion at a time like this.”

“When a disaster occurs, one of our key objectives is to minimize confusion and enhance communication among the Disaster Recover Team Members,” Avis notes. “The communication tools available today have made a huge difference in our ability to keep the information flowing between Disaster Recovery Team members as well as other stakeholders during an actual disaster.”

One way to limit confusion and execute proper business planning is through regular testing. Avis also observes that Crawford has a third party that audits and tests its BC plan a least www.claimscanada.ca

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once per year, as well as asking its customers to be included in their internal plans. “ “There is no benefit to having a BCP in place unless it is updated and tested regularly,” Avis says. “The BCP is not a static document. Rather it is constantly changing due to staffing changes, or changes to environments such as the introduction of new technology.”

Other adjusters concur that auditing and testing are crucial components of the BC planning process.

Holden notes that Granite Claims’ BC plan is tested on a regular basis to “reaffirm the plan, ensure it’s ready when needed and prove compliance to some of our clients (and vendors).

It is largely an exercise to ensure the base processes are there, and that they are flexible.”

This flexibility is a critical part of any planning, according to Holden. ”What worked during the floods in Toronto this past summer would not work for the same situation in Quebec, let alone a different event, like an earthquake,” he says. “This is why our team has developed, with the help of our regional VPs, Catastrophe Team, and Large Loss Leaders, a long list of scenarios for each region of Canada.”

McGregor also notes that regular testing is crucial for BC planning. “You must ensure the plan will work and this can only be tested via a rehearsal type exercise,” he says. “Key staff can ‘war game’ eventualities via conference calls or video calls. Various scenarios should be considered and the sessions should allow for each key player to freely ‘brain-storm’ outcomes.”

Those adjusters who have put the time and money into a thorough, comprehensive BC plan say the investment has paid off in the ability to stay up and running in real-life extreme events and disasters. Moving forward, they are keen to test the strength for their planning and prepare for different scenarios. The less robust alternative for adjusters who fail to plan is a hope for “business as usual” after a disaster.

“The question for smaller adjusters, and all adjusters in general, is www.claimscanada.ca

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not whether you can afford a BCP, but whether you can afford not to,” Riddell says. “Can you afford to be left behind as one of those firms that couldn’t process claims at a time of disaster? This is what our clients expect of us and this is what customers need us to do at a time of disaster.

It really is where the rubber hits the road.”

“Independent adjusters should be prepared to answer more ques-

tions about their BCP process and be transparent with the results of audits and tests that are completed,” Smith concludes. “It has become such a vital component of our service delivery we can no longer expect our clients to just assume we have it in place and trust it will work. We have an even larger opportunity to work with our customers on joint planning and integrated testing to ensure we all perform well when called upon.” 

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• spotlight S

No Substitute for

Experience Expertise is not a commodity, according to Bob Phipps and John Powell of Bannatyne & Company General Loss Adjusters in Hamilton.

It instead forms the competitive model for this five-adjuster team.

BY CRAIG HARRIS

Bob Phipps

W

hile trends of volume adjusting, national contracts, telephone claims handling and contractor outsourcing come and go, one thing always stays the same: the need for an experienced adjuster who can gather evidence, interpret policy wordings and determine the appropriate level of coverage.

That business model is the essence of Bannatyne and Company General Insurance Adjusters, a Hamilton, Ontario-based owner operated adjusting firm that has been in business for 34 years. With five skilled adjusters on staff, representing more than 100 years of combined experience, the company has found a quality-driven niche in the small to medium sized insurer marketplace. The adjusting team includes Bob Phipps, John Powell, Peter Walker, Karen Sunter and Alyson Harper. Bannatyne also has five dedicated administrative support staff, including one employee who has been with the firm since its start-up.

“There really is no substitute for experience,” says Bob Phipps, president of Bannatyne & Company. “We are fortunate in that we all have our areas of specialty, but we can handle a wide variety of claims.”

Phipps, who joined Bannatyne & Company in 1989, is recognized as one of the industry’s leading adjusters on large property and liability losses. He has been involved with the Hamilton Chapter of the Ontario Insurance Adjusters As18 Claims Canada

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sociation (OIAA) for decades, serving as a past president.

Phipps also is an instructor with the Insurance Institute of Ontario.

Joining Bannatyne & Company the same year, by coincidence, was John Powell, vice president of the firm. With more than 20 years of experience and a specialization in accident benefit claims (as well as property and liability risks), he echoes Phipps’ comments about the flexibility of the organization.

“There is not any type of claim we don’t deal with,” Powell says. “We have been working with several smaller to mid-size insurers, a large municipality and we are also a Lloyds-approved adjuster in Canada.”

The company was formed in 1979, when Ross Bannatyne, who had been in the insurance industry since the 1960s, decided to start his own independent adjusting firm.

“To Ross’s credit, he built up a lot of good relationships,” Phipps says. “It is always difficult to start up your own operation. People may admire the success, but they often don’t see what it takes to get to that point.”

Bannatyne’s “hands-on” approach to adjusting continued with his successors. “We have the flexibility and latitude to tailor our services,” Phipps notes. “We can say to a client, ‘tell us what you need’ and we can deliver that. It has worked for us.” www.claimscanada.ca

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Phipps says this strategy is diametrically opposed to the Even though the fire was extinguished 23 years ago, Phipps national contracts for flat fee adjusting that have become and Powell say the lingering effects continue to this day. Sevmore prevalent in the Canadian marketplace. “Unlike some eral firefighters who were exposed to toxic chemicals at the of the larger national firms that have a set procedure, we can scene have come down with aggressive cancers, according to be flexible,” he observes. “Obviously, we cannot compete an article in the Brantford Expositor. At least 10 firefighters on the level of flat rate contracts. That is not our business have been diagnosed with the rare cancers, with the Worker’s model.”

Safety Insurance Board (WSIB) giving special priority to The flip side of this coin for smaller adjusters is the need these compensation claims. to build mutually beneficial relationships, Powell notes.

Bannatyne & Company was involved in inspecting and in“There is a huge trust factor here,” he explains. “First, the vestigating the effects of the fire on the site and at neighbourclient agrees to let us handle the claim and we take on that ing properties. The region recently has made efforts to buy responsibility. And second, we promise to deliver what they out some of the surrounding properties, according to Phipps. tell us they need, not what we think On the more day-to-day side of they need – there is a big difference. It is business, Phipps has seen a number of based on mutual respect.” trends in the market, including a lot Phipps says that the firm receives fewer small claims for homeowner inpositive feedback from its roster of insurance policies due to higher deductsurers, clients and Lloyd’s coverholders. ibles. “These used to be the bread and “We have a good working relationbutter for smaller adjusters, so things ship with our small to medium-sized like burnt carpets or damaged counter clients,” he comments. “And when we tops, these don’t happen anymore,” he have worked for larger insurers, they notes. “That is not just for indepentell us they like our service, but their dent adjusters, but for the industry as hands are often tied with national cona whole. It doesn’t make sense to pay tracts.” these smaller claims.”

The changing dynamics of the inPowell also observes that Bannatyne surance company-adjuster relationship & Company has seen a “huge spike” in have not left Bannatyne & Company water damage losses. “That trend has unscathed. Phipps observes that he has clearly been taking place across the John Powell seen first-hand the impact of mergers country, but we have seen it here in and acquisitions, personnel changes in Hamilton, as well,” he says. “In some claims managers and new strategic dicases, insurers will go in and settle the ”Things get double rections for some insurers. claim quickly, pay out the maximum and triple checked; it limit and get a contractor to do the “We have had situations where we have worked with a company for many is how we have stayed work directly.” years and then there is a change in the Phipps says he is disturbed by the in business and dealt amount of direct contractor work in claims manager and a decision to bring claims in-house or to use another firm, with the competition.” the market, with the independent ad” Phipps says. “Similarly, we have had juster, in come cases, bypassed comcalls from companies we have never pletely. “An insurance examiner will worked for. That’s just the way business is in this industry. It review some photos and go directly to the contractor,” he typically has nothing to do with your firm.” comments. “We believe there is no substitute for an experiOne way to differentiate as a boutique-adjusting firm is to enced adjuster collecting information directly at the scene of pursue a consistent method of quality control and standard the loss. We are the eyes and ears of the client and we can go procedure, according to Powell. “We have control over the far beyond just looking at a photo behind a desk.” product that leaves the office,” he notes. “We provide expert The frequent challenges facing the small regional adjuster, reporting and we respond to companies’ request for more in- such as heightened competition from national companies, formation. Things get double and triple checked; it is how we evolving insurer strategies and contractor outsourcing, have have stayed in business and dealt with the competition. There always been there, according to Phipps. And likely always will is a strong sense of quality assurance here.” be.

