Canadian Underwriter September 2008

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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 UN ND DE ER RW WR R II T TE ER R .. C CA A

September 2008 A Business Information Group Publication Publications Mail Sales Agreement #40069240

Women Looking Up

BY VANESSA MARIGA

Commercial Lines Roller Coaster

BY MARK RAM

Will Fear Keep D&O Rates in Line?

BY CAMERON ROSE

Assessing Country Risks Saying ‘I’m Sorry’ The Rise of Fiduciary Liability Knowledge is Sales Power Confined Space Entry Collision Repair Recruiting

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Millions of Canadians rely on us for their peace of mind.

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Andwe werely relyon onyou youto todeliver deliverit. it.

And Allacross acrossthis thisvast vastand andbeautiful beautifulcountry, country,the themajority majorityofofCanadians Canadiansdepend dependonontheir their32,000 32,000local local All InsuranceBrokers Brokersfor fortheir theirinsurance insuranceneeds. needs.And Anda agood goodnight’s night’ssleep. sleep.

Insurance Noneofofthis thiswould wouldbebepossible possiblewithout withoutthe thebond bondestablished establishedbetween betweenbrokers brokersand andCanada’s Canada’s None leadinginsurers. insurers.The Thestrength strengthofofthis thisbond bondcomes comesfrom froma aspirit spiritofofmutual mutualrespect, respect,professionalism professionalism leading andcooperation. cooperation.This Thisrelationship relationshipenables enablesususall alltotodeliver deliverthe thepeace peaceofofmind mindour ourmillions millionsofof and customerssosomuch muchwant wantand anddeserve deserve– –a atrust trustbrought broughttotolife lifeininthe thenow nowfamiliar familiarBIP BIPlogo logoand and customers magenta“security” “security”blanket. blanket. magenta withheartfelt heartfeltthanks thanksthat thatbrokers brokersright rightacross acrossCanada Canadahere hererecognize recognizethe thesupport support ItItisiswith ourpartners partnersininthis thisindustry, industry,for forwithout withoutthem themmillions millionsofofCanadians Canadianscould couldnot notsleep sleep ofofour easyasasthey theydo. do. asaseasy

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VOL. 75, NO.9, SEPTEMBER 2008 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY BUSINESS INFORMATION GROUP

www.canadianunderwriter.ca

COVER STORY:

Women Looking Up

34

Even though there is a 50-50 split of men and women at middle management levels in the insurance industry, women make up only roughly 25% of the senior executive level positions. But given the number of men slated to retire over the next decade, it would appear women are poised to storm into insurance industry C-suites by 2020.

BY VANESSA MARIGA

FEATURES

14

44

Roller Coaster

Turbulence Ahead?

In commercial lines, if key drivers of profitability are not under stood, pricing might be the victim of a scary roller coaster ride.

Demand for D&O reinsurance is at its lowest point in years.

Only financial market volatility and fear of a mega-natural catastrophe might slow down price reductions in this sector.

BY MARK RAM

BY CAMERON ROSE

18

52

22 Collision Course

48 Fiduciary Liablity

The same recruitment issue facing the insurance industry is also affecting the collision repair industry. And the insurance industry can help find a solution.

A number of significant market events have combined to make fiduciary liability insurance a hot commodity.

BY JAY PERRY

28 Sales Knowledge Consumers today are much more knowledgeable about the products they buy. As a result, selling insurance requires a more sophisticated knowledge of consumers’ needs.

BY PETER J. MAIURI

30 Fuel Risks 50 Ways With apologies to Simon and Garfunkel, there are at least 50 ways for country financial risk analyses to go awry, making the risk management exercise fraught with peril.

BY PETER BEECHING

4

Canadian Underwriter September 2008

Loss Psychology Saying the words “I’m sorry” is a perfectly professional and empathetic reaction to a client who has experienced a loss.

BY RSA

What are the consequences for commercial insurers and risk managers of skyrocketing fuel prices?

BY DAVID GAMBRILL

BY ROB BICKERTON

54 Claims Cube Using the model of a “claims performance cube,” carriers will be able to leverage technology to offer better claims service and dispatch.

BY GREG HORN

56 Confined Spaces Insurers, adjusting firms and their employees need to be aware of their rights and obligations when it comes to sending workers into potentially hazardous work areas.

BY GLENN WOOD AND URSULA DREWNIAK

A VICIOUS TORNADO. AN UPCOMING RACE. YET THE ATLANTA MOTOR SPEEDWAY COULD REMAIN

A true story: On July 6, 2005, a powerful tornado tore through Atlanta, leveling everything in its path. When it reached the Atlanta Motor Speedway, entire sections of the track vanished.

Three-and-a-half months later, the fall race weekend opened as planned.

To make this happen, the people at the speedway worked in tight partnership with their FM Global client service team. And the damage was quickly repaired. So on race day, the only wind the fans were aware of came from the cars flying by at 170 mph. To read more true stories, visit fmglobal.com/insuranceevolved

Insurance Evolved

© 2008 FM Global. All Rights Reserved.

Code: BRD-08-1A Size: A Description: Page/Jr. Page June ‘08 Pubs: Harvard Business Review Treasury Risk Canadian Underwriter Risk Insurance / Jr Page

Direct Job No.: 803RWOO3615P SAP No.: FMG.FMGBRD.08009.K.011 Description: A Size BRD-08-1A This mechanical prepared by: Ogilvy & Mather Form: Other Color: 4/c Bleed: None Trim: 7 in x 10 in Safety: None Scale: 1:1 Actual Trim: Same as Trim Gutter: None Creative Director: None Art Director: Bill Bonomo Copywriter: Mark Drossman Account Exec: Satvir Parma Print Producer: Bianca Lau Traffic: Winona Davis Engraver: DCC REDWORKSNEWYORK Filename: FMG_BRD_08009_K_011_AD_1F.indd DCC Filename: 41753OM_BRD_08_1A_v1

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VOL. 75, NO. 9, SEPTEMBER 2008

PROFILE

12 Promoting Loyalty Peter Fredericks says he will be seeking to promote consumer loyalty to Canada’s independent broker channel when he takes over as president of the Insurance Brokers Association of Canada.

Senior Publisher Steve Wilson steve@canadianunderwriter.ca (416) 510-6800

Associate Publisher Paul Aquino paul@canadianunderwriter.ca (416) 510-6788

Editor David Gambrill david@canadianunderwriter.ca (416) 510-6796

Art Director Gerald Heydens

Associate Editor Vanessa Mariga vanessa@canadianunderwriter.ca (416) 510-6793 Account Manager Mike Wells mike@canadianunderwriter.ca (416) 510-5122

BY DAVID GAMBRILL

SPECIAL FOCUS

8

Advertising Sales Christine Giovis christine@canadianunderwriter.ca (416) 510-5114

Art Consultation Pylon.ca Production Manager Gary White (416) 510-6760 Print Production Manager Phyllis Wright President Bruce Creighton Vice President Alex Papanou

Editorial

10 Market Watch 60 Moves & Views 62 Gallery

Canadian Underwriter is published thirteen times yearly (monthly + the Annual Statistical Issue) by Business Information Group, a division of BIG Magazines LP, a leading Canadian information company with interests in daily and community newspapers and business-to-business information services.

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

Phone: (416) 442-5600.

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We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs. Š Published monthly as a source of news, technical information and comment, and as a link between all segments of the insurance industry including brokers, agents, insurance and reinsurance companies, adjusters, risk managers and consultants.

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Canadian Underwriter September 2008

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IBAO CUW SEPT 08

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INSURANCE BROKERS ASSOCIATION ONTARIO

Page 1

88 th Annual Convention

Wednesday, October 22nd – Friday, October 24th, 2008 The Fairmont Royal York Hotel, Toronto, Ontario Thursday, October 23, 2008 IBAO’s Annual KEYNOTE SPEAKER: Convention is Mitch Joel, Marketing & Personal Branding Expert the biggest and When Google wanted to explain online marketing to the top retailers in the United States (including Wal-Mart, Costco, Sears most exciting and Sephora), they brought Mitch Joel to the Googleplex in California. Mitch Joel is President of Twist Image – an awardwinning Digital Marketing agency. He is a marketing and communications visionary, interactive expert, community leader, insurance Blogger and Podcaster. Joel is a Board Member for both the Canadian Marketing Association and the Interactive Advertising broker event on Bureau of Canada. He is an executive for the National Advertising Benevolent of Quebec and an instructor of the CMA eMarketing professional certificate course. the Canadian Joel speaks frequently to diverse groups such as The Power Within, Google, Shop.org, Visa, Microsoft and has shared the stage insurance with former President of the United States, Bill Clinton, Anthony Robbins and Dr. Phil. He is frequently called upon to be a subject matter expert for CTV National News, Canada AM, CBC Newsworld, Marketing Magazine, The Globe & Mail, industry The National Post and many other media outlets. calendar. He is presently writing his first book, Six Pixels of Separation.

There is simply no other event quite like it!

EDUCATION PROGRAM AT A GLANCE: CSR SEMINAR: I-Care - Putting the Personal Touch Back into Non Face to Face Business Interactions (RIBO CE - 3 Personal Skills Hours)

Colleen Carruthers, The T-R Group Inc.

MEMBER’S SEMINAR: CEO PANEL (RIBO CE - pending RIBO accreditation) This year’s CEO Panel will be moderated by Evan Solomon - CBC Television Broadcaster, Journalist & Author. We wanted to enhance this annual panel discussion by bringing in one of the best moderators in Canada to participate in a “round table discussion” with our CEO’s. Stay tuned for our line-up of industry CEO’s who will be participating in this popular event.

Friday, October 24th, 2008 EDUCATION SEMINARS: Ethics and the Insurance Professional

(RIBO CE - 3 Management Hours)

Glenn Planert, FCIP, MBA Goldrun Consulting Services Inc.

Mitch Joel, Marketing & Personal Branding Expert

For a complete program and a registration package, please call IBAO at 416-488-7422, 1-888-ASK-IBAO or visit our Website: www.ibao.org

Banquet & Ball

Six Pixels of Separation - Marketing in a Connected World

Connecting to Young Canadians A Generational Difference (RIBO CE - 3 Management Hours)

Max Valiquette, Youth Culture Expert

(RIBO CE - 3 Management Hours)

Insurance Coverage Update: Think Like a Judge (RIBO CE - 3 Management Hours)

Ian Gold, LLB Thomas Gold Pettingill LLP

featuring: 1st Award of Excellence Event This year, don’t question whether or not you should stay for our closing night.

IBAO has embarked on a new format for Friday evening and will be hosting its inaugural Award of Excellence Gala featuring Toronto’s own local celebrity Dina Pugliese, Co-Host of “BT-Breakfast Television” as our Awards Host! We will be recognizing brokers for their contributions to the industry and community.

Be one of more than 400 guests who will be on hand to support the nominees, cheer for the winners and celebrate their peers!

After the awards show, we will be dancing the night away!

Platinum Plus Sponsors:

Platinum Sponsors:

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EDITORIAL

Exploding Fortunes

It’s hard not to think of the 2005 Suncor oil refinery explosion in Alberta when trying to come up with a reference point for damages incurred in an industrial explosion.

David Gambrill, Editor david@canadianunderwriter.ca

8

When the Sunrise Propane Industrial facility lit up Toronto’s night sky with a series of explosions at 4 a.m. on Aug. 9, what ultimately might have been destroyed is the insurance industry’s relatively good fortune.

For the past three years, Canadian insurers have been able to report that man-made disasters haven’t taken a bite out of their bottom lines. Not so anymore.

When the Sunrise plant exploded into a gigantic fireball, residential houses next to the plant had windows shattered and doors blown out by the concussive force of the blast. An estimated 12,000 residents were evacuated while firefighters attempted to bring the blaze under control.

It is amazing that, given all of the potential for massive property damage nearby, only 50 homes were damaged beyond repair. On the night of the explosions, windows of apartment buildings well beyond the 1.6-km evacuation zone established by emergency services could be heard rattling with each new blast of a propane tank going up in flames. Businesses in the area had their windows blown out and police established a watch over these areas to prevent looters, who nevertheless made their presence known.

Thus far, a global damage total is well beyond reach.

Initial reports from the police

Canadian Underwriter September 2008

estimated damages in the area of “tens of millions,” although it is unknown what such a figure would include.

Certainly, there will be residential claims for repairing windows, doors and other damage caused as a result of the explosions. Expect also commercial claims for business interruption, damage to property and for any loss of merchandise due to what looting there might have been.

It will be interesting to see what happens to the claims totals once liability for the blast is determined.

Eager trial lawyers announced their intention to launch a class action even before the cause of the explosion was determined. They suggest that since the company carried dangerous goods, it is automatically liable for negligence in situations such as this. Stay tuned to hear how the defence will respond.

As for damages sustained by the company, when Sunrise Propane was contacted, a company official answering the phone said the company had not yet been able to ascertain the scope of the damage to their facilities. He said at that point police and firefighters were still keeping employees away from the site (still considered to be a danger).

It’s hard not to think of the 2005 Suncor oil refinery explosion in Alberta when trying to come up with a reference point for damages incurred in an industrial explosion. Only recently has the Suncor litigation been resolved; all told, the final price tag for the Suncor explosion tallied at just northward of Cdn$1 billion.

Early indications are that the Sunrise Propane damage tally will not reach that level.

Still, it will be interesting to see what will happen to the claims totals once liability for the blast is determined.

If the company were to to be found liable, insurers may try to subrogate the claims, essentially passing along their claims payments to the company. This would affect the legal bills associated with any commercial claim the company might make (assuming liability is covered under its insurance policy). It might also kick-start a D&O commercial claim against the company’s executives.

And if the company isn’t liable, it would still have a large claim to make under its own insurance policy.

Either way, the tail of this unfortunate disaster will be a long one. It serves as an unpleasant reminder that insurers are relying a great deal on luck when it comes to avoiding major disasters. One has to wonder if the good fortune seen in 2006-07 may in fact have gone up in flames.

There’s a lot more to us than our name suggests.

Industrial Risk Insurer

You probably know us as the world’s largest reinsurer. But we’re much more than that. Swiss Re is a leader in offering many other innovative risk solutions – take for example Swiss Re’s Industrial Risk Insurer. We offer high-quality insurance capacity for single and multiline programs on a stand-alone basis, or as part of structured and tailor-made offerings. And we provide customized risk transfer solutions to large (multi)national corporations across the globe to assist in mitigating their risk exposure.

To find out more about these and other innovative possibilities, please visit www.swissre.com/iri.

Expertise you can build on.

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Mergers and Acquisitions AON CORPORATION TO ACQUIRE BENFIELD GROUP LIMITED Aon is acquiring reinsurance intermediary Benfield for £3.50 (Cdn$6.79) per share in cash and will assume £91 million (Cdn$176.43 million) of Benfield’s net debt, representing an enterprise value of approximately £935 million (Cdn$1.81 billion) on a fully diluted basis, the company notes in a release.

Assuming regulatory approval of the deal, Aon would integrate Benfield’s business with its existing reinsurance operations and operate the division globally under the newly created Aon Benfield brand.

KINGSWAY SELLS YORK FIRE & CASUALTY FOR CDN$95 MILLION Kingsway Financial Services Inc. is selling York Fire & Casualty Insurance Company to La Capitale General Insurance Inc., a member company of the mutual company La Capitale Financial Group Inc., which is owned by members of Quebec's civil service.

The transaction is expected to be completed during 2008 following the receipt of regulatory approvals.

York writes standard personal lines automobile and property insurance in Ontario and Alberta.

