Canadian Underwriter June 2015

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

JUN E 2 0 1 5 PM40069240

Learning to Share

BY CRAIG HARRIS

Staying Dry

BY ANYA SRI-SKANDA-RAJAH

Getting Innovative

BY TERRY STUART

WHAT DOES IT MEAN TO BE ACE INSURED?

Participant Accident Insurance | acegroup.com/ca It means my team, coaches and other members of my organization are protected by a sports accident plan that provides the benefits we need. ACE understands how to supplement our general liability programs with a separate accident and medical plan in order reduce liability and costs associated with retained claims. ACE knowing their game, means we can focus on ours.

© 2015 ACE Group. In Canada, coverages are underwritten by ACE INA Insurance and ACE INA Life Insurance. Coverages may not be available in all locations and are subject to actual policy wording.

ACE®, ACE logo®, and ACE insured.® are registered trademarks of ACE Limited.

CANADIAN UNDERWRITER

VOL. 82, NO. 6, JUNE 2015 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY NEWCOM BUSINESS MEDIA INC.

www.canadianunderwriter.ca

COVER STORY

Learning to Share

28

The “sharing economy” represents a murky area.

Brokers, insurers and regulators have issued warnings about the gaps in coverage as the lines blur between personal and commercial usage of property and vehicles. Will these shared services require a new approach to risk and rate assessment?

BY CRAIG HARRIS

FEATURES

14

38

Flood Modelling

Cyber Insurance

Data and technology are having an impact on the development of flood insurance products.

With recent breakthroughs, more insurers appear open to writing flood insurance.

Draft federal amendments to privacy legislation, if passed, would vastly change the current privacy landscape, as well as impact how cyber insurance is underwritten.

BY ANYA SRI-SKANDA-RAJAH

BY CHRISTOPHER GONZALES

20

18 Canada’s Anti-Spam Legislation (CASL)

45

The serious consequences of breaching requirements related to Canada’s Anti-Spam Legislation means companies are well-advised to develop appropriate corporate compliance programs.

40 Vicarious Liability When considering excess auto coverage in British Columbia, it is important to remember that even in a leasing or rental car scenario, the owner’s policy remains primary.

BY TODD DAVIES & SCOTT HARCUS

BY J. ANDREW SPRAGUE

24 Digital Technology Digital technology is poised to transform insurance.

Canadian carriers that take steps today to address trends will move from having a digital consumer strategy to having a business strategy that is digital.

BY LORRAINE THOMPSON

Broker Big Data

Tech Innovations

Business intelligence solutions have become a necessity for companies, including brokerages, of all sizes, industries and verticals.

The incredible disruptive potential of rapid advances in technology shows the need for business to ensure that they are properly prepared.

BY JEFF PURDY

BY TERRY STUART

June 2015 Canadian Underwriter

3

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Editor Senior Publisher Angela Stelmakowich Steve Wilson and resources from all segments of Editorto insurance professionalsSenior Publisher astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Editor Stelmakowich Senior Wilson Publisher Angela Steve Editor Senior@InsuranceMedia Publisher (416) 510-6793 the industry, providing marketers with aTwitter: range of specialized Angela Stelmakowich Steve Wilson Angela Stelmakowich astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Steve Wilson (416) 510-6800 astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca (416) 510-6793 Twitter: @InsuranceMedia Associate Editor steve@canadianunderwriter.ca and highly effective marketing communications opportunities.

(416) (416)510-6793 510-6793 Twitter: @InsuranceMedia (416) 510-6800 Greg Meckbach Twitter: @InsuranceMedia Art Director Associate Editor (416) Associate Editor (416)510-6800 510-6800 gmeckbach@canadianunderwriter.ca Gerald Heydens Associate Editor Greg Meckbach Art Director Greg Meckbach Twitter: @CU_Greg Art Director Greg Meckbach Art Consultation Director gmeckbach@canadianunderwriter.ca Gerald Heydens Art gmeckbach@canadianunderwriter.ca Gerald Heydens Heydens (416) 510-6796 gmeckbach@canadianunderwriter.ca Gerald Twitter: @CU_Greg Twitter: @CU_Greg Sascha Hass ArtArt Consultation Consultation Twitter: @CU_Greg (416) 510-6796 (416) 510-6796 Online Editor ArtInsurance Consultation Sascha Hass Sascha Hass Canadian Underwriter’s Media Group is committed Production Manager (416) Editor 510-6796 Harmeet Singh Online Sascha Hass Online Editor Gary White to providing the most timely and relevant Production Manager news, information Jason Contant hsingh@canadianunderwriter.ca Production Manager Online Editor Harmeet Singh Gary WhiteManager (416) 510-6760 jcontant@canadianunderwriter.ca and resources to insurance professionals from all segments of Production Twitter: @CU_Harmeet Gary White Harmeet Singh (416) 510-6760 hsingh@canadianunderwriter.ca (416) 442-5600, Ext. 3652 Gary Whitewith a rangeService (416) 442-5600 ext.

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Insurance Limited, James president HughCameron, McTavish, head of of Cameron &Consultants Associates was recognized by the CIP Cameron Associates Godfrey&Consultants Morrow Insurance Insurance Limited, Society when hebyreceived its Insurance Consultants Limited, and Financial Services was recognized the CIP Established Leader Award. was recognized theLtd., CIPitsa Ltd. and InsureMy Society when heby received BY ANGELA when STELMAKOWICH Society he received its brokerage specializing Established Leader Award.in Established Leader Award.

BY ANGELA STELMAKOWICH telematics, is working to

BY ANGELA STELMAKOWICH

ensure brokers remain a key part of the conversation when talk turns to the “connected world.”

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6SPECIAL Editorial FOCUS FOCUS 6 SPECIAL Editorial 86 Marketplace Editorial 8 8 Marketplace Editorial 56 & Views 8 Moves Marketplace 56 & Views 10 Moves Marketplace 58 56 Gallery Moves & Views 58 48 Gallery Moves & Views 58 Gallery 50 Gallery

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EDITORIAL

Sight on Cyber

“The key to successfully mitigating the impact of a cyber breach — or even preventing one in the first place — is knowledge.”

Angela Stelmakowich Editor Canadian Underwriter astelmakowich@ canadianunderwriter.ca

8

Canadian Underwriter June 2015

If one is in the Canadian property and casualty insurance industry, it seems there is no getting away from talk of flood — or cyber.

And while some encouraging, concrete developments are unfolding with regard to the former — insurers starting to offer “overland” flood cover and modelling improvements — progress on the latter seems more sedate.

Everyone agrees cyber risk is a potentially very bad (and costly) deal for companies that fall victim. But while flood offers a clear example of harm that can be done — making it more about how to offer coverage — cyber is still a moving target.

A recent report from PwC Canada notes that while 88% of private companies polled agreed or strongly agreed cyber security is an important issue for their organizations, their companies are in the dark about what they need to do and where their vulnerabilities lie. “Investing in cyber security will pale in comparison to the costs associated with being in the middle of a large-scale breach,” David Craig, leader of PwC’s Risk Assurance Services Cyber Security and Privacy Practice, said at the time.

The moving target makes it difficult to get a sight on the “true” risk and makes it even more difficult to persuade customers and clients that current cover, if available, will do what is expected.

Not knowing also makes it tough to build a mindset of protection beyond initial

knee-jerk responses.

Trustwave notes in a new report that 86 days was the median length it took to detect a breach, and the median length of a breach (from intrusion to containment) was 111 days.

That sounds bad and, frankly, it is. A lot of harm can be done while no one is watching. On the plus side, the median has dropped by three days from 2013.

But how long it takes to identify a problem is a big part of the losses that could result. Ponemon Institute recently reported the average consolidated total cost of a data breach in Canada, based on costs incurred by 21 Canadian companies from 11 different industry sectors, was $5.32 million.

The study identified three major reasons why costs keep climbing: cyber attacks are increasing both in frequency and the cost required to resolve the issues; the financial consequences of losing customers in the aftermath of a breach; and more companies are incurring higher costs in forensic and investigative activities, assessments and crisis team management.

Despite the numbers, some mind-boggling things are continuing. For example, the Trustwave survey found 28% of breaches resulted from weak passwords and another 28% from weak remote access security. These are things that can be addressed with just a bit of care — and education — and should be considered a bare minimum.

“The key to successfully mitigating the impact of a cyber breach — or even preventing one in the first place — is knowledge,” says Rick Roberts, president of RIMS, the risk management society.

Learning is continuing, true, but has a way to go.

A new RIMS survey of risk professionals in the United States shows 74% of those polled who do not have cyber insurance are considering buying it within two years to help protect their organizations. The survey found just 51% of respondents purchased stand-alone cyber insurance policies, with 58% carrying less than US$20 million in cyber coverage.

The need for education is also necessary when it comes to financial commitment.

A survey at this year’s RIMS annual conference by The Hartford Steam Boiler Inspection and Insurance Company, part of Munich Re, found that 55% of the 102 respondents did not believe their company is dedicating enough money or trained and experienced personnel to combatting the latest hacking techniques. Almost 70% of businesses polled had been hacked in the last year.

“Businesses are on high alert, but they can do a lot better. Simply reacting to new threats is not enough.

Businesses of all sizes need to anticipate hacking trends and deploy the resources necessary to protect their private or sensitive information,” said Eric Cernak, cyber practice leader for Munich Re.

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AIG Insurance Company of Canada is the licensed underwriter of AIG property casualty insurance products in Canada. Coverage may not be available in all provinces and territories and is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. © American International Group, Inc. All rights reserved.

MARKETPLACE

Technology WEARABLE TECHNOLOGIES EXPECTED TO BE WIDELY ADOPTED BY INSURERS Nearly two-thirds of insurers expect that wearable technologies will be adopted broadly by the insurance industry in the next two years, note survey results issued in May by Accenture.

Accenture Research conducted the survey of 2,000 business and IT executives across nine countries and 10 industries, and used a sample of 221 respondents, most of whom were C-level executives and directors.

In all, 63% of respondents believe wearable technologies will be adopted broadly by the insurance industry within the next two years, and 31% said they are already using wearables to engage customers, employees or partners.

“Emerging technologies such as wearables and other connected devices can help insurers break from their traditional business models and provide outcome-based services for their customers,” says John Cusano, senior managing director of Accenture’s global insurance practice.

AUTONOMOUS VEHICLES WILL AFFECT THE AUTO INDUSTRY BUSINESS MODEL Autonomous vehicles (AVs) will lead to a major disruption in the auto insurance sector, affecting the industry’s entire business model, suggests Barrie Kirk, executive director of the Canadian Automated 10 Canadian Underwriter June 2015

Vehicles Centre of Excellence.

AVs will be fleet-owned, so there will be a trend away from individual ownership of cars, Kirk predicted at a recent telematics conference in Toronto. “And, therefore, your whole business model, based on the majority vehicles being owned by individuals with their own policies, that will disappear as well.”

Kirk cited three transformative factors: driver behaviour becoming a non-issue once computers are operating self-driving cars; computers being much safer drivers so collision numbers and premiums will decrease; and so-called “transportation as a service,” where automated, driverless taxis take individuals where they want to go.

Canadian Market AON FLOOD MODEL COVERS 98% OF POPULATION Impact Forecasting LLC has announced the availability of a flood model for companies insuring properties in Canada.

Impact Forecasting, Aon Benfield’s catastrophe model development team, reports that the new flood model “covers a geographical area representing 98% of the Canadian population.”

The model has a hazard resolution of 10 metres for the most exposed areas of Canada and 30 metres for the rest. It “offers a complete view of Canadian flood risk from providing underwriting

data that drills down to individual locations while helping insurers to understand the impact of accumulations on their portfolios, to structuring reinsurance cover and fulfilling regulatory and rating agency requirements.”

AVIVA CANADA’S OVERLAND WATER PROTECTION AS ADD-ON NOW AVAILABLE Aviva Canada announced in early June that the insurer is now offering overland water protection for residential property owners and tenants through its network of independent insurance brokers.

Offered as an add-on to personal property insurance policies that have sewer back-up protection in place, the coverage can now be purchased through brokers in Ontario and Alberta, and will be offered in other provinces throughout the rest of 2015.

It responds to losses that result from the accumulation or run-off of surface waters, including torrential rainfall when water enters the property.

THE CO-OPERATORS LAUNCHES FLOOD INSURANCE IN ALBERTA The Co-operators General Insurance Company has launched overland flood insurance coverage in Alberta.

The coverage is available as an endorsement to The Co-operators homeowners’ insurance policies. It will be added to existing policies that have coverage for sewer/ water back-up, upon renewal.

The coverage is designed to protect homes against the

most common causes of water damage, namely flooding caused by an overflow from a body of water, sewer/water back-up and accumulation of surface water caused by heavy rain.

“Our coverage is available to homeowners throughout the province — not just those who have a low risk of flooding or sewer back-up,” says Kathy Bardswick, president and chief executive of The Co-operators.

WILLIS RE OFFERING THIRD-PARTY CASUALTY REINSURANCE COVERAGE A syndicated reinsurance facility covering “catastrophic and systemic loss accumulations arising from liability portfolios” is now available from Willis Group Holdings plc., including in Canada.

The facility has more than US$400 million of “reinsurance capacity worldwide on the basis of pre-agreed contract wording,” and is initially supported by 20 leading reinsurers, Willis notes.

It offers protection to insurers against events that impact multiple accident years, create quarter-onquarter earnings pressure and represent a significant unknown in terms of quantum from discovery of the event until it becomes a paid loss.

Regulation MOU TO SHARE INDUSTRY CONDUCT INFORMATION Four members of the Canadian Council of

MARKETPLACE

Insurance Regulators (CCIR) have signed a memorandum of understanding (MOU) that “sets out the terms for co-operation and exchange of information across provincial and territorial jurisdictions” to make the process simpler and more effective.