That quality assurance model came into play in one of “There has always been pressure on the independent adBannatyne & Company’s largest loss experiences – the infa- justing firm to survive,” he concludes. “I think today the demous Hagersville tire fire of 1990. The fire at the Straza tire mands on the individual adjuster are greater – you have to dump, which held a total of 14 million tires, broke out in respond quicker, you have to keep up with technology, you February of that year on the Norfolk-Haldimand boundary have to be flexible when it comes to changes in the market. In line. It took firefighters from 23 stations in Haldimand, Nor- the end, you have to look at your business model and whethfolk and other counties to fight the blaze for nearly a month. er it is competitive. That, and your level of experience.”  www.claimscanada.ca

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CIAA 29th Annual General Meeting and Conference, Banff, Alberta

The Canadian Independent Adjusters’ Association (CIAA) held its 29th Annual General Meeting and Conference in beautiful Banff, Alberta at the Fairmont Banff Springs Hotel from Sept. 12-15. More than 100 attendees joined together for a packed trade show, education sessions, social events and the member meeting. l

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CIAA 29th Annual General Meeting and Conference, Banff, Alberta

At the 29th Annual Canadian Independent Adjusters’ Association (CIAA) General Meeting and Conference, the President’s Banquet & Ball was held at the historic Fairmont Banff Springs Hotel. Marie Gallagher of Granite Claims Solutions took over the reins as president of CIAA for the 2013-14 year. She succeeds outgoing president John Seyler. l

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CIAA REGIONAL PRESIDENTS 2012 – 2013 NEWFOUNDLAND & LABRADOR Christopher Goodwin Crawford & Company (Canada) Inc. 96 Clyde Avenue, Suite 100 Mount Pearl, NL A1N 4S2 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Christopher.Goodwin@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 Claude Nadeau Cunningham Lindsey 1250 Guy Street #1000 Montreal, QC H3H 2T4 Phone: (514) 939-1570 Fax: (514) 938-5445 E-mail: cnadeau@cl-na.com ONTARIO Dorothy Lowry, FIIC Crawford & Company (Canada) Inc. 14 & 15 - 431 Bayview Drive Barrie, ON L4N 8Y2 Phone: (705) 728-5597 Fax: (705) 728-2167 E-mail: dorothy.lowry@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 Cheryl Hanson Crawford & Company (Canada) Inc. 210 – 227 Primrose Drive Saskatoon, SK S7K 5E4 Phone: (306) 931-1999 Fax: (306) 931-2212 E-mail: Cheryl.Hanson@crawco.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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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 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 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 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 Rob Seal, CIP Cunningham Lindsey Canada 1102 - 50 Burnhamthorpe Rd. W., Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: 905-896-3485 Email: RSeal@cl-na.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 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 John D. Seyler, CIP 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 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 Laurie Walker, CIP Granite Claims Solutions 5915 Airport Road, Suite 300 Mississauga, ON L4V 1T1 Phone: (905) 740-1784 Fax: (905) 671-1889 E-mail: laurie.walker@graniteclaims.com Albert Poon, CIP Cunningham Lindsey Canada 1102 - 50 Burnhamthorpe Rd. W., Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com 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 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 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 Justin MacGregor Avec Insurance Managers - Inc. 25 Toronto Street, Suite 200 Toronto, ON M5C 2R1 Phone: (416) 862-9527 Fax: (416) 862-9388 E-mail: justin.macgregor@avecami.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

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 CONVENTION David S. Riddell, FCIP, CRM Canadian Claims Services 17958 – 106 Avenue Edmonton, AB T5S 1V4 Phone: (780) 443-1185 Fax: (780) 443-1893 E-mail: driddell@canclaims.com 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 E. Brian Gough, FCIP, CLA, FCIAA Marsh Adjustment Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: ebgough@marshadj.com Robert V. Pearson, CLA, FCIAA Hansen Labelle Adjusters Ltd. 1328 17th Avenue N.W. Calgary, AB T2M 0R1 Phone: (403) 284-2211 Fax: (403) 284-2299 E-mail: bob@hansenlabelle.ca EDITORIAL Mary Charman, CIP Crawford & Company (Canada) Inc. 14 & 15 – 431 Bayview Drive Barrie, ON L4N 8Y2 Phone: (705) 728-5597 Fax: (705) 728-2167 E-mail: Mary.Charman@crawco.ca John M. Sharoun, FCIP, FCIAA, CRM 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

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

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

Beth Bull ACE INA Insurance 1400 – 25 York Street Toronto, ON M5J 2V5 Phone: (416) 594-3067 Fax: (416) 368-0641 E-mail: beth.bull@acegroup.com

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

Alex Walker, CIP Royal & Sun Alliance 2225 Erin Mills Parkway, Suite 1000 Mississauga, ON L5K 2S9 Phone: (905) 412-1397 Fax: (905) 403-2328 E-mail: alex.walker@rsagroup.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

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John D. Seyler, CIP 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 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 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 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, CIP 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 PROFESSIONAL PRACTICES 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

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13-10-22 9:09 AM

Understanding

Lloyd’s II

Independent adjusters can access this important insurance market if they have the right knowledge and resources. It is worth the investment of time to understand Lloyd’s of London’s approach and philosophy on claims handling.

(This is the second in a two-part series on Lloyd’s of London and Canadian Independent Adjusters)

BY FRED PLANT

Lloyd’s Head Office: One Lime Street, London

In a previous article on Lloyd’s of London (August-September 2013 Claims Canada), I discussed the structure and uniqueness of this marketplace, particularly in terms of underwriting and distribution. This article will focus on the claims management side of Lloyd’s and how it applies to Independent Adjusters in Canada.

Lloyd’s Claims Structure Adjusters have to understand how the Lloyd’s market operates from a claims handling standpoint. There are significant differences between how claims get reported and adjusted compared to the way many domestic insurers operate in Canada.

Let’s first tackle the claims structure at Lloyd’s of London, which operates as an insurance market, not an insurance company. There is no central claims office. Instead, losses are reported back to the Canadian broker who wrote the policy on behalf of the Lloyd’s insurance market; in Lloyd’s parlance, those brokers are known as “coverholders.” A retail broker may 24 Claims Canada

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have brought the business to the coverholder and that retail broker is likely where the insured first sends the notice of loss. From there, the claim gets passed on to the coverholder and it is at that point the Lloyd’s way of doing things kicks in.

When setting up relationships, Lloyd’s and the coverholder agree on the coverholder’s authority for direct-handling, reserving and settling claims.

In terms of claims handling, if a coverholder has authority for, say, all claims under $50,000, there is only need for updated reporting via bordereaux; a spreadsheet of claims reported and their status, usually submitted monthly. If a reported claim exceeds the coverholder’s authority, at the onset or as a claim progresses, the coverholder submits the claim to the London Broker and from there it goes on to lead syndicate at Lloyd’s for agreement. However, as noted in the previous article, there are often “following” or secondary syndicates that also participate on the insurance policy.

To expedite the claims process, Xchanging Claims Services was

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formed in November 2001. It is essentially an outsourced business relationship owned 50% by Lloyd’s and 50%

by Xchanging, a publicly traded company that specializes in back-office support.

Xchanging Claims is responsible for the provision of claims handling services to the Lloyd’s market, under the terms of the relevant Lloyd’s Claims Scheme. In cases where claims are required to be reviewed for the “following” market, Xchanging Claims handles the adjustment activity on their behalf. In other words, it provides a central overview function on behalf of the following syndicates for any claims, working closely with the lead underwriter(s).

With more than 200 employees, Xchanging Claims sees virtually all of the loss activity reported through Lloyd’s and maintains expertise on key aspects of claims handling, such as which legal firm should handle a professional indemnity claim, for example.

This ongoing dialogue between lead syndicates and Xchanging also allows all underwriters to be at the same www.claimscanada.ca

13-10-22 9:10 AM

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table when it comes to claims – and provides an efficient resolution mechanism for the vast majority of reported losses.

Once a claim has been agreed and validated against the slip details, an electronic record is created and a Unique Claims Reference number is allocated.

It’s crucial for adjusters to familiarize themselves with claims reporting standards for Lloyd’s and coverholders. In February 2011, Lloyd’s introduced new standards for reporting claims across all classes of business and territories. It was designed to “move towards straight through processing by standardizing information flows,” according to Lloyd’s.

The standards, which cover mandatory fields and relevant conditional fields for any claims submissions to the Lloyd’s market, also include a Lloyd’s claim reporting spreadsheet tool. New coverholders and TPAs (adjusters) are expected to build and file their reports with the requisite information. A field adjuster can obtain details of all that is required from the coverholder of TPA through which they report.

Accessing the Lloyd’s Market For adjusters in Canada, this doesn’t answer the question – How do I access the Lloyd’s market?