For the first six months of 2008, York had gross premi-

ums written of approximately Cdn$48 million, or 5% of the premiums of the Kingsway group of companies, and produced an underwriting loss.

Kingsway said it anticipates receiving gross proceeds from the transaction of Cdn$95 million, estimated to be approximately two times York’s shareholder’s equity at the closing of the transaction. At closing, Kingsway expects to record an estimated gain before taxes on the transaction of approximately Cdn$50 million.

Canadian Market WINTER WEATHER HITS ING CANADA’S 2008 Q2 PROFITS ING Canada Inc. (TSX: IIC) reported its profits declined to Cdn$112 million in 2008 Q2, down from the Cdn$194.3 million net income it reported last year.

The company said the decline was due in part to severe winter weather storms, as well as weakness in the equity markets, resulting in a reduction in investment gains.

The company’s return on equity (ROE) went from 18.3% in 2007 Q2 down to 10.3% in 2008 Q2.

Direct premiums written increased marginally in the quarter to Cdn$1.2 billion, up about 0.6% over the same period last year.

The consolidated combined ratio (excluding a market yield

10 Canadian Underwriter September 2008

adjustment) was 95.6% in 2008 Q2, up 1% from the COR recorded in the same period last year.

At the same time, ING Canada’s president and CEO Charles Brindamour observed in a press release that three out of four of ING’s lines of business (excluding personal property) achieved combined ratios of below 90%.

RSA CANADA SEES INCREASED WRITTEN PREMIUMS, DECREASED PROFIT RSA Canada reported net written premium of Cdn$851 million for the first half of 2008, up 21% over the same period of last year.

The company also reported an underwriting profit of Cdn$52 million, compared to Cdn$62 million over the fist six months of 2007, a company release says.

Combined operating ratio for the first six months was 93.7%, up slightly over last year’s 91.2%.

TRAVEL HEALTH PRODUCT PLAGUES EGI FINANCIAL’S QUARTERLY RESULTS EGI Financial Holdings Inc. (TSX: EFH) reported a profit of Cdn$2.7 million for Q2, marking a 38.1% decrease over the same period last year (Cdn$4.3 million).

The combined ratio for 2008 Q2 jumped nearly 20% when compared to last year, increasing from 84.8% in 2007 to 101.3% this year.

The company’s underwriting income dropped 110% quarter-over-quarter, from a profit of Cdn$4.5 million to a loss of Cdn$465,000, an EGI statement says.

The company points to its two newest sources of business as contributing factors to the underwriting loss. Its emergency travel health business incurred a loss of Cdn $4.5 million and the international division business incurred a loss of Cdn $800,000 for the quarter, the release says.

“With the most recent travel season behind us and concrete steps being taken to redesign the company’s travel health product offering for the 2008-09 travel season, we anticipate stronger results over the remainder of 2008,” said EGI CEO Douglas McIntyre in a press release.

KINGSWAY’S 2008 Q2 RESULTS TURN THE CORNER Kingsway Financial Services Inc. (TSE:KFS, NYSE:KFS) has reported net income of US$6.3 million in 2008 Q2, marking what the company called “a significant improvement” over the net loss of US$34.4 million reported in the first quarter of 2008.

Still, the result was below the net income of $41.7 million reported in the second quarter of 2007.

“The return to overall profitability in the second quarter resulted from consistent income from our investment

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portfolio, despite challenging market conditions, and improving performance in our insurance operations, where we have established more conservative reserving practices,” Kingsway president and CEO Shaun Jackson said in a press release.

Regulation IBC CALLS FOR MINOR INJURY CAP ON POST-PAF ASSESSMENTS IN ONTARIO The Insurance Bureau of Canada (IBC) has asked Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), to consider imposing a Cdn$1,500 cap on post-PAF assessments and treatments for minor injuries.

The suggestion is one of 25 recommendations IBC made to FSCO as part of the commission’s five-year review of the province’s auto insurance legislation. A complete set of all recommendations by stakeholders can be viewed on FSCO’s Web site at: http://www.fsco.gov.on.ca/english/insurance/auto/5yrrview/d efault.asp.

ALBERTA RATE BOARD ALLOWS 5% AUTO PREMIUM INCREASE The Automobile Insurance Rate Board (AIRB) has announced it is allowing a 5% increase in premiums for mandatory auto insurance in Alberta as a result of its annual insurance rate review.

As a result of the rate change, Alberta drivers could pay on

average an additional Cdn$30 per year for their mandatory insurance coverage.

AIRB said its traditional public review of rates

“became more complex this year after the court struck down the Minor Injury Regulation that placed a cap of [Cdn]$4,000 on non-pecuniary

damages for some soft tissue injuries. This resulted in a change in the insurance product and increased costs to insurers.”

Your Right Choice for Quality Claims Solutions Stephane Chapdelaine, Sr. Claim Adjuster, Montreal

At Cunningham Lindsey, we offer you more than just claims handling know-how. You’ll receive customized solutions unique to your claim or program requirements; online claims tracking and comprehensive management reporting; an expanded network of skilled adjusting professionals both here and abroad; and the highest level of service in the industry with performance reports to prove it.

We’re working hard to make your choice for the right claims partner that much easier.

Visit our website at www.cunninghamlindseycanada.com or email us at corpservices@cl-na.com.

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PROFILE

Keeping it in the Family David Gambrill Editor

Peter Fredericks, the incoming president of the Insurance Brokers Association of Canada, says he wants the public to perceive brokers as loyal and trustworthy One year ago, Peter Fredericks’ predecessor as president of the Insurance Brokers Association of Canada (IBAC), Danny Craig, cracked a joke at his own expense that still resonates with Fredericks to this day.

Canadian Underwriter profiled Craig a year ago in anticipation of his becoming IBAC president in September 2007. For that issue, Canadian Underwriter commissioned an artist to draw a ground hog for its cover, intending to represent the forecast for the Canadian auto insurance market.

Coincidentally, Canadian Underwriter had dropped the traditional thumbnail picture of its profile subject from the front cover of the magazine.

Craig, who expected to see his profile photo on the front cover, referred to the artist’s rendition of the ground hog

in his inaugural address to IBAC’s annual general meeting, thanking CU for devoting its entire front cover to his picture as incoming IBAC president.

Fredericks, a fun-loving principal of a four-person brokerage in Bedford, Nova Scotia, is now poised to succeed Craig as IBAC president in September 2008. Fredericks jokingly recalled his friend Craig’s speech from a year ago. And so, after the conclusion of our 40-minute telephone conversation, Fredericks is asked: “What animal would you like to be on the cover?”

After laughing for a few minutes, Fredericks replies: “I think I want to be a Saint Bernard — looking after everybody’s interests, trusted, faithful.”

In essence, this depicts Fredericks’ view of how he and other insurance brokers across the country should be perceived in the public eye.

It also suggests a theme in Fredericks’ professional life as a broker since Feb. 8, 1977.

After dabbling in some construction work out in Alberta, Fredericks followed his father and mother into the insurance brokerage business in 1977. At that time, when he was 19 years old, he answered the call to join his father’s business, Ray F. Fredericks Insurance Ltd. Ray Fredericks had started the insurance brokerage in 1965.

12 Canadian Underwriter September 2008

“My dad started the business, so I am second generation,” Fredericks says. “It was two brothers and myself, so there were three of us in the family and it was funny, actually, it was sort of pre-ordained for me. I guess personalities being what they are over the years, it was just always assumed that I was going to come into the business.”

It wasn’t only about being loyal to the family: he also had the right personality for the job. “There was always a ‘fit’ for me,” Fredericks says.

“I always enjoyed the business. I enjoy people and that’s a big piece of it. If you don’t enjoy people, it’s just not going to work for you at all.”

Fredericks has remained a

broker for the rest of his life, save for one brief period when he said he had a minor “dust-up with the old man.”

The incident prompted Fredericks and his wife to try their hand at operating a Robin’s Donuts franchise in Bedford — an idea that never really took off.

Fredericks soon returned to the insurance broking business.

Eventually, he bought his Dad out “with a handshake and a smile.” From the time his Dad and Mom retired from the business, Fredericks says he has been “basically the principal, the president, the manager, chief cook and bottle-washer” of the small brokerage firm.

In his journey through the

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PROFILE

IBAC ranks, Fredericks once again followed in his father’s footsteps — only this time, he says, loyalty to the brokerage community, not familial loyalty, was his primary motivator.

He joined the Insurance Brokers Association of Nova Scotia (IBANS), as his father did before him, and became IBANS president in 2003. At the time, the province’s auto insurance product was in a state of reform and flux. It was a perfect opportunity for him to demonstrate what he calls his “Larry-the-Cable-Guy, Let’s-get-‘er-done” attitude.

“I was president of [IBANS] in 2003, just when the hard market hit and everything went all to hell,” Fredericks recalls. “I remember at the [IBANS] AGM during the year, I was stepping down as president and becoming chairman. Some of the past presidents were coming up to me, shaking my hand, thanking me and telling me: ‘You did a great job.’ And the comment I heard from a couple of them was: ‘I’m glad it wasn’t like that when I was president.’ I remember standing there thinking: ‘I’m glad that it was,’ because if you’re going to do something, make it worthwhile. If you’re going to be involved, be involved.

Make sure that you’re contributing or making a difference.”

As far as making a difference goes, Fredericks sees three

opportunities during his upcoming term as IBAC president in 2008-09.

First of all, he said he would be surprised if there isn’t a federal election at some point during his term. [As of press time, Prime Minister Stephen Harper called an election for Oct. 14.] An election would provide a golden opportunity for brokers to express their interests to Parliamentarians, he noted.

“If you’re going to be involved, be involved. Make sure you’re contributing or making a difference.”

Talking to MPs is paramount in advance of a second major, forthcoming issue for brokers: the mandatory five-year review of the Bank Act. This time around, the Bank Act issue might be influenced by recent recommendations from the federal government’s Competition Review Committee, Fredericks notes. The committee’s mandate was to review the financial services sector and recommend ways in which the country could become more competitive in the global financial marketplace. Among its recommendations, the committee suggested dropping the current

ban on cross-pillar mergers, effectively allowing banks to buy out insurance companies and vice-versa.

Fredericks expects this would very definitely become an issue in any future Bank Act discussions. “When you look at the banks and the way they’ve approached other industries or other areas where they’ve looked for extended powers, it really frightens me to think we would ever get to the point where we would allow that few players basically to control everything around us,” Fredericks said. “Do we really want allow six major banks that much power?

“Competition is good, regard less of whether it’s banking or insurance. When one business or person has an opportunity to make all of the rules, I don’t think anybody’s served.”

As a second-generation broker, perpetuation is near and dear to Fredericks’ heart. He himself is dealing with the ‘Third-generation’ dilemma: he has two sons, both in their 20s, neither of whom seems like they will be picking up the torch from their father and getting into the insurance business.

“I sat through [a recent conference dealing with perpetuation] in Ontario, and you read articles and books, and you read that if a business is going to fail, it traditionally

happens in the third generation,” he said. “Because the person who forms the business gets it going, has that vision and has that drive. The second generation comes in and wall-to-wall you have an established business, but there’s still that drive to go forward and try and outdo the last one. And then when the third generation comes in — again, historically there are lots of cases when they’ve done well — but if you look at it, it’s where they say: ‘It’s not for me,’ or ‘I’m going to sell it off.’”

This is where promoting the Saint Bernard’s loyalty to the insurance broking business comes in. Perpetuation strategies are far more sophisticated now than when they were during the time he bought the business from his Dad, Fredericks observes.

But it all boils down to the insurance broking community being a good place to be.

“It’s good business, it always has been,” Fredericks said. It’s a funny industry, in that if you look at the people who are in it, both on the brokerage side and the company side, once we get into this business, we tend to stay. And I think if you’re inclined to want to work with people and just be involved in this industry, it’s not a bad way to make a living.”

September 2008 Canadian Underwriter 13

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The Commercial Lines Roller Coaster

Mark Ram President and CEO, Northbridge Financial Corporation

Roller coasters. We all love them. Happy memories of thrilling days at the amusement park, all smiles and fun. The commercial property and casualty industry, however, is on another kind of roller coaster ride that isn’t anywhere near as enjoyable and doesn’t usually have a happy ending. If the past is any predictor of the future, we may be in for a rough ride.

Insurance is one of the few businesses in which you sell your product today, but don’t know your true cost of goods sold for years to come.

Nowhere is that more true than in commercial lines. In an industry of estimates, it can be very dangerous when key drivers of profitability are not properly understood; this can lead to significant price volatility for insurers, brokers and, unfortunately, policyholders.

So why is there such volatility in the commercial marketplace? If you exclude some major but generally uncontrollable factors such as interest rates, inflation, catastrophes and regulatory and legal changes, competing rate strategies are largely driven by a combination of financial structure and operational sophistication. Different financial drivers such as return on equity goals, operating and investment leverage and economies of scale

14 Canadian Underwriter September 2008

can create very different approaches. Likewise, distinct competitive pricing advantages can be derived from an insurer’s level of operational sophistication in areas such as target market and underwriting expertise, data management, commercial claims skills, rate adequacy processes and pricing segmentation.Together, these factors provide a basis for deliberate decision-making and guarantee there will always be commercial insurers offering different prices to consumers, as it should be. But when key elements within the operational environment are weak, specifically rate adequacy processes, the result can be poorlyinformed business decisions that can lead to considerable price volatility.

ROOT CAUSES In the absence of strong rate adequacy processes, companies typically rely on income statement metrics such as calendar year loss and combined ratios to determine account prices. Unfortunately, these are not designed to assess rate adequacy on a given portfolio (let alone account). The result can be a distorted understanding of historical underwriting profitability and the incorrect belief that there is ample room to cut rates or, conversely, a strong need to raise them. Regrettably, the commercial industry has a long way to go before sophisticated commercial rate adequacy processes are fully developed, let alone integrated into underwriting decisions.When done properly, that integration provides powerful tools to support

Illustration: Graham Roumieu

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underwriters’ expert skills, judgment and understanding of exposures on individual accounts. Commercial underwriting will always be a blend of art and science, but it can’t work properly without both parts.

THE COSTS OF GETTING IT WRONG Another critical aspect in understanding rate adequacy is the ability to distinguish between changes in price and rate. Some companies may only be able to measure commercial lines price changes as opposed to true rate changes.

A commercial account’s price in premium dollars may increase from one year to the next, but if the true exposure increases, or if terms and conditions weaken, you may actually be left with a rate decrease. Now multiply this by thousands of commercial accounts. How does the insurer add up the true rate changes to see in a timely manner if the portfolio is rate-adequate or not? Without strong rate adequacy processes, an insurer simply doesn’t have the ability

Page 16

to prospectively make the changes to rate levels it needs to ensure it meets its profitability targets.

Compared to personal lines, commercial price volatility can be huge and is one of the leading causes of consumer mistrust and the poor credibility of our industry. Consumers tend to incorrectly assume the insurance industry is made up of large companies that are all equal and infinite in their sophistication. So if one insurer discounts the expiring price of another by 30%, it’s easy to see how the consumer could feel like the incumbent insurer ripped them off. How can a broker explain to their client an insurance company may have unknowingly offered rates far below cost? If an insurer knowingly sells its product below cost for reasons known only to them, that’s a proprietary business decision that fosters healthy competition. However, poor management practices that lead to unintentional underwriting losses can result in serious volatility for policyhold-

ers and brokers over time. In addition to seeking substantial rate increases in an attempt to make up for having underpriced their products in prior years, insurers sometimes decline to renew policies. Or worse, insurers have even withdrawn from particular lines of business outright, causing tremendous upheaval in the market.

