Canadian Underwriter April 2013

C A N A D A’ S I N S U R A N C E A N D R I S K M A G A Z I N E . C A N A D I A N U N D E R W R I T E R . C A

A P R IL 2 0 1 3 A Business Information Group Publication #40069240

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BY GREG MECKBACH

Time Change

BY ALISTER CAMPBELL

Power to the People

BY DOUG McPHIE

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VOL. 80, NO. 4, APRIL 2013 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY BUSINESS INFORMATION GROUP

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COVER STORY

Get Connected

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Competition from direct writers makes efforts by brokers to continue building customer relationships through face-to-face contact all the more important. But what role can (and should) technology and social media play in retaining current customers and attracting new ones to the broker channel?

BY GREG MECKBACH

FEATURES

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Drivers of Change

Nova Scotia Auto Reforms

The scope and scale of change is undeniable. In insurance, what are the top drivers of change? And what might be the implications for the industry?

Nova Scotia’s second round of auto reforms are now on the books. While diagnostic and treatment protocols have moved forward, optional tort for minor injuries is stalled.

BY ALISTER CAMPBELL

BY CRAIG HARRIS

22 Own Risk and Solvency Assessment The final version of ORSA guidelines intended to provide a more effective means of monitoring insurance risk and capital requirements are expected later this year.

54 Proximity to Peril Location intelligence allows for identifying and evaluating property-based risk. Perils like proximity to bodies of water or known contaminated sites can have a future financial impact.

18 Cross-Border Risk Brokers hoping to effectively manage cross-border risk need to understand the risks associated with their clients’ industries and the legal requirements in which those industries operate.

BY GARY HIRST

50 Reporting Suspicious Actions What happens when a broker who has solid relationships with current and former clients suspects another producer is not only stealing away clients, but may also be providing them bad advice?

BY THE CIP SOCIETY

28 P&C Industry Outlook The consumer is now wielding considerable power. Property and casualty insurers are well-advised to move toward a more consumer-centric model if they expect to maintain and enhance profitability.

58 e-Docs Pilot Economical Insurance has launched a pilot project with eight broker partners meant to test the functionality of its eDocs solution and help brokers enhance efficiencies.

BY DOUG MCPHIE

BY DIANNA FIORAVANTI

42 Agricultural Professorship

60 Claims Investment

The University of Manitoba now has what is believed to be the first-ever agricultural risk management and insurance professorship within an actuarial framework.

Many factors challenge p&c insurers as they search for profitable growth, including consumer expectations, the explosion of data and the continuing demands to deliver better claims outcomes.

BY LYSA PORTH

BY MICHAEL COSTONIS & DARREN NIPPARD

BY JOHN FISHER

BY J. BRIAN REEVE

April 2013 Canadian Underwriter

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VOL. 80, NO. 4, APRIL 2013

PROFILE

Editor Angela Stelmakowich astelmakowich@canadianunderwriter.ca (416) 510-6793 Associate Editor Greg Meckbach gmeckbach@canadianunderwriter.ca (416) 510-6796

10 The Go-Between Ross Totten has been around the insurance block. As he gears down from his time at Totten Group, he welcomes his next challenge as a consultant.

Totten has no specific plan in mind (yet), but specialty products and how best to distribute them to retail brokers will surely be part of the mix.

BY ANGELA STELMAKOWICH

SPECIAL FOCUS

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Editorial

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64 Moves & Views 66 Gallery

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EDITORIAL

Piece by Piece

The survey revealed 90% of respondents believed an extreme weather-related disaster is possible in their communities, but few are prepared for the consequences excess water can have on their homes.

Angela Stelmakowich, Editor astelmakowich@ canadianunderwriter.ca

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Canadian Underwriter April 2013

All the king’s horses and all the king’s men…

It may not be as dire as an egg taking a tumble off a wall, but the current state of Canada’s municipal infrastructure is unlikely to end up happily ever after without a big injection of resources and a whole lot of collaboration.

Come the next onslaught of far too much rain over far too short a period, overwhelming existing systems and producing inevitable sewer back-ups, it becomes clear why insurers have made it their business (literally) to encourage improvements to infrastructure.

That oft-repeated call was answered (some say) with Ottawa’s pledge in the 2013 budget to provide $53.5 billion in investments, including approximately $47 billion in new funding, for provincial, territorial and municipal infrastructure across Canada over the next decade. Among other things, $32 billion-plus is headed to municipalities for projects such as roads, public transit and recreational facilities, and other community infrastructure; and an additional $6 billion will go to provinces, territories and municipalities under current programs in 2014-2015 and beyond.

“As owners of more infrastructure than any other level of government, Ontario municipalities need long-term, sustainable funding to invest in local priority projects,” Russ Powers, president of the Association of Municipalities of Ontario, said at the time.

The Canadian Centre for

Policy Alternatives (CCPA) has a different take, arguing that money under the Building Canada Fund was reduced in 2014-2015 and is backend loaded, with 75% of expenditures to be spent in or after 2020. All other funding for infrastructure in the budget is a re-announcement of preexisting programs, it added.

“There’s never been a better time to take bold action on infrastructure — interest rates are at historic lows, the need for infrastructure investment has never been greater, and the jobs created would be a significant boost to the economy,” said CCPA senior economist David Macdonald.

“As severe weather becomes more common in Canada, updated storm and wastewater infrastructure is essential for municipalities,” noted Chris White, vice president of federal affairs for the Insurance Bureau of Canada (IBC).

IBC estimates the Canadian insurance industry paid $1.7 billion in claims in recent years from water damage.

Aviva Canada reported in April that its data shows approximately 40% of all home insurance claims are the result of water damage.

The data also indicates the average cost of water damage claims rose from $7,192 in 2002 to more than $15,500 a decade later.

Canadians taking part in a recent Royal Bank of Canada survey demonstrated that they are aware of — but not necessarily prepared for — possible water damage.

The online survey of 2,282 Canadians, conducted by GlobeScan, revealed that 90% of respondents believed an extreme weather-related disaster is possible in their communities, but few are prepared for the consequences excess water from such events can have on their homes.

Just 23% of individuals responded they have mitigated risk through landscaping with grading, and only 7% have replaced paved surfaces with water-permeable materials.

“All the impermeable surfaces in cities create the ideal condition for excess water to overwhelm our already strained municipal stormwater systems,” said Bob Sandford, chair of Canadian Partnership Initiative of the UN Water for Life Decade.

The hope is that certain tools will provide some relief. For example, the Municipal Risk Assessment Tool combines insurance claims data, detailed information about municipal infrastructure and climate modelling to predict where vulnerabilities exist in systems that could lead to millions of dollars in sewer back-up damage to homes and businesses.

The ability to identify areas of greatest concern will go a long way toward ensuring both dollars and resources can be appropriately targeted so that everyone is dealing with the before, not the after.

If that is the approach taken, there may be no need to put things together again — and no chance of the bits and pieces floating away.

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Regulation ONTARIO LIBERALS SUPPORT NDP MOTION FOR GRADUAL REDUCTION IN AUTO RATE The Liberal minority government has backed a New Democratic Party motion to reduce auto insurance rates by 15%, Premier Kathleen Wynne said in March, while reiterating her party remains focused on anti-fraud reforms.

The motion by Jagmeet Singh, NDP consumer affairs critic, called for the provincial government to direct the Financial Services Commission of Ontario (FSCO) “to gradually reduce average, industry-wide, private passenger auto insurance premiums by 15%.”

Support is non-binding on the government and there has been no offer to specify the 15% reduction figure in the budget. NDP leader Andrea Horwath included the percentage in her list of priorities for the 2013 budget, initially calling for the cuts to be completed by next March.

The Liberal government reiterated the best way to reduce consumer costs is by implementing the recommendations of the Auto Insurance Anti-Fraud Task Force.

The Insurance Bureau of Canada (IBC) reports being pleased the government acknowledges that “reducing costs is the key to reducing premiums.” Any reductions to auto insurance rates must be tied to larger reforms, IBC spokesperson Steve Kee says.

Earlier in March, the NDP

8 Canadian Underwriter April 2013

had demanded the Liberal government provide more details on what FSCO is doing to address the issue of insurance industry profits and driver premiums.

Last October, says Sonia Taurasi, FSCO’s acting senior manager of public affairs, the regulator retained two finance experts to conduct a review of the profit provision benchmark in auto insurance rate change approvals. Stakeholder submissions were received in December and in-person meetings held in January, Taurasi says. The final report is “expected in spring 2013.”

IBC has commissioned an actuarial study to look at the profit margin for Ontario auto insurance in recent years, with results expected in April.

Randy Carroll, CEO of the Insurance Brokers Association of Ontario, says the gradual reduction in auto insurance rates recently advanced by the Liberals makes the 15% target more realistic. Whatever the time frame, Carroll emphasizes, reductions mandated must be “responsible.”

results, notes preliminary data from MSA Research.

The figures show that the industry’s combined ratio for the year was 96.7% compared to 99.5% in 2011 (not including those in the Lloyd’s market and government insurers).

Better accident benefits results in Ontario and lower property losses allowed for the growth in personal lines, MSA Research CEO Joel Baker notes. But improvement in the Ontario auto market was offset by deterioration in third party liability-bodily injury losses, Baker adds.

On the commercial side, excluding the Lloyd’s market, commercial writers saw premium shrink by 4.4% in 2012, he reports.

Reinsurers saw results improve, reporting a combined ratio of 97% in 2011 to 89% in 2012, Baker says. This was due, in part, to a less severe catastrophe year in Canada and somewhat harder rates on cat-exposed risks.

Canadian Market

Some property and casualty carriers are deploying multiprong distribution strategies, which is putting pressure on the marketplace and resulting in activity on the mergers and acquisitions (M&A) front, Allan Buitendag, a partner and Canadian insurance consulting leader at PwC Consulting, said during his presentation at the Ontario Mutual Insurance Association’s 2013 annual convention in March.

PERSONAL LINES RESULTS CENTRAL TO 2012 GROWTH FOR CANADIAN P&C MARKET The Canadian property and casualty insurance market saw substantial growth in premiums in 2012, largely as a result of growth in personal lines, including improvement in Ontario auto

MORE CONSOLIDATION EXPECTED FOR P&C SECTOR

“There are challenges around people trying to control their distribution,” Buitendag said. “Our perspective is what you’re going to see in the next two years is going to be increasingly more aggregation around the market share side. Many of the companies that are going through significant transformation activities right now, including both operations and IT, are striving to become more efficient, to drive down that combined ratio, and position themselves well.”

A lot of the recent activity has been on the broker side, Buitendag noted, although certainly there have been some large deals on the carrier side in recent years.

The cost of “organizations seems to be quite high, but I think we’ll see some ongoing activity in the industry and more consolidation.”

Claims FSCO NEAR MIDWAY POINT OF MEDIATION BACKLOG PILOT The Financial Services Commission of Ontario is reaching the midway point of a six-month pilot aimed at streamlining part of the mediation process and saving mediators’ time.

Effective January 2, the pilot program has allowed parties involved in mediation who have already been assigned mediation dates, or who have files more than 50 days old, to go through one e-mail address to request rescheduling or adjournment.

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Before the pilot, FSCO was receiving upwards of 100 requests weekly to adjourn or reschedule, which was taking up a significant amount of mediators’ time.

“These requests only require that parties provide a new date that is agreed upon together, without input from FSCO,” the regulator reports.

Those eligible in the pilot must now e-mail the mediation address with a written rationale for requesting rescheduling or adjournment.

One mediator handles the account. The decision is final.

Fewer requests are being received, and FSCO will assess how the pilot is working at its midway point. The mediation backlog in 2012 was 17,540, with an average wait for mediation of 414 days.

APPEAL COURT UPHOLDS RULING IN OPTIONAL AUTO BENEFITS CASE The Court of Appeal for Ontario has upheld a lower court’s finding that Meloche Monnex Insurance Company breached its duty of care to a claimant of optional auto insurance benefits, but that the claimant would not have purchased those benefits anyway.

In Zefferino v. Meloche Monnex Insurance Company, Nicola Zefferino alleged Meloche was negligent since it failed to properly offer optional income replacement benefit coverage as part of his policy. In January 2012, Ontario’s Superior Court of Justice dismissed the claim in summary judgment on the

basis that Zefferino had turned down optional benefits in two separate telephone calls with the insurer.

“In my view, the plaintiff (or his spouse) chose to purchase the least expensive form of insurance available,” the judge wrote. “He cannot now change that bargain.”

In dismissing the appeal, the appeal court found that the trial judge had not made an overriding error.

INSURERS MUST TAP INTO TECHNOLOGY TO IMPROVE CUSTOMER SERVICE Improving the customer experience, especially through leveraging data analytics, is among the key issues facing the property and casualty industry in the coming year, notes a new report from PwC. With mobile technology and e-commerce, customers now expect fast, convenient service, states Top Insurance Industry Issues in 2013.

“Revisiting customer experience programs, changing traditional distribution platforms, designing products that balance consumer and producer needs and differentiating value proposition through new models of advice will help open the door to new opportunity, business and profit,” suggests Jamie Yoder, PwC’s U.S. insurance advisory practice co-leader.

Embracing things like smartphone applications can improve operational efficiencies, enhance customer services such as billing and claims-handling, and foster better customer relationships.

Risk Management HUMAN LINK IDENTIFIED AS THE WEAKEST LINK Concerns over brand reputations are on the minds of security leaders, says a report from Telus and the Rotman School of Management at the University of Toronto.

The Canadian IT Security study took a qualitative approach to its research, sitting down with IT and security decision-makers from firms across the country and asking them what keeps them up at night. Responses included a fear that their organizations have been breached, but they do not know about it. People are also often seen as the weakest link in IT security, with many data breaches coming from “insiders,” usually unintentionally.

The report cautions that strict policies on social networking and mobile devices may lead staff to break rules and leave their technology open to unmonitored threats.

Organizations must ensure employees understand how to use tools responsibly, and make adherence to security policy convenient and simple.

Reinsurance SWISS RE REPORTS 2012 INSURED LOSSES REACHED $77 BILLION Insured losses from natural catastrophes and man-made

disasters in 2012 total $77 billion, making 2012 the third costliest year on record, Swiss Re notes in its latest sigma report, released in late March.

Still, those figures are significantly less than the insured losses of more than $126 billion in 2011, a record year for earthquakes and flooding, Swiss Re adds.

Weather-related events in the United States throughout 2012 heavily contributed to last year’s losses, notes the report. Nine of the 10 most expensive insured loss events in 2012 were in the U.S., it states, with approximately $65 billion in economic losses covered by insurance.

Unsurprisingly, Hurricane Sandy was the most expensive event of the year, both for economic and insured losses. Insured losses were roughly $35 billion, with between $20 billion and $25 billion covered by the private insurance market, Swiss Re reports.

Most of the damage was caused by severe winds and massive storm surge, the report adds. A simulation exercise contained within the study explains that increased sea levels of 10 inches by 2050 will almost double the probability of flood losses occurring.

That translates to an approximately $20-billion insured loss event, which Swiss Re expects to occur once every 140 years (the current expectation is once every 250 years).

April 2013 Canadian Underwriter

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PROFILE

The Go-Between Angela Stelmakowich Editor

Ross Totten may have announced his retirement (from the Totten Group), but seems not to be slowing down. His next role as consultant will allow him to tackle whatever venture strikes his fancy.

One could say Ross Totten has been around the insurance block — and around again.

But a little mileage never hurt anyone, particularly in an industry that counts experience and relationships as the fuel that makes careers go.

After four decades as an insurance intermediary, the man officially known as H. Ross Totten, FCIP, CCIB is set to take yet another turn as he readies to leave his post as chairman and chief sales officer of Totten Insurance Group Inc. at the end of June.

His latest role at the company he co-founded with partners Laura Moses, Mike Callon and Carol Gawrylash follows a decade as president and CEO. Totten, whose father was a broker, retires feeling secure that the company bearing his name has a leadership team, headed by Heather Masterson, he has characterized as among the “best in our industry.”

10 Canadian Underwriter April 2013

Totten’s career in insurance dates back to 1966. “As Bill Cosby said in one of his routines, ‘I started out as a child,’” he quips.

In fact, his first job was in the claims department of Pitts Insurance Company in London, Ontario. He was there for nine months when an opportunity arose to move into underwriting in commercial auto at London and Midland General Insurance Company. Totten stayed there for more than three years before he was on the move again.

This time, in 1970, he headed to Leamington, Ontario and a new position at South Western Group. There were a few changes along the way, of course, including that he and his partner, Roger Hodgson, purchased the business in 1980. They grew the local company from a single office in southwestern Ontario to, at one time, a national business with nine offices across Canada.

By 2002, it was time for Totten to sell. That was the spring; by the fall, he and partners Moses, Callon and Gawrylash chartered Totten Group. The wholesale brokerage was up and running by early 2003.

“We built the company from two offices in London and Toronto to six offices across the country,” Totten says.

A subsidiary of HUB International Limited purchased all of the company’s stock in October 2007. “Aligning ourselves with HUB gives us the financial base to explore more opportunities in the wholesale intermediary field,” Totten

said at the time. “HUB International’s resources coupled with our independence as a separate HUB allow us to offer our brokers and markets a broader range of niche products going forward,” he added.

NEW CURVE Come June 30, Totten will again be on to something new — or, at least, new-ish. He intends to reactivate the consulting firm he founded before starting Totten Group.

“If we can get rid of some of the mundane processing so we can focus the people we’ve got on more detailed work, more interesting work, then that will help our industry.”

Totten had done some consulting in the period between South Western and Totten Group. “I found it very rewarding because I got to do different things and every day wasn’t the same,” he says.

As it stands, Totten has no preconceived notions of what he will be doing. But with the wealth of insurance companies that do specialty business, retail brokers, adjusting firms, restoration contractors, Lloyd’s brokers and syndicates, he suggests opportunities abound.

“Really, I would just look at any opportunity and say, ‘That’s something I’d like to

do,’ and equally important to me, it’s somebody I would like to work with,” Totten says. “If anything, I’d like to work with specialty insurance companies or retail brokers who want to develop specialty classes of business and find ways to market them,” he adds.

