Claims Canada August/September 2009

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August/September 2009

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Contents AUGUST/SEPTEMBER 2009 • VOLUME 3 • NUMBER 3

Cover Feature

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12 Rain Rain Go Away The risks facing the insurance industry continue to change right alongside the changing climate. As precipitation levels increase, so too do claims associated with water damage.

BY LAURA KUPCIS

Spotlight 20 Incoming President: Patti Kernaghan Patti Kernaghan will take the helm as president of the CIAA during the association’s annual general meeting in Montreal at the end of August.

BY LAURA KUPCIS

Education Forum

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50 Doing the Right Job When handling a professional liability claim it is important to understand the profession in question and an adjuster must determine whether one policy is sufficient coverage or whether there is more than one policy contributing to costs and indemnity.

News Features 22 Property Loss Update 40 Corporate Reputation and Effective Communication

The importance of evidence in a trial and a look at three recent Canadian cases and their importance as it relates to adjusters.

BY GLENN GIBSON

28 After the Fire A first person account of a trip through a charred Halifax neighbourhood.

BY MARLENE LANDRY

30 Reform of New Brunswick Limitation Legislation The importance of amending the Limitations of Actions Act.

BY TALIA C. PROFIT

34 Criminal Misuse of Rental Vehicles As thieves target rentals cars and trucks, the problem becomes a costly one on both sides of the border.

BY PHILIP WAYLAND

38 Mitigating Risk in Changing Times The insurance industry is based on making informed judgments about the probability of things going wrong.

BY ROYSTON COLBOURNE

When a catastrophe occurs, adjusters need to be prepared to handle the communications side of an event.

BY LORI BRASSELL-CICCHINI

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42 Spotlight on Site Security Hiring security can help to preserve evidence on site after an event.

BY ROBERT GARLAND

44 Functional Assessments Functional assessments can help an adjuster gain an understanding of the physical abilities of a claimant.

BY ELIZABETH CHAPMAN

48 The Emerging Use of ISCO in Environmental Claims In situ remediation transforms a polluting chemical from a harmful substance to a safe one.

BY DAVID WADE

Departments 4 First Notice 52 On The Scene

Columns 50 Education Forum

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F first notice Manitoba beefs up its forest-fighting fleet Manitoba will upgrade its forestfighting fleet with a $1.4-million investment in advanced avionics.

The fleet consists of seven water bombers and will be enhanced with vision systems for pilots to help them battle fires when visibility is low, said Stan Struthers, Manitoba’s conservation minister.

“This is key. It will increase our efficiency and make sure our crews are safe while they are getting the job done,” he said.

As of June 25, Manitoba Conservation’s Fire Program has recorded 115 fires in 2009, despite wet and cool conditions earlier this year.

Human beings caused 63 of these fires, a Manitoba government release says.

Manitoba Conservation now has a total of 294 firefighters and six contract helicopters, in addition to the seven water bombers, to battle forest fires.

While the vast majority — roughly 97 per cent — of forest fires in Canada are contained to less than 200 hectares, the largest insured loss to date from a Canadian wildland fire was $200 million from the 2003 Kelowna wildfire, according to information from the Institute for Catastrophic Loss Reduction (ICLR).

But the area burned in Canada has been increasing, the ICLR says, reflecting a build-up in fuels and a shift to older forests due to decades of fire suppression and fire exclusion near populated areas. ●

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Health Claims for Auto Insurance (HCAI) system to be re-introduced Health Claims for Auto Insurance (HCAI), an electronic system for processing auto insurance claims, is once again entering a pilot phase, starting on Sept.1, 2009.

HCAI was shut down in April 2008 at the request of the Insurance Bureau of Canada (IBC). At the time, insurers said they were experiencing serious disruptions in their claims adjustment process as a result of technical problems encountered by HCAI. This time, HCAI’s pilot phase will follow a staged approach, designed to test the capacity of the system at each implementation step.

“The rollout process is driven by a series of control gates that are designed to ensure a positive user experience and avoid adoption problems,” IBC said in a press release. “Each rollout phase will use a control point to confirm that the system is capable of adopting the next group of users.”

During the initial startup of the pilot phase, two insurers and a handful of health care facilities (HCF) will use the new HCAI system to ensure the production environment operates as tested.

In early October 2009, the process

will be opened up to a larger community of insurers and HCFs, creating a user base reflecting 25 per cent of the HCAI transaction volume by the end of the pilot phase (anticipated to end in February 2010). All things going well, the full, regulated adoption of HCAI by insurers is planned to begin in March 2010.

In the best-case scenario, assuming there are no glitches in the pilot phase, all insurers would adopt HCAI no later than Mar. 31, 2010.

Health care facilities (HCF) would adopt HCAI in three phased periods (500 in the first phase, from April to May 2010; 1,500 between June and August 2010; and the remaining HCFs in September to November 2010).

The current system will be decommissioned and turned off as of July 31, 2009. Once the current system is shut off, insurer setup information and claim/claimant information will be migrated to the new HCAI environment, as insurers enroll in accordance with the adoption schedule.

All insurer data extracts scheduled on or before July 30 will be processed prior to the system being decommissioned. ●

Royal Canadian Mint to file claim related to unreconciled gold The Royal Canadian Mint intends to file a claim under its all risks insurance policy to offset approximately $15.3 million worth of unreconciled gold.

The Mint commissioned Deloitte and Touche to conduct an audit to determine if the unreconciled difference in gold was the result of an accounting or transaction recording error.

The report concluded: “[T]he unaccounted-for difference in gold does not appear to relate to an accounting error in the reconciliation process, an accounting error in the physical stock count schedules or an accounting error in the recordkeeping of transactions during the year.”

August/September 2009

The Mint has requested the assistance of the RCMP to investigate the matter.

Deloitte and Touche’s report touches on three areas for the Mint to consider in connection with its risk management practices: • a technical review of operations; • an accounting review of prior periods; and • security reviews.

“In response to the report’s recommendations, the Mint has engaged third parties to assist the Corporation in its review of specific aspects of its operations, including refinery processes and internal controls,” said Ian E. Bennett, president and CEO of the Royal Canadian Mint. ● www.claimscanada.ca

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F first notice First insurer must pay AB claim, even if only connection with claimant is fraudulent insurance slip A first insurer in Ontario has a legal obligation to start paying accident benefits to an auto injury claimant, even though the only “sufficient nexus” between the claimant and the insurance company is information contained in an apparently fraudulent pink insurance slip.

The Financial Services Commission of Ontario (FSCO), made the finding in Vladmir Danilov and Unifund Assurance Company and Economical Mutual Insurance Company (the intervenor).

Section 268 of Ontario’s Insurance Act dictates that every contract evidenced by a motor vehicle liability policy in Ontario is deemed to provide for accident benefits set out in the law.

Danilov was involved in a 2005 accident with a vehicle owned by Georgiy Gnidenko. After the collision, Danilov applied to Unifund for AB benefits.

At the time of the accident, the police report indicates the 1996 Plymouth van driven by Danilov was insured with Unifund, as indicated on the pink Motor Vehicle Liability Insurance Card shown to the police. The same card indicated agent or broker of the policy was the Ensurco Insurance Group.

Unifund writes auto insurance policies exclusively through one broker, Johnson’s Insurance Brokers.

Neither Unifund nor Johnson’s wrote or issued the policy, and no such policy was in force at the time of the accident.

Neither insurer nor broker had mailed a pink slip to Danilov,

and neither had any relationship with Ensurco, which doesn’t have authorization to write policies on behalf of either.

Neither Danilov nor Gnidenko had ever contacted Unifund or Johnson’s to apply for an auto policy.

Unifund has no evidence that Danilov was complicit in a fraud.

Based on the above findings, Unifund argued that Danilov appeared to have no “sufficient nexus” to make a claim against it.

But the arbitrator found a first insurer’s legal obligation is to pay first, and work out the appropriate insurer later — as long as the initial contact with the insurer was not completely arbitrary.

Unifund was ruled to be the first insurer in this case.

“Certainly there can be no nexus where an applicant attempts to create a relationship by participating in a fraud,” FSCO arbitrator Robert Bujold ruled. “However, that is not the case here.

“In the absence of evidence that Mr. Danilov was complicit in any fraud, it is reasonable to infer from agreed facts that Mr. Danilov relied on the information contained in the police report when he applied to Unifund.

“To apply the phrase used in Valuskas, Mr. Danilov ‘turned his mind’ to the choice of the insurer and applied to Unifund on the basis of the information available to him,” Bujold wrote. ●

Alberta Appeal Court rules that auto cap legislation does not infringe the Charter The Alberta Court of Appeal has ruled that the province’s legislation introducing a $4,000 cap on insurance claims for minor auto injuries does not infringe the Canadian Charter of Rights and Freedoms.

In doing so, the appeal court overturned a lower court decision in February 2008 that found the Alberta cap legislation discriminated against victims of whiplash injuries and was therefore unconstitutional.

Writing for a panel of three judges, Alberta Court of Appeal Justice Patricia Rowbotham observed that the trial judge in the lower court, Alberta Court of Queen’s Bench Justice Neil Wittmann, focused his analysis exclusively on one part of Alberta’s 2004 legislation, the Minor Injury Regulation (MIR), which introduced the cap.

That focus was too narrow, Rowbotham ruled.

“The trial judge erred in failing to realize the insurance reforms as a complete package,” she wrote. “I conclude that his determination that individuals suffering minor soft tissue injuries are subject to stereotyping are subject to deference. However, I find that he erred in concluding that the insurance reforms as a whole perpetuate the stereotype.”

The Court of Appeal decision notes the MIR represents one aspect of a wider legislative scheme that also included proto-

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August/September 2009

cols for diagnosing and treating minor injuries. The legislation also increased medical benefits available to minor injury claimants who still required treatment after preliminary medical treatment protocols were followed.

For example, the MIR was brought in along with the Diagnostic and Treatment Protocols Regulation (DBTR), which provides for 10 or 21 treatment sessions in the first 90 days of the injury without the need to seek approval from the insurer.

Assuming the treatment protocols in the DBTR are followed, after a 90-day period is reached, an injured person can apply to an insurer for further payments, which the legislation increased from $10,000 to $50,000.

“In my view, [the trial judge] failed to analyse the insurance reforms as a whole, including the DPTR, which rather than perpetuating the stereotype, recognizes that the injuries suffered by MIR claimants are real and ought to be treated as such.

“Similarly, in analyzing whether the legislation meets the needs and circumstances of the claimants, the trial judge failed to assess the medical benefits provided to minor injury claimants in exchange for their reduced damages for pain and suffering.” ●

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F first notice Ontario court breathes new life into two longstanding auto claims The Ontario Superior Court of Justice has overturned an order to dismiss, on account of delay, two motor vehicle insurance claims (each of which has lasted for six years or longer) that arose from an October 2001 auto accident.

A court registrar made an order to dismiss the two cases on Feb. 18, 2009, after Sandra Sutherland, a self-represented litigant, was “apparently confused” about what to do when one of the terms of a deadline extension were not met.

Sutherland was the plaintiff in an action against The Manufacturers Life Insurance Company (Manulife) for long-term disability benefits after the auto accident.

She was also the plaintiff in a separate motor vehicle negligence claim against Joyce Vincenio, Emiliano Vincenio, KLLM Transport, James Corollo and Co-operators General Insurance Company.

After a prolonged case history that extended for more than six years, a court case management master asked Sutherland to bring her cases to trial by Nov. 28, 2008. Sutherland subsequently asked for an extension. The master said he would grant the extension as long as all of the parties consented, which they did not.

Sutherland did not realize she then had to meet a deadline

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Produced by the publishers of Canadian Underwriter magazine.

A bi-monthly magazine (6x per year), Claims Canada is published by Business Information Group, a division of BIG Magazines LP, a leading Canadian information company.

Business Information Group is located at: 12 Concorde Place Suite 800, Toronto, ON, M3C 4J2.

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

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to file a motion with the court to apply for an extension. When she did not, her case was dismissed by order of the registrar.

After some confusion about what to do next, she brought a motion to the Superior Court to set aside the dismissal orders.

In making his decision to overturn the dismissal orders and continue the trial, Ontario Superior Court Justice Paul Perell provided a long chronology of events in the proceedings, including 42 bullet points of trial events since the suit against Manulife was first launched in October 2002. [The Vincencio lawsuit was commenced in late 2003.]

Highlights of the chronology included 13 case management conferences between January 2004 and March 2008, as well as seven examinations for discovery — including four times with Sutherland — over the same period.

“Having weighed the various factors that a court should consider and adopting a contextual approach, it is my opinion that the dismissal orders in the two actions now before the court should be set aside, but on strict terms that are designed to advance the two actions to a final resolution with due procedure without any further delay,” Purell wrote.

The court ordered Sutherland to set actions down for trial by no later than Jul. 17, 2009. ●

Claims Canada

August/September 2009

Gary White Production Manager (416) 510-6760

non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management 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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MESSAGE

LA PLUME

From the President

Du Président RENO DAIGLE

As my term of office as president of the Canadian Independent Adjusters’ Association winds down, I can truly say the experience of serving our great organization in this capacity has been the ultimate highpoint of my 42-year career as an independent loss adjuster.

I had great expectations of accomplishing many of CIAA’s objectives and while we have achieved modest success, many initiatives and goals are ongoing. Member recruitment initiatives have resulted in the acquisition of several new member firms across the country and the increased numbers of adjusters on staff with current members has been very encouraging. CIAA disaster assistance programs in New Brunswick and Newfoundland have greatly benefited our members in those regions this past year and our emergency measures committee continues working in securing such programs in all regions. Additional opportunities to further develop reciprocal understanding between CIAA and CICMA have proven beneficial for all concerned and CIAA members are well represented on several industry related committees across the country. With the establishment of the industry liaison & promotion committee, CIAA is well positioned to promote the importance of independent adjusting in the delivery of the property and casualty claims service product in Canada. Our licensing committee has made significant advances in bringing us closer to common licensing rules and regulations across the country. When working with a group of such high caliber individuals, one prefers not to identify one above the rest, however Miles Barber has spent countless hours devoted to obtaining success in this area as well as a number of other related projects. With the increasing concerns regarding the declining numbers of independent adjusters, the creation of the career recruitment planning committee was key to facilitate promotion of independent loss adjusting as a career and supporting the training and recruitment of people entering the profession. A strategic planning exercise is underway and will include reviewing all activities and service offerings to ensure they are meaningful for members and reflect our organization’s objectives. The advancements made this year are the result of the efforts of many individuals. My sincere thanks and gratitude go out to the national executive, committee members and the regional

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Alors que mon mandat en tant que président de l’Association canadienne des experts indépendants touche à sa fin, je peux dire en toute sincérité que l’expérience acquise à ce titre au service de notre formidable organisme, a été le point culminant de mes 42 années de carrière d’expert en sinistre indépendant.

J’espérais fortement atteindre plusieurs des objectifs de l’ACEI. Bien que nous ayons déjà remporté certains succès, un grand nombre de nos initiatives et de nos buts sont encore en voie de réalisation. Les campagnes de recrutement nous ont permis d’acquérir plusieurs nouvelles sociétés à travers le pays.

L’ajout du nombre d’experts ainsi acquis à ceux déjà membres de notre association a entraîné une hausse très encourageante.

Au cours de l’année écoulée, au Nouveau-Brunswick et à TerreNeuve, les programmes de secours en cas de catastrophe de l’ACEI ont profité à nos membres de ces régions et notre comité des mesures d’urgence poursuit ses efforts d’instauration de ces programmes dans toutes les régions. D’autres occasions de développer les relations entre l’ACEI et l’ACDSA se sont avérées avantageuses pour toutes les parties intéressées. Nos membres sont bien représentés dans tout le pays au sein de comités connexes de l’industrie. Grâce au comité de promotion et de liaison avec l’industrie, l’ACEI est bien placée pour promouvoir l’importance des experts indépendants dans la livraison des produits de service d’assurance des dommages au Canada.

Notre comité de délivrance de permis d’exercer a été la source d’importants progrès en nous rapprochant de l’adoption de principes et de règlements communs pour tout le Canada.

Lorsque, dans le cadre de nos travaux, nous côtoyons des collègues hautement compétents, nous préférons ne pas identifier un seul individu parmi eux. Je dois toutefois souligner les heures innombrables que Miles Barber a consacrées pour l’exécution avec succès de ce projet ainsi que d’autres projets connexes. Avec les inquiétudes croissantes relatives au déclin du nombre d’experts en sinistre indépendants, la création du comité de recrutement de planification de carrière a été un élément essentiel pour faciliter la promotion de l’expertise des sinistres par des experts indépendants en tant que carrière. Elle a également encouragé le recrutement et la formation des personnes embrassant la profession. Un programme de planification stratégique est sous étude et couvrira l’examen de toutes les activités et de tous les services offerts pour s’assurer de leur utilité pour nos membres et de leur pertinence face aux objectifs de notre association. Les progrès faits cette année sont le

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president’s and their executives for their dedication and support. They are truly the people that make things happen across the country and whose integrity and ideals I admire and respect.