Anti-selection is another, less obvious risk. Without a proper rate adequacy structure, an insurer won’t know how to selectively apply desired rate changes on an individual account basis to meet their overall portfolio profitability goals. As a result, a common but misguided solution is the implementation of acrossthe-board rate changes, which generally don’t work well in commercial lines.

They usually result in anti-selection, which is, in essence, losing your best accounts due to over-pricing while under-pricing and retaining your poorest performers. In addition to hurting the insurer, it’s easy to see how policy-

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holders may find these underwriting decisions very confusing, ultimately affecting the credibility of the company and industry as a whole.

GROWING AWAY FROM PROBLEMS All of these issues can be further compounded by an insurer’s desire to deploy excess capital through top-line growth, usually in the form of volume or market share targets. Insurers may choose to focus heavily on the top line for many reasons. They may feel they can better manage their expense ratio by increasing the denominator (premium volume).

Unfortunately, this is usually self-defeating: without strong rate adequacy controls, the loss ratio usually rises more than the expense ratio declines. Or, a company may be using growth to improve combined ratios in the short term, as rapid premium growth will, for a while at least, outstrip the claims and expense growth that will inevitably follow.

Dangerous practices such as bonuses tied

Page 17

to commercial lines volume or market share growth can multiply the problem even further. Although each of these decisions is up to the individual company, a major impact of not being able to truly manage rate adequacy is undoubtedly increased price volatility.

Growing in the insurance business has always been easy, but the ability to effectively manage underwriting profitability is a very different story.

THE VIEW FROM THE TOP OF THE ROLLER COASTER So how is the commercial property and casualty marketplace doing today? That depends on how you measure underwriting profitability. Many companies have had favourable claims reserve development relating to recent hard market years, significantly lowering current calendar year combined ratios. When you remove the masking effects of the favourable reserve development, the industry may not be nearly as healthy

as it appears. This trend may only get worse if the severe competition experienced in the large account segment begins converging on the small to mid segments, as by some accounts it now appears to be doing in the United States.

Increasing combined ratios and declining ROEs may be just the beginning.

We’ve had a number of years with lowerthan-average claims costs, lulling much of the industry into a sense of calm, but that party seems to be ending. Combined with investment returns that are modest at best, the importance of having the tools to manage underwriting profitability becomes even greater. Many commercial segments are now into multiple years of compounding rate decreases, while terms and conditions are starting to weaken. Yet the industry is sitting on peak levels of excess capital and it seems that everyone wants to grow. Remember that sinking feeling you had as a kid at the top of the roller coaster, just before that first dip? Me too.

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Page 18

Country Risk Analysis:

50 Ways…

Rating countries for financial risk is an exercise often fraught with peril. There are, to quote Simon and Garfunkel, at least ‘50 ways’ in which the analyses may not square with reality.

Freelance Writer

A company is likely to perish if it ignores its markets. Shutting down its accounts payable is one way to survive a storm. Using creative accounting to justify ignoring its payables could be another.

Neither of these strategies is tolerated or permitted where laws are established and observed.

But with the rise of Country Risk Analysis (CRA), it can be argued that such practices have been conceptually legitimized.

How? Well, Simon and Garfunkel might conclude there may be 50 ways, but here only two aspects of CRA — econometrics and “history as mystery” — shall be reviewed. First, a little backtracking to establish context.

BACKGROUND Historically, CRA emerged as a discipline based on the confluence of two major 1970s financial events: Western banks extended defaulted sovereign loans to “emerging market” countries without IMF backing, and OPEC hiked its oil rates in 1973.To address solvency concerns arising out of these events, many financial institutions, credit rating agencies and business publications close to the financial industry evolved methodologies to establish any given country’s credit worthiness.

Wikipedia notes providers of country/political risk analysis use different methodologies to assess and rate countries’ comparative risk exposure.

Say Wikipedia’s online contributors: “Credit rating agencies tend to use quantitative econometric models and focus on financial analysis, whereas political risk providers tend to use qualitative methods, focusing on political analysis.

However, there is no consensus on methodology

18 Canadian Underwriter September 2008

in assessing credit and political risks.” 1 Country/political risk analysis has always tended to be the preserve of governments’ foreign affairs departments, working in tandem with their intelligence and military departments. But access to such sources was at best unreliable and, in many cases, not permissible. So, the private sector evolved its own methodologies to assess [future] credit-worthiness risk of both sovereign governments and business entities within their jurisdictions.

ASSESSING A COUNTRY’S CREDIT RISK For simplicity’s sake, a CRA 100-point score sheet system — familiar to individual consumers and corporate borrowers — will be discussed.

Credit decisions are typically based on complex weighted elements, including political, economic and social factors. For example, chances of a military coup could rate a 1 (if a peaceful, bloodless coup) or significantly higher if the civilian government is removed with considerable resistance and bloodshed (resulting in, say, a 10).

Economic stability based on a weak or strong economic infrastructure, volatile commoditybased foreign sales (extracted minerals, wheat) affects the rating yet again. As for social factors (civil society), these can influence ratings on the basis of tolerance of corruption and nepotism in society, with its inevitable crossover effect into business.The more corrupt the society, the higher the cost of doing business, the lower the efficiency of output, and the lower the return on investment (ROI) for the foreign direct investor (FDI) or foreign trader.

Illustration: Graham Roumieu

Peter Beeching

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ENTER SIMON AND GARFUNKEL Econometrics Applying predictive econometric criteria to such non-economic dynamics of national history and culture is [potentially] flawed. On this basis, future “results are in” before events have even unfolded, let alone assessed.Tim Weiner notes in ‘How to Make a Spy’ (Foreign Policy magazine): “Billion dollar spy satellites…do not tell us what we need to know… Language, history, and culture [are] where Americans need to begin.”2 Calibration techniques related to econometric models may benefit from a similar need. According to noted economist and CR analyst Armen Kouyoumdjian, CRA sins include:

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Page 19

three digits.”The result? Recession, inflation, a bankrupt banking sector and a gaping budget deficit. All of these bad consequences could have been avoided with a US$50-billion currency facility, which came partially and much later, anyways, after all the damage was done.6

Obsession with “phantom” GDPs These are “nebulous and capricious” figures, Kouyoumdjian notes. The first estimate of a GDP is not even available

Looking at a country intrinsically in terms of risk “This…weakness … was much affected by the Asian and Argentine crises, both of which [credit rating agencies] failed to predict,” Kouyoumdjian writes.3 Indeed, Argentine economist Carlos Escudé maintains the 2001 IMF crisis was deliberately conceived and executed by corrupt Argentine officials who profited handsomely from this fraudulent scheme. 4 Leaving aside whether Escudé is right or wrong, the point is: if such crimes were conceived secretly, what CRA practitioner could have known of it?

Concentrating too heavily on a country’s ability to service and reimburse external debt This has the effect of downplaying other cross-border activities — such as trade and investment — that have their own risk patterns and are not always linked to currency cash flows. 5 Incorrect diagnosis and treatment The Mexican financial crisis of 1991-92 is an example, Kouyoumdjian observes.

This was “an old-fashioned, currency cash-flow shortage,” he writes. “In order to treat it, in a country that had a balanced budget and single-digit inflation, the foreign juju doctors obliged the country to raise domestic interest rates to

until well into the following year, after which it is often corrected (up or down) in subsequent years — to which one has to factor in base-date and composition changes, and the impact of erratic exchange rates. Kouyoumdjian notes that what matters [in] debt and payments, are the actual quantities. “Irrespective of how large the debt or its servicing… the important thing is how much money it is, and whether the fiscal, currency and borrowing resources for such an

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amount are available from different potential sources.”7

Putting ‘balance of payments analysis’ at the centre of country risk assessment Kouyoumdjian writes that “high commodity prices and other changes in terms of trade and investment have meant that few countries today…have severe external problems. In fact, many have record levels of reserves.” However, he further observes, the situation may go into reverse one day. In 2007, for example, Mexico had a non-oil trade balance deficit of some US$55 billion with a falling oil output, which, barring reforms, may mean an end to its oil-exporting capacity in the medium term.8 Considering debt service as a percentage of exports “This…presupposes that export revenue could and should primarily be destined to debt service,” Kouyoumdjian notes.“It also presupposes that export revenue… accrues to the government treasury.”

It forgets the fact that the country also needs to import, he adds. “If it only imports Champagne and Cognac, these could be done away with, but is a country supposed to stop importing the energy…and food [for]…its population…and the intermediate and capital goods with which its various sectors develop, in order to service debt?”9 Changing the definition of fiscal deficit This practice evolved in the late 1980s to save the increasingly shaky reputation of the crisis managers. Having invented a statistic called ‘the Primary Balance,’ CRA analysts then targeted the category for elimination. “Basically, the authors of this aberration decided that by taking away from the figures the worst reflection of the problem, they would make it more presentable,” Kouyoumdjian writes. “To the extent…that the interest bill had become the main expenditure element in the budget, ignoring it was akin to a

20 Canadian Underwriter September 2008

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Page 20

clinical director [instructing] all doctors and radiologists to omit from their written diagnosis any threatening illness which may turn up in the examinations.” 10

HISTORY AS MYSTERY An open question is whether and to what extent CRA practitioners take into account the history and culture of jurisdictions being assessed for a probability outcome scenario. A separate, but very important question is whether this makes any difference to the outcome anyway.

Business understandably works on a need for predictability over a “deal/ investment-related” time frame — a given framework being five to 10 years.

Countries produce “five-year plans,” as do large corporations. Individuals looking to the future in their own lives ask themselves where they will be in that time? Companies hiring them ask the same thing.

But what are five or 10 years to the long (or even short) tail of history? Take two examples: Iran and the former Soviet Union. In the Iranian example, using a five-year accuracy forecast projection when the Shah was still in power (and following the Yom Kippur war in 1973), countries buying Iranian oil were anxious to sell into Iran to earn back the petrodollars that OPEC was charging.

This worked out fine until 1978. By 1979, one year after the five-year forecast expired, the Shah was out and the Iranian Revolution was in. Similarly, Mikhail Gorbachev’s glasnost/perestroika reforms in 1985 led to the complete collapse of the European Communist system within six years. The new opportunity to advance private enterprise market dynamics was completely unforeseen in 1984.

CRA makes predictive assumptions about jurisdictions and societies in much the same way a biologist determines a tree’s age by counting its annual trunk rings. Says Nassim Taleb in The Black Swan: “History and societies do not crawl.

They make jumps.They go from fracture to fracture with a few vibrations in

between. Yet we (and historians) like to believe in the predictable, small, incremental progression.” 11 In other words, the past is not necessarily a guide to the future.

Let the record show CRA still has a way to go as a discipline. If Taleb is right, if a guess is as good as a prediction, then if the outcome is as predicted, is it luck? Or is this something upon which a risk manager can stake his or her professional reputation?

If so, what of NASA’s 1986 Columbia Shuttle disaster. Was it a one-time event?

Yes, until 2003’s Columbia re-entry. In both scenarios, heat shield foam padding resulted in disaster. This is no less a case of “apples-to-apples” comparison as pre-or post-revolutionary Iran in 1979 or (counter-) revolutionary Russia in 1989.

1 http://en.wikipedia.org/wiki/Country_risk 2 Tim Weiner, ‘How to Make a Spy,’ Foreign Policy, September, 2007, Pg. 48.

3 Armen Kouyoumdjian, Country Risk Analysis: Time for a New Approach, February 14, 2008 http://www.rgemonitor.com/latammonitor/608/country_risk_analysis_time_for_ a_new_approach 4 Carlos Escudé, From Captive to Failed State: Argentina under systemic populism, 1975 – 2006, The Fletcher Forum of World Affairs, Vol 30, No 2, Summer 2006, Pg 125 – 147.; fletcher.tufts.edu/forum/archives/pdfs/30 -2pdfs/escude.pdf 5 Armen Kouyoumdjian, Country Risk Analysis: Time for a New Approach, February 14, 2008; http://www.rgemonitor.com/latammonitor/608/country_risk_analysis_ time_for_a_new_approach 6 Ibid.

7 Op. cit.

8 Op. cit.

9 Op. cit.

10 Op. cit.

11 Nassim Nicholas Taleb, The Black Swan, Random House, NYC, 2007, Pp 11 – 12.

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The Collision Repair Industry’s Shrinking Labour Pool The industry is discussing ways to help overcome stereotypes in a bid to recruit more talent into a shrinking labour pool Jay Perry Founder and CEO, Automotive Business Consultants Inc.

History has demonstrated many times that what happens in the wider context of the auto insurance claims industry can and does affect us within the collision repair industry. The most recent example is workforce shortage within the collision repair industry. Just as the insurance industry is coming to grips with a predicted labour shortage in the future, so, too, the collision repair industry is discussing how to retain employees and maintain a strong labour force in the not-so-distant future.

HISTORY The current condition of the collision repair industry has not crept up on us overnight — far from it. Over many years, a variety of external

22 Canadian Underwriter September 2008

influences have caused us to look for good people, with very few to be found. One of the barriers has to do with people’s perceptions of the industry. Many don’t see the industry as particularly glamorous. For the most part, over the past two decades, the industry’s image was dirty (both physically and figuratively), so it did not appeal to many — especially when an alternative to physical labour was presented in the form of an up-and-coming, exciting world of computers.

As a result, new recruits were thinner in number than what was needed to fill the ranks of older, retiring tradespeople. Working conditions have improved a lot over the past two decades. The industry’s image has improved enormously, but the damage has already been done. It takes time to get beyond the stereotype developed as the result of shop work in decades gone by.

BARRIERS: POOR IMAGE A poor image was only partly responsible for the difficulties in recruiting new members to the industry.Also, the industry made very poor efforts at recruitment. The result was that fewer new bodies were being funnelled into the field to fill up the opening spots.

To be fair, a number of factors act as barriers to recruitment. The wages a technician can command are quite low, for example, when

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compared to other trades — trades that may not be as challenging as collision repair. Despite the low wages, the level of knowledge required of technicians is very high. Coupled with this, tooling and technology have also contributed to the difficulties in recruiting new members. Given the complexities associated with vehicle manufacture today, the bar has been raised for entry-level training of technicians. Such training is costly: there is a protracted apprenticeship that may not appeal because of the lower wages that go along with junior positions.

It doesn’t help that tool purchase does not come with any tax relief, causing financial strain on a technician. And the education does not — nor should it — stop at licensing, since vehicle technology has changed rapidly at the manufacturer level. New materials in steels, plastics, composites, paints and substrates, as well as repair methods have demanded continuing education for professionals in the field. These kinds of changes and challenges are comparatively minor for other trades.

BARRIERS: PERCEIVED HOMOGENEITY Another potential barrier is when consumers lump all shops into one category, despite the reality that all shops have individual differences. Shops are responsible for this problem if they do not take the time to educate the buying public as to the differences between shops.

Process-focused shops that are on the leading edge of technology, education and process development can actually strip out costs, even if their door rate appears to be more than their competitors.

Highlighting nuanced differences between shops is one way in which national accreditation could be helpful.

I have been asked to chair a committee formed of Canadian Collision Industry Forum (CCIF) members that is developing a very easy-to-use identification system to help identify the differences between shops and their qualifications.

More on that later.

24 Canadian Underwriter September 2008

Page 24

REMEDIES: COLLISION INDUSTRY Dedicated professionals are employing multi-faceted remedies to counter the potential barriers to recruitment noted above. Solutions include cleaning up the shops they own, both physically and from a business reputation perspective.

If you have the opportunity to tour a modern, well-managed shop, you will be surprised at how clean they can be and how smoothly they operate.