“Too often, some insurance companies decide that they’re going to go direct or they’re going to control the distribution channels. I think the success of wholesalers in Canada and the success of retail brokers in Canada has been their ability for intermediaries and brokers to work together to find ways to write new and difficult classes of business.”

Some of that history can be aided by being as current as possible. “Technology is hugely important,” Totten says, adding that insurance companies and Lloyd’s, for example, should find how to deal with their intermediaries or retail brokers electronically.

“If we can get rid of some of the mundane processing so we can focus the people we’ve got on more detailed work, more interesting work, then that will help our industry. So it’s very, very important that we find ways to streamline our industry using technology,”Totten says.

“Quite frankly, if you’re not doing that, you’re not going to be around in five or 10 years,” he says, pausing before adding, “probably three to five years.”

Freeing up time opens the door for people to have more discussions about products, solve problems and answer

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PROFILE

Photo: Simon Cheung

TEACHER, TEACHER

questions. That personal contact is essential — and not just at renewal time.

He recommends giving clients a call, at the very least, halfway through a term so brokers can mention a product the client may need, ask questions or promote risk management.

It is a way to help build relationships, which he credits as at the heart of Totten Group’s success. “They’re not dealing with Totten Insurance Group because of some mystical name on the top of the

building,” he says, but rather because of the individual who professionally and efficiently gets quotes to the producer and then places the business.

“That personal relationship is what gets things done.”

That relationship may never be more important than when a claim is filed. “That’s when brokers separate themselves from call centres,” Totten says.

“Having a claim is a very traumatic experience and people appreciate help getting through that,” he says.

“We need to have some empathy with them as to the shock and the problems that they’re having and realize this is what we really are selling,” Totten says. It is not just about coverage, but also about providing help and walking claimants through the process.

“As long as insurance brokers can do that for their clients, they have nothing to worry about from the banks or anybody else selling it over the telephone. Personal service will beat these guys out over time.”

Totten, an early recipient of the National Leadership Award for Established Leaders, as well as a past governor of the Insurance Institute of Canada and a former president of the Insurance Institute of Ontario, appreciates many things, including an education — any education. “I’ve said to our people here, ‘If you can tell me that taking a basket-weaving course helps you be a better employee for our company, or helps you be better in your personal life, I’ll pay for the basket-weaving course.’ I don’t care how you’re educated — just, every day, try to learn something new,” he says.

Never stingy about giving back in this regard, Totten has been a course instructor for the Insurance Institute, a coordinator of Insurance Studies at St. Clair College, a teacher and lecturer for RIBO licensing and CAIB courses, and a frequent speaker at industry events dealing with niche or specialty markets.

He is encouraged by the turn insurance education is taking, citing the new FCIP curriculum through the Insurance Institute as a case in point.“Five years from now, when you have a FCIP person who’s graduated under the new course, you’re going to really have a business MBA person in insurance. This is a huge leap forward,” Totten says.

“We hold ourselves out as professionals, and I think it’s important we prove that each and every day,” he says.

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Plus ça change…

In insurance, as in everything else, the more things change, the more they stay the same.

What are the top drivers of change? How well are they understood? And what Alister Campbell implications will they have Chief Executive Officer, on how business is done?

The Guarantee Company of North America There is no more common theme in the business press than the need for corporations to respond to the challenges brought on by the accelerating pace of change — change, in large part, driven by technology innovation.The scope and scale of this change is undeniable.

As professionals in an old-fashioned and largely well-functioning industry, we all know that some areas of our business have changed little in the last decade. But as individual consumers ourselves, we are all part of that changing world in both our personal and professional financial interactions. And we all know just how

12 Canadian Underwriter April 2013

quickly our expectations are changing in regards to how we interact with vendors, suppliers and each other in financial services and retail trade.

Part 1 of this two-part article offers a quick review of 10 key drivers of change and discusses their implications for the insurance industry; Part 2 will spend a bit of time outlining the implications of that change in the context of several core elements of the world in which we do business that are, in fact, not changing at all.

Let’s start with those 10 drivers of change: Speed .

I’ll cover this one quickly — because it is so evident to all. In its recent album, The Suburbs, Canadian band Arcade Fire harks back to a bygone era when it asks, “Do you remember when you used to wait for the mail to arrive?”

I suspect some of us do. But today, I find myself impatient if a member of my management team does not respond to one of my e-mails within eight minutes (nine on weekends)! This need for speed is being driven both by capability and expectation. And it is not slowing down. I am asking my team to respond quickly because they

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7/24...........................

A corollary of the first trend is the dramatically expanded expectation regarding hours of service. As consumers, we are, of course, assuming that we can access telecom providers and banking services at late hours and on weekends — when we have time.

Vendors with limited hours of service are a hassle… and risk losing business.

With the possible exception of claims service, the property and casualty industry has been slow to respond to this reality. And our broker channel can be less responsive than direct alternatives.

A clear threat to that distribution channel is embedded in this fact.

3

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used to be. No longer can we rely on the complexity of our products to inoculate us from more direct-to-consumer competitive threats. Today’s commercial clients are sophisticated buyers of risk management solutions.

And personal lines customers are both more sophisticated in their buying

6

Diversity..............................

Ubiquity..............................

Our customers’ expectations for accelerated speed of sales and service and expanded hours of operation have one other added “degree of difficulty.” The wireless world is widening the range of options for customer interaction. Interfaces now need to accommodate retail branch, telephone, desktop, laptop, tablet and smartphone platforms in a market where computing is now ubiquitous.

It is a blunt fact that our industries’ legacy Cobol-based mainframe policy administration systems are challenged in responding to this new world. Just as the developing world has moved to mobile telecommunications and skipped over the “landline,” new competitors can implement new systems capable of supporting ubiquitous computing demands without the encumbrances of the past.

4

Sophistication........................

The web world is having other effects on our business models.

Customers are simply smarter than they

14 Canadian Underwriter April 2013

Car-buying is a powerful example of how this new world of transparency changes business models. Today’s new car buyer comes to the dealership armed with printouts of MSRP [manufacturers suggested retail price] and dealer margins. The decades-old ritual of negotiation, and the “I have to talk to my manager” charade, is rapidly becoming a thing of the past.The continued migration to fee-based insurance purchasing in commercial lines is driven by this same trend. And it is unreasonable to expect that personal lines will stay immune.

The web world is having other effects on our business models. Customers are simply smarter than they used to be. No longer can we rely on the complexity of our products to inoculate us from more direct-to-consumer competitive threats. behaviours and substantially more capable of rapidly securing product/price information, through their social media networks, or access to web-search functionality. This leads inexorably to the next big change.

5

Transparency............................

Today’s consumer is in a position to demand much more clarity as to how our business models work. How is rate calculated? What is covered precisely? What is your cut of the costs?

It is commonplace to acknowledge that the face of Canada is changing. New immigrants have joined their families and futures with the immigrants of previous generations and today’s nation looks quite different than 25 years ago. In our industry, perhaps not so much. We have made palpable progress in gender diversity in management ranks, but still have a ways to go. However, the new diversity of Canada is not yet fully evident in our broker channel. Here lies both opportunity and threat. To sell to and service the new Canada, we must become the new Canada. Failing that, others who do will take our place.

7

Globalization............................

Globalization is another commonplace term, but one that has not fully worked its way through our industry. It has, however, very much affected our customers. Especially in commercial lines, our clients have been battered by new competitive forces with different cost structures and operating models that are based overseas or operating globally. To compete, our clients have outsourced manufacturing or service capabilities and have sought to expand their own export customer bases.

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8

The 1%....................................

Last year’s “Occupy” movement helped bring this trend into focus.

It is true that the world is richer and that the combination of the end of the Cold War, the triumph of capitalism and the benefits of globalization have increased the average standard of living across the board, as well as brought hundreds of millions out of poverty into a new world of hope and potential prosperity. But it is also true that the benefits of this wave of wealth creation are not being spread as they were after the Second World War.The pressures on the middle class are real. As the “return on knowledge” increases, the “return on labour” (and perhaps even on capital?) seems to be falling. And the 1% is prospering both in emerging and developed markets. The Canadian consequences of this are being seen in the number of new competitors in the high-value homeowner business. But the larger trend is likely to be a “middle-class” consumer more costand price-sensitive than ever before!

9

Quantum.............................

Recently, it was reported that 90% of the world’s data was created in the last two years. As business professionals, we know we are being over-

16 Canadian Underwriter April 2013

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whelmed by data. As insurance professionals, we have always been in the information business, but the quantum is changing so fast that it is harder than ever to catch up and progressively more challenging to sort “wheat from chaff.”

The likely expansion of telematics technologies into insurance markets will present us all with a very live example of this quantum issue. We will have more data — and with it — new ways to price and select risk. But we will also have to learn how to manage these extraordinary data flows while simultaneously coming to grips with a whole new array of data privacy and related public policy risk.

10

Dis-intermediation ..........

The world of the web is creating a whole new era of Schumpeterian “creative destruction.”

Business models are being challenged and some are proving incapable of withstanding that challenge. Does anybody remember the record store? How many people still use a travel agent to book a family vacation? Once a business model is reduced to a digital stream, it is harder to extract value in the middle of the value chain. Once a product/ service/solution is just another price

on a screen, the risk for manufacturers is that value-added functionality or service becomes invisible or must be funded out of margin. The risk for intermediaries is that increasingly sophisticated consumers can exploit a progressively more transparent world and decide to make choices for themselves without intermediated assistance — quickly, 7/24 and on the platform of their choice — which increasingly turns out to be their “phablets” while sitting on their sofas at home on a Sunday afternoon.

So much for change. What about the argument that some things are not changing at all? Like human nature. Is it possible to make the argument that in the midst of this change, some key elements of traditional business models might actually have more power than ever before? By recognizing these constant elements in a world of change, is there a promising way forward for insurance intermediaries and the companies that support them?

In Part 2 of this article, I will argue that in order to win, we need to innovate in the context of a world of change, but also to properly embrace and understand those core elements that are proving to be immutable.

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Both Sides

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Gary Hirst

National Director, Burns & Wilcox Canada

Understanding international business practices and regulatory protocols are critical drivers for client and broker success on the global stage. To effectively manage this added cross-border risk, brokers need a firm grasp of both the risks associated with their clients’ industries and the legal requirements in which they operate.

Over the past two decades, Canadian companies have increasingly engaged in international commercial activity, expanding their operations globally thanks to fewer trade barriers and advances in communication technology and transportation services. Not only are these companies selling their products beyond the Canadian

18 Canadian Underwriter April 2013

border, they are also investing in production facilities and forming partnerships with suppliers, producers and innovators worldwide.

The Canadian Manufacturers & Exporters’ Management Issues Survey for 2012-2013 notes that Canadian companies expect globalization pressures will propel a shift in where they do business over the next three years. This crossborder trend is so strong, in fact, that the number of companies selling within their respective home provinces is expected to drop by 17%, while major growth in exports is projected in markets such as Eastern Europe, China and Brazil.

And this shift is expected to continue. Additional research from the Conference Board of Canada’s Global Commerce Centre highlights how the cross-border trend for business is expected to continue and diversify over the next decade. While the report found that the United States will continue to be Canada’s largest export market for the foreseeable future, Canadian exports to the U.S. will expand only modestly through 2025. Further, the share of Canadian goods exports to the U.S. will drop from almost

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three-quarters in 2010 to slightly more than two-thirds in 2025.

By contrast, the Conference Board report found Canada’s share of goods trade with booming China will expand from 3% to almost 7% by 2025. In addition, Canada’s exports to India will more than double, and will be roughly equal in size to the share of exports to our North American neighbour, Mexico.

The report found that growth is expected in Eurozone countries as well, up to 6% in 2025 from 4.5% in 2010.

CLEAR UNDERSTANDING While greater international commercial activity has had a positive impact on the volume and value of Canada’s exports and the bottom line of many Canadian businesses, the risk exposure of individual businesses has also increased. With evolving Canadian rules and recent changes to insurance markets, having a clear understanding of current international business practices and regulatory protocols are two critical drivers for client and broker success on the global stage.

To effectively manage this added cross-border risk, brokers must be wellinformed if they are to provide effective and valuable advice to their clients.

Brokers need to have a clear and detailed understanding of the complexities and risks associated with their clients industries, as well as the different legal systems and jurisdictions.

Insuring a company’s international and global operations is complex and cross-border commerce calls for additional compliance and regulatory considerations for insurance. Brokers and their clients must perform the necessary due diligence to ensure that general liability limits and coverage extends to cover exports when doing business with the U.S. As well, U.S. regulations require that brokers be licensed in each state in which they are doing business, and that policy taxes be filed with the local state’s superintendent of insurance.

20 Canadian Underwriter April 2013

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Determining if a client has international exposure can be complex and it is never as simple as confirming if said client has physical assets or properties in another country. A client may have international exposure if it sells products through the Internet, travels outside the country to trade fairs, relies on foreign suppliers, or competes for contracts outside Canada.

To truly help their clients and add value to the relationship, brokers need a comprehensive understanding of all aspects of their clients’ businesses to be able to advise and provide guidance on the most appropriate insurance policy. Brokers with clients in the oil

While greater international commercial activity has had a positive impact on the volume and value of Canada’s exports and the bottom line of many Canadian businesses, the risk exposure of individual businesses has increased.

Understanding international business practices and regulatory protocols is critical. and gas industry, for example, must keep up-to-date with industry regulations and closely examine and understand the sector-specific policy language to meet their clients’ insurance needs.

While cross-border insurance offerings present significant challenges to the broker, nation-specific regulations must be considered alongside any industry-specific conditions. For example, in Mexico, common co-pay clauses in policies require that the claimant pay a percentage of the loss above the deductible. Despite a $10,000 deductible, with an earthquake loss, a claimant could be faced with an additional deductible of 5% of the loss.

FILLING INFORMATION GAPS In light of these considerations, brokers have a clear responsibility to ensure their clients know and understand the workings of their policies, and must work to identify the right resources to fill the critical information gaps that are created through multi-national insurance policies.

Finding the right partner for crossborder business is no easy task. As roughly less than half of domestic carriers do not provide coverage in other countries, Canadian brokers must often do their own research to find a reputable agent in the country where the client requires coverage.

Brokers must understand how to coordinate insurance services with any foreign providers, as well as how to navigate the international banking regulations and fluctuating currency exchange rates.

Moreover, the insurance rules and regulations often vary within a foreign country. In the U.S., for example, the regulations vary from state to state.

As Canadian brokers try to partner with foreign brokers on a client-by-client basis, these legal and jurisdictional factors can result in a Canadian broker being placed at a competitive disadvantage. In many cases, for example, by working with an intermediary, brokers lose a percentage of the commission and jeopardize their client relationship.

To mitigate this risk, Canadian brokers may choose to work with an experienced cross-border partner that offers a network of international offices and expertise.

This allows brokers to access products that cover clients’ risks, wherever they are located, while brokers can benefit from a partner’s local insight, knowledge and expertise.

As Canadian businesses continue to expand globally, it is anticipated so too will the demand for the services of brokers who can provide cross-border insurance solutions.

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Getting Ready for ORSA

Partner, Cassels Brock & Blackwell LLP

In December 2012, the Office of the Superintendent of Financial Institutions (OSFI) issued a draft Guideline on Own Risk and Solvency Assessment (ORSA). After a period of industry consultation, it is expected that OSFI will issue the final version of the ORSA guideline later this year and that ORSA will come into effect in 2014. Although the ORSA guideline is not yet finalized, it is likely that most parts of the draft guideline will be retained in the final version.

22 Canadian Underwriter April 2013

WHAT IS ORSA? The concept of ORSA was originally developed by the Financial Services Authority in the United Kingdom. ORSA has been added to the list of insurance core principles that have been developed by the International Association of Insurance Supervisors. As a result, ORSA will become a global requirement for all insurers.

The basic purpose of ORSA is to provide a more effective means for insurers and insurance regulators to be able to effectively monitor insurance risk and capital requirements on a prospective, rather than retrospective, basis.

ORSA will require an insurer to identify its own material risks as well as assess the adequacy of its risk management and capital in order to meet current and future needs. ORSA is intended to provide a link between an insurer’s risk profile and its capital needs.

ORSA will become integrated as a key part of an insurer’s enterprise risk management (ERM) and strategic planning process. It will be necessary for an insurer to prepare a much more detailed analysis of how it identifies, measures and manages the risks that it faces as part of its business.

ORSA is an important step in risk management since it allows an insurer to develop controls and

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Canada, along with the rest of the world, will be subject to new Own Risk and Solvency Assessment rules in the future.

ORSA is intended to provide a more effective means for insurers and insurance regulators to be able to effectively monitor insurance risk and capital requirements on a prospective, rather than retrospective, basis.

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levels of capital that are appropriate for its own risks rather than simply following ones that have been mandated by an insurance regulator.

For insurers that are part of a group, ORSA will be applied to the entire group rather than just to each individual company. This approach will better reflect how insurers are managed and capital is allocated within a group. It also shows the importance of having uniform global standards for ORSA.

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ness is added). OSFI will require an insurer’s ORSA to be submitted to it for review, but will not actually approve it.

5. Internal controls and independent review: An insurer’s internal controls structure will be a critical part of making an ORSA effective. An ORSA should be subject to periodic independent review. OSFI’s draft guideline states that an external auditor would be an example of the type of person who would be able to perform such a review.

PREPARING AN ORSA

OSFI has recognized in the draft guideline that smaller insurers may be required to do less analysis as part of their ORSAs. However, it is likely that a significant amount of documentation will be required to prepare any ORSA. ORSA basically requires an insurer to assess the adequacy of its regulatory capital in order to mitigate the risks that exist in its business plan. An insurer will need to document its process for identifying, measuring, monitoring and managing the risks that are inherent in its business strategy.

