Claims Canada October November 2014

www.claimscanada.ca

October/November 2014

THE LIABILITY

LINE

Official Journal of the Canadian Indeépendent Adjusters’ Association

Which risks will cross it and create a casualty hit?

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Contents OCTOBER / NOVEMBER 2014 • VOLUME 8 • NUMBER

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Cover Feature 12 The Liability Line Casualty premiums account for roughly 10 per cent of the overall insurance market in Canada. However, the severity of long-tail liability claims can put disproportionate pressure on adjusters to effectively manage and adjudicate losses. Key risks, such as asbestos and tobacco, have had a huge impact on insurance companies when it comes to claim reserving. What are the current and emerging risks that insurers and independent adjusters should have on their radar screen?

26

BY CRAIG HARRIS

Spotlight 18 Time to Regroup Albert Poon leads the Canadian Independent Adjusters Association in what he calls a “critical year” for the organization.

BY CRAIG HARRIS

Education Forum 38 Cyber Surge Cyber-events can affect a company’s reputation and call for the use of both insurance and risk management tools

News Features 26 P3 and Potential Losses How the investigation of public-private partnership (P3) claims poses challenges for adjusters.

BY SEAN FORGIE

28 There’s Something in the Road!

Evaluating driver responses can be a complex task for engineers and scientists.

BY KURT ISING, DR. JASON DROLL AND PAMELA D’ADDARIO

32 Missed Opportunity Ontario Court of Appeal fails to clarify the duty to defend an additional insured.

BY JOSIAH T. MACQUARRIE

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34 Priority of Payment Establishing a “nexus” or connection is key to finding out which insurance company pays, as one legal case shows.

BY DANIEL STRIGBERGER

36 The Related Claim A single, related claim must involve analysis of specific facts around each allegation and cause of action.

BY JARED D. EPP

32

Departments 4 First Notice 40 On The Scene

Columns 10 President’s Message 38 Education Forum

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• first notice FN Canada needs better preparation for flood risk: study Canada is lagging behind on the issue of overland flooding, necessitating that measures be taken to ensure greater resiliency and to guard against associated losses, suggests a new report issued September 22.

Partners for Action: Priorities for Advancing Flood Resiliency in Canada – which reflects input received from a wide range of stakeholders representing all levels of government, non-governmental organizations, conservation authorities and several industries, including banking, real estate developers and builders, insurance and reinsurance – identifies key focus areas for better protecting Canadians and their property against flood, notes a statement from The Co-operators Group Limited.

Commissioned by The Co-operators, the research was undertaken by Dr. Blair Feltmate and Dr. Jason Thistlethwaite of the University of Waterloo.

“Canada is well behind other nations when it comes to managing the risk associated with overland flooding,” says Rob Wesseling, executive vice president at The Co-operators.

Citing the complexity of the issue, one that requires a multi-faceted response, Wesseling adds, “Together, we’ve made very good progress on identifying the issues and map-

ping out a way forward to better protect Canadians and their property from the ever-increasing risks of extreme weather.”

Stakeholders identified the following three priority areas where action could most effectively reduce the risk of flood damage: flood plain mapping: develop new flood plain maps with projections that anticipate changes in the intensity and duration of future precipitation; preparedness of cities: assess the preparedness of major cities for extreme weather and flooding; and built infrastructure: factor extreme weather and flood potential into new infrastructure designs and retrofits.

With regard to flood mapping, the report notes “research on Canada’s flood maps suggests a fundamental lack of co-ordination between governments and private agencies responsible for flood map data.”

The division in authority and capacity – the federal government has the most capacity to co-ordinate the standards required to harmonize and update maps, while the provinces are ultimately responsible for flood plan management – “suggests a need for more discussion on the steps necessary to update Canada’s flood maps.” l

SCM acquires Granite Global SCM Insurance Services has acquired the property and casualty businesses of Granite Global Solutions, SCM announced August 25. Terms of the deal were not disclosed.

The businesses acquired include Granite Claims Solutions, a national adjusting firm; Granite Health Solutions, a provider of medical assessments and health services; CKR Global, a national provider of risk mitigation and investigation services; and Rochon Engineering, a forensic engineering and environmental consulting company.

“Our two companies are stronger together, and poised for further growth and opportunity,” Larry Shumka, president and CEO of SCM Insurance Services commented in a statement. Shumka leads the combined entity.

“This transaction is consistent with SCM’s philosophy of building strong, autonomous brands, and a larger, more diverse company will better serve our customers with a portfolio of best-in-class services,” he added.

Under the acquisition, Granite’s claims, health and investigations businesses will be added to the corresponding business units in SCM Insurance Services, respectively ClaimsPro, Cira Medical Services and Forensic Investigations Canada (FIC). Rochon Engineering will continue as a standalone company. l

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October/November 2014

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• first notice FN Rate reductions could hurt Ontario auto: sources The Office of the Superintendent of Financial Institutions (OSFI) noted in its recently released annual report for 201314 that the target in Ontario to reduce auto insurance premiums by 15% could have a negative impact on profitability.

“Domestically, personal auto insurance continued to be the major underwriting challenge. Reforms related to accident benefits improved profitability in Ontario, the largest auto insurance market,” the report stated.

“However, the legislated target of 15% rate reductions in Ontario by August 2015 (with 8% reductions to be realized by August 2014) may negatively impact Ontario personal auto insurance underwriting profitability if the additional claims-related measures introduced in the 2013 Ontario budget are delayed in implementation.”

In related news, an Insurance Bureau of Canada senior source said the Ontario government’s reduction target in auto insurance rates is “absolutely not” doable.

“Absolutely not, and I think the government fully knows that although the government has not come out and said it,” Barbara Sulzenko-Laurie, IBC vice president of policy development. commented during a panel discussion September 23 at the National Insurance Conference of Canada (NICC) when asked whether the reduction is achievable.

“But certainly in our conversations with the superintendent of insurance, he’s indicated to us that no one in FSCO believes that there’s 15% that’s in the system (to be reduced),” she said, referring to the auto insurance regulator, the Financial Services Commission of Ontario.

“When we’re talking to the political side, they don’t admit it, but they sort of smile knowingly in response to the question,” she added. l

Claims frequency the issue for Canada in 2014: A.M. Best

Alberta hailstorm pegged at $450 million in damage

2013 and 2014 reflect stories in severity versus frequency for the property and casualty industry in Canada, Joel Silverthorn, a senior financial analyst for A.M. Best Company Inc., said during the company’s 2014 Insurance Market Briefing – Canada held in Toronto September 4.

With events such as ice damming, frequent storms and continued water events, this frequency “crept in below retentions,” Silverthorn said.

A.M. Best’s special report - released in advance of the briefing - notes the overall p&c industry combined ratio deteriorated to 99.8% in 2013, a 3.6-point increase from the prior year. Over the last five years, the combined ratio was 100.9% in 2009, 100.7% in 2010, 99.1% in 2011, 96.2% in 2012, and 99.8% in 2013.

Unlike what was seen when the combined ratio was about 99 at the end of 2013 – which Silverthorn calls “just barely break even” – when the industry starts seeing “the 103, this is all being kept. It’s not going off to the reinsurers,” he says.

“This is all part of what’s happening at this moment, because the industry itself is taking on this burden, because it’s a frequency event, not a severity event,” Silverthorn added.

Also emerging is the prominence of water as a peril. Noting that two of the largest-ever Cat losses occurred in 2013, he told delegates that water has now taken over fire as the largest peril.

“In view of the significant financial obligations and potential reputational risk associated with water claims, insurers have taken decisive actions, the impact of which will play out over the next couple of years,” notes the A.M. Best report. l

The severe hailstorm that hit Airdrie, Alberta August 7 caused an estimated $450 million in insured damage, according to Insurance Bureau of Canada (IBC) and Property Claim Services (PCS).

The intense storm hit Airdrie and surrounding areas, including Rocky Mountain House and Red Deer, with heavy rains and large hail.

“While the frequency and severity of weather events have been rising across the country, Alberta has been hardest hit,” said Bill Adams, vice-president, Western and Pacific, IBC. “What’s more is that we are not out of the woods yet, Alberta hail season traditionally runs through the end of September.”

This recent storm brings insurance payments from natural catastrophes to $4 billion in Alberta since 2011.

Canada’s largest p&c insurer Intact Financial said it estimates a pre-tax financial impact of $100 million to $120 million from catastrophe events in July and August. The Airdrie storm was the most significant event to date this summer, accounting for approximately 70% of the damages from the catastrophe events, noted a statement from Intact Financial issued in September. l

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Claims Canada

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October/November 2014

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• first notice FN Flood costs add up in Ontario, Manitoba and Saskatchewan The Insurance Bureau of Canada announced September 2 that an August rainstorm in Burlington, Ontario caused more than $90 million in insured damage, according to preliminary estimate from Verisk Analytics Inc.’s Property Claims Services (PCS) unit.

“During the storm, Burlington received so much rainfall that local highways had to be closed because of flooding in some places, as creeks and rivers throughout the city were inundated and crested at the same time,” IBC stated.

The City of Burlington — which borders Hamilton to the northeast — said just over 3,000 homes were reported to have been flooded as the result of the storm. Nearly 200 millimetres of rain fell in three hours, according to the city. At the time, Canadian Press reported that sections of Highway 407 and the Queen Elizabeth Way were shut down.

Meanwhile, insured losses from flooding in Manitoba and Saskatchewan over the Canada Day weekend this year are now

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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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estimated at more than $140 million, according to Catastrophe Indices and Quantification Inc. (CatIQ).

The estimate for the flooding that occurred June 28 to 30 includes loss adjustment expenses and came from a recent 45-day resurvey of the majority of insurers affected by the event. CatIQ has now pegged the flooding as the second largest catastrophe event to occur in Canada so far in 2014, behind the hailstorms in Alberta in early August.

The Canadian Press reported in late September that thousands of Saskatchewan residents are still waiting for payment as disaster assistance claims continue to pour in from this summer’s devastating flooding. The Saskatchewan government says about 10 per cent of the 3,126 claims through the Provincial Disaster Assistance Program this year have been paid out, according to CP. l

Claims Canada

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October/November 2014

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

CICMA/CIAA Ontario Chapters’ 48th Annual Joint Conference

Catastrophes “It’s Not Just About the Weather”

Tuesday, February 3, 2015 Metro Toronto Convention Centre, Toronto, Ontario Registration 8:00 a.m. • Seminar 8:30 a.m.

Reception and Lunch 12:00 p.m.

Guest Speakers: Mark Prefontaine, Assistant Deputy Minister,

Financial Sector Regulation & Policy, Government of Alberta

Glenn Gibson, President & COO,

Hamilton Tiger-Cats Football Club

Carol Kreiling, Vice President, Swiss Re Carl Van, Insurance Training Professional,

President & CEO, +International Insurance Institute

Luncheon Entertainment – Glen Foster, “That Canadian Guy”

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Delegate Registration Fee: Price: $215.00 — CIAA/CICMA Members Price: $245.00 — Non Members Register early - Space is limited Tickets will not be sold at the door.

RETURN WITH CHEQUE PAYABLE TO: CICMA/CIAA JOINT CONFERENCE to: Canadian Independent Adjusters’ Association, 5401 Eglinton Ave. W., Suite 100, Etobicoke, ON M9C 5K6

NAME: __________________________________________________ COMPANY: ______________________________________________ ADDRESS: ______________________________________________ CITY: ___________________________ POSTAL CODE:____________ E-MAIL:_________________________________________________ PHONE: _________________________________________________ FAX:____________________________________________________ Please indicate affiliation:

CICMA ❏ CIAA ❏ OTHER ❏

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Message from the President La Plume du Président ALBERT POON

As members were returning home from CIAA’s 30th

Au moment où les membres rentraient chez eux

Annual General Meeting and Conference, the acquisi-

après avoir assisté à la 30e édition de l’assemblée gé-

tion of Granite Claims Solutions by a non-member firm

nérale annuelle et à la conférence de L’ACEI, on a an-

was announced, placing the association in the precari-

noncé l’acquisition de Granite Solutions Sinistres par

ous position of potentially dealing with the magnitude of losing many loyal and long standing members.

We are grateful for David Porter’s role in steering

une société non membre. L’association s’est retrouvée ainsi dans une situation précaire, dans la mesure où elle pourrait faire face à l’ampleur de la perte de plusieurs membres fidèles et de longue date.