One of the more creative methods taking root is moving the threshold for total losses to a higher percentage of the vehicle’s actual cash value (ACV). When the total loss is considered in this manner, it becomes more beneficial to repair the vehicle quickly to achieve lower costs.

Some companies are rumoured to have set their ACVs as high as 105%.

The clean operations I mention above are due in part to a culture shift within the industry.Top-level shops are adopting the lean manufacturing model; they are eradicating inefficiencies from their operations. It has been a revolutionary-style of change in production procedures, and gains have been made. The method may not be as effective as it is in the manufacturing sector, because collision repair is actually a re-manufacturing process so absolute consistencies are not possible.

But facilities that have adapted this model for their use are increasing their efficiency, thus “doing more with less.”

As a result, sales-to-technician ratios rise when lean principles are implemented.

Better specialization and delegation of tasks within the employee pool is found in shops that are working hard at improving flow. By switching to “HighLow” technical team categories, many shops have kept the experienced techs working on high-skill tasks, while giving more junior and lower-paid technicians experience by working on less advanced tasks.This can be likened to a dental hygienist doing the skilled but lesser tasks for the dentist who stays concentrated on the more difficult parts of the job.

Networks originally created with the intention to leverage purchase power also bring an opportunity to distribute best practices. Such shared education has helped once-isolated and very independent businesses learn how to do things better. Along this same line, many training programs are available to help businesses increase their professionalism.

Networks can also help with naming and co-branding, as well as in not-so-obvious ways such as shops participating in a paint company’s “20” group.

Smart scheduling is another technique in workflow management that has helped to reduce cycle time. The principle often seems counter-intuitive to many, but the facts show that with better scheduling, two days can be shaved off the cycle time, floor space can be freed and higher levels of concentration can be achieved, thus resulting in higher efficiencies.

REMEDIES: INSURANCE INDUSTRY What can the insurance industry do to help? Plenty.

First, I would recommend that insurance companies need to abandon the old idea that vehicles need to be dropped off on Monday to avoid a weekend rental time.

Second, insurance companies should reward the professionals that invest in system development, facilities, equipment and training. All shops are not created equal. This is where the CCIF national accreditation effort will pay dividends. When the time comes for

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Third, one of the more creative methods now taking root is moving the

Page 26

threshold for total losses to a higher percentage of the vehicle’s actual cash value (ACV).When the total loss is considered in this manner, it becomes more beneficial to repair the vehicle quickly to achieve lower administration, rental and customer retention costs. Rumour has

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26 Canadian Underwriter September 2008

it some companies have gone to a 105% of ACV ratio, and yet they have nevertheless come out ahead on the claims’ total cost picture.

Fourth, insurers should be looking for opportunities that can build a closer relationship with their suppliers. If, for example, they can devise ways to eliminate red tape that adds costs and increases delays in delivery, they can actually beat their competitors in claim cycle times and associated costs.

Fifth, insurance companies need to get used to the idea they will have to pay more for high-quality, safe repairs.

They need to stop looking for bargains and instead focus on finding value.

Value is achieved through the balance of three things: timely delivery (cycle time), quality (the repair itself) and

budget (competitively priced services).

Many times, when the peripheral costs of a claim are factored in — i.e. rental vehicles, loss of customer satisfaction index (CSI) values due to a long time taken for repair, etc. — it is cheaper overall to pay a higher repair price to ensure well-qualified technicians are working on an insurer’s vehicle than to write off a vehicle or seek a cheaper door rate.

Balance these three items first, and then make your decision. Measure these things objectively; move away from any system that resembles a “good-old-boy” way of picking suppliers. Look at all the numbers, including internal costs, and see what can be reduced. It all helps in the solution to “do more with less.”

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Knowledge is

Sales Power Selling insurance is different than selling other products.

In insurance, the seller’s knowledge about his or her client’s business is critical to a successful sale Peter J. Maiuri Account Executive, FENA Insurance Solutions Inc.

Why does a person buy insurance? To meet contractual obligations and leaseholder agreements, to fulfill mortgage lenders obligations and to protect against the “what if.” These are only a few reasons why people buy. Understanding consumers’ motivations for the purpose of placing coverage is an important factor for the insurance broker. The role of the insurance broker is to complete applications of insurance with the insured and approach the insurance marketplace for the best coverage and premium. Once this process is complete, the insured binds coverage and the deal is sold. Or is it this easy?

To be a successful producer in the insurance industry, one must realize at an early point that insurance sales cannot be carried out like sales in other industries. To be successful, you must first remember that the insured is purchasing a contract; should a loss by a peril occur that is outlined in the agreement, the insurer will indemnify the insured. Think about this: the insured is purchasing a piece of paper in case something happens. So if the insured has never experienced

28 Canadian Underwriter September 2008

a major loss (as many have not), what value do they see in this piece of paper we call a policy?

If the insured does not see value in an insurance offering, why would they buy? Learn the insured’s business and industry conditions. Ask questions relevant to your prospective client. Find their need, and then provide an option that will meet their need or solve their problem. But remember, a solution that worked for a similar insured in the same industry will not always work again. Find the insured’s buying needs and influences and then plan your approach. Be client-centric in your approach: this is not about you, but rather the insured. Every brokerage has the best markets, loss control services and claims specialists. What every brokerage does not have is you — the producer.

Here is where insurance brokers earn their commission, by providing valued service to insureds, thereby differentiating one brokerage from the next.The insured can see and measure this part of the process. But it is much more difficult for the typical insured to measure a policy.

Knowledge is power and will only lead to further success for any broker’s sales. Product knowledge will allow the broker to find a policy that meets the insured’s needs; in our industry, these products are always changing. Once you have identified the insured’s buying influences and issues, finding the best insurer and policy is a major factor to presenting a viable solution.

The insurance industry is extremely cyclical. It is dependant on many external factors leading to

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profitability of insurers and brokers.

Stock market conditions, interest rates and inflation are all economic factors of which the clients are aware. But how many brokers explain how these conditions affect the insurance premium, or their ability to even obtain coverage at times? Every renewal is a sale for a broker. Once you close an account, that insured has no obligation to spend more than one, two or any years for that matter with the same broker. Outlining the marketplace for the insured and explaining why premiums fall in a soft market and rise in a hard market is

Be client-centric in your approach: this is not about you, but rather the insured. extremely important. Can you explain the concept of cash-flow underwriting?

Stop and think about an account you may have lost in a hard market simply because the insured was not properly educated on the market conditions that directly affected them.

Educating yourself with sales seminars and training courses will never hurt.

Educating yourself in your clients’ industries will allow you to speak intelligently with your prospects about their businesses. Also, taking classes through organizations such as the Insurance Institute of Canada will add instant value to your offering.

As you educate yourself, it is important to remember knowledge that is relevant today may not be relevant tomorrow.

Products, underwriting guidelines, rates, insurers’ appetites and even the number

of insurers in the marketplace are always changing. For the insured, the insurance broker can represent the one constant in the insurance market. The broker is the service provider. Due to the multitude of factors affecting the insurance marketplace (many not even mentioned in this article), you must become comfortable with change.

Selling insurance will no longer lead to success. Rather, to be successful increasing new business and retention, a broker must assess the insured’s business and the risk associated with it.The next step is to arrange the best policy/policies available for the insured at the most competitive premium.

Throughout this process, continue to educate and service the insured’s needs.

Ultimately, bring the insured the products and service that best suit their needs and not yours. In doing so, the insured will buy from you, and this is the key.

Selling insurance is not always the most glamorous process. But providing insureds with an offer they will buy, meeting their needs, and allowing insureds to buy based on their own decision are all key to increased sales for you and profitability for your brokerage. The following is a process that can be followed to help in this method: 1. Review of the insured’s industry prior to your first meeting; 2. Ask questions about the insured’s business. (Make sure you listen); 3. Identify the insured’s needs; 4. Evaluate the options available; 5. Present your solution and illustrate the transition process; and 6. Implement your solution and evaluate your experience with this insured.

September 2008 Canadian Underwriter

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Crude

Awakening David Gambrill Editor

Surging gas prices and fuel costs have placed company risk managers at the forefront of determining appropriate risk management strategies Who would have imagined in January 2007, when the average price of a litre of gas in Canada was 87.1 cents, that the average price of gas would soar up to $1.36/litre just one year and a half later?

The price of gas now sits at approximately $1.29/litre, having coming down to just below the average gasoline price in May 2008. Only a few months ago, analysts expected gas prices to crack the $1.50/litre barrier.

Of course with the higher price of fuel comes a higher cost of doing business. As a result, risk managers now find themselves charged with the task of considering ways in which the higher fuel costs will affect their companies — and whether these risks can be transferred by means of insurance or other financial products.

At first glance, it would be easy to dismiss the volatile fuel prices as a purely financial issue for companies that can be resolved through purely

30 Canadian Underwriter September 2008

financial instruments such as hedge funds. Some argue rising fuel prices don’t have much to do with property and casualty losses, per se, as much as they have to do with profit margins and shareholder interests.

But scratch beneath the surface and risk managers will tell you a variety of ways in which escalating fuel costs could ultimately affect the insurance industry’s bottom line.

One of those ways has to do with insurance to value. As fuel costs increase, so too do the prices of other commodities — including labour costs and material costs. So the question becomes: If your plant goes up in flames one night, will it be more expensive for you to repair? And will you have enough insurance to cover the escalating repair costs?

“The linkage between the global cost of commodities and the insured values people are keeping I think is a huge issue,” says Bertil Olsson, an executive vice president and Houston energy practice leader at Willis Group Holdings. “And it’s not an unknown issue. People in the industry are aware of it, but a lot of people are missing the boat. We see every now and again, there are big accidents and people don’t have enough insurance. Two years ago, you knew that if you had $100 million limit on your policy, that was more than enough to fix anything that might go wrong or maybe rebuild this plant. And then boom, it blows up in the middle of the night and now you

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find out it’s going to cost closer to $200 million.”

This means company risk managers will be under more pressure to look at all of their assets and check out the valuation to make sure it is correct, says Olsson. If the updated valuation isn’t correct, the company may have to buy more insurance, which in turn will put pressure on insurance premium pricing.

Risk managers will also need to look into their crystal balls to determine how the effects of higher fuel rates might ultimately filter down and put pressure on traditional commercial lines of insurance.

The effects of escalating fuel prices might be seen in any number of areas, most notably directors and officers insurance, says Shelley Lloyd, the operations manager for Aon’s financial services group. In particular, Lloyd observes, directors and officers are under the microscope when it comes to disclosing any material changes that could affect their public budget forecasts.

“There may be an obligation, at least for some industries, for the directors to be looking at whether there are alternative sources of energy that the company can use to lessen their dependency on fuel,” Lloyd notes. “I think there will be more scrutiny on the decision-making process companies go through at this point in time with respect to fuel costs and dependency. From that decisionmaking process, you may see more liability that could possibly trigger some D&O claims. Some E&O claims if you are involving your accountant in forecasting.”

Some smaller transportation companies in the United States have become insolvent as a partial consequence of the higher fuel costs, sources note. And where there is insolvency, there is usually litigation against the company directors.

Such litigation may also be related to employment and pension liability insurance.

“Generally we’re seeing some talk, if not hard statistics, about increased insolvency and increased layoffs,” says Lloyd.

“You certainly see that in the auto industry. That certainly may lead to a higher

32 Canadian Underwriter September 2008

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volume of lawsuits around wrongful termination [or] discrimination based on age, if you’re laying off your most highly-paid workers. In that respect, you could have employment practices liability coverage implicated.”

Policies covering commercial crime and employee theft may also see a hit due to the rise in certain fuel costs. In Atlantic Canada, for example, Ecclesiastical Insurance issued a public statement in mid-July expressing concern that two churches had significant amounts of oil stolen from their exterior oil tanks.

Fuel prices may also affect business interruption and other traditional modes of insurance products. “There [may be] more of [an impact on] classic credit insurance, credit default insurance and political risk insurance,” says Beth Enslow, the senior vice president of supply chain risk management at Marsh. She

The linkage between the global cost of commodities and the insured values people are keeping is a huge issue. notes a number of carriers have started to come out with specialized, supply chain risk insurance products. “That provides broader and more customized coverage for a company’s supply chain, so they can say, ‘Okay well, I’m really worried about this part of my supply chain and the supply of these commodities in these countries,’” says Enslow. “They can really narrow down where you are most concerned and then place a broad-ranging policy across that. That can not only be against your direct suppliers, but your suppliers’ suppliers as well. It could be a named product and so forth… This goes to the notion that a delay to the supply chain can be just as disruptive as a tornado hitting [your company].”

Many observe hedging is more likely than traditional insurance to be the risk transfer mechanism of choice for high fuel prices. They also point out that, at

face value, hedging appears to have less to do with risk managers than it does with the company accountants. But that doesn’t mean there isn’t a role for risk managers in the hedging process.

“Where I think the risk manager can come into play — because often these hedging strategies are done by the finance department, not the risk manager — is just making sure the right questions are being asked,” says Enslow. “Such as: Is there going to be some replacement ingredient or material, or some new product introduction we’re planning on doing in the next year, that would make the hedge commodity less vital? Have we looked beyond just the impact on us and what the [fuel] price impact may be on our suppliers? And do we need to think about buying raw materials for them? The way the risk manager can play a role in hedging is just making sure companies are looking at the big picture.”

Risk managers, Enslow adds, should also be able to help pinpoint the ultimate consequences of the “domino effect” of high fuel prices on the company.

This would be done through fuel cost simulations and scenarios, which can be modelled using available computer technology.

“The company should know the impact [of rising fuel costs] on its cost structure,” Enslow says. “There are tools out there, supply chain strategy tools, that can let you model that effect.You can say: ‘What if oil goes to $175-200 per barrel, or $70 per barrel?’ and be able to say, ‘This will be the impact on our balance sheet.’”

Knowing this will give risk managers the knowledge to explore risk transfer strategies. “It will help you to understand that if [fuel prices] rise to this price, maybe we [in the company] need to open some more local warehouses, so we don’t have to ship things quite so far away. Maybe we don’t source quite as much from China. Maybe we do more local sourcing from Canada and Mexico.

The risk manager is a great person to ensure the right scenarios are being done and this is all cross-functional.”

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34 Canadian Underwriter September 2008

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Women Looking Up F

or women and men alike, but particularly for women, it’s disheartening to see little has changed in the demographic make-up of the executive level of the Canadian property and casualty industry over the past decade. Women held only 23% of senior management roles in the industry in 2006, up a mere 1% since 1996. But waiting in the ranks, just below the senior management roles, at the management and middle management levels, the split in the gender divide is 50-50.

As the majority of aging chief executives contemplate retirement over the coming decade (one in five of the industry’s senior executives are in the “exit cohort” between the ages of 55 and 64), the question remains whether women in the management roles below them will be able to — or want to — shatter the traditional representational imbalance within the industry and edge into senior executive positions.

Many hope this will be the case. Certainly, the 50-50 split at the middle management level is an encouraging sign that women are well-positioned to make the move. Others find encouragement in the fact that there is an increasing share of women in the core business units of the industry (i.e. adjusters, claims representatives, appraisers, and brokers), areas in which women have traditionally been in the minority.

Optimists believe this is an indication of women breaking out of the clerical and customer service mold, a trend that will hopefully trickle up the chain of command. However, pessimists maintain that even though women in the property and casualty industry are increasingly participating in the core business units, the dual demands of their professional lives and home lives — often involving the primary care of elderly parents or children — may

VANESSA MARIGA ASSOCIATE EDITOR

Canadian Underwriter September 2008 35

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COVER STORY

Women Looking Up

women talked of a wealth of opportunities to move up in an organization — even if those career paths often ended up just short of the corner offices reserved for chief executives.

derail any ambition to become a senior executive. It remains to be seen whether acontemporary cultural shift in the division of labour in the household will be enough for women to break through the “glass ceiling” on the path to senior executive-level positions.