As I mentioned in the last article, one of the key opportunities in the Lloyd’s of London market for adjusters in Canada is to become a Third Party Administrator (TPA) for a domestic coverholder. For a long time, I didn’t fully understand the role and function of the TPA; it is not that complicated. A TPA is simply a company hired to oversee or administrate claims on behalf of an insurer. The TPA deals with many of the everyday functions of a traditional insurer claims department; however, the insurer retains the final word on any claims that are of a certain type or exceed a certain dollar amount.

Since most coverholders (typically MGAs in Canada, but also some larger brokers) have claims settlement authority, they also need loss adjusting expertise. Finding those opportunities is a solid potential revenue stream for independents.

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Understanding the Lloyd’s market and its unique protocols is fundamental to success in this claims market. Adjusters should know they don’t just hop on a plane, fly to London and start handing out business cards over a pint – that’s not how it works. One of the first steps is to build relationships with coverholders in Canada, of which there are currently 538 (www.lloyds. com/canada).

If your goal is to be a respected independent loss adjuster actively practicing the skills of your profession and utilizing your expertise and training, Lloyd’s of London represents a market of opportunity.

Through coverholders, adjusters will, over time, get introduced to London brokers and syndicates at Lloyds, often becoming part of a “panel” of known and approved adjusting firms.

Other potential avenues to this market could be through lawyers with established ties to Lloyd’s or even through existing national TPAs, which typically outsource a portion of their Lloyd’s-related field assignments to select adjusters in certain regions of the country. Become known as an effective field adjuster in your part of the country or in your niche and the people who

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need your expertise will beat a path to your office door.

There is, most certainly, a learning curve in understanding the Lloyd’s market and becoming known there.

You have to follow the established protocols, network with the right people and build a strong reputation. However, the opportunities are widespread for those adjusters willing to commit the time and effort become a known entity in the market.

For every niche that Lloyd’s (and its coverholders/managing agents) is involved in, there is a requisite need for loss adjusting expertise. That could be sports liability, entertainment, specialty industries/businesses, hard to place risks and increasingly, mainstream property and casualty business in Canada – all the types of claims into which independent adjusters like to sink their teeth.

The Lloyd’s Claim Handling Philosophy As independent adjusters, we have seen a major focus on cost containment, streamlining and even the outsourcing of claims handling directly to contractors in the insurance industry in recent years. While this approach may result in short-term cost savings for some insurers, many argue it leads to “leakage” in claim costs and a hidden ballooning of loss ratios.

From my perspective, what is different about the Lloyd’s claims management philosophy is that it reflects and reinforces a complete approach to professional field claims handling.

Specifically, Lloyd’s sets out claims principles and minimum standards, which apply to resources, skills and management, performance measurement and management of external service providers. It doesn’t spell out precisely how each specific claim is to be handled, but provides “best practices” for claims handling.

One of Lloyd’s claims management principles is that: “Managing agents should have appropriate claims resources, skills and management controls in each class of business written or proposed to be written.” For example, a coverholder cannot take on an aviation book of business if they have www.claimscanada.ca

13-10-22 9:10 AM

no experience or ability to mange associated claims.

I mentioned “leakage” in claims results due to cost cutting. One issue often raised, in safe surroundings, concerns insurance companies going direct to contractors; in those situations, there may not be a proper review of coverage that ties the policy wording to the field examination of the facts and circumstances. One insurer in the Canadian P&C marketplace forbids independent adjusters from providing opinions and recommendations on coverage. The Lloyd’s philosophy is entirely opposite.

Some question how insurers may truly know if the loss is covered under the terms and conditions of the policy if they don’t retain and rely on the expertise of an adjuster’s fieldwork; be that the work of an independent adjuster or a staff adjuster. As a professional adjuster, I am disheartened in those situations, where required, the adjuster a) doesn’t address cover or coverage issues at all or, b) reports facts with no recommendation or strategy on future handling.

At Lloyd’s, there is no standard coverage or wording; each policy has wordings that must be reviewed. Unlike some domestic insurance carriers, most Lloyd’s syndicates expect and value their adjusters’ opinions on both coverage and liability. They are in London and rely on professional Canadian adjusters who are local to the loss and who have expertise in their line of business for guidance on the claim.

The claims management philosophy at Lloyd’s is a welcome direction.

Through this market, the adjuster is given the freedom, responsibility and encouragement to use his or her professional skills. This is the way adjusting was historically done in Canada before claims were put into silos and the task assignment was born.

Canadian Insurers benefit greatly from what Lloyd’s demands of their independent adjusters. It is those fullblown assignments that keep field adjusters aware of all that is necessary to deal with the bits and pieces that make up the overall requirements for a proper loss investigation and fair www.claimscanada.ca

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claim settlement. The fieldwork of adjusting a claim is respected, and there is an expectation that a loss will be investigated, statements will be taken and evidence gathered. The settlement is expected to be the amount in accordance with the terms of the policy – no more and no less.

If your goal is to be a respected independent loss adjuster actively practicing the skills of your profession and

utilizing your expertise and training, Lloyd’s of London represents a market of opportunity.  Fred Plant is president of Plant Hope Adjusters Ltd. and a Past President of the Canadian Independent Adjusters’ Association (CIAA), having served as National President 2007- 2008. (With special thanks to Chad Hancock of Windsor Limited, London)

October/November 2013

Claims Canada 27

13-10-22 9:10 AM

Host Liability’s Legacy

Raising a Glass to the 40th Anniversary of Commercial Host Liability

BY TODD DAVIES AND SCOTT HARCUS

With 2013 winding down, we find ourselves upon the 40th anniversary of the seminal decision of Jordan House v.

Menow [1974] SCR 239 (SCC). In Jordan House, the Supreme Court of Canada created a new duty of care owed by alcohol serving establishments to their patrons. The service of patrons to the point of intoxication would now carry with it a positive duty to take steps to protect against foreseeable risks of harm.

As is often the case with groundbreaking legal decisions, the facts of Jordan House were ripe for imposing this new duty upon commercial hosts.

The Plaintiff, Mr. Menow, attended at a local tavern at the Jordan House Hotel on a dark and rainy evening. The hotel was located along a busy highway running between Hamilton and Niagara Falls. Mr. Menow was not a stranger to the establishment. In fact, he had developed a reputation for drinking to excess and becoming reckless. As a result, the owner of the tavern had banned Mr. Menow unless he was in the company of a responsible adult. On this particular occasion, he was accompanied to the tavern by his foreman and employer. However, they left shortly after arriving, leaving Mr. Menow to his own devices.

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The Court found that from 7:00 p.m. to 10:00 p.m. Mr. Menow drank beer. It was also found that the owner of the hotel, Mr. Fernick, was working on the night in question and was aware that Mr. Menow had become intoxicated. By 10:15 p.m., the staff observed Mr. Menow wandering around the tavern, and as a result he was ejected from the premises. The Court found that Mr. Fernick knew that Mr. Menow was unable to take care of himself and knew that he would likely have to walk home.

Approximately 30 minutes after being turned out, Mr. Menow was struck by a motor vehicle as he walked along the highway. Both the trial judge and the Ontario Court of Appeal found that the tavern breached a common law duty owed to Mr. Menow, and therefore was partially liable for his injuries.

At the Supreme Court, Justice Laskin, speaking for himself and two other judges, found that a general duty of care arose given the special relationship that existed between the tavern and Mr. Menow. Specifically, the tavern and Mr. Menow were in an invitor-in-

October/November 2013

vitee relationship and it was aware of his intoxicated condition, “a condition which… it fed in violation of applicable liquor licence and liquor control legislation.” Moreover, in the circumstances of this case, “there was a probable risk of personal injury to Menow if he was turned out of the hotel to proceed on foot on a much-travelled highway passing in front of the hotel”.

Given the special relationship between Mr. Menow and the tavern and the foreseeable risk of harm in these specific circumstances, the tavern was required to take positive action to ensure harm did not come to Mr. Menow.

The Court found that steps such as calling the police or a taxi would not place any inordinate burden on the tavern, and its failure to do so, was a breach of the standard of care owed to Mr. Menow.

In coming to this conclusion, Justice Laskin was aware of the wide ramification of imposing a general duty of care on drinking establishments, and perhaps in an effort to curtail the effect stated: www.claimscanada.ca

13-10-22 9:18 AM

The result to which I would come here does not mean… that I would impose “a duty on every tavern-owner to act as a watch dog for all patrons who enter his place of business and drink to excess”. A great deal turns on the knowledge of the operator (or his employees) of the patron and his condition…

It is notable that Justice Ritchie and Justice Judson did not endorse the reasons of Justice Laskin. While they agreed the appeal should be dismissed, their reasons were grounded not on a general common law duty, but rather on the specifics of this case – namely, the tavern’s special knowledge of Mr. Menow’s tendency to drink in excess and become reckless. Accordingly, it was based on a narrow 3 to 2 majority that the law of commercial host liability came into existence.