CIAA in a positive direction and the executive is intent

Nous sommes reconnaissants du rôle que David Por-

on advancing his progressive agenda and fully expect he

ter a joué en orientant l’ACEI sur une voie positive. La

will be back to lead CIAA in the future. Heartfelt thanks

direction a l’intention de poursuivre le programme pro-

to David and the many Granite members for their val-

gressif de M. Porter, et nous sommes convaincus qu’il

ued participation and steadfast support of the associa-

sera de retour pour diriger l’ACEI à l’avenir. Nous re-

tion.

mercions sincèrement M. Porter et plusieurs membres

Aligning all independent adjusters with CIAA’s mandate is fundamental in achieving recognition and influence when addressing issues impacting our members; and effectively pushing them into the forefront of

de Granite pour leur précieuse participation et leur soutien résolu de l’association.

Il est essentiel que tous les experts en sinistres indépendants soient en adéquation avec le mandat de l’ACEI, car cela nous permettra de gagner de la recon-

those organizations that can provide the results we seek.

naissance et de l’influence lorsque nous abordons les

Working closely with all our industry stakeholders will

problèmes qui touchent nos membres, et d’inciter effec-

forge a more cohesive, unified and all-encompassing or-

tivement ces derniers à être à l’avant-garde des organ-

ganization that ultimately enriches the experience for all

isations susceptibles de fournir les résultats que nous

CIAA members.

recherchons. En travaillant en étroite collaboration avec

We are committed to executing an aggressive strategic plan that will govern our actions and ultimately deliver more value to our membership. Increased awareness of Members’ self-interests to government and

nos intervenants de l’industrie, nous formerons une organisation plus cohésive, unifiée et globale qui permettra, en fin de compte, d’enrichir l’expérience de tous les membres de l’ACEI. Nous nous engageons à exécuter un plan stratégique

industry; increased visibility and promotion of Mem-

audacieux qui régira les mesures que nous prendrons et

bers’ professionalism and standards through creden-

qui offrira finalement plus de valeur à nos membres. Les

tialing programs; continuing education opportunities

priorités principales sont notamment : une conscience

and marketing campaigns; enhancements to benefits of

accrue des intérêts personnels des membres à l’égard du

10 Claims Canada

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October/November 2014

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membership through partnerships and financial commitments are all key priorities.

These are challenging yet opportune times for CIAA. I am looking forward to working with the brilliant minds that have led CIAA in the past; Executive Director, Pat Battle; and the current members of the Executive. Again, sincere thanks to the many who contribute in advancing the independent loss adjusting profession through their membership in CIAA and I welcome those that would like to participate in this first class association.

An association’s stature relies heavily on the expertise, astuteness and selflessness of its volunteers. CIAA is extremely fortunate for the dedicated commitment of countless members for over 60 years. n

gouvernement et de l’industrie; une visibilité et une promotion accrues du professionnalisme et des normes des membres, par l’entremise de programmes d’accréditation; des occasions de formation continue et des campagnes de marketing; des améliorations aux avantages de l’adhésion, au moyen de partenariats et d’engagements financiers.

Il s’agit d’une période difficile, mais opportune pour l’ACEI. Je me réjouis à l’avance de collaborer avec les brillants esprits qui ont dirigé l’ACEI dans le passé, avec la directrice générale, Pat Battle, ainsi qu’avec les membres actuels de la direction. Une fois encore, je remercie sincèrement tous ceux qui ont contribué à faire progresser la profession d’expert en sinistres indépendant, par leur adhésion à l’ACEI, et je souhaite la bienvenue à ceux qui voudraient participer à cette association de premier rang.

L’envergure d’une association dépend largement de l’expertise, de l’habileté et de l’altruisme de ses bénévoles, et l’ACEI est extrêmement chanceuse de pouvoir compter sur l’engagement constant d’innombrables membres depuis plus de 60 ans. n

NATIONAL EXECUTIVE 2014 - 2015 PRESIDENT Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com 1ST VICE-PRESIDENT Gary Ellis, BBA, FCIP, RF, FCLA, FCIAA AMG Claims Inc. 535 North River Road, Unit 3 Charlottetown, PEI C1E 1J6 Phone: (902) 628-9091 Fax: (902) 628-9093 E-mail: gary.ellis@amgclaims.ca SECRETARY Monica Kuzyk, FCIP, CRM Curo Claims Services 125 Northfield Dr. W., P.O. Box 218 Waterloo, Ontario N2J 3Z9 Phone: (866) 952-2876 Fax: (519) 888-9704 E-mail: mkuzyk@curocanada.com

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TREASURER John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca PAST-PRESIDENT John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.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, CIP, CIOP 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 Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: jjones@cl-na.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

October/November 2014

Claims Canada 11

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CS

• cover story

THE LIABILITY

LINE

Casualty premiums account for roughly 10 per cent of the overall insurance market in Canada. However, the severity of long-tail liability claims can put disproportionate pressure on adjusters to effectively manage and adjudicate losses.

Key risks, such as asbestos and tobacco, have had a huge impact on insurance companies when it comes to reserving for future claims. What are the current risks that insurers and independent adjusters should have on their radar screen?

And what emerging exposures may cross the liability line?

BY CRAIG HARRIS

12 Claims Canada

p12-17 COVER STORY edit.indd 12

October/November 2014

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iability risks, it’s fair to say, punch above their weight class.

Canadian property and casualty insurance companies collected $4.5 billion in net written premiums for this business line in 2012 (latest year for available data). They paid net incurred claims of $2.6 billion in the same year.

Both figures represent about one-tenth of the overall general insurance market, a business that tends to be dominated in premium volume by auto insurance.

However, casualty insurance, with its long-tail nature and notoriously difficult emerging exposures, can present numerous challenges for independent adjusters and their clients. The complexity of the policies, the nature of the investigation, the determination of time periods (claims made versus occurrence) and the involvement of several different parties (including potential subrogation) are factors that shape how liability claims are handled. All contribute to the challenges of adjusting casualty claims.

“With liability, you are really dealing with two claims in one,” notes Craig Walker, managing director at casualty specialist adjusting firm Maltman Group International. “The first step is investigating whether the insured has any liability and, if so, determining whether the policy will respond to the specifics of the claim. If there is liability, the second part is going back and ‘re-adjusting’ the claim that has been made. You have to look at all the documentation and see if it should have been legitimately paid, especially if there is subrogation involved.”

Complexity of Casualty Exposures The complexity of casualty exposures extends to underwriting, pricing and projection of claims exposures, according to Swiss Re’s sigma 2014 paper – Liability Claims Trends: Emerging Risks and Rebounding Economic Drivers.

“Liability risks are challenging to underwrite and price due to the longtail nature of risks that often result in claims being settled many years after business is written,” the reinsurer notes www.claimscanada.ca

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in the report. “Additionally, risks can accumulate, causing a ‘clash’ (when there are multiple liability claims originating from the same cause) or a casualty catastrophe, and can overlap with property risks.”

“Liability insurance is arguably the most complex property-casualty line,” states a recent report from research firm Conning & Company – Liability and Tort Trends: Trouble Around the Corner? ”Liability insurance results are driven by an unusually wide array of factors above and beyond the inherent covered exposure of insureds’ liability for bodily injury or property damage to third parties.”

The Canadian liability insurance market, the sixth largest in the world, has been growing at a rapid average annual rate of 9 per cent since 2000, according to Swiss Re’s sigma report. It predicts “future annual nominal claims growth” in liability insurance in Canada of 6-7 per cent from 2014 to 2020.

After a period of relative stability in liability claims, there are signs of increased loss activity. One key reason for flat or diminished claims activity in recent years is the aftermath of the global financial crisis. Swiss Re observes that weak economic growth, low inflation and wage freezes or declines affect the level of casualty losses. However, with a strengthening global economy, things are expected to change in the liability market.

“Claims growth is expected to pick up to a pace that is again faster than gross domestic product (GDP) growth,” Swiss Re observes. “Economic activity will also influence claims growth. For example, wage gains had been declining but are now beginning to accelerate. Many of these factors will increase liability claims and boost demand for insurance.”

Worm Starting to Turn Others agree that the worm may be starting to turn for liability insurance claims trends. ”There are signs… that the benign period for liability insurance results may be coming to an end,” Conning & Company notes in its report. “Current

trends in loss frequency, tort filings, and reserve releases suggest that an inflection point may have been reached.“ While recent reports on liability insurance tend to focus on severity issues and so-called “shock losses,” Walker says frequency should not be underestimated as a driving factor in liability claims within the Canadian market. “There are a lot of classes of business or business activities that generate high frequency,” Walker notes. “Although there may not be high dollars attached to individual claims, they certainly add up for insurers. In the end, it can create just as big of a problem.”

The business types tend to involve snow removal contractors, maintenance/janitorial firms and, to a lesser degree, property management companies, according to Walker. The source of legal action is typically slips and falls or any injuries suffered due to alleged lack of maintenance or upkeep.

“It seems like claimants and plaintiffs counsel are trying to hold contractors to a standard of perfection, which is next to impossible to achieve,” Walker says.

“But they are still being targeted and are getting pounded left, right and centre in terms of frequency.”

In terms of severity, one of the most prominent issues in liability insurance claims is catastrophic injury. Walker notes that these types of serious impairments, which typically include future care costs, involve car collisions, falls off structures/buildings and freak accidents. Often, municipalities are drawn into legal actions because they are responsible for maintaining local roads, facilities and operations. Once the limits of an auto insurance liability policy (typically $1 million) are reached, claimants and plaintiff counsel seek other potential “payers” and these often involve municipalities and other large establishments.

Catastrophic Injury Claims “These (injuries) involve car accidents and road maintenance standards, but also extend to things municipal

October/November 2014

Claims Canada 13

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Pierre Maheux Principal, Environmental Giffin Koerth Forensic Engineering is pleased to announce the appointment of Pierre Maheux, MSc, FGAC, PGeo, to the role of Principal, Environmental.

A recognized leader in the Environmental Services industry, Pierre will build on our reputation of excellence and effectiveness, to establish Giffin Koerth as the go-to environmental forensic consultant. Through his appreciation of environmental concerns as among the most compelling and prominent issues of our day, Pierre will bring an enhanced level of sophistication to the field of environmental forensics.

Pierre combines decades of experience in contaminated site assessment and remediation with a passion for insurance claim and litigation support surrounding contaminant releases and trespass. With a background in Geology and Environmental Geoscience, Pierre possesses an intuition for his work that can only be gained through extensive practical experience and a keen appreciation of the science of subsurface contamination, the associated human and ecological impacts, and the accompanying concerns with regard to civil and regulatory liability.

Over the course of 20 years as an environmental consultant, primarily with Stantec Consulting Ltd., Pierre has honed his expertise in the assessment of risk associated with contaminants, and the design and execution of site assessment programs, risk management plans, and remediation action plans. He has directed and designed environmental site assessment and contaminant management/ mitigation programs in a variety of contexts and in support of insurance, legal, commercial and governmental clientele.

Giffin Koerth is one of Canada’s leading forensic engineering firms, providing support to insurance, legal, and commercial clients around the globe. With a broad range of in-house expertise, the firm is able to apply a unique multidisciplinary approach to identifying complex causes, providing preventative advice and developing effective remediation options.

Through its commitment to the clear communication of the facts, GK is known for empowering its clients to make decisions with confidence.

Pierre Maheux M.S.c., FGAC, QPESA, P.Geo 416.368.1700 pmaheux@giffinkoerth.com

www.giffinkoerth.com 14 Claims Canada

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governments operate, such as pools, playgrounds, athletic facilities, arenas,” Walker says. “These facilities are prone to injuries because of kids running around and horseplay.”

Walker cites an example of a child who fell out of the bleachers at a hockey arena, owned and managed by a municipality. The older structure, which met building codes at the time of construction, was not compliant to current building codes. The child slipped through the railings, fell to the ground and was catastrophically injured.

“That (claim) is squarely on the municipality, which operated the arena,” Walker notes. “It hit several different layers of coverage because of the size of the claim.”

Car accidents are, however, the most frequent cause of catastrophic injury.