The MOU “will formalize information sharing and address issues like risk surveillance, consistent handling of consumer complaints, commercial practices and protection of confidential information,” CCIR chair Patrick Déry reports.

Remaining CCIR members are expected to sign on in the “coming months,” Déry adds.

NEW TANK CAR CLASS FOR TRANSPORTING FLAMMABLE LIQUIDS ANNOUNCED Canada and the United States recently unveiled a new class of rail tank car for flammable liquids.

The newer, stronger tank car will be used for transporting flammable liquids, such as crude oil and ethanol. Any new tank car used for flammable liquid dangerous goods service manufactured on or after October 1, 2015 will be built to the TC-117 standard.

The TC-117 tank car will be jacketed and constructed with thicker steel, thermal protection, a full head shield, top-fitting protection and a new bottom outlet valve. The regulations will apply first to cars carrying crude oil.

The new demands come almost two years after the deadly train derailment in Lac-Mégantic, Quebec.

HIGH COURT TO RULE ON ROADSIDE DRIVING PROHIBITIONS There could be an increase in collisions and auto claims costs if the Supreme Court of Canada does not uphold the British Columbia government’s authority to impose immediate licence suspensions on drivers who fail roadside alcohol breathalyzer tests, Insurance Bureau of Canada (IBC) argues in a factum.

In May, Canada’s high court noted it would hear an appeal from Richard James Goodwin and three other B.C. motorists who had been subject to 90-day roadside driving prohibitions (and had their vehicles impounded 30 days) after either failing to provide breath samples or failing the roadside breath tests.

In a March 2014 ruling, British Columbia’s Court of Appeal ruled the province’s automatic roadside prohibition regime is not valid provincial legislation. If upheld, argues IBC, which has intervenor status, this would “potentially have an impact on the enforcement of provincial safe driving laws.”

An “inevitable increase” in vehicle collisions and injuries “would increase IBC members’ exposure to accident benefit claims and tort claims under automobile insurance policies for injuries sustained in automobile collisions and pedestrian accidents, and, consequently, would result in higher rates charged and premiums paid for such policies by policyholders.”

Risk WILDFIRES IN CANADA DOUBLE: CATIQ There has been double the number of wildfires nationally and almost nine times as many hectares burned this year since the same time last year, says Carolyn Rennie, director of catastrophic loss analysis with Catastrophe Indices and Quantification Inc. “The hot and dry weather in the West coupled with human interaction and lightning has sparked over 2,220 fires as of yesterday,” Rennie said at a conference in late May. “[Forest fires] are already becoming more frequent due to above-average temperatures and a dry climate,” she reported. “This is one peril to keep a close eye on.”

AVERAGE COST OF DATA BREACH IN CANADA $5.32 MILLION: PONEMON The average consolidated total cost of a data breach in Canada was $5.32 million, notes numbers from the Ponemon Institute.

The study examined costs incurred by 21 Canadian companies from 11 different industry sectors “following the loss or theft of protected personal data and the notification of breach victims as required by various laws.”

For the average cost, the largest cost component was lost business at $1.99 million on average, followed by detection and escalation ($1.68 million) and ex-post response ($1.53 million).

DRONE MAKERS COULD FACE POTENTIAL PRODUCT LIABILITY ISSUES Aerial drone manufacturers are likely to face potential product liability issues, suggests A.M. Best Company.

“The potential for dangers to aviation, invasion of privacy and inappropriate misuse of drones have the obvious insurability problems,” a company briefing notes.

But with clearer definitions from the Federal Aviation Administration in the United States and similar regulators elsewhere, “operating parameters will be more measurable,” it adds.

Reinsurance ONGOING SOFT MARKET CONDITIONS A CHALLENGE FOR REINSURERS Xuber reports “ongoing soft market conditions to be the most widely cited challenge facing the global reinsurance industry in 2015.”

A survey of 40-plus senior professionals show 81% of global reinsurers listed soft market conditions among their top five concerns.

But opportunities exist “for reinsurers who can adapt to the fast-changing market landscape.” This includes better use of analytics and modelling, cited by 71% of respondents as the top opportunity to refine the identification of risk/reward to empower better business decisions, and using Big Data effectively (51%).

June 2015 Canadian Underwriter 11

PROFILE

Part of the Conversation Greg Meckbach Associate Editor

The “connected world” is the focus of InsureMy Ltd., a Calgary brokerage specializing in telematics and headed by Hugh McTavish.

Hugh McTavish, president of both Godfrey Morrow Insurance and Financial Services Ltd. and InsureMy Ltd., a Calgary brokerage specializing in telematics, understands the value of being connected.

That value has become even more clear as insurers continue to offer reduced auto rates based on data gleaned from telematics, suggests McTavish, pointing out that InsureMy is using the vehicle-monitoring technology to provide independent advice to customers.

Although a full-service brokerage — which sells telematics-based auto policies to commercial and personal lines customers in Ontario and to commercial customers in Alberta — he notes it is “branded around a connected world.” As insurers “look for direct channels and look for other opportunities to talk to the consumer,” 12 Canadian Underwriter June 2015

McTavish says, telematics “allows us to be part of that conversation in a much more relevant way as people have questions.”

McTavish says that he wants the brokerage to be a source of products for personal lines auto customers should insurers in Alberta receive the green light from the provincial Superintendent of Insurance to use telematics to approve private passenger auto rates. Even with approval, he says many consumers are still reluctant to share data on their driving behaviours with insurance providers if they do not think they will qualify for a large discount.

Consumers seem open to having data shared “in other parts of their life,” McTavish says, citing as an example the value-added service of knowing the price of gas at the next gas station. “But as soon as you mention insurance, a lot of people don’t want to do that. We think there’s real value to the customer in better understanding their insurance costs through the data, so we want to be part of that conversation.”

RURAL ROOTS Raised on a farm near Shakespeare, Ontario, about 30 kilometres west of Kitchener, McTavish says that he, like many others, “fell into insurance.”

He studied at the University of Western Ontario in London, working in construction, to

make some money. But after finishing, he found that in 1979, “there were not a lot of jobs so I ended up laying sod,” he reports. “I had a very well-educated crew. I think we all had at least a BA,” McTavish quips.

At one point, he owned a farm and later did income tax returns for farmers.

But in 1982, he began his insurance career, hired as a claims adjuster for Safeco

As insurers “look for direct channels and look for other opportunities to talk to the consumer,” McTavish says, “telematics allows us to be part of that conversation in a much more relevant way as people have questions.” and moving to Calgary in 1987. Safeco was later acquired by then Dominion of Canada General Insurance Company, which, in turn, was acquired in 2013 by The Travelers Companies Inc. In 1992, McTavish left The Dominion to work at ING Western Union Insurance Company, later amalgamated with ING Insurance Company of Canada (now Intact Insurance). His roles at ING in-

cluded, among others, regional vice president for southern Alberta and vice president of commercial insurance.

After earning his MBA from Western University’s Ivey Business School, McTavish left ING Canada in 2000 to work in Calgary as regional director of pensions, Western Canada for Manulife Financial Corporation.

During his two-year stint there, he “kept in touch” with people he knew from ING Canada, some of whom ended up working at Equisure Financial Network Inc. The brokerage network was acquired in 2000 by ING Canada and is still owned by Intact Financial Corporation.

At the time, ING Canada sold portions of each brokerage to local insurance professionals.

Around the time McTavish left ING Canada, companies that were acquiring and consolidating brokerages — such as Equisure Financial Network, BrokerLink and Hi-Alta Capital Inc. (now Western Financial Group Inc.) — were “really having an impact,” he reports.

“In the two years on the pension side, I had spent a lot of time with financial advisors, life (insurance) folks and pension advisors,” McTavish says. “There seemed to be a strong opportunity to cross sell p&c.”

Today, Godfrey-Morrow Insurance and Financial Services — formed in 2002 when McTavish merged

Photo: Mikaela MacKenzie

PROFILE

Bishop Morrow Insurance with Godfrey Jolin Insurance — offers both commercial and personal lines property and casualty, as well as life insurance and financial advice.

At the time the brokerage was formed, McTavish says he felt “that you needed about 10,000 customers to really have enough to make it viable from a financial services standpoint, so I bought 50% of two brokerages.”

REMAINING RELEVANT McTavish reports that he “got serious” about telematics about two years ago after following developments in Europe and the United States, where insurers were starting to use telematics to sell auto directly to consumers.

“My concern was, how does a broker remain relevant in that conversation?”

InsureMy launched its telematics offerings in November 2014, though the domain name insuremy.ca had already been registered

by Godfrey-Morrow Insurance and Financial Services as “an Internet play to get more traffic to our website,” McTavish reports.

“It made sense that we set up a separate company and branded it differently,” focusing on telematics, he says of InsureMy. “Not everybody out there is going to be interested in telematics.”

The brokerage is “a different type of advice channel,” he suggests. “We talk a lot about data, because that’s where we believe that the consumer will become more empowered around understanding and controlling their insurance costs,” he says.

Commercial clients get

“what we call effective fleet management,” McTavish says.

“We will visit with them at least twice a year to go over the data to see what the data is saying. ‘Is there a way that we can improve this fleet?

Is there a driver who is obviously either going to have an accident or cause the rates to go up through other things?’

So we see the data before something might happen.”

The same sort of opportunity is there for a brokerage offering telematics-based insurance to private passenger auto customers. Beyond providing the device, “the data will be shared with the customer, and they can look at what they can do to improve their behaviour.

Eventually we will be able to take that data and shop it to various companies and say, ‘What is your premium for

this data?’” McTavish says.

For a policyholder with a young driver, a broker could provide coaching and explain what the data means “without the insurance company having to be involved,” he says. “Ultimately, what we want to have is something where somebody comes in and says, ‘I am interested in telematics’ and our discussion is around, ‘What features are you looking for?

What benefits are you seeking? Here’s a couple of different products.’ Price certainly remains a very relevant part of the discussion, but you certainly have a lot more to talk about,” he reports.

Telematics is really “all about this connected world that everybody talks about,” McTavish says. “What about homeowners and commercial buildings? Should they all pay the same, depending on what the building is telling us? If the building is occupied, 90% of the time, should that (policyholder) pay as much as a building that’s not occupied?”

Brokers “have an opportunity to remain relevant” to consumers by providing advice and advocating on their behalf, McTavish says.

“We just have to find ways to remain relevant in the conversation and get in front of those customers, whether it’s virtually or physically, letting them decide how they want to deal with us and making sure we are able to do it.”

June 2015 Canadian Underwriter 13

Drought to Deluge

For the past five years, the property and casualty insurance industry has been talking more and more animatedly about the flood peril in Canada, with a marked sharpening of focus since the Calgary and Toronto events of summer 2013.

Statistics relating to industry losses from these two unprecedented events, along with trends in the annual average water losses paid through insur-

14 Canadian Underwriter June 2015

THE COST EQUATION In order to offer insurance coverage for any peril, a company or industry needs a sense of how often these losses take place, how large the associated loss for a given policy can be and what risk factors influence that likelihood or magnitude of loss. In addition, for natural catastrophe perils such as flood or earthquake, the insurance industry as a whole needs an understanding of the correlated nature of the risk, whether through physical proximity of exposures to one another or as a result of common susceptibility of exposures to the same set of external conditions.

These elements need to be taken into account, both at the individual insured location level, as well as at the aggregated portfolio level, to ensure that both profitability targets and solvency considerations will be satisfied over the long run.

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Both data and technology are having an impact on the development of flood Anya Sri-Skanda-Rajah insurance products. With Managing Director, recent breakthroughs GC Analytics, Canada Flood Model that advance the ability Strategic Lead, to perform stochastic Guy Carpenter & Company modelling, more insurers appear open to writing flood insurance, a move that could help shrink the coverage gap for homeowners.

ance claims, are thrown around with heightened frequency and greater urgency.

While economic and industry estimates vary, the Calgary event generated more than $6 billion of economic losses while the insured losses were approximately $2.4 billion, largely due to overland flood exclusions and very low sub-limits on sewer back-up coverage for residential property policies.

Yet, in spite of all of this attention and the latest unfortunate examples of how material the losses associated with flooding can be, the industry has seen little tangible progress towards an actual solution.

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On the surface, this should not pose a challenge to the industry for the flood peril. After all, the industry has addressed these needs for many other perils already through the use of sophisticated catastrophe models. These probabilistic models allow the Canadian p&c industry to evaluate, rate and offer peace of mind to clients and shareholders alike.

For Canada, tornado, hailstorm, thunderstorm, winter storm, hurricane and earthquake and fire-following earthquake are all perils that have already been addressed through the development and use of such models. Why then has no such model been developed in the past for Canadian flood?

The answer lies in the information and technology required to develop these models and allow them to produce results within a reasonable timeframe.

UNDERSTANDING THE HAZARD The first requirement in developing a catastrophe model is an understanding of the hazard. This means a proper sense of the likelihood of an event of a given intensity.

For earthquake, the Canadian Geological Survey, founded in 1842, started taking seismographic readings in Toronto and in Victoria in 1897 and 1898, respectively. Since then, the Canadian National Seismograph Network has expanded to approximately 125 seismographs across the country and there are almost 200 such devices in Canada when academic and research institutions are included.

There are extensive scientific publications on ground motion attenuation through various soils, as well as soil maps and studies of the country’s fault lines. Combining these elements creates a strong understanding of the likelihood of various ground-shaking intensities in Canada.

For meteorological perils, such as severe thunderstorm, tornado, hailstorm and winter storm, a long history of rainfall measurements and wind speed and direction is available.