Since Jordan House, the Supreme Court of Canada has considered the liability of a commercial host on only one other occasion. In Stewart v. Pettie [1995] 1. S.C.R. 131, the Plaintiff, Gillian Stewart along with her husband, her brother, and his wife, attended a dinner theatre at Stage West in Edmonton, Alberta. The group sat at a table together and were served by one waitress throughout the evening. While the husbands consumed a significant quantity of alcohol, the wives did not drink any alcohol.

The Court found that Mr. Pettie consumed five to seven “double” rum and cokes throughout dinner and the play. The waitress made no inquiries as to how the group planned on getting home. In the parking lot, the group discussed whether Mr. Pettie was safe to drive and decided that he was fit to do so. On the drive home, Mr. Pettie lost control of the vehicle on an icy road and hit a wall, causing serious injury to Ms. Stewart.

The trial judge found that the theatre company was not liable as it was not foreseeable that Mr. Pettie would drive given that two of the people at his table were sober. The Alberta Court of Appeal disagreed finding that the theatre company had breached its duty of care by over-serving Mr. Pettie and not taking any steps to dissuade him from www.claimscanada.ca

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driving. The Supreme Court of Canada restored the trial judge’s decision. In doing so, the Court reiterated its statement in Jordan House that liability arises not from over-service alone, but from over-service that gives rise to a foreseeable risk of harm.

While liability was not imposed in Stewart, the decision of the Supreme Court of Canada extended the scope of commercial host liability in two important respects. First, while the Court in Jordan House found that a commercial host owes a duty to its patrons, the Court in Stewart extended this duty to third parties. Specifically, the Court found that it was a “logical step” to extend the duty to those that the patron “might reasonably be expected to come into contact with… and to whom the patron might pose a risk”.

40 With the passage of nearly 40 years, the law of commercial host liability continues to grow in new directions.

Second, the Court endorsed two lower court decisions, which found that a commercial host could not escape liability because the serving environment had been structured in a way that prevents the host from foreseeing the risk of harm. For example, where alcohol is served from behind a bar and the amount served to each patron is not monitored, the commercial host can be held liable despite not knowing that a particular patron was over-served. In this sense, a commercial host bears the risk of liability if they fail to monitor the consumption of their guests. Notably, this runs counter to Justice Laskin’s comment in Jordan House that a tavern is not required to act as a watchdog for all guests that drink to excess.

In this respect, while the decision of Jordan House planted the seed for commercial host liability, it was the decision of Stewart where the branches became fully grown. Commercial hosts now owe a duty to all users of the highway, and in effect, must monitor their

guests consumption of alcohol or bear the risks arising from over-service. The judgement of Jordan House has been cited in more than 100 decisions across Canada. In no fewer than 30 cases, courts have imposed liability on a commercial host for over-serving alcohol and failing to protect against reasonably foreseeable risks of harm.

With the passage of nearly 40 years, the law of commercial host liability continues to grow in new directions. In the recent decision of McLean v. Knox, 2013 ONCA 357, the Plaintiff, Mr. Mclean and the Defendant, Mr. Knox, became intoxicated while drinking together at Finnigan’s bar. The two young men, along with two other friends, left the bar, got into Mr. Knox’s vehicle and drove away. Mr. Knox lost control of the vehicle and it flipped over. Mr. Mclean sustained injuries and sued Mr. Knox as well as Finnigan’s.

Mr. Mclean was found contributorily negligent for accepting a ride from Mr. Knox when he knew that Mr. Knox was intoxicated. The Ontario Court of Appeal citing , among other decisions, found that Finnigan’s was responsible not only for Mr. Knox becoming intoxicated and driving, but also for Mr. Mclean becoming intoxicated and accepting a ride from Mr. Knox. The overservice of McLean placed him at risk of negligently accepting a ride from Mr. Knox. On this basis, Finnigan’s would bear both a portion of the fault for the accident in general, as well as a portion of the Plaintiff ’s contributory fault, thereby extending Finnigan’s liability.

The law of commercial host liability continues to provide new challenges for the legal practitioner, as well as those who underwrite the risks associated with alcohol serving industry. For those who defend and underwrite these risks, may we suggest, with a dose of irony – raising a glass, to the 40th Anniversary of commercial host liability in Canada.  Todd Davies is a partner and Scott Harcus is an associate with Alexander Holburn Beaudin + Lang LLP. Both practice with the Firms’ insurance group and regularly team up in handling the defence of commercial host claims.

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13-10-22 9:18 AM

A Weighty Decision

For heavy truck and vehicle accident investigations, are Electronic Control Modules worth the time and money?

BY RUSS COLOSI

In the increasingly complex world of vehicle accidents where multiple factors may be in play, traditional on-site visual examination, mechanical analysis and computer modeling may not be enough to bring clarity to the event. With the value of trucks and heavy vehicles being in the hundreds of thousands of dollars and their use directly related to the livelihood of the vehicle owner, there is a lot of pressure on adjusters and insurance companies to resolve these claims quickly and fairly.

Reviewing critical event data from on-board Electronic Control Modules (ECMs) of trucks and heavy equipment is a relatively new but increasingly important step in accident reconstructions that should aid in the resolution of claims.

This article will explain how ECM data can assist investigators in their reconstruction.

A Little History Sophisticated ECMs have been around since the early 1990’s and were originally intended to improve engine performance and allow information regarding the truck’s performance to be accessed by special software programs.

ECM data continues to be used primarily by mechanics and fleet managers to troubleshoot mechanical failures in their trucks and maintain an efficient fleet operation. This leads to the first frustration for investigators trying to perform an accident reconstruction: the data recorded by ECMs was never intended for this purpose.

Electronic Control Modules in trucks are not the same as airplane ‘black boxes’ or airbag control modules and 30 Claims Canada

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collision data recorders found on most modern-day automobiles. Unlike automobiles, major components of commercial trucks such as the engine, transmission and braking systems are often made by different manufacturers and use proprietary electronic controllers. Communicating on a network within the vehicle, each controller is responsible for the operation of its component and maintains its own event and fault records.

This aspect of truck ECMs leads to the second frustration for investigators: the amount of information that might be useful in a collision reconstruction varies greatly from controller to controller and thus from truck manufacturer to truck manufacturer. Compounding this frustration is the resulting lack of a universal software tool for accessing data from the myriad of ECM and truck/heavy vehicle manufacturers. Regardless of these frustrations, this source of information is not available from any other investigative technique and should not be overlooked as it can be critical to the reconstruction.

How to Use ECM Data to Best Effect It’s important to remind readers that ECM data is not a substitute for any element of an investigator’s existing investigation protocol. It is a separate and distinct, additional element to be included in that protocol. Investigators can prepare for adding the retrieval of ECM data in their investigation methodology by reviewing the guidelines in ASTM E2493-07. Methods of data recovery can often come under scrutiny in court. Following forensic rules documented in the ASTM standard and the instructions provided in the software package is the best practice. www.claimscanada.ca

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Downloading of data should occur as soon as possible after the event and prior to any inadvertent or malicious tampering with the vehicle’s electronics systems. Too often data is lost during the salvage process of the vehicle by carelessness. Knowing what information a specific ECM can provide is useful in guiding an investigator to the appropriate module so time is not wasted or data overlooked.

Engine Controllers A truck’s ECM is often referred to as the engine’s “brain.” It is essentially a small computer attached to the side of the engine and receives data from different sources on the truck as well as reporting events or conditions. The engine controller of a truck can store data about a particular event such as a sudden deceleration or record a ‘snapshot’ of settings when an event has occurred.

However, as mentioned earlier, these controllers were not designed for accident reconstruction and as such might not have recorded the specific event the investigator is looking for. With experience, an investigator may be able to relate data captured about an event that occurred close to the time of the accident with the accident itself. It is recommended that an investigator examine all the surrounding evidence and treat

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data from the controller as an adjunct to the other evidence from the accident.

Modern engine controllers may contain information such as last brake or hard brake events or sudden decelerations, useful information for collision reconstruction. As new versions of engine controllers are developed, the information that they provide changes as well. Information provided by the engine controller of a 2002 vehicle may vary greatly to that provided by the controller for the same make of engine manufactured in 2012.

An example of how ECM data can be interpreted in an investigation is provided in the accompanying table of figures. The red arrows show a situation where the vehicle has stopped yet the engine load is high and neither the brake nor the clutch have been engaged.

This indicates that the truck has likely struck something and stopped but the engine is still powering the transmission. The driver did not brake or engage the clutch prior to the impact.

The brakes and clutch were eventually engaged and the vehicle moved forward slowly before coming to a final stop indicated by the dashed red line.