We value our members’ commitment and are continually looking to develop an even stronger, more dynamic association providing the benefits and services essential to enhancing and promoting the professionalism of the independent adjuster. CIAA members recognize group representation through their professional organization is the fundamental link to having their voices heard. I encourage all members to get involved and assist the Association within your region. Not only will you be working in advancing the interests of your chosen profession but also the unique opportunity to confer on mutual business challenges with your peers is invaluable.

Incoming president, Patti Kernaghan, brings substantial industry experience and immeasurable enthusiasm and energy and I have every confidence 2009 – 2010 will be an exciting and successful year for CIAA under her leadership. ■

fruit des efforts d’un grand nombre de personnes. Permettezmoi de témoigner ma reconnaissance et d’adresser mes remerciements à l’exécutif national, aux membres des comités et aux présidents et directeurs régionaux pour leur dévouement et leur appui. Ce sont eux qui véritablement font bouger les choses partout au pays. J’admire et respecte sans réserve leur intégrité et leurs idéaux.

Nous apprécions l’engagement de nos membres et cherchons sans cesse à instituer une association encore plus forte et plus dynamique fournissant les bénéfices et les services essentiels au renforcement et à la promotion du professionnalisme chez les experts indépendants. Les membres de l’ACEI savent que leur regroupement, par le biais de leur association professionnelle, sert d’intermédiaire indispensable pour faire entendre leur voix. J’encourage tous les membres à s’impliquer et à soutenir leur association régionale. Non seulement contribuerez-vous ainsi à faire progresser les intérêts de votre profession, mais vous aurez aussi une occasion unique de discuter avec vos pairs des défis d’affaires qui vous confrontent.

Patti Kernaghan, qui sera sous peu votre présidente, jouit d’une grande expérience dans l’industrie et apportera à ce poste un enthousiasme et une énergie débordants. Je suis sûr que, sous sa direction, l’année 2009-2010 sera pour l’ACEI exaltante et fructueuse. ■ Translation provided by Henry Arcache, Themis Translations.

NATIONAL EXECUTIVE 2008 – 2009 PRESIDENT Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 Email: Reno.Daigle@crawco.ca

SECRETARY Marie C. Gallagher, FCIP, CRM McLarens Canada 71 King Street, Suite 204 St. Catharines, ON L2R 3H7 Phone: (905) 984-8282 Fax: (905) 984-8290 Email: marie.gallagher@mclarens.ca

1ST VICE-PRESIDENT 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 Email:pkernaghan@kernaghan.com

TREASURER Randy P. LaBrash, CIP, CFE, CFEI Crawford & Company (Canada) Inc. 300 – 191 Lombard Avenue Winnipeg, MB R3B 0X1 Phone: (204) 947-2340 Fax: (204) 943-9168 Email: Randy.Labrash@crawco.ca

2ND VICE-PRESIDENT Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 Email: Mary.Charman@crawco.ca

PAST-PRESIDENT Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 Email: fplant@planthope.com

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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 Email: pbattle@ciaa-adjusters.ca DIRECTOR John R. Smith Crawford & Company (Canada) Inc. 166 Charing Cross Street Brantford, ON N3R 2J4 Phone: (519) 759-5760 Fax: (519) 759-5691 Email: John.Smith@crawco.ca

DIRECTOR John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 Email: john.jones@mclarens.ca DIRECTOR Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 Email:cmesservey@marshadj.com

DIRECTOR Wendy Fralick, CIP Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com

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RAIN RAIN GO AWAY As the climate changes, so do the risks facing the insurance industry.

Water damage has risen to the number one spot in terms of claims relating to warming weather.

BY LAURA KUPCIS

When it rains, it pours.

Literally.

We are less often seeing a light sprinkling of rain and more often witnessing downpours that wreak havoc on old, crumbling and inadequate infrastructure. Inevitably, this causes increased insurance claims when sewers back up into basements of homes and buildings.

“Water is kind of public enemy number one these days,” Larry Lythgoe, FCIP, vice president of corporate claims at Intact Financial Corporation, says.

Environment Canada has ranked the winter of 2008 as one of the top 10 wettest winters between 1948 and 2009.

Additionally, the Great Lakes/St. Lawrence region experienced the thirdwettest winter on record between December 2007 and February 2008, Lythgoe notes, adding that precipitation levels during this period were 31 per cent above normal.

“I would say in the last year we’ve probably had 10 situations where we’ve had major floods due to heavy rainfalls and rainfalls that we hadn’t typically seen before, where massive amounts of rain fall in short period of time,” Fred Plant, president of Plant Hope Adjusters Ltd., says. “I think today actually in Sydney, Cape Breton, they’ve experienced the highest amount of rainfall in 75 years. Last September, we www.claimscanada.ca

had Rothesay Avenue in St. John under three feet of water. We’ve never seen that before.”

The climate’s impact on the insurance industry has slipped slightly in terms of a concern factor — in 2007, climate change ranked fourth in a list of risks facing insurers, according to an Insurance Banana Skins survey, and dropped to number 28 in the 2009 survey. But this is mainly due to the current economic recession, according to Christine Schuh, associate partner and climate change service leader at PricewaterhouseCoopers LLP. “The insurance industry still considers climate change as a long-term risk that needs to be managed and developed, but they’ve got some more urgent matters that they need to take care of . . . related to the economic recession,” Schuh notes. “So it’s not that climate change has fallen off the table. It hasn’t. It’s still recognized as a long-term risk that needs to be addressed.”

For an insurer, climate change has a direct impact on the increased frequency and severity of weather-related property insurance claims. “The insurance sector in particular is experiencing one of the most direct impacts of climate change,” according to PwC’s Insurance Digest. “It is estimated that around onethird of all overall insurance claims are from weather-related natural disasters.

Increased losses, in turn, could raise the cost of capital and increase the volatility of insurance markets.”

How we got here As people continue to drive cars and factories continue to run, among other factors, the pollution spewed into the air — carbon dioxide in particular — is causing the “blanket” around the world to keep more heat in. The warming process has been going on for roughly 150 years, accelerating since 1970, and all predictions suggest the world will only continue to get warmer, Paul Kovacs, the executive director of the Institute for Catastrophic Loss Reduction (ICLR) says.

Part of the warming trend means there will be a lot more hot, muggy days. More moisture will evaporate out of the soil, the lakes, the rivers, etc., and be held in the air. There will still be water, but instead of being in the ground and the lakes and rivers, it will be in the air. At some point, there is too much moisture in the air and it comes down as precipitation. Over the last few years, there has been less of the light sprinkle rain events and more of the pouring rain events, which occurs when the saturation point in the air is hit.

“We’re getting a lot more of those events and we are getting more of those in Canada, we’re getting more of those

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around the world,” Kovacs says. “In a warmer world, the frequency of very intense rain goes up. Intense rain can be overwhelming and put water into our house where it’s not expected.”

The warmer air is also wreaking havoc on forests by drawing the moisture out of the trees leaving them more prone to ignition during lightning storms — which are also occurring more frequently.

The area around the Atlantic Ocean, where most hurricanes start, has gotten warmer and is predicted to get much warmer still. The conditions for starting a large hurricane are greater than they used to be, while the conditions for starting small hurricanes are probably actually weakened in this process, Kovacs says. “There’s a sense that we have had and we will continue to have more large hurricanes.”

Issues of concern Statistics speak to the increasing severity of weather-related claims. In Toronto alone, there have been two 1in-100-year events and six 1-in-50-year

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events in terms of rain intensity during the past 15 years, according to Robert Tremblay, director of research at the Insurance Bureau of Canada.

Roughly three years ago, the insurance industry began to see an increase in water claims. In 2005, the industry thought it had just been a bad year. But since that so-called “bad year,” things have become progressively worse, leading insurance companies to hold their breath during the first two quarters of 2009 — quarters that typically see a lot of snow and rainfall, Irene Bianchi, vice president of claims at RSA, notes. “I remember last year we were breaking records all over the place in terms of the amount of snow and rainfall we got,” she says. “It just wasn’t in one specific locality across the country. And when we do have this level of weather activity, it puts an enormous strain on the claims handlers themselves and then obviously the process.”

Lythgoe points out that fire and theft have traditionally made up the largest percentage of claims in the past. But now 40 per cent or more of claims have

some kind of water component. The residual effect of hurricanes also features a water component. For example, when a large hurricane hits Florida or the Gulf Coast, it is very much a wind and water event. However, by the time the hurricane comes to Canada, it’s usually run out of steam and is mainly a water event, Kovacs says.

Climate change is not just about water. In addition to rain, the insurance industry is dealing with severe wind and wildfire claims.

Wind events that cause structural damage in Canada are often related to a tornado. While there are a number of reasons to believe there will be more and larger tornadoes in the future, the research is still unclear; more analysis is required to determine how much of an increase we will see in tornado frequency, Kovacs says. That said, wind is still a concern because it is very costly to make improvements to houses that have already been built in order to make them more resilient to wind damage.

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number of acres burned per year in Canada has increased since the 1980s.

Going forward, the amount of area burned every year could double by 2050, Kovacs warns. Currently when people think of fire, they think of British Columbia and Alberta, but there are fires in Northern Ontario and Quebec as well, he says. But the population is sparser in Eastern Canadian areas and therefore the impact on claims costs is reduced. Kovacs is quick to point out, however, that despite successful and aggressive fire suppression efforts, which stop fire from creeping into towns and burning buildings, the number of wildfires in the future is expected to increase; at some point, these fires are going to make their way into towns. “I’m quite worried about some risks in Ontario and Quebec, as well as thinking first about British Columbia and Alberta,” Kovacs says.

Kovacs notes that 10 to 15 years ago, the insurance industry in Australia and California was complacent about wildfires due to a lack of frequency. Similarly in Canada, many in the insurance

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industry are not focused on wildfire for the same reason — a lack of frequency and potentially more pressing issues — but there is clear evidence surrounding increasing wildfires here at home.

Increased claims severity Social change over the past 20 years has contributed to the increased severity of insurers’ claims costs. For example, previously if a sewer backed up into a homeowner’s basement, there was very little of value stored down there. Now, however, homeowners are using their basement as an extension of the home, storing high-end electronics and expensive furniture in fully finished basements. When there is water damage, the cost to fix it is much higher, Tremblay says. “From day-to-day expertise, when the average claim for a sewer backup goes from $5,000-$6,000 to $50,000-$60,000, well, it will have an impact on the cost of the claim,” he says.

In addition to more elaborate basements, there has been a shift in the requirements associated with cleaning

up after a water claim. If damage occurs to a building built prior to 1986, then there must be a test completed for asbestos in the drywall, which can drive up the cost, Glen Oxford, national property claims manager at The CoTips for Industry Representatives

Insurance Digest offers up some action points for the insurance industry related to climate change: • Conduct further research to under stand the effects of climate change.

• Enhance models to factor in necessary risks, with better climate-related data.

• Review portfolios with an ‘updated’ view of potential exposures.

• Review contractual terms to re-examine whether coverage and limits remain appropriate.

• Ensure customers are treated correctly and fairly. Some customers could be left with uninsurable risks.

• Perform a role in public policy formation.

When you’re not FirstOnSite, who is?

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operators, says. Additionally, there is an increased vigilance around health and safety of those working on site: face masks and protective shields to protect again mould and dust are now standard equipment for cleaning up sites damaged by water.

Fancy basements and regulatory changes for clean-up aren’t the only culprits in the increasing severity of claims costs.

Extreme weather events have proven to be quite costly for the industry: the Saguenay floods in 1996 ($1.5 billion), the Ice Storm in 1998 ($1.6 billion), Peterborough floods in 2004 ($90 million) and the Toronto rains in 2005 ($500 million). The country experienced its first Force 5 tornado in Elie, Manitoba in 2007. As luck would have it, the area is sparsely populated and so only to a few barns and houses were damaged. But if this same tornado had ripped through Winnipeg (80 kilometers east of Elie), the damages would have been exponentially higher, Tremblay points out. Population density is a huge factor in terms of cost of insurance elements, he adds.

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“When we look industry-wide, we see that virtually every company in Canada had a huge adverse effect on their results simply because of weather-related personal property claims in the first half of this year,” Bianchi points out. “So [it was a] huge financial impact for us all.”

Oxford says there hasn’t necessarily been an increase in the large number of events. Rather, in Western Canada at least, smaller storms have occurred with greater frequency — in some instances, once a week.

These aren’t just sewer back-up type events, but hail and wind contribute to the water damage caused by the heavy rains. “Last year, when we look back on our storms, we really didn’t have anything that stood out where we had a thousand or two to three thousand claims like we’ve had in some other major events,” Oxford says. “But it was just sort of non-stop small events that were occurring literally every week that kept us busy.

By the time you finished the season, you have had an awful lot of storm activity.”

Vale Training Solutions For adjusters interested in ramping up their green adjusting skills, or those within the industry looking to expand their knowledge of green technology and its impact on the environment, Vale Training Solutions offers Green Risk 1 and Green Risk 2. Successful completion of the program will earn the participant a Green Risk Professional credential.

THE FIRST COURSE TAKES A LOOK AT THE FUNDAMENTALS: • History of green building and how did we get here?

• Fundamental principles of green construction.

• Green building endorsements, programs and rating systems such as Leadership in Energy and Environmental Design (LEED).

• Green products.

• Insurance coverages.

• Customer service — understanding the mindset of the owner.

THE SECOND COURSE PICKS UP WHERE THE FIRST ONE LEAVES OFF: • Green roofing — i.e. Vegetative roofs and Energy Star shingles • Deconstruction — diverting debris and garbage away from the landfill.

• Certification costs.

• Flushing out a building, including the implications on business insurance.

• Green endorsements.

• Building commissioning issues.

The courses take a look at how green buildings fit into traditional policies, Trent Massey, green course developer at Vale Training Solutions, says. There are already coverage issues surrounding green products and technologies covered under traditional policies. The adjuster must be aware of these.

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What needs to be done As the impact of climate change on the insurance industry continues to be felt, insurers are likely to encounter new types of claims and will seek to develop new products to handle these, according to Insurance Digest.

“I’d like to think that I can control the weather,” Bianchi jokes. “I have absolutely no influence whatsoever on the frequency of these claims. They are going to happen, and they are going to happen often if we keep continuing to get more severe weather.”

With this in mind, companies are working to reduce or mitigate the severity of the cost, ensuring that customers are aware of steps they can take to protect property from water damage.

In addition, insurance companies are being forced to look at processes, productivity and staffing models, Bianchi notes, adding that RSA has looked at how to streamline processes in order to get to customer faster and resolve claims quicker. This includes developing and solidifying relationships with vendors, such as contractors, to ensure they are available in the event of a disaster.

Since more people are living in densely-concentrated areas, the potential for a cluster of claims is much greater now than ever before. For an insurer, this means having an organized cat or storm team and plan in place is key.

Even in the absence of full catastrophes, companies have had to adjust to a significant influx of weather-related claims, Albert Poon, vice president of strategic business development at Cunningham Lindsey Canada, says. Most companies cannot deal with a spike of 100 to 200 claims in one day, and so they look to workflow changes to handle these types of ‘mini-cat’ situations.

Insurance companies are reaching out to independent adjusters to help out, Poon adds. The company is able to pull adjusters in from elsewhere, if required, to help handle the influx of claims in a slightly different fashion than during a fully-fledged catastrophe. During a cat situation, adjusters are brought in and housed over the entire length of the event, But with smaller, pocketed www.claimscanada.ca

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storms, an adjuster would come in for a week, handle as many claims as possible and then finalize the files back in their office.

Mike Koch, property and catastrophe manager at Crawford & Company (Canada) Inc., notes that when branch managers within the adjusting firm have reached their capacity levels during a weather event, they will hit trigger points and call up the cat team to access necessary resources to respond to the event at hand. When a weather event hits, the first step is to determine how much an insurance company will handle on their own and how much the adjusting firm will be taking on.

From there, step two is determining the number of claims involved and what sort of additional resources will be required to respond appropriately.

Lythgoe points out that previously catastrophes were sporadic events.

Now, however, over the past five years, storms have been hitting nearly every region of the country, forcing companies to step up cat-handling protocols.