For hurricane, the National Oceanic and Atmospheric Administration tracks sea surface temperatures, climate cycles 16 Canadian Underwriter June 2015

and the formation of storms. There is sufficient data and scientific knowledge to permit forecasts of whether or not the upcoming season is likely to be active, as well as forecasting whether any given storm forming over water is likely to intensify or dissipate and narrow down the potential paths that a given storm may take.

For flood, the hazard is not wellunderstood, particularly in a country as large as Canada.

Flood hazard is managed at a “local” level, often by municipalities. This local approach is taken because flood is highly subject to local topographic features and man-made defences, which change and shape the likelihood of any given location to be inundated.

For Canada, tornado, hailstorm, thunderstorm, winter storm, hurricane and earthquake and fire-following earthquake are all perils that have already been addressed through the development and use of such models.

Why then has no such model been developed in the past for Canadian flood?

However, management at the local level means that maps of the hazard may be of varying vintage from one community to the next, as well as of varying technology and resolution. In this way, progress both helps and hurts industry’s overall understanding of the peril.

Unlike other perils, the risk of flooding may diminish with investment in defences, but increase with expansion of built-up areas into more flood-exposed places or beyond the capacity of the associated infrastructure, such as sewer systems. Ignoring the development of defences radically changes the likelihood of flood events arising, since, as a society,

steps are taken to reduce the risk of events that can be foreseen.

Incorporating this factor represents one of the biggest obstacles to modelling the flood peril in Canada.

The next major challenge relates to the size of Canada, almost 10 million square kilometres. To compute hazard over such a large area can be a daunting, if not prohibitive, undertaking. And yet this has not been a major obstacle for other catastrophic perils.

The reason for this difference is a question of resolution. For earthquake, the attenuation of ground motion arising from an event is continuous. Typically the intensity of ground shaking decays smoothly away from the epicentre. Likewise, with wind, rain, hail or snow, the wind speeds and intensity of precipitation taper off at the edges of an event.

With flood however, there is an allor-nothing aspect to the peril: if the water comes right up to the driveway and stops three feet from the front porch, there may be no damage to the house. If it comes a few feet closer and crosses the threshold, it could cause a flooded basement and a severely damaged ground floor.

The likelihood and degree of damage is, therefore, very sensitive to estimates of the location of the flood boundary.

As a result, the objective is to use the finest resolution possible given the data and computational limitations. The desired resolution is in metres (or finer) not kilometres.

Even if the focus is solely on the populated area of Canada, which is just over 3% of its total land area, and aimed for 10-metre resolution, this would produce a grid of more than 3 billion cells over which to overlay calculations of likelihood and magnitude of loss.

Fortunately, graphics processing unit (GPU) computing technology has enabled companies specializing in modelling the flood peril to combine the considerable processing power of multiple GPUs together with multiple CPUs to churn through these endless calculations to determine the hazard on an order of

square metres, rather than square kilometres.

The advent of this computing breakthrough has enabled undefended flood hazard maps to be generated at a fine resolution for the whole of Canada, using the historical rainfall record, river gauge data, hydrologic models and hydraulic models. This, in turn, has made it worthwhile for companies to put in the extraordinary effort required to assess the impact of flood mitigation infrastructure on the undefended hazard.

Some companies have taken the last required step to generate a stochastic event set to allow insurers to assess the impact of all potential flood events to understand not only the likelihood of flood, but the degree of damage following a given event.

This positions insurers to perform pricing by line of business, exposure type and risk zone, to undertake locationlevel underwriting, and to practice sound and proactive portfolio management.

NEW REVENUE STREAM In today’s market, a pre-condition for the industry to offer insurance protection for any catastrophic peril is the ability to conduct statistical analysis and to perform stochastic modelling. The lack of current coverage available to homeowners and the risk of extra-contractual payments being imposed has been unsatisfactory and frustrating for insureds and insurers alike.

With the recent breakthroughs in modelling, tools are now available that allow insurers to increase their knowledge of flood, which could lead to opportunities to generate a new revenue stream for residential property writers.

The Canadian p&c industry has discussed the risk of flood in Canada for years and is now increasingly in a position to formulate a solution.

With several insurers’ appetite to write flood insurance already growing, the coverage gap for homeowners is starting to shrink.

CASLReady The country’s regulators are taking corrective actions and issuing penalties related to Canada’s Anti-Spam Legislation, which took effect last July. The serious consequences arising from breaching related requirements, though, make clear that companies need to take steps to develop corporate compliance programs.

J. Andrew Sprague

Associate, Miller Thomson LLP

On July 1, 2014, the anti-spam provisions of Canada’s Anti-Spam Legislation, known as CASL, became enforceable law. Several months later — on January 1, 2015 — CASL’s installation of computer program provisions became enforceable law. They regulate the unsolicited installation of computer programs, including mobile applications for smartphones and smart devices.

CASL applies to more than just those types of messages that one might traditionally consider to be “spam” and its anti-spam provisions have broad application, applying to more than just email messages. As well, the definition of “commercial” under CASL, as it applies to commercial electronic messages, is very broad and catches many activities that might not readily come to mind.

CASL also regulates the following additional activities: • the altering of transmission data in electronic messages; • engaging in fraudulent or misleading practices through electronic messages or websites; • the automated collection of electronic addresses (email harvesting) and subsequent uses; and • the unauthorized use of computers to collect personal information and subsequent uses.

18 Canadian Underwriter June 2015

A simple reading of the legislation will not disclose everything that one needs to know about this new law. The interpretation guidance, both verbal and written, provided by CASL’s regulators is an important component in understanding obligations under the law.

SHOULD CASL BE TAKEN SERIOUSLY? In 2014, many individuals and organizations speculated whether CASL was just another “Y2K” or if it would become like the perceived unenforced National Do Not Call List (DNCL) and the Unsolicited Telecommunications Rules. Is CASL something they really need to worry about?

In 2015, the answer is CASL is, indeed, something that individuals and organizations should be concerned about and with which they should be compliant.

ENFORCEMENT ACTION This past March 5, the Canadian Radio-television and Telecommunications Commission’s (CRTC) chief compliance and enforcement officer issued a Notice of Violation to a Quebec company, which included a $1.1 million penalty for violating CASL. The company had sent commercial electronic

This past March 5, the CRTC’s chief compliance and enforcement officer issued a Notice of Violation to a Quebec company, which included a $1.1 million penalty for violating CASL. The company had sent commercial electronic messages to recipients without their consent, as well as emails in which the unsubscribe mechanisms did not function properly.

messages to recipients without their consent, as well as emails in which the unsubscribe mechanisms did not function properly. The imposed penalty — the first issued by the CRTC pursuant to its authority under CASL — was based on four alleged violations.

Three weeks later, on March 25, the CRTC announced that a company that operates a user-driven website had paid a penalty of $48,000 as part of an undertaking for an alleged CASL violation.

It is alleged the company sent commercial emails to registered users of its website with an unsubscribe mechanism that was not clearly and prominently set out, and which could not be readily performed, as required by CASL. And on March 11, the Competition Bureau announced it has taken action against two of Canada’s largest rental car companies, alleging that the companies have engaged in deceptive marketing practices relating to false or misleading price representations. The bureau is seeking both $30 million in administrative monetary penalties (AMPs) and refunds for consumers.

The action marks the bureau’s first proceedings under the new provisions of the Competition Act that came into force on July 1, 2014 as part of CASL. It is reported the companies used electronic messages to disseminate the alleged false or misleading representations.

Notwithstanding the false perception that the CRTC is not enforcing the DNCL and the Unsolicited Telecommunications Rules, the commission is, indeed, engaged in enforcement and is actively issuing related monetary penalties. Like CASL, compliance in this area is also highly recommended.

PENALTIES AND CONSEQUENCES Individuals or organizations that do something for which CASL requires consent — and they do so without the appropriate consent or they cannot rely upon an exemption — could be subjected to a number of significant consequences and penalties.

These include the following: • AMPs of as much as $1 million per violation for individuals and $10 million per violation for any other person (i.e., any legal entity that is not an individual); • corporate officers, directors and agents may be held personally liable for corporate violations; • vicarious liability may arise for violations committed by employees or agents; • private right of action, starting July 1, 2017, including class-action lawsuit risk; and • reputational risk.

CASL COMPLIANCE STRATEGIES A due diligence defence is available under CASL against claims of non-compliance.

In 2014, the CRTC issued guidelines to help businesses develop corporate compliance programs, the stated purpose of which is to provide general guidance and best practices on the development of corporate compliance programs to facilitate compliance with CASL, and also the CRTC’s Unsolicited Telecommunications Rules.

The CRTC acknowledges in the compliance guidelines no two organizations are the same and that every organization has different risks. As a result, compliance programs will vary depending on the size of an organization, its risk pro-

file and its available resources.

In the guidelines, the CRTC expressly states the following: Commission staff may take into consideration the existence and implementation of an effective corporate compliance program if the business presents the program as part of a due diligence defence in response to an alleged violation of the Rules or CASL. Although the pre-existence of a corporate compliance program may not be sufficient as a complete defence to allegations of violations under the Rules or CASL, a credible and effective documented program may enable a business to demonstrate that it took reasonable steps to avoid contravening the law. Thus, the program may support a claim of due diligence.

As well, Commission staff can take the existence of such a program into consideration when determining whether a violation of the Rules or CASL is an isolated incident or is systemic in nature, and whether sanctions against a business should include AMPs. If individuals and organizations take proactive steps to establish appropriate policies, procedures and processes relating to activities prohibited under CASL — as well as properly enforce them — such individuals and organizations may be able to use their efforts as an aid to a due diligence defence. In addition, such efforts may be a factor in determining liability or damage awards arising out of a CASL non-compliance claim.

Given the potential for serious consequences under CASL, developing a corporate compliance program, if one has not already been developed, should be on any company’s “to do” list, especially in light of the CRTC’s aforementioned comments and the fact that the CRTC is clearly enforcing CASL.

June 2015 Canadian Underwriter 19

Big Data, Big Opportunity

Jeff Purdy

Senior Vice President of International Operations, Applied Systems

In an industry that generates an immense volume of data every day, insurance executives are increasingly turning to new business intelligence (BI) strategies and solutions that provide additional, data-driven visibility into their clients, prospects, internal operations and broker and insurer relationships. Strategy Meets Action’s 2015 Insurance Technology Priorities and Spending report notes the top technology-oriented projects are focused around mobile and business intelligence/ analytics, with data warehousing, predictive analytics and big data included in the mix.

For many executives, business intelligence solutions build on the established capabilities of traditional reporting. Traditional reports typically allow executives to examine “what happened” using data based on a defined set of criteria as of a specific moment in time. By contrast, BI solutions extend traditional reporting to focus on “why something happened” by using visual representations of data over time that are both interactive and multi-dimensional, thereby allowing brokerages to drill into a particular aspect of the

20 Canadian Underwriter June 2015

business for deeper understanding.

So with all this data, where do brokerages start? First, storing, cleaning and organizing data is a complex task that requires an immense time and monetary commitment when managed internally. Second, brokerages must ensure data is being extracted correctly from their brokerage management systems and other integrated technologies before then accurately populating into an excel spreadsheet or alternate reporting asset.

To understand the complexity of these operations, consider the following scenario: A brokerage has 500 clients, 15 employees across three branches, and writes 25 policy types for four lines of business with 12 insurers. If the brokerage were to review its book of business monthly, quarterly, annually, year to year and year over year, it would result in 135 million different combinations of data to splice and analyze.

With business intelligence solutions, these exponential combinations of data are simplified in real time, with easy-to-understand visual illustrations of key performance metrics such as

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How can the tremendous amounts of data generated in the insurance industry be used to enhance broker operations and profitability?

Business intelligence solutions have become a necessity for companies of all sizes, industries and verticals to be highly competitive in today’s marketplace.

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retention rates and hit ratios, as well as complex analysis of client growth, book of business trending, insurer response rate and employee productivity.

By looking at data from multiple perspectives, executives gain greater business insights and better understand the cause and effect of what drives business and how to respond to new business and market opportunities.

As an example, when evaluating an organization’s book of business, an executive can cross-examine and splice data to do the following: • identify coverage packages that are popular and profitable within one in-

By quickly identifying this information, brokers can then proactively reach out to their clients to provide the level of personalized service and guidance that is expected from their roles as trusted advisors.

Additionally, geographic BI can visually identify new business development opportunities and monitor marketing campaign success by region.

If a brokerage increases advertising for a month in a specific suburb in its main city of operation to grow its business, the owner can evaluate sales in the region leading up to the campaign, during the campaign and thereafter. This analysis enables the owner to identify any change in the sales trend that could be a direct result from increased marketing activities.

PEOPLE MAKE OR BREAK THE BUSINESS

dustry and determine new industries that need identical coverage; • track active regions for business expansion and net growth; • know the best insurers with the highest likelihood of writing specific types of business; and • measure business activities against book of business trending, identifying efficiencies and improved productivity.

LOCATION, LOCATION, LOCATION In the event of a catastrophic event, such as a natural disaster, business intelligence solutions enable an owner to instantly tap into his or her BI tool to visually identify which clients could be affected in the geographic area where the event hit. These tools can drill down into geographical maps to provide instant access to critical information, including when the event happened, who is impacted, what type of coverage a particular client has, was the client covered, and where the client’s assets are.

22 Canadian Underwriter June 2015

The insurance industry is a peopleoriented marketplace that is defined by trusted advice and guidance. Business intelligence solutions can provide owners a better understanding of the most important determining factor of a brokerage’s success: its people.

To better understand the growth and profitability of a brokerage’s business, executives must closely evaluate employee productivity and revenue generating activities to accurately determine their impact on the growth and profitability of the business.

When trying to identify revenue per employee or top-performing account executives, BI solutions enable executives to dynamically evaluate employee performance and business development activities through dashboards that can be adjusted to visually provide different cross-comparisons of data.