Brake Controllers If we need to know if a driver swerved at the last minute to avoid something in the truck’s path, or gradually

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A series of severe

equipment such as integrated aerial veered off the road due to the driver rollover stability trucks. Trucks and heavy vehicles that falling asleep, it will be data from the have been modified with third-party brake controller that will be most helpprogram (RSP) events ful. Commercial trucks have been equipment often have the ECMs of that in the hours before a equipped with electronic brake conequipment integrated with the host verollover accident trollers since the late 1990s. hicle’s data network. Logic programEvents recorded by brake controlming features in modern cab conmay support other trollers allow third-party equipment lers include the number of hard and evidence indicating an manufacturers to integrate functions panic stops. If a driver is suspected of unstable load or a driver and safety features with the vehicle. tailgating before a rear end collision, a For example, a tree-trimming bucket long history of hard stops may indicate taking an exit ramp truck controller may require a status that the driver had a habit of following too fast. too close. report of the body stabilizers before alMany controllers in today’s braking lowing the hydraulic lift of the bucket systems are equipped with electronic to operate. stability and rollover prevention programs. These programs A Definitive Answer may use yaw sensors, horizon sensors, accelerometers, and In the grey areas that surround accident reconstructions, steering angle sensors to prevent rollover and out-of-control conditions such as a tractor-trailer jackknife. Significant there is no definitive answer as to whether or not it is worth events are recorded and time-stamped in the controller’s the time and money to retrieve critical event data from onmemory and may prove to be valuable in collision recon- board electronic control modules. Are you willing to take struction scenarios. A time-stamped yaw correction event the chance that a critical piece of the puzzle was overlooked just before an accident may help confirm that something for the sake of saving a little time or money?

The fact is that the technology for recording and retrievsuddenly ventured into the path of the truck, and the driver swerved in an attempt to avoid a collision. A series of severe ing this data continues to evolve, and there are real benefits rollover stability program (RSP) events in the hours before for being an early adopter of this source of information not a rollover accident may support other evidence indicating the least of which is a more thorough investigation and factbased conclusion for your client.  an unstable load or a driver taking an exit ramp too fast.

Cab & Transmission Controllers In addition to collision reconstructions, data found within cab and transmission controllers may be important during investigations of workplace accidents involving 32 Claims Canada

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Russ Colosi, VFI, CFEI, is a heavy vehicle forensic investigator with Arcon Forensic Engineers (www.arconeng.ca).

Russ is a certified vehicle fire investigator with over 20 years experience. www.claimscanada.ca

13-10-22 9:23 AM

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13-10-16 10:45 AM

BILL 28

BILL 28

Quebec’s New Culture of Law

How the province has moved to a revised code of civil procedure

BY LEÏLA JANANJI

On April 30, 2013, the Québec Minister of Justice, Mtre Bertrand St-Arnaud, introduced Bill 28 – An Act to Establish the New Code of Civil Procedure. If adopted, this Bill will replace the current Code of Civil Procedure. Apart from some partial modifications, for example the adoption of articles 54.1 through 56.6 C.c.p. on June 4, 2009, this new Bill is the first major reform of the Code since 1965.

In recent years, a large number of specialists have been consulted in order to thoroughly review the current Code. A draft bill was tabled in the National Assembly in September 2011, and submissions were received during public consultations in January 2012.

Therefore, the adoption of Bill 28 is highly anticipated by Quebec’s legal community.

The new Code of Civil Procedure seeks to generate a change of approach 34 Claims Canada

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in all those involved in the legal system with objectives such as accessibility, quality and efficiency of the civil justice system, proportionality and the economical application of procedure, as well as cooperation between the parties.

The Bill proposes a set of rules designed to ensure the achievement and the fulfilment of these objectives.

In an effort to improve the efficiency of the civil justice system, the Code starts with the notion of voluntary dispute prevention and resolution methods. Accordingly with this notion, the parties are obligated to consider private prevention and resolution processes before referring their dispute to the courts and the Bill highlights the benefits of these methods.

Apart from recognizing that the court’s mission includes facilitating conciliation, the future Code will rely on new provisions to ensure a proper case management and facilitation of the disclosure of evidence, such as:

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• Requiring the parties to co-operate in order to either arrive at a settlement or to file a binding “case protocol” in which they will set out their agreements and undertakings, the issues in dispute, the steps to unfold during the proceedings, etc. In cases of failure to comply with this protocol, the courts may sanction the transgressor by awarding the other party the legal costs incurred. It is also required that the parties conserve the evidence, be open with each other and keep each other informed at all times of the facts and particulars conducive to a fair debate.

• Encouraging the use of a joint and single expert by the parties. With the goal of saving time and costs, the use of a common expert would be the standard, and the parties wishing to call on their own expert would need the court’s permission to do so.

The purpose of the expert evidence will be to enlighten the court and to assist it in assessing the evidence, www.claimscanada.ca

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which ought to override the parties’ interests. In order to achieve this, the courts may appoint the expert, define its mission, or order that the experts with conflicting reports reconcile their opinions. It should be noted however that this novelty is highly contested and that it may not be part of the next code.

• Limiting and regulating pre-trial examination. Again, in order to save time and costs, Bill 28 specifies that pre-trial examinations can only be conducted if provided for in the case protocol. The Bill removes the distinction between examinations before and after the defence.

All examinations may bear on any fact relevant to the dispute and may be oral or written. The possibility of a written examination is a new method allowing a party to notify a list of questions to the other party, or other person, who must answer within a specified time, which cannot be shorter than 15 days or longer than one month. The examinations can only be conducted if the amount claimed, or if the value of the property claimed, is worth $30,000 or more. Moreover, they are limited to 5 hours, with a possible 2 hour extension, only if agreed to during the course of the examination. The Bill also provides that objections other than those pertaining to the fact that the person cannot be compelled, to a fundamental right, or to an issue raising a substantial and legitimate interest, shall be answered under reserve, so as not to prevent the examination from continuing. Such objections will then be adjudicated at trial.

To facilitate access to the justice system, the new Bill increases the limit for the Small Claims Division of the Court of Quebec to $15,000. The limit for the Court of Quebec would also increase to $85,000.

The new Bill revisits the concept of costs. Instead of adjusting the amounts granted by the Tariff of Judicial Fees of Advocates, Bill 28 repeals it. Thus, each party will assume their own professional fees and won’t be able to include the amounts that were granted by the Tariff to their bill of costs. At the same www.claimscanada.ca

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time, the Bill maintains the rule that the party that was successful in its proceedings is entitled to the legal costs, unless the court decides otherwise The legal costs that the successful party will be able to recover are the following: court costs and fees, professional fees and expenses for the service or notification of pleadings and documents, witness indemnities and allowances, expert fees, interpreter fees, fees for registration in the land register or the register of personal and movable real rights, costs related to taking and transcribing oral evidence filed in the court record

The Bill also provides that objections other than those pertaining to the fact that the person cannot be compelled, to a fundamental right, or to an issue raising a substantial and legitimate interest, shall be answered under reserve, so as not to prevent the examination from continuing.

Other measures are stipulated in the new Bill in order to respect the principle of proportionality. For example, the Bill allows and encourages the parties to submit their cases orally when possible. It also gives large powers to the courts to sanction a party which does not properly observe this principle or abuses of procedures, especially by forcing a party to pay the legal costs or a fair and reasonable amount to cover the professional fees of the other party’s lawyer.

Among other modifications in Bill 28, it should be noted that some changes have been made to the sections regarding family matters and the

protection of minors, including new particularities.

Furthermore, regarding the notion of the forum of the proceedings, in matters pertaining to insurance contracts, the district of the domicile or residence of the insured (or the beneficiary), whether that person is the plaintiff or the defendant shall be deemed to have jurisdiction.

The final sections of the Bill stipulate that the new Code will apply as soon as it comes into force. Despite this, however, cases that have already been filed may continue to be governed by the former Code for the issues pertaining to the agreements concerning the conduct of the proceeding (Scheduling Agreements), to the presentation of the demand before the court (oral or written), as well as for the delays.

This initial and immediate launch will not leave much time for the lawyers and the other members of the legal system to adapt to these new changes.

It is to be expected that the legal organizations (such as the Bar Association) will offer courses detailing the new powers of the courts, the new rules of procedure and the new terminology used in the Code. However, lawyers who have not already done so should start familiarizing themselves with alternative methods of dispute resolution and integrate them into their practices, as this appears to be the future of legal practice.

Finally, it should be mentioned that the Bill’s adoption date is not yet scheduled. Since the Committee on Institutions will hold special consultations and public hearings on this matter in September 2013, the Bill is still likely to undergo further changes before its final adoption.  Leila Jananji is an attorney with Donati Maisonneuve Lawyers in Montreal. She practices in insurance law, and specifically in damage insurance and commercial litigation. In her work with the firm, she is regularly called upon to manage litigation files, draft legal opinions, negotiate settlements and represent the firm’s clients before the Courts of Quebec.

