CLAIMS ADJUSTING MARKET 2008:
Expansion on the Roll A A BUSINESS BUSINESS INFORMATION INFORMATION GROUP GROUP PUBLICATION PUBLICATION Publications Publications Mail Mail Sales Sales Agreement Agreement #40069240 #40069240
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Cover Story How the expansion of national adjusting firms, acquisitions, private equity capital, ‘big box’ shopping and flat-fee adjusting have all combined to form the growing tangled ball that is Canada’s increasingly concentrated claims adjusting industry.
V O L . 7 5 , N O . 1 , J A N U A R Y 2 0 0 8 www.canadianunderwriter.ca PUBLISHED BY BUSINESS INFORMATION GROUP
BY VANESSA MARIGA
16 Profile: COMPASSIONATE GENERALISTS OIAA president Alan Gallagher said the adjusting profession is starting to look at ways to find compassionate people who are able to adjust claims based on a wide breadth of knowledge. BY DAVID GAMBRILL
18 Insight: LIMITATIONS LABYRINTH First introduced in 2004 to streamline the limitations process, Ontario’s Limitations Act has since been amended in a way that may in fact be creating a new form of labyrinth. BY DONNA FORD
42 MOBILE – A claims cruiser fully equipped with all of the
latest gadgetry gives insurers the ability to drive claims service right up to a policyholder’s door. BY IRENE BIANCHI
PROCESS OPTIMIZATION – Insurers are struggling to squeeze every penny of cost possible out of key business processes in a seemingly endless quest for optimized processes and lower costs. BY MAY GIBILLINI
BURNING ISSUE – Canadian insurers have a proud tradition of promoting urban fire safety, and yet some may not be adequately prepared for losses arising from potentially devastating wildfires. BY PAUL KOVACS
22 CLAIMS VALUE – Independent brokers support their own value proposition when they support the value that independent adjusters bring to the claims process. BY FRED PLANT
54 HANDLE WITH CARE – Canada’s insurance industry is
commended for wanting a Basel 2-style model akin to that recently implemented by the country’s banks, but be careful what you wish for, OSFI cautions. BY DAVID GAMBRILL
YOUR PRODUCT EXCLUSION — Ontario’s Superior Court in Axa Insurance v. Ani-Wall Concrete has further restricted the scope of the Your Product Exclusion. BY MICHAEL S. TEITELBAUM
58 ROAD TO IFRS – Canadian insurers have something to learn from the European adoption of the International Financial Reporting Standards (IFRS). BY VANESSA MARIGA
34 PREFERRED SHOP — Key Performance Indicators play an integral role in a collision repair centre becoming one of an insurer’s preferred shops. But are they the only factor at play? BY DAVID GAMBRILL
8 Expansion on the Roll
60 HAPPY BIRTHDAY – Lloyd’s of London celebrated its
75th anniversary in Canada with a call for a public-private terrorism backstop in Canada. BY DAVID GAMBRILL
38 WHODUNIT? – What happens when a missing policy, written up during the days of paper documentation (i.e. no cell phones, no email) suddenly vanishes into thin air? BY JULIE A. DABRUSIN
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5 Editorial 6 Market Watch 67 Moves & Views 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. All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. We acknowledge the financial support of the Government of Canada through the Canada Magazine Fund toward our editorial costs. ©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. Privacy Notice From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374 Fax: 416-442-2191 E-mail: firstname.lastname@example.org Mail to: Privacy Officer, 12 Concorde Place., Suite 800, North York, ON, M3C 4J2
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individuals named above are still working within the industry on a board-level, part-time or contract basis. In one case, an executive simply moved to Europe; in two other instances, company CEOs merely became board chairmen, hardly connoting any kind of “winding down.” Nevertheless, the flurry of announcements in 2007 gives rise to a feeling that all this talk about a future “changing of the guard” is more than just a vague, abstract potential: we are now actually right in the middle of it. And one has to know that as everyone shuffles up a rung in the ladder to replace these executives, or as people leave their posts at other companies to fill these positions, there is a lot more internal resource shuffling happening than meets the eye. How are the companies and organizations listed above handling these shifts? How are they recruiting new people? Are they finding any so-called ‘talent gaps’ in the search to accommodate whatever experience has been lost? What strategies are they using to find new people? What, for example, are the advantages and pitfalls to promoting from within? And, assuming a company prefers to fill gaps by promoting from within, what happens at the bottom of the ladder once everyone has climbed up a rung within the organization? Has it been easy or difficult to entice people into the industry? If not, what techniques to attract people to the industry are working? Which approaches are failing? And what, if anything, can be said about the secretive, but time-honoured tradition of pilfering talent from another insurance company’s treasury? (This topic tends to receive short shrift, for obvious reasons, but perhaps something might be learned from the insurers who have recently brought these concerns up in the much less comfortable environs of a courtroom.) These questions have all been asked before. But as the changing of the guard we have witnessed in 2007 indicates, the answers should no longer be theoretical or unplanned. Perhaps the biggest question is how to amass specific answers to all of the above questions and present them to interested industry parties in a way that the information doesn’t start entering the twin realms of proprietary information and gaining a competitive edge. Once solutions start to get refracted by these concerns, the industry as a whole loses.