In addition to partnering up with an independent adjusting firm to ensure they are ready to go at a moment’s notice, Intact has also developed small cat teams that are used in addition to normal staffing; they are in place and ready to go in the event of a weather incident.

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At The Co-Operators, a 10-person team devoted exclusively to handling storm claims was created last year to move from one location to another, Oxford says. The team has been relatively quiet this year, although last year they responded to storm losses in Western Canada on a consistent basis between May and September.

Climate events are costly and extreme, and insurance products are generally offered for a period of 12 months so that exposure can be limited by reviewing cover and price upon renewal, according to Insurance Digest.

Clearly, infrastructure needs to be improved — both the electrical distribution network and wastewater and surface water infrastructure, Tremblay says. The life expectancy of a sewer is anywhere between 50 and 100 years.

Therefore, when updating the infrastructure, it is essential to examine what the climate is anticipated to be during that period. This way it will help to ensure infrastructure can withstand any changes in weather patterns. Unfortunately, what frequently occurs is this: When installing new infrastructure, municipalities use intensity direction and flow (IDF) curves that are already outdated, despite the existence of information that predicts how the climate will be over the next 50 to 100 years, Tremblay adds.

Ways To Migrate Water/Sewer Backup RSA has released ways that homeowners can help to mitigate water damage within their home.

OUTDOOR: • Check your eavestroughs and downspouts to ensure they are not blocked.

• Downspouts should discharge at least 3 feet from the side of the home • Disconnect any downspouts that are connected to the sewer system.

• Have a licensed professional check your weeping tiles in case they are damaged or blocked.

• Older clay piping can get blocked with tree roots and water can get into your home. Consider having them replaced with metal, PVC or ABS pipes.

• Install window wells on basement windows at or near ground level.

INDOOR: • Install a backwater valve.

• Install a sump pump.

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• Keep your drains and toilets free of grease and other foreign objects that can cause blockage.

August/September 2009

Ways to Mitigate Fire The provincial, territorial and federal governments rallied together to create a program called Firesmart, intended to help mitigate the risk of fire damage from a wildfire. The program shows how homeowners can implement certain changes to their home in order to reduce the risk: • Ensuring the roof is made out of material that cannot burn, which can help reduce the risk of flying embers catching fire.

• Cleaning up debris on the roof.

• Do not plant trees within 10 meters of the home.

• Keep the lawn healthy and green.

• Within the subsequent 10 meters, ensure trees are trimmed and healthy.

Looking at the information, municipalities might recognize there will not necessarily be more water entering the hydraulic system; it is the intensity of the downpours that will change. “If you were to look at how fast that water comes down, it will be in droves,” Tremblay says. “When you have those types of things . . . the storm sewers are being overwhelmed very, very quickly and that leads to sewer backups, localized flooding and so forth. If you are putting that kind of money into improving the infrastructure, well, at least build it in such a way that it will be able to take care of what we will have in the future. In other words make your pipes a little bigger.”

Looking to the future, it seems the frequency of these claims will only continue to increase. These very large and frequent events are taxing on adjusters. “From a professional perspective, the adjusters are going to be very much-sought-after specialty,” Tremblay says. “They will need to be more flexible and some work needs to be done in terms of ensuring that an adjuster who normally operates in Alberta would be able to go down in the Atlantic if there is a crisis there to adjust claims. Those are some of the issues that need to be considered as we move on down that path.”

www.claimscanada.ca

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S spotlight Incoming President: Patti Kernaghan As Patti Kernaghan looks forward on her year as president, the first order of business is to look to stakeholders to help change the focus of the association.

BY LAURA KUPCIS

s she prepares to embark on her year as president of the Canadian Independent Adjusters’ Association (CIAA), Patti Kernaghan has already begun working on a Creative Strategic Plan (CSP) intended to help focus the association over the next five years.

The plan begins with a survey — which is currently in the works — that will be sent to members, non-members, insurers, suppliers, self-insureds and stakeholders. The intent is to solicit feedback in terms of what they believe the CIAA should be providing in the marketplace.

“It’s something that I feel is an important step for the association in order to take a look in the mirror and see where we should be,” Kernaghan, who is the president of Kernaghan Adjusters, says. “(To) work on bringing continuity to the association year over year, continuity with these initiatives.”

Essentially, she is looking to the stakeholders to provide an updated mandate for the CIAA — the very people affected by the mandate will have a say in its creation.

“I expect certain things will come up, but I think it’s important that we shape what we do from the outside in,” Kernaghan says.

She anticipates that a large focus of the new mandate will be on the continued pursuit of professionalism within the claims industry. “As independent adjusters we need to exude professionalism, we need to protect our area in the industry,” Kernaghan says. “We’re a relatively small group in the property and casualty industry . . . and if we are such a small group within the industry, I feel that it is critical that we work together as one voice.”

Additionally, Kernaghan says she believes harmonization of licensing will be of importance to stakeholders. This is an area that Miles Barber, a past president of the association,

A

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began working on when he was president. He has continued to work towards licensing harmonization since he completed his term in August of 2007.

The continued recruitment, education and mentoring of new people in the industry is also something Kernaghan says she anticipates will continue to be a priority in the new strategic plan. As the shortage of new people coming into the industry still remains a cause for concern, not only in the field of adjusting but throughout the insurance industry as a whole, working towards a focused and committed recruitment strategy is essential. The CIAA has already formed a career recruitment planning committee dedicated solely to finding new ways to pique the interest of potential candidates into the field, as this area has been the main focus for current president, Reno Daigle.

Focusing on value-added services for members is also essential, Kernaghan says. This includes such avenues as further educational opportunities, both in print and online, or providing a vehicle for catastrophic services. Currently the CIAA has excellent working relationships with Emergency Measures Organization (EMO) representatives in Newfoundland and New Brunswick and the Emergency Management Organization in Nova Scotia.

The association is also in talks with people in EMO offices in Ontario and Manitoba and has previously worked with the EMO office in Saskatchewan.

“I think that’s a very important thing to continue with,” Kernaghan says.

Additionally, the CIAA has a member services agreement in place with the National Association of Independent Insurance Adjusters (NAIIA), where CIAA members can register to be on a contact list for catastrophe work in the U.S. if NAIIA requires assistance. www.claimscanada.ca

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Finally, members can also enroll for adjuster assistance within Canada.

“There’s an opportunity through CIAA for members to assist in catastrophe claims,” Kernaghan says. “We need to make sure our members are reminded of this.”

After the results of the initial survey are obtained, an updated mandate will be created as part of the CSP. From there, it will be up to Kernaghan and the rest of the CIAA national executive to look for accountability measures to ensure these things are done.

“Whatever falls out of the creative strategic planning process will be the most important issues for the association and we’ll need to update our stakeholders on our progress – probably through our website and through our magazine (Claims Canada),” Kernaghan says.

Kernaghan is quick to note that she is not starting from scratch during her term — nor is she disregarding all that was done before her — she is building on what presidents before her began. Because of their dedicated efforts, initiative and hard work, she has a pad from which to launch.

She says she has looked to the last 10 years of presidential mandates to ensure that she is not missing something, to see where the CIAA was heading and to determine exactly how she should be focusing her term. “It is a building process on what the past presidents have done there’s absolutely no question,” Kernaghan says. “We’ve had some great people.”

Harmonization was essential to Miles Barber, communication with insurers and brokers was a strong point for Fred Plant, and Reno Daigle has been focused on attracting and mentoring new recruits, Kernaghan points out. “What I want to ensure is that we don’t lose any of these things as we move forward,” she notes. “It’s that CSP that is going to tell us where we need to put our emphasis. It all comes back full circle and then putting the accountability in place to ensure that we don’t lose the focus.”

When Kernaghan takes the helm on Aug. 29 in Montreal during the annual conference, she brings with her 22 years of adjusting knowledge and wealth of volunteer experience. She is a past president of the Canadian Insurance Professionals of Vancouver (CIPV), past president of the Insurance Institute of British Columbia (IIBC), she has served on various councils for and was the recipient of Award of Merit from the Insurance Institute of Canada, she sat on the Insurance and Risk Management advisory board for the University of Calgary, is on the Advisory Board of the Insurance Dispute Resolution Services of British Columbia, also sits on the advisory for the British Columbia Institute of Technology’s new insurance program and was awarded Insurance Person of the Year in B.C. in 2006.

“All that experience collectively I hope will help develop the CIAA,” Kernaghan says. “Through experience one always brings new perspective and I hope I bring a slightly new perspective.”

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Property

Loss Update

BY GLENN GIBSON

As a loss adjuster, you do not have a second chance to do things right. Your performance on every file you handle has the potential to end up in a court of law. To stay out of trouble and deliver excellent service requires a daily commitment to embracing the right attitude. Your daily attitude requires a commitment to doing things consistently the right way.

But, this choice has to also be combined with a personal commitment to your own training and education. These two combined are powerful forces that allow you to consider yourself truly a professional.

The foundation of winning a trial is evidence. The cases highlighted in these updates show how trials can swing in different directions.

Evidence • Investigate.

• Evaluate.

• Negotiate.

• Settle.

Obviously you have to get past the investigation stage to carry out the other functions. The goal of any investigation should be a search to obtain the 22

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truth by determining the facts. The foundation of any investigation is the gathering of evidence to demonstrate the truth. Evidence can be considered anything that is used to determine or demonstrate the truth of an assertion being made.

In a Civil Court matter … the test is proving your case “on the balance of probabilities.”

There are four types of evidence: 1. Direct evidence — this involves giving evidence on your five senses.

2. Circumstantial evidence — this is evidence upon which a conclusion can be reached.

August/September 2009

3. Hearsay evidence — these are statements that are not made in the presence and hearing of the subject.

4. Opinion evidence — this is opinionbased evidence given by a witness who is deemed qualified by the court and the opinions are based upon their training, skill, knowledge or expertise.

There are three forms of evidence: 1. Testimony — this is accomplished by going into the witness box in court and providing direct evidence.

2. Real — this represents physical evidence.

3. Secondary — this could come in the form of videotape, photographs etc.

The trial judge and /or the jury are considered to be the “trier of facts.”

When they weigh the evidence before them they will give consideration to a number of things including: • Credibility of the witness can be eroded with incomplete notes, criminal record, attitude, lack of witness preparation, poor case management.

• Effective cross-examination.

• Volume or lack of volume of evidence.

• Exclusion of evidence — a complete picture is not presented by the side calling the evidence.

• Sloppy investigation. www.claimscanada.ca

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•

Lack of continuity and contamination of exhibits.

• Spoliation of evidence.

In weighing the evidence consideration will be given to the “burden of proof.” In a criminal court proceeding, the Crown will be required to prove their case “beyond any reasonable doubt.” In a Civil Court matter, the burden is somewhat different as the test is proving your case “on the balance of probabilities.” Although the tests may seem different, when an insurer decides to deny a claim payment on the basis they believe the policyholder committed arson, they must do so very carefully. They are alleging their policyholder committed a criminal act. Most triers of fact will require the insurer to be able to ‘almost’ meet the burden required in a criminal court proceeding.

Bismark v. Sagl, Ontario Court of Appeal, Apr. 23, 2002

Sagl v. Chubb Insurance Company of Canada, Ontario Court of Appeal May 8, 2009 How does one person end up in the Ontario Court of Appeal twice on issues relating to one fire loss? On Dec. 16, 1997, a fire caused significant damage to the building and contents of the primary residence of Bridgette Sagl. An investigator with the Office of the Fire Marshall investigated the cause of the fire and concluded it was intentionally set. The insurer hired fire experts who reached the same conclusion. Additional investigation by the insurance company led it to believe several material misrepresentations had been made that were relevant to the application for insurance. When scrutinizing the actual claim for damages filed, Chubb took the position that misrepresentations had also been made in this area. Coverwww.claimscanada.ca

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age to the policyholder was denied and litigation ensued against the insurer.

Another legal action, Bismark v.

Sagl, also commenced after the fire had taken place. This came from artist, Ruth Von Bismark. She alleged in trial that there had been a breach of contract and conversion relating to artwork destroyed in the fire that had been provided to Sagl for her to sell on behalf of the artist. This action included a claim for punitive damages for breach of fiduciary duty.

The trial judge found that Sagl, “failed to take any steps to sell the paintings and instead appropriated the paintings for herself.” In making this finding, the judge awarded $83,500 for breach of contract and conversion and $50,000 in punitive damages.

The decision was appealed to the Ontario Court of Appeal and Sagl represented herself. The appeal was dismissed with some interesting comments: • The Appeal Court felt the trial judge made a “very clear and cogent finding of fact”.

• The finding of punitive damages was affirmed by the Appeal Court. They supported the trial judge’s decision that Sagl’s behaviour “rose to the level of wrongdoing necessary to justify such an award.” They affirmed the breach of fiduciary duty in “appropriating the paintings and her misrepresentation that some of the paintings were being sold to an American buyer.”

• The original trial judge felt Sagl was “guilty of planned and deliberate misconduct.” This and other reasons laid out by the trial judge provided “rational reasons” that supported the punitive damage award.

• Of interest, was an endorsement that related to the “insurance proceeds” from the fire. The Appeal Court agreed with the trial judge that Von Bismark was entitled to “priority” of payment if and when proceeds were paid by Chubb on the fire loss proceeds.

While that piece of litigation was winding its way through the courts, another case involving the Sagl house insurer was also on the move. The matter, before a Superior Court trial judge,

lasted 22-days. A judgment was released on Sept. 4, 2007 (Sagl v. Cosburn et al, 54 C.C.L.I.(4th) 236) and several things should be highlighted: • The trial judge did not accept the evidence of the fire marshall nor the insurer’s fire expert that this was an “incendiary” fire. He accepted the evidence of the policyholder’s fire expert that the fire cause was “undetermined.”

• The judge went further in commenting that even if this was a set fire he could not see the motive behind why Sagl would “torch her possessions”.

• The judge disagreed that material misrepresentations had been made on the policy application and in the subsequent filing of the insurance claim.

• An award was made for over $4.5 million in direct damages which was increased by a further sum of $500,000 for punitive damages.

This judgment went before the Ontario Court of Appeal in November 2008 (Sagl v. Chubb Insurance Company of Canada). Three Appeal Court judges heard this appeal, which led to a 47-page decision released on May 8, 2009. Given the original trial decision was 36-pages in length there was a great deal of analysis that went into this decision. It resulted in a new trial being ordered. Noteworthy within the Appeal Court decision is: • The insurer did not appeal against the trial judge’s finding that the fire cause was “undetermined”.

• Reference was made to a judgment in July 1997 which was a divorce settlement awarded to Sagl of $4 million, payable on a quarter basis, plus on-going support. The plaintiff not only owned the property in question, but also the home next door where her daughter, son-in-law and grandchild lived.

• The plaintiff was represented to the insurer as someone of wealth, but the evidence at trial showed she was in default on

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three mortgages. There had been a prospective buyer for the properties, but the conditions had lapsed. She owed substantial amounts to Canada Revenue Agency. When she applied for insurance coverage, excluding the mortgages, she had personal debt of over $1 million.

• At the time Sagl applied for insurance there was an additional issue about whether or not her ex-husband remained on title as a joint owner of one of the homes.

• The Appeal Court provided significant commentary on the events that took place between the insured, insurance brokers and the insurer during the period of time that the “binder” of insurance was in place.

What emerged were three significant and material facts that the insurer felt would have altered their decision to insure this risk had they been revealed by Sagl.

• There was also a lot of specific attention paid to items claimed on the proof of loss that the insurer felt represented “intentional misrepresentations.”

In reviewing the case, the Appeal Court provides significant analysis which draw out certain conclusions of note including key points where the appeal did fail: • The case law indicated there is a heavy burden put on the buyer of insurance, “… to provide full disclosure to the insurance company of all information relevant to the nature and extent of the risk that the insurer is being asked to assume.”

The insurer felt the plaintiff had not made full disclosure of material facts within her knowledge. They felt the trial judge had relieved her of the good faith obligation to disclose material information and facts. The Appeal Court acknowledged the duty to disclose all material facts applies even if the insurer failed to ask the right questions. But, they noted if the insurer did fail to ask a specific questions, it could be open to interpretation that the insurer did not consider this to be a “material” fact.

The key issue for the Appeal Court was “materiality.” The insurer argued the trial judge had relieved 24

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the plaintiff of her good faith obligation to disclose facts within her knowledge that were material to risk being assumed. The Appeal Court felt the insurer was challenging the trial judge’s finding of fact that the information at issue was not material to the insurer. Was this a legitimate finding? The Appeal Court decided the facts which the insurer relied upon were not material to the decision to provide insurance to Sagl. This was supported by the evidence at trial, so the Appeal Court were not prepared to interfere with the trial judge’s decision on this point.