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13-10-22 9:31 AM

Spoiling

for a Fight

Why spoliation can often be a nasty allegation

BY DANIEL DOOLEY

I am with increasing frequency seeing the allegation of “spoliation” in pleadings, whether in original form or by way of amendment.

An accusation of spoliation recently arose at my office. My client was the defendant in an action where he was the driver of a motor vehicle alleged to have caused an accident. At the defendant’s examination for discovery in February 2010, the defendant testified that he was no longer in possession of the vehicle he was driving at the time of the accident because the vehicle had been “written off ” as a result of the accident. More than two and a half years later (and, coincidentally, on the eve of trial) the plaintiff brought a motion seeking leave to amend their Statement of Claim to plead spoliation as an independent tort. We opposed the motion on the grounds that the two year limitation period to plead a new cause of action had expired.

This sudden accusation of spoliation raised two issues: firstly, can spoliation be raised as an independent tort or is it only a rule of evidence?

This inquiry lead my office down the rabbit hole into the history of spoliation.

Secondly, do counsel who make such implications- often with little or no foundation in fact- realize the implications of such an allegation?

Those that make a spoliation allegation impugn someone else’s integrity. I think that should never lightly be done.

In fact, I suggest that to do so is repre36 Claims Canada

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hensible and deserving of punishment in costs and judicial and professional sanction.

Spoliation: Background Spoliation refers to the intentional destruction of relevant evidence when litigation is existing or pending. It has been described as a form of cheating, which threatens to undermine the integrity of the civil justice process.

Accidental destruction or inadvertent loss of evidence is not spoliation.

Spoliation will only be found where the following occur: 1. evidence has been destroyed; 2. the evidence destroyed was relevant to an issue in the lawsuit; 3. legal proceedings were pending, and 4. the destruction of the evidence was an intentional act indicative of fraud or an intention to suppress the truth.

If a Court finds that spoliation has been established, the evidence is presumed to have been unfavourable to the “spoiler”. If the “spoiler” cannot rebut the presumption, remedies such as a denial of costs or the exclusion of expert reports (i.e. reports that relied upon the spoiled evidence) are available to the opposing party.

Spoliation as an Intentional Tort While the law is well settled that spoliation exists as a rule of evidence, the law is all but clear when it comes to spoliation as an independent tort.

The Ontario Court of Appeal, on motion, opened the doors in Spasic Estate v. Imperioal Tobacco Ltd., [2000] O.J. No. 2690. In Spasic, Justice Borins held

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that it was open for the trial judge to determine whether the plaintiff should have a remedy on the basis of a tort of spoliation where, “[i]t is established that the destruction or suppression of evidence by the respondents results in the inability of the plaintiff to establish other nominate torts pleaded in the Statement of Claim.”

However, no Court in Canada has defined the elements of the tort of spoliation nor has there been any judicial ruling in Canada awarding a remedy for the tort of spoliation.

In November 2004 the British Columbia Law Institute prepared the Report on Spoliation of Evidence.[1] The report stated that a number of American cases have extensively considered the options available for the tort, the most desirable formulation being as follows: 1. The existence of pending or probable litigation involving a plaintiff; 2. Knowledge on the part of the defendant of the pending or probable litigation; 3. Intentional spoliation by the defendant designed to defeat or disrupt the plaintiff ’s case; 4. A causal relationship between the act of spoliation and the plaintiff ’s inability to prove its case; and 5. Damages.

The idea of an independent tort of spoliation was subsequently discussed in Ontario in Tarling v. Tarling (2008), 43 E.T.R. (3d) 177 (Ont. S.C.J.). Unfortunately, aside from the Court’s conclusion that spoliation is the intentional destruction of evidence, the trial judge did not address the elements of the tort. www.claimscanada.ca

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Though the tort of spoliation continues to evade full definition and application, Canadian courts still acknowledge that it could be an independent tort in the future. In McDougall v Black & Decker Canada Inc. (2008), ABCA 353, 97 Alta LR (4th) 199, the Alberta Court of Appeal summarized the law of spoliation in Canada and included the following statement on the independent tort of spoliation at paragraph 29: “The courts have not yet found that the intentional destruction of evidence gives rise to an intentional tort, nor that there is a duty to preserve evidence for purposes of the law of negligence, although these issues, in most jurisdictions, remain open.”

In the case I described above, I was opposing the motion to amend on the grounds that the two year limitation period to plead a new cause of action had expired. My office had the difficult task of determining when the limitation period to plead spoliation started to run given that the existence of a tort of spoliation has yet to be resolved.

The plaintiff argued that the limitation period started to run when he discovered the material facts upon which the cause of action is based. Because the elements of the tort of spoliation are presently undetermined at law, the

plaintiff could not have “discovered” the material facts – at any point! Of course, we submitted that the concept of a never ending limitation period was counterintuitive. However, we also argued that the limitation period started to run when the plaintiff discovered that the evidence had been destroyed.

Unfortunately, the motion judge allowed the amendment (given the lax threshold for amendment to pleadings), but deferred the limitation issue to the trial judge. Even more unfortunate is the fact that the matter settled before trial.

Therefore, the elements of spoliation as an independent tort remain to be determined.

Spoliation as an Attack on Personal Integrity Though it was an unnecessary drain on our client’s resources to deal with a “late-in-the-day” allegation of spoliation, what was more upsetting to me was counsel’s unwarranted attack against the individuals in my client’s employ whose handling of the matter was impugned.

An allegation of spoliation amounts, in my opinion, to alleging fraud by a person whose livelihood may depend on the manner in which they perform their duties. Counsel who allege spoliation challenge the honesty of that person – they allege, for example, that

an insurance company employee intentionally destroyed evidence to suppress the truth. Such conduct would warrant termination of employment as the least of possible consequences and will understandably be cause for underserved consternation, upset and possible diminished reputation.

Spoliation is not a “boilerplate” or “it’s nothing personal” allegation. I suggest that spoliation is an allegation that must never be made without solid evidentiary foundation. Indeed, I suggest that to make an allegation of dishonesty for strategic purposes or without evidentiary basis is unethical as well as unbecoming of the true advocate.

There must be a sanction for unwarranted allegations. The possible new tort of malicious prosecution of a civil proceeding recently analyzed by the Privy Council (but that’s my next article) is one possible sanction, but legal proceedings are lengthy and expensive. I believe that costs must be awarded personally against any lawyer who alleges without adequate basis that another person intentionally destroyed evidence with the intention to commit fraud or suppress the truth.  Daniel Dooley is the founding partner of Dooley Barristers in Barrie, Ontario. He has a wide range of mediation, tribunal, trial and appellate experience.

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13-10-22 9:34 AM

EF

• education forum

A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA

Best Foot Forward:

Brand and Reputation in the P&C Sector

I

n last issue of Claims Canada, Education Forum looked at how to analyze your firm’s stakeholders and assess the depth and breadth of your network of relationships. In this article, we look at the interplay between stakeholder relationships and a firm’s brand and reputation.

As discussed in the last issue, stakeholders are the individuals and groups that are affected by a firm’s performance or that have a claim (a stake) in its performance.

They include employees, customers or clients, suppliers, shareholders, partners, regulators and the broader community.

A firm’s standing with its various stakeholders is reflected in the firm’s reputation. A firm with a positive overall reputation is meeting or exceeding the expectations of most of its key stakeholders. A strong brand can contribute to a firm’s positive reputation and at the same time remind stakeholders, especially customers and clients, about that reputation.

Customer values Marketers often describe a firm’s relationships with its customers in terms of reach (the range and volume of customers a firm can access), richness (the depth and detail of the flow of information between firm and cus38 Claims Canada

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tomers) and affiliation (the level of customer loyalty created).

Firms with branded services or products seek to create brand equity: a situation in which potential purchasers are familiar with the brand and have favourable, strong and unique mental associations with it.

An effective brand needs to be rooted in a solid customer value proposition, which requires understanding what the customer values. This in turn requires market segmentation: determining which customers to serve and which of their needs to meet.

Branding Brand equity can be distinguished from value equity (an objective assessment of the quality, price and convenience of a product or service) and relationship equity (loyalty to a specific product or service based on factors such as the comfort of familiarity). These three kinds of equity can exert differing levels of influence on purchasing decisions.

A chief purpose of marketing programs is to increase brand awareness and establish strong, positive brand associations in the minds of potential purchasers of the product or service.

Brand associations can involve attributes (such as product features or price), benefits (how the product or

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service works, what it’s like to use it, what it means to use it), and attitudes (positive or negative evaluations of the product or service).