or the past year at least, interviews with company executives and leadership panel discussion speakers have all presented a short-term forecast of retiring senior executives from the Boomer Era, followed by an expression of concern as to whether there will be enough young talent available to replace them. Given the flurry of press releases in 2007 announcing the retirement of insurance and reinsurance company CEOs, we can now safely say: Forget the future, the future is now. Without doing any research, it is easy to list at least five industry CEOs or managing executives that have either shifted out of or retired from their posts in 2007. They include (but, as lawyers would say, are not limited to): Claude Dussault of ING Canada, Igal Mayer of Aviva Canada, David Wilmot of Toa Re, Robert Landry of Zurich and, most recently, Bill Star of Kingsway Financial Services. And if we wanted to cast the net a bit wider than just private corporations, Stan Griffin retired this year as the CEO of the Insurance Bureau of Canada after 32 years of dedicated service. Based on the farewell press releases for these five people alone, the industry has shifted more than a century’s worth of experience in one fell swoop... This is not to say the industry doesn’t have the talent to replace those who are moving their experience elsewhere. Subbing in for the departed will be a number of capable senior executives who have paid their dues by rising through their companies’ ranks internally, or who have made the jump from one organization to another. ING, for example, has created a new chief operating officer position headed up by Charles Brindamour. Aviva Canada has appointed Robin Spencer to the CEO position. Toa Re has appointed Caroline Kane to take over Wilmot’s role as senior vice president and chief agent in Canada Wilmot. Zurich has appointed Alister Campbell, formerly at ING, to take over the reins from Landry. And Bill Star, who remains as chair of Kingsway’s board, will be succeeded by Shaun Jackson, who has been with the company since 1995 and most recently served as Kingsway’s executive vice president and CFO. It should be emphasized here that the industry hasn’t really “lost” the talent moving out of the senior positions noted above. In many cases, even in retirement, the
Claims Go-kart not an “automobile” on private track, court rules go-kart operated on a private track is not an “automobile” according to the standard Ontario automobile insurance contract, the Ontario Court of Appeal ruled in Adams v. Pineland Amusements Ltd. Denis Potvin was driving a go-kart on a track owned and operated by Pineland Amusements Ltd. when he allegedly lost control of his go-kart after colliding with another go-kart driven by his father, Roland Potvin. Representatives of Denis filed an action against Pineland and Roland for damages related to injuries suffered by Denis. Pineland filed a cross claim alleging that Roland caused or contributed to the injuries of his son. Roland had an automobile insurance policy with Kingsway General Insurance Company and issued a third-party claim against Kingsway, stating it had a duty to defend and indemnify him in the main action and cross-claim.
M A R K E T WAT C H
www.canadianunderwriter.ca • January 2008
But even though a go-kart is technically considered a vehicle, it cannot meet the legal requirements of the Highway Traffic Act relating to registration, licensing and the equipment of motor vehicles, Ontario Court of Appeal Justice Russell Juriansz wrote for the court. Since a go-kart cannot meet these regulatory requirements, then under the Compulsory Automobile Insurance Act, a go-kart cannot be and is not required to be insured by a motor vehicle policy, he continued. Juriansz said Roland's automobile insurance policy does not cover the main claim made by Denis' representatives, in that it “does not cover damages for injuries resulting from a go-kart accident in the circumstances of the case.” Kingsway, Juriansz added, “does not have the duty to defend Roland Potvin in the main action or in the cross claim by Pineland Amusements Ltd.” ■
Insurer obliged to defend influence of ‘33-or-free’ policy on pizza delivery driver n Ontario Superior Court judge has ordered an insurer to defend a pizza company on allegations that the company's “30-minutes-or-it’s-free” delivery policy caused driver negligence leading to a collision. Pizza Pizza Limited faces court allegations of negligence in relation to its speedy delivery policy, which promises delivery in up to 30 minutes or else the driver is required to pay for a late pizza out-of-pocket. The allegations stem from an incident in which a Pizza Pizza delivery person struck and injured a pedestrian. The plaintiff alleged Pizza Pizza failed to have
safe driving policies in place, failed to test the driver for his propensity for speed and failed to investigate his driving record. In Aviva Insurance Company of Canada vs. Pizza Pizza Limited, Pizza Pizza argued it was entitled to coverage by Aviva under a commercial general liability (CGL) policy. Aviva argued it has no duty to defend and is not obligated under its CGL Policy to cover the plaintiff 's claims. Furthermore, the insurer argued, those claims ought to be covered by ING Canada’s non-owned policy. “I accept Pizza Pizza’s view there is a
non-automobile related concurrent claim in relation to injury caused by Pizza Pizza's corporate policy,” writes Ontario Superior Court Justice Beth Allen. “I find the pleadings do give rise to the possibility that the plaintiff’s injuries were caused by Pizza Pizza’s delivery policy and failure to screen drivers’ driving records. I find that claim is independent of the claim that involves the use or operation of an automobile, and for that reason, falls outside the scope of the exclusion in Aviva’s CGL policy.” ING has a duty to defend under its non-owned policy on the automobile related claims, she added. ■
Adventures in vicarious liability wo men struggling for control of a rented vehicle made it difficult to assess vicarious liability in a case involving the interpretation of an Insurance Act exclusion, the Ontario Court of Appeal has ruled. And a motions judge erred in deciding the factual issues by means of a summary judgment. In Henwood v. Coburn, George Fitzgerald rented a vehicle from Ontario Car and Truck Rentals and listed the driver as
Peter Henwood. Fitzgerald, a supplier of meat products, asked Henwood, a door-to-door frozen meat salesman, to take Frederick Coburn along on his sales trip so that Coburn could be trained. Coburn had neither a driver's license nor car insurance. Henwood and Coburn went to a local tavern at the end of the day. At that time, according to Henwood, Coburn began drinking and became belligerent. When Henwood refused to drive continued on page 62...
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CLAIMS ADJUSTING MARKET 2008:
Expansion on the Roll
By Vanessa Mariga he adjusting community is not immune to the shifting sands underpinning the general financial services community at large. Gone are the days of handshake deals and the prevalence of mom-and-pop shops. Instead, the adjusting community is hearing more about the so-called “big box” phenomenon, in which an array of insurance services are all housed under the roof of one parent company — not unlike the retail equivalent of a Wal-Mart or a Home Depot. Insurers are increasingly putting out requests for proposals (RFPs) and building procurement teams to select their adjusting firms of choice instead of the tradition of relying on past business relationships. Claims, some say, are becoming a commodity, meaning that insurers might award contracts to adjusters based partly on the promise that adjusters will handle a high volume of claims for a flat fee per file. This commoditization of claims first edged into the personal auto lines, but many say this is now common practice across all personal lines. What’s driving these shifts? Are we following in the footsteps of the market across the pond, where insurers with European and U.K.-based parent companies are leading the charge towards claims commoditization? Some suggest venture capital injections are allowing mid-size adjusting firms to become giants, by giving the adjusting firms access to fresh capital for acquisitions. Increasingly, this venture capital is coming from private equity firms, which, in addition to buying up claims adjusting firms, have gathered an array of other insurance services under their umbrella. This is helping to create the so-called “Home Depot” or big box effect now shaping the Canadian insurance industry. Is this new-found growth responsible for adjusting firms playing the commodity claim game? Some argue yes. Others suggest the claims industry is going to experience some serious growth pains, and a more “back-to-basics” approach — one less focused on expansions and acquisitions — will be required for claims adjusters to stay afloat. Step back and observe and it may appear that the claims adjusting industry is beginning to look a bit like a tangled ball of elastics: as the industry rolls forward, some of its players are amassing into larger entities, expanding and stretching for greater market share. But it remains unclear whether or not all of the elastics may in fact gather into a gigantic, tangled knot. More importantly, is the Canadian insurance industry even large enough to support such a creation?