There have been several examples of legal awards that exceed $10 million, and go as high as $24 million. For example, an Ontario Superior Court Justice Peter Howden awarded Katherine-Paige MacNeil $18.4 million on Sept. 2, 2009 after the car in which she was a back-seat passenger ran a stop sign, crossed a highway and landed in a ditch. And in a single judgment totaling $24 million in damages, the Ontario Superior Court handed down in 2007 both the largest award for a spinal cord injury in Canadian history and one of the largest for a brain injury, to two young men catastrophically injured in a motor vehicle accident in September 2003.

“The costs are phenomenally high,” Walker says. “With the auto liability policy for the at-fault party, it is rare to see a limit more than $1 million. For a catastrophic injury over $10 million, if even a small percentage of liability attaches to the municipality, joint and several liability kicks in and the limits are blown.”

Joint and several liability is a common law principle holding that those who have combined to cause a single indivisible loss are each liable to the injured person for the full amount of the damage suffered. A defendant, who may be only 1% at fault, can be obligated to pay the plaintiff ’s entire judgment, particularly in cases where the other defendant is unable to meet a court-ordered award. This applies to municipalities but also to other so-called “deep pockets” – other levels of government, large commercial establishments, restaurants and taverns, amongst others.

October/November 2014

Joint and Several Liability In all, 11 common law jurisdictions in Canada have “joint and several” language contained in their contributory negligence legislation. In addition to Ontario, other jurisdictions with the joint and several rule on their books include Alberta, B.C., Manitoba, New Brunswick, P.E.I., Nova Scotia, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut.

According to the Association of Municipalities of Ontario (AMO), for several years the cost of municipal insurance has been rising at a disproportionate rate compared to inflation and all other municipal expenditures. The AMO noted in a 2011 study that municipality liability premiums increased 22% from 2007 to 2011. The report predicts that, unless change is made, insurance-related costs will increase further to $180 million by 2015, an additional 16%.

Beyond catastrophic injury, industry observers constantly forecast emerging liability risks. It’s not just auto losses that can fuel liability awards, but also large property claims.

Swiss Re notes that: “Over the past 10 years, with the exception of pharmaceutical mass tort product liability and financial institution losses, many of the largest claims originated from major property events.

Key drivers for the increase in casualty claims from property lines include the increased frequency and severity of catastrophic events, a diminishing societal acceptance of ‘acts of God,’ more transparency through media, and increased scrutiny by shareholders, analysts and auditors,” according to its sigma report. Everything from e-cigarettes to air drones to the latest medical device/pharmaceutical product lawsuit can be projected as the next big liability exposure.

The most frequently asked question is: “What is the next asbestos or tobacco?”

The answer is both elusive and speculative.

“A number of technological, social and regulatory changes will shape the near-term future of liability insurance.

Cyber risk and the liability from emerging technologies, such as hydrofracking and autonomous cars, may become more prominent in liability claims.” according to the Swiss Re sigma report.

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ture injury or damage, (3) applicability of tort law to ensuing damages, and (4) a definable universe of potentially liable defendants.

Potential risks and exposures are difficult to predict and are rarely “siloed” into neat categories. However, reinsurers, insurers and research firms agree there are some key trends that insurers and adjusters should monitor. Beyond the traditional risks of professional liability in directors and officers (D&O) and errors and omissions (E&O) insurance, casualty exposures tend to collect around some major areas.

Technology – Cyber Risk and the Cloud Cyber liability is clearly a prominent area of casualty risk. Several major retailers, including Target and Home Depot, have been victimized by serious data breaches in recent months. According to Swiss Re: “The global annual cost of cybercrime is estimated to be in the range of $100 billion to $500 billion. A recent study showed rapid growth in not only the number of incidents, which reached 2,164 worldwide in 2013, but also in the number of exposed records, which reached 823 million.”

Walker notes that “cyber liability is a big issue. This can be true for smaller to mid-size operations,” he says “They may not have the money to put in proper safeguards, they are vulnerable. With the size of corporations that have been hacked, you would think they have robust safeguards. If they can get hacked, anyone could be hacked.”

Cyber risk is particularly an issue for information technology contractors, who work with organizations to implement and develop hardware and software systems, according to Walker. “We have seen claims against IT consultants so far that have been along the lines of ‘you sold us a system that you said was capable of doing this and this, and it has not met those targets and we sustained a financial loss as a result,’” he says “But if you take it to the next logical step, the IT contractors could be liable for a cyber attack.”

The risk of cyber liability may be magnified as systems move to the cloud for data storage and retrieval. In a 2014 report from Swiss Re titled SONAR, Emerging risk Insights, the reinsured noted that: “Shared access also fuels risks such as data leakage, data loss and hi16 Claims Canada

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jacking of computer resources,” adding the “potential impact” includes “internal data loss and partial business interruption,” as well as “reputational and financial damage if confidential client data is lost.”

“There are only a limited number of cloud locations, which could mean large accumulation issues to insurers if multiple clients are on the same cloud,” observes Carol Kreiling, a vice president at Swiss Re Property & Casualty Business Management Canada on the insblogs site hosted by Canadian Underwriter Magazine. “The question becomes: How many of your clients are on the same cloud?”

As automobiles become more “connected,” the potential for more accidents related to distracted driving raises significant safety concerns.

Transportation – Planes, Trains and Automobiles 2014 was an eventful year for the aviation hull and liability market. First, Malaysian Airlines Flight 370 disappeared while travelling from Kuala Lumpur to Beijing on March 8. Then, the shooting down of Malaysian Airlines Flight 17 in July over Ukraine caused another massive rupture in the aviation insurance market.

Jason Hutchings, vice president and team leader for Aon Risk Solutions, noted in the September 2014 issue of Canadian Underwriter Magazine that these and other aviation losses created a major challenge for aviation insurers. “The final quantum is yet to be determined, but loss estimates for hull and liability insurance market for the year so far range between US$1.5 billion and US$1.8 billion,” he stated.

October/November 2014

The transportation of dangerous materials by train has become a key issue in North America after several high-profile derailments and explosions. The most obvious example was Lac-Mégantic, Quebec in July 2013, yet several less fatal train derailments, including the October 7 2014 incident near Clair, Saskatchewan involving hazardous materials, has focused public attention.

A prime area of concern is third-party liability and minimum insurance cover for railroad operators. Montreal, Maine & Atlantic, the railway involved in the Lac-Mégantic disaster, had liability insurance of only $25 million, typical for a small railroad. The costs of the cleanup alone have been put at $200 million.

Compensation for deaths, injuries and damage to property will add hundreds of millions more.

“Shortly after the (Lac-Mégantic) tragedy, the Canadian Transportation Agency (the federal regulator) announced a public consultation process and review of the adequacy of third-party liability coverage.” Insurance Bureau of Canada noted in a 2014 document.

“The review could lead to future regulatory changes that will undoubtedly affect commercial insurance writers.”

Auto manufacturing recalls are a consistently troublesome product line for insurers. The product recall numbers at General Motors for faulty ignition switches are alarming: 54 separate recalls in the first half of this year involving nearly 29 million vehicles worldwide.

The company estimates the recalls will cost it $2.5 billion for the first half of 2014 alone.

However, the liability issues related to cars involve far more than just product recalls. As automobiles become more “connected,” the potential for more accidents related to distracted driving raises significant safety concerns. Virtually all vehicle manufacturers have installed some form of dashboard or wi-fi connected communications systems.

Many of these systems are so errorprone or complex that they require more concentration from drivers rather than less, according to studies released in early October by the AAA Foundation for Traffic Safety and the University of Utah and quoted in The Associated Press.

“Infotainment systems are unregulated,’’ Deborah Hersman, president of the National Safety Council and former chairman of the U.S. National Transportation www.claimscanada.ca

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Safety Board told The Associated Press.

“It is like the Wild West, where the most critical safety feature in the vehicle - the driver - is being treated like a guinea pig in human trials with new technologies.”

Environment – Hydrofracking and Air Pollution Hydraulic fracturing (hydrofracking) is quickly emerging as a risk on the radar screen of insurers and clients. Hydrofracking is an oil and natural gas extraction and production technique in which a mixture of water, sand and chemicals are injected into deep wells under high pressure to fracture shale rock formations in order to increase the efficiency of releasing oil and gas, according to Swiss Re’s sigma report.

“Energy firms engaged in hydrofracking face an array of risks, ranging from environmental liability litigation to regulatory uncertainties,” Swiss Re notes.

“Potential environmental risks include contamination of groundwater with fracking fluid or methane gas, air pollution from methane emissions at well sites and fumes from drilling equipment, and accidental wastewater spills.” To date in Canada, Quebec, New Brunswick and Nova Scotia have either passed or proposed moratoriums to ban hydro-fracking in their respective provinces.

Another emerging risk with “high impact” is air pollution, which, Swiss Re notes in its SONAR report, “has been identified as a major health risk in the form of chronic obstructive pulmonary disease. It has now been found to cause cancer also.” This, Swiss Re contends, has the “potential for an increase in litigation against polluters, car manufacturers and energy companies.”

Health – Food Products and Pandemics The health effects of food consumption in society have been a key source of risk speculation in recent years. Foods ranging from genetically modified organisms to high sodium or sugar products to fast food outlets have been the target of speculation and, in some cases, litigation.

“Our analysis of the conceivable universe of risks finds that more likely suspects may be found somewhere in the food production and processing chain, or elsewhere in the broad swath of activities that may adversely affect the environment,” notes the Conning & Company liability study. www.claimscanada.ca

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“The grim reality is that today’s children in North America are more obese than children from previous generations,” notes Swiss Re in a recent report entitled Are Potato Chips the New Cigarette? ” Whether through government intervention – via tax or ban – corporate initiatives or consumer activism, there are no easy solutions for this obesity epidemic. If the solution cannot be legislated, then we can be sure that it will be litigated.”

A global pandemic is the most important extreme risk for the insurance industry to worry about in the long term, according to a recent survey of global insurance industry executives conducted

by Towers Watson. Given the outbreak of Ebola in Africa and the spread of the disease to other parts of the world, the identification of a pandemic as a major source of risk seems particularly relevant. Where the next threat, or liability, will come from is anyone’s guess. 

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October/November 2014

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• spotlight S

Time to Regroup

Albert Poon leads the Canadian Independent Adjusters Association in what he calls a “critical year” for the organization.

BY CRAIG HARRIS

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Moving forward for Poon means sharpening the focus of CIAA on achieving its strategic objectives. He says there is a pressing need to develop a “strategic mandate that demonstrates the value of CIAA.” This includes raising awareness around the role and brand of independent adjusters and delivering on results that mean something to the day-to-day operations of member firms.

“As a volunteer group we have not been as successful as we would have liked in meeting a lot of our strategic initiatives,” he notes. ”It’s a fair question that I have heard from members and non-members: if we are unable to meet our strategic objectives, then what is the value of the organization?”

I am more “interested in

engaging in a dialogue with all adjusting firms about where we can take CIAA.

“

A

lbert Poon, CIP, most recently CIAA’s 1st vice president, has assumed the role of CIAA national president. In line with the CIAA succession plan, Poon takes on duties as president with the resignation of David Porter, formerly vice president, Western region for Granite Claims Solutions.

Porter, who took over as president of the CIAA at the association’s Annual General Meeting and Conference August 21-24 in Quebec City, resigned effective September 19, 2014. Since taking the reign as CIAA president, Granite Claims Solutions was acquired by SCM Insurance Services and Porter is no longer with the firm. According to the association’s constitution, Executive Members must be employed by a CIAA member firm.

With Poon’s appointment as president, the CIAA has made it clear that its “services and commitment to membership continues without interruption.”

But it is not necessarily business as usual, according to Poon, who is director of operations at Cunningham Lindsey Canada Claims Services Ltd “My term as president of the association got accelerated by one year, but the main consequence (of the SCM acquisition) is the fact that we stand to lose 300 members from CIAA,” he says. “This is a critical year from the standpoint of demonstrating the value our organization brings not just to the membership, but to the insurance industry as whole.”

Poon fully acknowledges that the loss of Granite Claims Solutions as a member will have a significant impact on the association. “There are budgetary issues, but the reality is that Granite Claims was very active in our membership – from past presidents to involvement in committees,” he says. “We need to understand the impact, and then move forward. This is a reality that we have to address.”

A key part of the CIAA strategic mandate will be increasing awareness around the professional independent adjuster brand.

“We want to increase the profile of the association and our members, “ Poon explains. “How do we do that? A lot of the discussion has been around the CIP and how good of a job the Insurance Institute of Canada has done in increasing awareness of the designation and the professionalism around it. We need to learn from that exercise.”