ORSA also requires an insurer to document the level of risk it is prepared to assume and the amount of capital that is required to meet the risks. The starting point for preparing an ORSA is for an insurer to review the following: 1. its current ERM framework; 2. its capital management policy (CMP) — (OSFI Guideline A-4); 3. its stress-testing procedures — (OSFI Guideline E-18); 4. its dynamic capital adequacy test (DCAT) analysis; and 5. other relevant polices already in place, including investment, outsourcing, reinsurance risk management and responsible persons policies.

An insurer’s DCAT scenarios should be used to assist in identifying potential risks and evaluating the adequacy of capital. The stress testing procedures required by OSFI Guideline E-18 will be an important part of an insurer’s ORSA. OSFI currently requires all Canadian licensed insurers to have both a CMP and an internal target for capital. The CMP will become incorporated as a part of the ORSA. It will also be necessary for an insurer’s broader ERM framework to be co-ordinated and linked with its ORSA.

Because ORSA is a self-assessment process, OSFI will not require any specific approach to be taken. It will be necessary for each insurer to adopt an approach that reflects the size of its business and the volatility of the lines of business that it is writing. OSFI expects the amount of analysis that will be necessary will depend upon the size and complexity of the business.

IMPLEMENTATION ISSUES It is likely that the preparation of an ORSA will involve a significant amount of time and expense for most insurers.

Insurers that are Canadian branches or subsidiaries of European insurers may find the implementation of ORSA slightly easier due to its similarity with some aspects of Solvency II.

THE ORSA GUIDELINE The draft OSFI guideline identifies the following elements within an ORSA: 1. Comprehensive identification and assessment of risks: insurance, market, credit and operational risks must be explicitly addressed as part of the analysis required by an ORSA.The list of risks is expected to change and evolve over time.

2. Relating risk to capital: An insurer is required to make a determination whether or not to hold capital for each type of risk. ORSA will require an insurer to establish its own “internal target” for capital.That target will be established based on an insurer’s analysis of its own risks. The amount of capital required to support the insurer’s business should be adequate for both normal and stressed market conditions.

3. Board oversight and senior management responsibility: The Board of Directors of an insurer will be responsible for the oversight of its ORSA. It will be necessary for the board to review its ORSA and to challenge management with respect to the analysis that has been made. The board will also be responsible for determining the stated risk appetite of the insurer.

Senior management will be responsible for ensuring that adequate procedures are in place in order to allow the ORSA to operate effectively.

4. Monitoring and reporting:The ORSA should be reviewed on at least an annual basis and changes should be made whenever they are necessary (for example, if a new line of busi-

24 Canadian Underwriter April 2013

Because ORSA is a self-assessment process, OSFI will not require any specific approach to be taken. Each insurer must adopt an approach that reflects the size of its business and the volatility of the lines of business that it is writing.

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ORSA will require insurers to specifically define and describe risk appetite and risk profile. This process may be more complicated and difficult than it initially appears — particularly since it will require some insurers to provide public disclosure about their stated risk appetites and risk profiles.

The following are comments and concerns that are likely to be made regarding ORSA: 1. The ORSA guideline is very general and does not provide much specific direction regarding what OSFI will expect an ORSA to include.

2. An ORSA will be time-consuming to prepare and document, as well as will add another layer of expenses related to compliance.

3. ORSA may create a real burden for very small Canadian branches or companies that lack the people and resources necessary to complete an ORSA. 4. The requirement for a third-party review of ORSA will also add an additional expense.

5. There is uncertainty about when ORSA will actually become effective in Canada. There may be a relatively short time frame imposed by OSFI for insurers to develop and approve an ORSA. It is also possible the implementation date may get delayed in order to harmonize its introduction with other jurisdictions, such as the United States (the National Association of Insurance Commissioners is currently planning for a 2015 implementation date).

GOING FORWARD ORSA will become a global regulatory requirement that will change and evolve over time. OSFI views ORSA as an important tool that insurers will use to support their corporate governance as well as risk and capital management.

OSFI will still require an insurer to meet its minimum and supervisory target regulatory requirements for capital.

However, these tests will likely be viewed as minimum targets for capital.

26 Canadian Underwriter April 2013

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The internal target for capital that is established by an insurer based on its ORSA will become the key capital test.

The lack of specific direction from OSFI about how an ORSA should be prepared may initially cause concern for some insurers. However, once an

ORSA is really just part of an insurer’s overall ERM. It may be viewed as simply being a formalization or documentation of a number of capital and risk management processes that an insurer likely already has in place. initial ORSA has been prepared, it is likely that most insurers will become more comfortable using it as an effective tool for determining required regulatory capital.

ORSA potentially offers insurers greater flexibility regarding the amount of regulatory capital they must maintain in Canada if they can demonstrate that they have a low risk profile or are effectively

managing higher-risk lines of business.

The traditional approach to solvency regulation has been for insurance regulators to impose minimum uniform standards that must be followed by all insurers regardless of lines of business or risk profile. ORSA allows insurers to (at least partially) manage their own solvency risks. ORSA is intended to provide a more dynamic and prospective approach to the amount of regulatory capital that is required.

ORSA is really just part of an insurer’s overall ERM. It may be viewed as simply being a formalization or documentation of a number of capital and risk management processes that an insurer likely already has in place. ORSA should lead to better decision-making as well as risk and capital management if it is implemented effectively and has the full support of the insurer’s Board of Directors and senior management.

ORSA will likely be viewed as one of the most significant regulatory developments implemented by OSFI in recent years. It will be important for all insurers to begin the planning process for ORSA early in order to be ready once the ORSA guideline becomes effective.

Jacinta Whyte, General Manager and Chief Agent for Canada, Ecclesiastical Insurance Office, plc, is pleased to announce the following executive appointments.

Jane Williamson, AICB, CIP, CRM Vice President, Claims

Jan Wleugel, B.A., CRM Vice President, Risk Managed and National Accounts

Kevin Webster, FCIP, CRM Regional Vice President, Western Region

Debbie Archambault, CIP Interim Regional Vice President, Central Region

Jane Williamson has been appointed to the Executive Team as Vice President, Claims. Jane is responsible for leading a national team of claims professionals and for the development and implementation of Ecclesiastical’s claims strategy.

Jane joined Ecclesiastical in 2006 as Claims Team Leader and was subsequently promoted to the position of Vice President, National Programs. She holds a Diploma in Business Administration with a Major in Finance from St. Lawrence College and is an Associate of the Institute of Business Bankers (AICB).

Jan Wleugel has been appointed Vice President, Risk Managed and National Accounts having joined Ecclesiastical in 2011 to head up the Risk Managed practice. With over 25 years of experience in the insurance industry, Jan is responsible for the leadership and development of these two specialized areas. He holds a B.A., Administrative and Commercial Studies (Financial) from the University SJ ;IWXIVR 3RXEVMS ERH E 'IVXM½GEXI MR -RXIVRIX and Business Technology from the University of Toronto.

Kevin Webster has been appointed Regional Vice President, Western Region with responsibility for the development of Ecclesiastical’s long-term business goals in Alberta, Saskatchewan and Manitoba. Kevin brings over 15 years of commercial property and casualty underwriting and business development experience to his role, having held progressively senior positions with major national and international organizations.

Debbie Archambault has been appointed Interim Regional Vice President, Central Region having joined Ecclesiastical in 2012 as Regional Underwriting Manager. In her new role, Debbie is responsible for implementing our underwriting strategy and for developing Ecclesiastical’s business in Ontario. With over 20 years of underwriting and management experience, Debbie brings a wealth of expertise to her position.

Protecting those who enrich the lives of others Owned by a charitable trust, Ecclesiastical is a unique specialist insurance company. Working closely with independent brokers across Canada we provide customized insurance solutions to faith organizations, retirement communities, educational institutions, unique properties, VIKMWXIVIH GLEVMXMIW ERH RSR TVS½X SVKERM^EXMSRW ERH WIPIGX GSQQIVGMEP IRXIVTVMWIW Ecclesiastical is deeply committed to protecting those who enrich the lives of others and to supporting local and global initiatives that help eradicate poverty and improve the lives of people in need.

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POWER to the Consumer

Doug McPhie

Partner and Canadian Insurance Leader, Ernst & Young

With changing times putting consumers front and centre, they wield considerable influence over what constitutes good service. Property and casualty insurers looking to maintain and enhance profitability in 2013 and beyond are advised to adopt a more consumer-centric business model.

It is no secret that insurance customer behaviour and expectations are in the midst of profound change. From the ability to research and purchase products online, to the ease of speaking out via social media, consumers not only have a voice, they have power.

Combine that with challenging economic and market conditions, continuing weak investment returns and expanding regulatory supervision and one thing is clear: insurers need to refocus their efforts to sustain a competitive advantage

28 Canadian Underwriter April 2013

and position themselves for growth.

Ernst & Young’s Canada 2013 property-casualty insurance outlook notes that developing new products and strategies specifically designed to better fulfill consumer expectations will play a key role in maintaining and enhancing profitability in 2013 and beyond.

Lucky for insurers, they have access to a rapidly expanding volume of data from transactions, claims histories, social media interactions, Internet searches and GPS-type devices. While a host of challenges exist when it comes to deriving meaningful, insightful information from that data, those insurers that integrate and leverage the information through product development, pricing, sales and claims can improve underwriting capabilities, customer service and even the claims experience, giving consumers the power they are demanding.

MYTH BUSTER Ernst & Young’s Global Insurance Consumer Survey 2012 looked at insurance consumer behaviour and preferences in Canada, and around the world.The company surveyed 24,000 insurance customers globally, including 1,000 Canadians, to better understand what customers want from their insurers.

Many of the findings bust some popular myths that abound in the industry.

For one, while technology is of utmost importance, the future is not all about being online.The survey found only 32% of Canadian respondents used the Internet to research insurance and only 7% had actually bought insurance online.

While those numbers are low, insurers need to think about integrating both online and offline channels to meet their customers’ expectations in the future. Most still currently prefer to buy insurance through more traditional channels, but 31% of respondents indicated they will use an insurance quote comparison website in the future.

While online is an important part of the future, it is just one component of an integrated channel management capability that is critical to growth. Insurers need to carefully gauge how current and

While possibilities for insuring new risks are easy to find, often presenting a seemingly straightforward opportunity to gain significant market share and profits, insurers must overcome a lack of historical data that would help to model price, coverage and underwriting. prospective customers prefer to purchase insurance, and then invest in those channels.Those that determine a more direct sales channel is most appropriate might choose to develop that channel through a more robust online presence, or even consider broker acquisitions.

In any case, customers will continue to look to the Internet and other technology-enabled systems to enhance their insurance service experience, and insurers need to catch up. Many insurers are using out-of-date systems that cannot effectively support online and mobile integration. Investing in new or improved systems can make a big difference when it comes to seamlessly integrating the

overall customer experience. Upgraded systems that can make better use of data will also be an advantage when it comes to cross-selling and retention.

Insurers need to realize the old wisdom that customers do not enjoy the sales process and resent insurers trying to sell them additional products simply is not true. In fact, the survey found that, if insurers understand customers’ needs and offer the right proposition in

the right way, they can cross-sell, upsell and repeat sell effectively.

Despite these preferences, most insurance companies fail to take advantage of opportunities to market additional policies to clients, apart from auto and home. To cross-sell effectively, insurers need to ask how they can demonstrate that another purchase from the same provider is either easier or a better value than going to another insurer. Online

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April 2013 Canadian Underwriter

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Customers Requiring All Personal Contact

Regional Average

Americas

Country Average Brazil Renewing Extending cover Making a claim Other questions

Canada

Mexico

USA

0%

10%

20%

30%

40%

50%

60%

70%

Source: Ernst & Young’s Global Insurance Consumer Survey 2012

Key Reasons For Multiple Products From The Same Provider K

It just makes it simpler to have it all in one place

It was cheaper to have multiple products with one insurer

65% My agent/advisor suggested that I do it

I think I will get a better service from one provider

36%

51% Other

5%

Don’t know

2%

2%

Source: Ernst & Young’s Global Insurance Consumer Survey 2012 S channels, for their part, should offer easy-to-understand, unbundled products with clear up-sell options, enabling customers to build into the product the value that meets their specific needs.

In addition, by developing valuable loyalty or points programs, insurers can make these extra purchases even more attractive. Soon, reward programs will be more than just nice-to-have; consumers will expect them.

BEYOND PRICE Tied to that, another notable survey finding was that buying insurance is not all about price. Make no mistake, price is critical, but other factors, such as brand and service, are increasing in importance as prices converge. Harnessing new technologies like vehicle telematics, for ex-

30 Canadian Underwriter April 2013

ample, can provide real-time data delivery.

And this idea extends beyond simply gathering relevant market data. Think about the possibility of identifying an accident the moment it occurs, and being able to start the claims process immediately.

Similar opportunities exist when it comes to homeowners’ insurance, too.

Sophisticated video monitors and intelligent security systems might transmit real-time data that insurers can, in turn, respond to in real time, providing a powerful customer experience.

Ultimately, consumers want control, predictability and service — and finding ways to give them those things will be critical to retaining them. While data management and analytics have been a fundamental element of insurance operations for decades, a new era of big data

means insurers can fine tune that analysis to gain even deeper insight into customer behaviour and better offer products and service to meet their needs at the right time, and in the right place.

New technologies also provide myriad opportunities for insuring new and emerging risks. Cyber liability, for example, is an important emerging exposure area. And with the recent explosion of mobile and cloud computing, the fear of corporate and public data breaches is more real than ever before.

While possibilities for insuring new risks are easy to find — and often present a seemingly straightforward opportunity to gain significant market share and profits — insurers need to overcome a lack of historical data that would help to model price, coverage and underwriting.

A number of mergers and acquisitions have been seen in the Canadian p&c industry as of late, and for good reason.

These types of deals can provide access to underwriting and loss data for different products and markets, and growth via new distribution networks and expanded geographies — all leading to more targeted and relevant customer experiences.

Of course, growing in this way is not without risk. Merging different company cultures and systems can be challenging, and while access to historical information might seem easy, problems with integrating different systems can make that data irrelevant.

Finally, insurers need to use the personal information entrusted to them by their customers with the utmost prudence.While most people are willing to share personal data in exchange for a benefit, insurers take on risk upon accepting that data. Putting in place data security systems is not an option, but rather a necessity to safeguard the trust of the customer.

While it is clear that rapid advances in technology can provide many opportunities, customer service remains a key competitive advantage and insurers need to allocate adequate resources to meet these rising demand expectations — or risk being left behind as customers seek alternatives.

Decemb er 2nD, 3:52 p. m .

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Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all provinces and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2012 Continental Casualty Company.

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Get Connected

Computers are supposed to save time and effort, but too many brokers still spend too much time re-entering data from their own records into insurance carrier systems.

Combine that wasted time with what some analysts see as an industry that lags other sectors in capitalizing on readily available technology to maintain existing — and attract new — business, and resources may be diverted away from what brokers see as fundamental: face-to-face contact.

GREG MECKBACH

32 Canadian Underwriter April 2013

B

rokers continue to regard face-to-face contact with customers as critical, especially in the wake of competition from direct writers. But it remains to be seen how technology can and will be employed to preserve those critical connections and foster additional growth.

Experts are urging distributors of insurance products to redouble efforts to build customer relationships, in part by more fully employing Internet and social media tools. Others suggest that many brokers and agents are bogged down by a tangle of incompatible computer software that fills far too much of their time with mundane, repetitive data entry tasks, time better spent on efforts to build and maintain those all-important relationships.

Consider findings in a recent report from Boston-based Strategy Meets Action (SMA), based in part on a survey of 479 property and casualty carriers, agents and brokers in North America, including a small number of Canadian firms. Asked to name the top three capabilities that carriers should provide to brokers and agents, 81% of surveyed personal lines agents and brokers identified “data to be keyed once” — not twice, as is the case when once using the broker’s own software and then again using the carrier’s computer system.

April 2013 Canadian Underwriter 33

COVER STORY

Get Connected RE-ENTRY WOES “The unfortunate reality is the goal of data being keyed only once still remains just that — a goal,” notes the report, written by SMA co-founders Mary Ann Garwood and Deb Smallwood, a former software developer with Liberty Mutual Insurance. “Insurers would do well to start their efforts from the viewpoint of the agent.”

Entering the same data twice is an issue on this side of the border as well.

“It is just criminal what we’re doing in the insurance industry,” argues Karen Rutherford, an associate with C.W. Consulting, formerly Cookson Walker, in Toronto. “We did a quick-and-dirty calculation about how much labour is executed at the broker’s office off the broker’s payroll that used to be done at the insurance company’s office. It’s significant, and brokers aren’t compensated in any way, shape or form for that,” reports Rutherford, a broker for 23 years before joining C.W. Consulting.

“If you were to have an insurance company person sitting in the room, they’d say, ‘But brokers love it, because the work is accurate,’” she continues.

“I think that is just complete hokum, because if I type in a serial number to you, and I think I typed ‘12345,’ I can’t see my own mistake.”

What brokers want is a single system that accumulates all data required “to be able to underwrite the risk, and to be able to send transactions, from their agency management system to the insurer without having to go to the insurer’s portal and input that information again,” says Ted Harman, treasurer of Quebec’s provincial broker association, Regroupement des cabinets de courtage d’assurance du Quebec (RCCAQ).

“There isn’t a single insurer in Canada who would accept to work the way that brokers are required to work,” contends Harman, president of Accent Insurance Solutions in Montreal. “There is no way they would support having 10 or 11 or 12 different systems in order to transact policies, and that is exactly the situation brokers are put in across the country.”

Harman’s colleague at RCCAQ, its 34 Canadian Underwriter April 2013

outgoing chair Catherine Mainguy, suggests an industry portal will help brokers compete with direct writers.

Harman, who sits on the technology committee of the Insurance Brokers Association of Canada (IBAC) and is RCCAQ’s representative at the Centre for the Study of Insurance Operations (CSIO), says that the industry is making good progress towards its goal of

“We did a quick-and-dirty calculation about how much labour is executed at the broker’s office off the broker’s payroll that used to be done at the insurance company’s office. It’s significant, and brokers aren’t compensated in any way, shape or form for that.” allowing brokers to work in one single system and to manage transactions without having go to individual carriers’ portals.