How the expansion of national adjusting firms, acquisitions, private equity capital, ‘big box’ shopping and flat-fee adjusting have all combined to form a growing ball that is Canada’s increasingly concentrated claims adjusting industry.
9 www.canadianunderwriter.ca • January 2008
EMERGENCE OF PRIVATE EQUITY It is an overstatement to say private equity firm involvement in the Canadian marketplace is rampant, but certainly the influence of such private equity firms is prevalent. Over the past four years, private equity firms have featured in significant partnerships affecting three claims adjusting firms with a Canadian presence. Cunningham Lindsey, for example, teamed up with Stone Point Capital in November 2007. Granite Partners invested capital with McLarens Canada in 2006 and SCM Adjusters Canada Ltd. is in its fourth year of partnership with the private equity firm TriWest. The presidents of all three adjusting firms listed above agree that the access to venture capital has afforded them opportunities for growth and expansion. Cunningham Lindsey’s partnership is still in its infancy, but SCM Adjusters now has more than 60 offices across the country. And thanks to private equity capital, McLarens says, it has managed to satisfy many objectives of its five-year growth plan in
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only two years (to date, the firm has purchased six adjusting firms). “As to how we partnered with TriWest, we let it be known in the financial community of our interest in equity,” Larry Shumka, the president and CEO of SCM Adjusters Canada Ltd., says. “We were approached by numerous equity firms. We interviewed five and chose TriWest.” Shumka’s story is not unique. Michael Holden, president and CEO of McLarens Canada, says his adjusting firm sought out Granite Partners. The opportunities for growth afforded by such a pairing are indisputable he maintains. Adjusting firms are “looking to get into the next level,” Holden says, and the equity injection from venture capitalists is just the vehicle to provide it. “The next level is, to a certain degree, the satisfaction that there’s a financial security behind you,” he says. “We [as an industry] have these five-year cycles and it gets tough at times, so it’s nice to have a financial backer behind you to make sure that you’re still there.” Greg Smith, vice president of national programs for Crawford & Company (Canada), believes private equity involvement in the industry is driven by the sheer volume of investment that insurance adjusters must make for their firms to be able to compete in a changing business environment. “If you go back 20 or 30 years ago, it was a fairly low capital industry to be involved in,” Smith says. Nowadays, independent firms need to invest millions into technology infrastructure and compliance with governance and regulatory oversight. “Even things like errors and omissions insurance — and we all need to carry those premium increases year-over-year — is becoming a more significant cost to doing business.” What used to be a viable business for a small enterprise with 10 or 20 employees, for example, with little overhead, is becoming more and more complicated and expensive. Doug Buchanan, the managing director of Toronto-based Granite Partners, says once an organization like an adjusting firm is purchased by Granite Partners, it can simply “snap into the infrastructure into which they’ve invested millions of dollars, and then simply leverage off of that.” Examples of such “infrastructure” projects could be a new IT system, a human resources department or E&O coverage. But surely, the benefits are not one-sided. Buchanan says that after Holden approached him, he took a close look at the adjusting industry and drew the conclusion that “it’s an industry ripe for consolidation.” Buchanan added: “We have more capital than good places to put it. And we think this is an excellent industry in which to be involved because there are growth opportunities and there are consolidation opportunities.” WHAT PRICE, VENTURE CAPITAL? Some observe there are there risks attached to relying on private equity backers that have the overall objective to gain a suit-
able return on investment within a specified period of time. As Shumka himself notes, fundamentally, private equity firms have one financial imperative: “to realize a substantial gain on their investment in a limited amount of time.” Theoretically, that could lead to a situation in which capital support for the insurance services industry is fickle: if private equity firms see their gains coming from outside the insurance industry, then they might just as easily yank their money out of the industry than invest in it. As a result, the revamping of an adjusting firm’s business culture is one primary risk of partnering with private equity firms. “You now have a partner that will require extensive financial reporting,” Shumka says. “In addition, private equity will be involved in certain elements of business decisions.” Operational risk represents a further consideration. “Entrepreneurial, longstanding companies are typically debt-
What used to be a viable business for a small enterprise with 10 or 20 employees...is becoming more and more complicated and expensive.