One view can offer an overall snapshot of how each producer is driving revenue. Another view can rank producers by revenue, added lines, retention, attrition or a number of any other key business metrics.

The ability for executives to dynamically manage the ways in which they evaluate their employees’ performance

enables them to better understand how their staff is driving business growth and profitability.

RELATIONSHIPS ARE EVERYTHING When researching services for clients, brokerages engage with a number of insurer partners to find the best policy for their clients. Brokerages frequently place more business with insurers that are most responsive and provide the most competitive service.

The key to effective negotiations and profitable relationships with insurers is factual data. Executives now have the ability to track the performance of submission responses, declines and, ultimately, what policies were written with each of their insurer partners.

With a BI solution, executives can quickly review insurer response rates to provide clear visual proof that the

brokerage is trying to actively engage with the insurer. Executives can evaluate specific success metrics for their insurer marketing activities, as well as compare multiple insurers down to the submission activities for each policy type.

BROKERAGES TAKE ON BI As the need to provide higher levels of customized service and quickly identify new market opportunities grows, leading brokerages are beginning to evaluate how to incorporate BI tools and best practices into their regular business operations.

Multi-branch brokerage, Schill Insurance, is keenly focused on organically growing its business by empowering employees with unique business insights that allow them to further build

strong client relationships and accelerate profitability. To better understand its business, Schill Insurance executives recognized the need to integrate business intelligence tools into the brokerage’s larger digital strategy.

Key focal areas for adopting a BI solution for quicker, visual analysis included employee performance, business performance trends year over year, and geographic analysis, specifically distribution of business and new marketing opportunities.

With a focus on expanding business into new regions and nurturing insurer relationships, an increasing need to quantitatively evaluate business performance and understand the “why” behind it was identified.

“Business intelligence will provide our business with a quick snapshot of what is going on in our brokerage — in real time,” says Kari Schill, operations manager and partner of Schill Insurance.

By quickly identifying this information, brokers can then proactively reach out to their clients to provide the level of personalized service and guidance that is expected from their roles as trusted advisors.

“By tapping into these purpose-built tools, all of the data extraction and calculations are managed in a matter of seconds. Being able to view trends year over year — including revenue per employee and revenue — through interactive dashboards provides the next level down of detail, enabling us to make more actionable decisions around next steps to build business in new markets with our strong insurer partners,” Schill points out.

The idea is to help the brokerage gain a competitive advantage in the Canadian market by tapping into the gold mine of data currently within its system, using that information to better service clients by being able to quickly identify coverage gaps and ensure brokers continue to deliver on their roles as trusted advisors.

Notes Schill, “Our investment in business intelligence will empower our business for the future. It will allow us to make business projections and put strategies in place to ensure we are successful in driving continued growth and profitability.”

Business intelligence solutions have become a necessity for companies of all sizes, industries and verticals to be highly competitive in today’s marketplace.

These are designed to bring insights to help refine a brokerage’s decisions, permeate client, insurer and employee discussions, and, it is hoped, create big opportunities for new business and more profitable relationships.

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DigitalTransformation Digital technology is poised to transform the property and casualty insurance industry both here at home and abroad.

Canadian carriers that take steps today to address trends will move from having a digital consumer strategy to having an overall business strategy that is digital.

Lorraine Thompson

Canadian Lead, Insurance Practice, Canada, Accenture

Ten years ago, when nobody had a smartphone in his or her pocket and analytics was a buzzword only among math PhDs, the insurance business model did not seem like it was on the verge of transformation.

The thought of having a computer helping to safely drive a car — or a car, in fact, being a computer — was more Star Trek than reality. And if someone forgot to turn on his or her home alarm system or turn down the heat before leaving for vacation, there was little way to protect property aside from tracking down a neighbour with a key.

Fast forward to 2015, and digital has turned property and casualty insurance on its head. There are now connected cars featuring telematics devices, and home safety and alarm systems that can run homes remotely from phones. There is a vast array of insurance options for consumers, with new solutions coming online all the time.

COMPETING IN A NEW ERA Around the world, traditional insurers are finding that the rising tide of digital is buoying new competitors that no one considered — or perhaps imagined — a decade ago. Aggregators, banks and even grocery stores are selling insurance.

24 Canadian Underwriter June 2015

For example, Google now has a licence to sell insurance in most states south of the border and potentially understands a policyholder far more than any other provider ever could — considering people do not ask their insurance providers about every random symptom they experience, but do ask their search engines.

The call to action for Canadian insurers is loud and clear: harness digital to disrupt competitors, or be disrupted.

But with so many years in a stable business model that required little in the way of broadbased technological innovation, insurers often have what some might gently refer to as “legacy” computer systems. Canadian insurers are now responding to this challenge and, as a result, a digital renaissance of sorts has emerged in the industry.

Successful digital insurers today should be cloudbased, and they must fully embrace analytics software and capabilities, as well as components such as sensors in homes and geo-tracking in cars.

Digital is even changing the sales model: instead of picking up the phone to inquire about a policy, there are now connected places where insurance can be sold, such as connected cars.

The insurers that embrace digital transforma-

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tion today will be able to maintain a competitive advantage, and use their enhanced digital capabilities to create new and relevant products.

But how? For several years, carriers have worked to optimize their operations at the dawn of the digital era, but they need to start focusing on what comes next.

TECHNOLOGICAL TRENDS Accenture’s Technology Vision for Insurance 2015 — Digital Insurance Era: Stretch Your Boundaries, based on input received from 200 insurance executives worldwide — identified the technological trends expected to have the most impact on insurers in the next three to five years.

These are as follows:

1. Internet of me

The time is now to put the consumer at the centre of everything, because this is going to decide how an insurer plans to do business. As components increasingly become intelligent devices, insurers have an opportunity to embed themselves into connected devices to become a more relevant part of people’s lives.

Of course, entering into this space opens up the doors for outside industries to play, such as technology companies. If insurers do not start to put the customer experience at the centre of all they do, someone else will. Some carriers are already providing value-added services, including roadside assistance or automatic accident detection to their offerings.

The key is to ensure that trust, security, privacy and transparency are maintained with every interaction. Determine what can be offered in return for increased personal data — e.g., if a customer shares his or her driving data with a company, the company will provide free or discounted roadside assistance.

2. Outcome economy: shift from

selling things to selling outcomes This step sounds simple, but it is harder than one might think. It is an old industry chestnut that insurance is sold not bought, and focusing on outcomes is how to achieve this.

26 Canadian Underwriter June 2015

As insurers begin selling solutions and results rather than products, carriers today appear to be taking a two-pronged approach: addressing short-term needs by improving internal processes, while investing in digital transformation to help prepare for the future.

Insurers are in a unique position to mitigate the risks of new technology.

They can innovate while taking on the responsibility of governing the dangers of disruptive new technologies, putting the end-user at the centre of every digital experience.

For example, State Farm, the largest home insurer in the United States, has announced partnerships with home security companies ADT and Lowe’s to install smart home-monitoring systems for policyholders. Here, it is not just about selling policies, but also helping customers to enjoy the outcome of living in smarter, safer homes.

3. Platform revolution

Digital platforms are the tools of choice for delivering outcomes to consumers.

Cloud-based solutions, analytics, hardware sensors and other digital technologies are providing insurers with the insights to provide a better, more personalized customer experience.

For example, Microsoft and American Family Insurance, the third-largest mutual U.S. property and casualty insurer, have partnered to launch a business accelerator for start-ups focused on home automation. The aim is to nurture advances that can help lead to safer and smarter homes.

The insurer will provide its industry experience, consumer insights and homeowner knowledge to help the startups to succeed and, in return, will get access to cutting-edge connected home technology.

4. The intelligent enterprise

Becoming a digital insurer means embedding software intelligence into every aspect of business, and platform-based ecosystems represent a new plane of competition. For example, one leading insurer recently announced that it will

provide new policyholders with a free fitness band to track their health progress — and then reward their healthy living with a reduction in life insurance premiums.

Insurers are also leveraging start-ups and innovation labs to explore and use the new technologies available to them.

The big question is, does a company build its own ecosystem or tap into an existing one? For example, does it make sense to build a travel app or partner with a popular aggregator to leverage its existing app to sell travel insurance?

Taking it one step further, insurers can leverage the geo-positioning on consumers’ smartphones to make relevant promotional offers, such as offering shortterm accident insurance to a customer pulling into the parking lot of a ski lodge.

Insurers can also use big data to enable intelligent systems to make better decisions. Mass access to these innovations is being driven by some key factors, including the decrease in cost of storage, the proliferation of cloud-based technologies and the major advances in data science.

5. Workforce re-imagined

This trend has to do with the intersection of humans and machines: that is, wearable technologies and smart machines acting as members of a broader team. This goes far beyond the commonly used, “no ladders up roofs” example, and into compelling new areas such as using drones to assess home damage at disaster sites.

Claims field adjusters could use wearable cameras to augment their ability to evaluate damage by recording all of the information needed to evaluate the claim.

To do this well, insurers need to be thinking of their workforce in terms of human-machine collaboration.

There are great opportunities ahead for insurers with the emergence of digital, and Canadian carriers that take steps today to address these trends will emerge as the winners in an increasingly complex market, and move from having a digital consumer strategy to an overall business strategy that is digital.

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Learning to Share The “sharing economy” of services like Uber and Airbnb represents a murky area for property and casualty insurance.

Brokers, insurers and regulators in Canada have issued warnings about the gaps in coverage as the lines blur between personal and commercial usage of property and vehicles. The trench fighting about insurance deficiencies masks a bigger issue — the growing popularity of these unique shared economic services will require a new approach to risk and rate assessment.

CRAIG HARRIS

28 Canadian Underwriter June 2015

G

et things straight. Vacation rental operator Airbnb currently has more than 36,000 users in Canada. UberX, the popular app-based ride-sharing service, uses “tens of thousands” of drivers in six cities across the country, reports a spokesperson for the parent Transportation Network Company (TNC).

Both companies are backed by either a “Host Guarantee” program (in the case of Airbnb) or contingent auto liability coverage (in the case of Uber). In the vast majority of Canadian cases, this coverage is secondary to the primary auto or personal property insurance coverage of the driver or homeowner. However, insurers require disclosure of any commercial usage on personal insurance policies (the alternative is to purchase far more expensive commercial insurance).

So how many “shared economy” participants are disclosing their commercial ventures to their personal insurance companies? And what would happen if there were a major accident or loss that slips through the cracks of coverage? This is currently not known.

Companies like Uber and Airbnb are tightlipped about their insurance policies and procedures. Insurers in Canada are not saying much either (of the Top 10 property and casualty insurers in Canada, all but one — The Co-operators Group Limited — declined to comment or deferred to Insurance Bureau of Canada, IBC).

The fallout is that there are significant coverage exposures for consumers, who may or may not understand the implications of their insurance policies. A potential range of risk scenarios exists — whether it is a renter using a house for short-term vacation stays that suffers substantial damage or an UberX driver carrying a loaded car of passengers involved in a fatal accident.

June 2015 Canadian Underwriter 29

COVER STORY

Learning to Share COVERAGE GAPS “The concern is that consumers may be unaware about their insurance gaps, their risks and limits,” says IBC spokesperson Steve Kee. “There could be serious coverage implications,” Kee notes.

“Personal insurance products, such as auto insurance and many types of home insurance, are not meant to cover commercial risks. In fact, many of these policies state that they will not provide coverage if the auto or home is used for commercial purposes,” he says.

“Often, insureds engage in operations without contacting their insurance company or broker and assume they have coverage,” reports Jason Arbuckle, vice president, program specialist Canada/ USA with Gen Re. “Others don’t disclose that they are engaging in commercial operations for fear that they will be charged additional premium,” Arbuckle points out.

“Personal lines policies are not designed to cover commercial operations so the insured may find themselves in a situation where they have no coverage,” he explains.

The lack of transparent, comprehensive and primary commercial insurance coverage is one major reason that several municipalities in Canada have either banned TNCs like Uber or sought court injunctions to block the ride-sharing service. While the company maintains a presence in Edmonton, Toronto, Ottawa, Montreal, Quebec City and Halifax, it is not operating in Vancouver and Calgary.

A three-day hearing into Uber’s future in Toronto was set to begin June 1 in Ontario’s Superior Court of Justice.

The city’s position is that Uber is operating illegally and should be stopped over public safety, licensing and insurance issues.

USE DETERMINES INSURANCE Insurers such as The Co-operators expect disclosure from clients taking part in ride-sharing services like UberX, which allows unlicensed drivers to offer rides in their own vehicles (the company also operates more traditional Uber Black limousine and Uber Taxi services).

30 Canadian Underwriter June 2015

“When The Co-operators sells an auto policy, we do ask if the client will be using the vehicle for any sort of business use, and services like Uber would fall into that category,” says company spokesperson Leonard Sharman. “That would be the case for any sort of compensation a person earns by providing services such as Uber — whether they receive cash payments or something else.”

“There is certainly an expectation that that sort of activity would be disclosed,” notes Leonard Sharman of The Co-operators.

“Failing to disclose that could be a case of misrepresentation, which could void the policy and lead to denial of coverage.”

Sharman says “there is certainly an expectation that that sort of activity would be disclosed either when the policy is purchased or when they start using the vehicle for that sort of thing, depending on the situation. Failing to disclose that could be a case of misrepresentation, which could void the policy and lead to denial of coverage.”

The same principle applies to personal property policies. “In terms of homeowners’ insurance, we do ask what the home being insured is going to be used for, and there is an expectation that if it is

going to be used as an income generator and/or frequently used by people other than the clients’ family, such as a B&B or rental, that will be disclosed to us, so that we can reassess the risk,” Sharman says.

“In cases where it is going to be rented out through a service like Airbnb on a fairly regular basis, we would reassess the risk and might have the client purchase a home business package to have it properly protected,” he reports.