Brands may also evoke secondary associations connected with the company, its distribution channels or a specific event. Direct experience can create particularly strong associations. For example, experiencing a loss of insured property and going through the claims process can form

Reputation Risks Factors that can affect reputation in the p&c sector overall: • catastrophe exposure, including perceptions of the industry’s response • use of certain rating and underwriting factors, such as age or education levels • the performance of business partners • beliefs about business in general • corporate scandals • public skepticism about institutions • fallout from economic cycles

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a strong impression for a policyholder and either improve or damage the person’s opinion of the insurer. So, the performance of independent adjusters can have an important impact on their insurer partners’ brands.

Brands also tend to share some associations with other competing brands and with the product category as a whole. A policyholder who has positive or negative associations connected with one p&c firm or with the industry in general will likely have a similar attitude toward other firms in the industry.

Reputation Reputation is another factor that influences customers and clients: outsiders can’t know as much as they would like to about how a firm will perform, so reputation helps them make choices. Reputation is very important for service providers such as adjusters, whose offerings can’t be evaluated before purchase. It is also critical for insurers, whose service is purchased far ahead of delivery and is not always well understood by the purchasers.

Brand and reputation are closely linked. A firm’s overall reputation reflects its past actions and results, but its reputation with customers also reflects the success of its brand. A firm’s individual reputation can be affected by the reputation of the industry as a whole. In turn, the industry’s reputation is affected by the actions of its member firms, particularly in times of crisis.

In dealing with a loss on behalf of an insurer, an independent adjuster can potentially influence reputation on three levels: the insurer’s reputation in the eyes of the policyholder; the reputation of the industry as a whole in the eyes of the policyholder; and the adjusting firm’s reputation in the eyes of the insurer. In the case of catastrophe situations, the large-scale handling of losses can also influence the industry’s reputation with regulators and governments.

For any firm, benefits of a positive reputation can include increased sales, the ability to command higher www.claimscanada.ca

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prices, access to talent and higher stock market valuations. A poor reputation can lead to loss of clients, loss of key staff, an increasing cost of capital and an increased regulatory burden.

At the firm level, reputation can be influenced through tools such as corporate philosophy (a commitment to defined values), corporate governance structures (for implementing the values through procedures and rules of behaviour), and compliance rules (to ensure employees adhere to the values in day-today activities). Communication is also a critical tool.

sources over a sequence of stages, such as: • research and analysis • deciding how to respond to an identified issue • implementing a response – drafting a contingency plan, communicating with stakeholders or issuing a position paper • evaluating the process and any evolution of the issue Smaller firms can also benefit from communications and issue management activities. For example, developing relationships with local media can allow a firm to highlight the work it does, improve the public perception of the industry and increase credibility with policymakers.

Communication principles that can be scaled for use by firms of any size include: • scanning the environment for information about potential threats and opportunities • communicating regularly with stakeholders using messages that are consistent in content and timing

A firm’s overall reputation reflects its past actions and results, but its reputation with customers also reflects the success of its brand.

• meeting face to face with key stakeholders occasionally, especially in times of change or uncertainty • developing networks of relationships with external organizations for exchanging information and opinion

Communications Effective communications and issue management can help firms to present themselves as reliable and authoritative, emphasize the industry’s contribution to economic and social progress, and identify common ground with key stakeholders. All of these effects can contribute to a positive reputation.

Large firms may have an extensive issue management process that draws on a mix of internal and external re-

Word-of-mouth and social networking communications can play an important role in shaping brand and reputation. Social media can also be a means for organizations of various sizes to communicate with stakeholders, build networks and establish relationships.  This article is based on material used in the Insurance Institute’s FCIP program, the pinnacle of learning in Canada’s p&c industry. Focusing on strategic leadership and advanced management principles, the program blends academic business theory with practical insurance application.

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• on the scene OTS

Mandy Simard

Robert V. Pearson (left), CLA, FCIAA, of Hansen Labelle Adjusters Ltd. in Calgary, was given the Honourary Life Membership Award at the CIAA annual meeting in Banff on September 14. Bob, who has worked in the adjusting business since 1959, was presented the award by Crawford & Company’s Jim Eso (right). In his speech, Eso noted that the award is the association’s “highest honour” and is “bestowed upon only those members who have gone above and beyond in serving and furthering the objectives of this association.” Eso outlined Bob’s remarkable career, including his role as control adjuster of the 1988 Winter Olympic Games in Calgary. “I am proud to call him a colleague and a friend, and the adjusting fraternity is proud to have you as a representative symbol of what we do every day,” Eso said.

“We applaud your excellence and your unselfish contributions to further the aims of CIAA.” l

CIAA SPOTLIGHT Ever wonder what outside groups think of the CIAA? Executive director Pat Battle shared a recent note from a new participant at the CIAA annual meeting recently in Banff. “Let me say what a pleasure it was to be a part of your meeting last week. Getting to know you and some of your people is a privilege not to mention the beauty of the venue. I would also like to say that I attend many meetings annually. Rarely have I experienced the acceptance and warmth both I and my wife were shown by you and your membership. Thanks again and I look forward to Quebec next August.” Louis Smith, AIC, EGA, President, AmeriClaim l

The CIP Society recently named its five National Leadership Award honourees for 2013. Those honoured as “established leaders” are Ginny Bannerman, vice president finance west at Intact Insurance in Calgary, and James Cameron, president of Cameron and Associates in Toronto. Honourees for 2013 in the “emerging leaders” category are AnneMarie Deschênes, Lindsay Mackenzie and Tammie Norn.

Deschênes is marketer, medium to large-sized companies at Aon Risk Solutions in Montreal. Mackenzie is commercial lines manager at Intact Insurance in Mississauga, Ont. while Norn is chief executive officer of ProFormance Group Inc., the Pickering, Ont.-based firm she founded in 2008. l 40 Claims Canada

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Granite Health Solutions (operating under the brands of Sibley & Associates, MDAC and TRM), has expanded into the Western Provinces of Canada with the opening of a new regional office in Calgary.

Ian Elliott, President of GHS, also announced that Mandy Simard has been appointed Manager of Medical Assessments and Audrey Holliday appointed as Director of Operations in the West. “With the new office and management team we can now provide even better service to our customers in Western Canada,” he said. l

Audrey Holliday In other company news, Granite Claims Solutions announced the opening of a new branch in the municipality of Matane, Québec and the addition of Marius Gagnon to its team. The opening of the Matane branch marks the 7th within Québec totaling 59 locations across Canada, with plans of further expansion in the province of Quebec. l Kernaghan Adjusters’ newest branch in Cranbrook, British Columbia officially opened July 2, 2013 and services Cranbrook, Fernie, Sparwood, Elkford, Kimberley, Elko, Jaffray and Creston. The Cranbrook team consists of Mark Graw, Senior Adjuster and Wendy McBride, Administrative Assistant. l CRDN of Greater Toronto, the textile experts, has appointed Ben Clements as account manager for the Greater Toronto office. Ben moves to Toronto from CRDN of Nova Scotia where he led their company’s account team for the past 3 years. Ben achieved many service awards and accolades during his employment with CRDN. l A Montreal-based consumer advocacy group has agreed, with 15 insurance carriers, to settle a class action lawsuit over homeowners’ coverage for additional living expenses related to the January, 1998 ice storm, which killed up to 35 and left more than a million without electricity. Option consommateurs announced in a press release Wednesday that the 15 insurers reached an agreement in principle for an out-of-court settlement. That agreement is subject to approval by the Quebec Superior Court, in a hearing scheduled Oct. 25 in Montreal. “The class action suit launched by Option consommateurs sought to determine, among other things, whether the insurance companies had an obligation to compensate all policyholders included in the class action for additional living expenses incurred as a result of the power outages, as well as the amount to be reimbursed,” the 15 carriers and Option consommateurs stated in separate releases. l www.claimscanada.ca

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CIAA New Members — September 2013 INDIVIDUAL MEMBERSHIP Crawford & Company Don McConaghy Kathryn Rehse Susan Thain

Itech Environmental is pleased to welcome Art Vesterfelt to the role of Director of Dangerous Goods. Art brings over 38 years of experience in Canada’s railway industry, approximately half of which he was involved in dangerous goods, emergency response, and incident command. l DKI Canada announced that M&G General Services has joined the organization. M&G has provided property restoration services in the Greater Moncton area for almost 20 years. M&G also services surrounding areas such as: Memramcook, Sackville, Port Elgin, Shediac, Cap Pele, Bouctouche, Richibucto, as far as Amherst and Springhill, NS. DKI Canada also announced that Contrast Cleaning & Restoration has joined the organization. Contrast has provided property restoration services in the East Mountain area for over 20 years. Contrast also services surrounding areas such as: Truro, Central Nova Scotia, Amherst/The Sunrise Trail, Fall River, Sackville, Rodon Hills, Windsor, and Elmsdale NS. l Aviva plc has appointed Maurice Tulloch, current CEO of Aviva Canada, as CEO of Aviva UK & Ireland General Insurance. Tulloch joined Aviva in 1992 and was appointed CEO of the Canadian business in 2009. Under his leadership since then, operating profits in the Canadian business have grown by 63% and the combined operating ratio has improved from 100% to 92%, according to Aviva. Greg Somerville, executive vice president of broker distribution for Aviva Canada, will lead the Canadian business while the selection of Tulloch’s replacement proceeds. l Aviva Canada is offering existing customers in Ontario and Alberta who purchase winter tires – critical for keeping safe on the road – a chance to receive a discount as part of a new promotional partnership with Kal Tire. With winter driving just around the corner for many parts of the country, Aviva Canada is emphasizing the importance of vehicle safety through the partnership with Canada’s largest independent tire dealer, the insurer noted in a statement.