OPPORTUNITIES KNOCK One interesting feature of the stories one hears from women in the industry is the relative ease of crossing over from one business unit to another. Gloria Haydock, a manager at The Economical’s Atlantic Region’s Customer Contact Centre, began her career 23 years ago as a file clerk.

Bored out of her mind, she jokes that she

THE CURRENT STATE OF AFFAIRS The Insurance Institute of Canada released A Demographic Analysis of the Property and Casualty Insurance Industry in Canada 2007-2017 in May 2008.

Richard Loreto of R.A.L. Consulting undertook the study, which was specifi-

A well-rounded career experience will aid women in attaining senior-level positions. But some suggest employers and the industry in general will have to help facilitate women’s move into the C-suites. cally related to the Canadian property and casualty industry. Commissioned by the institute, Loreto’s team collected demographic data from 43 (re)insurance companies, adjusting firms and brokerage firms, as well as four insurance councils and regulators, over the summer and fall of 2007. Nearly 91,000 records were submitted, representing 28,300 records of active employers within organizations, 12,500 terminated records and 50,000 records from the regulatory bodies across the country. Loreto then compared this data to Statistics Canada’s Labour Force Survey and the 2001 Census.

Loreto found men held 78% of the industry’s senior management positions in 1996 and, 10 years later, that number remained relatively unchanged at 77%.

But during the same period, women increasingly began to participate in other areas of the industry. For example, women represented only 49% of the claims adjusters and examiners in 1996, but that level of representation shot up to 70% a decade later. Similarly, but on a

36 Canadian Underwriter September 2008

more modest scale, 49% of agents and brokers were women in 1996, whereas that number bumped up to 54% in 2006.Twenty-four per cent of the industry’s assessors, valuators and appraisers were women in 1996; this number increased to 31% by 2006.

As this happened, roles traditionally viewed as female-occupied bastions showed signs of diversification. Men, for example, increasingly performed customer service, information and related clerks’s tasks (24% of such occupations were held by men in 1996; 34% in 2006).

Also, the percentage of male underwriters ticked upward by a percentage point over the past decade (as of 2006, men represented 29% of underwriters).

What do these numbers mean for women in the insurance industry?

Canadian Underwriter approached a number of women, representing many different stages of a typical industry career, to check into the current status of what was once assumed to be an ‘Old Boys’ Club.’

Contrary to the myth, however, many

was probably more assertive as a young woman fresh out of school than most in her cohort. “I knew I wouldn’t be in that position for very long, but I could see that there were a lot of opportunities in the industry,” she said. “So I went into my manager’s office and told him that he had to transfer me.”Within her first year,Haydock rose through her company’s ranks and was promoted from filing clerk to adjuster.

Twenty years ago, when Belynda Kerelchuk (now a vice president with Aon Re Canada in Toronto) first began her career in the industry, the majority of women working in the business held clerical positions. “But there were some in senior positions, and that was probably one of the reasons why I stayed,” she says. Before joining Aon Re, Kerelchuk worked in a firm with only one fellow female commercial underwriter. “The rest were all guys,” she says. “It was a total old boys’ club and they weren’t very welcoming.” A handful of senior managers strived to change the situation, by making a concerted effort to diversify

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Women Looking Up

the work place and encourage existing employees to keep pushing forward.

“They really encouraged me to take courses,” she recalls. “They kept telling me they valued what I was doing and encouraged me to apply for different positions.”

The courses individual companies or industry associations offer provide “an opportunity to see the different angles of the business,” says 18-year-veteran Maria Pagliaro, an accident benefits team leader at Desjardins General Insurance. As did many others, Pagliaro accepted a job as a client service representative; she proceeded to take Institute courses that allowed her to narrow the focus of her career to her current position.

Peace Hills Insurance president and CEO Diane Brickner says the fact she is a woman has never hindered her from pursuing any opportunities in the industry — except once. She recalls applying for a marketing position early on in her career, when she was a commercial underwriter. The marketing position called for her to be alone on the road for a majority of her time.

The branch manager — “a very senior gentleman, a wonderful person,” she says — took her aside and explained that he could not in good conscience give the position to a young woman, because she would be on her own all the time and he would worry constantly about her safety.

“I didn’t walk out of his office offended at all,” Brickner says. “He was of a different generation and just couldn’t see putting me on the road.” A year later, after he retired, Brickner applied again for the job. This time she got the job — and despised it. “That’s been in my entire career the only time that I felt that I couldn’t go ahead or move forward because I was a female.And to tell you the truth, he was right: I hated that job,” she chuckles.

The road hasn’t always been so smooth for women. Louise Rivett, operations manager for Canada at Sedgwick CMS, has been an adjuster for nearly 30 years.

She opened her own independent firm in Ontario in 1981 and was one of three female proprietors at the time. Rivett

38 Canadian Underwriter September 2008

21% of Canada’s property and casualty insurance firms had women on their boards as of 2007. started her business in February and struggled with her “mostly-male” client base, which initially wanted verification that men worked for her before they would give her their business. She hired an experienced man in April “to whom I jokingly referred to as my Dad,” she says. Lo and behold, her business started to boom. “There was definitely a different perception as to how the industry looked at women versus men and their qualifications and expectations,” Rivett says. “I just stopped looking at that and thinking about it and forged on. I never let it bother me at all. I never let it be an issue.”

Karen Barkley, president and CEO of ACE Canada, believes that as more women enter the field, the industry will continue to see a cultural shift. She notes when she first began her career with ACE’s predecessor company, a number of women occupied senior management roles in key areas of underwriting and claims. “To me, they were instrumental in my development,” Barkley recalls. “As trail-blazers, they had made my senior management ambition attainable.To this point, I believe those coming up behind me will receive greater and greater acceptance.” She doesn’t subscribe to the

notion that the commercial property and casualty industry is the last bastion of the old boys’ club. “I and others like me are proof of its demise,” she says.

The fact that more women are occupying core business units is encouraging news to Kathy Bardswick, president and CEO of The Co-Operators. “If women are getting into the core business roles, as opposed to the more clerical roles, I’m hoping this shows more well-roundedness in women’s experience generally.

When you look at what’s needed at the senior levels, we need people with a deep understanding of the business from a number of perspectives. That will position women well to assume the senior and executive roles in the future.”

SHATTERING THE CEILING Having a well-rounded career experience will no doubt aid women in attaining the proverbial “brass ring” associated with senior executive positions. But some suggest it will take a concerted effort on the part of employers and industry in general to help facilitate women’s move into the so-called C-suites, a reference to chief executive level positions. Some suggest the traditional dual obligations of career and family responsibilities — which have historically weighed more heavily on the shoulders of women — might conspire to prevent women from reaching the final rung of the corporate ladder.

Is there a “glass ceiling” for women in the insurance industry? The Insurance Institute’s study shows 75% of the senior managers in the insurance industry are male. How does this compare to other industries? It turns out the property and casualty insurance industry in Canada is slightly ahead of general corporations when it comes to female representation at the board level. Catalyst, an organization tracking the progress of women in corporate Canada, analyzed the demographics of the “Financial Post 500” companies in 2007. In its findings, released in June 2008, Catalyst found women’s representation on corporate

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Women Looking Up

boards in Canada remains remarkably low. Women held 13% of board seats in the FP500, up only one percentage point since 2005. Slightly more than 40% of FP500 companies in Canada in 2007 had no women acting as board directors; less than one-third of companies had multiple women on their boards. By comparison, 21% of property and casualty insurance firms had women on their respective boards.1 This is still a long way off from the 50-50 split many would like to see.What happens to women when it comes to making that jump from middle management into executive-level management?

Studies of women’s career trajectories in other professions provide us with a clue.

In May 2007, for example, the Law Society of Upper Canada released a study of the law profession’s demographics.

Researchers noted that although women were graduating from law school in record numbers, few were actually making it to the level of partner. They suggested the stunted career trajectory for women had to do with finding the right balance between a professional and family life.

Bardswick admits the insurance industry, like the law profession, is still influenced by the belief that women must sacrifice their family lives in order to succeed in the C-suite. Historically, she suggests, the responsibilities of childrearing and elderly parent care have rested more heavily on the shoulders of women than men. “And so, women are still facing some imbalance from that perspective; either out of necessity or just because they decide life is too short, they don’t want to be living under those kinds of pressure. They don’t want to take on the more senior levels at work that are more demanding.”

CULTURE SHIFTS AND FLEX MUSCLE A documented cultural shift associated with raising families might help clear a path in the future for women to move from middle management to senior executive-level positions. Recent studies

40 Canadian Underwriter September 2008

suggest that as women take up more non-traditional roles in the workplace, men appear to be taking on more responsibilities on the home front. This could play out in a way that frees up more time for women to succeed in the C-suite.

For example, an increasing number of men are taking advantage of paternity leave. Statistics Canada in June 2008 released its study on Father’s use of paid paternal leave. The report uses data from the 2006 Employment Insurance Coverage Survey to examine the use of paternity leave in and outside of Quebec

A cultural shift associated with raising families might help clear a path for women to move into senior executivelevel positions

(Quebec enhanced its parental leave program in 2006). Of those men eligible for the Quebec program, 56% claimed benefits in 2006, up from 32% in 2005. The participation rate for fathers outside of Quebec,11%,remained steady over the three years that the study took into consideration.

For women, paternal leave confers important professional benefits. If women are no longer obliged to take a full year of maternity leave, they won’t have to leave the workforce for 12 months at a time in order to rear their children.

Shared responsibilities for raising children helps break down a traditional barrier so often cited as a chief obstacle to women entering senior executive positions; that is, women do not have the time to be mothers and senior executives at one and the same time.

“Family roles are shifting, and you’re starting to see men participate more and more at home,” says Kelly MacDonald, vice president and manager of Aon Reed Stenhouse’s professional services group

in Toronto. But, she adds, “there are still household and family demands that pull [women] away from the workplace.”

Referencing the law society study, Ellen Moore, president and CEO of Chubb Canada, notes differences between the nature of the legal profession and the insurance industry might create opportunities for insurers to better manage the special needs of a female employee juggling both sets of responsibilities.

“If I understand the law profession’s business model correctly, making partner is all about billable hours and the relationships you have with significant clients who are very demanding and hard to transfer to someone else and step away [from for long periods],” Moore observes.This in turn “may keep women lawyers from ascending the ladder.”

An insurer, on the other hand, can work with women on a broader basis, developing broader skill sets and other career opportunities that women can take advantage of whenever life throws them a personal challenge or choice, Moore continues.The work force is 50% female, she adds, and so if insurers fail to stay connected with that 50% in a way that works for both parties, then insurers stand to lose their competitive edge.

“It can be something as specific as handling a maternity leave,” Moore says. “If we don’t as an organization have a way to off-ramp and on-ramp the employee in such a way that they can continue to be a very important part of the development of our business, shame on us.”

Still, the thought of losing a full-time employee for a year can be quite frightening for an employee. Brickner stresses a balance must be maintained when staffing, because having five or six employees in a department off for one year can be “crippling to an organization.” Rivett agrees, noting she’s had to deal with staffing issues of her own.

When the company had its first longterm mat leave, “we continued to reach out and talk to that colleague even though she’s on leave,” she says.

The office kept the employee involved

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COVER STORY

Women Looking Up

in new developments, quarterly results and invited her in for special occasions, to meet new hires and for important meetings so that she doesn’t come back feeling like a stranger, Rivett says. “It takes a bit of effort to do that. But they’re still employees, even though they’re not here. A leave doesn’t mean that your employee is terminated.”

Pagliaro was actually promoted to a new position while out on maternity leave. Before leaving, she had a conversation with her manager in which she expressed her interest in a training position.While she was on leave, a posting for her desired job came up and a colleague called her to let her know.

“I actually got that job while on mat leave, so that when I came back to work I was in a new position.”

The industry as a whole, as well as individual organizations, can take steps beyond just aiding an employee during her maternity leave. Some have, for example, formed professional development programs to help women achieve their career goals, be they entering the C-suite or becoming a heavy equipment adjuster.

Fifteen years ago, Moore was a founding member of Chubb’s corporate women’s development council, which has since grown to chapters around the world, including one in Canada. The council’s mandate is to provide special programming for skill development and career planning unique to women. A consortium program was created in conjunction with an American business school and the company sponsors 12 female employees a year to partake in the program, which covers everything from financial courses to softer skills unique to women. This year, the Canadian chapter hosted a meeting for all assistant vice presidents and above in Canada. The chapter invited an expert on personal branding to coach women in how to talk about their successes and promote themselves in the workplace.

ACE Canada launched a women’s forum this year as well, Barkley says.

“It’s a global program… to ensure ACE

42 Canadian Underwriter September 2008

maximizes its business opportunities by providing a culture that actively fosters career development for women.” One of the first Canadian initiatives, she adds, is the launch of a mentoring program.

Aviva Canada also runs a number of development programs, specifically targeting senior leaders and executives, regardless of gender, notes a company spokesperson. The focus of its Raleigh International program is leadership development and learning through experience — an equal number of men and women participate, the company adds.

In a recent round of Aviva Canada’s executive hires, seven of the appointments

making it easier to balance a busy professional life with a busy household. Noting this, Bardswick suggests employers in the industry should be creative in providing opportunities for their employees, either through work-sharing, mentoring, teleworking or flex time. She notes one of her colleagues has three children — one with high needs — and works “really weird hours, but she’s able to hold a senior role because we can build the support around it.”

Most importantly, employers need to have an open and honest dialogue with their employees, Bardswick stresses. “If any of us claim that we’re always in balance, I think we’re not being honest with ourselves,” she says. “It happens and you need to be able to talk about it and get yourself re-focused.”

ACHIEVING BALANCE

were women compared to three males.

Donna Garcia, a senior commercial underwriter with ING Canada, notes her employer has recently implemented programs that are not necessarily specifically designed for women, but aid them in professional development and the balancing of the double-day duty. Through the “Development Plan” program, Garcia gets to both be a mentee and a mentor, allowing her to gain a sense of what’s required from a more advanced job; at the same time, she helps and manages others with less experience. “It really allows me to get a sense if this is something that I want, and to gain a sense of what’s involved while having someone to look up to,” she says.

Another recent workplace innovation, “flex hours,” allow people to adapt their work schedules to home life, thus

Looking ahead over the next 10 years, hope remains high the imbalance between men and women in the insurance industry’s senior levels will level off.

That could be achieved through a natural evolution of women taking up more non-traditional roles that eventually trickle to the top. Or it might be the result of a concerted effort made by the industry’s employers and employees.

“Balance is a moment in time,” Moore says. “There is a road map that you need to have for yourself.”This means engaging an employer about what one is prepared to do at work, and also discussing career options with family members and loved ones to create the balance and support needed to succeed.

“It doesn’t happen perfectly, there are always compromises,” Moore counsels.

“But if you can be realistic about it, then you’ll have a better shot at it.”

1 When female representation in the insurance industry is compared to that of other financial service organizations, the comparison is more of a match: 21% of accounting firms, 20.9% of banks and 24.3% of credit unions have women represented at the board level.

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D&O Liability:

Brokers, insureds and (re)insurers will face divergent pressures in the near future related to the need for D&O insurance capital.

Cameron Rose Senior Vice President, Marsh Canada Limited

Current trends in both Canada and the United States indicate 2008 will be the most active year for securities litigation filings since 2002. That development, in combination with the competitiveness of the executive liability insurance markets (outside the financial and real estate industries), give rise to the following questions: • Are we at a crossroads in the market-cycle, or is the soft market here to stay into 2009 and beyond?