However, for that progress to continue, solid standards are a must. Debbie Thompson, president of the Insurance Brokers Association of Ontario (IBAO), and vice-president of business development for Beyond Insurance Brokers Inc. in Whitby, Ontario, cites the standard being developed by IBAC.

“It’s a standard that has to be developed that all insurance companies will accept,” Thompson says. “I can’t just go out and develop (a portal) and hope for the best,” she emphasizes.

EXPENSIVE PAPER Dealing with a whole lot of flimsy paper day in, day out can produce some hard costs. After completing a study, Marsh Canada Ltd. discovered the company spent at least $225,000 annually to retrieve paper-based files, Laura Hill, vice president of finance, planning and analysis for Marsh Canada, said during a panel discussion at the Insurance Canada Technology Conference in Toronto this past March.

The study determined that each customer service representative retrieved an average of 20 files daily, with each retrieval taking about three minutes to complete, Hill reported. Multiply $22 per hour by 260 hours annually, and that translates into a cost of $5,700 for each of customer service rep.

The results were enough to convince Marsh Canada to start scanning incoming documents. The company can also retrieve electronic documents from one carrier’s file transfer protocol (FTP) site, Hill said, suggesting this reduces the time to get the documents and attach them to customer files.

TESTING THE WATERS Industry-wide, things are far from done, but things are nonetheless chugging along. In March 2012, CSIO announced the availability to its members of its Extensible Markup Language (XML) eDocs standard, which is designed to let brokers transmit policy documents directly to broker management systems (BMSs).

Less than a year later, in February 2013, software maker Applied Systems Inc. announced it had certified eight carriers for the CSIO XML eDocs standard.

At G&B Allen Insurance Brokers Ltd. in Warkworth, Ontario, staff members capture declaration pages from eight carriers’ portals, Karen Gale, the company’s information technology manager, noted during the aforementioned technology

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COVER STORY

Get Connected conference. “I can’t say enough about it because we have been through the scan and attach, which takes approximately seven minutes of somebody’s time,” Gale told session attendees. Add to that the time it takes to capture a dec page and attach it to a client file, about five minutes more, even when done by someone who is well-trained, she added.

Intact is one of the eight carriers that University Park, Illinois-based Applied Systems certified for XML eDocs in February. The others are The Dominion, Germania Mutual Insurance Company, Gore Mutual Insurance Company, Kent & Essex Mutual Insurance Company and Wawanesa Mutual Insurance Co., plus Peace Hills Insurance and SGI General Insurance Services Ltd., both out of Edmonton.

For its part, Economical Insurance in Waterloo, Ontario, was to run a monthlong pilot implementation of the CSIO eDocs XML standard in April. “Brokers will implement the same workflow they have in place with other insurers offering eDocs,” reports Kathryn Curran, Economical’s director of broker solutions. “This is significant because it streamlines broker workflows and they do not have to learn different ways for different insurers,” Curran points out.

SUPPORTING EASY ACCESS One organization developing workflows for insurance is the Organization of Real-time Brokers Implementing Technology (ORBiT). Its president, Wendy Watson, moderated the eDocs session at the technology conference.

“Customers want information now,” Watson said at the time. “When they call us because they just got their declaration page in the mail and we don’t have it yet, we cannot talk to them in an intelligent way. So we’ve got to have it at our fingertips right now.”

Brokers need to divert more efforts from mundane, repetitive tasks toward activities that generate revenue and retain clients, Watson said.

But as direct writers ramp up their businesses, brokers’ market share is dropping, Marcon vice president 36 Canadian Underwriter April 2013

Catherine Kargas noted at the conference. Data from the Montreal-based market research firm indicates that brokers’ share of the personal property market in Canada dropped from 74.5% in 2000 to 64.7% in 2008, Kargas said.

(IBAC reports there are approximately 40,000 brokers in Canada).

Poll results indicate that insurance customers who want to do business through brokers do so because they want to consult with experts.

“They want to deal with a trusted advisor, who in their opinion is an expert in the field, and no matter how many Google searches they do, they may not get all the information that they require.”

“To a large extent, the broker channel has let the directs take some of the business away,” Kargas said. “We have allowed, in personal lines, relationships to be taken over by once-a-year renewal.”

Marcon studies have shown the reasons customers are opting for direct writers using the Internet include the convenience of 24/7 access, and the perception that they will save money.

But other poll results indicate that insurance customers who want to do business through brokers do so because they want to consult with experts, Kargas pointed out. “They want to deal with a trusted advisor, who in their opinion is an expert in the field, and no matter how many Google searches they do, they may not get all the information that they require.”

But not all efforts to employ technology been positive. “There is less focus, than we have been doing in the past, to maintain a relationship with the customer and that has been done in an effort to increase efficiencies and decrease costs, but at the same time we are creating a situation where the product is commoditized in the process,” Kargas told conference attendees.

She suggested, however, Canadians still want to close their deals in person, citing State Farm Mutual Automobile Insurance Co.’s Chicago-based Next Door service, where clients can access both in-person coaching and classes on personal finance and insurance. “Next Door is proving people want to talk to a person, which is very different from the communication we’ve been receiving from communications that get passed on from the brokers,” Kargas said.

Canadian brokers, she advised, should encourage customers to come to their offices, rather than focus on competing with direct writers in web services.

BIG AND SMALL It is relationships — developed face-toface rather than through the Internet — that give small and mid-sized brokerages a way to compete with the largest brokers, suggests Jason Dunn, a general insurance broker at LaRoche-McDonald Agencies Ltd. in Saskatoon. “Just going out there and having a personal meeting and a walk-through of the operation often goes a long way,” Dunn says.

Despite not having the practice groups and resources of the largest brokers, another way small to mid-sized brokers can compete is by helping to steer clients in the right direction, says IBAO’s Debbie Thompson. “Most small

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COVER STORY

Get Connected to medium-sized brokers deal with small to medium-sized customers. They need some help with other products and services and if we become that trusted advisor, that we really should be or want to be as brokers, then these are things we can help them with,” she adds.

MANAGING RISK There are several risk management services available to brokerages that can provide models and risk management data, says Mike Berris, a Vancouver-based partner with KPMG Enterprise. “There are also a number of risk management services available to brokerages that specialize in an industry or area,” Berris notes in an e-mail. “Brokers tend to hire them on an account-by-account basis.”

But there are more brokerages specializing in one industry or risk, he reports. “These niche brokerages compete well with the larger brokerage practice groups,” Berris adds.

Technology may be helping to level the playing field. Berris notes that computer software vendors are developing technology that will allow niche brokerages to compete with major brokerages.

“We have seen smaller brokerages deploy commercial technology to allow clients to access policy info, renew, get quotes, etc. online and at their own schedule,” he writes. “In the past, only larger brokerages would have this capability.”

Larger brokerages also tend to have “thresholds,” whereby they will not normally offer services to a client paying below a certain premium, says Harman.

“Depending on the company, it could be $25,000; it could be $50,000,” he notes. “That leaves a segment of the market that smaller brokerages can compete in,” he adds.

MAIN ATTRACTION Another broader challenge for brokers is one that is also faced by carriers, says Harman. “Brokers are having a harder time attracting young people into the industry, so we need to have some method as an industry of generating more interest and drawing more young people into our business,” he suggests.

38 Canadian Underwriter April 2013

If 100 high school students were surveyed, he expects that “you won’t find too many who say, ‘Oh, I want to work in the insurance business, because that’s a really cool career choice.’”

Once young people are persuaded that insurance is a solid career choice, they need to be trained. “You can’t learn to be a good broker by reading three textbooks and passing three tests and so I have a concern about being able

comments. There is no need for brokers to “think their way through what’s right for a customer.”

One area where younger workers at brokerages tend to excel, however, is using social media web services, some sources suggest. For example, RCCAQ’s Catherine Mainguy, who owns Quebec City-based Mainguy Assurances & Services Financiers, reports that she recently hired a new employee who uses Facebook to make connections.

“He gets information out there, he has people following him, he’s got these contests going,” she says. “It’s really working out well.”

Mainguy is also a fan of using LinkedIn to connect with people in the business world, regarding it as a very professional way of using social media to obtain data on who is where in your community, as well as a vehicle to send information to clients. “I think individual brokers are using it, but I don’t think it’s widespread yet. I think they still have a lot to learn about how to use it.”

Customers want information now, conference delegates heard. “When they call us because they just got their declaration page in the mail and we don’t have it yet, we cannot talk to them in an intelligent way. So we’ve got to have it at our fingertips right now.”

SOCIAL PRESENCE

to transfer a lot of knowledge, both on the underwriting side and on the broker’s side, to the next generation,” C.W. Consulting’s Karen Rutherford says.

“The next generation in Canada isn’t learning to know insurance as a craft.

Insurance underwriters have tried to make it easy for the brokers, so they have dumbed down the products,” she

Bryan Bedford, senior analyst for insurance technology at Peel Mutual Insurance Company in Brampton, Ontario, said during a presentation at the technology conference that he considers it vital for brokers to have a social media presence.

Social media can bolster accessibility, he suggested. It may not be that a broker is “servicing people right away through that channel — but (prospective clients are) going to be finding you or looking for you through that channel.”

Another speaker recommended that brokers analyze geographic markets and then buy ads from Google. Doug Davis, president of Davis Consulting Inc., relayed he conducted an analysis of food stores in London, Ontario and found, through Internet services, data on individual stores’ size, annual revenue and number of employees. “If a grocery store owner wants to find you, he or she is going on the Internet,” he said.

Davis acknowledged a Google search using a generic term can produce millions of hits, but targeting is certainly

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COVER STORY

Get Connected

It must be acknowledged that somebody from New Brunswick can now advertise (and is advertising) in Ontario “for the very products that you are trying to sell. So it’s not just the guy in the next county; it’s the person in the next province that’s attacking you.” possible. A broker can have advertising directed at people searching for information through Google, he suggested, alluding to AdWords, the Google service that allows companies to post Internet ads related to key words selected by the advertiser. The ads may appear on Google web pages displaying the results of searches that people did using those same key words.

“This isn’t pie in the sky,” Davis said of such services. “This isn’t three to five years from now; this is right now.”

That said, Davis finds from the brokers he speaks with that they are focusing more on renewing with or selling additional products to existing clients than on developing new business.

“It may be just, ‘We support the community,’ and those are all noble things, but it’s not going to get you the new business that you’re looking for,” Davis argued. “The days of calling Bob the insurance broker in the other county and saying, ‘I’m thinking of putting a Yellow Pages ad in your area if you put one in mine,’ (and Bob replying), ‘Okay, I won’t put one in yours if you don’t put one in mine and we won’t compete,’ those days are over.”

40 Canadian Underwriter April 2013

It must be acknowledged somebody from New Brunswick can now advertise (and is advertising) in Ontario “for the very products that you are trying to sell.

So it’s not just the guy in the next county; it’s the person in the next province that’s attacking you.”

ADDING TECH TO THE MIX Despite the challenges, the insurance sector still tends to lag behind other industries in “applying technology to win and serve customers,” suggests KPMG Enterprise’s Mike Berris.

“For example, personal lines customers that are used to doing transactions using online banking and investment brokerage services, do not have much luck finding the same level of functionality in p&c insurance, at least as of today,” Berris notes. “Insurers themselves will likely deploy more sophisticated technology solutions in future, and the question for brokers, particularly in personal lines, is whether this will create compelling cost and convenience advantages for direct writers, or whether brokers can strengthen their own ecommerce and other customer service to keep pace.”

Major carriers are currently focusing on replacing their “core” information technology systems, including policy administration and claims, reports Daniel Shum, partner in consulting for Deloitte.

Noting that he has heard the desire to have a paperless office, Shum comments that “regulatory compliance or constraints will make it more difficult to have it. However, there are technologies out there, and software vendors that are beginning to pilot applications that allow for (electronic) signatures.”

In Saskatoon, LaRoche-MacDonald’s Jason Dunn says his firm is still “very much in a paper business and it is a challenge,” although he adds staff have started scanning declaration pages so they can be stored electronically.

“Our biggest use of technology would probably be on the personal lines front,” Dunn reports. “I find very much that success in commercial insurance is very largely based on the relationship that you’re able to build with your underwriter. You may be able to gain efficiencies through technology, but all this e-mail and portal use... I still don’t think that it’s as good as building a strong relationship with an underwriter where you have mutual trust.”

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Growth

Potential Opinion/Analysis

Lysa Porth

Head of Professorship, Agricultural Risk Management and Insurance, I.H. Asper School of Business, University of Manitoba

A new professorship at the University of Manitoba’s I.H. Asper School of Business, funded by Guy Carpenter & Company, offers an opportunity to take the global lead by conducting academic research in agricultural risk management and insurance from an actuarial perspective.

Support from Guy Carpenter & Company is allowing a Canadian university to offer a world first: a new professorship in agricultural risk management and insurance at the University of Manitoba’s I.H. Asper School of Business in the Warren Centre for Actuarial Studies and Research.

As the first-ever research position of this type within an actuarial framework, the professorship represents a leading-edge opportunity for the agriculture sector in Canada, and internationally.

Agricultural insurance plays a vital role in the stability and growth of the agriculture sector, helping to ensure a more productive and stable food supply for countries around the world. In a global context, having in place a strong agricultural insurance system is critical to meeting the demand to feed the world, and to enhance world food security.

In managing agricultural risks, insurance can help to reduce the negative impacts of natural catastrophes, such as floods or droughts, through effective risk transfer at both producer and government levels, expedite recovery, enable investment by reducing fluctuations in investment returns, improve access to credit, and reduce

42 Canadian Underwriter April 2013

government liability in financing post-disaster reconstruction, which can often be more costly to government than a well-functioning insurance program.

As agricultural risks have become more complex, actuarial foundations have become increasingly important to help ensure the long-term sustainability of programs. It is essential to step up the pace of innovation to achieve long-term profitability, competitiveness and sustainable agricultural production.

As the reinsurance market continues to evolve, Guy Carpenter has invested in qualified people and actuarial technology and is looking to make progress towards global food security by adopting a multi-stakeholder approach. Much of this must start with educational programs and research opportunities specializing in advanced agricultural insurance and risk management techniques.

Agricultural insurance is one of the fastestgrowing lines of business in the property and casualty industry. Investing in the new research professorship will help foster and shape the next generation of actuaries trained in p&c generally, and agribusiness specifically, an area of actuarial

NAVIGATE YOUR WAY TO VICTORIA BC ON OCT 6–9 2013 TO DISCOVER THE FUTURE OF RISK MANAGEMENT. The BC Chapter is excited to invite you to a city proud of its rich heritage, historic downtown, gorgeous gardens and parks, and scenic Inner Harbour. It’s the perfect backdrop for this voyage of discovery, chart your course for 2013 RIMS Canada Conference in Victoria, BC. The organizing committee has its sails fully furled as it navigates past the buoys marking the final months. Our program committee is putting together an exciting nautical map with ports of call at ERM, Claims, Legal and Insurance, with 25 concurrent sessions over 6 blocks.

Our exhibit hall is already 75% full; be sure to meet your friends and colleagues on the exhibit hall floor starting on Sunday. Tuesday night’s first port of call is our Rose Compass Reception followed by the Discovery Regatta.

The Convention Centre is connected to the historical Fairmont Hotel overlooking the pictureseque Victoria Inner Harbour. There are six conference hotels, Fairmont Empress Hotel, Marriott Inner Harbour, Hotel Grand Pacific, Executive House, Inn at Laurel Point, Chateau Victoria Hotel & Suites; all accommodations are within walking distance.

Look to our website www.rimscanadaconference.ca for all the latest information. The local organizing committee and all our volunteers look forward to seeing all delegates and industry partners.

Join other risk and insurance professionals on a voyage of Discovery at the 39th Annual RIMS Canada Conference.

OCTOBER 6–9, 2013 The Victoria Conference Centre

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science that has received little attention to date.

One of the goals for the professorship will be to help develop reinsurance capacity for Guy Carpenter’s crop insurance clients, as well as to create new and innovative products. Not only will Guy Carpenter’s agriculture clients benefit from the research, other interested parties — such as stakeholder groups, insurers, reinsurers and governments — will have the opportunity to liaise with the professorship to solve realworld agricultural problems.

ENHANCING PARTNERSHIPS Another main focus of the professorship is to strengthen public-private partnerships and encourage more co-operation and dialogue among producer organizations, insurers and reinsurers, and provincial and federal governments — something that has traditionally been somewhat limited. From a research perspective, academia can play a key role in helping to bridge the dialogue involving the private sector.

It is key that the professorship be interdisciplinary, helping to push the boundaries of innovation through collaboration that begins at the University of Manitoba across such disciplines as finance, economics, engineering, statistics and agribusiness, and extends to other universities in Canada and those around the globe. It is anticipated this broad-based co-operation will foster both improved production insurance and broader business risk management policies for agricultural producers.

Lysa Porth, Ph.D., head of the professorship, was awarded her doctorate in 2011 from the University of Manitoba and the Warren Centre for Actuarial Studies and Research, and holds an MBA with a thesis option in management science and a Bachelor of Commerce (Hons.) in financial and actuarial studies from the Asper School of Business in Winnipeg. Her industry work experience includes positions at Great West Life Assurance Company and the City of Winnipeg.

Dr. Porth, who most recently served as assistant professor in the Department

44 Canadian Underwriter April 2013

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of Statistics and Actuarial Science at the University of Waterloo, has accepted an assistant professor cross-appointment in the University of Manitoba’s Department of Agribusiness and Agricultural Economics, and an adjunct professor appointment in the University of Waterloo’s Department of Statistics and Actuarial Science.

In a statement last January, the University of Manitoba noted the establishment of the professorship was made possible through a gift of $750,000 from Guy Carpenter & Company. “We have the greatest respect for (Dr. Porth) and we are confident she will lead valuable research that will facilitate a deeper knowledge in this specialized field of

Another main focus of the professorship is to strengthen public-private partnerships and encourage co-operation and dialogue among producer organizations, insurers and reinsurers, and provincial and federal governments. study,” stated James McCarney, managing director of Guy Carpenter, a global provider of risk management and reinsurance intermediary services.