“Each year, we see an almost 50% increase in auto collisions during the winter months,” reports Gerry De Lauro, vice president of marketing and web strategy for Aviva Canada, pointing out that “quality tires are a crucial part of a vehicle’s safety system.” l www.claimscanada.ca

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Kernaghan Adjusters Limited Wendy McBride Cranbrook, BC

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Granite Claims Solutions Tyler Ducheminsky David Fulljames Trent Buchanan Bob Phillips Andrea Symons Eugene Brischuk Daryl Schroh Glenn Hillgren Isobel McNab Shauna Dobson Kim Davis Wayne Grudnitzki Kyler Broad Karen Cox Michael Odnokon Sheila Schill Catherine Elliott Tracey Tesch Philip Pitre Lori-Ann Morgan Joe Parilac Jason Williams Stephen Scullion Lee-Ann Vansteenkiste O.F. Gerry Downes Amar Balkaran Bruce Johnston Glenn Cheeseman Jennifer Chetcuti Peter William Doublard Denis Houle Kathy James Randall Kamino Bruce Martin Elaine Obcena Allan Perkins Gary Sherren Chris Stogios Jeffrey Traves Margo Vanword Mike Vipond Laurie Walker Kaylin Yataco Catherine Blandford Amanda Burke Mary Ann Ricker Bonnie Birks Walter Lincoln Henry Scullion Hung-Yin (Cindy) Wong

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• on the scene OTS Zurich has launched a new set of coverage products for mid-sized technology companies, which it says addresses the needs of a sector growing faster than Canada’s economy overall. The new suite of insurance offerings includes about 20 technology risk coverages based on the industry’s risk profile, with underwriters managing errors and omissions, property and casualty and foreign coverage. l The Guarantee Company of North America (The Guarantee) is going beyond traditional insurance coverage, pushing a fresh alternative into the Transportation market with the launch of its newest segment, the Guarantee Transportation Solution (GTS). “GTS is a one-stop insurance solution for Transportation companies. We’ve got the right people and the right partners in place to offer customers a fresh approach, rather than an annual negotiation exercise,” said Angelique Magi, National VP, Strategic Initiatives for The Guarantee. l

Identa-DNA Corp. is pleased to announce the launch of its long awaited DNA forensic solution at the Annual Toronto Fraud Forum in Toronto on September 25th, 2013.

It is a Patented DNA Forensic solution designed to protect personal property and valuable items and to assist in their recovery should they be stolen. Each solution is made absolutely unique with insertion of the owner’s DNA. l

On Side Restoration is pleased to announce that Peter Duhault has joined as the company’s new Medicine Hat, Alberta Branch Manager. Native to the Medicine Hat area, Peter brings hometown knowledge and a valuable construction-related background to support him in his new role with On Side. l First General is proud to annouce that First General Thunder Bay has been voted Thunder Bay’s Favourite Contractor. First General Thunder Bay would like to thank all of the residents of Thunder Bay for voting them Thunder Bay’s Favourite Contractor for the second year in a row. l Aon Risk Solutions, the global risk management business of Aon plc, has released a new cyber diagnostic tool to help risk managers better identify and understand exposure to cyber risk. Noting that high-profile profile attacks are raising cyber as an emerging risk, the tool was introduced at the Federation of European Risk Management Associations (FERMA) Forum in Maastricht in late September. l CAA Insurance is launching a new legal coverage product, underwritten by DAS Canada. The product, launching this fall, offers Basic Legal Expense Insurance, and will be included at no extra charge to CAA’s property insurance policyholders with a multi-line auto policy. l

ARC Group Canada held its 2013 Annual Seminar & Cocktail Reception at the St. Andrews Club & Conference Centre in Toronto on September 19. This year’s seminar saw a panel of experts present on the topic of ‘Defending Brain Injury Claims’ including speakers: Dr. Charles Tator, Neurosurgeon, Toronto Western Hospital; Dr. Grant Iverson, Ph.D, Harvard Medical School; Ms. Laurie Walker, Executive VP, Granite Claims Solutions; David Cameron, Burchells LLP, ARC Group - Nova Scotia Affiliate; panel moderated by Ronald Silverson, Gasco Goodhue StGermain LLP, ARC Group - Quebec Affiliate. Attendees had the chance to network and discuss the activities of the day at a cocktail reception after the event. l

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State Farm Mutual released survey results in mid-September that show “strong disconnections between Canadian parents and teens regarding graduated driver licensing (GDL) laws.” In the survey, teenagers were asked: “How often do you follow or will follow the laws?” The results were broken down by four different restrictions on new drivers subject to graduated licensing: The number of passengers, nighttime driving, texting and talking on a handheld phone.

Fewer than half (48%) of teenaged respondents said they “almost always” do or will follow the restriction on nighttime driving. However, when asked how often they believe their teen “follows or will follow the law,” 69% of parents said their teen “almost always” does or will follow the law on nighttime driving. l Intact Financial announced in late September estimated catastrophe losses for the third quarter of the year of $270 million, pre-tax and net of reinsurance. After-tax, that estimate is about $199 million. The estimate is based on 10 loss events in the quarter, including hailstorms in Alberta and rain storms in Ontario and Quebec. l Quindell Portfolio plc, a consultancy, software and outsourcing firm active in the insurance and claims industry, has agreed to a 26% investment in PT Health, a provider of healthcare and rehabilitation services with over 100 physiotherapy and rehabilitation clinics across Canada. l

Frank Cowan Company, a provider of specialized insurance programs, will now offer its clients a web-based weather monitoring and operations management platform designed for municipalities across Canada. The platform, called Snowman, is being offered as part of a partnership between Frank Cowan and Baseline Telematics, a supplier of telematics-based solutions for the insurance industry. l Allstate has introduced a new feature on its mobile app that allows a qualifying customer in the United States who has had an accident to kickstart the claims process by submitting pictures of a damaged vehicle taken on a smartphone through the app. The QuickFoto Claim feature will initially be available in 10 states across the south and southwestern U.S. before it is expected to be rolled out in the majority of states by the end of 2013, Northbrook, Illinois-based Allstate Corporation noted in a press release last week. l

Technology and information solutions provider Mitchell International has announced the general availability of its RepairCenter Reputation Manager package. The new offering “combines real-time text and email updates with advanced customer insights from satisfaction surveys and social media data to improve the repair shop and vehicle owner processes,” according to Mitchell.l

Sensational jazz crooner Sophie Milman entertained a crowd of insurance industry professionals at La Maquette Restaurant in Toronto on Sept. 12th. The ‘Evening of Jazz’ was presented by CKR Global Investigations and Beard Winter LLP. Guest’s had the pleasure to enjoy an evening of a live jazz, fine cocktails and delectable hors d’oeuvres. l

www.claimscanada.ca

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• on the scene OTS The Property Loss Restoration Expo (PLR) held Canada’s largest restoration conference in Toronto, Ontario at the International Plaza Hotel from Sept. 23-25. The event featured a trade show and seminars covering a wide variety of timely restoration industry topics.

Over 50 exhibitors filled the Exhibit Hall and the trade-show floor bustled with delegates from throughout Canada. The booths offered opportunities for learning, networking and sharing. l

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THE PROPERTY RESTORATION SPECIALISTS WITH OVER 85 SERVICE LOCATIONS ACROSS CANADA 24 HOUR ASSIGNMENT/EMERGENCY RESPONSE TOLL FREE 1-866-4-WINMAR ( 494-6627 ) Proud to be Canadian owned and operated. www.claimscanada.ca

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For more information visit www.winmar.ca October/November 2013

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• on the scene OTS The Association of Certified Fraud Examiners (Toronto Chapter) and the Canadian Association of Special Investigations Units (Trillium Chapter) held the Annual Fraud Forum on Sept 25.

The event held at Le Parc Conference Centre in Thornhill, Ont. featured a mix of both general and insurance fraud seminars in addition to a tradeshow. l

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