• What are some of the key issues driving today’s dynamic environment for executive liability risks?

• What are some of the trends to come?

THE MARKET Unlike the last soft market experienced in the late 1990s, in which the quantum of insurance capital was offered by a limited number of admitted insurers in Canada, the current part of the cycle appears to be driven less by a limited

44 Canadian Underwriter September 2008

few, and more by an increasing proliferation of domestic and foreign-admitted players.The health of the market is driven by the supply and demand of available insurance capital. With the exception of certain financial and real estate risks, capacity, quality of product from credit-worthy insurers and stability of pricing are all prevalent features of the current market cycle. There has been little consolidation in the executive liability industry to date. But with 2009 budgets looming and insurers vying for market share, we are sure to be in for an interesting ride.

The executive liability reinsurance market is not immune from this soft-rate environment. In fact, demand for reinsurance is at its lowest point in years. Only fear related to the increasing odds over time of a mega-natural catastrophe happening, in addition to the effects of the weakening global economy affecting equity valuations in the underwriting sector, might slow down the magnitude of price reductions or firm pricing in the reinsurance markets.

ECONOMIC FACTORS AND THE CREDIT EFFECT The full impact of the sub-prime mortgage and asset-backed commercial paper (ABCP) market

Illustration: Graham Roumieu

Clear Skies or Turbulence Ahead?

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crisis is still not clear. Initial losses to the property and casualty insurance industry were estimated in 2007 to be in the low, single-digit billions of dollars, but now they have increased significantly.

It is unlikely the effects of both loss and litigation damages will be known for some time.

Given that financial markets continue to be volatile, and investments form a significant portion of insurers’ profits, instability remains the current theme.

Recently, a number of highly-publicized insurers reported staggering quarterly financial losses; others reported solid financial results. The underlying effects of these losses are not yet known.

LITIGATION AND LEGAL TRENDS The effects of Canada’s new secondary market statutory regime, including Ontario’s Bill 198 and other similar provincial legislation, are starting to take flight. But does this really mean Canada will be susceptible to U.S.-style litigation tactics and trends? Since the new laws have taken effect, approximately nine actions have been filed, with almost 50% of these actions being filed in 2008. Filing rates are expected to increase.

In the United States, the securities filing trends are no different. NERA Economic Consulting recently reported in their 2008 Mid-Year Update that there have already been 139 filings through to June 30, 2008. If that same pace held throughout the rest of the year, it is estimated 280 filings would be brought in 2008. Although the majority of cases filed this year are still considered to be standard cases (containing common financial- and accounting-related allegations), more than half of the cases represent sub-prime, auction-rate securities and options backdating cases. Most of these cases will not go to trial given the obvious incentives to settle; looking at the situation positively, a number will be dismissed. Both average and median settlement amounts appear to be decreas-

Page 45

ing, although given the magnitude of investor losses in some of the sub-prime related cases, the averages may rise again in the future if these cases are resolved in the plaintiffs’ favour.

Recently a small mining development company launched the first lawsuit against a Canadian credit rating agency,

DBRS Ltd., over the seizing of a Cdn$35billion market for ABCP. Will there be more litigation related to our southern sister crisis?

FUTURE CONSIDERATIONS So what’s in store for the near- and longterm future of the executive liability

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September 2008 Canadian Underwriter 45

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marketplace? Typically the market is driven by attritional frequency and severity of loss development. If the credit crisis isn’t going to change behavior, outside of the financial and real estate industries, what will?

Some key issues on which underwriters and constituents in the executive liability industry will be focusing in the future include solvency issues, the effects of climate change and environmental laws, issues concerning executive compensation, global D&O regulatory/tax issues, changing purchasing trends of personal and balance sheet protection, pension issues, recent amendments to Canada’s bankruptcy laws, cyber risk exposures and proposed amendments relating to income trust conversions. Let’s focus on a few very recent developments.

First, the findings earlier this year of OSC Staff Notice 51-716, related to environmental reporting and disclosure of TSX and venture issuers, were alarming.

There were many findings based on the 35 reporting issuers reviewed, but some of the key findings included a lack of quantification of the risks and liabilities, as well as the use of too many boilerplate statements. It is clear there will be an increasing importance related to disclosure and transparency requirements regarding environmental related risks, but will the appropriate laws and standards come soon enough for Canadian issuers — i.e. before the litigation?

Second, Canada will soon have its own set of rules concerning executive compensation. The proposed repeal and substitution of Form 51-102F6, Statement of Executive Compensation, is not expected to be brought into effect until the end of 2008. When implemented, it will create increased disclosure and transparency regarding all aspects of compensation, as well as a new Compensation Discussion and Analysis (CD&A) requirement that will provide rationale and detail regarding a company’s compensation practices. This is clearly a step ahead of our environmental disclosure obligations.

46 Canadian Underwriter September 2008

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Third, in a recent case decided by the Delaware Court of Chancery, Schoon v.Troy Corp., it was held a company had the right to amend its bylaws.This in itself is not surprising, but what’s unique is that this includes the ability to remove the right to provide indemnity to former board members who have not already been named as a party to a lawsuit. This legal development will no doubt have a far-reaching effect, particularly in respect

Only fear related to the increasing odds over time of a mega-natural catastrophe happening, or the effects of the weakening global economy on equity valuations, might slow down the magnitude of price reductions in the D&O reinsurance markets. of buying trends for specialized D&O insurance products such as Side A or non-indemnifiable insurance coverages, in addition to the corporate indemnities themselves. Over the past few years, there has been a clear shift in the purchasing priorities of boards both inside and outside of Canada to the protection and

insuring of personal assets. This trend is likely to persist.

Fourth, to restore balance and fairness to Canada’s corporate tax regime, the federal Canadian government released draft conversion rules for income trusts on July 14, 2008. The rules are designed effectively to level the tax playing field between income trusts and corporations.

It is not yet known when these proposals will be enacted into law; when they are, there may be far-reaching effects on both trustee and D&O liability insurance purchases — particularly given the uncertainty related to whether or not an “acquisition of control” of corporations within the income fund structure occurs on the conversion of the income fund into a corporation.

Finally, recent amendments relating to the Bankruptcy Insolvency Act (BIA) and Companies Creditors Arrangement Act (CCAA) passed by Parliament in July 2008 now empower the courts upon application to remove directors that are unreasonably impairing the possibility of a viable plan or are likely to act inappropriately.

The amendments have been codified to encourage directors to remain on boards during the restructuring by granting a judicial charge to secure a corporate indemnity. The charge may not be granted if the company is able to obtain adequate D&O insurance at a reasonable cost.With bankruptcy filings on the rise, the need for appropriate counsel and advice on the issues and liability protection continues to increase.

In order to maintain stability and sustainability in the marketplace, brokers, insureds and (re)insurers will face divergent pressures in the near future that demand respect for the valuation of quantitative and qualitative D&O insurance capital.Without some restraint, the market may be destined for a crisis. But as long as there continues to be a proliferation of participants driving competition (outside of the unknown impact of the financial credit crisis), there is likely no end in sight to this soft market anytime soon.

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Opportunity

Knocks A number of significant marketplace events have combined to place fiduciary liability insurance on centre stage Insurance industry press has focused on directors and officers’ insurance coverage in light of the current poor economy and soft market for insurSenior Underwriter, Corporate Risk Division, ance coverage. But important developments in The Guarantee Company the lesser-known area of fiduciary liability insurof North America ance are also taking place. There are risks and opportunities for pension plan fiduciaries and brokers that can no longer be ignored.

Rob Bickerton

WHAT IS FIDUCIARY LIABILITY INSURANCE? Trustees of employee benefit plans have a legal duty to act in the best interests of the plan members and the sponsor. Most fiduciary liability policies provide protection for losses that insureds (the fiduciaries of the pension plan) are legally obligated to pay on claims for damages resulting from wrongful acts.

The main areas of exposure to loss involve allegations against fiduciaries for loss arising from any or all of the following: • administrative errors; • improper advice or counsel; • misrepresentation; • conflict of interest; • imprudent investment; • failure to arrange adequate funding for the plan; • denial or change of benefits; • incorrect benefit calculation; • wrongful termination of the plan; and • civil rights denial and/or discrimination.

48 Canadian Underwriter September 2008

There are two basic approaches to the provision of fiduciary liability insurance coverage: standalone policies and policies for D&O and other liability exposures that offer fiduciary liability insurance as a sub-limit or component thereof.

As in all areas of insurance coverage placed through the network of licensed brokers, the broker’s key role cannot be understated.

In working with his or her client (the corporate executives and management), the broker first identifies exposures and then conveys the importance of appropriate coverage to the insured. In doing so, brokers build their own books of business and solidify relationships with their clients.

Fiduciary liability insurance will be an increasingly sought-after coverage. Although there may be many factors affecting the level of interest insurance buyers express, there are at least four reasons for the increasing popularity of fiduciary liability insurance:

More people are retiring Canada is experiencing a demographic change of large proportions. Thousands of working-age people are nearing retirement. As of now, approximately 225,000 Canadians retire every year; this is expected to climb to 370,000 per year by 2010 and 425,000 annually by 2020.

With more people approaching retirement, there is a natural increase in the number of people thinking about pensions.

Structural changes in the economy affect the value of pension funds Drawing on U.S. data (since U.S. research is broader than Canadian research and the core issues are the same), pension plans were typically well-funded prior to the stock market plunge in 2000-02. In fact, at end of 1999, the average plan was over-funded by 20-30%. But the figures masked the true, underlying economics of the plans: many sponsors had not contributed

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to their defined-benefit plans for more than a decade. And so, given that stocks accounted for 60-70% of portfolio assets during 2000–02, the average corporate plan’s funded status fell to 80% from 130% by the end of 2002.

As recently as the end of 2004, the average plan remained only about 85% funded.All of this indicates the pension-funding crunch was not just a temporary event.

In addition, major events like the meltdown of technology-sector stocks have triggered steep declines in the value of pension funds that were invested in this and other affected sectors. High-profile corporate crimes such as the financial meltdowns at Enron and WorldCom have also led to concerns among many workers, who have subsequently renewed their focus on the health of their pension plans.

At the same time stocks fell and corporate CEOs received jail time, unemployment, stagnant wages, privatization, deregulation and the globalization of finance and markets all played a role in causing workers to feel less secure about their financial well-being.

Plan fiduciaries pressured to be accountable In general, a greater level of outsider scrutiny is leading those in charge of overseeing pensions and corporations to demonstrate greater accountability.

As a result, these fiduciaries and others are naturally seeking greater personal protection for their actions or inactions.

Additional pressure on fiduciaries is mounting because of the worth — and hence the importance — of the pension assets managed by the financial industry in general. To appreciate this, we need only realize that pension assets comprise the largest single source of capital in the world. Canadian pension funds have assets estimated at more than $720 billion, second only to the Schedule A Banks in Canada. This represents a significant portion of the global pension market estimated at more than US$7 trillion.

Pensions as a pool of capital have increased 400% over the past two

50 Canadian Underwriter September 2008

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decades. Pension funds own more than one-third (35%) of all Canadian publicly traded equity.

The unionization factor The best way to belong to a workplace pension plan is to be a union member: 83% of unionized employees are covered by either a pension plan or a group RRSP, compared to just 33% of nonunion workers. However, as seen in the most recently available Statistics Canada information (2004), only 31% of all Canadian workers belonged to unions, and this number is trending downwards.

Workplace pensions are certainly not the panacea of retirement bliss they once might have been.

A greater level of outsider scrutiny is leading those in charge of overseeing pensions and corporations to demonstrate greater accountability. As a result, these fiduciaries are seeking greater personal protection for their actions or inactions.

All of the above factors suggest a future trend in which pension plan participants and other pension plan stakeholders take an increasingly careful look at their own pension plans and the governance exercised over them. Economic downturns, coupled with plan participants increasingly concerned about pension adequacy, point to a potentially more litigious stance against plan fiduciaries. Plan fiduciaries, therefore, can no longer afford to opt out of this vital insurance protection. Furthermore, insurance brokers, able to write new lines of business in the current soft market, would be well-advised to explore fiduciary coverage as a way to increase their book of business and further solidify their relationship with the insured.

Why isn’t fiduciary liability insurance a well-known coverage? Notwithstanding all of the factors above, risk managers and other insurance-buying corporate executives are under pressure to find ways to reduce costs.This is especially the case in light of the economic downturn currently experienced, in addition to shareholders exerting pressure on companies to maintain profitability.

When exploring cost savings, fiduciary liability insurance is frequently seen as a program from which to opt out.Alternatively, it may not even be on the radar screens of many risk managers and/or insurance brokers.

As many brokers will agree, one of the best ways to sell insurance is to show the potential buyer the negative consequences of failing to purchase the product. The most recent Canadian example involves well-known Nortel and a group of its employees. On June 24, 2008, the law firm of Nelligan O’Brien Payne commenced a national class action suit on behalf of Nortel employees from across Canada regarding recent changes made to their pension plan. The class action suit, which contains allegations not proven in court, seeks damages for Nortel Networks’ alleged failure to provide their employees with reasonable notice of the changes to their pension plan. As of July 30, 2008, Nortel had not yet filed a statement of defense. The Nortel case illustrates a key event that might expose plan fiduciaries to potential litigation and liability — the re-organization or redesign of a pension plan.

LOOKING TO THE FUTURE Fiduciary liability insurance represents an opportunity for insurance brokers to diversify or expand their book of business and solidify their relationships with corporate clients. The coverage provides insured fiduciaries with peace of mind, knowing they are protected from liability while properly conducting obligations. Although it remains a relatively lesser-known coverage, it is increasingly one that fiduciaries and brokers can no longer afford to ignore.

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Permission to say

Article contributed by

RSA

It’s a perfectly professional and appropriate reaction for a claims handler to express empathy when first hearing about a client’s loss In the dark days following a severe motor collision or a devastating house fire, sometimes all it takes for an insurance claims handler to bring comfort to a customer is to tell them: “I’m sorry for your loss and I’m here to take care of you.”

Having an insurance claim can be a devastating event in a customer’s life. Providing empathy right at the start of a claim allows for some muchneeded emotional support and can go a long way towards reducing fear and anxiety.

It sounds simple, but in reality some claims handlers are hesitant to apologize and show empathy for a customer’s loss. The fear is that it might somehow indicate they have done something wrong.

“I think at times people feel they need to receive permission to apologize, but it’s a perfectly professional thing to do,” says Irene Bianchi, the vice president of claims and corporate services at RSA. “In fact, it’s a great thing.When people experience

52 Canadian Underwriter September 2008

violations to the normality of their lives, they deserve empathy.”

Empathy is so important that it was listed as one of the main requests policyholders made of their insurer, according to a customer service survey RSA conducted in May and July of 2007.

Based on the survey results, RSA spent five months putting its entire Canadian claims team through a unique, two-day customer service and empathy and listening course. The International Insurance Institute tailored the course, entitled “Awesome Customer Service Empathy & Listening,” to the specific needs of insurance claim representatives. It is designed to help customerfacing employees improve communication.

“It gave them the skills and tools needed to reach customers in a meaningful way,” says Bianchi.

Participants found that small things, such as softening the tone of their voices, speaking slower and spending more time with a customer during the initial claim call, could create an immediate and lasting connection and decrease workloads down the road.

According to Carl Van, a trainer with the International Insurance Institute, the following five tools are invaluable ways to make claim representatives more empathetic listeners (thereby

Illustration: Graham Roumieu

“I’m sorry.”