October/November 2014

He notes that this does not necessarily involve reinventing the wheel, but some major fine-tuning through marketing and branding initiatives.

Another important prong in CIAA’s strategic mandate will be enhancing partnerships with parallel associations in the insurance industry, according to Poon.

“Our mandate must encompass all stakeholders – the membership we serve, but also the broader insurance industry,” he says. “That involves brokers, insurers, the risk management community, government, among others. All of these groups are also our stakeholders and have an interest in our mandate.“ Poon notes that closer affiliations can be made with other associations serving the industry. “We can strengthen strategic partnerships that would be aligned with our vision and find some common ground amongst other industry groups and organizations,” he says.

The association itself has to step up to the plate and deliver results in other key areas, such as education/designations and harmonized licensing, Poon notes.

“The CIAA has been actively involved in developing educational programs and lending itself to a CLA designation, which is on the cusp of being finalized. In terms of harmonization, we have reached agreement with the Canadian Insurance Services Regulatory Organization (CISRO) for an expedited licensing process in times of urgency which is a step in the right direction towards full licensing harmonization,” he observes.

“I think the message is that it’s time for CIAA to deliver on its strategic objectives,” Poon adds.

During a challenging time of adversity, in Poon the CIAA has found a solid representative who is calm, measured and inclusive. He also possesses a broad perspective on the multi-faceted property and casualty www.claimscanada.ca

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insurance industry, with a diverse legacy of work experience.

Starting out in the insurance industry with Home Insurance in 1990 as a telephone adjuster, Poon quickly advanced into the role of field adjuster in his five years with the company (later bought

by AXA, then Intact Financial). He then moved to Crawford & Company (Canada) Inc., where he spent 10 years, including a stint leading the firm’s risk management services division.

From there, Poon delved more directly into the risk management profession, setting up a self-insurance and claims administration program for Discount Car and Truck Rental. After four years, he joined Cunningham Lindsey, where he now oversees all operations for the large, national adjusting firm.

Poon also has a good vantage point from which to observe trends in the broader insurance industry and loss adjusting. One development is the tendency for insurers to more carefully monitor capacity and response to catastrophes, parwww.claimscanada.ca

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ticularly in the wake of natural disasters in 2013.

“Capacity is now process-driven,” Poon comments. “In the past, there was more of an expertise model, whereby insurance companies really wanted adjusters to go in, conduct a thorough investigation, take time to evaluate, negotiate and settle. Now, it is more aligned with dealing with capacity issues and making sure they manage caseloads for insurers.”

Independent adjusting firms have responded with a wide variety of strategies –developing greater efficiency and compliance to meet insurer real-time scorecards/ metrics, diversification into complementary fields, niche or specialty lines focus for some companies and the pursuit of self-retention clients.

Just as individual firms have responded quickly to changing market realities, Poon says the CIAA will also have to adapt in reaching out to all independent adjusting companies. He thinks it’s time for a fresh start and a new conversation that will guide the short and long-term

priorities of the independent adjusting profession.

“I am more interested in engaging in a dialogue with all adjusting firms about where we can take CIAA,” remarks Poon, who adds he will be setting up meetings with senior leaders of adjusting companies to discuss this vision. “I hope they see existing or potential value and they want to participate in shaping our profession as part of the insurance industry. That is our goal.”

Poon says dealing with adversity is nothing new for independent adjusters, who have to handle and cope with stressful situations such as natural catastrophes, major losses and the serious after-effects on individual people and communities.

“As much as there are challenges, there are also opportunities. We have to face those challenges head-on and make sure the industry understands the value that independent adjusters bring to the table,” Poon concludes.

“The question today is: what does that next chapter look like for the independent adjusting profession?” 

October/November 2014

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CIAA 30th Annual General Meeting and Conference, Quebec City, Quebec

The Canadian Independent Adjusters’ Association (CIAA) held its 30th Annual General Meeting and Conference in beautiful Quebec City at the Fairmont Le Chateau Frontenac from Aug. 21-24. More than 100 attendees joined together for a bustling tradeshow, informative education sessions, social events and the member meeting. l

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www.claimscanada.ca

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Quebec

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CIAA REGIONAL PRESIDENTS 2014 – 2015 NEWFOUNDLAND & LABRADOR TBA 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 Crawford & Company (Canada) Inc. 7171 Jean-Talon Est, Suite 500 Montreal, QC H1M 3N2 Phone: (514) 748-7300 Fax: (514) 748-2228 E-mail: Claude.Nadeau@crawco.ca ONTARIO Dorothy Lowry, FCIP Crawford & Company (Canada) Inc. 11 - 431 Bayview Drive Barrie, ON L4N 8Y2 Phone: (705) 728-5597 Fax: (705) 728-2167 E-mail: Dorothy.Lowry@crawco.ca MANITOBA Emmanuel Sol Cruz Kernaghan Adjusters Ltd. 203 – 90 Garry Street Winnipeg, MB R3C 4H1 Phone: (204) 956-2550 Fax: (204) 943-5760 E-mail: mcruz@kernaghan.com 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 M. Doreen Lennon, CIP Townsend & Leedham Adjusters Ltd. 200, 4245 - 97 Street Edmonton, AB T6E 5Y7 Phone: (780) 463-7776 Fax: (780) 462-1280 E-mail: dlennon@tladjusters.com PACIFIC TBA

National Standing Committees 2014-2015 ADVISORY Gary Ellis, BBA, FCIP, RF, FCLA, FCIAA AMG Claims Inc. 535 North River Road, Unit 3 Charlottetown, PEI C1E 1J6 Phone: (902) 628-9091 Fax: (902) 628-9093 E-mail: gary.ellis@amgclaims.ca John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca

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

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

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

John Jones, BA Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: jjones@cl-na.com

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

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

Justin MacGregor Past President Insurance Brokers Association of Canada Phone : (416) 859-4567

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 Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com Gary Ellis, BBA, FCIP, RF, FCLA, FCIAA AMG Claims Inc. 535 North River Road, Unit 3 Charlottetown, PEI C1E 1J6 Phone: (902) 628-9091 Fax: (902) 628-9093 E-mail: gary.ellis@amgclaims.ca John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca Patricia M. Battle Canadian Independent Adjusters’ Association/L’Association Canadienne des Experts Indépendants Centennial Centre, 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, CIP, CIOP 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 Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: jjones@cl-na.com

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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

October/November 2014

Mark Stewardson, FCIP Royal & Sun Alliance 2225 Erin Mills Parkway, Suite 1000 Mississauga, ON L5K 2S9 Phone: (905) 403-2333 Fax: (905) 403-2326 E-mail: Mark.Stewardson@rsagroup.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 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 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 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 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 John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 85 Englehart Street Dieppe, NB E1A 8K2 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com

CONSTITUTION & RULES John Jones, BA Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: jjones@cl-na.com

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

CONVENTION TBA

MEMBERSHIP & QUALIFICATIONS Georgiana Chen, CIP ProFormance Group Insurance Solutions Inc. 1101 Kingston Rd., Suite 280 Pickering, ON L1V 1B5 Phone: (877) 539-3111 Fax: (905) 554-3776 E-mail: gchen@proadjusting.ca

DESIGNATION Paul W. Greening, CLA, FCIAA Greening Aviation Claims Inc. 26C Palliser Park, Box 190 Riverhurst, SK S0H 3P0 Phone: (306) 353-2000 Fax: (306) 353-2200 E-mail: pgreening@sasktel.net 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 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 EDITORIAL Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Dr. Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 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 EDUCATION Gary Ellis, BBA, FCIP, RF, FCLA, FCIAA AMG Claims Inc. 535 North River Road, Unit 3 Charlottetown, PE C1E 1J6 Phone: (902) 628-9091 Fax: (902) 628-9093 E-mail: gary.ellis@amgclaims.ca EMERGENCY MEASURES Richard Van Horne Action Investigations Inc. 2 Catelina Court Dartmouth, NS B2X 3G9 Phone: (902) 462- 1222 Fax: (902) 462-3688 E-mail: richardvanhorne@actioninvestigations.ca FINANCE John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca

NOMINATING John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com James B. Eso, CIP, CIOP 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, CIP, CIOP 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 John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: jseyler@integrated-ins.ca

Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: apoon@cl-na.com 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

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CIAA 30th Annual General Meeting and Conference, Quebec City, Quebec

The Canadian Independent Adjusters’ Association (CIAA) held its 30th Annual General Meeting and Conference in beautiful Quebec City at the Fairmont Le Chateau Frontenac from Aug. 21-24. The President’s Banquet and Ball saw numerous awards being handed out to CIAA members. l

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Quebec

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P3 and Potential Losses

How the investigation of public-private partnership (P3) claims poses challenges for adjusters.

BY SEAN FORGIE

Governments are increasingly turning to alternative financing and procurement methods to deliver large capital construction projects, commonly referred to as public-private partnerships, or ‘P3.’

P3 projects help transfer risk from the taxpayers to the private sector by relying on consortiums of financiers, developers, contractors, professional consultants and other private sector experts to design, build, finance, and in some cases maintain and operate infrastructure projects. P3 development allows public sector project owners to harness the expertise and efficiency of the private sector to procure infrastructure projects with a high degree of certainty over project costs, delivery timelines, and project quality.

Private sector P3 project consortiums are usually project specific special purpose joint ventures (‘JV’) or special purpose vehicles. When a P3 project is awarded, the JV assumes all financial, technical and operational risks. This creates unique challenges for professionals working on P3 projects: information utilized for pre-bid design is often very preliminary data, which can affect bid-pricing and design elements. If this leads to underestimation of materials, or design changes discovered during the construction phase, the designer can face claims from the design builder, even though “errors” may have flowed from incomplete preliminary data. Of course, design professionals also regularly face allegations of “errors” unrelated to this issue.

Design services agreements Design professionals selected by the JV are usually required to execute a Pre-Bid Teaming Agreement for design services furnished during the bid stage of the project. Services provided during this stage are used by the JV to develop the bid for presentation to the project owner. In addition to outlining the scope of services, this document usually defines the required professional standard of care. Contracts we have seen require that professional services “conform to professional standards and principals accepted as standards of care customarily observed by professional consulting firms providing similar services at the same time and location.”

If the JV’s bid is accepted and the project is awarded, design professionals usually execute a Design Services Agreement, 26 Claims Canada

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P3

which includes a very detailed scope of work and services to be provided during each phase of the project. Design Services Agreements we have reviewed include a definition of the professional standard of care as noted above, and also define “liability of consultant” as “consultant’s negligent acts, errors, or omissions in the performance of services or in connection with any of its other obligations under this agreement.”

Architects, engineers, geotechnical consultants, surveyors and “any other firms which have or will provide professional services in regard to the project” are covered by the P3 project specific professional liability policy. This coverage is primary, but most professionals maintain their own E&O coverage as well, which may apply to claims below any applicable deductible or self-insured retention, or in excess of the project specific policy limit.

The insuring agreement covers the professional’s negligent acts, errors and omissions, and breach of contract or agreement resulting from negligent acts or errors and omissions in the conduct of professional services.

Professional services are defined in the policy as “those the insured is legally qualified to perform for others;” a description of services is often contained in the application for insurance, if in doubt. Day-to-day supervision of manual operations, labour, or physical construction work usually undertaken by building or engineering contractors is not considered professional services under the policy.

Standard of care It is beyond the scope of this article, and my expertise as an adjuster, to provide an in-depth analysis of the court’s interpretation of the standard of care applicable to professionals. www.claimscanada.ca

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During the pre-bid design phase of the project, the consulHowever, generally, professionals are expected to faithfully execute the terms and conditions of their service agreements by tant estimated 100kg of reinforcing steel was required per cubic meter of concrete for caisson construction. During the construcdiligently doing their best professional work.

E&O claims arise when professionals fail to exercise due dili- tion phase, it was determined 300kg of reinforcing steel per cubic gence, or they perform their duties in a substandard way. When meter of concrete was necessary to meet caisson load specificaprojects exceed budget, fail to be delivered on time, or defects in tions, given soil conditions. This caused significant cost overruns the finished project require repair or modification, professionals for supply of reinforcing steel, and fabrication of reinforcing steel can be held financially responsible if it is proven they failed to cages for caissons.