Dr. Porth’s research covers a breadth of topics, including crop insurance, price insurance, revenue insurance, livestock insurance, business interruption insurance and financial risk, weather insurance, weather derivatives and agricultural derivatives, as well as government agricultural and food insurance programs. Her recent research has primarily focused on developing innovative risk management products to achieve more stable incomes for agricultural producers, and more efficient risk management solutions for agricultural producers in Canada and around the world.

RESEARCH A STRONG FIT Dr. Porth’s research program and unique interdisciplinary background is seen as

a strong fit with the goals of the professorship. “Academic research in agricultural insurance and risk management from an actuarial perspective is new and emerging,” she comments.

“This is a tremendous opportunity to take a global lead in this important and interdisciplinary effort to advance the agricultural sector, both in developed markets such as Canada, as well as emerging markets such as India and China. The presence of strong and efficient agricultural insurance programs helps to align production incentives and encourage investment,” Dr. Porth adds.

Michael Benarroch, dean of the I.H. Asper Business School, emphasizes that Dr. Porth’s “background and expertise in agricultural risk management will be a great addition to our university and our faculty.”

The federal and Manitoba governments have lent their support to the professorship, citing the importance of advancing risk management in agriculture, which serves as an economic driver in the province and across the country.

“We are proud of this endeavour that has governments and industry groups, the academic community and the private sector working together to develop new risk management tools for our hardworking farmers,” federal agriculture minister Gerry Ritz says in a statement.

“We are committed to giving producers the resources they need to make insurance their first line of defence when it comes to managing their risk,” notes Ron Kostyshyn, minister of Manitoba Agriculture, Food and Rural Initiatives.

Future plans to continue building the agriculture risk management and insurance program and expertise are under way. The investment by Guy Carpenter will help keep Canada at the forefront of the agricultural sector, facilitate innovative research for the global economy and contribute to the need for a multistakeholder approach to improve and strengthen the agricultural sector.

Funding is also expected to help develop, attract and retain the world’s top agricultural insurance and risk management researchers here in Canada.

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Craig Harris Freelance Writer

Nova Scotia’s planned auto reforms came into effect April 1, but did not include a controversial optional tort product for minor injuries — which was “deferred” by the provincial government for further study. Other changes, such as diagnostic and treatment protocols for minor injuries, are full speed ahead.

The second phase of reform to Nova Scotia’s auto insurance system is now in place, marking a significant product change over the past two years. After bringing in enhanced mandatory no-fault accident benefits and other measures in April 2012, the province has moved forward with its latest round of changes. These include diagnostic and treatment protocols for minor injuries, direct compensation for property damage and limited vicarious liability for car rental companies.

However, one key proposed measure was left out of the reform package — an optional tort product for minor injuries. The decision to de-

46 Canadian Underwriter April 2013

fer this reform came in an announcement by Maurice Smith, Nova Scotia’s transportation and infrastructure renewal minister, during a speech on February 7.

The main reason for the deferral seems to be the complexity around offering consumers a full tort choice for pain and suffering awards for minor injuries, particularly in terms of education, claims costs and product pricing.

Nova Scotia’s decision to postpone the tort option was welcomed by the insurance industry.

“Insurance Bureau of Canada (IBC) had continuously expressed to government that it would be prudent to abandon or, at the very least, delay its implementation until more research and development could be compiled,” notes Amanda Dean, the bureau’s director of external and government relations, Atlantic.

“Given the extent of change that industry and consumers have seen since the government started the reforms in 2010, it was a very prudent decision for government to make — and a decision that it made after much thought, research and listening to stakeholder concerns,” Dean says.

“There was a lot of feedback between the industry and the Nova Scotia government on the optional tort coverage, which I think prompted them to take another look at it,” says Gordon Murray, vice president of business development, Atlantic Canada for Aviva Canada. “Generally, the

Illustration by Dave Whamond/www.threeinabox.com

Turn in the Road

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feeling from the industry was that the product may not be utilized to a great extent by consumers,” Murray adds.

DIRECT ACCESS TO TREATMENT While the optional tort product is off the table for now, it’s green lights for the other auto reform measures. One of the most important changes is the diagnostic and treatment protocols for minor injuries, based on Alberta’s model, which was introduced back in 2004 for sprains, strains and certain types of whiplash-related disorders.

“The introduction of diagnostic treatment protocols for minor injuries will mean Nova Scotians who are injured in an automobile collision have direct access to physiotherapy and chiropractic treatment without waiting for approval from an insurer or a physician’s referral,” notes a fact sheet on the reforms, released by the Nova Scotia government.

“This reform is patient-focused and delivers better care sooner in order to promote healthier outcomes for automobile accident victims. Diagnostic and treatment protocols will promote consistency and quality of care for minor injuries,” the fact sheet adds.

Insurers and brokers say they support the use of consistent diagnostic tools and treatment programs for accident victims.

“Like Alberta and Ontario, this is a good example of tying treatment as part of mandatory accident benefits coverage to evidence-based and science-based practices,” suggests Karin Ots, senior vice president of regulatory and government affairs for Aviva. “Standardizing the treatment helps to mitigate against overutilization of health care services.”

“The diagnostic treatment protocols are a good thing for consumers,” says Karen Slaunwhite, executive director of the Insurance Brokers Association of Nova Scotia (IBANS). “Consumers will be able to access the right treatment at the right time, which will lead to improved health outcomes,” Slaunwhite notes.

“The reforms will better serve collision victims, and ensure they get the treatments that they need,” Dean suggests. “Because people with sprains and

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strains are going to have access to preapproved, science-based treatment, they will get better quicker.”

She adds that insurers are “cautiously optimistic that the additional claims costs anticipated as a result of the reforms will not adversely affect the affordable price of auto insurance for all Nova Scotia vehicle owners over the long term.”

Insurers, brokers and claims adjusters have worked with the Nova Scotia government and health care practitioners

to clarify the diagnostic and treatment protocols. A training session on the protocols was held March 20 by IBC, IBANS and the Nova Scotia chapter of the Canadian Insurance Claims Managers Association.

“Collaboration between insurers and health care professionals will be key to the success of the (diagnostic and treatment protocols) implementation,” Dean notes. “We’ve begun the conversation, and it’s clear that more is needed in

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order to ensure this product is implemented effectively,” she adds.

“Insurers will have to be compliant with the new timelines in the new diagnostic and treatment protocols,” says Rosalind Staples-Simpson, vice president, Atlantic for RSA. “One of the main changes brought forward is that an insured will no longer have to use their own private insurance before claiming under their auto policy,” Staples-Simpson reports.

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for several years in New Brunswick, Ontario and Quebec — is akin to a no-fault structure designed to streamline the claims process and get insured drivers money as quickly as possible. For other damages, drivers can still sue under the tort system in Nova Scotia.

“Consumers will work with their own insurer under DCPD to repair or replace their vehicle when involved in a collision and someone else is at fault,” Dean explains. “Given the program’s similarities to that of New Brunswick, a system

CLAIMS QUESTIONS REMAIN Nova Scotia’s government has released several bulletins on the changing regulations, including a service and fee schedule that sets out the authorized payments and treatment sessions for physicians, physiotherapists and chiropractors. But some say the new regulations need clarification when it comes to actual claims-handling.

“We still have some questions in terms of the definition of injuries, who will be the actual treatment provider and the role of injury management consultant reports,” states Carol Messervey, a senior casualty adjuster with Nova Scotia-based Marsh Adjustment Limited.

Despite the new treatment and diagnostic protocols, Messervey says she does not expect that the nature of claims adjusting will change drastically.

“I think it will be important for insurers to go back to the basics of loss adjusting,” she observes. “That means getting solid, accurate statements, conducting proper investigations and receiving good documentation on the nature of the injury and the treatment plan.”

“This (the new protocols) could possibly increase the volume of claims, but won’t affect the claims-handling process,” Staples-Simpson notes. “We view these changes as positive, as they should allow the insurers to assist injured people to receive treatment in a timelier manner.”

In terms of direct compensation for property damage (DCPD), this measure will allow insured drivers to deal with their own insurance company for property damages that result from an accident caused by another driver. The new system — which has been in place

48 Canadian Underwriter April 2013

Insurers are “cautiously optimistic that the additional claims costs anticipated as a result of the reforms will not adversely affect the affordable price of auto insurance for all Nova Scotia vehicle owners over the long term.” that is tested in this region after years of application, we are confident that consumers will be well-served.”

Dean adds the industry also hosted training sessions on DCPD requirements in Nova Scotia that included comparisons to traditional tort application and fault determination rules. Insurers and brokers generally favour the introduction of DCPD in the province.

“This will be beneficial to both con-

sumers and insurers because policyholders will deal with their own insurers for repairs to their vehicle, for loss of use of the vehicle, and damages to contents carried in the vehicle when the policyholder is not at fault for the accident,” Staples-Simpson observes.

“This means speedier settlements for policyholders as they are dealing with their own insurer, less litigation and subrogation activity and, ultimately, cost savings, which are reflected in premiums,” she notes.

Adds Slaunwhite, “These changes make a more seamless system for the consumer at the point of claim, especially for those who may not carry collision coverage.”

For the changes to auto rental and leasing companies, the Nova Scotia government has limited the liability of these firms to as much as $1 million, with damages above that amount the responsibility of the individual at fault.

This reform applies to rental or leasing companies that do not offer the option to purchase the vehicle at the end of the lease, notes a government fact sheet.

The information also explains new “priority of pay” rules that further limit the liability of rental or leasing companies. Under the rules, insurance held by the person renting or leasing the vehicle (even if not the driver) will respond first, followed by the rental or leasing company’s insurance. This update reflects changes in other provinces, such as Ontario.

Sources contacted for this article say that changes to rental liability rules are in the early stages and have yet to be fully clarified by the Nova Scotia government.

For the Phase II reforms in general, while there are still some lingering questions about the details of bulletins and the interpretations of regulations, the general tone of the insurance industry response is positive.

“Auto insurance is a heavily regulated product,” Dean points out. “The Nova Scotia government saw fit to review and make these changes to its regulation.

With that said, the manner in which government conducted the review… is one that should be emulated when any government looks to amend its product.”

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What When Who Where Why do You Tell?

How

The CIP Society Ethic Series

A seasoned broker who maintains good relationships with current and former clients notices that she is losing business to another producer. Upon investigation, she discovers the advice being provided by the other broker may be putting clients at risk. What’s an ethical broker to do?

A seasoned commercial broker with a solid repThe CIP Society utation in both the industry and the community made it a habit to stay in regular contact with her Insurance Institute clients. Recently, she had noticed some clients of Canada were not renewing their policy contracts and that she was losing in competitive situations.

The CIP Society represents more Clients suggested that pricing was the issue, and than 16,000 graduates of the although they trusted and respected her, as well Insurance Institute of Canada’s as appreciated her advice, they owed to their Fellow Chartered Insurance shareholders the lowest price they could obtain.

Professional (FCIP) and As well, the broker noticed she was also being Chartered Insurance Professional outbid when trying to develop new business. It (CIP) Programs.The CIP was evident she would need to complete an Society, through articles such as analysis of what was going on. this, is working to bring ethical In discussions with clients and former clients issues to the forefront and provide with whom she maintained trusted relationlearning opportunities that ships, she discovered she was consistently losing enhance the professional ethics of all insurance professionals. business to the same broker.While conducting a comparative analysis of the policy documents she was permitted to examine, she discovered the clients were not getting the proper coverage, leaving them quite vulnerable in many cases. In addition, it appeared the competitor in question was also telling clients things that were untrue.

Looking deeper into this issue, the broker discovered this competitor was fairly new in town and that he had a reputation for questionable

50 Canadian Underwriter April 2013

dealings, similar to this, in his previous town.

The seasoned commercial broker was distressed for several reasons. She was concerned for her clients (and former clients) regarding their risk exposure, and also because her book of business appeared to be under attack by an unscrupulous operator. She was also uncertain as to who should be informed: for example, the regulators, her employer, her clients, etc. Knowing that this discreditable conduct must not be allowed to continue, who should she tell?

Tracy Makris, CIP President Bryson & Associates Insurance Brokers Ltd. The commercial broker, who has a solid reputation and maintains trusted relationships with her clients, must first conduct her own due diligence to ensure that all facts and information received can be verified. If it can be confirmed that inaccurate and potentially damaging advice has been given to a client, the broker should bring immediate attention to those who may be affected: the client, the brokerage of the unethical broker, and the insurance company.

The broker should draw attention to the issues with the client in a professional manner. She should

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highlight the coverage discrepancies by performing a comparative analysis and by providing examples of where the consumer may be exposed.This should all be based on factual information, professional experience and real-life scenarios to ensure that no ambiguity exists.

I would also recommend the broker disclose the situation to her principal broker. The principal broker can, in turn, evaluate the information and, if required, advise regulators (including RIBO), who accept consumer complaints and inquiries from other brokers.

As professionals, it is necessary to work together to ensure the industry’s integrity is intact. It takes years to create professionalism and to develop trust among customers.

Doug Laird, BSc., FCIP President McLean & Shaw Insurance Inc. In this scenario, I would recommend the professional producer contact her past clients, outlining some of the con-

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cerns she has with respect to coverage, or the lack thereof, and pricing. It could be that the competitive broker sold the clients less coverage without their full knowledge. If the clients felt they were misled, I believe it is for them to address these issues with the regulators. The broker can certainly provide assistance if required.

The professional producer should also inform her employer, who may know the owner of the brokerage employing the unscrupulous producer. I would suggest the last thing the owner of this brokerage would want is an issue with his or her reputation based on how this broker conducts his business. Most often, the type of behaviour described in this case can be addressed at this level.

I believe the insurance industry has done a decent job of educating clients about coverage and pricing. I also believe that longer-term relationships with brokers and insurance companies are beginning to see their true value with clients. Less often do I see risks lost on

price alone.While price is a factor in the overall risk assessment, coverage, service and claims adjudication is equally important and would have to be taken into consideration in the overall evaluation of this particular case.

Keith Miller, CIP, CRM Commercial Marketing Manager W. B.White Insurance & Financial Limited Any broker who submits a questionable risk to a company without disclosing all the material facts is surely going to be found out in the long run. In time, that broker will lose the trust of the underwriter, and without trust, the relationship is worthless. Relationships are everything, both in business and in personal life.

So what to do if one suspects that a competitor is not providing complete, accurate information? One of the most important points is not to slander the other broker. There could always be extenuating circumstances of which you are unaware.

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The broker should highlight the coverage discrepancies by performing a comparative analysis and by providing examples of where the consumer may be exposed. This should all be based on factual information, professional experience and real-life scenarios to ensure that no ambiguity exists.

Bearing in mind the clients, we have to take their potential for disaster into consideration. The clients are the reason we are in business and we are obligated to protect their interests. If we ignore the situation, knowing full well they could have a loss that would not be covered, we have done them a disservice.

Generally speaking, without knowing all the facts, I would contact the clients and point out the merits of my proposal. Rather than finding fault with the competitor’s quote, I would advise the clients that their policies are a contract with the insurance company.The policy requires that both parties act in utmost good faith.

All information provided to the insurance company is a condition of the policy and could affect how a claim could or could not be paid.

Nazir Haji, CIP Senior Vice President, Business Development AEGIS London The scenario raises a number of issues and is a symptom of several underlying problems. First, it is recommended the broker contact local insurance licensing authorities so they can conduct a comprehensive review of the unscrupulous broker and his past dealings. The local licensing board maintains complaints, activities and so forth.

If the board does not have anything on the broker, it would be a good time to start tracking.

Second, the broker may want to contact the unscrupulous broker’s previous employer. The end result may be that the broker has some restrictions placed on him by markets and restrictions from his E&O carrier.

52 Canadian Underwriter April 2013

Nadine Austin, FCIP Senior Investigator Complaints & Investigations Department RIBO The fundamental issue is integrity. Price and competition will always be an issue, but dishonest representation of a risk to get business is a discredit to the reputation of the industry as a whole and goes beyond a book of business under attack by a competitor.

This broker may be losing some business today, but she stands a pretty good chance of getting it back in the future if she loses it to a broker who uses unscrupulous methods. She must leave her clients with a good opinion of her and her work ethic.

So how does she get the point across to her clients without it appearing to be sour grapes?

Because the broker has been given the opportunity to review the competitor’s quotations, the broker has a moral obligation to bring possible coverage shortfalls to the attention of clients. She should write a letter to her clients thanking them for sharing the new quotation with her and highlighting the differences between the two policies. The point has been made without saying anything negative. At the same time, she has protected herself.

Next, she should let her employer know what is going on and the steps she took to safeguard her position. Her employer may have some suggestions as to how she might maintain her book of business when it is under attack.

Last, the regulatory body does want to have unprofessional behaviour reported to it. Rules of professional behaviour dictate it can be considered an act of misconduct not to report unprofessional behaviour. However, if the broker

has heard that the competitor is saying things that are not true, those allegations must be supported with proof.

In other words, the person must put into writing what he or she has heard and must agree to stand behind it when questioned by the regulator. Otherwise, the comments are hearsay and cannot be proven.

THE LAST WORD As professionals, we have a certain expectation that the people with whom we work, as well as compete against, are playing by the same rules. When it is discovered that someone is not acting in a professional way, we cannot ignore their actions, especially if those actions have the potential of harming our clients.

In this scenario, when a competing broker provides what appears to be insufficient coverage to clients, we must do our due diligence to ensure clients understand the discrepancies between the two contracts and what that means for them at claim time. By doing so, we are ensuring our clients are making informed decisions about their insurance needs, and that we have done all we can to help them protect their assets.

Although it is tempting to call out unprofessional behaviour right away (and loudly), we should understand that in many instances, it will be one individual’s word against that of another.

That is why it is doubly important to approach any such situation as professionally as possible.

We should find out all of the circumstances relating to the situation, report only the facts, and keep the focus on the well-being of clients. By doing so, we will be gaining the trust of not only our clients, but other brokers, insurance companies and the industry.