•

The insured owes the insurer a duty of honesty and accuracy in making a claim.

• The plaintiff denied she felt she was in financial distress when applying for insurance. She did not feel the insurer asked for information about the issues upon which they were now relying on to void the policy.

The insurer’s viewpoint was they had been told she was “independently wealthy” and was going to be soon receiving a “substantial matrimonial settlement.” Attention was paid to the application for insurance and questions it contained. Reference was made by the Appeal Court as to whether or not an insurer’s failure to inquire “may provide evidence that the insurer does not consider the information relevant.”

On this point, Justice G.J. Epstein concluded: “I agree with the trial judge that it runs contrary to the good faith

August/September 2009

•

•

•

obligation that the insurer owes to the insured for the insurer to agree to insure a risk, whether at the binder stage or at the time the policy is issued, when it knows or should know that there is information relevant to the risk that it does not have and that it did not even inquire into or that is incomplete, and then to raise the lack of information as a defence to a claim under the policy.”

Epstein said she felt the insurer had to satisfy the trial judge that the information Sagl allegedly misrepresented or withheld was material to its assumption of the risk. She did not feel the insurer had done this and agreed with the trial judge’s conclusion on this point.

One further element of the appeal to the trial decision was whether or not oral changes being requested to the original binder of insurance were acceptable or not. Chubb noted that “although changes to formal polices of insurance must be agreed upon in writing, it is entitled to rely on oral changes made to a binder prior to the issuance of the formal policy, as binders are often created instantaneously in circumstances where only the outline of a contract is discussed and the contract is therefore subject to change.”

The Court of Appeal did not accept Chubb’s position siting Sect. 124 of the Insurance Act applies to binder situations. Therefore, any changes need to be agreed upon in writing in order to be enforceable.

Chubb’s position was that Sagl should be denied recovery because she did not prove her claim or she overstated it.

The onus of proof is on the insured to prove their loss. This is based on the test of a “balance of probabilities.”

The insured owes the insurer a duty of honesty and accuracy in making a claim.

The policy clearly states the policy is “void” if the insured “intentionally concealed or misrepresented any material fact relating to this policy before or after the loss.” There is clear law that once fraud is established, no matter the amount, the entire claim under the proof of loss www.claimscanada.ca

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is forfeited. The insurer’s appeal of the trial judge’s decision in this area centered on two points: a) The trial judge mistakenly relied upon the fact that Sagl was underinsured. b) The plaintiff’s credibility was a key issue and the foundation for the proof of loss submitted. The trial judge did not indicate in his reasons how he resolved the challenges to her credibility.

The Appeal Court decision agreed that the fact the insured may be under-insured has no relevance to whether or not a fraud has been attempted. But, they focused much of their analysis on the credibility of the plaintiff. They highlighted that her credibility was “intertwined with every aspect of the decision: the proof of loss was no exception.” The trial judge had to address challenges to her credibility and those challenges were “significant.”

The top court in Ontario felt that it was incumbent on the trial judge to “explain, even in succinct terms, how he resolved the challenges to credibility and reliability of evidence upon which Sagl relied in support of the amount of her loss.” In fact, the Appeal Court noted the word “credibility” did not appear anywhere in the lengthy trial judgment. The trial judge owed a more adequate explanation on this particular point.

The role of the Appeal Court has been well established in that they do not lightly turn over decisions of a lower court. The reasons behind the decision should demonstrate the judge was “alive to” the central issues before the court. In this instance the Appeal Court felt the trial judge erred in failing to explain how he reconciled “the obvious problems with Sagl’s credibility and reliability, especially given the challenges to the authenticity, contents and values of the inventory.” So, the trial judge’s conclusions in this area were not articulated well enough.

The Appeal Court of Ontario struck down the entire trial judgment of the lower court, ordering a new trial but “restricted solely to the issue of Sagl’s proof of loss, specifically whether she is 26

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able to prove her loss in relation to her fine arts collection, and whether the policy is void due to intentional misrepresentation in the proof of loss.”

Summary It certainly is unusual to have the same person in the Court of Appeal for two separate situations that weave together at the end of the day. There are some key points here relating to policy applications and insurers should take note of the guidance the Court of Appeal is giving on the need to ask detailed questions up front.

Alfano v.

Piersanti, Ontario Superior Court Mar. 18, 2009 When litigation ensues it is not unusual for either side in the matter to hire a subject matter expert to try to prove their point of view. Even if you have previously been court-qualified as an expert, every time you get into the witness box you have to go through the same process. The lawyer will go through education, training, skill and experience to deem you qualified as an expert. The other side in the matter can challenge that request through a crossexamination process. The judge then makes a decision. If you are qualified by the judge to be an expert in your field then you can offer up an opinion to the court.

In Alfano v. Piersanti, in the middle of a trial, a witness was being offered forward to be qualified as an expert.

The trial judge ordered the production of emails that were referred to in the dockets/time entries of Ronald AnsonCartwright, the proposed expert. The plaintiffs challenged the impartiality and independence of the two reports produced by the expert. These challenges were heard in a voir dire.

The essence of the challenge to the expert’s credibility was summarized by the plaintiff’s counsel, James Diamond, in his closing statements when he referred to the decision of Justice Bellamy in Eastern Power Ltd. v. Ontario Electricity Financial Corp., wherein it was stated that, “The purpose of expert evidence is to assist the trier of fact to

August/September 2009

understand evidence outside of his or her range of experience so that a correct conclusion can be reached: R. v. D. (D), [2000] 2 S.C.C. It is commonly recognized that, in order to be of assistance to the trier of fact, experts must remain objective . . .”

Justice Macdonald accepted this as the role of an expert and went on to note that, “ . . . he or she cannot “buy into” the theory of one side of the case to the exclusion of the other side. To do so, poses the danger that could taint the court’s understanding of the issues that must be decided with impartiality and fairness to both sides. The fundamental principle in cases involving qualifications of experts is that the expert, although retained by the clients, assist the court.”

She commented that in some civil cases the “path of least resistance” seemed to be to admit the evidence and then compensate for it by attaching less weight or credibility to the opinion. But this is a rejection of the proper role of a trial judge. She quotes Justice Binnie who said, “ . . . the trial judge should take seriously the role of “gatekeeper”. The admissibility of the expert evidence should be scrutinized at the time it is proferred, and not allowed too easy and entry . . .” The expert must be neutral and objective.

A review of the email exchanges between the accountant expert and their client factored into the judge’s decision. The voir dire also illuminated the flow of information and the judge wrote she felt this proposed expert witness was actually not acting in an independent role but had put themselves into the role of an advocate for the client. As a result of this, the trial judge refused to qualify this person as an expert witness.

Summary This type of situation does not happen very often in a trial. Did the additional information gleaned by reading emails between the proposed expert and his client represent the ‘tipping point’ in the judge’s decision? There are certainly good lessons to be learned in this case by any professional who might seek to be qualified as an expert witness in a trial situation. www.claimscanada.ca

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Tavernese v.

Economical Mutual Insurance, Ontario Superior Court May 26, 2009 A claim is being made against the insurer for valuables stolen from a wall safe. The evidence presented by two engineers hired by the defendant concludes that the safe was in the open position when damaged. According to the plaintiffs, the safe was locked when they left and they are the only ones who know the combination. If the safe door was open when it was removed from the safe then, “the logical inference is that the safe was left open or that the burglar or burglars had the combination. Both scenarios could lead the jury to the further logical inference that the plaintiff’s were complicit in the burglary. This expert evidence is therefore significant.”

The counsel for the plaintiffs challenged whether or not two engineers are qualified experts with respect to damages to a wall safe.

This ruling highlights a number of cases, but includes additional information that comes into play when dealing with a conflict between both parties as to whether or not a witness can be qualified as an expert: • The challenge to the witness’s qualifications can be heard in the presence of a jury. If the challenge goes beyond the witness’s qualifications and might involve the actual opinion that might be expressed then it’s within the trial judge’s discretion to hear the challenge with the jury excluded. In the case at hand, this is exactly what the judge decided to do which resulted in this ruling.

• There is a four-part test to determining the admissibility of expert evidence (Regina v. Mohan, 1994, Supreme Court of Canada, 2 S.C.R. 9). In short: a) Is the evidence relevant? b) Is the evidence a necessity for a trier of fact or jury to understand or appreciate something that is outside their own experience level? c) Is there an exclusionary rule? d) Is the witness a properly qualified expert? www.claimscanada.ca

Page 27

The trial judge concluded that both engineers would be deemed qualified as experts and they will be allowed to give opinion evidence in the trial. This ruling is only one piece to the ongoing trial. The “expert” witnesses will introduce their investigative opinions before the jury and no doubt will be faced with a rigorous cross-examination. How this plays out in the end will depend upon what other evidence is

introduced and how it all impacts the jury’s decision.

Conclusion The Ontario Court of appeal is passing along important, especially as it pertains to policy application.

Glenn Gibson is the global chief strategy officer with Crawford & Company Inc.

GILBERTSON DAVIS EMERSON LLP Barristers and Solicitors

Practice restricted to CIVIL LITIGATION, INSURANCE LAW Including Defence, Subrogation, Personal Injury, Bad Faith & Punitive Damages, Legal Opinions, Coverage, Products Liability, General Casualty, Motor Vehicle Litigation, SABS, Disability, Life, Arson & Fraud Claims, & ADR Representation.

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After the Fire

BY MARLENE LANDRY

photo by Deborah Sharpe

On May 1, 2009, the day after a massive fire devastated the Herring Cove/Sryfield neighbourhood of Halifax, Marlene was invited to join fire victims for a bus trip through the charred neighbourhood. The experience gave her heightened insight into our industry’s approach to claims handling. This is her account.

The trip started with speeches from the fire inspectors and the police officers. We were told that the smell of smoke would be heavy and there would be many smouldering sites. Nobody would be permitted to leave the bus for the duration of the trip. Anybody who was not comfortable with that, was asked to step off the bus.

Although well warned, I was not prepared for what I saw. This had been an upscale neighbourhood: custombuilt homes, secluded lots and private roads. The houses had contained artwork, antiques, studio equipment, cars, jewels, fine china and irreplaceable items from all over the world.

It looked like a war zone.

Some houses were gone completely, others were burned-out shells. The grass and trees were charred and black.

Many of the homeowners had moved here to share in a piece of Nova Scotia’s world-famous coastline. The views these people once enjoyed now looked like another planet. These weren’t just 28

Claims Canada

houses that had gone up in smoke — they were dreams.

I was sitting near the back of the bus.

The fire inspector had announced an IBC representative was on board. He introduced me and said if anybody had any insurance questions, I could help. I heard a collective sigh from the group.

They seemed a little shocked at my presence, but glad I was there. I squirmed a little in my seat, hoping I could be helpful and wondering how I could possibly bring any sort of comfort to these people at a time like this. I was glad I was wearing jeans and had left my briefcase back at the office. It was better that I not look like I was there on official business, especially because many of the victims had been wearing the same clothes for a few days.

The victims included me in everything they were seeing and feeling. They helped me visualize what life was like before the fires — pointing out in great detail what stood where, who owned what and what they had lost. The bus was filling with smoke as they all had windows open trying to snap pictures.

There were many tears because in some cases pets were still inside the houses and their fate was not known.

I had tears too.

The fire victim sitting next to me told how he and his wife had moved to Halifax two years ago to build their dream home. His wife owned expensive clothes, artwork and artifacts from their homeland. Fortunately, their house was still standing, but many of

August/September 2009

these expensive possessions may have sustained smoke damage. He told me he didn’t have most of the items insured separately because he knew they were irreplaceable and a dollar value would be hard to determine.

During our conversation, he received a phone call from his insurer’s local representative. Afterwards, he could not remember half of what she had told him. His failure to remember parts of that phone call made me realize how much these people were suffering and how they were not in any frame of mind to be making decisions around contents, blueprints, reconstructions and engineers. Their bodies were in survivor mode; their minds were numb.

I helped this man fill in the blanks of the conversation he had with his insurance representative. In retracing their discussion, I realized his “blanks” mostly revolved around what to do next in the claims process.

Later, after the tour, back in the “real” world, the residents of this burned out neighbourhood had many questions. Fortunately, there were several of us from the industry to help bring clarity. Representatives from the brokers association and the claims managers association were also on hand.

I wish all the answers were simple. I wanted so much to guarantee everything would run smoothly, but all I could do was reiterate that rebuilding after disaster is our industry’s expertise, it’s what we do best, and if policyholdwww.claimscanada.ca

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ers do run into issues they could call me and I would do my best to answer their questions or concerns. I made it clear that I might not always have the answers they want to hear, but I would get them the facts.

The most heartbreaking question I heard was “What if I don’t want to rebuild here?” To those who asked this, we said their policies may very well permit them to rebuild elsewhere. But we urged them not to make such a hasty decision in their current state of shock and remorse.

Nature has a way of repairing itself, and within months you will begin to see the landscape return to some form of normalcy. Colour will return. Green will replace black. We tried to reassure them that once the rebuilding of their homes begins, their community will come alive again. It takes time, but it does happen. They should not give up on their dreams.

The tour was a stark reminder that we are an industry which deals with people in crisis. For many years, I’ve put myself in the customers’ shoes and listened to their stories of loss. In talking to those going through the claims process, I’ve found some people need time to vent about what’s happened to them, and others are just angry. Some people need to cry and others just need to hear that everything will be okay.

Most people just want to know someone cares; that they are their insurance company’s number one priority.

Our industry is put to the test when we handle customers during their most traumatic experiences. For example, the community affected by the Halifax fire is tightly knit. People talk. As they proceed through the claims process, they will compare notes. If insurers deliver excellent claims service, the neighbours will know. If a claim is not handled well, that too will be known.

For this reason, our industry must continue to recognize the need for crisis management and soft skill training.

Insurers train claims staff to understand how to handle the processes, but not necessarily how to deal with the people impacted by the loss. We need to understand the emotional effects a total loss can have on an insured. We must have the ability to recognize when a www.claimscanada.ca

client is traumatized and know that individuals deal with trauma in different ways.

Claims handling needs to be more than just getting down to the business of assessing damage and settling the claim. For people in distress, the language of insurance can be overwhelming. After the Halifax fire, I saw the difference it makes to customers when they are treated like people and not paper files. Understanding a client’s thought process after a loss will help

adjusters effectively communicate with an insured. It’s amazing to see how a few extra minutes of compassion can create loyal, lifelong customers.

Inspired by Marlene’s story, the Insurance Institute has created a soft skills and crisis management webinar.

For more information turn to page 53.

Marlene Landry is the consumer information officer for Insurance Bureau of Canada’s (IBC’s) Atlantic office in Halifax.

August/September 2009

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Reform of New Brunswick Limitation Legislation

BY TALIA C. PROFIT

One of the most fundamental rules in litigation is the observance of limitation periods.

Even the best claim disappears if the limitation period is exceeded — even if by only one day — and represents a complete bar to an action. People cannot sit on their rights indefinitely — a defendant is entitled to timely notice of the claim he needs to meet, having consideration for the fading memories of witnesses and the disappearance of evidence.

On Dec. 16, 2008, the attorney general of New Brunswick introduced to the legislature the proposed Bill 28 to amend the current Limitations of Actions Act. After receiving a first reading, the bill was referred to the standing committee on law amendments for review and public hearings were held in February 2009.

It is difficult to speculate the eventual outcome of the hearings and review, however this initiative demonstrates willingness on the part of the attorney general to correct inefficiencies inherent in the current Act. Such amendments will bring the Act in line with acts recently adopted in other jurisdictions, including the Uniform Limitations Act adopted by the Uniform Law Conference of Canada, and in some cases the amendments represent new provisions, which depart from such precedents.

The attorney general should be praised for incorporating several provisions into Bill 28 to address situations not addressed in the current Act. Section 6 deals with the circumstances where an act or omission “continues” 30

Claims Canada

and directs that a continuous act be measured on each day that it continues.

Section 16 addresses the situation where someone has “willfully concealed” the existence of a claim. Both sections however suffer the same difficulty, since the terms are not defined and subject to differing interpretations.

Bill 28 makes various amendments to the current Act, the most significant being an ultimate limitation period of 15 years. The general limitation period found in Section 5 of the bill stipulates

Bill 28 is an important initiative, which will hopefully have the desired effect of greater clarity for practitioners and litigants in determining the time limits applicable to the lawsuits they face. that no claim shall be brought after the earlier of a) two years from the day on which the claim was discovered and b) 15 years from the day on which the act or omission on which the claim is based occurred. The moment of discovery is also defined.