The insured acknowledged the “error” when the issue was meet the standard of care.

To confirm whether the standard of care was met, claim discovered and brought to their attention by the JV, and agreed investigations need to focus on whether the involved profes- 100kg reinforcing steel per cubic meter of concrete was insufsional possessed the requisite skills for the project undertaken, ficient. As such, the JV asked that a claim be submitted under the Project Specific Professional Liability and whether they conducted professional Policy. activities with due diligence and the reaOur claim investigation revealed that sonable care necessary. On large infrathe consultant had been provided with instructure projects, it is essential that prostructions from the JV during the pre-bid fessionals do not take on projects beyond design phase of the project to use 100kg of the technical capabilities of the individureinforcing steel per cubic meter of conals assigned to the project, or those of the crete for preparation of the bid, pending firm. receipt of geotechnical testing data that Claim investigations must also conwould confirm soil conditions where the sider what information was available when caissons were to be installed. It was andecisions leading to alleged “errors” were ticipated that once this information was made, and whether similar professionals on hand, it would be possible to evaluate with similar information would have made the actual amount of reinforcing steel rethe same decision. What appears to be an quired for the caissons. Unfortunately, this error with the benefit of “20-20 hindsight” was not addressed prior to submission of may have been a reasonable decision at the the bid. time.

As the engineering consultant followed It is important to note the standard of instructions from the JV, professional negcare is not perfection. Experts are retained ligence was not proven, and our investigabecause they have special skills. When tion confirmed the standard of care was retained, they have a duty to exercise the met. The engineering consultant did not ordinary skill of a competent member of When projects exceed have sufficient information to calculate an their profession; failure to do so equals negligence. Those retaining experts for budget, fail to be delivered accurate amount of reinforcing steel during the pre-bid design phase, and followed their special skills cannot expect infallibilon time, or defects in the instructions to the letter. ity, only reasonable care and competence. finished project require Professionals must conduct their activiConclusion ties with the same or superior expertise to repair or modification, To confirm whether professionals meet similar professionals in similar circumprofessionals can be held the necessary standard of care, it is essenstances, given similar information. In othtial to determine what information was er words, professionals are required to do financially responsible when decisions were made, and what’s normal, reasonable and customary if it is proven they failed to available whether a similar professional in similar and refrain from doing whatever similar meet the standard circumstances would reach the same conprofessionals would not do in similar circlusion. Negligence can only be proven if cumstances. of care. the professional failed to exercise due care Professionals must also ensure all conin the circumstances, or was not reasontractual obligations have been met, but ably competent. needn’t do more than contractually obliWhen dealing with P3 projects, the temptation exists to gated, as long as professional services meet the ordinary standard use coverage available under the Project Specific Professionof care.

If professionals have not violated the standard of care, they al Liability Policy to address any cost consequences relating should not be held financially responsible in the absence of neg- to design. As such, each alleged error must be investigated and scrutinized to confirm whether the standard of care was ligence, recklessness or intentional misconduct. met. 

Example

A recent claim investigation undertaken by our firm involved allegations an engineering design consultant on a P3 infrastructure project underestimated the amount of reinforcing steel required for the construction of a number of caissons supporting an elevated rail line. www.claimscanada.ca

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Sean Forgie, BA, CIP, CFEI, is national director of casualty/ liability for major loss services (MLS) at Cunningham Lindsey. He oversees the handling of complex liability claims conducted by the executive general adjusters, senior general adjusters and general adjusters that make up the MLS team in Canada.

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There’s Something In the Road!

Evaluating driver response can be a complex task for engineers and scientists.

BY KURT ISING, DR. JASON DROLL AND PAMELA D’ADDARIO

Drivers predictably encounter the unpredictable. Whether as benign as a newspaper blowing across the road or as serious as a child darting from the curb, drivers must decide what to do when confronted with these situation.

In the case of the blowing newspaper, a driver may decide to do nothing, whereas in more serious situations, drivers typically respond. Unfortunately response alone does not guarantee successful avoidance. Failure to avoid the hazard may lead to injury, which may in turn lead to close scrutiny of the driver’s response.

In this article, we describe how scientists and engineers evaluate driver responses to help clarify liability questions. Driver responses are generally scrutinized in three ways: 1) response speed, 2) response choice, and 3) response magnitude.

Response Speed A driver’s perception/response time (commonly called PRT) is a measure of how much time a driver takes to respond to a hazardous event. “Perception” is perhaps a misnomer here, since we cannot read the driver’s mind to determine the moment a hazard was first “perceived.” Indeed, if drivers were held accountable to when they said they first “perceived” the hazard, they could simply say they never saw it!

Instead, PRT is bracketed by two events. The first event is when a hazardous event begins or becomes apparent. This might be the moment a stopped vehicle begins to accelerate into the path of the approaching driver, or the moment when a pedestrian steps out from behind a parked truck. The second event is when the driver begins to execute a physical response, such as steering or braking.

During a driver’s PRT, it is generally accepted that they must perform four tasks. First, the driver must detect the hazard in front of them. In daytime, this is usually straight-forward. At night, reduced lighting may reduce a driver’s opportunity to detect the hazard.

Second, the driver must identify the situation as hazardous.

This may be clearly apparent when approaching a stationary pedestrian who is looking in the opposite direction but could be more difficult if the collision path between two vehicles must be predicted.

Third, a driver must decide what to do. Their options include doing nothing, swerving left or right, braking or accelerating, or some combination thereof. The complexity of the hazardous situation can complicate this decision. Drivers typically respond faster when the response choice is clear. For example, in response to a decelerating lead vehicle, the decision to brake is clear. In response to an oncoming vehicle crossing the centerline, the decision to swerve left, swerve right, brake, or do nothing is less clear, and it typically takes drivers longer to decide how to respond.

Lastly, a driver must physically act. In the case of braking, the driver moves their foot from the accelerator to the brake pedal.

If a driver already had their foot over the brake, their response time can be quicker.

Once the driver begins to initiate a vehicle response, such as steering or braking, the PRT is considered “officially” over.

Numerous studies have tested drivers under nearly real-world conditions, and these studies often help provide a better context against which to evaluate a driver.

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Human factors and accident reconstruction techniques have evolved far beyond the one-size-fits-all approach to perception/ response time, recognizing that driver response will depend on the hazard confronting the driver and its context. Numerous studies have tested drivers under nearly real-world conditions, and these studies often help provide a better context against which to evaluate a driver.

Response Choice

the case of modern anti-lock-brake-equipped vehicles, how often did you feel the characteristic pulsation of anti-lock braking through your brake pedal? If you are typical of many drivers, your answer is likely “not very often” or perhaps even “never.”

Even if you have achieved these high levels of deceleration, it is likely that they weren’t achieved instantly but rather evolved as you continued to assess the situation you were responding to.

There are numerous experiments that suggest drivers faced with a simulated hazard will not typically respond immediately with full braking. As early as 1968, researchers used a driving simulator to expose subjects to the sudden appearance of a pedestrian entering the road from behind a shed located near the road edge. The results showed there was a significant variation in the degree of braking applied by the subjects. In fact, the subject who had the fastest initial brake response time never actually applied his brakes hard enough to avoid impact.

In another experiment, drivers on a test track were presented with the sudden appearance of child-sized dummies moving across their path. The study showed that 86% of subjects demonstrated a twostage braking response. That is, while drivers were relatively quick to brake to an initial value, they then paused to assess the situation further before applying the brakes harder. Those drivers who exhibited a two-stage braking response were 17% more likely to impact the dummies than those who exhibited single-stage braking.

Facing a complex hazard, a driver may not know which avoidance response is best. In retrospect, their decision to swerve left instead of right might seem to be clearly wrong. Sometimes drivers are criticized for not making what may appear to have been a better choice.

This sort of after-the-fact avoidance analysis incorporates what is referred to as hindsight bias. That is, with the benefit of hindsight, the analyst can clearly see the avoidance manoeuvre that should have been taken. Unfortunately, that clarity is not always present in the moment and drivers often rely on instinct. For example, drivers often steer away from a hazard. Although intuitive, this can increase, rather than decrease, the likelihood of collision.

Imagine a vehicle accelerating across a driver’s path from a stop sign on the right.

The approaching driver is likely to swerve left. Unfortunately, this response steers the car towards where the incurring vehicle will be, rather than steering towards where it won’t be, a moment later.

In litigation, Conclusion Steering towards the incurring vehicle is driver response may counter-intuitive. It may successfully avoid a In litigation, driver response may be collision if that incurring vehicle continues assessed in three ways: 1) response speed, be assessed in accelerating across the approaching driver’s 2) response choice, and 3) response magthree ways: path, but could cause a collision if the incurnitude. Response speed, typically quantiring vehicle instead stops. The behaviour of fied as perception-response time (PRT), 1) response speed, the incurring vehicle is not something the is assessed based on the particular haz2) response choice, and approaching driver can predict. ard confronting the driver with reference 3) response magnitude.

For these reasons, some jurisdictions to experimental data. Response choice, acknowledge that drivers facing the “agony which may be linked to the “agony of colof collision” should not be held to a stanlision”, is difficult to critique without the dard of perfection, but to a standard of what a “reasonable” driver influence of hindsight but may also be compared to typical exwould do in similar circumstances. When judges and juries are perimental response. With respect to response magnitude, many shown that an incident driver responded in a manner consistent studies have demonstrated that drivers are hesitant to fully apwith other “typical” drivers in a study with similar circumstances, ply their brakes – even in emergency situations. For those who the incident driver will often be considered to have chosen a “rea- do, there may be a significant delay in reaching higher levels of sonable” response, despite the unfortunate outcome. deceleration.

Consideration of these three issues allows scientists and enResponse Magnitude gineers to evaluate the “typicalness” of a driver’s response in a Often, collision avoidance analyses assume that once a driv- particular incident.  er’s PRT is complete, their brakes can be fully applied – perhaps subject to some mechanical lag within the brake system. The Kurt Ising is a senior engineer and principal of MEA Forensic problem with this approach is that drivers typically do not take Engineers & Scientists. He is responsible for technical investigaadvantage of their vehicle’s full braking capabilities. If drivers tions of motor vehicle accidents with an emphasis on driver visibildon’t typically brake as hard as possible, yet are held to this stan- ity and human factors. Dr. Jason Droll is a human factors expert. dard by analysts or courts, drivers may be found to be at fault for He analyzes the performance and behavior of people in a variety of a collision when their imperfect behaviour actually reflects that tasks, such as when driving or using consumer products. Pamela of a typical driver.

D’Addario conducts technical investigations of motor vehicle colThink about your own emergency driving experiences. How lisions including determining collision severity, collision sequence, often did you lock up your tires and skid down the road? Or in vehicle speed and avoidance potential.

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Missed Opportunity Ontario Court of Appeal fails to clarify the duty to defend an additional insured.

BY JOSIAH T. MACQUARRIE

We need a unified approach to the duty to defend additional insureds in liability claims, but it seems like every court decision in this area uses a different set of rules. Regrettably, the recent Ontario Court of Appeal decision in Great Atlantic & Pacific Company of Canada Limited v. Economical Mutual Insurance Co (2014 CarswellOnt 5667, ONCA). has only added to the inconsistency.

Great Atlantic is an unsatisfying decision for two reasons – not only did it fail to clarify the test for defending additional insureds, but it resulted in two appellate level decisions endorsing different approaches to this issue.

A party is typically added as an additional insured to a liability policy when they hire a contractor to perform services related to their business. The most common example is when a property owner hires a winter maintenance contractor to plow and salt their premises, but it can include any number of commercial relationships.

The coverage afforded to the additional insured is limited. The language used typically states that the policy of the contractor will cover the additional in-

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sured for liability “arising out of” the operations of the contractor. But additional insured coverage is rarely this simple.

Often, the claims made against the property owner include independent allegations of negligence that do not “arise out of” the operations of the contractor.

For example, in a slip and fall situation, they may allege that the area of the fall was poorly lit, or that the premises did not conform to the relevant building code. This can bring the claim outside the ambit of additional insured coverage.

“True Nature” vs. “Specific Allegations” Courts have struggled with how to deal with these situations, and two distinct lines of case law have emerged in response. One line looks to the “true nature” of the claim being made. Essentially, this is an all or nothing approach where, if some of the claim could fall within the scope of coverage, the additional insured is owed a defence.