Insurance and Risk News and Information In Realtime: Property & Casualty Insurance Newswire

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John Fisher

Chairman and CEO, DMTI Spatial

Location, location, location.

The oft-repeated objective when purchasing real estate becomes critically important when the goal is to determine how location history can influence future risk.

Understanding risk from proximity to peril is essential.

Determining proximity to peril to understand and evaluate risk is innate to survival. Over time, our means and reasons for doing so have evolved from simple (not dying) to more complex.

In 1854, London physician James Snow plotted outbreaks of cholera on a city map. This was done to prove a theory that cholera was not, as previously believed, spread by “bad air,” but

54 Canadian Underwriter April 2013

rather by some shared experience local to the outbreak. The careful plotting revealed that, in this case, the issue was the communal water well dug near a cesspool.

The study represented a major event in the history of public health, geography and locationbased risk analysis.

Though the term did not exist at the time, Dr. Snow’s work was an early example of “location intelligence.” The combination of business data with geographic context, location intelligence is now all but required in the insurance industry to identify and evaluate property-based risk. Key factors in the industry include the hidden risks of proximity to bodies of water, above- and belowground fuel tanks or known contaminated sites.

These perils can result in significant future financial impact — something that can often be overlooked when evaluating a property.

Location is one of the most important factors when valuing a home. The Municipal Property Assessment Corporation (MPAC) reports location is one of the five factors that represent 85% of the value — the other four being lot dimension, living area, age of property and quality of construction. Consider that a beautiful and well-built mansion located next to a landfill is valued at 6% to 10% less than the same house located elsewhere.

Illustration by Dave Whamond/www.threeinabox.com

Pinpointing Peril

ADDRESSING ADDRESS From an insurance perspective, in addition to value, associated risk is equally important. A large component of that risk assessment is understanding the proximity of a property to peril. Being able to assess the multitude of factors affecting replacement value and risk accurately (and quickly) is key to providing underwriters with the information they require to make well-informed, timely decisions.

Leveraging location-based data Before starting to analyze a property to determine value and risk, it is necessary to have correct address information. A component of location intelligence is the leveraging of accurate and comprehensive location-based data.This means ensuring that not only is the address correct, complete and verified, but also that its exact location can be pinpointed and understood within the context of its surroundings.

It is easy to understand the costs associated with insuring a home that does not exist, or that is not as described by the applicant. Location intelligence allows for validating the existence of an address, differentiating addresses that appear to be real from those that, in fact, are real, as confirmed by multiple sources.

Accurate location also helps to verify the accuracy of the property characteristics and to detect fraud. Confirm before it is too late that the policy is actually being taken out on a twobedroom bungalow and not the condominium building across the street that has a far different value and risk profile.

Potential perils, prospective policies As an underwriter, it is necessary to be aware of where potential perils are located in relation to current or prospective policies. This plays a large part in determining both the replacement value of a property and the risks associated with it. It allows an underwriter to price policies accordingly, charging premiums that are more reflective of the potential for negative events.

This information also helps when

Leveraging comprehensive location-based data means ensuring that not only is the address correct, complete and verified, but that its exact location can be pinpointed and understood within the context of its surroundings.

considering the portfolio as a whole.

The overall risk exposure should be calculated by taking into consideration the proximity of natural and artificial environmental factors. Use accurate location information to measure accumulation, especially in areas known to be in close proximity to high-risk factors.

For instance, insuring a high concentration of properties on a street that is prone to flooding could become a prob-

2013

Canadian Association of Insurance Women 47th Annual Convention Hosted by: Manitoba Association of Insurance Professionals

June 5, 2013 to June 9, 2013 Theme: It’s All About You Being - Healthy, Wealthy and Wise Location: The Fort Garry Hotel, 222 Broadway, Winnipeg, Manitoba R3C 0R3 1-800-665-8088

EDUCATION DAY - June 7, 2013 Time:

8:30 am - 4:30 pm Registration opens at 8:00 am

Location:

The Fort Garry Hotel, 222 Broadway, Winnipeg, Manitoba R3C 0R3

Cost:

$150, includes lunch and coffee breaks

Register:

contact Beverley Emes-Macklin at bemes-macklin@mpi.mb.ca or emes-macklin@shaw.ca

• “BANISH BURNOUT” Bev Doern, Distinguished Toast Master and Business Owner - A Thought Worth Sharing • COMPREHENSIVE GENERAL LIABILITY Kevin Briscoe, Commercial Manager, Wawanesa Mutual Insurance • LESSONS FROM A CANCER SURVIVOR Shawnda Muir, Author and Keynote Speaker • REACHING YOUR CUSTOMER THRU SOCIAL MEDIA (TWITTER & LINKED-IN) James La Page, Broker Services Administrator, Manitoba Public Insurance • Including ‘Break-out’ Sessions for those who do not require credit hours: • Yoga Public • Wellness and Nutrition Established in 1966, the Canadian Association of Insurance Women (CAIW) is a national association made up of 10 member associations located in cities from across Canada. Members are professional women and men who work in the insurance industry. CAIW’s objective is to provide educational programs, a chance to network with like minded professionals and provide opportunities for personal development. For more information or to become a member, visit the CAIW website: www.caiw-acfa.com April 2013 Canadian Underwriter

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Environmental perils, however, are not as easy to detect. A policy applicant is unlikely to tell (or know) that the next-door neighbour has a buried oil tank. As such, having environmental period data built into underwriting systems can provide this insight as each new application is being processed.

lem with a fast spring thaw, leading to a lot of wet basements and high payouts for insurance organizations.

RISK UPON RISK There are literally hundreds of proximity factors that affect risk. Some of the more common ones include geographic features (water and railroads); land use (industrial sites, airports and landfill); emergency services (fire stations); safety concerns (fuel tanks and transmission lines); as well as crime statistics and a history of claims in the area.

Achieving more accurate premiums Building a model that incorporates these many factors improves the ability to accurately identify risk at the individual property level, providing a more accurate premium for each customer and generating greater insight as an organization.

One factor receiving a lot of attention of late is risk of flood.While one cannot accurately predict hurricanes or other natural disasters, factors that make flooding more likely can certainly be analyzed. Understanding the proximity of a property to a body of water is important. Combined with knowing the relative change in elevation — Is the water higher or lower than the property? — allows for implementation of flood models that help to determine probability of various nature events having an effect on the specific properties in question.

This information is especially important when one realizes that about 40% of all claims in Canada are water-related.

Environmental perils, however, are not 56 Canadian Underwriter April 2013

as easy to detect. A policy applicant is unlikely to tell (or know) that the nextdoor neighbour has a buried oil tank. As such, having environmental peril data built into underwriting systems can provide this insight as each new application is being processed. With the Insurance Bureau of Canada reporting clean-up costs related to oil spills average about

$250,000 to $500,000, it is important to have this information before the policy is priced and approved.

Knowing where and when to order an environmental assessment report saves time and money, reduces risk and, most important, offers the ability to give prospective customers answers more quickly.

Bringing together information Tying together all location-based information is the final step in providing a more accurate risk assessment. Most leading insurers have built a risk score

that incorporates a variety of factors associated with the home’s value and the risk in insuring that residence.

How those factors are weighted is the “secret sauce” of the organization, but the common elements usually include the replacement value of the property and dwelling, proximity to the types of the aforementioned perils, neighbourhood trends (like demographics and crime rates), and proximity to existing policies to see how this policy affects accumulation.

With a comprehensive, reliable and automated risk score that takes into account proximity to peril, an insurer can be more confident that it is efficiently and effectively measuring the risk to which its business is exposed.

When faced with a crowded competitive market and rate-savvy consumers, an organization needs to leverage location intelligence in order to maintain its advantage.

Location intelligence can improve process automation, resulting in faster, more accurate risk and valuation assessments. Organizations will be able to provide quicker responses to prospective customers using less manual intervention, which ultimately frees up internal resources for other important work.

Finally, by understanding proximity to peril during the initial underwriting process, an organization has a better understanding of the risk to which it is exposed and can make the appropriate pricing and policy decisions necessary to protect business interests in the long run.

To Read the Full Story for Each Press Release visit insPRESS.ca

The SPECS Blog - Storm Season is Approaching!

by SPECS (Specialized Property Evaluation Control Services) – Apr. 10 First General Canada Executive Announcement

by First General Services Canada – Apr. 9 Environmental Solutions® Remediation Services Changes Its Name to EFI Global

by EFI Global – Apr. 8 CG&B acquires Believer Plus Insurance Brokers

by CG&B Group Inc. – Apr. 5 Travelers Canada Appoints New Middle Market Vice President for Business Insurance

by Travelers Canada – Apr. 3

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by Paul Davis Systems – Apr. 1 Ian Elliott Appointed President of Granite Health Solutions

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by SCM Insurance Services – Mar. 26

Ava Marine Group Launches its New Marine Division “Bunker Detective” – First of its Kind in Canada

by AVA Marine Group Inc. – Apr. 3

Granite Claims Solutions Welcomes Jean-Marc Laurin as Senior Vice President, Quebec and Atlantic Canada

by Granite Claims Solutions – Mar. 25

Cunningham Lindsey Celebrates its 90th Anniversary in Canada

by Cunningham Lindsey Canada Limited – Apr. 2

Peter Sutton Appointed to Business Development Role at Hamilton Hospitals Assessment Centre

by Hamilton Hospitals Assessment Centre (HHAC) – Mar. 21

Burns & Wilcox Adds to Team in Atlantic Canada

by Burns & Wilcox Canada – Apr. 2

Kevin Spiers Joins Itech Environmental Services as Business Development Manager

by STRONE-Itech – Mar. 21

Insurance Industry Benefits from New Spin on Claims Support by rcv Mobile Claim Support Services Ltd – Apr. 2 FirstOnSite Restoration hits the road to demonstrate mobileCT - software to live manage and track restoration projects

by FirstOnSite Restoration L.P. – Apr. 2 National Brokerage Services relocates its headquarters to Montreal

by National Brokerage Services Inc. – Apr. 2 Disaster Kleenup Canada Ltd. Returns to its Roots; Rebrands Corporate Name to DKI Canada

by Disaster Kleenup Canada Ltd. (DKC) – Apr. 1

INSPRESS COLUMN AD.indd 1

Granite Claims Solutions turns 37

by Granite Claims Solutions – Mar. 15 Spectius Underwriting Solutions is now Canadian Reports

by Canadian Reports – Mar. 14 FIC Strengthens its Edmonton Branch with New Ace Manager

by SCM Insurance Services – Mar. 13 Pacific Marine Underwriting Managers Ltd. Welcomes Mohamed Nasser as Underwriting Manager of Eastern Canada

by Pacific Marine Underwriting Managers Ltd. – Mar. 12

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Pull to Push Dianna Fioravanti

Vice President, Sales, Distribution and Underwriting Operations, Economical Insurance

Economical Insurance is launching a pilot involving eight broker partners to test the functionality of its eDocs solution, based on the Centre for Study of Insurance Operations’ (CSIO) XML standard. The goal is to help brokers realize enhanced efficiencies by pushing declaration documents electronically to their broker management systems.

Economical Insurance has launched a pilot project with eight broker partners that use The Agency Manager (TAM), sigXP, Power Broker or The Broker Workstation broker management systems (BMSs). The goal of the month-long pilot, which runs until the end of April, is to validate the quality of the company’s eDocs solution.The next step will be to roll out eDocs to the company’s brokers across the country.

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Gone will be the days when the only option for broker partners to receive these electronic copies in their BMSs was coming to Economical’s broker extranet to “pull” policy declaration pages for downloading. With the implementation of eDocs, the company will automatically “push” broker declaration documents electronically through CSIO download to the BMS of each broker partner.

Beyond making this critical information readily available to all staff in the broker’s operations, it is anticipated the new approach will drive real cost efficiencies for broker partners.

The pilot implementation is being conducted to test the functionality of Economical’s eDocs solution, which supports broker workflows in place today. The goal is to help broker partners increase the efficiency of their operations with streamlined business processes for receiving broker declaration documents for personal lines and individually rated commercial auto.

In addition, eDocs supports the company’s sustainability practices as it moves towards turning off the print function. Brokers who elect to turn on the eDocs option will no longer receive print copies of declaration documents they receive electronically.

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Feedback from pilot brokers is critical. A dedicated specialist assigned to each broker will help gather feedback on workflow and ensure the solution is functioning as expected.

Economical’s eDocs solution will be delivered by the company’s team of dedicated broker solutions specialists, who work closely with broker partners and understand both their workflow needs and system requirements. This specialized knowledge will help foster seamless integration of Economical’s eDocs solution into brokers’ workflows.

Although a significant number of brokers asked to be part of the pilot project, the final eight selected by the company represent the four BMSs noted earlier.

End-to-end testing had been done internally with the four systems, each of which has received download certification from each BMS vendor.

The selection criteria also included the requirement for brokers to be currently suppressing print with Economical and to be using eDocs with another insurer. This ensured that the pilot involves experienced brokers, thereby allowing Economical to focus on workflow validation and integration over the course of the pilot.

Besides being electronic data interchange-equipped to download for personal lines and individually rated commercial automobiles declaration documents, the company further sought pilot brokers who were committed to providing feedback and experiencing a sufficient volume of transactions during the pilot project.

Throughout the initiative, the goal is to validate the quality of Economical’s eDocs solution. The company will not move to full implementation until the solution has been fully validated with pilot brokers in a real-world production setting.

Feedback from pilot brokers is critical.

A dedicated specialist assigned to each pilot broker will help gather feedback on workflow and ensure the solution is functioning as expected. The specialist will relay this information to the company’s business implementation leader who, in turn, will be able to ensure that any changes or issues that arise during the pilot project are quickly addressed and corrected.

FEWER TOUCHES, GREATER EFFICIENCIES It is anticipated the benefits that broker partners will realize from implementing eDocs are significant — and will be derived from a number of sources. For those who want broker declaration documents within their BMS systems, the integration saves the time that would have been spent coming to the broker extranet to retrieve the documents.With eDocs, the material is automatically pushed to broker partners, which lowers the number of touches required to get documents into the BMS. It also alleviates the need to manually file and store paper documents, scan incoming paper into electronic format and shred incoming paper copies.

This increased efficiency gives brokers the option to re-allocate staff time to more important and potentially revenue-generating tasks.

There is time and cost savings for insurers, as well. As insurers work towards eliminating printing personal lines broker declaration documents, they will collectively be making significant reductions in paper consumption, which is good for the environment.

In the event there is some electronic issue and a transferred document is lost,

there are several options for brokers to receive their documents. Brokers can do the following: • “pull” the document(s) from the broker extranet; • request a re-issue of the document which, in turn, would be sent via the next eDocs download delivery; or • re-print the document.

For those brokers who continue to request printed declaration documents, change management is the key. Over the coming months, Economical’s broker solutions specialists will work closely with these brokers to educate them on how eDocs can enhance efficiency of their business operations by removing paper-based tasks.

It is important for brokers to adopt this solution for two main reasons: the first is to drive cost out of broker operations and to improve customer service; the second relates to insurers and BMS vendors.

Industry players have worked collaboratively — led by brokers themselves — to identify the need for eDocs. From there, CSIO standards and an agreedupon workflow were developed.

Understanding the initiative’s importance, many carriers and vendors put aside other priorities to develop this functionality, which clearly supports an independent broker channel.The next step is for brokers to implement that functionality.

Customers today have high expectations with regard to the speed and quality of service they receive. For brokers to remain competitive, they need immediate access to information while controlling the number of touches required to get that information.

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SOLID Investment Technology offers potential solutions for property and casualty insurers looking for ways to build profitable Michael Costonis growth. But technology also Managing Director, presents challenges, making Accenture Property it critically important that and Casualty companies pursue the right Insurance Services investments in claims systems and organizations.

Darren Nippard Managing Director, Accenture’s Insurance Practice in Canada

Multiple factors challenge property and casualty insurers as they search for profitable growth, including changing consumer expectations, the explosion of structured and unstructured data, and continuing demands from management and shareholders to deliver better claims outcomes.

Throughout North America, insurers’ claims operations are trying to cope with these changes using workforces that are, in many cases, smaller than they were before the 2008 financial crisis.

60 Canadian Underwriter April 2013

Claims teams are also dealing with changing types of risk — from the growth of cybercrime and organized fraud to the increase in the frequency and severity of natural events.

While technology offers potential solutions to these problems, it poses its own challenges as insurers try to maintain maximum flexibility and adaptability. In such an environment, making the right investments in claims systems and organizations will be critical for property and casualty insurers.

To gauge insurers’ attitudes toward investing in claims, Accenture conducted quantitative survey research with 50 C-level claims executives in 2012. As the company had anticipated, most insurers agree on the lack of modernity and flexibility of their claims management systems, especially in terms of allowing change in system behaviours and business processes and in addressing consumers’ evolving needs. The p&c insurers surveyed expect to spend considerable amounts of money — $17.5 million on average over the next three years — to upgrade and modernize their claims functions.

CHANGE ADAPTABILITY Most insurers agree that their claims systems lack the modernity and flexibility to allow change in systems’ behaviours and business processes, as well as to address the evolving needs of consumers. For example, 40% of respondents answered “not at all” when asked if their claims management system was modern and flexible enough to allow change in systems behaviour and business processes without intervention from the IT department, and another 43% said the system was able to do so only to some extent. Only 17% of respondents noted their systems could allow such change “to a great extent.”

Similar concerns about preparedness appeared in regard to insurers’ ability to meet consumers’ evolving needs. More than one-fifth (21%) of insurers reported that their systems were not at all prepared to do so, while almost twothirds (64%) said their systems could

meet such needs only to some extent.

Only 15% of respondents rated their systems as ready to a great extent to meet consumers’ evolving needs.

These concerns were amplified for p&c insurers with older core claims systems. Insurers with core claims systems over five years old — more than half of the survey sample — saw themselves as much less able to deal with the problems of responding to changes in business processes, addressing consumers’ evolving needs, integrating with other systems and allowing changes in systems behaviour and business processes without IT intervention. Nearly half (48%) of insurers with core claims systems more than five years old said their system was not at all able to allow such changes without IT intervention.