Asked about Uber’s insurance policy, spokesperson Susie Heath states: “Every ride on the UberX platform in Canada is backed by $5 million of contingent auto liability insurance covering bodily injury and property damage.

Heath notes that although the company’s “insurance policy is proprietary, Canadians can rest assured knowing that ride-sharing partners are well-covered by commercial auto insurance, in addition to any insurance coverage maintained by the driver. This $5 million of coverage is more than two times the standard requirement for taxi and limo insurance in all Canadian cities, and is written by an insurance company (that has an) A (Excellent) A.M. Best rating.”

Aside from public statements, Uber has been unwilling to disclose detailed information about its insurance policy — to the point that it has asked for a sealing order to protect its commercial insurance as a “trade secret” in the Toronto court case.

Justice James Diamond of Ontario’s Superior Court of Justice ruled in late March that he was “not satisfied that Uber has presented sufficient evidence to show that disclosure of the insurance policy would lead to a loss of any competitive advantage.”

If Uber introduces the insurance policy as evidence, it must be made public.

Also, unlike in the United States, where Uber’s stated coverage is a blend of primary and contingent, in Canada, it is only called “contingent” (or excess).

In a March 26, 2015 Globe and Mail article, Ian Black, general manager for Uber’s Ontario operations, was quoted at a luncheon conference in Ottawa stating that the company’s extra layer of

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COVER STORY

Learning to Share insurance is an “interim” measure, “but it doesn’t remove some of the complication of the fact that existing insurance policies are not written in a way [that] contemplate ride-sharing.”

The article further reported that Black said Uber is working with insurers in Canada to create hybrid policies that cover drivers who use cars both for personal and commercial uses. “That’s the hardest part of the work that we need to do now.”

ance, depending on the circumstances of the collision and where the collision happened, there could be limited or even no coverage for the driver and the passenger,” he explains.

NEED FOR CLARITY Philomena Comerford, chief executive officer of Baird MacGregor Insurance Brokers, who also attended the Ottawa luncheon meeting, is also quoted in the article: “I find it very strange that the business model doesn’t have the insurance issue bolted down correctly so that there’s no ambiguity.”

This “ambiguity” also appears to extend to Airbnb’s Canadian operations, whose “Host Guarantee” program is not defined as an actual insurance contract.

“The Host Guarantee is not insurance and should not be considered as a replacement or stand-in for homeowners or renters insurance,” notes information posted on Airbnb’s website. Notably, the program does not protect cash and securities, pets, personal liability or shared or common areas.

“The $1 million Host Guarantee may cover damages irrespective of whatever other insurance arrangements a host may or may not have,” says Airbnb spokesperson Jacob Kerr. “In the U.S., we have a liability insurance program called Host Protection Insurance. We’re working hard on finding ways to expand it internationally,” Kerr reports.

A major challenge for insurance companies is dealing with claims from a less-than-forthcoming ride- or homesharing participant. “Each company has its own practices, but insurance claims in these circumstances may be denied,” Kee observes.

“For example, if you use your vehicle or your home for commercial purposes when the policy says no commercial use, your company could cancel the policy or deny coverage. For auto insur32 Canadian Underwriter June 2015

“FSCO does not regulate transportation network companies; however, we do regulate the insurance companies that would provide insurance coverage for their drivers and users throughout Ontario,” says Malon Edwards of the Financial Services Commission of Ontario.

Arbuckle emphasizes consistency is crucial in claims handling. “Insurers need to have a consistent approach to claims, but in the fledgling sharing economy there is really no precedent to look to,” he states.

“If, hypothetically, a company decides to treat not disclosing the carrying of passengers for hire as a misrepresentation, then will best practices dictate that they do that with all claims?” he asks.

“Consistency in the claims-handling approach is one of the keys to avoiding bad faith claims,” Arbuckle comments.

IN THE SPOTLIGHT The coverage ambiguity of shared economy services is typically thrust into the spotlight when a major loss occurs. For Uber, that liability turning point happened in the U.S. when an Uber driver hit and killed a young pedestrian in San Francisco on December 31, 2013.

The family of the six-year-old girl filed a wrongful death lawsuit against Uber, alleging that the driver was logged into its app. Uber countered that the driver was “a partner of Uber” who was not providing services on its system at the time of the accident.

The family’s lawsuit in California state court notes that the girl’s mother and brother were seriously injured. (In the U.S., Uber faces multiple ongoing lawsuits from individuals, regulators, cab companies and others).

Given that there are tens of thousands of UberX drivers operating in Canada, this scenario could surely play out here, as well. In fact, the lack of clarity between primary and contingent liability insurance only makes the situation more complicated in this country — a literal accident waiting to happen.

In Canada, there have been some reported minor accidents involving Uber drivers. In one case reported in the Toronto Star March 22, 2015, Uber driver Waita Sindi was involved in a collision in Toronto in February while carrying three passengers.

“You’re kind of left wondering: What am I supposed to do, who am I supposed to contact, there’s no phone numbers — standard stuff, as you would with an insurance claim,” Sindi was quoted in the article as saying.

A high-profile case in Calgary in late April also showed some of the possible negative consequences for homeowners using services like Airbnb. Renters of a house owned by Mark and Star King caused more than $75,000 in damage in what media reports have termed a “drug-induced orgy.”

“In terms of property-sharing services, media reports on a recent case in Alberta had the service-providing company offering to pay for damage caused by the

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COVER STORY

Learning to Share renter of the property,” Kee says. “In any case, it is always a best practice, for the peace of mind of those offering these services, to check with their insurance representative,” he advises.

LIABILITY READY? Aside from individual cases, the bigger question may be this: Is the insurance industry (or regulators) in Canada prepared for the liability implications of shared economy services? The response so far has involved consumer warnings from various groups, including the Financial Services Commission of Ontario (FSCO), IBC, insurance companies and several brokerages across the country about the insurance impact of sharing services.

In late March, FSCO issued an online posting to consumers regarding the insurance-related risks of ridesharing programs.

The infographic stated the following: “If you are intending to participate in a ride-sharing service as a driver, you should check with your auto insurance representative to ensure you have proper insurance that protects the driver, passenger and others. It’s also a good idea to seek independent legal advice before you sign on.”

When asked if there are any plans to regulate the insurance aspect of ridesharing services, FSCO senior communications officer Malon Edwards responds that “FSCO does not regulate transportation network companies; however, we do regulate the insurance companies that would provide insurance coverage for their drivers and users throughout Ontario.” Adds Edwards: “FSCO’s other interest in these matters is ensuring that drivers and users have the right information to make informed decisions about their insurance protection.”

To date in Canada, no formal regulatory guidelines have been created to deal with the issue of sharing services such as TNCs and short-term home rentals.

In addition, insurers have yet to introduce any targeted insurance products for ride-sharing programs.

Vancouver-based Square One Insurance, reports it has offered an insurance prod34 Canadian Underwriter June 2015

uct for home-sharing hosts in Ontario, the Prairies and British Columbia since July 2013.

IBC’s Steve Kee says the bureau is in early stages of working with the insurance industry and regulators. “There is an opportunity for the Canadian insurance industry to lead in the development of solutions that both address

“The insurance industry in Canada could use some guidance from the regulators and courts before it can act. Once that is done, homeowners and personal auto present the biggest opportunities, followed by personal umbrella,” suggests Gen Re’s Jason Arbuckle. the insurance gaps and facilitate small business enterprise,” he says. “IBC and its member companies are already looking… at the legislation, the regulations and the forms to see what, if anything, can be done to fill the gaps,” he adds.

“With respect to personal lines, there are certainly opportunities,” Arbuckle agrees. “However, the insurance industry in Canada could use some guidance from the regulators and courts before it can act,” he suggests. “Once that is done, homeowners and personal auto present the biggest opportunities, followed by personal umbrella.”

LESSONS LEARNED Specific examples of a tangible insurance response exist in the U.S., where TNCs and insurers have developed a framework to accommodate shared-economy services. One of the key sticking points in ride-sharing services involves the potential insurance gaps in various stages of the ride pick-up process: Period 1, when the driver is logged in and available, but does not have a fare; Period 2, when the driver is on his way to pick up a passenger; and Period 3, when the driver is carrying a passenger(s).

In March, Allstate Insurance Company, the American Insurance Association, Farmers Insurance, Lyft (TNC), the National Association of Mutual Insurance Companies, Property Casualty Insurers Association of America, State Farm and Uber announced a “Compromise Model Bill” for proper auto insurance coverage for ride-sharing services.

The proposed agreement sets minimum liability limits ($50,000 per person for bodily injury; $100,000 per incident for bodily injury; and $25,000 in physical damage) for Period 1, plus any other state compulsory coverage. When the driver is on his way to pick up a passenger (Period 2) or carrying a passenger or passengers (Period 3), minimum liability coverage of $1 million applies, along with any other compulsory coverage.

The proposed agreement also deals with other issues, such as subrogation, claims investigation co-operation between auto insurers and TNCs, and the creation of “innovative new products” for ride-sharing programs.

“This type of legislation is already under discussion in Tennessee, Maryland, Washington state and Kansas, and could be introduced in other states in the near future,” Michael Costonis, executive director of Accenture’s insurance practice for North America, notes in a blog.

“It is designed to effectively close the gap between insurance coverage offered by ride-sharing companies and the driver’s personal insurance policy.

That’s a big step for the TNCs, but it also represents a major change for insurers.

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COVER STORY

Learning to Share

“For insurance companies, there are new exposures and new risks. The competitive insurance market will, no doubt, see opportunities to create and sell new coverages,” says Insurance Bureau of Canada’s Steve Kee. It helps them shift from covering car ownership to a new ‘unit of risk’ based on usage and role,” Costonis explains.

Colorado was one of the first states to authorize ride-sharing in the U.S., allowing companies such as Uber and Lyft to legally operate.

Insurance company USAA launched a pilot in Colorado that offers coverage to TNC drivers from the moment their ride-sharing mobile apps are turned on until they are matched with a passenger.

The program, which began in February, extends a member’s existing auto policy coverage and deductibles.

Erie Insurance, for its part, announced a ride-sharing insurance program last December that covers a driver “before, during and after the hired ride” in Illinois and Indiana.

“In the U.S., some states have already passed bills or revised statutes to address ride-sharing,” notes Arbuckle. “As a result, insurance companies have developed personal auto products to sell the ride-share drivers. Some insurance companies have opted to add endorsements to their wordings while others are offering a combined personal and commercial form,” he reports.

EXPANDING MARKET In fact, Arbuckle states that new technology and approaches to risk can help the ride-sharing market. “There will also be creative new ways to look at pricing this exposure,” he observes.

“Start with a TNC app measuring usage, add a dash of telematics and mix in an 36 Canadian Underwriter June 2015

insurance company that charges by the kilometre, and you get a customized, comprehensive insurance solution,” Arbuckle suggests.

In the Accenture report, Lead the Pack or Follow the Leader: Insuring Risk in the Sharing Economy, the consulting firm notes that Forbes predicts that the global sharing economy will grow by 25% this year, reaching more than US$3.5 billion.

Frost & Sullivan has estimated the North American car-sharing economy alone will reach US$3.3 billion by 2016, with more than 9 million members participating.

The sharing economy also extends beyond cars and homes to include a varied range of services — everything from job-matching (Taskrabbit) to boat storage (Boatbound) to diners for home chefs (EatWith).

Costonis, author of the Accenture report, notes that insurers should see the upside of marketing to a growing sector of the economy. “While the lack of historical data and nebulous boundaries can prove problematic, the sharing economy also offers an opportunity for companies to rise above traditional insurance market dynamics and define the rules in an entirely new playing field,” he writes.

“The sharing economy represents a phenomenal opportunity for those insurers that become first-movers in this arena,” Costonis suggests. In particular, he reports that insurers can seek to expand their client base through sharedeconomy services.

“For example, an innovative insurer might design an offering or a technology that not only allows it to interact with the owner of a car or home, but also with all the renters that conduct business with that owner,” he says.

“Insurers who present solutions to their sharing-economy customers are also likely to build strong loyalty that strengthens retention,” he adds.

In Canada, the impact of the sharing economy is spreading to insurance companies whether they are prepared for it or not. A classic case of a “disruptive” player in the economy, ride- and home-sharing services seem destined to expand rapidly over the next several years. Will insurers see these “new economy” services as an obstacle — or as an opportunity?

“There will be opportunity to write business, both in commercial and personal lines,” Arbuckle predicts.

“To achieve sustainability, companies must make underwriting profitability a foremost priority. Exposures must be thoroughly evaluated, and business must be underwritten and priced with appropriate discipline. In addition, claims must be handled in a manner that is fair, consistent and prudent,” he says.

“The shared economy is a new industry,” says Kee. “For insurance companies, there are new exposures and new risks. The competitive insurance market will, no doubt, see opportunities to create and sell new coverages.”

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Poised for Change Proposed amendments to Canada’s Personal Information Protection and Electronic Documents Act, if passed, would vastly change the current privacy landscape. Beyond modernizing the way personal information is protected, Bill S-4 may impact how cyber insurance is underwritten. This new environment will demand a corresponding change in cyber insurance’s approach and coverage to remain in step.

National Product Leader, Professional Liability, Burns & Wilcox Canada

38 Canadian Underwriter June 2015

quirements with regard to consent, notification, remedies, disclosure and annual reporting will necessitate enhanced training and education for cyber underwriters and brokers.

FAR-REACHING IMPACT Though the changes from Bill S-4 are expected to be far-reaching, there are several key areas worthy of closer examination by cyber experts.

Strengthened role of the OPC Most notably, Bill S-4 enhances and increases the power of the OPC by enabling the commissioner to enter into compliance agreements. Should an organization not conform to this agreement, the commissioner may then apply to the Federal Court for a hearing to prosecute the offender.