However, another line of case law has looked at the “specific allegations” made against an additional insured. It holds that insurers may be obligated to defend some, but not necessarily all, of the claims made against the additional insured, with corresponding defence costs.

October/November 2014

In RioCan Real Estate Investment Trust v. Lombard General Insurance Co (2008 CarswellOnt 2129, ONSC). a plaintiff suffered a slip and fall at one of RioCan’s shopping malls. The plaintiff named RioCan as the defendant, and RioCan in turn added its winter maintenance contractor as a third party. The contractor had a contractual obligation to add RioCan as an additional insured to its liability policy.

RioCan tendered the claim to the contractor’s liability insurer (Lombard) for a defence, which was denied. RioCan sued for coverage. The court held that, because some of the claims made against RioCan could fall within the scope of coverage, Lombard was therefore obligated to defend RioCan. All that was required was that the additional insured demonstrate the mere possibility that a claim could fall within the scope of coverage in order for the duty to defend to be triggered.

A similar approach was taken by the Nova Scotia Court of Appeal in SREIT (Park West Centre) Ltd. v. ING Insurance Co. of Canada (2009 CarswellNS 191, NSCA), where ING had initially assumed the defence of the additional insured.

However, the claim was later amended and ING refused to defend the additional

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allegations made in the amended claim.

The court did not accept ING’s position, however, and ordered it to defend.

A much different approach was taken in Atlific Hotels and Resorts Ltd. v. Aviva Assurance Co. of Canada (2009 CarswellOnt 2697, ONSC). Atlific Hotels and Resorts Ltd. operated the Deerhurst resort. A hotel guest slipped on ice on hotel property, and commenced an action against both Atlific and its winter maintenance contractor. The claim contained a number of allegations about improper winter maintenance, but also included allegations of poor lighting and a lack of anti-slip matting, as well as the failure of the resort to cancel an evening program.

While some claims fell within the scope of additional insured coverage, several allegations were related to the general operations of the resort. The court held that Aviva was only obligated to defend Atlific with respect to the former, and not to the latter. The result: Aviva had to contribute to some, but not all, of Atlific’s defence costs.

The reasoning in Atlific was adopted by the Court of Appeal in Papapetrou v.

1054422 Ontario Ltd (2012 CarswellOnt 9127, ONCA). Papapetrou is a confusing decision in its own right, but until now was the leading decision on defending additional insureds. The problem with Papapetrou was that the winter maintenance contractor failed to add the property owner as an additional insured. The Court instead looked to the indemnity and hold harmless provisions of the maintenance contract to find that an insurer was only obligated to defend a party to the extent that specific allegations of negligence were made against them. This problematic approach has left many in the insurance industry anxious for clearer direction from the Court of Appeal.

Recent Developments Rather than clarifying the law, Great Atlantic & Pacific Company seems to have endorsed the “true nature” approach set out in RioCan without actually rejecting Atific and Papapetrou. As a result, we now have decisions from the Ontario Court

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of Appeal endorsing both approaches.

In Great Atlantic, the plaintiff fell on water left behind by a cleaning machine.

She sued the property owner, the maintenance company and a maintenance subcontractor. Economical defended its insured (the maintenance contractor), but refused to defend the property owner. The property owner commenced a coverage application seeking a defence and indemnity. The application judge considered whether there was a duty to defend the property owner based on the

what approach governs the duty to defend an additional insured.

Conclusion

Regardless of the approach taken, it is important to remember that issues involving additional insured coverage are best addressed early.

The current state of the law is problematic. While some commentators suggest that RioCan and Atlific are not contradictory, the reality is that the two lines of cases lead to lengthy and often unnecessary disputes about the duty to defend and whether a certain case is more like RioCan or more like Atlific.

While both the “true nature” cases and the “specific allegations” cases have merit, lost in the discussion is the specific purpose of additional insured coverage. It is not meant to provide liability insurance to property owners in all cases where there is a slip and fall on their property. In that sense, the “true nature” cases, which draw heavily on the traditional duty to defend analysis, go astray. It is a limited coverage meant to limit the liability exposure of property owners due to the negligence of their contractors. The “specific allegations” cases seem to better reflect this intent, and allocate the cost of defending claims accordingly. Unfortunately, we will have to wait before the case law is reconciled.

In the meantime, and regardless of the approach taken, it is important to remember that issues involving additional insured coverage are best addressed early. Failure to do so will likely result in added defence costs and potentially unnecessary coverage litigation.

This is true no matter what approach the courts ultimately take.

language of the policy. He examined a number of cases, including RioCan and Atlific (though surprisingly did not mention Papapetrou), and held that there was a duty to defend where the “true nature” of the case was that injuries were suffered due to a failure to maintain the premises.

On appeal, the Court of Appeal simply adopted the reasons of the application judge, with which they said they “largely” agreed. One would have hoped for a clearer signal from the Court as to

Josiah T. MacQuarrie is a lawyer with Dutton Brock LLP, with a practice focus on the defence of personal injury and property claims, insurance coverage and subrogation. Dutton Brock LLP is a member of Canadian Defence Lawyers(CDL), the only national organization representing the interests of civil defence lawyers.

It offers broad opportunities to unite the defence bar over common issues, as well as providing accredited continuing legal education. 

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Priority of

Payment Establishing a “nexus” or connection is key to finding out which insurance company pays, as one legal case shows.

BY DANIEL STRIGBERGER

In a 2-1 split, the Court of Appeal for Ontario allowed an insurer’s appeal in a unique priority of payment dispute case.

It decided whether any insurer of any kind, or only “motor vehicle liability insurers,” is obliged to pay accident benefits pending the resolution of a priority dispute.

In Zurich v. Chubb, the claimant was driving a Ford Windstar that she had rented from Wheels4Rent, a car rental agency. On September 23, 2006, she had an accident and was injured.

No other vehicle was involved.

Wheels4Rent offered an optional accident policy providing coverage in the event of accidental loss of life and injury. Chubb was the insurer of the optional policy. The claimant declined the optional policy. After the accident, the claimant applied for accident benefits under the optional policy. Chubb declined to provide benefits on the basis that the optional policy was not a motor vehicle policy, but rather a commercial policy. In other words, Chubb refused to accept her application on the basis that 34 Claims Canada

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it was not an automobile insurer with respect to her claims.

The claimant then applied for accident benefits to Zurich, which insured Wheels4Rent. Zurich administered the claim on a “without prejudice” basis.

Zurich took the position that Chubb was the first insurer under Ontario’s statutory accident benefits scheme and should have paid first, pursuant to section 2 of O. Reg. 283/95.

At arbitration, the arbitrator found that that Chubb was not an insurer for the purposes of the Insurance Act and O. Reg. 283/95, because at no time did it issue a motor vehicle liability policy to Wheels4Rent or the claimant. Accordingly, he held that there was no nexus or connection between Chubb and the claimant. In other words, section 2 of O. Reg. 283/95 did not apply to Chubb in this case.

On appeal, the judge disagreed with the arbitrator’s finding that Chubb was not an insurer or that there was no nexus/connection between Chubb and the claimant. The judge found that the arbitrator erred in finding that the optional policy was not a “motor vehicle liability policy” under the Insurance Act. He found that the policy was spe-

October/November 2014

cifically intended for car rental companies and their customers. The obvious intent was to provide extra insurance for renters.

With respect to the nexus argument, the judge held that the arbitrator erred by applying a “remoteness” test instead of an “arbitrariness” test. He held that the connection between the claimant and Chubb may have been remote, but it was not arbitrary.

The Court of Appeal held that the appeal judge erred in concluding that the Chubb policy was a “motor vehicle liability policy.” There was no element of that accidental death and dismemberment policy that insured against liability to others arising out of property damage or injury caused by an automobile or the use or operation thereof: “Ms. Singh’s choice to send her application to Chubb was not random or arbitrary, but was based on the optional coverage provided to Wheels4Rent customers,” the court stated in its decision. “Nonetheless Chubb was not required to respond as it was not a ‘motor vehicle liability insurer’, nor had it held out or represented to have ever provided such coverage www.claimscanada.ca

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at any relevant time. Both the plain meaning of s. 268 of the Insurance Act and O. Reg. 283/95, and the underlying policy behind the legislation, favour excluding non-motor vehicle liability insurers from the obligation to pay first and dispute later.” [emphasis added] Juriansz J.A. disagreed with the majority. In his dissenting reasons, he took issue with the new concept of a “non-motor vehicle liability insurer,” noting that Chubb does regularly write motor vehicle liability policies in Ontario. In other words, Chubb is not a “non-motor vehicle liability insurer” in the broad sense.

“I expect that adjudicators in future cases will struggle with determining whether an insurer is a ‘non-motor vehicle liability insurer,’” Juriansz J.A. sated. “They will have difficulty reconciling the conclusion that the plain meaning of the Regulation excludes ‘non-motor vehicle liability insurers’ with the proposition that the pay first obligation will continue to apply in cases where there is no actual coverage, but only ‘purported’ or ‘represented’ coverage.”

The “nexus test” has been the subject of much debate over the past several years, primarily because insurers that did not have valid auto policies in play at the time of a loss were being forced to pay accident benefits

(and incur loss control expenses) at the outset. Some of those insurers became saddled with claims indefinitely, having taken an off-coverage position initially without pursuing a priority dispute.

In Danilov v. Unifund (FSCO Arb., 2009), there was never an objective

The “nexus test” has been the subject of much debate over the past several years, primarily because insurers that did not have valid auto policies in play at the time of a loss were being forced to pay accident benefits (and incur loss control expenses) at the outset. connection between the claimant and the insurer because the insurer never issued a policy that insured the claimant or the vehicle he was in at the time of the accident. However, the arbitrator found that the claimant had “turned his mind” to his choice of insurer when he applied to the insurer. He held that

the claimant had reason to believe that there was coverage, which was enough to trigger the insurer’s obligations to pay now and dispute later.

Danilov was the first nexus decision emphasizing that the nexus test was subjective, based on the claimant’s belief that there was coverage.

In Zurich, there was no question that the claimant believed that there was coverage with Chubb when she applied there. This alone would have satisfied the test from Danilov, and also was enough to satisfy the appeal judge and Juriansz J.A. that her application to Chubb was not arbitrary. Yet now it seems that the test has been modified to include an objective component: Whether the claimant believed that there was coverage and, if so, whether the impugned policy was a “motor vehicle liability policy.”

With that in mind, insurers should be aware of the huge (and sometimes very costly) risk of relying on the nexus test to refuse an application for accident benefits, especially in light of the new requirements under section 2.1 of O. Reg. 283/95 for accidents on or after September 1, 2010. Zurich has applied for leave to appeal to the Supreme Court of Canada.  Daniel Strigberger is a partner in the insurance litigation group in the Waterloo office of Miller Thomson LLP.

Your Insurance News Source .ca Sign-Up at http://bit.ly/cuenews to receive Canadian Underwriter’s free DAILY e-Newsletter each morning – containing all of the latest industry news, press releases, blogs, events, careers and more.

www.claimscanada.ca

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The Related Claim

A single related claim must involve analysis of specific facts around each allegation and cause of action.

BY JARED D. EPP

On June 25, 2014, the Ontario Court of Appeal over-turned a decision of the lower court on the issue of whether or not a Statement of Claim, which alleged that a law firm had committed various acts of misconduct, could be considered a single, related claim pursuant to the terms of that firm’s professional liability policy.

The appellant decision, Simpson Wigle Law LLP v. Lawyer’s Professional Indemnity Co., provides a clear framework for analyzing the concept of “related claims” by stressing the importance of looking at the specific facts and remedy underpinning each alleged cause of action. The decision, which concluded that the claims were not related, is significant as it increased the potential amount of the law firm’s insured loss by $1 million.

Facts of the Case Simpson Wigle is an Ontario law firm. In the early 1990s, it was retained by two brothers, Angelo and Frank Agro.

The brothers operated a number of businesses together.

Sometime in 1993, Angelo was diagnosed with Parkinson’s disease. As a result, Simpson Wigle drafted two different powers of attorneys, each naming Frank as the primary attorney. Angelo’s nephew, Richard Agro, was named as an alternative attorney.

Sometime after the powers of attorneys were executed, Frank refused to act for Angelo, and Simpson Wigle, along with the CIBC (who did not participate in the appeal) brought an application seeking to be appointed as Angelo’s 36 Claims Canada

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committee. According to the Statement of Claim, Simpson Wigle did not disclose that Angelo had an alternative power of attorney in its application materials.