TRENDING NOW While the survey highlighted insurers’ concerns about their claims systems’ modernity, flexibility and ability to deal

with consumers’ evolving needs, it also identified three broad priorities for future investment: core claims system modernization and replacement; analytics capabilities; and workforce improvement.

1. Core Claims System Modernization and Replacement Core claims system modernization is p&c insurers’ first investment priority.

Currently, these insurers rely on multiple applications to process claims: half have between two and four applications and one-third have over five. A little more than half (54%) of respondents said they have a core claims system that is more than five years old.

Nearly eight in 10 (78%) respondents reported that they were on an upgrade path for their core claims system; 8% said such an upgrade was under discussion; and 12% said no such investment was planned.This was a particularly high percentage given that 36% of respondents noted that their last major core claims system upgrade took place in the

Brian G. Main

Vice President Insurance Operations at HIROC

1950 - 2013 Brian Main, HIROC’s Vice President of Insurance Operations, passed away on February 14, 2013. He was 63.

Brian joined HIROC in 1994 as Managing Director of HIROC’s Brokerage. When the Brokerage and the Reciprocal’s underwriting department were combined several years later, he was promoted to Vice-President, Insurance Operations. Brian was passionately committed to the growth of the organization, making his mark with the successful development of HIROC’s property and other insurance programs.

With his high moral standards, Brian could always be counted on for his caring and honest approach with clients.

Brian was equally dedicated to the professional development of his employees. He made it a point to meet regularly one-on-one with staff, talking to them about their jobs, as well as life outside work. Even as his management duties grew, Brian never stopped being a valuable mentor and resource to his staff.

A cancer diagnosis several years ago didn’t diminish Brian’s vigour. He continued to work while undergoing treatment and travelled extensively with his beloved wife Rita to Australia, New Zealand, Japan and Hawaii.

We will remember Brian as a wonderful colleague and exceptional leader who inspired us all with his humility, sense of humour, curiosity, and deep and abiding interest in his profession.

A memorial website has been set up to remember Brian: www.rememberingbrianmain.weebly.com.

If you wish to contribute a story, pictures or a message of condolence, please email pdesouza@hiroc.com.

April 2013 Canadian Underwriter

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CU Seminar ad April 2013_Layout 1 13-03-19 9:45 AM Page 1

Putting the pieces together.

Events and Seminars Calendar You work hard to protect your clients’ property. Now, it’s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.

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St. John’s – Spring Fling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 9

Ottawa – Demographic Research . . . . . . . . . . . . . . . . . . . . . . . . . . April 30

Halifax – Spring Fling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 23

Vancouver – Class Action Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . May 9

Calgary – Battle of the Insurance Bands . . . . . . . . . . . . . . . . . . . . . . . May 23

Toronto – The New Tort Relating to Invasion of Privacy . . . . . . . . . May 9

Vancouver – 11th Annual Golf Tournament . . . . . . . . . . . . . . . . . . . . . May 24

Toronto – Income Loss Calculations for Personal Injury Claims . . . . May 9

Toronto – Annual Fellows’ Golf Tournament . . . . . . . . . . . . . . . . . . . . June 10

Calgary – Competing Beyond Price with Jeff Mowatt . . . . . . . . . May 14

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last year, and another 33% said that such an upgrade had taken place in the last two to three years.

New options for core claims systems, such as cloud computing and software as a service (SaaS), are rapidly gaining credibility. One in five (20%) insurers plan to migrate claims to the cloud or a SaaS model in the next two years, and these options could be an alternative for another 26% of insurers polled.

An equal percentage of larger (net premiums written above US$500 million) and smaller (net premiums written below US$500 million) insurers are planning to migrate claims to cloud or SaaS models in the next two years, but a higher percentage of larger insurers are considering doing so in the future (36% of larger insurers versus just 16% of smaller insurers).

2. Analytics Capabilities Despite the enormous potential of analytics for p&c insurers, two-thirds (66%) of respondents cannot take full advantage of the growing volume of data available for claims management due to their inability to collect and analyze data.

Without the ability to collect and analyze the growing volume of data available — including insights about consumers from social media, usage data collected by means of telemetry and GPS, and asset damage records collected by millions of RFID devices — insurers are unable to take advantage of this information to refine and improve claims management.

A full 80% of insurers reported using offline data obtained from Excel spreadsheets and Access databases, and 74% said that they used structured data commonly found in the core claims system in the claims process. Nearly two-thirds (62%) use unstructured data such as voice, text, pictures and video. Substantial minorities of insurers currently use social media (40%), predictive models (34%) or location based-data (34%) in the claims process, but this share should increase in the future based on the num-

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ber of insurers who said they would like to do so (20%, 32% and 20%, respectively).

3. Workforce Improvement The claims workforce was the target of some of the extensive cost-cutting that took place in response to the financial crisis of 2008. While insurers were reducing their claims workforce, many of their most experienced claims professionals are also at, or near, retirement age.

As a result, increasing the size as well as enhancing the skills of the claims workforce is a top priority for p&c insurers.

More than two-thirds (68%) of respondents are either actively hiring or planning to hire claims professionals.

Insurers with core claims systems more than five years old saw themselves as much less able to respond to changes in business processes, addressing consumers’ evolving needs, integrating with other systems and allowing changes in systems behaviour and business processes without IT intervention.

Recruitment of these individuals will take place among competitors (82%), at universities (70%) and among other industries outside of insurance (48%).

Among the companies actively hiring claims professionals, 26% are facing problems in hiring, with claims-handler positions being the most difficult to fill, followed by claims supervisors and customer service representatives.

More than half (59%) of the insurers surveyed see hiring or training customer service professionals as a top priority to address customer needs. Among other programs to improve customer service and satisfy customer needs, insurers cited

creating or deploying mobile applications for customers (57%); building digital customer profiles available for claims professionals during claims-transaction handling (45%); and undertaking initiatives focused on improving net promoter scores (43%) and those focused on improving JD Power claims satisfaction scores (30%).

NEW FOUNDATION FOR ANALYTICS While the insurers in Accenture’s survey expressed a willingness to invest in improving claims performance by improving technology, they must do so with a “foot in today and a leap into tomorrow.” They must meet current needs, but anticipate those of the future by preparing themselves for harnessing data and enabling customers.

Importantly, p&c insurers should be thinking about data collection and management as the foundation for advanced analytics. Analytics opens up a world of possibilities in claims, but only for those insurers able to collect and organize the vast quantities of data coming in from new sources, such as social media, telemetry and GPS. While there is no doubt many claims functions are under-staffed, there is also a need to rethink the role of the claims professional. Claims professionals armed with ready access to relevant information can play a central part in meeting customers’ expectations for rapid resolution and a positive overall experience.

As survey results indicated, p&c insurers will invest considerable sums in upgrading or replacing core systems.

Core systems upgrades, though, should be implemented with an eye to the future, allowing for maximum flexibility and for rapid changes in systems behaviour and business processes, preferably without costly, time-consuming IT intervention.These actions should be part of a rational approach to the entire claimsoperating model — including technologies, processes and people — in order to fully unlock the value in claims.

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MOVES & VIEWS UPCOMING EVENTS: FOR A COMPLETE LIST VISIT

www.canadianunderwriter.ca

AND CLICK ‘MY EVENTS CALENDAR” ON THE HOME PAGE

1

Scott Tannas [1], founder, president and CEO of Western Financial Group, has been appointed to the Senate, filling the vacancy left by Bert Brown, who is retiring. Tannas’s “strong business background and deep knowledge of Alberta are sure to benefit the Senate,” Prime Minister Stephen Harper says in a statement. Western Financial Group reports the company has begun its transition plan, including finding a successor for Tannas. A new president and CEO, expected to be named by Labour Day, will be able to work with Tannas for the last few months of 2013.

Tannas will remain president and CEO until December 31, after which he will become vice chairman and hold the title of company founder.

Tannas founded Western Financial Group in 1996, a subsidiary of Desjardins Group since 2011.

2

Economical Insurance of Waterloo, Ontario has named Elizabeth (Betty) DelBianco [2] to its Board of Directors. DelBianco, chief legal and administrative officer for Celestica Inc., replaces David MacIntosh, who had served as chairman of the board’s pension and investment committees.

DelBianco has extensive experience in executive compensation, public company

64 Canadian Underwriter April 2013

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compliance, securities and mergers and acquisitions, Economical reports. She is on the board of the Information Technology Association of Canada and is called to the bar in Ontario and New York.

DelBianco was welcomed “as we continue to prepare to be the first Canadian property and casualty insurance company to demutualize,” notes Economical chairman Gerald Hooper. “Demutualization will put us on a level playing field to thrive in a consolidating industry. We will gain access to capital that will give us the ability to make significant acquisitions as well as strategic investments in tools and processes that will improve our productivity and the level of support we provide our broker partners who help generate our business.”

3

Peel Mutual Insurance Company in Brampton, Ontario reports that John Lockwood [3] is its new president and CEO. Most recently vice president of claims for the property and casualty carrier, Lockwood was to take the helm April 1. He has been president and CEO designate since March 4 and replaces Brian Bessey, who is retiring.

4

Several companies in the property and casualty industry have made Deloitte’s list of Canada’s 50 Best Managed Companies.

Among this year’s recipients was Toronto’s FirstOnSite Restoration. “Over the years, we have strived to meet our commitment to excellence in customer service, employee

engagement and innovation at every touch point,” says company CEO Dave Demos [4a].

STRONE of Oakville, Ontario was also honoured. Neil Blinco, co-CEO of marketing and sales, acknowledged “our people and their dedication to our vision of ensuring STRONE continues to set and maintain a position of leadership within the disaster recovery and restoration industry.” TU Group, which includes Travel Underwriters in Canada, also made Deloitte’s picks as a first-time applicant. “We’ve been innovating and evolving in the travel insurance industry for 49 years,” says Patrick Robinson [4b], group president and CEO. Cambridge, Ontario-based brokerage Cowan Insurance Group also made the list. President Heather McLachlin [4c]

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MOVES & VIEWS

4a

4b

6 10 praised “the calibre of talent we have within our organization” and “their unwavering commitment to put our customers at the centre of all we do.” Among the requalified winners (have made the list for two consecutive years) were CARSTAR Automotive Canada Inc. and CarProof.

5

CNA Canada reports that Michael O’Connor [5] has been named the company’s vice president of underwriting. At CNA, O’Connor has held several positions, including as senior underwriter, branch manager in Montreal, and assistant vice president of marine underwriting, and served in a specialty/casualty role. He previously worked for Kemper Canada and Chubb Insurance.

The Guarantee Company of North America has partnered with IDT911 Inc. in Scottsdale, Arizona. The insurer now offers several privacy risk services to corporate policyholders though IDT911, such as helping victims of a privacy breach avoid fraud and identity theft.

IDT911 will also provide the insurer’s clients with project management to mitigate costs that might be incurred as a result of a privacy breach. “This is an area of growing exposure for corporations and particularly for members of Boards of Directors,” says Alister Campbell, CEO of The Guarantee.

7

Joyce Usher-Mesiano [7], president of National Brokers Insurance Services Inc. and Monarch Intermediaries Inc. in Mississauga, Ontario, is among the recipients of the Enterprising Women of the Year Award for 2013, presented by the U.S. publication, Enterprising Women. Nominees are judged based on, among other things, leadership exhibited in their

communities and/or at the state, national or international levels. Monarch Intermediaries, launched by Usher-Mesiano after her sister’s battle with cancer was influenced by a second opinion, offers patients, employees of businesses and customers of insurers and financial institutions quick and easy access to second opinions from medical professionals and academic health care institutions. Among other things, she is chair of the Waterloo Insurance Advisory Council and a member of Economical Insurance’s National Council.

8

RSA has announced its upper mid-market, large domestic, complex, multinational and specialty risks business will now operate under the collective title of Global Specialty Lines (GSL).

The GSL leadership team includes the following: Bernard McNulty, vice president of underwriting for GSL; Tony Hayes, vice president of sales and marketing for RSA; Paul Lucarelli, vice president, Ontario for GSL; Chris Short, vice president, West for GSL; Rosalind Staples, vice president, Atlantic for RSA; and Glen Bates, vice president, Quebec for RSA.

9

University Park, Illinoisbased Applied Systems Inc. has announced it has agreed to acquire the

property and casualty business of IVANS Inc., a data exchange solution provider based in Stamford, Connecticut, for an undisclosed amount. IVANS P&C will operate as a separate business division of Applied Systems, led by Jim Ochiltree, current president of IVANS P&C, and its existing senior management team. Applied Systems will maintain and invest in IVANS’ open platform and integration with all carriers and agency management systems in the marketplace.

It is expected the transaction, which is subject to customary conditions, will be complete during the first half of 2013.

10

The Guy Carpenter Professorship in Agriculture Risk Management and Insurance has been created at the University of Manitoba. Made possible through a $750,000 gift from Guy Carpenter, the professorship is located in the Warren Centre for Actuarial Studies and Research, part of the University of Manitoba’s I.H. Asper School of Business in Winnipeg. Lysa Porth, Ph.D. [10] started her role in the professorship February 1. Dr. Porth’s research covers topics ranging from crop insurance to price insurance, business interruption insurance and weather insurance.

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April 2013 Canadian Underwriter

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Hamilton Hospitals Assessment Centre (“HHAC”), one of Ontario’s leading, hospital-based providers of independent medical evaluation services, has announced that Peter Sutton has been appointed to lead its business development and quality control initiatives. In this role he will be responsible for expanding and strengthening relationships between insurance company personnel and the HHAC team of medical evaluation professionals.

HHAC manager Christine Pook said, “Peter brings a unique combination of expertise and understanding to this role. He is widely recognized within the auto insurance sector for his expertise as an accident benefit and bodily injury claims adjuster and for the services he provided as part of a team that successfully built and operated an IME business. Peter’s link with that business ended two years ago when he sold his share.”

According to Pook,“the industry-wide slow-down in IME referrals since the introduction of new legislation in 2010 has not diminished HHAC’s focus on expanding its share of the entire Ontario independent medical evaluation market. Our goal has been and remains the delivery of defensible, highquality medical evaluation services and standards of reporting provincewide. We work with an impressive roster of credentialed clinicians and we have achieved one of the lowest no-show levels in our industry.”

Peter can be contacted at Tel: 905-388-1035 or 1-800-663-0423 email: sutton@hhac.on.ca About Hamilton Hospitals Assessment Centre Since being formed in 1990, the Hamilton Hospitals Assessment Centre (HHAC) has provided credible, defensible and high quality medical assessment services to auto and disability insurance companies, the Workplace Safety and Insurance Board, public and private employers, and the legal profession. Clients are provided a reliable framework for determining the right benefit, at the right time, and for the right cost.

HHAC’s team of leading clinical specialists and its commitment to bestin-class assessment techniques makes its operation unique within the IME sector. Its services include quick access to timely specialty testing, diagnostic services, and complex assessment procedures. A unique aspect of their operation is that revenues generated from its services are reinvested into the public hospital system to support patient care and research. www.hhac.on.ca

66 Canadian Underwriter April 2013

Ronald McDonald House Charities Canada hosted the 28th Annual National Ski Challenge at Mt. Tremblant, Quebec on Feb. 4-5. With the support of 252 skiers, suppliers and sponsors, over $165,000 was raised in support of Ronald McDonald House families across Canada. The insurance industry put forward a strong contingent of teams once again for the annual event. According to the insurance industry organizer for the event, Cedric Gyles, senior vice president & director, Risk Management

Practice at Aon Reed Stenhouse, industry teams from various sectors of the insurance market, while not winning the flight trophies this year, dominated the runnerup placings in most of the flights and contributed their share to the après. With the backdrop of displaying the corporate logos, special recognition was given to the insurance industry at the Awards Dinner to offer thanks from the organizers for the industry participants’ contribution in helping to make the Challenge a success.

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GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

WICC BC held a Valentineâ&#x20AC;&#x2122;s Lunch fundraiser at Vancouver pub Mooseâ&#x20AC;&#x2122;s Down Under, raising $4,006.50 towards the fight against cancer. 200 insurance industry professionals attended the event.

April 2013 Canadian Underwriter

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Mohamed Nasser assumed duties effective March 4th as the Underwriting Manager of Eastern Canada with Pacific Marine Underwriting Managers Ltd. Over the past 8 years he has held the title of Senior Underwriter among a range of capacities with a major marine MGA. His duties included marketing, educating, supervisory and underwriting.

Mohamed has achieved his CIP, CRM, AMIM (Associate Marine Insurance Management, USA) and is a candidate for Fellowship of the Insurance Institute.

He will be instrumental in enhancing services to brokers in Eastern Canada. “Mohamed brings years of experience as one of Ontario’s favorite marine underwriters. I couldn’t be more excited for the future of Pacific Marine”, claims Andy Friyia, VP Eastern Canada. “I have been looking forward to making a major move since I took over the eastern operation and I know we have achieved that with this valued addition to the team”.

Pacific Marine is a licensed marine MGA underwriting pleasure craft in Canada for over 50 years. Security provided by CNA, one of Canada’s largest marine insurers.

Mohamed’s contact information: Phone: 416-607-7087 Cell: 519-619-1605 mnasser@pacificmarine.ca

www.pacificmarine.ca/ontario

68 Canadian Underwriter April 2013

CMW Insurance Services Ltd., an insurance brokerage based in Vancouver, recently welcomed its insurer partners to an Old Hollywood-themed cocktail party to thank them for their continued business.

The Oscar-worthy thank-you was held on Feb. 28, 2013 at the Villa Amato Ballroom. As guests enjoyed “casaBLANCa” martinis, they were treated to VIP sightings of Elvis Presley and Marilyn Munroe mingling with the guests!