adverse,” Shumka says. “Private equity will drive aggressive debt leverage, given that senior debt is still the least expensive capital for which management is responsible.” Fred Plant, president of Plant Hope Adjusters and president of the Canadian Independent Adjusters’ Association (CIAA), believes pluses and minuses should be considered when toying with the idea of courting third-party capital. At a time when the industry is struggling to attract and retain new talent, Plant says, “these large companies may prove to be a saviour of our profession if they are successful in creating an environment in which today’s experienced professional can work and be paid appropriately for his or her experience and ability, and if they can create an environment that entices new people.” But, Plant cautions, if the growth afforded to these adjusters allows them to swell to the point that they can start taking on national contracts at lower fees, they will need to be wary of under-pricing their services, lest they are no longer able to reinvest in the firm to promote internal growth. ONE-STOP SHOPPING Growth through acquisition is not the only name of the game: for Holden, the opportunity to pair up with Granite means McLarens can expand “horizontally” as well. He explains that McLarens, under Granite Partner’s umbrella, “is putting together a group of insurance-related service companies, all individually known and based professionally in Canada, and we’ll have mutual ownership by the same company.” Holden supports the “Home
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Cover Story Depot approach,” but he acknowledges the one-call-for-claimssettlement-services may not be for everyone. “The concept of multi-product services from one vendor will have traction with the clients that demand aligned operational governance, service delivery continuity and an integrated single IT platform,” says Shumka. “The only risk is: will the vendor be able to deliver consistently on all products?” Smith says Crawford’s long-term strategy involves diversifying services, and the approach has served the firm well. He notes the strategy has the additional bonus of convenience for the insurer, but it also benefits Crawford to have different revenue streams “that help us to deal with some of those peaks and valleys in our industry.” Sometimes weather-related catastrophes and storms affect the bulk of the adjusting firm’s business, he adds. “Having these other divisions, which are less dependent on
www.canadianunderwriter.ca • January 2008
therefore the first to hear policyholder complaints — in various communities to make sure policyholders are getting the very best service, be it from a national provider with a local franchise or a locally-owned independent. “The brokers may be very supportive of using a national provider, but you, as an insurer, really need to rely on [the brokers] to flag areas where one particular shop or service provider in a particular territory may not be the best.”
PROCUREMENT AND FLAT-FEE As adjusting firms attempt to leverage various services, some insurance companies are moving towards the request for proposal [RFP] and procurement process in an attempt to flex their purchasing muscle. Smith believes this is a trickle-down effect of the actions of insurers with U.K.-based parent companies. “We see some of the different things that Canadian insurers are doing [now] being similar to what happened in the U.K. about three or four years ago,” [On underpricing of services, potentially he says. “If you talk about the way a U.K. arising out of flat-fee service.] “You can’t company handles a claim, they’re at the pay people well, so you can’t attract and point where they are doing complete hold onto the experienced adjusters and outsourcing of commodity claims.” In [therefore] you can’t commit resources other words, insurers are asking adjustto education and professional developing firms to develop programs that will ment for the long haul.” help insurers to process large numbers of — Fred Plant, president, CIAA claims. The adjusters will thus serve as a “pressure relief valve” when the internal adjusting staff of insurance companies weather, has helped us to stabilize where we are able to earn our become too busy to handle the claims.“We have a number of files where, because it’s a large number of claims that are each worth money from.” a small amount of money from an indemnity standpoint, we will But are the insurers biting? Irene Bianchi, claims manager at Royal & SunAlliance, says actually work inside the insurance company’s computer systems,” she sees the appeal in the approach. “From our perspective, it’s Smith says.“We’re acting like their employees, but they don’t have quite appealing simply because it gives us a lot quicker access to us on their payrolls and they can call us when they need us.” Bianchi says R&SA in 2005 developed a formal procurement services for clients and it also gives us a little bit of buying power,” She says. “The only issue that I can see with having a one-stop- strategy including a team that negotiates contracts with vendors shop is when you have claims that are outside the norm, or you from a national and provincial perspective. Vendors are invited to have large or very specialized claims. That would really take you bid on business based on service, quality and price, she says. “In the past, it was all about which firms we had relationships with. outside of the big box environment.” Colin Simpson, president and CEO of York Fire and Casualty By formalizing the process, we are able to better negotiate a pricInsurance Company, says it is not a black-or-white issue. The ing program and service level agreements that are built into our main reason why insurance companies invest in the supply chain contracts.” She adds procurement programs are crucial in “hot [i.e. the suppliers of claims services] is because it provides for the markets” such as those in Western Canada in order to “lock in” predictability and stability of two important things: pricing and vendors. But adjusting firms that strive for big growth, and reach the service levels. “They [one-stop shops] can offer particular services to their point where they are able to offer insurance companies national, customers that maybe some of the other guys cannot provide, but flat-fee adjusting contracts, may be under-pricing their services, the bulk of it comes down to pricing,” Simpson says. “The better not allowing them to properly invest in its staff, Plant warns.“The you are at controlling your supply chain and your claims costs, fact is,” he says,“you can’t pay people well, so you can’t attract and then the easier it is to become predictable in the pricing of your hold onto the experienced adjusters and [therefore] you can’t commit resources to education and professional development for products,” which in turn leads to stability in the marketplace. Simpson says the challenge York Fire has experienced with the long haul.” Dave Cernak, president of PCA Adjusters in Ottawa, agrees. national providers of insurance services is inconsistency between franchises. He says insurers will typically consult with brokers — The commoditization of claims, he says, has created a “producwho are on the front line of the insurance transaction, and are tion line” type of environment in which the focus is simply on
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www.canadianunderwriter.ca • January 2008