The two-year limitation period, as suggested in the Bill 28, is a departure from the current version of the Act in that it makes the distinction between the moment when the cause of action arose and the moment when someone discovers they have a claim. Even sub-

August/September 2009

ject to the current version of the Act, common law has already enabled the argument that the discovery of the claim is the salient moment which begins running the limitation period.

Nevertheless, the amendment will allow for greater certainty and consistency with other jurisdictions.

The implications of an ultimate limitation period are twofold. Guttel and Novick suggest, in A New Approach to Old Cases: Reconsidering Statutes of Limitation, a plaintiff enjoys an unfair advantage in a late discovery situation since it is the plaintiff who initiates litigation, and is likely to preserve inculpatory evidence while the defendant, unaware they have become the target of an impending law suit, lacks the motivation to maintain the necessary exculpatory evidence.

The decision to include an ultimate limitation period in Bill 28 will at least provide an end point for a defendant, striking a balance between the competing rights of the plaintiff and defendant.

The same “discovery” and “ultimate” limitation periods are found in section 33 pertaining to fatal accidents.

An action for wrongful death must be brought two years from the “discovery” with an “ultimate” limitation period of five years and is a necessary reconciliation of the Fatal Accidents’ Act and the Survival of Actions Act. Although many positive initiatives were incorporated into Bill 28, there were other provisions the attorney general did not attempt to change or address. There was no amendment to the provision that the Crown is bound by the Act. If the Crown is to be bound in the same way as other litigants, then www.claimscanada.ca

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the attorney general should have taken the opportunity to repeal the twomonth notice requirement before a lawsuit can be filed against the Crown.

There is currently no notice requirement for the federal Crown, and the only provinces that impose such a requirement are Nova Scotia, Prince Edward Island, Ontario and New Brunswick.

Bill 28 did not deal with the limitation periods for insurance claims and the recovery of possession of land. In the Commentary on Bill 28 released by the attorney general in January 2009, it was expressed that, “the Bill does not alter the limitation periods created by the Insurance Act for bringing legal proceedings under different kinds of insurance policies. These, too, are in need of reform, but they are currently under review by the Superintendent of Insurance, and similar reviews are under way in other provinces.

It would be premature to amend them in this Bill.”

The Supreme Court of Canada in the matter of K.P. Pacific Holdings v.

Guardian Insurance [2003] 1 S.C.R. 433, was critical of the confusion that all risk and multi-peril policies create in limitations laws, issuing that, “A dominant policy in today’s world is the “allrisks” or “multi-peril” policy, which covers a panopoly of perils. This is good for consumers. It minimizes the number of policies they need to buy and ensures comprehensive coverage of costs. But it is bad when legal issues arise. The outmoded category-based Act contains rules based on the old classes of insurance. The newer comprehensive policies are difficult if not impossible to fit into the old categories. The result is continued uncertainty about what rules apply. Claims stall. Litigation ensues. Courts struggle with tortuous alternative interpretations.

The rulings that have emerged have been likened to a “judicial lottery”…

5. It would be highly salutary for the legislature to revisit these provisions and indicate its intent with respect to allrisks and multi-peril policies. In the meantime, the task of resolving disputes arising from the disjunction between insurance law and practice falls to the courts.”

The companion case of Churchland v. Gore Mutual Insurance Co. [2003] S.C.R. 445, which involved an action www.claimscanada.ca

for theft under a multi-peril policy, had a similar outcome.

These two Supreme Court cases were likely the motivation behind the new proposed amendments in other jurisdictions, intended to provide greater certainty with respect to limitation periods in insurance litigation.

Bill 11: the Insurance Amendment Act, 2008 has already received Royal Assent in Alberta and Bill 40: the Insurance Amendment Act, 2008 has received a first reading in British Columbia.

While the New Brunswick bar is encouraged that legislative reforms in this area will be forthcoming, litigation in this area will continue to be subject to confusion over the applicable limitation period, and such “judicial lottery,” until such amendments are made. Legislative reform in this heavily litigated area is both necessary and long awaited.

The civil litigation section of the New Brunswick bar took the opportunity to add their input to the detailed consultation process that Bill 28 has enjoyed. The section undertook a

thorough analysis of the proposed legislation and provided essential feedback to the standing committee, encapsulating many of the present commentaries and critiques, in addition to others.

The amended Limitation of Actions Act, if proclaimed, will be subject to interpretation and dispute, no matter how well drafted. It would be hard to imagine a piece of legislation a good lawyer would not try to manipulate to their client’s advantage. Bill 28 is an important initiative, which will hopefully have the desired effect of greater clarity for practitioners and litigants in determining the time limits applicable to the lawsuits they face.

Talia C. Profit is an associate at Barry Spalding in Moncton, N.B. Barry Spalding is a member firm of the ARC Group of Canada, Inc.

August/September 2009

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Criminal Misuse of Rental Vehicles is a Costly Cross-Border Problem Thieves Target Cars and Trucks for Black Market Resale and Fraudulent Accidents

BY PHILIP WAYLAND

For many, renting a vehicle provides a them to unsuspecting buyers or to black market brokers for means for conducting business, going on a shipment overseas. Criminals use stolen vehicles to commit road trip, moving to a new location and so other crimes, including drug trafficking, transporting stolen forth. For some, however, a rental vehicle is goods or insurance fraud. an object for theft, a device for fraud or More dangerous than thefts are accidents staged to comother criminal activity. mit insurance fraud. Well-organized groups use a simple Insurance Bureau of Canada (IBC) esti- approach: Criminals rent a car, buy full insurance coverage, mates fraudulent insurance claims are worth $3 billion each load the vehicles with paid accomplices as “passengers” and year, with auto theft adding $600 million then intentionally cause an accident with more. In the United States, the Federal an unsuspecting or distracted driver.

Bureau of Investigation says staged acciThere are several types of staged acciInsurance Bureau dents cost insurance companies more dents. The most common include the folof Canada than $20 billion annually. The National lowing: Insurance Crime Bureau notes that estimates fraudulent Swoop and squat: This type requires staged accidents are becoming one of the two drivers and their vehicles and an insurance claims leading insurance frauds in the United unsuspecting motorist. The “squat” driStates. ver positions his car in front of the victim, are worth While it is not clear how many crimithe “swoop” driver passes in front $3 billion each year, while nal cases involve rental vehicles, consider of the squat car, which causes him to slam with auto theft that if just 10 per cent of crimes involve on the brakes, causing the victim behind rental vehicles then it is a $360 million adding $600 million them to crash into the rear of the squat problem for Canada and a multi-billion driver’s vehicle. The victim has no time to more. dollar in the U.S. Add the cost of police swerve or slow down. The driver of the response and investigation, health care swoop car who caused the accident keeps and administration and judicial process, going, leaving the victim’s insurance comand it becomes transparent that crime involving rental vehi- pany to pay for the accident. All personal injury and damcles has a tremendous impact on a society’s bottom line. age claims made by the driver and passengers in the squat Complicating the problem for investigators are orga- vehicle are the victim’s responsibility. nized criminal groups that operate between the provinces Panic stop: A driver has a rental vehicle full of “passenand the United States. Law enforcement and insurers both gers” with one them on the lookout for distracted drivers. north and south of the border are working together to com- As soon as this occurs, the passenger tells the driver to slam bat the costly menace. on the brakes, causing the distracted victim to hit the sudThieves steal rental cars to resell them to other criminals denly stopped vehicle. The victim is totally at fault, espeor to strip them for parts. They may steal them to resell cially since he was “distracted.”

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Drive down: A collision is staged at an intersection or • Insurance theft rings use both cars and trucks. parking lot entrance after yielding the right-of-way to the • The vehicle driven by the plaintiff may have pre-existing innocent victim by waving them ahead. As the victim prodamage. Damage to the vehicles may be inconsistent with ceeds through the intersection, the suspect purposely accelthe circumstances or description of the loss; in some cases, erates and collides with the victim’s vehicle. damage seems the result of running the vehicle into a staIn these incidents, the innocent victim is shocked and tionary object. possibly hurt. They may not realize what just happened, and • The renter will have purchased an excessive amount of have no idea that they are being victimized by criminals. In insurance coverage. The rental vehicle is more than likely the meantime, the “passengers” complain of serious (and the at-fault vehicle. hard-to-prove) back and neck injuries. Approaching sirens • The renter pays in cash or tries to use someone else’s credwail, confusion and concern it card for the transaction. cloud the judgment of the The renter is not always Law enforcement, governments victim. the driver and may not Motivated by greed, crimeven be in the car at the and insurance companies in Canada inals who stage accidents can of loss. and the U.S. are on the offensive in • time unintentionally cause serious There are usually mulan effort to apprehend these tragedies. This is especially so tiple occupants in one or when the staged accident both vehicles. The occucriminal groups. occurs on a highway. Many pants may not produce criminals believe that “the identification, and when faster the victim is going, the questioned, deny knowlmore damage will be done” edge of the other parties to the squat car and the larginvolved. The parties er the claim. They can misoften have aliases or nickjudge the consequences for names. The occupants their accomplices in a car rarely know the complete slammed from behind. Rearnames of the other occuend collisions may push pants. They provide cell squat cars into oncoming phone numbers, incorrect traffic or in front of other addresses or post office speeding cars. In fact, an box numbers. innocent 71-year-old New • Destination details, York woman died in 2003 description of the accident when her car hit a tree in an and other details change, intentional rear-end collision. More recently, a California alternatively, details and descriptions appear too exact or family died in a fiery crash after criminals purposefully scripted. struck their car from behind.

• There is usually no ambulance called to the scene and no Law enforcement, governments and insurance compainjuries claimed at the scene. At times, the loss is a onenies in Canada and the U.S. are on the offensive in an effort car accident or involves a phantom vehicle. to apprehend these criminal groups. Many states and • Medical facilities serving the “injured” passengers provide provinces have passed laws and regulations that target multiple diagnostic imaging/testing for subjective soft tisstaged-accident rings. Some have also formed special task sue injuries, or multiple assessments. Their reports arrive forces, dedicated the resources of prosecutors and others to late. The facilities’ billing seems unclear or confusing; they combat the problem. double bill, bill for treatment not rendered or for excesIn 2005, New York prosecutors indicted 85 people in what sive treatment for alleged injuries. they said was a multi-billion dollar accident fraud operation Using these flags, those who work in the insurance with connections to Russian organized crime groups. Last industry can be on alert and can lend our eyes and ears to October, 70 companies and individuals in Florida were sued identify suspicious claims. Bringing concerns to proper by an insurance company for more than $1.5 million in dam- authorities has and will lead to larger investigations, appreages. It was alleged that 17 car accidents were staged and hension and prosecution of organized criminal groups. insurance claims were made by an organized ring that includ- Cooperative effort by those on the front line with law ed auto body shops, tow-truck companies, chiropractors and enforcement and government is necessary to attack the people posing as drivers and passengers. problem, reduce its tremendous financial and human costs Insurance professionals play an important role in stop- and protect us all from becoming victims. ping this kind of criminal fraud. Experts say there are a number of indicators and red flags that warrant additional invesPhilip Wayland is director of insurance replacement for tigation by claims professionals. They include the following: Avis Budget Group in Canada.

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www.claimscanada.ca

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The Insurance Community Presents

Wish Upon a Star Charity Golf Tournament Thank you for making 2008 a successful event!

A generous group of people raised $35,000 for the children and helped make a difference in the life of a child.

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On-line Registration is available at: www.golfwishuponastar.com Interested in supporting or sponsoring this event?

Call one of the committee members: Camille Alexander @ 416-953-9153 Chris Baylis @ 905-752-7827 ext.228 Tony DeSantis @ 416-744-0123 ext. 297 Debby Matz @ 905-637-8246 Mark Weir @ 416-341-1464 ext. 43101

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Mitigating Risk In Changing Times

BY ROYSTON COLBOURNE

isk mitigation represents the core of insurance: The What is new entire industry is based on making informed judgOn the one hand it could be said nothing is new: business ments about probabilities of things going wrong. The is interrupted and incidents of damage and injury occur and industry has, in general, made a very effective process of cal- claims are made. On the other hand, what is new are the type culating premiums in the context of risk. There are, histori- of incidents and events that result in claims. cally, unforeseen events and incidents that remind us all the The systems and judgments made for assessing premiums process needs to evolve and continue to be improved. The is driven by the insurance industry. This is based on a histormathematical calculations that compare risk with probability ical perspective and based on data and information. The realin respect of premiums is and has been an excellent guide to ity is industries and society evolve so rapidly in our current calculation of premium and risk mitigation. It continues to age that by the time sufficient data and information is collatplay an important part in the process. The nature of the cur- ed it is often old news and does not form a holistic view in respect of anticipation and prediction of rent system is that it is prediction-based the forthcoming year. on history.

The process The old adage — the only thing that It is not suggested that the historic perchanges is change itself — is very true. Sudspective is not relevant or does not form of risk mitigation den events that are unpredictable in their an important part of premium assessment should be viewed detail can be the subject of planning, prepa— the fact is it is reactive prediction. But ration and mitigation. What must be rewhat is new and different and in what ways from a more membered is that hindsight generally reveals can the industry continue to be in front of proactive stance; indicators were there for the discovery. the curve?

Over the last six months alone, terrora more lateral The role of insurance brokers is to ism continues to evolve and probe to find assess the risk and to guide, by various examination of new soft underbellies of western inframeans, clients to take certain measures to threat risk and structure and society, there has been a make the likelihood or impact of a claim rapid and unprecedented economic downto zero. The reality is factors come into vulnerability turns and now a pandemic. We can look play that are unforeseen or outside the is required. back and generally say we were not surreality of predicted probabilities. Insurprised that x or y happened. While these ance brokers examine a range of factors when considering rates: the industry, nature of business, his- issues are not new in theory, they are becoming an issue for tory of relevant factors, the clients history and the measures an organization, company or industry for the first time.

It has been suggested that where minimum standards or taken by the client to mitigate risks and reduce the probabilregulations are not dictated, there is a reluctance to explore ity of circumstances leading to a claim.

The combination of reduced premiums and reduced risk deeply, leaving some organizations ill prepared for potential makes the venture more attractive for all involved: brokers, eventualities. It is not advocated that more regulation and insurance companies and, of course, the end users of prod- standards be introduced, but that organizations take a hard ucts or services as the cost of insurance is inevitably passed look at standards and regulations and ask if the aim is to meet or exceed them. on to consumers.

R

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What is different Acceptance and accountability from shareholders and the public is rapidly changing. The tolerance level for getting it wrong in the past was much more liberal than it is now. In the past, the public and shareholders did not feel as empowered as they do in the rapid information age of the 21st-century. After an event, people know exactly what should have been done, how it could have been avoided or mitigated and how a manager’s focus, policy or attention to detail could have averted or minimized whatever the event was. Could a pandemic, terrorist attack or serious industrial accident, sabotage or environmental spill have been averted or mitigated by policy, practice, planning? The answer to all those is probably yes if we are bold enough to admit it.

Staying ahead of the curve The insurance industry is in a privileged position in terms of mitigation. The reality is the most attractive aspect of risk mitigation is the bottom line: Reduction in insurance premiums, civil claims and all the other financial penalties associated with getting it wrong. The pivotal role insurance plays in guiding others to get it right is by prompting and promoting risk mitigation to play a broader and deeper role in client’s activities. Simply focusing on the historic perspective and encouraging compliance is only part of the process.

The process of risk mitigation should be viewed from a more proactive stance; a more lateral examination of threat risk and vulnerability is required.

The process of conducting threat, risk and vulnerabilities surveys is an important part of getting it right. Where those surveys are carried out as checklists or simply ensuring compliance with standards and regulation, important as that is, it does not reveal emerging and changing environments, and negative activity. The art of a survey is to find threats, risks and vulnerabilities previously unidentified, which will inevitably bite the client. There is significant advantage to both insured and insurers in taking a more proactive approach to risk mitigation. Insureds should be encouraged to look beyond the typical, conventional and historic areas of risk providing insurers tangible evidence of proactive risk identification and reduction.Explore beyond the obvious and you will find those opportunities which positively impact the bottom line. Proactive risk mitigation is the crucial step to getting it right.

Royston Colbourne, BSC, is the senior risk consultant with Canpro Global Services Inc. He provides comprehensive security and threat risk mitigation services to overseas missions organized by the United Nations, primarily in the Middle East and Eastern Europe. Mr. Colbourne is a former member of the London Metropolitan Police.