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GALLERY See all photos from this event at www.canadianunderwriter.ca/gallery

The Canadian Insurance Claims Managers' Association (CICMA) Ontario chapter held its general meeting Mar. 6 at the Ontario Bar Association conference centre in Toronto. Ron Bouwmeister, vice-president of Lindsaybased Farmers Mutual Insurance Company and a former CICMA Ontario chapter president, was presented

with the CICMA Award of Merit in recognition of outstanding and valued service to the association. After the formal portion of the meeting, four speakers talked about the use of computer software to detect fraud in auto claims. They were: Karin Ots, senior vice president of regulatory and government relations, claims and customer service operations at

Aviva Canada; Elizabeth Kepes, section manager for claims and investigations at Desjardins General Insurance Group; Steve Turner, national manager for RSA Canada's special investigations unit; and Neil Ringwood, vice president of consulting at computer service firm CGI Group Inc. The CICMA Ontario chapter holds four meetings per year.

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GALLERY

Over 400 attendees enjoyed a fun night of live music, refreshments and appetizers at Grace O’Malley’s Irish Pub for the

4th Annual St. Patrick’s Day Charity Social on Mar. 14, 2013. Event sponsors Forensic Investigations Canada, ClaimsPro, CIRA Medical Services,

RMS and OPTA hosted insurance industry partners and associates in an effort to raise funds for the Juvenile Diabetes Research Foundation.

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0DULO\Q +RUULFN Alister Campbell, CEO, The Guarantee Company of North America (The Guarantee) is pleased to announce the appointment of Marilyn Horrick as National Vice President, Guarantee GOLD® effective February 19, 2013.

In this role, Marilyn will be accountable for all aspects of product, underwriting, branding, distribution, and supporting strategies to position Guarantee GOLD® for accelerated profitable growth, while ensuring exceptional customer experience and efficient business interactions with our GOLD partner brokers.

Over the past 20 years, Marilyn has held positions of increasing seniority within the property-casualty insurance industry, most recently as Assistant Vice President, Strategic Initiatives and Communications Manager for the Canadian Operations of a major insurance company.

She brings a depth of experience in the sector focused on high net worth individuals with specialized knowledge in the areas of product development, broker and customer facing communications and marketing, strategic pricing, operations and compliance, underwriting, and technology solutions for companies, brokers and their clients.

Marilyn is a graduate of Concordia University with a BA in Communications, and is an active Director on the WICC Ontario Board (Women in Insurance Cancer Crusade).

Since 1872, The Guarantee has been a leader in specialty insurance within the North American marketplace and has earned a prominent reputation for providing specialized insurance products, supported by a depth of knowledge and expertise in niche segments including contract and commercial surety, directors’ & officers’ liability, fidelity and personal insurance targeted at high net worth individuals through Guarantee GOLD®.

2012 marked the 140th anniversary of The Guarantee, a testament to the company’s long term dedication to product expertise, industry knowledge and strong partner relationships.

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+XH 1JX\HQ Claude Blouin and Jamie Dunn, Partners at Blouin Dunn LLP, are extremely pleased to announce that Hue Nguyen has joined the firm as an associate lawyer.

Hue received her Bachelor of Arts (Honours) degree in History from Queen’s University in 2007 and obtained her Juris Doctor at Osgoode Hall Law School in 2010. She was called to the Ontario Bar in 2011 Hue’s practice focuses on several areas of insurance litigation including personal injury, occupiers’ liability and disability insurance. Prior to joining Blouin Dunn, Hue practiced at a Toronto personal injury law firm where she gained valuable insight and experience in personal injury litigation.

Hue is currently a member in good standing of the Law Society of Upper Canada, the Advocates’ Society, the Ontario Bar Association, the Canadian Bar Association, Canadian Defence Lawyers and the Federation of Asian Canadian Lawyers.

Outside of work, Hue enjoys travelling, hot yoga, spinning, volleyball and trying new restaurants.

Hue’s contact information is: hnguyen@blouindunn.com (416) 365-7888 ext. 163 Blouin Dunn is one of Ontario’s leading insurance defence firms whose members have been providing quality legal support to the insurance community for over 30 years.

We offer services in Ontario to property and casualty insurers throughout North America, at all levels of experience, at appropriate and competitive rates.

www.blouindunn.com

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Those attending the Ontario Risk and Insurance Management Society’s (ORIMS) Professional Development Day on Mar. 19, in Toronto were treated to a full slate of information sessions.

A mock trial on a case involving transportation law, presented by “players” from McCague Borlack LLP, kicked off the day. The ORIMS PD Day also offered plenary speaker Brian Lambie and three specific tracks — legal risk issues, insurance risk issues and business risk issues — featuring topics ranging from privacy issues to legislation updates, cyber insurance, business continuity and climate change.

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The Ontario Mutual Insurance Association (OMIA) held its 131st annual meeting as part the annual convention on Mar. 20-22, in downtown Toronto. The convention offered a mix of information and fun. Attendees had an opportunity to hear presentations by General Rick Hillier, former chief of the defence staff for Canadian Forces, and personal finance expert Patricia Lovett-Reid, as well as attend concurrent sessions on an array of topics of interest to the industry. There was also a bit of fun at OMIA’s annual banquet, which featured Eddy & The Stingrays.

4PJOHLS 6»*VUUVY Gary Owcar, President and C.O.O of CNA Canada, is pleased to announce the recent promotion of Michael O’Connor to the position of Vice President, Underwriting.

Michael has been with CNA Canada for over 8 years, and started his career with CNA as a Senior Underwriter in Toronto.

In 2007, Michael was promoted to Branch Manager, Montreal, and relocated with his family to Montreal. He returned to Toronto in 2009 to lead a team of marine underwriting professionals as AVP, Marine Underwriting until moving into the AVP, Specialty/Casualty role in April, 2010. Prior to joining CNA, Michael spent several years working with Kemper Canada and Chubb Insurance Co. as a Senior Underwriter Serving businesses and professionals since 1897, CNA is one of the largest North American commercial property and casualty insurance companies and has strong financial ratings from A.M. Best, Moody’s and Standard & Poor’s with stable rating outlooks. CNA’s insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages.

CNA’s services include underwriting, risk control and claims administration.

CNA is a registered trademark of CNA Financial Corporation. Copyright © 2013 Continental Casualty Company. All rights reserved. For more information, please visit www.cnacanada.ca

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Beach & Associates hosted their 6th Annual St. Baldrick’s event on Thursday Mar. 21, raising spirits, hope and funds towards childhood cancer research. Beach & Associates has been proud to be part of this event since 2007, when president Jonathan Beach raised over $50k to shave his head at an event in New York. In 2008, Beach & Associates were the first group to organize an event in Canada – and including this year’s event, $390k in funds has been raised in support of St. Baldrick’s.

In Canada, St. Baldrick’s has partnered with the Childhood Cancer Canada Foundation –Canada’s leading foundation dedicated entirely

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to the fight against childhood cancer. Childhood Cancer Canada’s mandate is to raise funds for research, and to provide support and programing for children with cancer and their families. On March 21, the following individuals participated and together raised $65,000 towards childhood cancer: Lisa Rutherford – Beach & Associates; Chris Rain – Arch Canada; John Brienesse – LIU Canada; Ken Mok – Guy Carpenter; Erick Carreon – Swiss Re; John Tung – AXIS Canada. Special thanks to Lisa Rutherford who surpassed her goal of $35,000 and is now the reigning female St. Baldrick’s top fundraiser in Canada!

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Lambert Morvan Chief Underwriting Officer Northbridge Financial Corporation

Silvy Wright, Chief Executive Officer of Northbridge Financial Corporation, is pleased to announce the appointment of Lambert Morvan to the position of Chief Underwriting Officer.

Lambert has been with the Fairfax family of companies for over twelve years and was most recently with Odyssey Reinsurance Company as their Senior Vice President & Chief Agent. He has over seventeen years of experience in the insurance industry and is a fellow of both the Casualty Actuarial Society and the Canadian Institute of Actuaries.

As the Chief Underwriting Officer, Lambert will have oversight over the corporate underwriting and actuarial teams and will play an important role in supporting Northbridgeâ&#x20AC;&#x2122;s growth strategies by ensuring we continue to build on our underwriting and pricing capabilities.

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On Mar. 21, Quebec's RIMS chapter, QRIMA hosted a conference on the latest development of Cyber Risk, attended by the leading players within the Montreal region. Risk managers, insurers, lawyers and claim adjusters listened to Ben Beeson from Lockton Companies in the UK and Alexis Heroux from BFL Canada speak of Cyber Risk in general, with an emphasis on the liability regarding data breach. The conference was held along a short mixer and a lunch at the St-James Club of Montreal.

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,DQ (OOLRW SURPRWHG WR 3UHVLGHQW RI *UDQLWH +HDOWK 6ROXWLRQV Murray Wallace, CEO of Granite Global Solutions today announced that Ian Elliott has been promoted to President of Granite Health Solutions (GHS) effective April 1, 2013. He has been Chief Operating Officer of GHS since October 2012.

Granite Health Solutions is Granite Global Solutions’ Health and Disability Management Division. GHS operates in the marketplace under the separate Sibley, TRM, and MDAC brands.

Ian is responsible for all operations at GHS including setting the strategic goals for the organization and committing the company to the high quality standards of ISO 9001:2008.

After graduating from the University of Western Ontario as a Physiotherapist, Ian worked in private practice before joining Sibley & Associates in 2002. In addition to his solid background in the health, wellness and medical fields, Ian has a Masters in Business Administration from the Richard Ivey School of Business. Prior to this appointment Ian managed the operational growth of GHS and the quality assurance of over 1000 medical professionals. He is an active member of both the Ontario and Canadian Physiotherapy Associations.

“Ian is ideally qualified to lead the GHS team in meeting the business challenges as the marketplace for GHS’ services changes”, said Wallace. “Ian’s experience enables him to understand both the needs of the patient and the client, and to provide excellent and measured quality.”

About Granite Health Solutions Granite Health Solutions is a single source solution to insurers, employers, government organizations, and legal firms on disability issues.GHS provides fully-integrated solutions to prevent, manage and resolve client injury or illness no matter where the disability issues fall along the healthcare continuum. www.graniteglobalsolutions.com

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INSURANCE INTERNET DIRECTORY ASSOCIATIONS Canadian Independent Adjusters' Association (CIAA) "The voice of Independent Adjusters in Canada" www.ciaa-adjusters.ca Honourable Order of the Blue Goose—Ontario Pond Our fraternal organization has been dedicated to fellowship and charity since 1908. www.bluegooseontario.org The Insurance Institute of Canada The professional educational arm of the industry. www.insuranceinstitute.ca Risk & Insurance Management Society Inc. Dedicated to advancing the practice of effective risk management. www.rims.org

CLAIMS ADJUSTING FIRMS ClaimsPro Inc. Committed to providing leading-edge claims management services. www.scm.ca Crawford & Company (Canada) Inc. Enhancing the customer experience, every day. www.crawfordandcompany.com

PCA Adjusters Limited Adjusting to Meet your needs™ www.pca-adj.com

GRAPHIC COMMUNICATIONS Quelmec Loss Adjusters Identifying, Investigating, Resolving... for over a quarter century! www.quelmec.ca

Cunningham Lindsey International independent claims services. www.cunninghamlindsey.com Kernaghan Adjusters Doing What Is Right®. www.kernaghan.com Granite Claims Solutions Global Adjusters and Marine Surveyors www.graniteclaims.com

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Informco Inc. Integrated Graphic Communications Specialists. www.informco.com

INSURANCE SOFTWARE APPLICATIONS Kanetix Ltd. - SAAS Division We provide corporate clients with fast & reliable insurance quoting systems, web services, web systems and hosting. www.kanetix.ca/about_dev_services

INSURANCE COMPANIES CONSULTING FIRMS Cameron & Associates Insurance Consultants Ltd. Insurance & Risk Management Consultants. www.cameronassociates.com Keal Technologies Complete technology solutions for insurance brokers. www.keal.com

CONSTRUCTION CONSULTANTS MKA Canada, Inc. Providing creative solutions to the Construction, Legal and Insurance Industries. www.mkainc.ca

DAMAGE COST CONSULTANTS SPECS Ltd. (Specialized Property Evaluation Control Services) Providing Innovative Solutions to Control Property Claim Costs www.specs.ca

EMPLOYMENT ONLINE CRU Adjusters Calm in the face of a storm. www.cruadjusters.com

complex engineering incidents. www.waltersforensic.com

I-HIRE.CA Canada's Insurance Career Destination. www.i-hire.ca

ENGINEERING SERVICES Giffin Koerth Forensic Engineering and Science Investigate Understand Communicate www.giffinkoerth.com Rochon Engineering Inc. Forensic Consulting Engineers & Code Consultants. www.rochons.com Walters Forensic Engineering Inc. Providing scientific answers to

Aviva Canada Inc. Home Auto and Business Assurance. www.avivacanada.com Catlin Canada Underwriting Ambition. www.catlincanada.com Chartis Insurance Company of Canada Your world, insured. www.chartisinsurance.com FM Global The leader in property loss prevention. www.fmglobal.com Grain Insurance and Guarantee Company Commercial Lines Underwriters www.graininsurance.com RSA Leading car, home and business insurer. www.rsagroup.ca Sovereign General Insurance Company of Canada Since 1953 www.sovereigngeneral.com The Guarantee Company of North America “Specialized insurance products...professional service” www.gcna.com

Keal Technologies Complete technology solutions for insurance brokers. www.keal.com

REINSURANCE Guy Carpenter & Company The world’s leading reinsurance intermediary. www.guycarp.com Munich Reinsurance Company of Canada Complete reinsurance coverage from Canada’s largest reinsurer. www.mroc.com Swiss Reinsurance Company Canada The leading P&C reinsurer in Canada. www.swissre.com Transatlantic Reinsurance Company For all your reinsurance needs. www.transre.com

RESTORATION SERVICES Winmar Property Restoration Specialists Coming Through For You! www.winmar.on.ca

RISK MANAGEMENT

Wawanesa Insurance Earning your trust since 1896. www.wawanesa.com

The ARC Group Canada Inc. Your Partner in Insurance Law and Risk Management. www.thearcgroup.ca

INSURANCE LAW

SPECIALTY INSURANCE

The ARC Group Canada Inc. Your Partner in Insurance Law & Risk Management. www.thearcgroup.ca

William J. Sutton & Co. Ltd. Insuring Special Risks since 1978 www.wjsutton.com

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On Mar. 20, the Insurance Brokers Association of Durham Region hosted a luncheon at the Oshawa Golf & Curling Club with guest speaker Alister Campbell from The Guarantee Company of North America. Campbell engaged an audience of over 50 Durham Broker affiliate members with his insights on ‘Innovating and Winning in a World of Change’.

ADVERTISERS’ INDEX ACE INA Insurance The ARC Group Applied Systems Canada, Inc. Aviva Canada Inc. Blouin, Dunn LLP Burns & Wilcox Canada CAIW Canadian Underwriter e-News Daily CNA Canada DAS Canada DSB Claims Solutions Ecclesiastical Insurance Group Elliot Special Risks First General Services Canada Granite Global Solutions The Guarantee Company of North America Hamilton Hospitals Assessment Centre (HHAC) HIROC insPRESS.ca Insurance Institute of Canada Insurance Internet Directory The Insurance Marketer inswire.ca Keal Technology Northbridge Insurance Pacific Marine Underwriting Managers Ltd. RIMS Canada Conference 2013 – Victoria RSA – Royal & Sun Alliance Insurance Company of Canada The Sovereign General Insurance Company SUM – Strategic Underwriting Managers Inc Totten Insurance Group Travelers WICC WINMAR Wawanesa Insurance XL Insurance

7 21 15 83 (IBC) 72 35 55 70 31, 73 13 79 27 17 51 77 29, 71 66 61 49, 57 5, 41, 62 78 76 53 37 75 68 43 2 (IFC) 39 25 67 23 45 47, 69 84 (OBC) 19

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Insurance industry technology provider Applied Systems held the launch of its broker management system Epic 7.0, available in Canada for the first time, on April 3, 2013. Dozens of brokers and members of the P&C industry gathered at the National Club in downtown Toronto to hear a presentation from various speakers on the benefits of the companyâ&#x20AC;&#x2122;s latest BMS. Jeff Purdy, Senior Vice President and General Manager, Applied Systems Canada, Inc. introduced the speakers, in-

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cluding Applied CEO Reid French. Presentations were made from executives of firms that have adopted the system, including Canadaâ&#x20AC;&#x2122;s Jeff Burke - President and CEO, Western Financial Group and Joe Pratts COO of Hoffman Brown Company (based in California). Randy Carroll, CEO of the Insurance Brokers Association of Ontario, also made a presentation on how brokers can leverage technology to meet new consumer expectations.

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Cunningham Lindsey Canada Claims Services Ltd. (Cunningham Lindsey) announced the firm’s 90th anniversary in Canada on April 1, 2013. “March 2013 marked Cunningham Lindsey’s 90th anniversary in Canada, an amazing milestone in our firm’s history,” said Presi-

dent and CEO Rob Seal.

“90 years is a very long time and a huge accomplishment for any business. I attribute this success and longevity to our employees and customers for their support and commitment that has enabled us to grow and diversify into a leading

President and CEO Rob Seal

Vancouver, Port Moody-Fraser Valley Celebration

Mississauga Head Office Celebration

Gatineau, Quecbec Celebration 82

claims solutions provider here in Canada and around the world.” Cunningham Lindsey’s story began in March 1923 when founder Manley Morden first opened his one man one office operation in Hamilton, Ontario.

These humble beginnings transformed into a national

Canadian Underwriter April 2013

network of over 500 employees in 85 offices across Canada and through strategic growth, a global platform of over 7000 employees in 65 countries around the world.

“I would like to extend a personal ‘thank you’ to our employees who, for over 9 decades, have demon-

strated a commitment to this industry, their profession and to Cunningham Lindsey. And to our customers who have been trusted partners and strong supporters of our services, we thank you for your support and look forward to serving you for the next 90 years,” said Seal.

Calgary, Alberta Branch Celebration

St. John, New Brunswick Celebration

Dartmouth, Nova Scotia Celebration

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