fulfilling the volume. Although this may result in initial cost-savings for the insurer, insurers run the very real risk of “not matching the claims to people with the appropriate expertise,” Cernak says. “I think what happens is you get into a large funnel effect: all of the claims come in and you’re the next adjuster in line, so you’re handling the claim. Does that person have the expertise or the knowledge to handle it? At the end of the day, the company may be saving expense dollars, but will they be losing it in settlement dollars, and is the customer really receiving the service and peace of mind they paid for when they purchased their contract of insurance?” The insurers’ movement towards the RFP process is creating a squeeze, agrees Malcolm Scott, senior vice president of CGI’s insurance businesses services. “As the industry has consolidated, the companies tend to leverage that by using the existing skilled base of staff adjusters. But these people are getting older and leaving the workforce. This means it’s becoming increasingly competitive to find these people. It’s pushing costs up, and is it’s in direct conflict with the way that some companies buying our services are changing the way that they’re operating.” As insurers leverage their buying power through centralized processes, RFPs and flat-rate files, he goes on to explain, it’s in contrast with the premise that there are fewer company claims adjusters. Shumka says a flat-fee, national contract with specified volumes gives the adjuster control over costs and the knowledge that resources will be available to the firm. The benefits and challenges of such an arrangement are interrelated, he continues. On the plus side, “committed, long-term sustainable volumes allows for the formation of committed units of resources and thereby creates the delivery of aligned and integrated efficiencies.” Without a committed volume, he adds, such “efficiencies are difficult to achieve.” Rob Seal, president and CEO of Cunningham Lindsey, suggests the idea of “a small loss” is changing and the value of a “commodity claim” is increasing. Once $25,000 in value, a commodity claim may now include up to $100,000 claims. These are increasingly handled over the telephone, in flat-fee types of arrangements, he says. Although this undoubtedly helps to control insurers’ costs, Seal points to the recent flooding in the United Kingdom as an example of how the industry might ultimately revert back to the traditional way of adjusting claims. “I guess we’re still in the people business,” Seal says. “When insurers sell a piece of paper, that is a promise that if you have something happen at your residence or to your car, you will be taken care of. During times of stress, such as during a major storm, people, quite frankly, want to see an individual. They’re not so enamoured with talking with someone over the telephone.” Wilfred Tioh, regional claims manager of The Sovereign General Insurance Company, agrees the emphasis needs to remain on delivering service, not quantity. For an adjuster, that
means one-on-one time with the policyholder. If the adjuster is paid a flat-fee, he continues, the motivation to go the extra mile with the policy holder is lost. Cernak agrees. “You need some of the large multinationals or networks of adjusting firms, because they can and do respond in cat emergencies across the country. If you get a catastrophic loss out in B.C., they team up and they work well together and you have the people power there when you need it. But you also need the expertise.” He says, adding, “unfortunately, it sometimes appears that the human element to adjusting is being lost, which will eventually be reflected in unsatisfactory claims service.” Tioh suggests a blended fee, in which the insurer stipulates an hourly rate and the adjuster bills for the hours spent adjusting
As insurers leverage their buying power through centralized processes, RFPs and flatrate files, it’s in contrast with the premise that there are fewer company claims adjusters. — Malcolm Scott, CGI insurance business services
and investigating the claim. Scott adds that by improving the efficiency of the adjuster through the use of improved technology, and by making a concerted effort to bring in fresh blood, the adjusting profession will be able to continue delivering fast and effective service without expanding the costs of such service. Plant remains optimistic that insurers that “are in it for the long haul,” know that “low pricing is a short-term response to a cost-cutting mandate but that it has significant long-term consequences.” CRYSTAL BALL It remains to be seen what long-term effect all of these interlinked dynamics will have on the claims adjusting industry. Many experts suggest the huge ball that is consolidation, fuelled by private equity capital, is just beginning to roll across the landscape of Canada’s adjusting industry. In five years, people say, Canada’s insurance claims industry will look similar to that of the United Kingdom’s, where the players in the industry are fewer in numbers, but larger in size with rampant commodization. Others are not so quick to make the comparison, saying the Canadian experience is unique. Although there will likely be fewer players on the Canadian adjusting field (and those players will be larger), they predict, there will always be a need for independent adjusters to handle niche, high-end markets. And even in personal lines, the insured will always want to deal with an adjuster in the flesh, they add. “In five years, I see the Canadian industry somewhere between the United States and the United Kingdom,” says Seal. The U.S. is further down the claimshandling modernization path than Canada, he adds, but it’s still not where the U.K. is currently. “I would suggest there will be a need for commodity, low-end stuff. There will be a need for the high-end, niche stuff. But it remains to be seen who’s going to fill the gap in the middle for the mid-sized claim.”
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www.canadianunderwriter.ca • January 2008
ecruiters may soon be looking to turn compassionate Rhodes scholars into insurance adjusters, assuming current trends in the adjusting profession hold true. This is an exaggeration, of course. But certainly good adjusters can use a well-rounded education, and there’s no question empathy is among the most important assets in an adjuster’s skill set. For Ontario Insurance Adjusters Association (OIAA) president Alan Gallagher, one of the key issues facing the insurance adjusting profession is recruiting such compassionate generalists. And in tackling this challenge, the profession must find its way out of a conundrum, the former CBC radio broadcaster observes. On the one hand, the profession is appealing to those with a generalist knowledge base who like variety. Whether they deal with claims related to fire damage, agricultural mishaps, jewellery theft, printing press breakdowns, or even stolen art or knitting supplies, adjusters quickly need to grasp the subject matter at hand. “You can’t not know what you’re talking about,” Gallagher observes. And certainly part of the thrill of being an adjuster comes from not knowing from one moment to the next what kind of claim will come through, and what kind of knowledge base might be required. But such thrill-seeking generalists are hard to find these days.
“It’s tough because so many people are in high school and they’re told: ‘You’ve got to be going down this path, and here’s where you want to go,’” Gallagher says in a phone interview from his Ottawa adjusting office of Vanler McLarens Canada. “That makes it tougher to find someone who has a lot of general interests and is willing to help people and go from there.” In addition, it is increasingly difficult to keep up with consumer expectations in a wired world. Instantaneous Internet and cellular communications have shrunk the amount of time adjusters can take to work out problems and offer responses. Some adjusters working for insurance companies might find their good intentions caught in the middle of a feud between the policyholder and the insurance companies for which the adjuster works. Other adjusters might find themselves on the front line, working out solutions with policyholders in a delicate frame of mind.