)NDEPENDENT -EDICAL %VALUATIONS /CCUPATIONAL 4HERAPY %VALUATIONS &UNCTIONAL !BILITIES %VALUATIONS 6OCATIONAL %VALUATIONS 4RANSFERRABLE 3KILLS !NALYSIS ,ABOUR -ARKET $IAGNOSTIC 4ESTING &ILE 2EVIEWS Ìi \ {£È x£ä Ó{Èn v>Ý\ {£È x£ä nÇÈÈ Ì vÀii\ £ nÇÇ Îä{ ÓÓÎ i > \ v J>Àà °V> ÜiL\ ÜÜÜ°>Àà °V>

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August/September 2009

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Corporate Reputation and Effective Communication A Catastrophe Adjuster’s Responsibility

BY LORI BRASSELL-CICCHINI

As significant catastrophes make their way into headlines, adjusters must be well-prepared to handle the media after an event occurs.

Canada’s headline news has reported some significant environmental catastrophes in recent years. Fortyfour peanut-related products were recalled from a plant in Mississauga, Ont. after Salmonella sickened consumers. A massive explosion devastated a plant in a Northern Toronto propane facility leading to the evacuation of 12,000 people, including workers and local residents. Sydney Tar Ponds were identified as a hazardous waste site in Nova Scotia.

As these and other dramas were played out in the media, catastrophe claim adjusters worked tirelessly behind the scenes to manage the claims and losses in an effort to minimize the negative impact to the company involved.

Catastrophe claim adjusters specializing in man-made losses recognize that they operate as a representative of the company they represent. In this critical role, it is important for adjusters to know, understand and be able to execute on the company’s established protocols for dealing with a catastrophe. Perhaps, most important, adjusters need to be aware of the potential effect their actions could have in preserving the integrity of a company’s reputation and image.

Communication is a big piece of the complicated catastrophe management pie. Managed well, communica40

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Linking the company’s need to manage the catastrophe with the public’s desire for information becomes a high priority.

• Careful candor: Engage legal counsel to develop appropriate messages regarding the acknowledgement of responsibility.

• Identify key messages: Select one or two key things that you want your audience to know.

• One voice, one message: Designate spokespersons and make sure they are prepared to deliver consistent messages.

• Be factual: Be sure spokespersons know all of the relevant facts.

Instruct them never to speculate.

• Provide regular updates: Know how to collect and disseminate relevant information as events unfold.

• Respect the media: Stick to your message when communicating with the media. Maintain your composure when asked difficult questions and do not try to manipulate the interview.

• Avoid no comment: This statement always sounds defensive and evasive.

Corporate side of crisis communications Most companies contemplate the possibility that a catastrophe could happen at some point in time. In preparation, they develop operational procedures and a detailed communication plan. The plan usually discusses the company’s communication philosophy with regard to its stakeholders, maps specific communication channels and designates spokespersons. In general, good communication plans follow these simple rules: • Preparation: Assume the worst-case scenario and be prepared.

Adjuster’s side of crisis communication Often, the claims adjuster is the first company representative to speak to a claimant.

Experienced claim adjusters understand the fundamentals of proper communication. First and foremost, they know how to locate their company’s crisis communication plan so that they can study the procedures and be prepared to handle whatever communication challenges come their way.

Below are some guidelines that adjusters can use when dealing with claimants. Keep in mind, the adjuster’s job is to do what they can to assist the

tions can help minimize negative consequences to the brand, reputation and financial strength of the company.

For this reason, most companies have developed proactive strategies for making public statements or dealing with informal communications with employees, claimants and other key stakeholders.

Linking the company’s need to manage the catastrophe with the public’s desire for information becomes a high priority. So, how do these adjusters know what information to convey, with whom, and when?

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claimant, while helping to preserve the company’s reputation and assets.

• Follow the company guidelines: Prior to meeting or speaking with claimants, it is important that adjusters be well-versed in the company’s public position about what happened, why it happened, what is being done about it. Most companies tell adjusters exactly how they want this information presented to claimants.

• Don’t guess or improvise messages: Sometimes, adjusters are asked questions they are not equipped to handle. It is okay to tell the claimant that you don’t know the answer. At the same time, this is an opportunity to build credibility by assuring the claimant that you will try to find out and get back to them in a timely manner. Adjusters should never speculate or make up responses on their own. This may jeopardize the company or its agents.

• Avoid jargon: Don’t use acronyms or

other language that may be confusing or open to misinterpretation.

Furthermore, be considerate and take the time to explain the process to the claimant so they will understand what you are doing and why.

• Listen to the claimant: In many instances, catastrophic losses affect many people inside and outside of the company. Discussing the event with you may reveal useful information that can be used to help settle the claim. In addition, this will help identify the need for critical incident counseling. The company may want to consider providing these services as they work to preserve their image and reputation.

• Follow up: Maintaining good public relations over time may be necessary.

Claim adjusters who remain in close contact with claimants are better informed and are able to address important issues that may arise after the fact. In addition, this is an opportunity to gather intelligence and cre-

ate good will for the company.

• Be discrete: Do not discuss the company’s losses in public. Keep sensitive information to yourself. Discuss claimant information only within company walls with individuals who share responsibility for the company’s claim experience.

When any company is faced with a catastrophe, there is bound to be some degree of internal turmoil and service disruption.

The claim adjuster can be the company’s most valuable asset by understanding their valuable role in managing claims and losses while being good stewards of the company’s most important asset — its reputation.

Lori Brassell-Cicchini is vice president, ESIS Catastrophe Services, where she oversees the catastrophe-services program. ESIS, Inc., is the risk management services company of ACE Group.

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Spotlight on Site Security

BY ROBERT GARLAND

Does it matter what happens to a fire or other loss scene after the official investigation is over? Clearly, the courts have weighed in with their opinion that site security and continuity of evidence are paramount in any cases involving the defence of an insurance claim or subrogation.

Many remember the devastating blast that rocked a Toronto neighbourhood just before dawn on Aug. 17, 2008.

A series of explosions ripped through the Sunrise Propane Industrial Gases plant, leaving two men dead and forcing thousands to flee their homes.

For insurance companies and claims adjusters, the work in these kinds of traumatic events is just beginning. Investigations must be conducted, policies need to be referenced and claims must be processed. In many cases, lawsuits also have to be defended.

One issue frequently overlooked in disasters is the security of the scene and the preservation of evidence for potential court proceedings.

Sunrise Propane is just one example of the many different types of events that require security and protection. It could be a four-alarm blaze at an industrial facility, a residential fire, an explosion at a multi-tenant condo that forces evacuations or a building collapse. No matter the cause of the event, protocols and procedures must be followed to ensure the scene is secure, evidence is protected and access to the site is closely monitored.

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fence. Take the example of a recent fire that prompted the evacuation of hundreds of tenants. On Mar. 19 2009, 500 people were forced from their apartment building on Kingston Road in Scarborough, Ont. after an explosion in the main electrical room led to a smoky blaze. It was almost three months before residents were able to return home due to ongoing repairs.

The multi-tenant building evacuation illustrates a number of complex issues related to site security, such as: • How is the scene protected continuously throughout the process of the Office of the Fire Marshall’s investigation and ensuing insurance company investigation?

• How should visitors be monitored to allow reasonable access for legitimate tenants and to prevent theft; • How should multiple contractors/restoration firms be identified and recorded?

It is vital for insurance companies and loss adjusters alike to consistently rely on standard, recognized procedures to protect equipment, maintain continuity of evidence and prevent any further damage or theft. Trained, licensed professionals should be used to secure the site and ensure there is a smooth hand-off from official investigation to private insurance company and/or policyholder control.

NFPA 921: Standard of care There should also be standardized protocols in place that require precise activity logs and comprehensive reports on the status of the site, as well as 24-hour activity communication with the loss site. Security professionals must be trained to identify suspicious visitors and vehicles and www.claimscanada.ca

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should have a guaranteed callback response policy, with could potentially compromise the adjusting of the claim.

Just as importantly, a secure site can buy adjusters time to toll-free access to adjusters or local authorities.

Some may think this is overkill, but there are several rea- bring in qualified experts and investigators, with specializasons why site security is so important to so many different tion in their chosen fields. For restoration companies, a groups. The first is NFPA 921 – the National Fire Protec- secured site will translate into a clear identification and tion Association’s Guide to Fire and Explosive Investiga- recording of sub-contractor access and protection of expentions. This is an investigative guide that was first written in sive on-site equipment from theft.

Policyholders are also afforded the security of knowing 1992 and most recently revised in 2004. It recommends a “systematic approach” and “scientific method” be used in their belongings and valuables are safe from further loss.

For insurance brokers and agents, this provides policyholdall fire investigations.

Although NFPA 921 is represented as a “guide” to assist ers with peace of mind and can contribute to a stronger fire and explosion investigators, the reality is that it has client relationship. Insurance companies that properly probecome the prime document upon which any fire investiga- tect loss scenes also control the loss amount and, by extention will be scrutinized. Most importantly, courts in the sion, a broker’s loss ratio, reducing any potential negative United States have now embraced NFPA 921 as the stan- impact on contingent profit commissions.

The ultimate test of integrity of site security at a loss dard of care in several major cases, and a body of law has formed around these cases. There is increasing evidence that scene lies with the courts. Judges have been increasingly Canadian courts have also adopted this guideline for inter- scrutinizing the integrity of evidence obtained by insurers to defend claims, as shown in several preting the proper approach to fire high-profile cases. investigation.

It is vital for In Mazza v. Hamilton Township One of the key aspects of NFPA 921 Mutual Insurance Co., the court awardrelates to spoliation of evidence. The insurance companies ed a record-setting $2 million in puniNFPA defines spoliation as “the loss, and loss adjusters tive and compensatory damages against destruction or material alteration of an Hamilton Township Mutual Insurance object or document that is evidence or alike to consistently Co. after the jury dismissed the insurer’s potential evidence in a legal proceeding rely on standard, claim of arson and admonished its bad by one who has the responsibility for its preservation.” Spoliation encompasses recognized procedures faith treatment of the claimant. The had made several attempts to both intentional and negligent destructo protect equipment, insurer show gasoline had been used to start the tion of evidence. Dozens of legal cases fire at the plaintiff’s mushroom farm, in the U.S. have shown that the destrucmaintain continuity but by the time it investigated the scene, tion or alteration of evidence applies of evidence and the building had been gutted and the site not only to equipment, but also to the prevent any further was completely unsecured. This comscene itself. promised the integrity of any evidence Another reason why site security is damage or theft. obtained. important involves subrogation. SecurIn another well-known case, Whiten ing the loss scene before any debris is removed or any repairs are performed can aid immensely in v. Pilot Insurance, a jury awarded $1 million (later reduced any potential subrogation action. A prompt investigation to $100,000 on appeal) to a woman and her family who lost should then be conducted by an experienced investigator everything they owned in a house fire. The award was largewith expertise in the appropriate area. All potential subro- ly to send a message to the insurer and the industry in gengation targets should be placed on notice of the loss and eral that protracted defence of a legitimate claim would not advised of their right to examine the loss scene. Physical evi- be tolerated. In turn, insurers were essentially put on notice dence related to the cause of the loss should be retained and that to effectively defend a claim, they must produce properly collected evidence or face the penalty of a bad faith photographed. claim.

Continuity of evidence is key This is the reality of what can happen when loss scenes The message for property insurers is the need to take are compromised by poor security, altered evidence or quick, comprehensive and affirmative steps upon receiving incomplete investigations. The bottom line is insurers face a notice of loss to secure the scene and establish a chain of far greater additional dollar losses from legitimate claims if custody to protect evidence throughout the entire investi- the investigation process they follow is flawed or haphazgation. The main issue is continuity of evidence from start ard. This is easily preventable with a timely response to to finish. Properly securing a site also allows the insurance post-event site security and protection of evidence. company to protect itself against potential further losses Perhaps nowhere does the old adage that “an ounce of due to theft or safety and liability issues. prevention equals a pound of cure” apply more than in asset There are other parties that benefit from a properly security and protection. secured site. Claims adjusters can carry out their investigation with confidence that there will be no surprises that Robert Garland is vice president at A.S.A.P. Secured Inc. www.claimscanada.ca

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Functional Assessments The Difference is in the Details

BY ELIZABETH CHAPMAN

What are the details?

Which ones enhance the ability of a claims professional to gain strong decision support to effectively manage the claims process?

Functional testing measures and provides information on the objective physical abilities of a claimant. The results of an assessment act as a bridge between the stage of recovery and return to work and/or pre-injury activities. The results/opinions formulated following the assessment are based on actual performance (i.e. claimant can lift 50lbs) vs. self reports (i.e. I don’t think I can lift more than 10lbs). This objective information is essential in supporting medical decisions, particularly related to the presence of a disability or not and whether return to work is safe and appropriate.

Assessment products The type of equipment, testing philosophy and evaluator qualities, has an impact on the safety, reliability, validity, practicality and utility of the results of the assessment.

Manual vs. computerized functional testing systems Many providers complete manual testing, which requires the evaluator to use tools with dials or digital readouts and manually document the results.

Calculations are done by hand.

Depending on the type of measurement tools used, the frequency of calibration is often an issue. From a legal defensibility stand-point, the ability of 44

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the clinical provider to maintain a record of calibration is important.

Report writing software is available, wherein the evaluator manually enters the data into the software. These reports are typically well organized and easy to read, but the method by which the functional testing data is collected is potentially an issue.

A computerized system is one where the data is captured by the computer from the testing tools (load cell, range of motion device etc). Comput-

The results of an assessment act as a bridge between the stage of recovery and return to work and/or pre-injury activities. erized systems are becoming more and more popular for both evaluators and payers for the following reasons: • Accurate: The system requires calibration to ensure the values recorded are accurate. There is no risk for recording errors since the computer is capturing the data versus writing the data down on paper.

• No bias: The computer captures the data and there is no risk that the data will be changed intentionally or unintentionally (dependent on system manufacturer).

• Real time strength graphing: This allows for the evaluator to see muscle

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fatiguing or unusual muscle recruitment.

• Real time heart rate graphing: This allows for the assessment of cardiovascular endurance and ensures the claimant is performing safely throughout the assessment.

• Safety parameters built into software: Dependent on the system manufacturer, safety parameters are programmed so that testing does not start unless the resting heart rate and blood pressure are within safe limits and the testing will stop if the heart rate increases to unsafe levels for the claimant.

• Reliable and valid: Trail length, rest periods, repetitions and the test process are all standardized in computerized systems. Test protocols programmed are based on peer reviewed research or they match the requirements of the job tasks.

Standard vs. custom testing protocol A number of functional assessment manufacturers and clinic chains use standardized testing protocols. This means that no matter what, the same test components are completed for each claimant. Other providers/evaluators customize the assessment based on the injury, job tasks and referral questions. Each assessment will be slightly different and tends to provide more relevant/valid results.

Length of assessment Assessment length will vary based on the referral questions. If the adjuster only needs to know whether or not a claimant can perform the liftwww.claimscanada.ca

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ing requird at their job, then an assessment would take approximately an hour to complete. A full functional assessment is generally between twoand-a-half and four hours long.

Research has found that multiple day assessments are not much value and that the shorter functional assessment can provide the same reliable and valid information.

Finding a healthcare provider Evaluator Functional assessment evaluators should have a knowledge base in anatomy, physiology, biomechanics, and psychology. Generally the health-care professionals involved with this type of assessment include kinesiologists, physiotherapists, occupational therapists, chiropractors, athletic therapists and occupational health nurses. It is essential these professionals have post graduate training in functional assessment as university programs do not have specific courses in this area. Due to the large number of complaints that are received related to this type of assessment, malpractice insurance and membership to a professional certification or regulatory body is essential.

Use a reputable company As a claims adjuster, there is an obligation to the claimant to send them to the best provider/evaluator available, where the service and report meet high standards. Here are some questions to ask when contacting a provider: • Who does their assessments? (education, post graduate FCE training) • Do they have a quality assurance program? (i.e. senior clinician assisting with selecting test components and reviewing reports) • What type of equipment do they use?

• What is the referral process for ordering an assessment (i.e. what are their timelines for booking and sending the report) Referral process A quality functional assessment will address the specific claims questions with objective measurement and sound clinical judgment. The following outlines the primary and secondary triggers for making a referral.

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• Referral questions so the evaluator knows what information is needed to move the claim forward.

Primary triggers for assessment • Lack of progressive improvement with consistent treatment.

• Physician requests functional assessment as a tool for determining clinical direction.

• Fraud is suspected.

• Documented activities contradict expected activities level.

• Days out of work exceeds maximum published days to recover for type of injury. Assessment can be used to verify physical recovery.

Secondary triggers for assessment • Subjective complaints do not match physician’s objective findings.

• Treating provider will not determine work capacity.