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Delivering on promises It’s pretty simple: do what you say you will do. Call back when you say you will.

This makes a final impact in terms of building trust with the customer.

“The key is to make sure we understand when we are making promises,” says Van. “That means being specific about when we’re going to call a customer back.” Failing to return a call when you said you would call might be perceived as breaking a promise.

reducing the degree of customer anxiety following a traumatic event and, in many cases, speeding up the claim management process):

Explaining the process Excellent customer service means explaining the claim process in a way that makes the customer feel we are on their side, says Van.This is true even for a client who is completely at fault. “ Most of the time we do a pretty good job of explaining to people what’s going to happen to them,” he says. “Unfortunately, we sometimes explain it in a way that sounds more like they are going to get run over by a steamroller.” says Van. Spending as much time as possible on the phone with a customer during the initial claim discussion can free up a lot of time in the future. It can help eliminate confusion and is key to making an immediate emotional connection. This can also result in reducing the number of repeat calls in the future, allowing for better time management.

Showing empathy According to the International Insurance Institute, we tend to empathize with people going through situations that would upset us if we were in their shoes. The challenge is, the longer someone works in claims the likelier they are of becoming desensitized. “Even if this is a case where a person’s vehicle fender got scratched, it can still be a traumatic and unfamiliar event for that person,” says Van. “It doesn’t mean that all customers would be upset in this situation. It just means that we as claims people have to remember that they have the potential for being upset, regardless of the size of the claim.”

Some claims handlers are hesitant to apologize and show empathy for a customer’s loss. The fear is that it might somehow indicate they have done something wrong.

If claims representatives don’t empathetically acknowledge their customers’ needs, they can get stuck in the middle of a claim themselves. Showing empathy can help to eliminate a claimant’s anxiety, which will make it much easier for that person to listen and respond.

A claim handler can learn a lot about how to deal with a particular claim based on the type of language the customer uses. For example, people who begin sentences with the words “I think” tend to be more analytical and want a more fact-based approach. Those who say “I feel” may be looking for a more emotional response. The tone, pace and inflection of the voice are all key in creating an empathetic atmosphere for a customer.

Ensuring prompt and equitable settlements Many customer service issues can arise out of settlements.The International Insurance Institute stresses an insurer must ensure the settlement is for the right amount and is paid out promptly. If a customer doesn’t agree with a claim settlement, a claim representative should show how the amount was determined and invite the customer to submit any evidence that might support an increase in their claim.

Meeting and exceeding a customer’s expectation Customer service is meeting or exceeding a customer’s expectations. Even if tasks and responsibilities aren’t listed out in detail, claims representatives must understand their overall job is to provide customer service to every customer, says the International Insurance Institute.

“If you meet or exceed the customer’s expectations, you have a customer-service win and you’ll probably hold on to that person as a customer,” says Van. “If you fall short of those expectations, whatever they are, you’ll probably ultimately lose that customer.The key here is that in claims, we have the opportunity to set those expectations.”

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Better Service Without Hiring Extra Staff Using the model of a claims performance cube, carriers can leverage their technology to increase customer satisfaction Greg Horn Vice President, Industry Relations, Mitchell International

The Canadian property and casualty industry is faced with a mature market with little ‘organic’ growth (growth from customers new to the market).

As reported earlier this year in the 2008 Q1 MSA/Baron Outlook Report, overall the industry experienced a 25% drop in net income in 2008 Q1 over 2007 Q1, from Cdn$903 million to Cdn$677 million. Given modest growth projected for 2008, and a stable work staff that receives salary increases averaging around 3%, it won’t take too long for a company that does not improve market share or reduce salary expenses to begin to experience an expense problem.

So how can a company increase customer retention when there is pressure to keep expenses under control?

The answer lies in employing business workflows and technology. If you can find a technology that improves customer cycle time (and thereby an aspect of overall customer satisfaction), while at the same time improving internal efficiencies that allow you to reduce staffing, you have highly leveraged your technology buy.

Celent Research has done a great job of illustrat-

54 Canadian Underwriter September 2008

ing this concept, using the graphic of a claims performance cube. Simply put, the cube has different axes for internal and external forces and it shows how the pieces interlock.

This concept shows it is possible to improve aspects of the claims process on multiple fronts.

It changes the notion that a better Customer Satisfaction Index (CSI) means you have to increase staffing to do so.

A good example is the investment in a field appraiser dispatching system. Service industries with similar field tasks to be performed have long embraced automated dispatch mechanisms with route optimizers. Other field service providers, from appliance repair technicians to satellite cable installers, have the ability to reprioritize their fleet of service technicians if a particular service call took longer or shorter than expected.

As demanding customers, we expect this ability to be a routine service feature. But the insurance industry, with analogous sorts of operations — be they face-to-face evaluations of a homeowner’s property or bodily injuries, or automobile appraisal inspections — has lagged behind for years. Why have carriers not embraced the technology commonplace in other service industries to perform similar tasks? I believe it has been cost-prohibitive for carriers (other than the largest or second-largest ones) to build a comprehensive integrated system — with dynamic route and skill-set optimizers, GPS capabilities and the ability to customize task duration based on complexity — on their own.

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Fortunately, the insurance industry need is no longer faced with a ‘build-ityourself’ option.A few products are now available for claims department task-dispatch work. So what do you look for when evaluating potential claims field dispatch products?

Claims Performance Cube EXTERNAL INTERNAL

EFFICIENCY

EFFECTIVENESS

Using your own rules will create the optimum schedule for staff adjusters, independent adjusters and body shops.

To minimize your company’s maintenance, the vendor you select should host 100% of the application.This will minimize the workload for your company’s IT department and make sure the necessary safeguards are in place to protect your

Claimants, Agents, Repair Shops, Attorneys, Medical Providers etc.

Actuarial, Underwriting, Policy

ALAE: Loss ULAE: Loss

Process Quality Duration

Leakage Reserving

Decision Quality Claimant Experience

FINANCIAL

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“Get all the right connections!”

2009

Ontario Insurance Directory This outstanding directory is your personal address and telephone book dedicated solely to the Ontario Insurance Industry… find the company contacts you need immediately!

Reprinted with permission, Celent Research

Service industries with field tasks to be performed have long embraced automated dispatch mechanisms with route optimizers. But the insurance industry has lagged behind for years.

Key requirements should include the ability to integrate into your claims management system, eliminating the need to re-key data, and automating the dispatch process as a whole.

It is vital that the system can also send the data and assignments — via the Web, e-mail, text message, or PDA — to any of the major estimating software applications the industry uses.

A Web-based architecture is also important, because it allows for a fast and safe rollout and implementation.

The system should use your business rules, not theirs.You know your staff and business partners better than anyone else.

system and your business.

Once implemented, you will quickly see efficiency gains, because you have leveraged so many parts of the claims performance cube.With customers being better served by quicker response by claims staff with the right skill set, can improved customer satisfaction be far behind?

Used on a daily basis by all segments of the Industry — the O.I.D. is the Undisputed Source for Insurance professionals to make contact with companies quickly and easily.

(The 2009 edition will be published & distributed in December, 2008)

THE COIL BOUND O.I.D. CONTAINS: • 300+ pages of information • 2,200+ company listings G G G G G G

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Lawyers / Dispute Resolution Engineers / Accountants Bodyshops / Collision Repair Automotive Recyclers Insurance Industry Associations Industry Suppliers Guide

Call now to order

1-800-668-2374

Or order online @ www.canadianunderwriter.ca

Completely Updated for 2009– over 10,000 changes!

September 2008 Canadian Underwriter

55

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Safety in

are sometime subtly different for each province and territory, and they occasionally change, so it is important to stay current with the applicable laws.

For example, in Ontario a confined space is any partially or fully enclosed space that is both not designed and intended for continuous human occupancy and is one in which atmospheric hazards may exist.

This description illustrates two of the main risks associated with confined spaces: the tight fit, and the potential for atmospheric hazards.

Generally, confined spaces are considered to be large enough for someone to enter, but have limited access, pose a risk of engulfment and have internal configurations likely to entrap and cause suffocation.They might have other hazards as well: risk of illness caused by excessive heat or cold, moving equipment, exposed electrical equipment/contacts and fall hazards.

Atmospheric hazards are defined just as broadly. Levels of oxygen deficiency or excess are defined in precise numerical (percentage) terms, and more activity consumes oxygen faster. Flammability on the other hand depends on several criteria including the (percentage) amount of flammable material, the type of activity undertaken by the person entering the space and, of course, jurisdiction.

In some jurisdictions, an enclosed space is not considered a “confined space” if there is crossventilation within the space.This generally means functioning vents on opposite sides, so that a cross-breeze will reduce the accumulation of hazards inside. However, anyone carrying out an on-site investigation would need to confirm that the vents are working and not obstructed — which is generally done by pushing through a metal rod or ruler from the outside — before they accepted the ‘not-a-confined-space’ designation or description.

Confinement Insurance-industry personnel need to understand the legal and safety implications of confined space entry

Glenn Wood Associate and Head Facilitator, Golder Associates Ltd., Mississauga Health & Safety Training Services Group

Ursula Drewniak Occupational Hygienist, Asbestos Laboratory Coordinator, Golder Associates Ltd.

It could be a claim for fire, mould or water damage to a house. Perhaps an industrial accident caused an explosion in a warehouse.Whatever the cause, you’re on site by yourself and someone has to go into that crawl space, attic or storage tank and check for damage. You want to get this resolved now so you can start processing the claim — but if you go in, can you get back out safely?

Spaces such as these can cause more harm than just claustrophobia — there can be a risk of explosion, collapse, asphyxiation or poisoning, or even an angry raccoon that does not like its territory being invaded. Entering a mould-infested space can be a hazard for anyone with asthma; even someone who does not have asthma may develop it through repeated exposure on the job.

Underwriters and other insurance-sector personnel need to understand the legal and safety implications of confined space entry. There have been many instances of injury or death involving people who did not consider the risks.What they thought would be a quick in-and-out inspection tragically became one-way.

Insurance sector workers need to understand the risks so they can protect themselves, and insurance companies, adjusting firms and other corporate members of the insurance sector need to provide a safe environment for their employees.This includes making sure employees have the training and equipment needed for confined space entry; it also means knowing when it is necessary to call in specialists with the appropriate personal protective equipment (PPE), air quality assessment and other specialized equipment.

WHAT IS A “CONFINED SPACE”?

To begin with, recognize that not every “space” one would consider “confined” is actually a “confined space” according to regulations. Regulations

56 Canadian Underwriter September 2008

RECOGNIZING THE HAZARDS Determining whether a space is a “confined space” under the applicable legislation may seem arcane, but it is important for two reasons.

One is that all employers — such as members of the insurance sector — must provide a safe environment for their employees. Asking employees to enter a hazardous area without appropriate training, PPE and other necessities is dangerous for the worker, and it will ultimately leave the company exposed to sanction and its

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SUPPORT: The capacity to move equipment and expertise when needed allows us to better serve your most challenging needs.

At WINMAR we always come through for you.

24 hour assignment / emergency response Toll free 1-866-4-WINMAR Proud to be Canadian owned and operated.

For more information visit www.winmar.ca

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INSURANCE INTERNET DIRECTORY

ACCOUNTANTS

COLLISION SERVICES

Williams & Partners Inc. Forensic and Investigative Accountants. www.williamsandpartners.com

CertifiedFirst Network Consider it done.™ www.certifiedfirst.com

ASSOCIATIONS

CONSULTING FIRMS

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

Cameron & Associates Insurance Consultants Ltd. Claims consultants to the insurance and reinsurance community. www.cameronassociates.com Keal Technologies Complete technology solutions for insurance brokers. www.keal.com

CLAIMS ADJUSTING FIRMS Crawford Adjusters Canada One Globe, One Company www.crawfordandcompany.com Cunningham Lindsey International independent claims services. www.cunninghamlindsey.com Kernaghan Adjusters Adjusting Solutions — Depend On Us! www.kernaghan.com McLarens Canada International Loss Adjusters and Surveyors www.mclarens.ca SCM Adjusters Canada Ltd. Committed to providing leadingedge claims management services. www.scm.ca

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

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

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

INSURANCE COMPANIES AIG Commercial Insurance Company of Canada "THE STRENGTH to BE THERE". www.aig.com Aviva Canada Inc. Home Auto and Business Assurance. www.avivacanada.com/

58 Canadian Underwriter September 2008

FM Global The leader in property loss prevention. www.fmglobal.com Grain Insurance and Guarantee Company Commercial Lines Underwriters www.graininsurance.com The Guarantee Company of North America “Specialized insurance products...professional service” www.gcna.com Kingsway General Insurance Company The Specialty Insurer www.kingsway-general.com Royal & Sun Alliance Insurance Company of Canada Forward thinking since 1710. www.royalsunalliance.ca Sovereign General Insurance Company of Canada Since 1953 www.sovereigngeneral.com Wawanesa Insurance Earning your trust since 1896. www.wawanesa.com

PREMIUM FINANCING Third Eye Solutions Inc. Provides Internet-enabled premium financing/payment plan software solutions. www.thirdeyesolutions.com

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

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

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

RISK MANAGEMENT INSURANCE SOFTWARE APPLICATIONS Keal Technologies Complete technology solutions for insurance brokers. www.keal.com Tritech Financial Systems Inc. Provider of an enterprise solution to P&C insurance companies and their agents and brokers in Canada and USA www.trifin.com

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

SPECIALTY INSURANCE Firstbrook Cassie & Anderson Ltd. Your Source For Camp Insurance www.nbrown.com William J. Sutton & Co. Ltd. Insuring Special Risks since 1978 www.wjsutton.com

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officers to criminal liability. At the same time, insurance adjusters are often called upon to investigate events that may require entry into what might be considered confined spaces.

So it is important for insurance-sector companies to teach their employees to recognize a confined space when they see it, enter it only when hazards have been appropriately controlled and/or eliminated and to make sure employees know it is their right and obligation to refuse unsafe working conditions.

A second important reason to recognize a confined space is that any space that meets the definition is almost certainly hazardous; those hazards may come from unexpected sources.

Consider the case a few years ago at a chemical plant in which there was need to enter a tank made of mild steel to decontaminate it prior to repairs. After a few days, the tank had been successfully and safely cleaned and decontaminated, and considered safe for re-entry. Two

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welders subsequently entered the tank to conduct the repair and were asphyxiated. Analysis conducted after the fact indicated the water used to rinse the tank at the end of the cleaning had caused rusting of the mild steel of the tank; given insufficient natural air exchange, the oxygen levels were depleted to levels that resulted in rapid asphyxiation.

Consider also a 2007 incident in which two workers entered, unprepared, a utility vault that was subsequently found to be seriously oxygen-deficient from unknown causes. They were quickly overcome, and died of asphyxiation.

Some gases have an odour that warns a person of the danger (natural gas has the odour added for this reason). Other atmospheric hazards, such as carbon monoxide, are undetectable. Oxygen deprivation can cause irreversible brain damage — and death — within seconds.

As a result, employees need to have the right equipment for their job. A respirator or mask that protects an employee

against mould spores and asbestos fibres will still leave the person vulnerable to reduced oxygen levels, the presence of carbon dioxide or other hazards. A powerful flashlight, used from outside the space, can sometimes allow the employee to conduct inspection-type work without a need to enter.

Companies also need to make sure they have access to the appropriate professional advice, either in-house or outsourced. This would include a consultant specializing in health and safety who also has confined-space training and experience. There is also a need for a relationship with a firm able to supply remediation specialists with the appropriate PPE, training and other qualifications to enter the space, if necessary, to do the assessment.