e Generalists OIAA president Alan Gallagher says the association is employing job fairs as one way to recruit caring people with a wellrounded education into the profession By David Gambrill
17 www.canadianunderwriter.ca • January 2008
“You are dealing with people who are in a lot of cases at their worst,” Gallagher notes. “They’ve lost the house, or they’ve been in a car accident in which there may have been a fatality for that matter… “I think you also have to be able to separate your work from [your personal life] and realize that when the guy’s screaming at you, he’s not screaming at you — it’s at what you’re telling him.” Certainly, adjusting is not a vocation for just any generalist. “It’s tough to attract people [to the adjusting profession],” Gallagher agrees. “It’s not a job for everybody, that’s for sure. You have to be good with people.” Like so many before him, Gallagher himself did not enter the profession with any kind of specialized knowledge or education. In fact, prior to moving to Ottawa in the late 1980s, Gallagher was working as a radio announcer for CBC in Toronto. After getting married, Gallagher and his wife received some land in the Ottawa area at about the same time Gallagher’s work with the CBC in Toronto started to dry up. He and his wife moved to Ottawa, where Gallagher followed the footsteps of his father and became an insurance broker in 1990. Two years later, Dominion of Canada General Insurance Company bought up Safeco Insurance and hired 18 new people in the Ottawa area. Dominion hired Gallagher, who started doing work on the claims side. “Claims seemed to be more interesting,” Gallagher said of his shift from insurance broking to claims adjusting. “More change, more variety. At Dominion, I started as a telephone adjuster and then progressed through the ranks, handling all types of claims… “What I like is the resolution. There’s been a couple of large house fires in which everything is destroyed and you’ve been able to get the people back in and get their lives going again. I did a large golf club that got burned down, and we were able to get it back up and running. There were a lot of people involved because it was actually a community association that ran it. It was kind of nice to get them back and going, and I took some pride in that.”
Gallagher worked at Dominion until 1997, when he left to work for an independent adjuster named PCA Adjusters. From there, he jumped to Vanler Insurance Adjusters Ltd., which McLarens Canada acquired in late 2007. Gallagher, whose family includes four children aged 6-13, believes he is only the second OIAA president to be based in Ottawa. Gallagher notes times are increasingly tough for independent adjusters looking for a steady flow of work. He observes companies have been doing more of their claims adjusting work inhouse or by means of call centres. Gallagher says communications technology has advanced to the point of crowding out the independent adjuster’s traditional role as intermediaries between policyholders and the insurance companies. “You know, there are so many more ways to communicate with people,” he says. “Half the insureds — well, probably threequarters of the people — own a digital camera and can forward pictures to someone just as quick as I could.” Market consolidation and retirement are also both contributing factors to a relative lack of work available to independent adjusters these days. For one thing, the shrinking number of insurance companies means greater competition among adjusters to handle the companies’ claims. “From when I first started, [the number of insurers] probably dropped 10-15% [through consolidation], so the job opportunities are limited,” Gallagher says. “As they’ve amalgamated, a lot of the smaller [insurance] companies have disappeared, and that’s happening in the adjusting field as well … In Toronto it’s different, there are still a lot of smaller firms. That’s due to sheer volume. But in Ottawa, we’re limited to pretty well national firms. There are a couple of small firms still here, but most of them are now national, and I think [because of that] the job opportunities are limited a little bit as well.” To counter this trend, Gallagher notes independent adjusters have taken to offering unique or exceptional service through the use of rapidly advancing technologies. Also, they have tended to offer more specialized or niche services not generally offered by larger companies. Consolidation, however, is not the only cause for concern when it comes to drumming up business opportunities for independent adjusters. Another issue is that there may not be enough independent adjusters to handle an increased workload, even if more work were to become available. The adjusting profession is no stranger to a demographic trend seen in all of Canada’s financial service industries in that a growing number of senior and experienced adjusters have retired or are planning to do so in the near future. That’s where the OIAA’s recruiting efforts come into play. “What we’ve done each year is that we’ve had our claims conference in Toronto, where we have 150 vendor booths and various seminars,” Gallagher notes.“In the last several years, we’ve offered a job fair for students, where we bring in students from the insurance program and have various employers in the room and let them go at it. It’s not only claims-oriented but it definitely is something that we can help. We’ve talked to [students] before, just to try to let them know what [claims adjusting is] all about, really. For a lot of people, the stories they usually hear about claims are about the bad experience of the guy who didn’t get something covered. We try to battle that. That’s one of the things the association will be doing is the job fair.”
When Time Ontario’s Limitations Act, revised to streamline the time limits for m has in fact shown signs of becoming “labyrinthine,” le By Donna Ford
www.canadianunderwriter.ca • January 2008
awyers acting for defendants or subsequent parties had better watch out: Ontario’s Limitations Act has tightened the long leash that insurers previously enjoyed to the point of a choke chain, legal experts warn. If insurers don’t immediately consider whether claims for contribution and indemnity exist (and add the necessary parties), they may well find themselves on the receiving end of negligence suits. The Limitations Act, 2002 came into force in Ontario on Jan. 1, 2004. Of particular note to insurers, the legislation contains, among other things: • a common two-year period to commence litigation against insurers, the period beginning from the date of discovery of the injury, loss or damage; • an ultimate limitation period of 15 years, regardless of discoverability, with certain exceptions; • retention of some specialty limitation periods that are listed in a schedule to the Act; • a prohibition on contracting out of the Act; and • transition rules for acts or omissions that took place before Jan. 1, 2004. A number of insurance industry representatives from western Canada have noted that Ontario’s Limitations Act has served as a model for proposed changes to the Limitations Acts in both Alberta and British Columbia. So it may be of some interest to observe recent remarks made by Ontario lawyers that Ontario’s act is “labyrinthine” in its application. Graeme Mew, a partner at Nicholl Paskell-Mede’s Toronto office, made such remarks at the Ontario Bar Association’s “Third Annual Hot Topics in Motor Vehicle Insurance,” held in Toronto on Nov. 12, 2007. Mew’s presentation focused on some of the pitfalls of the new legisla-