Entering into an agreement does not limit an affected individual’s right to go to court against the organization that experienced a breach. The new bill removes incentive for the organization to enter into the agreement, and allows for individuals not satisfied with the agreement to take action, notes a Canadian Bar Association (CBA) submission on Bill S-4.

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Christopher Gonzales

Experts suggest that Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) has been challenged by the emergence of smartphones, mobile payments, cloud computing and the rise of big data. A series of widely publicized data breaches over the past two years have kept the issue top of mind and, as a result, Canadians continue to voice concerns over the collection and treatment of their personal information.

Bill S-4, An Act to amend the Personal Information Protection and Electronic Documents Act, tabled April 8, 2014, aims to modernize PIPEDA and maintain the country’s leadership in privacy protection by significantly enhancing the powers of the Office of the Privacy Commissioner of Canada (OPC).

These increased powers provide a potent incentive for organizations to exercise greater care and caution in ensuring that the data and personal information they collect remains safe while encouraging continued growth and trust in the digital economy.

In addition to vastly changing the privacy landscape in Canada, the proposed changes to PIPEDA will have a significant impact to the way that cyber insurance is underwritten. Changing re-

In addition, the draft amendments propose allowing the commissioner to fine up to $100,000 organizations that knowingly contravene sections of PIPEDA, or fine organizations up to $10,000 for offences punishable on summary conviction. This clause gives the commissioner real recourse and further bolsters PIPEDA’s effectiveness, as knowingly contravening the legislation now has a monetary consequence.

With actual dollar amounts attached to fines, the insurance industry may begin to see requests for higher regulatory proceedings coverage within cyber policies.

Under the proposed bill, the OPC will have an enhanced advocacy role to protect the public interest. In addition, it will be able to disclose information necessary to conduct investigations and make recommendations in its annual report to Parliament.

It may also disclose information for proceedings or hearings before a Federal Court, and disclose information to the Attorney General of Canada, a provincial attorney general, or any other government institution for any findings related to an offence under Canadian or provincial law. Raising the profile of breaches has had a large effect on the privacy landscape in the United States and this is expected to have similar results in Canada.

These new disclosures aimed at protecting the public interest may work to raise the profile of the privacy exposures organizations face today and may result in increased demands for additional privacy coverage.

Breach test: more costs and human capital The “breach test” in Bill S-4 mirrors the test found in Alberta’s Personal Information Protection Act. Under this, an organization must report a breach to the commissioner and notify individuals if it is reasonable to believe that the breach “creates a real risk of significant harm” to the party involved. Although broad, that harm is based on the level of sensitivity of the information that has been breached and the likelihood that the information is

being, or will be, misused.

The threshold for reporting is tied to “real risk of significant harm to an individual.” The ambiguity of the threshold allows for interpretation. Systemic or large breaches may go unchecked should an organization feel no significant harm will manifest, notes the CBA submission.

The bill also requires organizations to maintain records of every breach of security safeguards. This requirement will

need to be addressed by organizations, depending on the level of threat detection; some organizations may have to devote additional administrative costs and human capital to record-keeping.

Given the lack of clearly defined thresholds, organizations will be further burdened by logging and tracking incidents that may not qualify as “real risk of significant harm,” the submission adds.

The potential impact on the insurance industry is unknown at this point as the vagueness of “significant harm” may mean either that very few or the majority of breaches meet notification requirements. At the very least, the demand will increase insurer’s forensic costs in line with the burden to investigate incidents to find out if data was stolen, who took it and for what purpose.

From an underwriting standpoint, it will be important to know if an organization’s current infrastructure can handle the additional burden of tracking and record-keeping.

Breach notifications The new bill requires that when a breach occurs, any communication to impact-

ed individuals must convey the significance of the breach and include enough “prescribed information” that could be deemed relevant. The notification must also be “conspicuous” and given directly to the individual, if feasible, as soon as possible. Bill S-4 also outlines notifications to any other organizations or government institutions that can reduce or mitigate the harm from the breach.

The new requirements and mandatory reporting will create real, measurable costs for organizations that experience a breach. Accordingly, cyber underwriters must consider these additional costs.

Changing consent In the proposed new bill, “consent” will be considered valid only “if it is reasonable to expect that an individual to whom the organization’s activities are directed would understand the nature, purpose and consequences of the collection, use or disclosure of the personal information to which they are consenting.” The changes to the definition, though not significant, protects Canadians by ensuring they understand the “nature, purpose and consequences of the collection.”

The revised definition may give rise to additional questions or contradictions from the perspective of Canada’s judicial system. Given the decade of interpretation under the old definition, organizations will have to review their standards and ensure they are still in compliance, argues the CBA submission.

If passed, the proposed updates to PIPEDA will vastly change the privacy landscape in Canada. Canadian carriers are already wary of the large claims paid by their U.S. counterparts following a number of high-profile data breaches and the response by several carriers to increase rates or exit certain retail and medical record segments of the market.

For cyber insurers, the effects of Bill S-4 will be far-reaching and come at a time where the industry has already experienced significant change, largely as a result of the impact of the significant loss ratios posted by many U.S. cyber carriers in the last two years.

June 2015 Canadian Underwriter 39

Living

Vicariously Todd Davies

Partner, Alexander Holburn Beaudin + Lang LLP

Scott Harcus

Associate, Alexander Holburn Beaudin + Lang LLP Alexander Holburn Beaudin + Lang LLP is a member of The ARC Group of Canada, a network of independent insurance law firms across Canada.

When considering excess auto coverage in British Columbia, it is important to remember that even in a leasing or rental car scenario, the owner’s policy remains primary. A recent ruling

by B.C.’s Court of Appeal illustrates the limits of vicarious liability and makes clear that underwriters looking to limit coverage to the leasing company alone must include related language in a prominent place in the policy.

Most Canadian provinces have legislation in place making the owner or lessor of a vehicle vicariously liable for a driver negligently operating the vehicle with the owner or lessor’s consent. As a result, in the absence of any independent fault

40 Canadian Underwriter June 2015

on the part of a leasing or rental car company, that “innocent” company’s exposure is vicarious liability for damages arising from an accident caused by the driver’s negligence.

In order to restrict this liability, some provinces, namely British Columbia, Alberta and Ontario, have instituted a legislated $1 million monetary cap on the damages that an innocent lessor or rental car company may face.

In Alberta and Ontario, legislation also provides for “reverse” priorities in the leasing scenario, making the lessee, renter and/or driver’s policies sit in priority to that of the owner’s policy, further isolating the exposure on leasing and rental car companies and their insurers.

Not so in British Columbia. In B.C., even in a leasing or rental car scenario, the owner’s policy remains primary. Furthermore, absent very specific language, a leasing or rental car company’s excess policy may also be found to insure the driver or lessee, effectively eliminating the cap insofar as the insurer of the leasing or rental car company is concerned.

In British Columbia, the $1 million monetary cap is established by Section 82.1 of the Insurance (Vehicle) Act (IVA), which has the effect of limiting a lessor’s vicarious liability to $1 million. Most

insBlogs automobile leasing agreements in B.C. require the lessee to obtain third-party liability coverage naming the lessor as an insured and requiring limits of at least $1 million. Indeed, the IVA requires that a lessee name a lessor as an insured, although limits are not addressed.

The intended result of the standard leasing agreement is to address the liability exposure created by Section 82.1, so that in the event that a lessor is sued for damages arising out of a motor vehicle accident involving its lessee, the lessor can rely upon the lessee’s Insurance Corporation of B.C. (ICBC) policy for coverage. This intended result does not apply to short-term rentals of less than 30 days where there is usually no obligation on the renter to obtain insurance naming the owner (for example, where a tourist rents a car for the weekend).

The insurance policy did not include the requisite wording. The lower court judge found that this omission was immaterial because the statutory language was meant to alert insureds to exclusions or limits of coverage of which they might not be aware (not those who were never insured under the policy).

NEW GUIDANCE In the 2014 decision, Stroszyn v. Mitsui Sumitomo Insurance Company Limited, British Columbia’s Court of Appeal addressed the interplay of the above-noted provisions. The facts of Stroszyn require only a cursory review.

The defendant, Mary Chen, leased a vehicle from Honda Canada Finance Ltd. Chen obtained the mandatory ICBC policy, which insured herself, Jason Chen

and Honda Canada. The policy had a provide coverage for the lessee or driver third-party liability limit of $1 million. of the motor vehicle (Mary and Jason Chen).

Honda Canada also had an excess auJason Chen was involved in a motor tomobile policy with Mitsui Sumitomo vehicle accident with Edward Stroszyn.

Insurance Company with a policy limit An action was commenced by Stroszyn of $9 million. The excess policy provided for damages and the claim was settled for that it would indemnify the “insured”, $1.6 million. ICBC paid out its $1 million which was defined as Honda Canada. policy to Stroszyn, leaving $600,000 On its face, the excess policy did not owing on the judgment.

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Stroszyn applied to the court for a determination on two points: (1) whether the payment of $1 million under the ICBC policy, which named both the lessor and lessee as insureds, extinguished Honda Canada’s liability pursuant to the vicarious liability cap; and (2) whether Jason Chen was an insured under the excess policy so as to make Mitsui Sumitomo Insurance liable for the remaining $600,000 of the settlement.

Stroszyn argued the $1 million payment under the ICBC policy did not discharge Honda Canada’s obligations.

He submitted that given the $1 million payment was made on behalf of all of the insureds, the court should conclude that only $333,333 was made on behalf of Honda Canada. The Court of Appeal rejected this argument and found that payment under the ICBC policy satisfied Honda Canada’s obligations as a vicariously liable lessor to the $1 million cap.

Justice Peter M. Willcock stated: I see no basis in law for considering only a portion of the ICBC payment to have been made on behalf of Honda. In my view, each of the insureds in this case can regard the whole of the payment made by ICBC to have been made on his, her or its behalf and to have reduced its liability to the petitioner to the full extent of the payment. In the absence of a statutory provision limiting the lessor’s liability, all three would remain jointly and severally liable for the balance of the petitioner’s damages. However, the I(V)A having limited the lessor’s liability to $1 million, it is my view that the payment of $1 million to the petitioner on behalf of all insureds, including the lessor, completely discharges the lessor’s liability and leaves the other defendants jointly and severally liable for the balance of the damages.

Justice Willcock pointed out that this conclusion only addressed a situation where the vicariously liable party is a co-insured under the ICBC policy. Specifically, he continued: In the circumstances of this case, because the

42 Canadian Underwriter June 2015

lessor is an insured under the ICBC policy, we need not determine whether the lessor’s liability is reduced by payments expressly made by or on behalf of lessees or drivers alone. The liability of the lessor is certainly reduced by payments made on its behalf by its insurer and I cannot see in the legislation an evident intention to treat payments made under the primary insurance policy as payments made on behalf of the tortfeasor alone and not payments equally made by the parties vicariously liable for his negligence and insured under the payer’s policy, as they would be at common law.

This is an important limitation of the judgment. In circumstances where a driver or lessee makes a payment that is expressly made by the driver or lessee alone, this may or may not limit the liability of the lessor under the $1 million vicarious liability cap. This issue remains undecided.

The Court of Appeal then considered whether Jason Chen was insured under the Mitsui Sumitomo Insurance excess policy. While it was clear on the face of the Mitsui Sumitomo Insurance policy that the company had only intended on insuring Honda Canada, the policy was an “optional insurance contract” under the IVA, and, therefore, was governed by the requirements of the IVA. Pursuant to Section 61 of the IVA, optional insurance contracts may: ...prohibit a specified person or class of persons from using or operating the vehicle, exclude coverage for a specified risk or provide different limits of coverage for different persons or risks or classes of persons or risks.

However, pursuant to Section 61(2), such limitations of coverage are not binding on an insured unless the policy has “printed on it in a prominent place in conspicuous lettering the words”: “This policy contains prohibitions relating to persons or classes of persons, exclusions of risks or limits of coverage that are not in the insurance it extends.”

NO REQUISITE WORDING The Mitsui Sumitomo Insurance policy did not include the requisite wording.

The lower court judge found that this omission was immaterial because the statutory language was meant to alert insureds to exclusions or limits of coverage of which they might not be aware (not those who were never insured under the policy). The Mitsui Sumitomo Insurance policy would not have been provided to Jason Chen, and, therefore, the failure to include the specific warning was of no real consequence.

The Court of Appeal disagreed: ...the failure to meet the statutory requirement precludes the insurer from reducing or altering the underlying coverage by writing limiting terms into the excess policy. The statute provides a means by which an insured may easily determine whether the coverage afforded under the lessor’s excess coverage differs from the underlying coverage. The wording required by the I(V)A is a measure of protection for all insureds. The exclusion of lessees and their agents from coverage is only effective if the mandated words appear on the policy; the exclusion is ineffective if the mandated words do not appear. That is so, whether or not the wording is brought to the attention of the insured. (our emphasis) In the result, Mitsui Sumitomo Insurance was required to pay the remaining $600,000 of the settlement, not because the initial $1 million payment failed to discharge Honda Canada, but rather because Jason Chen was an insured under the Mitsui Sumitomo Insurance policy.

The implication of this decision for those underwriting excess liability insurance for leasing companies in British Columbia is clear.