Confined spaces are an inevitable part of many insurance industry members’ lives. Managing the work correctly also manages the risks involved, resulting in a safer workplace and workforce.

ADVERTISERS’ INDEX ACE INA Insurance AIG A.M. Best Aon Reed Stenhouse Atlantic Marine Underwriters Aviva Canada Inc. Best Doctors Chubb Insurance CIP Society Canadian Broker Network Cunningham Lindsey Canada e2Value, Inc. FirstOnSite Restoration

37 31 27 33 62 68 (OBC) 25 41, 67 (IBC) 39, 64 43 11 51 16, 17

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FM Global 5 The Guarantee Company of North America 19 Guy Carpenter 21 IBAC 2, 3 (IFC) IBAO 7, 15 i-hire.ca 26 Kingsway General Insurance Company 31 MINT Canadian Specialty 47 Ontario Insurance Directory 55 South Western Group 49 Swiss Reinsurance Company Canada 9 WICC 45, 62 WINMAR 53

get on the field of your life...

Reply in confidence with your resume, your expectations, goals and objectives along with your value proposition statement to: Canadian Underwriter Magazine, Box # 1000, 12 Concorde Place, Suite 800, Toronto, Ontario, M3C 4J2

ACCOUNT EXECUTIVE NEEDED Insurance Broker located in the Muskoka ON area, is looking to fill an account executive position. The brokerage is looking for an individual to handle an existing book of business comprised of both personal and commercial lines and to assist with the growth of the business. The successful candidate must be RIBO-licensed, possess a strong work ethic requiring minimal supervision, good organizational skills and the ability to work within a team environment. The position involves significant client contact, providing quotations to prospects, maximizing every sales opportunity by cross selling as well as developing opportunities for quotation for other lines of business to our existing clients.

This is a full time permanent position with a competitive compensation package and benefits. The brokerage is looking to fill this position as soon as possible.

Only serious candidates need apply. All levels of experience will be considered.

Please forward resume to bconsulting187@gmail.com

September 2008 Canadian Underwriter 59

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MOVES & VIEWS

UPCOMING EVENTS: FOR A COMPLETE LIST VISIT

www.canadianunderwriter.ca

AND CLICK ‘MY EVENTS CALENDAR” ON THE HOME PAGE

1

Aon’s Ontario claims group has made a variety of new staff appointments. Eugene Savaia [1a] has been appointed senior claims consultant. Savaia has more than 26 years worth of insurance claims experience, most recently with Zurich North America Canada. He has resolved major industrial/ commercial property losses, as well has gained casualty experience as a mould technical specialist. Deanna Scott [1b] has been appointed senior claims analyst. She has 10 years of experience at Aon, and will assume responsibility for claims handling and advocacy on the accounts handled by the recently-retired Don Roach. Scott will continue to act as liaison for clients with a focus in the GRS accounts, including the Social Housing and Conservation Authority programs. Mark MacDonald [1c] has been appointed as a claims advocate. Prior to joining Aon, he gained extensive working knowledge of automobile, liability and property claims. In addition, he gained in-depth experience in accident benefits claims includ-

ing large losses, special investigation claims and catastrophic claims. Adam Furfuro [1d] was appointed claims analyst. He joined Aon in 2005 as part of the Wilfred Laurier University co-op program.

2

Crawford & Company (Canada) Inc. appointed a new leadership team for its ClaimsAlert contact centre. Roland Giguere has joined Crawford as assistant vice president, ClaimsAlert.

Giguere brings with him extensive experience in optimizing human resource management, technological innovation and business line development. He will develop and execute strategic initiatives focused on revenue growth, new business development and customer service. Andrea Zimny will assume the role of director of operations. Zimny has worked in a number of different positions with Crawford, most recently as manager of ClaimsAlert, and was instrumental in the division’s recent expansion in Ontario and Quebec. She will be responsible

60 Canadian Underwriter September 2008

1a

1b

1c

1d

for both the Waterloo and Montreal centres. Jordan Whaley will assume the role of national manager, telephone adjusting claims. Whaley is an alumnus of the ClaimsAlert telephone unit and most recently was the group’s manager. She will continue the process of streamlining and improving the management of telephone claims with Crawford’s key partnership customers.

3

Neil Morrison [3a] has been appointed as CEO of Hub Ontario in addition to his current role as CEO of HKMB Hub International Limited. Dennis Pauls, [3b] who is currently the CEO of Hub Ontario, will become

CEO of Hub Midwest West (Chicago). Both appointments are effective Oct. 1. Hub Ontario and HKMB Hub will remain as separate legal entities. However, collaboration of their respective executive teams is anticipated under Morrison’s leadership, the company notes in a release.

4

Alan Gallagher has joined Winmar Ottawa’s team as a manager/estimator. Gallagher is a chartered insurance professional with the Insurance Institute of Canada and the past president of the Ontario Insurance Adjusters Association, a Winmar release says. “Since 1989, Alan’s diverse background as an insurance broker,

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MOVES & VIEWS

3a

6 claims adjuster and independent adjuster arms him with the common sense and skills necessary to ensure good communications between insurers, insureds and everyone in between in the related service industry,” the release says.

5

Carstar Automotive Canada has created two new regional director positions aimed to help the company develop three distinct regions of operation within Canada. Bob Gagnon will assume the role of regional director of eastern Canada (Quebec and the Maritimes).

He has 25 years of experience in senior automotive franchise system management

3b positions. Lloyd Wheeler will take on the position of regional director of western Canada (B.C., Alberta, Saskatchewan, and Manitoba). He has 20 years of experience in senior automotive retail, franchise and service positions. Currently the Ontario region is managed by Larry Jefferies, executive vice president, but a regional director will be added in 2009.

6

XL Insurance has launched an aviation insurance team for the Canadian market. Tony Trost [6], Canadian aviation manager, will report to Rod Mearing, XL Insurance’s international aviation manager. Mearing will lead the new team. Before joining XL Insurance, Trost served as senior vice president of the Canadian aviation practice with Marsh Canada Limited.

“With Tony’s team in Toronto, our clients now have an alternative to the London Market, on which they previously relied for their aviation

it became evident it was not compatible with that of Disaster Kleenup’s, and so the two parties have mutually agreed to a separation.

coverages,” Peter Bilsby, chief aviation underwriter, said. “Local underwriting capabilities also offer XL Insurance the opportunity to see our clients’ operations first-hand. This enables us to be more discerning and more efficient in the underwriting process.” The new Canadian team also includes Jim Hyatt, assistant vice president and aviation class underwriter.

9

7

PPG Automotive Refinish has launched the CertifiedFirst Network monthly Webinars series to help collision centre owners successfully market their centers to consumers. Industry specialists will run the Webinars, each of which will run for approximately 45 minutes. The Webinars will be followed by 15-minute question-andanswer sessions.

8

FirstOnSite Restoration left the Disaster Kleenup Canada organization effective Aug. 31, 2008. In January 2007, TorQuest Partners Inc. announced the creation of a limited partnership that now operates under the name of FirstOnSite Restoration LP. The partnership is primarily comprised of a number of DKC Members. As FirstOnSite developed its business model,

Ontario native Richard Scott, a professional golfer sponsored by the Insurance Brokers Association of Ontario (IBAO), recently boasted his most impressive performance of the season at the Jane Rogers Championship in Mississauga. With three Canadian Men’s Amateur Titles under his belt, Scott, 24, is considered to be among the most promising young golfers in Canada.

Aspiring to a spot on the PGA Tour, Scott has been sponsored by the insurance brokers since he turned professional in early 2007.

Scott has earned three Top10 finishes on the Canadian Tour so far this year, including tying for fifth spot at the Canadian Tour Players Cup in Winnipeg. He tied for fifth again at the TELUS Edmonton Open in July.

“We’re proud that Richard is sporting the IBAO logo once again this season,” said IBAO CEO Randy Carroll. “And we look forward to having him join the broker community in September at some local golf events with which IBAO is involved.”

September 2008 Canadian Underwriter 61

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GALLERY

Simmlands Insurance held its 2008 Canadian PGA Women’s Championship PRO-AM at Credit Valley Golf & Country Club in Mississauga on Aug. 6 in support of Women in Insurance Cancer Crusade. More than 30 teams competed for numerous prizes, including accommodations for eight in Florida and a Nike Golf makeover worth more than Cdn$2,000. Amateurs from the insurance industry were able to compete against touring professionals of the Canadian Women’s PGA, including defending champion Salimah Mussani, one day prior to the start of the PGA Women’s Championship.

WICC (Ontario) Golden Horseshoe Committee Presents:

Underwriting Agents and Intermediaries

Underwriting Agents and Intermediaries in Marine insurance.

Product offered in:

Commercial hull • Ocean, air and inland transit cargo Marine liabilities • Private pleasure craft Peter Taylor – President Ocean, Air & Inland Transit Cargo Transit Liabilities

peter.taylor@atlanticmarine.net

Jennifer McEwan –Marine Underwriter Marine Liabilities & Marina Packages Fine Arts & Collectables Commercial Property & CGL Auto Fleets – Physical Damage Only

jennifer.mcewan@atlanticmarine.net

Michelle Scott – Marine Underwriter Commercial Hull, Private Pleasure Craft

michelle.scott@atlanticmarine.net

ATLANTIC HOUSE, 223 Kent Street West, Lindsay, Ontario K9V 2Z1 Tel: 705-878-9014 • Fax: 705-878-4387

www.atlanticmarine.net 62 Canadian Underwriter September 2008

“Stayin’ Alive at the Arnie“ A 70’s inspired Pub Night in Support of the Fight Against Cancer

Thursday October 2nd, 2008

Featuring: “The Accidental Benefits” LIVE! Time: Doors open at 5:00 p.m.

Tickets: $40.00 per person.

Tickets only available online at www.wicc.ca

You and your collegues are invited to join us at the Arnie Pub at Mohawk College (135 Fennell Ave. W., Hamilton, ON) for a our 2nd Annual ‘WICC Golden Horseshoe’ Pub Night.

Following our very successful Sock Hop event in 2007, this Fundraiser will be a “Groovy” evening that’s “too funky” to miss – with food, fun and music inspired by the 1970’s. Big hair, platform shoes, bell-bottoms and leisure suits are optional!!

To sponsor the event Please contact: Lori Fernandes at 905-575-6809 x195 lfernandes@pearsondunn.com Jean Faulkner at 905-319-6341 jfaulkner2@cogeco.ca Lyna Newman execdirector.wicc@sympatico.ca

wicc

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Announcement

Eleanor Olszewski, Q.C. Counsel, Alberta The lawyers of MacPherson Leslie & Tyerman LLP are delighted to welcome Eleanor Olszewski, Q.C. to our Alberta insurance and litigation practice. Eleanor brings more than 20 years of experience in the courts and insurance defence to MLT. She has participated in a number of complex trials and hearings and has successfully defended bad faith claims against insurance carriers. Eleanor's background in pharmacy has been invaluable to her defence of medical practitioners in civil actions and disciplinary proceedings, and to her work on pharmaceutical and medical device claims.

Eleanor joins a team of accomplished insurance practitioners providing full service insurance and coverage advice to clients in Alberta, Saskatchewan and beyond. MLT regularly acts for some of Canada's largest and most well-known insurance companies on issues related to property, general liability, automobile, professional liability, life, disability and travel insurance, and surety and fidelity bonds.

We have extensive experience advising and representing Canadian, American and European insurers and reinsurers on a broad range of matters including the defence of large and catastrophic loss claims and the prosecution of subrogated claims.

MacPherson Leslie & Tyerman LLP is one of Western Canada's leading business law firms, serving business clients from the small to the multi-jurisdictional. With over 100 legal professionals working from offices in Calgary, Edmonton, Saskatoon and Regina, we have assisted clients with actions from Ontario to British Columbia. MLT is a Canadian founding member of Lex Mundi, the world's leading association of independent law firms, and a 2008 FORTUNE Magazine "Go-To Law Firm".

September 2008 Canadian Underwriter

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CU Seminar ad Sept 08

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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.

Toronto

CIP Society Events

PROedge Seminar: Advanced Business Interruption . . . . . . . . . . . . . . . . October 15

Toronto - Grape Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 9

PROedge Seminar: The Anatomy of Errors and Omissions Insurance . . October 21

London - London Knights vs Plymouth Whalers . . . . . . . . . . . . . . . . . October 10

PROedge Seminar: Boiler and Machinery Insurance . . . . . . . . . . . . . . . October 29

Kitchener - Insurance Night at Oktoberfest . . . . . . . . . . . . . . . . . . . . . . October 17

PROedge Seminar: Equipment Breakdown . . . . . . . . . . . . . . . . . . . . . . . October 29

Winnipeg - CIP Society Dreambuild Gala . . . . . . . . . . . . . . . . . . . . . . . October 18

Kitchener/Waterloo

Hamilton - 6 Degrees of Insurance Industry (Industry Reunion) . . . November 6

PROedge Seminar: The Anatomy of Errors and Omissions Insurance . . October 30

London - London Knights vs Owen Sound Attack . . . . . . . . . . . . . . . November 7

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

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

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Earlier this year, ING crossed the finish line once again as sponsor of the Ottawa Marathon.

At the same time, they broke through another finish line — the one ending the WICC (Women in Insurance Cancer Crusade) Challenge. For the past four years, WICC and ING Insurance joined forces to challenge brokers, employees and others in the industry to raise money for cancer research. Each year, many took the challenge and ran with it. Almost Cdn$64,000 was raised in 2008, bringing the four-year total to more than Cdn$200,000. “Our sincerest thanks for all of you who collectively raised pledges for the 2008 ING Ottawa Marathon,” said WICC executive director Lyna Newman. “Your commitment, energy and enthusiasm is overwhelming.” ING Durham’s regional vice president Tracy Laughlin (who initiated the province-wide challenge) added: “We didn't know what to expect when we started the challenge four years ago.

The response from our staff and brokers has been absolutely amazing. We are extremely proud of what we’ve accomplished.” KRG Insurance Brokers was the winner of this year’s challenge between teams. Their nine-person team raised Cdn$18,221.

One hundred per cent of the money raised will go directly to fund cancer research projects sanctioned by the Canadian Cancer Society.

September 2008 Canadian Underwriter 65

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GALLERY

Totten Group held an Open House on July 8 to celebrate the opening of their new office in Mississauga, which now accommodates both the Brampton and Mississauga offices of Totten Group.

Brokers, insurers, suppliers and staff were on hand to tour the newly combined facilities, located at 555 Burnhamthorpe Road, 8th Floor, Toronto, Ontario.

66 Canadian Underwriter September 2008

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expertise: n. full knowledge or skill in a particular field.

Insurance for technology, such as IT or biotech, needs technical knowledge as well as insurance expertise to understand the required coverages.

The Chubb Insurance leadership in technology coverage lets it better define its policies. This provides more certainty in coverage.

If your client’s business requires category expertise, Chubb is your recommendation.

Chubb Defines Insurance www.chubbinsurance.com Chubb Insurance refers to Chubb Insurance Company of Canada.

The precise coverage offered is subject to the terms, conditions and exclusions of the policy as issued.

'One Aviva, twice the value' means: Aviva Insurance Aviva Elite Aviva Pilot Aviva Traders Aviva Scottish & York Aviva Surety Aviva Commercial Lines All of the above

Notice a theme? Through Aviva, you have access to the broadest and most competitive selection of insurance products in Canada, supported by the most experienced and dedicated team. So to offer your customers what they need, when they need it, remember “One Aviva, twice the value� and contact your Business Development Specialist or Account Executive.

Aviva CU Sept2008 REVISED.indd 1

9/4/2008 5:15:12 PM