tion encountered by insurance coverage and defence lawyers. His paper, co-written with his colleague, Anna Casemore, refers to how “labyrinthine” certain areas of the law of limitations have become. Mew told his audience that his initial expectation was that the act would make limitations simple and straightforward. But “that hasn’t happened yet,” he said. Some of the highlights from Mew’s speech and paper are: Contracting out the new act Prior to The Limitations Act 2002, the limitations regime did not speak to the issue of contracting out of limitation periods. Parties could agree to extend, shorten or extinguish a statutory limitation period — which only made sense, according to Mew. But s. 22 of the new act explicitly prohibited parties from contracting to vary a limitation period in most circumstances. Agreements made prior to Jan. 1, 2004 were grandfathered under the new act, but the explicit prohibition meant: • parties could no longer enter into tolling or standstill agreements. In addition, arguably, they could not incorporate effective representation and warranty clauses into contracts. Also, they could not limit the timeframe in which a party could commence an action for breach; • contractual limitation periods, commonly found in insurance policies, were of no force and effect (unless incorporated into the contracts as statutory conditions or by legislation.) The absolute prohibition contained in s. 22, which was likely intended to protect parties from unwittingly compromising their rights, was a dramatic step backward for certain commercial parties. Ontario legislators responded to the extensive criticism of s. 22 on Oct. 19, 2006, bringing into force amendments that allowed parties to a “business agreement”
— defined as an agreement made by parties, none of whom is a consumer as defined in the Consumer Protection Act — to vary (i.e. to extend, shorten and suspend) or exclude a statutory limitation period, and to vary the ultimate limitation period. However, parties to a business agreement cannot suspend or extend the ultimate limitation period beyond 15 years until after the claim has been discovered, at which time, they could agree to extend it beyond 15 years. The ability to shorten or exclude a limitation period is restricted to business agreements,not consumer agreements. Statutory Condition 14 of s. 148 of the Insurance Act Many insurance policies contained clauses purporting to extend the application of statutory conditions that ostensibly related only to fire loss to all perils insured under the particular policy. Prior to new act, Ontario courts had upheld the one-year limitation period set out in Statutory Condition 14 of s. 148 of the Insurance Act — even in situations in which it had been incorporated as a term of a multi-peril policy, and where the loss had not been the result of fire. However, in K.P. Pacific Holdings Ltd. v. Guardian Insurance Co. of Canada, the Supreme Court of Canada in 2003, in the context of the insurance legislation in B.C., held that the limitation period prescribed by the statutory condition would only apply if the statutory condition was contained in a fire — i.e. not a multirisk — policy. Recent amendments to s. 22 of Ontario’s new act have added another dimension to the question of when limitation periods contained in statutory conditions will apply. A personal insurance contact, typically created “for personal, family or household purposes” (and therefore not a “business agreement”) would attract a limitation period of no less than two years pursuant to the amended s. 22; in contrast,
is Money or making claims against insurers, ,” legal experts warn the parties to a commercial insurance contract could agree to a shorter limitation period. It therefore appears the principles articulated in K.P. Holdings may conflict with s. 22 of the new act in circumstances in which the parties are not “consumers,” and in situations in which the policy was issued after Oct. 19, 2006. (There was no ability to vary the limitation period in policies that were created during the period of Jan. 1, 2004 to Oct. 19, 2006.)
19 www.canadianunderwriter.ca • January 2008
Transition Provisions: Breathing New Life into Old Claims Most of the judicial debate arising from the new act revolves around s. 24, which contains transition provisions. The purpose of the transition provisions is to preserve former limitation periods in circumstances in which the act or omission at the centre of the litigation was discovered before the new act came into effect. Section 24(2) provides: “This section applies to claims based on acts or omissions that took place before the effective date [Jan. 1, 2004] and in respect of which no proceeding has been commenced before the effective date.” In Pepper v. Zellers Inc., the Ontario Court of Appeal ruled in 2006 that if the act or omission took place prior to Jan. 1, 2004, and no proceeding “with respect to this incident” was commenced before Jan. 1, 2004, then the transition provisions would apply. Section 24(3) provides: “If the former limitation period expired before the effective date, no proceeding shall be commenced in respect of the claim.” In Philion (Litigation Guardian of) v. Lemieux Estate, the Court of Appeal in 2007 held that the “former limitation period” did not stand alone, but was as modified by s. 47 of the Limitations Act; the limitation period did not begin to run until a minor reached the age of majority. The principle of discoverability is incorporated into s. 24(5) of the new act. Basically, if the former limitation period did not expire before the effective date — and if a limitation period under the new act applied in situations in which the claim was based on an act or omission that took place on or after the effective date — the following rules apply: “1. If the claim was not discovered before the effective date, this [new] act applies as if the act or
www.canadianunderwriter.ca • January 2008
omission had taken place on the effective date. “2. If the claim was discovered before the effective date,the former limitation period applies.” Section 5 of the new act, which sets out the discoverability principle, provides that the clock will start to run when either the “person with the claim” first discovered the claim, or when a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have discovered the claim. There is a debatable presumption that the person with the claim discovered the claim on the date of loss. The act does not define “person with the claim,” which has led to debate as to whether, under the former limitations regime, a litigation guardian could be a person with the claim for the purposes of the transition provisions. In St. Jean (Litigation guardian of) v. Cheung, , Ontario Superior Court Justice John Murray responded by extinguishing rights of a person with a disability — rights that existed prior to the new act coming into force. Mew believes St. Jean contains glaring errors, was wrongly decided, and should be overturned on the pending appeal. Time’s Up: Claims for Contribution and Indemnity Contribution is a doctrine that arises when an insured has insurance with more than one insurer covering same risk and same interest. In this scenario, either one of the two insurers is liable for 100%; then it's up to one insurer to seek contribution from the other. The new act has significantly changed this area of law. Prior to the new act, an alleged wrongdoer could seek contribution and indemnity any time up to a year after the settlement or judgment. Presumably, the rationale was that the cause of action for contribution and indemnity would not arise until liability had been determined. The new act has considerably shortened the limitation period. Section 4 of the new act provides a basic limitation period of two years from the day on which the claim was discovered. Section 18 modifies the discoverability rule in s. 5 as it applies to claims for contribution and indemnity. Section 18(1) provides that for the purpose of the presumption prescribed by s. 5(2) — i.e. the claim is discovered on the date of loss — and the accrual of the ultimate limitation period, time respecting a claim for contribution and indemnity of one alleged wrongdo-
er against another will start to run from the day on which the first alleged wrongdoer was served with the statement of claim, whether the claim arises in tort or otherwise. This section raises two issues. First, the term “first alleged wrongdoer” is not defined. Second, this section potentially creates procedural problems because plaintiffs don’t have to file affidavits of service for the statement of claim. As a result, the defendant’s insurer cannot always rely on the date the defendant says he or she was served; the plaintiff’s lawyer will often need to be contacted to ascertain the dates of service. The overall result of the application of s. 18 is that an alleged wrongdoer has two years from the date he or she “discovered” the “claim” to commence a proceeding. Mew has this warning for lawyers who are handling claims on behalf of defendants or subsequent parties: they must immediately consider the possibility that potential claims for contribution or indemnity exist.