If underwriters wish to limit coverage to the leasing company alone, it is necessary to include the language from Section 61(2) in a “prominent place” and in “conspicuous lettering” in the policy.

c

Recent Insurance Press Releases featured on insPRESS.ca Peace Hills Insurance named one of Alberta’s Most Respected Organizations May 1, 2015 - by Peace Hills Insurance You’re Invited to ‘Music Heals 4’ on Wed. June 17 in Toronto An Evening in Support of Muscular Dystrophy Research May 4, 2015 - by Canadian Underwriter magazine ENCON Group Inc. Announces Expanded Cyber Liability Coverage and New Cyber Hotline May 4, 2015 - by Encon Group Inc. London Market Launch of ProFormance Group’s New TPA in partnership with Xchanging May 5, 2015 - by ProFormance Group Inc. Crawford & Company (Canada) Inc. Offers RIBO Accredited Online Courses May 5, 2015 - by Crawford & Company (Canada) Inc. ARC Group Spring Seminar 2015 - A personal invitation from endnote Paul Hanley: The new world of cyber risk May 6, 2015 - by The ARC Group Canada | Le Groupe ARC Canada Lorie J. Phair appointed CEO of ingenie Canada May 7, 2015 - by ingenie Canada AIA Expands Xactimate Training to Ottawa May 7, 2015 - by CRU - Catastrophe Response Unit SPECS Limited – New Branch Manager – London, Ontario May 7, 2015 - by SPECS (Specialized Property Evaluation Control Services) Canada roadshow successfully promotes Bermuda as jurisdiction May 8, 2015 - by Bermuda Business Development Agency Please support ‘Cycle for Wishes II’ from Montreal to Quebec City to kick-start the 2015 RIMS Canada Conference May 8, 2015 - by Cycle for Wishes Elliott Special Risks announces Ricardo Philip as Product Line Leader, Environmental Impairment Liability May 11, 2015 - by Elliott Special Risks Ltd. SPECS Welcomes New Appraiser in the Ottawa Ontario Region May 11, 2015 - by SPECS (Specialized Property Evaluation Control Services) CRU Environmental Services to Participate in Clean Pacific Conference May 12, 2015 - by CRU - Catastrophe Response Unit SPECS Limited - New London Ontario Appraiser May 12, 2015 - by SPECS (Specialized Property Evaluation Control Services)

Roar Engineering Announces it’s Open for Business May 14, 2015 - by Roar Engineering Maltman’s Hosts London Market on Rooftop Terrace of Canada House May 14, 2015 - by CRU - Catastrophe Response Unit Builders Connection™ has Joined Unica Insurance’s Suite of Connection™ Products May 19, 2015 - by Unica CEP’s Multidisciplinary Team in Ontario Keeps Growing Stronger May 19, 2015 - by CEP Forensic Engineering Inc. Opta Information Intelligence welcomes Michael Wright BBA, Bcs as Vice President of Information Technology May 19, 2015 - by SCM Insurance Services ARC Group Spring Seminar 2015 (being held Thursday, May 21, Toronto): Last chance to register!

May 20, 2015 - by The ARC Group Canada | Le Groupe ARC Canada AIA Starts Hands-On, Low Cost Xactimate Training in Ottawa May 20, 2015 - by CRU - Catastrophe Response Unit FirstOnSite Restoration promotes two executives, strengthens commercial, technology services May 20, 2015 - by FirstOnSite Restoration Itech Proud to Assist TRANSCAER Flammable Liquids Training in Haldimand County May 21, 2015 - by STRONE-Itech National Brokers Insurance Services Inc. awarded with “Most Innovative Full-Service Brokerage Firm - Canada” by Corporate LiveWire’s Innovation and Excellence Awards May 2015 May 21, 2015 - by National Brokers Insurance Services Inc. Xpera Risk Mitigation & Investigation welcomes Ray Wilderman as Director Technical Services May 21, 2015 - by SCM Insurance Services Investing in Cyber Resilience to Build a Competitive Edge [Video] May 22, 2015 - by The ARC Group Canada | Le Groupe ARC Canada A new world order: Are you cyber ready? [Video] May 22, 2015 - by The ARC Group Canada | Le Groupe ARC Canada Cyber security: How to prepare for the future? [Video] May 25, 2015 - by The ARC Group Canada | Le Groupe ARC Canada New JLT Canada Regional Office Opened in Halifax May 25, 2015 - by JLT Canada

Opta Information Intelligence welcomes Karl Norris as Account Manager, Prairie Region May 14, 2015 - by SCM Insurance Services

Fenchurch General Insurance Company Expands Surety Program Capacity May 27, 2015 - by Fenchurch General Insurance Company

Xpera Risk Mitigation & Investigation welcomes Georgiana Chen as National Account Manager May 14, 2015 - by SCM Insurance Services

Crescent Beach Neighbourhood House Receives Facelift Complements of BCAA and On Side Restoration May 27, 2015 - by On Side Restoration Services Ltd.

Read the Full Story for Each Press Release

INSPRESS COLUMN AD JUNE 2015.indd 1

15-06-18 3:35 PM

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.

PROedge Seminars & Professional Development Curriculum

CIP Society Events:

Calgary – Beyond the Sales Script ........................................................ June 11 Webinar – Host Liquor Liability Law .................................................... June 16 Calgary – CGL Refresher & Compare Sessions ..................................... June 16 Red Deer – CGL Refresher & Compare Sessions .................................. June 22 Lethbridge – CGL Refresher & Compare Sessions ................................ June 24 Conestoga – Building Better Relationships at Work ........................ October 1 Edmonton – Think on Your Feet® ............................................. October 20-21

Victoria – Golf Tournament ................................................................. June 24 Calgary – Annual General Meeting .................................................... June 26 Moncton – Charity Softball Tournament ................................................ July 9 Edmonton – Golf Tournament .............................................................. July 20 Moncton – Golf Tournament ........................................................... August 13 Hamilton – Volleyball Tournamen .............................................. September 2 Brooklin, ON – Volleyball Tournament ........................................ September 3

Keeping you at the forefront of the P&C industry.

The CIP Society. MEMBERS BENEFIT. www.insuranceinstitute.ca/cipsociety

p r i s D Age of u t ion

Terry Stuart Chief Innovation Officer, Deloitte Canada

Disruption is coming — and Canadian firms are not prepared.

The way Canadians live and work is about to change profoundly. Rapid advances in technology are poised to disrupt many of the sectors that anchor Canada’s economy. The impact will be felt across the country — and Canadian businesses are not prepared for it.

Disruptive innovation has the potential to impact each and every business, no matter its size, sector or location. The development and application of advanced technology is accelerating at such an exponential rate that people have difficulty coming to grips with the sheer pace of change. Among the key factors propelling these advanced technologies is the exponential growth in computer processing power — and, in turn, the staggering drop in the price of computer chips. In 1992, one would pay $222 for a million transistors; today the cost is $0.06.

Advances in technology have also increased the rate of business growth — and business failure. Since 2003, a new company has reached a $1 billion valuation every three months in the United States. Yet the time it takes to reach that valuation has shrunk considerably: Shopify took

nine years; Slack took one.

As businesses are growing more quickly, they are also exiting much more quickly. In 1960, the average lifespan of an S&P 500 (Standard & Poor’s) company was 56 years; by 2014, it had dropped to almost 15 years.

Advanced technologies are driving the disruptive innovations that will bring significant and permanent change to Canada’s business landscape.

In a recent report released by Deloitte, Age of Disruption — Are Canadian Firms Prepared?, five technologies were identified for their considerable disruptive potential: artificial intelligence, advanced robotics, networks, advanced manufacturing and collaborative connected platforms.

Whether profound change comes from these specific technologies, others or some combination that has yet to be seen, the incredible disruptive potential of these five will illustrate the importance of being prepared.

For over a year, Deloitte studied the Canadian economy to better understand whether or not firms have what it takes to withstand significant technology-driven disruption. As part of this research, 700 business leaders across Canada were surveyed to gain their insights into the issue.

Illustration by Dave Whamond/threeinabox.com

Canada’s economy, like others around the world, is facing rapid advances in technology. The incredible disruptive potential of these changes — including, but not limited to, artificial intelligence, advanced robotics, networks, advanced manufacturing and collaborative connected platforms — clearly demonstrate the need to be prepared.

June 2015 Canadian Underwriter 45

Each firm’s performance was evaluated in four areas that are vitally important to disruption preparedness, namely the following: • Awareness: understanding changing technologies, the accelerating pace of change and the potential for technology-driven disruption in the firm’s industry and business environment; • Culture: the extent to which a firm promotes, encourages and provides incentives for innovative behaviours and practices; • Organizational agility: the ability to rapidly redeploy systems, assets and people to address external opportunities or threats; and • Effective resources: the technology, human capital and financial assets that firms can use to enable change.

THE FINDINGS Based on results of the survey, Deloitte discovered that a mere 13% of Canadian firms can be considered highly prepared for disruption, 23% are prepared in one area, but not others, 29% have started, but are struggling with their overall preparedness efforts, and, most disturbingly, 35% are completely unprepared.

The implication is dramatic. The survey shows that more than four out of five Canadian businesses are not wellprepared for disruption.

Compounding the essential lack of

Graphic provided by Deloitte Canada

46 Canadian Underwriter June 2015

preparedness is the fact that a large number of firms — almost half — believe themselves to be more prepared than they actually are. This “perception gap” is based on firms reporting a lack of substantive activity in key areas of preparedness, while simultaneously arguing that they are, in fact, prepared.

LEADING BY EXAMPLE To improve preparedness, consider looking to Canada’s best-prepared firms. One survey result that was particularly interesting was the diversity of the 13% of highly prepared firms themselves. They do not fit a single mould. They represent firms from every sector, of all shapes and sizes.

From a large bank to a small bakery, these firms are as diverse as Canada.

However, there is one important similarity: they are all taking concrete steps to ready themselves for disruption from a future that can only be imagined.

By understanding what sets Canada’s highly prepared firms apart from their peers, it is possible to identify how the country’s numerous, poorly prepared businesses can change.

It has already been stated the highly prepared firms excel in all of the key preparedness areas: awareness, culture, agility and resources. Yet, it was also discovered that these same organizations exhibit attitudes and behaviours of highly productive companies, as identified in previous studies on Canadian productivity.

Specifically, highly prepared firms do the following: • remain committed to research and development investment, and more than half of them plan to boost R&D spending over the next five years; • are more likely than their peers to focus on national or international markets, which brings them into contact with new ideas and approaches and gives them a different perspective on how to create and sustain success; and • were almost 25% more likely than unprepared firms to report revenue growth over the past five years.

The implication? Investments that can improve a company’s productivity today can enhance its preparedness for the

wave of technology-driven disruption tomorrow.

THE PATH TO PREPAREDNESS After reviewing the data, it becomes clear that Canadian companies can take concrete steps to dramatically improve their capacity to anticipate, respond to and capitalize on the disruptive storm that is coming.

• Cultivate awareness: Creating sensing engines to identify and assess the forces that have the potential to disrupt a

sources can help firms become more competitive as they prepare for future disruption.

pared for what is to come. Research shows that the best-prepared companies share characteristics that other organizations can adapt for themselves.

If Canadian businesses, together with governments and academia, take concrete action today, the results will yield stronger, more profitable companies that are able to withstand — and thrive within — a storm of change.

THE TIME FOR ACTION IS NOW Canadian firms are facing serious, significant challenges in their preparedness for disruption. But they also face incredible opportunities to improve their productivity and to become better pre-

If you’re in Manitoba, this is considered an automobile.

Surprised? ARC isn’t.

Compounding the essential lack of preparedness is the fact that a large number of firms — almost half — believe themselves to be more prepared than they actually are. This “perception gap” is based on firms reporting a lack of substantive activity in key areas of preparedness, while simultaneously arguing that they are, in fact, prepared.

Your customer has a list of the vehicles that are covered by your fleet policy. You have a list of the vehicles that are covered by ARC Group Canada is a national that policy. network of independent law firms, And your lists aren’t theintimately same. each connected to their local market.

When the one vehicle that is involved in Insurance risk appear management an accident is the one thatand doesn’t on experts.

Regionalnext? strength. both lists, do you know what happens National scope.

ARC does.

That is the ARC Group.

Su

ARC Group Can network of indepe each intimate th

Insurance and r experts. Re

That is

Go to

Go to AskARC.com

business or industry better positions a firm to take action today to prepare for disruption’s impact tomorrow.

• Build the right culture for preparedness: Developing a resilient, innovative organizational culture can help companies withstand disruption in the future, and also offers important benefits today.

• Foster organizational agility: Embracing new ways of working and making decisions can help firms avoid becoming mired in the bureaucracy that can bring change to a screeching halt.

• Develop effective resources: Investing in advanced technologies and using resources effectively can increase companies’ resilience in the face of change.

Acquiring and deploying the best A National Network of Independent Law Firms people, technology and financial re-

ARC Group Canada is a national network of independent law firms, each intimately connected to their local market.

Insurance and risk management experts. Regional strength.

National scope. Go to AskARC.com

The ARC Legal Reporter Winter Issue – Article #1 A National Network of Independent Law Firms

When is a medical examination considered a second examination under Rule 36 of the New Brunswick Rules of Court?

The ARC Legal Reporter v. Crowther and Kelly Case: Winter IssueReported – Article #1 Blyth 2009 NBCA 80 Citation: At Issue:

When is a medical examination considered a second examination under Rule 36 of the New Brunswick Rules of The Court?

Court: ARC_Fleet ad_1/2 page.indd 1

Reported Case: Citation:

If Manitob consid aut

Blyth v. Crowther and Kelly 2009 NBCA 80

Judgment Rendered: Factual Summary:

When both the plaintiff’s physical and mental condition are in issue in an action the plaintiff undergoes a physical examination, will a subsequent application psychiatric examination be considered an application for a second m examination?

Should medical examinations that are ordered as part of the discovery proce characterized as ‘independent’ medical examinations?

Court of Appeal of New Brunswick October 13, 2009 (Reasons delivered November 2015-02-14 26, 2009) 1:05 PM The plaintiff suffered injuries in a motor vehicle accident and commenced an seeking damages. Both the plaintiff’s physical state and mental state were in iss the action. The plaintiff submitted to a physical examination by the defendant’s e but subsequently refused to submit to a psychiatric examination.