• Return to Work (RTW) restrictions needed for case settlement.

• Claimant is frequently unable to sustain work at specified work restrictions.

• Lost time injury where light or restricted duty placement is difficult.

• Determine functional abilities and levels of effort of suspicious claims.

What to send the evaluator When making a referral for functional testing it is important to send some key information to the evaluator prior to the appointment.

• Physical Demands Analysis if job match is required; • Details on mechanism of injury; • Information on diagnosis; • Medical reports if there is a need to know if treatment was appropriate or if further treatment is required; • Information on pre-existing medical conditions;

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End result It is important that each functional assessment report be to a standard that would withstand legal scrutiny. Key factors to ensure this include: • Peer reviewed and published protocols are used.

• Unbiased computerized technology.

• Test components and functional assessment design are valid.

• Cross validation of tests to ensure consistency of effort.

• Equipment accuracy with calibration reports available.

• Well qualified assessor.

Once the functional assessment has been completed, the potential actions that can be taken include: Case management perspective • Support physician’s opinion on return to work; facilitate early RTW. • Specificity of actual residual deficit as compared to job requirements.

• Consult with physician to determine other options for residual deficits.

• Obtain an objective opinion of consistency of effort to demonstrate work ability.

• Evaluating the need for retraining /vocational rehabilitation Claims perspective • Objective test to support evidence and/or to dispute other objective findings.

• Use results of functional assessment in comparison with surveillance.

• Use results as objective, defensible documentation in settlement negotiations.

A well completed functional assessment should provide adjusters with the details they require to move a claim towards resolution. An informed adjuster can make a referral to a provider/evaluator who has the necessary experience and equipment to perform these assessments and provide objective data to answer referral questions.

Elizabeth Chapman B.Sc.Kin.,CK, is the clinical specialist/business development manager at BTE Technologies Inc. www.claimscanada.ca

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The Emerging Use of ISCO in Environmental Claims

BY DAVID WADE

There is an emerging trend that all insurance adjusters and claims managers should be aware of — in situ chemical oxidation (ISCO). This technology is commonly provided by specialized environmental contracting companies in conjunction with a technically competent environmental engineering firm.

While in situ environmental clean-ups have been occurring over the past decade, it is classified as an emerging trend because only in the last few years has ISCO entered the mainstream. It is now more widely used by environmental risk management professionals.

What is ISCO? The phrase in situ is a Latin term that means “in its place.” In situ remediation refers to clean up efforts that take place in the ground, for example, simulating natural processes in the soil or groundwater to remove contamination. Conversely ex situ remediation generally refers to cleanup efforts where contaminated material is excavated and removed to an off-site location. The second part of the term ISCO encompasses the process of chemical oxidation. Simply put, a polluting chemical is transformed from a harmful substance to a safe substance by the placement of a oxidant or treatment chemical into the zone of contamination.

Typically the ISCO process is achieved by injecting a treatment chemical into an area of contaminated soil or groundwater through injection wells.

These are drilled into the ground so that contact can be made between the treatment chemical and the polluting chem48

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ical. The more contact made between the treatment chemical and the polluting chemical, the higher the likelihood the polluting chemical will be destroyed or transformed into a safe substance.

The treatment chemical could also be placed in the bottom of an excavation where contaminated soil or groundwater are encountered, for example, in the base of an excavation after removal of a gasoline storage tank.

Cross section of ISCO injection wells (white tubes) into subsurface contamination (red)

ISCO uses on claims ISCO is an excellent technology to use for the remediation of properties that are contaminated with chlorinated solvents such as degreasing fluids like trichloroethylene (TCE), dry cleaning fluids like perchloroethylene (PCE), petroleum based contaminants (BTEX, PHC) and products of incomplete combustion (PAHs). There has even been success treating problematic compounds such as PCBs (Polychlorinated biphenyls).

As ISCO has evolved there have been many new products available for the specific destruction of polluting chemicals. For example, potassium permanganate and sodium permanganate are

August/September 2009

commonly used treatment chemicals that destroy TCE and PCE, with the former being less expensive and the latter remaining longer in the ground creating a more lasting effect.

Treatment chemicals such as base activated persulfate are very effective in the destruction of BTEX and PHC or similar petroleum related polluting chemicals. Proprietary designer chemicals are also available such as RegenOx, which is comprised of an oxidizing chemical with a catalyst to destroy specific polluting chemicals.

Advantages of using ISCO The advantages of ISCO are as follows: • the time required to clean-up a contaminated soil or groundwater is greatly reduced when compared to traditional remedial methods (pump and treatment systems, air sparging, etc). Contaminated sites can be cleaned up in months to years compared to decades with traditional methods.

• costs can be greatly reduced for soil remediation when compared to excavation and landfilling of contaminated soil, especially for deeper impacts or impacts located beneath a building.

• costs are greatly reduced for groundwater remediation when compared to traditional methods.

• Contamination can be cleaned up below buildings without demolition.

This is an excellent technique for use under historic buildings or monuments.

• remediation can be achieved with minimal disruption to property occupants. Small injection wells/points are used to deliver the treatment chemical to the subsurface versus large excavations for soil removal or the conwww.claimscanada.ca

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struction of buildings to house pumping and treatment systems. remediation can be successfully achieved in winter and summer versus biological remediation techniques that only work well in warm temperatures or pumping systems that require heating to avoid freeze up of liquid transfer lines. minimal equipment and capital costs are required to get the remedial work started. harmful breakdown products such as vinyl chloride, a human carcinogen, are not created during the oxidation process. a process that is safe to use in explosive environments versus traditional remedial techniques that use electricity or involve excavation. The photo below shows a site with gasoline contaminated soil that caught fire when an excavator hit a stone and caused a spark during soil removal work.

ISCO selection considerations The key to a successful ISCO remediation program is to retain an environmental science and engineering firm with a proven track record of designing and overseeing numerous ISCO projects. The firm should be prepared to present client references that can attest to the success of ISCO projects on the contaminants of concern at the subject property upon which the claim has been made. Similarly, the environmental contracting company must have a proven track record of success undertaking ISCO projects in many different situations.

Because ISCO is based on chemical reactions in the subsurface, it is very important the employees fully understand not only the chemistry of the contaminants but also the complexity of the hydrogeology and geology in which the ISCO reactions will take place.

When to use ISCO Below are examples of recent insurance claims that made use the ISCO technology: • Hydrocarbon contamination was treated below a five-storey office building in Hamilton, Ont. The contaminants were reduced to well below the MOE standards. The use of ISCO www.claimscanada.ca

prevented the need to demolish the building, resulting in savings of over $1,000,000.

• Former gas station in Strathmore, Alta. had Benzene, PHC, Napthalene and MTBE contamination in groundwater on the site and below the adjacent roadway. Alberta Tier 1 Standards were achieved in 18 months using a series of percarbonate solution injections at a cost of $750,000. Alternative remedial strategies were estimated to take eight plus years to com-

plete remediation at a costs of well over $2,000,000.

When used properly on environmental insurance claims, ISCO has the ability to eliminate long-tail claims, reduce total claims payout and minimize disruption to the occupants of the contaminated site.

David Wade, P.Geo., CRM, FRM is the president of Canadian operations for Premier Environmental Services Inc. and Premier Risk Management Solutions.

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p50,51 EDUCATION FORUM

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education forum

A SERIES OF ARTICLES PROVIDED BY THE INSURANCE INSTITUTE OF CANADA

Doing the Job Right: Professional Liability Claims rofessional liability claims are usually handled by specialized loss adjusters who have years of experience in general claims adjusting and are familiar with the procedures and practices of the relevant profession.

The liability of the professional is rooted in the law of contract. A professional is responsible for performing the duties owed to his or her client as described in the contract, and failure to deliver gives the client the right to bring an action for breach of this contractual obligation. Suits were originally limited to persons having privity of contract.

This position was expanded by the 1964 English case of Hedley Byrne & Co. v. Heller & Partners Ltd The court held that a person with a special skill has a duty of care toward those who rely on the skill. When a third party suffers damage as a result of negligence on the part of a professional, a claim will be allowed even if no contract exists.

P

Higher standard of care The ordinary test of negligence is the care exercised by a reasonable person, but professionals are held to a higher standard. They do not have to have the highest possible degree of skill, but they are expected to perform with the skill and care of an average competent, practising member of their field. Professional organizations set standards of conduct for their members. Such guidelines can be helpful in establishing the applicable standard of care within a profession.

A professional will not be held liable for an error in judgment if a competent practitioner would customarily behave likewise in similar circumstances. However, if a professional recommends a course of action that is obviously and 50

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plainly wrong, the professional may be found negligent.

Which policy?

Most professional liability policies are unique to the specific professional group being protected. There are a few standard policy forms available, such as the Druggists’ Liability Coverage Rider and the Physicians’, Surgeons’, and Dentists’ Professional Liability Policy; however, insurance is often provided through the association or society that regulates the profession. Unlike most general liability policies, professional liability claims that arise from rendering or failing to render services often relate purely to economic loss rather than to physical damage.

But professionals also require other types of liability insurance, such as a commercial general liability policy that provides premises and operations coverage. When a claim occurs, problems may arise in assessing which policy should cover ambiguous coverage situations. Each case should be reviewed carefully to determine whether two policies might contribute toward the defence costs and indemnity payment.

Strategic choices A professional liability claim usually involves a claimant making accusations of wrongdoing against the insured.

When the claim is for a minor sum such as $200 or $300, the professional may decide to pay personally. (The deductible under a professional liability policy is usually substantial — $1,000 or even $5,000.) In choosing to pay, the professional takes responsibility for minor errors and can be seen to be looking after the best interests of clients.

August/September 2009

However, any such admission of liability must have the insurer’s prior permission. An admission of liability by the insured without the agreement of the insurer is grounds to deny coverage.

In other cases, professionals may press the loss adjuster to have the insurer defend on principle: admitting negligence too many times can undermine a professional’s credibility. An insurer, on the other hand, views a settlement proposal as a means of closing a file efficiently and effectively. Settlement may be recommended without an admission of negligence.

Taking care of business In times of economic and corporate turbulence, adjusters may see an increase in claims under directors’ and officers’ liability policies. D&O policies normally have two insuring agreements: one that indemnifies the directors and officers for losses not covered by the corporation and another that reimburses the corporation for indemnifying its directors and officers.

Although some policies also provide entity coverage — coverage for the corporation itself when it is named in a lawsuit — many do not, so policy Professional liability insurance applies to a range of roles with an exposure to risk, including: • Accountants

• Undertakers

• Architects

• Real estate agents

• Beauticians

• Pharmacists

• Dentists

• Lawyers

• Doctors

• Engineers

• Insurance adjusters, agents and brokers

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wordings must be examined to determine whether any direct coverage for the corporation is in place.

When both the corporation and the directors are named in a lawsuit, the policy may provide an allocation formula to apportion defence costs if the corporation itself is not insured.

Directors on the hook Directors and officers can be held personally liable if they do not perform competently, diligently, prudently, and honestly. Federal and provincial business legislation outlines the duties and responsibilities to be followed. The best interests of the corporation must be upheld and balanced against the competing interests of the shareholders.

In assessing liability, the test is whether a prudent person in similar circumstances with comparable knowledge would act the same way. The courts will not second-guess a business decision; the business judgment rule allows directors to make decisions without fear as long as they discharge their duties in good faith and in the best interests of the corporation.

Weighing up a D&O To investigate a D&O claim, a loss adjuster needs access to various company documents, including • copies of the company charter and bylaws (describing the mandate and limitations within which directors must operate) • financial statements and annual reports (providing information about the company) • minutes of board meetings (if a director recorded disagreement with the activity at the centre of the claim, that director may mount a successful defence) Directors’ activities must be investigated not only to determine whether liability exists, but also to ensure that no director has engaged in activities that preclude coverage under the policy.

The adjuster may also need the help of experts such as accountants and lawyers to examine highly complex financial manoeuvres and determine their legality.

Although professional liability policies are often sold under a claims-made

form, it is not unusual for them to carry a prior acts exclusion: an exclusion for wrongful conduct that took place prior to the inception date of the policy. The adjuster therefore needs to find out the date of the wrongful conduct, when the damage manifested itself, when the company or director first knew that a potential claim existed, and when the director was given notice that action would be taken.

Investigating the investigator It’s worth remembering that the act of investigating a professional liability claim itself involves professional exposure. The adjuster and the insurer have a duty to properly investigate a claim.

Failure to do so can result in a suit against the insurer, the adjuster, or both.

This article is based on excerpts from the study material in the Claims Professional Series of applied courses – a core of the CIP Program that helps adjusters learn the functional knowledge and skills required of their profession.

we assess all kinds of risk Liability Risk - Risk Reduction - Risk Control - Coverage Analysis - Litigation Defence Risk Management Counsel of Canada is a national association of independent law firms with expertise in providing legal advice and representation to insurers, insureds, brokers and companies with self-insured or high SIR liability exposures.

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p52-53 on the scene

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O on the scene Blouin, Dunn LLP is pleased to announce that Brendan Lanigan has joined the firm as a first year lawyer as of June 15.

Having articled with the firm since June 2008, Lanigan has worked in many areas of insurance defence litigation and specializes in products liability, motor vehicle and occupiers liability cases. Lanigan attended the Faculty of Law at Brendan Lanigan Queens University and received his J.D. in 2008. As an active member of student government, Brendan served on the executive board of the Society of Graduate and Professional Students and volunteered with Queen’s Legal Aid. ● Crawford & Company (Canada) Inc. has made a number of organizational changes.

• Bill Johnstone has been promoted from his current role as vice president of Greater Toronto Area and Global Technical Services (GTS) to the position of senior vice president of GTS for the Americas.

• James Giffen, manager of the Toronto GTS branch, has been promoted to director of the GTS division.

• Claudine Davoodi has been promoted to the position of director of operations in Quebec.

• Sheri Martinello has been promoted to vice president of Risk Management Services (RMS).

Supreme Collision has committed to being a National Sponsor at the Platinum Level of the Women in Insurance Cancer Crusade (WICC).

This is the first time a collision repair centre has committed to being a major WICC sponsor, according to Jean Faulkner, WICC Ontario board co-chair. “As an organization we have always supported a variety of charities within our respective communiMarty Reddick ties,” Marty Reddick, president of Supreme Collision, said in a release. “Knowing that 40 per cent of women and 45 per cent of men will develop cancer during their lifetime and that 166,000 new cases are recorded each year, was a significant factor in our decision.” ●

Bill Johnstone

James Giffen

Sheri Martinello

Crawford’s British Columbia and Prairies regions have consolidated to become Western Canada. Personnel changes include: • Walter Waugh, vice president of operations for the Prairies region, has been promoted to vice president of operations for Western Canada.

• Jim Eso, vice president of operations for British Columbia, will relocate from B.C. to Ontario and will become vice president of national property and casualty.

Crawford’s three Ontario regions have consolidated.

Personnel changes include: • Brent Hackett has been promoted to vice president of operations for the Ontario Region.

• Rod McDonald will transfer from his role as assistant vice president of operations for the Ontario South West region to the position of assistant vice president of branch operations for the Ontario Region.

• Reno Daigle, Crawford’s assistant vice president of operations for Ontario North East, will transfer to the position of director of quality and customer service for the Ontario Region. ●

Walter Waugh

Brent Hackett

Rod McDonald

Jim Eso

Reno Daigle

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: laura@claimscanada.ca 52

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Tom DeLong, CIAA, and Tim Vanderwillik, first vice president of the Bluenose — Atlantic Chapter — of the Canadian Insurance Claims Managers Association (CICMA), presented Barb Dunphy-Gottell, executive director of the Queen Elizabeth Hospital Foundation, with a cheque for $5,000. The money was raised during the joint CIAA/CICMA conference in June 2008. ●

FirstOnSite Restoration L.P. has acquired First General Services (Saskatchewan) Partnership and Calgary-based ServePro Disaster Restoration.

Since early 2007, FirstOnSite has acquired operations in all Canadian provinces except Newfoundland.

Including the original founding companies, this is FirstOnSite’s 15th and 16th acquisitions in less than three years.

With the newly acquired operations, FirstOnSite now has more than $200 million in annual revenue and more than 1,100 direct employees in 38 cities and towns across Canada.

FirstOnSite anticipates additional acquisitions as it continues to grow nationwide. ●

In today’s competitive insurance market, insurers are emphasizing the value that empathy and compassion bring to claims service. Marlene Landry’s experience with victims of the Halifax fire sheds light on the importance of having training available to help insurance professionals deal with clients emotionally affected by a loss.