Frank would later pass away, appointing a partner of Simpson Wigle as his executor. This executor would ultimately arrange for the sale of 6 properties owned jointly by the brothers. The Claim alleged that the sale undermined the value of Angelo’s estate. Angelo then passed away and his estate, including Richard Agro, brought an action against Simpson Wigle and the CIBC, alleging a number of causes of action, including negligence, breach of contract and breach of fiduciary duty.

Court Proceedings As a preliminary matter Simpson Wigle, who was insured by the Lawyers’ Professional Indemnity Co., sought a declaration from the court that the Statement of Claim alleged two different claims as opposed to a single related claim within the meaning of their insurer’s policy. Simpson Wigle was unsuccessful in its initial application. On appeal, the Court was asked to consider a single issue: whether the Statement of Claim disclosed a single claim under the policy. Justice Gillese authored the appellant decision.

In considering how to characterize the Claim, Justice Gillese held, as a starting point, that the court should review the terms of the insurance policy. After repeating several well established interpretation principles of insurance law, Justice Gillese identified the critical wording of the law firm’s insurance policy: “All CLAIMS... which arise from a www.claimscanada.ca

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single or related error(s), omission(s), or negligent act(s), shall be considered a single CLAIM regardless of the number of INSUREDS or the number of persons or organizations making a CLAIM or the time or times the error(s), omission(s) or negligent act(s) took place.”

Based on the wording in the policy, the key issue for the appellant court was the meaning of the term “related.” In considering the meaning of this term, Justice Gillese reviewed several historical decisions including: Simpson (Receiver of) v. Lloyd’s Underwriters (multiple consumer deposits lost due to thefts by real estate broker constituting unrelated claims); Elstrom, Smith, & Co. v. Kansa General Insurance Co., 1988 (allegation that accounting firm failed to consider benefits of amalgamation and failed to properly manage company property constituting unrelated claims) and Dunn v. Chubb Insurance Co. of Canada (allegation against Nortel arising from revenue recognition and earnings management scheme constituting unrelated claims).

the court that Angelo had an alternative power of attorney; and the negligent administration of Angelo’s estate (resulting from the sale of the six properties).

To Justice Gillese, these allegations were, on their face, different. A court could find that it was negligent for Simpson Wigle to fail to report that Angelo had an alternative power of attorney but not find that the sale of land was conducted in a negligent manner. Justice Gillese came to a similar conclusion when reviewing the remedies being requested

by Angelo’s estate.

The remedy flowing from the allegation relating to the power of attorney omission was the recovery of expenses charged by Simpson Wigle while acting as Angelo’s committee. Conversely, the remedy for the negligent administration of Angelo’s estate was compensation for any diminution in the estate’s value.

Given the different facts underpinning the legal allegations and the differences in remedy being requested, Justice Gillese concluded that Simpson Wigle was entitled to an Order that the Statement of Claim raised more than one claim. The decision reached by the Court represented a significant victory for Simpson Wigle as it could result in the firm receiving an additional $1 million of liability coverage.

Meaning of the Term “Related” In light of these decisions, Justice Gillese suggested that the Court look to the dictionary for the appropriate meaning of the term “related.”

Thus, to Justice Gillese, two claims are related “when there is a sufficient Conclusion association or connection between Justice Gillese’s them, reading the Policy as a whole Justice Gillese’s reasoning is an reasoning is an important and bearing in mind its objective. In important reminder to insurers, and reminder to insurers, determining whether there is a suftheir counsel, to analyze the specific ficient association or connection, the facts that comprise each allegation and their counsel, court must consider the similarities and cause of action alleged in a Stateto analyze the specific and differences between the nature ment of Claim. Although at a general facts that comprise each and kind of the alleged misconduct level a Claim may appear to relate to which underlies each claim, and the the same course of conduct, at a more allegation and cause kind and character of the losses for detailed level, the comparison breaks of action alleged in a which recovery is sought in each down.

Statement of Claim. claim.”

It is also a reminder to insurers, In considering the factual and lein bringing subrogated actions where gal connection between the claims, judgment enforcement or collection Justice Gillese stressed the impormay be an issue, to frame claims tance of a detailed analysis. Courts should identify the with sufficient particularity to ensure defendants will be specific facts that underpin each particular cause of action. fully indemnified by their own insurers for a loss. Care In other words, a general analysis of a claim is insufficient. should be taken to ensure that facts, remedies and legal Many claims, at a general level, may appear to be related. allegations are not conflated in the claim where they relate For example, the parties, background facts and particular to different legal wrongs.  causes of action that are pled may all be the same. However, that does not mean, according to Justice Gillese, that the Jared D. Epp is a lawyer with Robertson Stromberg LLP claims are related. (www.rslaw.com) focusing on construction and insurance Applying this analysis to the case at hand, Justice Gillese litigation. Robertson Stromberg LLP is a member of The Arc characterized the claim against Simpson Wigle as involving Group of Canada, a network of independent insurance law primarily two allegations: a failure by the law firm to advise firms across Canada (www.thearcgroup.ca). www.claimscanada.ca

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EF

• education forum

A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA

Cyber

Surge Insurance Solutions to a Growing Threat

I

n the last issue, Education Forum looked at the growth in product recall insurance and how it fits into the commercial landscape. In this issue, we look at another trending product: cyber-liability insurance. Like product recall, cyber-events can affect a company’s reputation and call for the use of both insurance and risk management tools.

Virtual crime-wave With the growth in Internet usage and the expansion of connectivity, exposure to cyberrisk is on the rise for most businesses. From malware such as viruses and worms to hackers grabbing credit card details; and from denial-ofservice (DoS) attacks to advanced persistent threats (designed to steal data over a long period) – the forms of cyber-attack are many and varied.

Defending a business against cyber-attack is difficult.

Tools such as firewalls, authentication devices and antivirus software are helpful – indeed, essential – but vulnerabilities can persist. It is virtually impossible to mount and maintain a comprehensive, fail-safe defence against the diverse and ever-evolving forms of attack.

Although it can be tempting to think of cyber-risk as a problem that mainly affects large US companies, Canadian organizations are far from immune. Separate reports released over the last two yearstattacks. In the past 12 months, high-profile cyber-crime events have afflicted USbased retailers Target and Home Depot, but also the Canada Revenue Agency and the National Research Council.

Costs and consequences In this context, Canadian businesses increasingly need to be prepared for a cyber-event. The effects of cybercrime on a company can include direct financial loss (through fraudulent activity), indirect financial loss (such as through business interruption and the costs of restoring 38 Claims Canada

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data and services), and the loss of intellectual property or other forms of competitive advantage.

Loss of data can also result in a company breaching its obligations under privacy and data protection legislation.

This can lead to regulatory repercussions, such as fines, and can expose a company to the threat of litigation by affected customers.

But perhaps the biggest potential cost of cybercrime is the damage to business reputation and loss of customer confidence that can result.

When an organization fails to protect its information intelligence, clients and other key stakeholders lose their trust in the organization.

Many companies have been slow to take these risks seriously, but media reports of breaches – coupled with evolving legislative requirements – are driving increased interest in cyber-security and cyberinsurance.

Exploring further Cyber-risk is an exposure that is not well understood and is changing very quickly, with significant implications for insurance products, claims and liability cases – and also for the internal data management practices of adjusters, insurers, and all other industry participants.

To contribute to a better understanding of this emerging exposure, the CIP Society has commissioned a white paper exploring the implications of cyber-risk for the p&c insurance industry in Canada and addressing its potential impacts on commercial insurance and cyber-liability coverage. The white paper, which will include recommendations for the industry, is to be published in spring 2015.

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Standalone coverage Cyber-insurance is available on a standalone, monoline basis. Some policies provide coverage that is limited to third-party liability expenses such as legal defence costs and regulatory fines. More comprehensive policies also include first-party coverage for the costs associated with a data breach (such as data restoration), and may provide access to services such as notification assistance, credit monitoring, communications and crisis management, forensic accounting and a range of legal services.

Some standalone cyber-insurance policies also provide business interruption coverage (or more specifically network interruption coverage) in response to denial of service attacks or for data losses, even those that involve no physical damage.

Endorsements Cyber-insurance is also provided through endorsements to existing policies – such as errors and omissions (E&O) policies, commercial general liability policies or regular business interruption policies. So far, endorsements have been a more popular option in Canada than standalone cyber-policies.

While the endorsement route can appear flexible, allowing clients to add clauses that fit their needs without putting a separate policy in place, policies that were not designed for cyber-risk may not always provide the level of cybersecurity protection that a given business expects. Adjusters handling a cyber-claim under an endorsement to another type of policy will need to review the policy carefully to check for issues such as high deductibles or sub-limits on first-party exposures.

Crime and carelessness Although recent high-profile cases of data loss and privacy breach have involved cyber-attacks by hackers, sensitive data can also be lost through other means. For example: • theft of a laptop • fraudulent conduct by an employee with access to information • loss of a USB storage device • improper disposal of information Many cyber-insurance policies will cover some or all of these situations as well. For this reason, policies may be referred to by a broader description such as “cyber-risk” or “privacy breach”. trends and issues provided to members of the Chartered Insurance Professionals’ (CIP) Society. The CIP Society is the professional organization representing more than 15,000 graduates of the Insurance Institute’s Fellow Chartered Insurance Professional (FCIP) and Chartered Insurance Professional (CIP) programs.

Work in progress Cyber-insurance is still a fairly new offering, and coverages vary from policy to policy. For example, a policy may or may not contain exclusions for failure to maintain systems, software or risk controls. Coverage of legal services might be focused on defence expenses or might also include alternative dispute resolution services such as arbitration and mediation.

As high-profile cases raise awareness among consumers and business leaders about cyber-threats, businesses may feel increasing pressure to tackle cyber-risk as a strategic issue with potentially serious consequences for business reputation and business continuity – and the market for cyber-insurance is likely to expand as a result. For claims professionals, learning about these new coverages and developing approaches to these complex, multifaceted claims could provide a stimulating opportunity to develop a new area of expertise.  This article is based on excerpts from ADVANTAGE Monthly, a series of topical papers on emerging www.claimscanada.ca

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• on the scene OTS The CIP Society announced its three honourees for this year’s National Leadership Awards, a program that recognizes outstanding achievements in the insurance industry, established in 2009. This year’s honourees in the “Established Leaders” category include Johanne Lépine, executive vice president and leader for eastern Canada at Aon Reed Stenhouse in Montreal and Lynn Oldfield, president and CEO of AIG Canada, based in Toronto. In the “Emerging Leader” category, the awards have recognized Adrian Osti, manager of learning and development at Northbridge Financial Corp. in Toronto. l Cunningham Lindsey Canada Claims Services announced in early October the launch of its new global Third Party Administration (TPA) service called inTrust. Though Cunningham Lindsey has successfully delivered local TPA services, the firm’s clients are increasingly demanding global solutions, Rob Seal, the company’s president and CEO, noted. “The creation of inTrust means Cunningham Lindsey clients will now have a single entry point to a service where claims are centrally managed across multiple territories and classes of business, as well as access to program management, payment management and claims data from any one of nine hubs located on 5 continents,” Seal said in a company announcement. l Xchanging plc, the business process, procurement and technology services provider, and ProFormance Group Insurance Solutions (PGIS), a Canadian-based specialized insurance services company that delivers claims, TPA, training and auditing services, have launched a jointly developed Third Party Administrative (TPA) service specifically tailored to meet the needs of the Canadian Market when processing London Market Business. Aimed to facilitate the reduction of indemnity spend, the solution seeks to combine innovative technology solutions with qualified and trained professionals to maximize efficiencies for the Canadian insurance market, a significant force with approximately $1.7 billion in direct premiums. l On Side Restoration recently announced that Lance Buffitt, current Branch Manager, Grande Prairie, AB will be relocating to become On Side’s new St. John’s, NL Branch Manager. l CEP Forensic Engineering announced that Jean-François Goulet has joined the company at its Ottawa location.