MOVES & VIEWS

UPCOMING EVENTS: FOR A COMPLETE LIST VISIT

www.canadianunderwriter.ca

AND CLICK ‘MY EVENTS CALENDAR’ ON THE HOME PAGE

1

Allianz Global Corporate & Specialty SE (AGCS) announced in May that Ulrich Kadow [1] has been appointed chief agent for AGCS Canada.

Kadow was previously AGCS’s global head of package and multi-line, “where he established the mid-market property, liability and engineering business in Canada, Asia, South Africa, Australia and Denmark,” notes a company statement. Based in Toronto, he will report to Arthur Moossmann, president and chief executive officer of AGCS North America.

Kadow has an MBA from New York City’s Columbia Business School and an MS in computer science from Technische Universität München, the company adds.

2

Shaun Johnston [2] is now chief operating officer of BMS Canada Risk Services Ltd., and will report to Brian Gomes, chief executive officer of the company. Johnston is a former executive with Aon plc in Vancouver. “During his time at Aon, Shaun led a team of 20 specialists and grew a leading broking portfolio, providing risk management services, national and cross-border insurance program design and management to some of western Canada’s largest and most diversified construction 48 Canadian Underwriter June 2015

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8a

8b

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and property development companies,” notes a statement from BMS Canada.

Desjardins General Insurance Group Inc., was recently elected as chair of the Board of Directors for Insurance Bureau of Canada. Paquette holds a degree in actuarial science and is a fellow of the Canadian Institute of Actuaries and the Casualty Actuarial Society. In addition, Kenn Lalonde, executive vice president of insurance for TD Bank Group and president and chief executive officer of TD Insurance, is the IBC board’s new deputy chair.

Opta Information Intelligence reports Wright’s “leadership and sales acumen make him ideal” for his new position.

3

Jardine Lloyd Thompson Canada Inc. plans to open a new regional office in Halifax, with Peter Campbell [3] serving as branch manager. With more than 20 years of experience, Campbell has worked as a marketing specialist and client manager at Marsh Canada and as a senior broker at Aon Canada. The Halifax office will initially focus on construction, healthcare, life sciences and real estate, and will also support JLT Canada’s public sector practice.

4

Sylvie Paquette [4], president and chief operating officer of

5

Michael Wright [5] was recently named vice president of information technology for Opta Information Intelligence.

Wright last served as senior vice president of operations at Brovada Technologies Inc.

6

Pario Engineering and Environmental Sciences has appointed Mark Samis [6] as vice president of environmental services. Samis joined Pario Engineering, formerly known as Rochon Engineering, two years ago. He has experience in subrogation support, spill response, site assessments, site remediation planning and design, water supply investigations and environmental impact assessments for land development.

7

Crawford & Company (Canada) Inc. reports several of the courses

MOVES & VIEWS MOVES & VIEWS

of Calgary; Gordon Adams; Robert Cartwright, Jr.; Al Gorski; Leslie Lamb; John Phelps; Michael Phillipus; Frederick Savage; and Lori Seidenberg.

3

5

4

5

9 positions 9a have included general adjuster, branch manager, delivered by itsofcorporate vice president operations learning and development and Lloyd’s Division leader. centre are accredited by the Registered Insurance Brokers of Ontario.

The offerings “conMacdonald Chisholm sist ofTrask technical courses that Insurance (MCT) cover aannounced range of insurancein early related topics general January that it from will join propcasualty to homeowner’s liabilierty and casualty brokerage ty and dispute resolution, BrokerLink. The terms of as the well as courses transaction weretailored not dis-to the professional closed, notesdevelopment a statement of soft skills and management.” from BrokerLink.

BrokerLink

6

8

companies, subsidiaries of Justin Sharp [8a] is Intact Financial Corp., president includethe 84 new offices servingand operating officer clients chief in Atlantic Canada, of FirstOnSite Restoration.

Alberta and Ontario. Dating In hismore mostthan recent at back 60 role years, SNC-Lavalin Operations MCT has more than 110 & inMaintenance Inc., Sharp surance professionals in 18 “was responsible for driving offices.

Michael Brien, who growth overall has led and MCTproviding over the last 12 leadership executive years, joins and BrokerLink as management for domestic head of its Atlantic operations.

10 9b

7

Carolyn Snow [7] will and international lead RIMS businesses, as president including real estate for the 2014 term, management services, project which took effect January 1. delivery solutions and faciliSnow, who has been on the ties management services,” RIMS Board of Directors for FirstOnSite notes.

Also atdiseven years, is currently FirstOnSite John rector of riskRestoration, management for Stephenson been Humana Inc.[8b] Shehas previously named vicetreasurer, president, served senior as RIMS’s commercial accounts, and secretary and director of Nathan Belcher [8c] has external affairs. The RIMS been boardappointed for 2014 vice also president includes of information technology. vice president Richard Stephenson more than Roberts, Jr.;has treasurer Julie 30 years of leadership Pemberton; corporate secreexperience the property tary NowellinSeaman, director management disaster for of global risk and management recovery field. With 20-plus Potash Corporation of years of IT experience, Saskatchewan Inc.; Gloria Belcher played a major Brosius;has Steve Pottle, director role in the development and of risk management services design of the company’s at York University; Jennifer customer Santiago; management Janet Stein, direcprograms proprietaryand tor of riskand management software insurancesystems. at the University

8

As of January 8, Toronto insurance broker Jones DesLauriers 6 Insurance Management Inc. (JDIMI) had acquired Whitley Insurance and Financial Services. Whitley Insurance has offices in Belleville, Ontario and the nearby communities of Trenton, Deseronto and Stirling. “The acquisition is expected to build a solid presence for JDIMI in Eastern Ontario 11 and position the firm to better service their clients, with strengthened commerRoar Engineering is cial and personal insurance open for business. offerings in the region and a Its co-chief executive new financial services diviofficers, Michael Rochon [9a] sion,” notes a statement from and Vincent Rochon [9b], JDIMI. President and CEO have more than 50 Shawn DeSantis willyears lead of the combined investeams fromexperience both companies. tigating forensic incidents.

Loris Clarke [8] has been They previously served as conamed successor to Paul CEOs of Rochon Engineering.

Whitley, president of Whitley Roar Engineering’s Insurance, who willservices remain include accident during a transitionreconstrucperiod. tion, fire investigations and environmental remediation.

9

9 10

Ken Rayner [9] has SCM Insurance joined Anderson Services Inc.’s McTague & Associates Opta Information Ltd. as its director of busiIntelligence unit hasCentral anness development, nounced the availability of Region. “Ken brings a wealth its Commercial Peril Score, of experience to our com- a product designed identify pany, having heldto various commercial properties more senior management positions at risk for claims frequency with insurers and other MGAs,”

says Chuck McTague, president of Anderson McTague & Associates, a familyand severity geo-coded owned MGA by based in New address.

It is also meantAnto Brunswick. In January, augment current & information derson McTague Associates and processes employed by announced it was expanding, insurers to office help them more to adding an in Toronto effectively service theunderwrite brokers of and Ontario rate properties providing a and Manitoba. by Rayner’s better understanding the appointment confirmsofthe risk as it relates to losses. company’s “commitment to

11

the Ontario/Manitoba marketChenof place, and Georgiana to the building [11]team is a new a local support to assist account brokers withnational their surplus manager for Xpera Risk lines and difficult to place Mitigation Investigation. business,” &McTague adds.

Chen will provide customers with “comprehensive strategies and solutions to help The Guarantee mitigate existing and potential Company of risk.” She has previously North America worked at ProFormance has announced that Tara Group Inc., SCM, CGIvice Wishart [10] became Group Inc. and Underwriters president of claims for the Adjustment Bureau. insurer’s Toronto branch on

10

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December 2, 2013. Having Canadainhas 21 years ofAviva experience The it is a Guarantee’sannounced claims department,national Wishartcorporate will be partner of the Red responsible forCanadian the operations Cross’ “Ready When the Time of the Toronto Branch Claims.

Comes” program, committing She first joined The Guaranmore $500,000 to the tee inthan 1995 as an adjuster partnership over the next and has held roles of increasthree years. As part the ing seniority with theofcomprogram, the Redmost Cross pany, including, trains employees to provide recently, claims manager for assistance after Wishart natural is a specialty lines. disasters, member ofincluding both the floods, Surety house fires and forest fires, Association of Canada and tornadoes andAssociation extreme of the Canadian weather conditions.

Women in Construction.

Follow @CdnUnderwriter on http://twitter.com/CdnUnderwriter

June 2015 Canadian Underwriter 49 February 2014 Canadian Underwriter

57

GALLERY

WICC Ontario held its 19th Gala Dinner, ‘Prohibition Party’ on April 22 at the Westin Hotel in Toronto.

WICC dinner co-chairs and evening emcees Sandy MacSpadyen and Michael Butler presented a $200,000 cheque from WICC to Martin Kabat, CEO of the Ontario division of the Canadian Cancer Society. WICC Co-Chair ‘s Ellen Moore and Marilyn Horrick acknowledged WICC’s Tribute Recognition initiative – the seven WICC Tributes currently established having raised over $115,000, including Tributes for: Leona Charbonneau; Cristina De Vargas; Linda Hajekerou; Mary Goodbrand; Jamie Knowles; Jim

50 Canadian Underwriter June 2015

McRae; and Micki Traikos. A Gold flame Award, recognizing significant contributions to WICC, went to Enterprise McKellar Structured Settlements. The Hall of Flame Award went to Canadian Underwriter magazine – Insurance Media Group. Two separate Lew Dunn Memorial Awards were presented to Jean Faulkner (Hub International, Ontario) and to Paul Martin (KRG/RRJ Insurance). WICC Relay for Life chairs Paul Martin and Mariellen Glover spoke about the industry’s commitment to the event and 2015 Relay for Life plans and goals. Since WICC’s inception in 1996, the Canadian P&C insurance industry has raised more than $11 million for cancer research.

GALLERY

June 2015 Canadian Underwriter 51

GALLERY

Crawford & Company (Canada) offered their guests at the 2015 RIMS (Risk and Insurance Management Society) Annual Conference & Exhibition in New Orleans a taste of history on April 25. Located within the heart of the French Quarter, historic Antoine’s restaurant provided the quintessential backdrop for guests to have a true New Orleans experience as they sampled hors d’ouvres and cocktails on a private balcony. The evening also provided a private dining experience.

52 Canadian Underwriter June 2015

APPOINTMENT

GALLERY

John Nelson, Chairman of Lloyd’s greeted guests at the Lloyd’s Cocktail Reception held at The Chicory in New Orleans on April 26 during the 2015 RIMS Annual Conference & Exhibition. While mixing and mingling, guests enjoyed gourmet food and live music.

Farouk Ahamed, CPA, CA

Gore Mutual Insurance Company is pleased to announce that Farouk Ahamed has been appointed as Chair of its Board of Directors. Mr. Ahamed is President of ADF Invescap Inc., a corporate finance advisory firm. He is a retired partner and Senior Vice President of Ernst & Young LLP and Ernst & Young Orenda Corporate Finance Inc. Mr. Ahamed is the past Chair of the Board of Governors of Wilfrid Laurier University, on the Dean’s Advisory Council for Laurier’s School of Business & Economics and a director of Armtec Infrastructure Inc.

Along with hundreds of guests, Canadian risk and insurance professionals took over the House of Blues on April 26 in New Orleans for the AIG 2015 RIMS Networking Reception, which included NOLAstyle entertainment from various acts throughout the venue.

Mr. Ahamed has served on the boards of the Freeport Hospital, the Social Planning Council of KitchenerWaterloo, United Way of KitchenerWaterloo, the Waterloo Wellington Chartered Accountants Association and the Aga Khan Economic Planning Board, Ontario.

Mr. Ahamed is a Chartered Professional Accountant and an Institute of Corporate Directors Certified Director.

Gore Mutual has been offering Canadians a stable, long-term solution for their insurance needs since 1839.

The company provides both personal and commercial insurance through its offices in Cambridge, Ontario and Vancouver, British Columbia.

June 2015 Canadian Underwriter 53

GALLERY

More than 400 exhibitors filled the Exhibit Hall at the RIMS 2015 Annual Conference & Exhibition from April 26-29 in New Orleans. Held at New Orleans’ Ernest N. Morial Convention Center, the show floor bustled with thousands of delegates from across North America and around the globe. The booths offered unlimited opportunities for learning, networking and sharing.

54 Canadian Underwriter June 2015

GALLERY

June 2015 Canadian Underwriter 55

GALLERY

Canadian delegates of the 2015 RIMS Conference and Exhibition in New Orleans gathered with their U.S. and international friends at Canada Night on April 28, hosted by SCM Insurance Services and the Canadian Litigation Counsel. The event provided delegates a chance to catch up and share stories while enjoying fine food and drinks.

56 Canadian Underwriter June 2015

GALLERY

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GALLERY

HDI Gerling Industrial Insurance Company hosted a Spring Reception Party at 1 King West Hotel, within “The Vault” room, on April 16. More than 70 brokers and risk managers gathered to enjoy an evening of fine food, great cocktails and excellent mingling.

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41 st

SEPT. 27-30, 2015

THERE IS NO BETTER PLACE TO ...

Meet and network than at the 2015 RIMS Canada Conference in Quebec City !

Gain perspective and broaden your horizons in Quebec City, a Unesco World Heritage site.

Choose from more than thirty educational concurrent sessions with various focus areas like cyber liability, new trends and developments in traditional areas like D&O liability.

Continue to build and enhance your business relationships and boost your brand at the Conference Exhibitors marketplace.

FOR MORE INFO

www.rimscanadaconference.ca | LinkedIn/RIMS in Canada | Twitter/@RCC_Quebec2015

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