Inspired by Landry’s story, the Insurance Institute, Toronto location, is bringing soft skill and crisis management training to brokers/agents, underwriters and adjusters. On Nov. 3, 2009, from 12:00 p.m. to 1:00 p.m., Martin Gyoroky, executive general adjuster, AIM Underwriting Ltd., will host a webinar called Crisis Management for Insurance Professionals. Anyone wishing to get more information about the session or to register for this webinar, contact Nancy Rivera at 416-362-8586 ext.

2244 or email: GTAseminars@insuranceinstitute.ca ● www.claimscanada.ca

Security Services Physical evidence – often key to winning a court case – is increasingly important to protect. The courts have recently asserted that the proper collection and preservation of evidence is vital to its admissibility.

The security professionals at ASAP are specially trained to handle and protect evidence at the scene of a fire or disaster. They can also help reduce the risk of liability concerning public safety and theft.

ASAP Fire Scene Videography Services ASAP takes scene documentation to the next level with its new Professional Video Documentation Services. At ASAP, we record with high quality digital video equipment operated by technicians who have over 30 years of combined fire scene experience. With the professional visual documentation of all contents and scene damage, clients have the added advantage of providing an expeditious overview in the event critical issues are later disputed.

24-HOUR EMERGENCY RESPONSE

1-877-923-ASAP (2727) www.asapsecured.com August/September 2009

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p54 on the scene

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O on the scene Andrea Digdon has been appointed branch manager for Cunningham Lindsey’s Halifax, N.S. location.

Digdon joined the company in 1998 and has worked in a number of roles, including being mentored in the commercial risk division. She was appointed the Halifax office transportation fleet services manager and subseAndrea Digdon Jacques Beland Roch Pelletier Sylvie Dorion quently worked extensively on public entities claims and marine cargo loss adjustment.

The company’s Quebec division is rapidly expanding.

Jacques Beland is the district manager for Quebec, Q.C. He joined Cunningham Lindsey in 1996 and his specialties include fire/arson investigation, cargo and commercial and industry property losses.

Roch Pelletier is district manager for Gatineau, Q.C. Pelletier has over 30 years of experience in the insurance claims industry.

Sylvie Dorion is the district manager for Montreal, Q.C. She joined Cunningham Lindsey in November 2008 and Richard Cuende Serge Picard Karen Carignan has her CIP designation and more than 19 years’ of experience as an independent adjuster.

Richard Cuende recently joined Cunningham Lindsey as Serge Picard has been appointed as South Shore manager district manager Montreal North. He brings more than 25 years for Montreal, Q.C. He will manage this new office, which of management and road adjusting experience. opened June 1, 2009.

In addition to the new Blainville office, Cunningham Lindsey Karen Carignan is the branch manager for the new Amos, has also opened two new offices in Quebec.

Q.C. branch which opened in February 2009 ●

CIAA New Members — June 2009 ASSOCIATE MEMBERSHIP Adjusters of North America/Northeast Adjusting Services – Akron, Ohio CORPORATE MEMBERSHIP Giannini Group Ltd. – Toronto, ON Evaluate It Claim Services Inc. – Edmonton, AB N.S. Tasks Ltd. – Truro, NS INDIVIDUAL MEMBERSHIP Giannini Group Ltd. Giuseppe Giannini, FCIP, CRM Toronto, ON

Licentiate

Evaluate It Claim Services Inc. Valerie Phillips-Boyle, CIP Edmonton, AB

Investigator

N.S. Tasks Ltd. Gary D. Betts

Licentiate

Truro, NS

Crawford & Company (Canada) Inc. Jocelyn Duguid Saskatoon, SK Carly Quennell Saint John, NB Serena Whitehead, CIP Sarnia, ON

54

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Student Student Investigator

Cunningham Lindsay Canada Limited Pierre-Luc Thiffeault, CIP Burnaby, BC Jodi Payne Calgary, AB Jennifer Jory Lloydminster, AB Catherine Elliott Winnipeg, MB Dave Lavergne Winnipeg, MB Shilpa Tailor Winnipeg, MB Kevin Quinlan Brampton, ON Greg Waller Guelph, ON Allen Chee, BA, CIP Mississauga, ON Randy Kamino, BA, CIP Mississauga, ON Renata Kuliga Mississauga, ON Elaine Obcena, CIP Mississauga, ON Lorraine Rochard Mississauga, ON Brian Samec North Bay, ON J.M. Michel Laberge, BES, CIP, CRM Ottawa, ON Hector Palma Barrie, ON Jennifer Shapton Hamilton, ON William R. MacDonald London, ON Bernice Dickson Mississauga, ON Michelle Gopie Mississauga, ON Mary Spencer, CIP Mississauga, ON Lynne Meikle, CIP Oshawa, ON Joanne O’Driscoll St.John’s, NL

Student Investigator Investigator Student Licentiate Investigator Investigator Student Licentiate Investigator Student Investigator Investigator Investigator Licentiate Licentiate Student Investigator Student Student Licentiate Licentiate Licentiate

McLarens Canada Dale Smith, AIC

Investigator

Calgary, AB

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National Standing Committees 2008 – 2009 ADVISORY 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 Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com John R. Smith Crawford & Company (Canada) Inc. 166 Charing Cross Street Brantford, ON N3R 2J4 Phone: (519) 759-5760 Fax: (519) 759-5691 E-mail: John.Smith@crawco.ca Wendy S. Fralick, AIIC Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com CAREER RECRUITMENT PLANNING Heather Matthews Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Heather.Matthews@crawco.ca Wendy S. Fralick, AIIC Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com

CONVENTION Jean-Marc Laurin, FPAA, CRM, FCIAA Cunningham Lindsey Canada Limited 1250 Guy Street, Suite 1000 Montreal, PQ H3H 2T4 Phone: (514) 938-2124 Fax: (514) 938-5445 E-mail: jmlaurin@cl-na.com

Jean-Marc Laurin, FPAA, CRM, FCIAA Cunningham Lindsey Canada Limited 1250 Guy Street, Suite 1000 Montreal, PQ H3H 2T4 Phone: (514) 938-2124 Fax: (514) 938-5445 E-mail: jmlaurin@cl-na.com

DISCIPLINE Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com

FINANCIAL Randy P. LaBrash, CIP, CFE, CFEI Crawford & Company (Canada) Inc. 300 – 191 Lombard Avenue Winnipeg, MB R3B 0X1 Phone: (204) 947-2340 Fax: (204) 943-9168 E-mail: Randy.Labrash@crawco.ca

EDITORIAL John M. Sharoun, FIIC, CFE, FCIAA Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: John.Sharoun@crawco.ca Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Drive Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: Mary.Charman@crawco.ca EDUCATION Gary A. Ellis, BBA, FCIP, RF, FCIAA, CLA, FIFAA Crawford & Company (Canada) Inc. 18 Great George Street Charlottetown, PE C1A 4J6 Phone: (902) 566-1011 Fax: (902) 894-3044 E-mail: Gary.Ellis@crawco.ca W.E. (Ted) Baker, BA, CFE, FCIAA Baker, Bertrand, Chassé & Goguen Claim Services Limited 3660 Hurontario St., Suite 601 Mississauga, ON L5B 3C4 Phone: (905) 279-8880 Fax: (905) 279-5338 E-mail: webaker@bbcg.ca EMERGENCY MEASURES Roger S. Bickers, CIP, FCIAA McLarens Canada 600 Alden Road, Suite 600 Markham, ON L3R 0E7 Phone: (905) 946-9995 Fax: (905) 946-0171 E-mail: roger.bickers@mclarens.ca Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com

Christina Welton, FCIP McLarens Canada 637 The Queensway, Unit 9 Peterborough, ON K9J 7J6 Phone: (705) 740-0023 Fax: (705) 740-2296 E-mail: christina.welton@mclarens.ca

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

CONSTITUTION & RULES John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca

Robert V. Pearson, CLA, FCIAA HBA Adjusters Ltd. Suite 201 – 1217 Centre Street NW Calgary, AB T2E 2R3 Phone: (403) 245-4599 Fax: (403) 287-1775 E-mail: rpearson@hbaadj.com

www.claimscanada.ca

Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com FORMS Tammie Norn, CIP ProFormance Adjusting Solutions Inc. 32 Bayern Drive Whitby, ON L1M 0A3 Phone: (905) 431-8774 E-mail: tnorn@proadjusting.ca INDUSTRY LIAISON & PROMOTION Craig J. Walker, CIP, FIFAA, FCIAA Maltman Group International 1049 McNicoll Avenue Toronto, ON M1W 3W6 Phone: (416) 492-4411 Fax: (416) 492-5657 E-mail: cwalker@maltmans.com Greg G. Merrithew, CIP, FIFAA Arctic West Adjusters Ltd. 401 – 5204 – 50 Avenue Yellowknife, NT X1A 1E2 Phone: (867) 920-2212 Fax: (867) 873-2244 E-mail: gregm@arcticwest.ca LEGISLATIVE Russell E. Malkoske, BA, FCIP, CLA QA Adjusting Company 279 Provencher Blvd.

Winnipeg, MB R2H 0G6 Phone: (204) 233-8844 Fax: (204) 233-7793 E-mail: qa-russ@shaw.ca LICENSING J. Miles O. Barber, B.Comm. (Hons.), FCIP, CRM Network Adjusters Ltd. 67 Folkestone Blvd.

Winnipeg, MB R3P 0B4 Phone: (204) 897-5793 Fax: (204) 897-5797 E-mail: mbarber@mts.net MEMBERSHIP & QUALIFICATIONS 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 NOMINATING Fred R. Plant, AIIC Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: fplant@planthope.com

Reno Daigle, CIP, CLA, FCIAA Crawford & Company (Canada) Inc. 326 McIntyre Street W. North Bay, ON P1B 2Z1 Phone: (705) 476-2120 Fax: (705) 476-9280 E-mail: Reno.Daigle@crawco.ca

CIAA REGIONAL PRESIDENTS 2008 – 2009 NEWFOUNDLAND & LABRADOR Neil F. Lacey, CIP, FCIAA Crawford & Company (Canada) Inc. 44 Torbay Road, Suite 300 St. John’s, NL A1A 2G4 Phone: (709) 753-6351 Fax: (709) 753-6129 E-mail: Neil.Lacey@crawco.ca

John Jones, BA McLarens Canada Suite 300, 5915 Airport Road Mississauga, ON L4V 1T1 Phone: (905) 671-3164 Fax: (905) 671-1889 E-mail: john.jones@mclarens.ca

NOVA SCOTIA Nicholas B. MacDonald, AIIC Cunningham Lindsey Canada Limited 11 Morris Drive, Suite 200 Dartmouth, NS B3B 1M2 Phone: (902) 421-1519 Fax: (902) 429-7296 E-mail: nmacdonald@cl-na.com

Carol A. Messervey, CIP, FCIAA, FIFAA Marsh Adjustment Bureau Limited 1550 Bedford Highway, Suite 711 Bedford, NS B4A 1E6 Phone: (902) 469-3537 Fax: (902) 469-2396 E-mail: cmesservey@marshadj.com

NEW BRUNSWICK & PRINCE EDWARD ISLAND Luc Aucoin, BBA, FCIP Plant Hope Adjusters Ltd. 16 Coronation Drive Moncton, NB E1E 2X1 Phone: (506) 853-8500 Fax: (506) 853-8501 E-mail: laucoin@planthope.com

PRIVACY James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 203 – 5780 176A Street Surrey, BC V3S 4H1 Phone: (604) 574-6275 Fax: (604) 574-7354 E-mail: Jim.Eso@crawco.ca

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

Wendy S. Fralick, AIIC Cunningham Lindsey Canada Limited 50 Burnhamthorpe Rd. W., Suite 1102 Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: wfralick@cl-na.com

ONTARIO 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

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 WAYS & MEANS 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

MANITOBA Cory R. Malkoske, B.Sc., CIP QA Adjusting Company 279 Provencher Blvd.

Winnipeg, MB R2H 0G6 Phone: (204) 233-8844 Fax: (204) 233-7793 E-mail: qa-cory@shaw.ca SASKATCHEWAN Rob Johnston Midwest Claims Services 320 Gardiner Park Court Regina, SK S4V 1R9 Phone: (306) 522-1656 Fax: (306) 569-1256 E-mail: rob@midwestclaims.ca WESTERN Bea Boutcher, CIP Horizon Adjusters Ltd. #207, 9814 – 97 Street Grande Prairie, AB T8V 8H5 Phone: (780) 402-8383 Fax: (780) 402-7888 E-mail: bea.boutcher@horizonadjusters.com PACIFIC James B. Eso, BA, CIP Crawford & Company (Canada) Inc. 203 – 5780 176A Street Surrey, BC V3S 4H1 Phone: (604) 574-6275 Fax: (604) 574-7354 E-mail: Jim.Eso@crawco.ca

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O on the scene The Canadian Independent Adjusters’ Association, Ontario region, held its annual convention Jun. 11 to 13. The new Ontario region executive was inaugurated during the three-day event at the Prince of Wales Hotel in Niagara on the Lake.

Incoming president Richard Swierczynski was given a warm welcome by outgoing president John Seyler during the president’s dinner on Friday night.

Special thanks to the event sponsors: Palings Industries, Strone Construction, ServiceMaster (Corporate), First General Services, Foley Restorations, Higgins Proteau, ITECH Services ●

Standing L to R - Chad Hancock, Joel McQuilkin, Teri Mitchell, John Seyler, Dorothy Lowry, Scott Clements, Steve Del Greco and Edgar Lethbridge.

Seated L to R - Richard Swierczynski, Ontario Region President 2009 - 2010 and Reno Daigle, CIAA National President.

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The Annual Atlantic CIAA/CICMA Joint Seminar was held Jun. 24 to 26 at Mill River Resort in Prince Edward Island.

There were more than 100 guests and members in attendance.

The education portion of the seminar focused on evidence, preservation and spoliation. There were three speakers at the conference: Janet Clark, a partner with Stewart McKelvey, Greg Cann, a partner with Cox Palmer, and Grant Rhyno, owner of Contrast Engineering. â—?

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O on the scene The Ontario Insurance Adjusters Association took its Out-of-Town Meeting to Kingston, Ont. on May 28. More than 600 people attended the trade-show that showcased more than 90 booths. Delegates managed to mix business with pleasure by updating their case-law knowledge in some educational seminars before attending dinners and being entertained by the likes of a hypnotist and a live band. â—?

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www.claimscanada.ca

GK-CCfullpg:GK-CCfullpg

7/15/09

11:51 AM

G I F F I N KO E R T H

Page 1

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Take one in case of loss A big loss needn’t become a big headache Dollars aside, big headaches typically result when: • People don’t see the whole picture – and things get tangled up • The right people aren’t kept in the loop – time is wasted and tempers shortened • The right forensic expertise isn’t brought in – so contributing factors are overlooked We asked Heavy Industry veteran Craig Smith to make sure that these things just don’t happen on any file we handle.

In his 23 years on the insurer side, Craig ran some of the largest industrial risk-managed accounts in Canada.

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Call Craig to find out more. And start feeling better already.

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O on the scene The Honorable Order of the Blue Goose, Ontario Pond, hosted Tres Chic Martini night at the C Lounge in Toronto.

Hundreds of guests were treated to three different flavours of martinis — shaken, not stirred — in addition to hors d’oeuvres and great company. The rain held out for the evening on June 25, and guests were able to spend time connecting both inside and on the patio. ●

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Assured Automotive hosted a Toronto Harbour Charity Cruise with donations going to the MS Society of Canada.

On June 25, 300 guests boarded the River Gambler — a boat known for it’s large, 2,000 square foot dance floor.

Guests were treated to an inspirational speech from Pinball Clements and the evening was filled with good food and lots of dancing. ●

www.claimscanada.ca

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O on the scene Hundreds attended an evening of support and celebration for Siobhan Usher-Post on June 23 at the Steam Whistle Brewery in Toronto. Usher-Post, with National Brokers Insurance Services, a non-smoker, was diagnosed with lung cancer in December 2008, when she was five months pregnant with twin boys.

Butterfly Kisses and Granting Wishes Fund, in support of lung cancer patients, held this, their first event, to raise funds for a cutting-edge cancer treatment to be provided to Usher-Post, who has been undergoing chemotherapy and radiology and will begin a pioneering chemical treatment at a cost of $3,000 a month.

“We are in awe of your steadfastness and nobility of heart and mind, and look forward to your complete recovery to raise your beautiful sons, Braeden and Brenden,” Eileen Green, chairperson, said during the event.

Donations can still be made by contacting butterflykissesgrantingwishes@gmail.com or by calling 905-564-8488 x 231 ●

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www.claimscanada.ca

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