Goulet, a road vehicle accident reconstruction specialist, increases CEP Forensic’s range of services to include accident reconstruction. l AssessMed Inc. announced the appointment of Dr. Max Kleinman as Medical Director for AssessMed Ontario and Maritime Provinces. In other company news, Julie Langlois joins AssessMed as Senior Director of Business Development, Quebec and Christopher Coe was appointed as Business Relations Advisor, Western Division. l

40 Claims Canada

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Johanne Lépine

Lynn Oldfield

Adrian Osti

DKI Canada announced that A T Restoration DKI has joined the organization as its newest member in Grand Falls/Windsor, NL. l Regional Reporting Inc., a U.S.-based marine risk control and claims services firm, has announced the creation of a Canadian division, based out of Toronto. Captain Philip Vardon, Master Mariner, will act as manager of marine services for Canada. Vardon has more than 14 years of marine survey experience across Canada of project cargo, break bulk cargo, hull and liability risks, as well as over 20 years sailing experience. Andrew Rayner will also join the division as business development leader, heading up the Canadian sales efforts. l Aviva Canada has launched its sixth Aviva Community Fund competition, which provides $1 million to “encourage Canadians to create positive change across the country through community initiatives.” Created in 2009, the competition has since provided more than $4.5 million in funding to 91 charities and community groups including youth programs, public schools, camps, animal shelters and centres for those affected by disabilities or illness, according to the insurer. l Traffic delays and being stopped at a red light are common times Canadian drivers use their cell phones while behind the wheel, according to a new survey on distracted driving, conducted by Leger for Allstate Canada. In the nationwide survey, 40% said they check their phones when stopped in traffic because of delays. While at a red light, 34% said they check their phone and 18% admitted to texting. Allstate points to Transport Canada figures from 2011 that show more than 40% of all collisions occur in or around intersections. l The majority of Canadians included in a new survey from Square One Insurance believe that the government will provide financial assistance to homeowners and renters for damage from earthquakes. “According to our recent survey, virtually all Canadians correctly assume that earthquakes can occur anywhere in the country,” Daniel Mirkovic, president of Vancouver-based Square One said in a statement. “But, a majority wrongly believes the government will provide financial assistance for earthquake damage.” l

www.claimscanada.ca

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APPOINTMENT

As a part of its anti-distracted driving ‘Your Last Words’ campaign, Manitoba Public Insurance announced Tuesday the release of a simulator designed to encourage people to stop texting while they drive. The simulator will be available both online at yourlastwords.ca and as a portable, event version.“ The simulator is interactive, sending scripted texts to participants who respond via their smartphone, while encountering vehicles, intersections and obstacles,” stated MPI, the government-run auto insurer for Manitoba, in a press release. “When participants are finished they will see their driving errors and have the option of pledging to not text while driving, and sharing their experience via social media.” l The Nova Scotia government introduced legislation in late September that would place an indefinite moratorium on high-volume hydraulic fracturing for onshore oil and gas from shale deposits, according to Canadian Press. But the legislation would provide an exemption for fracking used for testing and research purposes. Energy Minister Andrew Younger says the amendments to the Petroleum Resources Act will not provide a loophole for the shale gas industry. l The Insurance Institute of Canada recently announced a certificate program designed to give “deeper” technical knowledge to workers who already have IIC’s Chartered Insurance Professional (CIP) designation, as well as a one-day program intended to “give leaders with a non-insurance background a deeper understanding” of the property and casualty insurance industry. The advanced CIP program will start in 2015. The new IIC educational program — titled P&C Insurance: Essentials for Executives — is intended to give business leaders who do not have an insurance background an understanding of “the critical issues and challenges facing insurers today,” according to Peter Hohman, IIC chief executive officer. l Allianz Global Assistance Canada and TIC Travel Insurance Coordinators, with its subsidiary SelectCare Worldwide, have merged their travel insurance businesses in Canada, the firms announced in September. Once closed, the combined entity – operating as Allianz Global Assistance – will be one of the largest travel insurance providers in Canada, according to a statement. The deal is targeted to close by the end of the year. l More than 63% of the 1,201 qualified Canadian drivers taking part in a Traffic Injury Research Foundation (TIRF) survey reported that they felt drug-impaired drivers posed a serious threat to traffic safety. Survey results show the youngest (71.9%) and oldest (78.5%) polled drivers expressed the most concern about drug-impaired drivers, notes a statement from TIRF, a national, independent, charitable road safety institute whose mission is to reduce traffic-related deaths and injuries. The finding is included in The Road Safety Monitor 2013: Drugs and Driving, an annual public opinion poll developed and conducted by TIRF, with financial support from Beer Canada, the Toyota Canada Foundation and Aviva Canada. l

CORRECTION NOTICE

Lindsay Traves Claude Blouin and Jamie Dunn, Partners at Blouin, Dunn LLP, are extremely pleased to announce that former articling student Lindsay Traves has been hired back as an associate at the firm.

Lindsay received her Bachelor of Arts in Philosophy with a minor in Political Science from the University of Western Ontario in 2009, after which she obtained her Juris Doctor from the University of Windsor, spending one semester at Monash University in Malaysia, in 2013.

While attending Law School, Lindsay participated in the Hicks Moorley moot, the Lerners Cup, and the Zuber moots. She also wrote for the Law Enforcement Accountability Project’s blog for which she won two writing awards, was Editor in Chief of the student magazine, and the proud General Manager of the UWindsor Outlaws hockey team.

Prior to articling at Blouin, Dunn LLP, Lindsay worked for a prominent insurance company gaining valuable insight as a member of the legal and compliance departments.

Lindsay completed her articles at Blouin, Dunn LLP and was called to the Ontario Bar in 2014.

While articling, Lindsay attended the Superior Court of Justice for a variety of matters as well as handled her own Small Claims Court files.

Lindsay is a member in good standing with the Law Society of Upper Canada.

Lindsay’s contact information is: ltraves@blouindunn.com (416) 365-7888 ext. 142 Blouin Dunn is one of Ontario’s leading insurance defence firms whose members have been providing quality legal support to the insurance community for over 30 years. We offer services in Ontario to property and casualty insurers throughout North America, at all levels of experience, at appropriate and competitive rates.

Due to editing errors, incorrect information appeared in the article “Dust to Dust” by Michel Millmore in the August-September 2014 issue of Claims Canada Magazine. The original article referenced asbestos measurement, management and the occupational health and safety code in Quebec. These aspects do not necessarily apply to the rest of Canada. Some jurisdictions have specific regulations respecting asbestos and recommended exposure time limits, according to the Canadian Centre for Occupational Health and Safety. l

www.blouindunn.com www.claimscanada.ca

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• on the scene OTS The Office of the Superintendent of Financial Institutions (OSFI) has released a revised Minimum Capital Test Guideline for property and casualty insurers, which comes into force Jan. 1, 2015. “This new version of the guideline represents a more robust risk-based test that more accurately aligns capital requirements to the risks faced by the property and casualty insurance industry,” OSFI Deputy Superintendent Mark Zelmer said in a statement Sept.

24. l Lloyd’s of London released Sept. 25 the pro forma financial results of the Lloyd’s market for the first six months of 2014, reporting an “unusually high incidence of aviation losses,” a 13% year-over-year drop in gross claims paid and a 1.3-point deterioration in its combined ratio. The Society of Lloyd’s reported earned premiums for the market, net of reinsurance, were £9.916 billion in the first half of 2014, up 2.7% from £9.651 billion during the same period in 2013. l A judge in Newfoundland and Labrador has dismissed a class-action lawsuit that claimed the provincial government was negligent by failing to do enough to protect drivers from moose-vehicle collisions, according to The Canadian Press.

Provincial Supreme Court Judge Robert Stack delivered his decision Sept. 19, saying the provincial government was not liable for the collisions and implemented an appropriate accident-prevention policy. The class-action lawsuit included people who were seriously injured since 2001 and several estates of those who have been killed. l British Columbia has moved forward with a new advertising campaign and enhanced police enforcement into the dangers posed by distracted driving. The effort – launched in early September by the B.C. government, the Insurance Corporation of British Columbia (ICBC) and police – seeks to answer the results of driver distractions, which on average, kills 88 people each year in the province.

“That makes distracted driving now the second leading cause of car crash fatalities in B.C., trailing behind speed and narrowly ahead of impaired driving,” notes a statement from ICBC. l The House of Commons passed Sept. 18 a bill that — if accepted by the Senate without amendments — would impose strict liability and compulsory pollution insurance on ship owners and also allow the federal government to indemnify airlines and other aviation firms against losses arising from acts such as terrorism, war and insurrection.

Bill C-3, the Safeguarding Canada’s Seas and Skies Act, passed third reading Thursday and is now awaiting first reading in the Senate. If passed into law, it would make a new law called the Aviation Industry Indemnity Act. It would also make changes to other laws — including the Aeronautics Act, the Canada Marine Act, the Marine Liability Act and the Canada Shipping Act, 2001. It would “ensure that shipowners carry the appropriate amount of compulsory insurance for the risks associated with the cargoes they carry,” Transport Minister Lisa Raitt said. l 42 Claims Canada

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CIAA New Members — July 2014 CORPORATE MEMBERSHIP Doerr Claims Services Inc. R.F. Moore Claims Service Ltd.

Barrie, ON Aldergrove, BC

INDIVIDUAL MEMBERSHIP AMG Claims Inc. Jonathan Stone Fredericton, NB Level 2 Arctic West Adjusters Ltd. Kerrie-Lynn Balsillie Yellowknife, NT Level 1 Bannatyne & Company Dawn Tuplin Hamilton, ON Level 1 Colonial Adjusting and Appraisal Services Krista Berkshire St. John’s, NL Level 1 George Cunning St. John’s, NL Level 3 Janine Thomson St. John’s, NL Level 1 Crawford & Company (Canada) Inc. Amir Hosein Erfanian Vancouver, BC Level 1 Stephanie Koponen Victoria, BC Level 1 Stuart Ries Regina, SK Level 1 Michelle LeBlanc Moncton, NB Level 1 Kim Heinze, CIP Calgary, AB Level 1 Lynn Adams Mississauga, ON Level 2 Danielle Lacourse Mississauga, ON Level 1 Robert Ligda Toronto, ON Level 1 Julian Nguyen Waterloo, ON Level 1 Cunningham Lindsey Canada Claims Services Ltd. Daryll Yeng Vancouver, BC Level 1 Dana Lawrence Winnipeg, MB Level 1 James Bolland, CIP, CRM Mississauga, ON Level 3 Margaret Martingano, CIP, CRM Mississauga, ON Level 3 Doerr Claims Services Inc. Greg Doerr Barrie, ON Level 3 Granite Claims Solutions John Finnerty Burnaby, BC Level 2 Kernaghan Adjusters Limited Mitch Montpetit Vancouver, BC Level 3 Maltman’s Group International Stephen Cordery Toronto, ON Level 3 R.F. Moore Claims Service Ltd. Warren Garrett Aldergrove, BC Level 3 Network Adjusters Ltd. James Magnan Winnipeg, MB Level 3 Sedgwick Canada Lee-Anne Klawsuc Toronto, ON Level 2

Claims Canada Wants You! Claims Canada magazine wants you to send us your company news, appointments and event photos for possible inclusion within our ‘On the Scene’ department.

Please help us share your items with the claims industry across the country. For more information, please email: craig@editinsight.com

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A.R.S. Assessment Rehabilitation Services held its RIMS Canada Conference cocktail reception on September 14 at the Earls Kitchen + Bar in Winnipeg. l

FirstOnSite Restoration hosted annual RIMS Canada Cocktail Luncheon at the RIMS Canada Conference on September 16 at 295 York (formally “Lobby on York�) in downtown Winnipeg. l

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• on the scene OTS Crawford and Company (Canada) Inc. held its annual RIMS Canada Conference dinner on September 13 at Hermanos Restaurant & Wine Bar in downtown Winnipeg. l

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More than 60 companies and organizations providing products and services filled the Exhibit Hall at the 2014 RIMS Canada Conference in Winnipeg, September 14-16. l (continued on next page.)

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• on the scene OTS

2014 RIMS Canada Conference in Winnipeg, continued.

The ARC Group hosted a reception at the RIMS Canada Conference at the Tavern United in downtown Winnipeg on September 15. l

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Here we grow again.

We’re now here to help in: St. John’s, NL Tel: 709-738-2229 stjohns@firstgeneral.ca

Miramichi, NB Tel: 506-622-2224

miramichi@firstgeneral.ca

Fredricton, NB Tel: 506-450-5035

fredericton@firstgeneral.ca

With over 80 offices across North America

We’re here to help

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