of a limitation period. The Ultimate Limitation Period: Is it Long Enough? Section 15 of the new act provides that “no proceeding shall be commenced in respect of any claim after the 15th anniversary of the day on which the act or omission on which the claim is based took place,” even if the claim is not barred by s.4. The Ontario Court of Appeal in 2007 addressed the issue of the ultimate limitation period in York Condominium Corporation No 382 v. Jay-M Holdings Limited. The alleged negligence occurred in February 1978, but the claim was not discovered until May of 2004. The claim would not have been statute-barred by s. 4 of the new act because it was commenced in June of 2005, within the two-year limitation period; nevertheless, the motions judge found it was statute barred on the basis of section 15. The Court of Appeal, in allowing the appeal, concluded the transition provisions postponed the commence-
Most of the judicial debate arising from the new [limitations] act revolves around s. 24, which contains transition provisions. The purpose of the transition provisions is to preserve former limitation periods in circumstances in which the act or omission at the centre of the litigation was discovered before the new act came into effect.
(Negligence claims are already rolling in to Law Pro, Mew noted.) Has the “Special Circumstances” Test Finally Been Laid to Rest? Under the former limitations regime, a plaintiff who failed to add a party as a defendant to an existing proceeding within the limitation period could seek leave to add the party if there was no prejudice to the adverse party and there were “special circumstances.” This involved an exercise of the court’s discretion. Section 21(1) of the new act removed the potential for relief based on special circumstances. Despite the explicit wording, however, some courts have ignored the provision and considered or granted relief based on “special circumstances.” Section 21 of the new act does not appear to prevent a plaintiff or a new cause of action from being added after the expiry
ment of the ultimate limitation period to Jan. 1, 2004. The court adopted a statutory interpretation that it felt best fulfilled the objects of the legislation; it thereby construed the new act to avoid any inconsistency between its different provisions, and interpreted it liberally in favour of the individual whose right to sue for compensation was in issue. (Leave to appeal to the Supreme Court has been refused.) Mew noted that while the result of Jay-M Holdings appears to be fair and based on sound principles, as time goes by, the extension of the ultimate limitation period based on this principle will decrease until the limitation period will be no more than 15 years from the date of the act or omission, irrespective of when the claim was discovered. Litigation arising from the application of the transition provisions will diminish over time, as the provisions become progressively redundant.
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BALANCING the EQUATION
Independent brokers increase their value proposition when they support the value proposition of independent claims adjusters
www.canadianunderwriter.ca • January 2008
22 By Fred Plant, President, Plant Hope Adjusters Ltd.
he fight for the Canadian property and casualty premium dollar is heating up. The battle lines have been drawn — Well, sort of. Most of the combatants are deeply entrenched on one side or the other; a few are straddling the line. Independent broker v. direct sell: which is best? Like so many questions regarding insurance, that one is best answered: “That depends.”
Direct writing is on the rise, and independent brokers have now acknowledged that banks and other direct-writers are here; they’re real, they’re staying and they’re proving to be tough competition. In standing up to this competition, brokers may find some value in comparing their situation to that of independent adjusters, who are no strangers to facing down intense competition. BROKERS In 2003, I watched from the wings as Igal Mayer, then-president and CEO of Aviva Canada, addressed those assembled at the IBAO conference in Toronto. Aviva, through its Scottish & York entity, had just announced a move into the world of direct writing through brand affiliation
with a major supermarket chain. It was like Darryl Sittler had gone to play for the Canadiens and this was his first game back at the Gardens. The crowd was not happy. In spite of the atmosphere, Mayer boldly stood up and explained what most should have already known, but perhaps did not really want to acknowledge: Aviva is a public stock company with responsibility to its shareholders. Since Aviva was in the business of selling insurance, it had to do all it could to reach out to as many possible premium payers as it could. Some people will only buy insurance from direct writers or over the Internet, and Aviva management had an obligation to its shareholders to pay attention to its bottom line and gain as much market share as possible. Ignoring a large and growing
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segment of the market was not good business for Aviva. Obviously Mayer was right: direct writing has gained popularity over the past four years, as measured by the increase in the number of participating insurers and in the percentage of consumers who buy direct. Property and casualty insurance is a very competitive marketplace in this country. Each and every company wants to get as big a piece of the Cdn$35-billion pie that Canadians spend on premiums each year and turn as much of that as possible into profit. Different insurers take different paths to reach their goals. It’s not that one way of selling policies is right and one is wrong, not at all. Both the direct and independent broker distribution
INDEPENDENTS: PEAS IN A POD I see a parallel in the drop of our fortunes as independent adjusters — particularly the loss of assignments on the smaller losses, which allow us to attract and train new adjusters and to keep the lights on between large losses — to the migration of independent broker clients to direct writers. The average person who has a home, a mortgage, a car and a loan does not really have complicated insurance needs; many of those consumers tend to look at basic insurance as a commodity — something they have to buy to satisfy their creditors. Yet in spite of their very basic needs, those customers are critical to the survival of
concerning this initiative included statements from members of the association’s executive about the benefits of buying insurance through an independent broker rather than through a 1-800 phone service or over the Internet. It’s too early for an accurate assessment as to the effectiveness of the New Brunswick brokers’ campaign, but at least one body was reading the news in early October — the Canadian Association of Direct Response Insurers (CADRI). An editorial appeared in the Oct. 30 edition of the Moncton Times & Transcript under the byline of CADRI president Richard Evans (better known as the senior vice president of TD Meloche Monnex). In that letter, Evans took exception to some of the com-
For years, I have heard brokers say customers don’t care about claims service when they buy their insurance. But I can tell you most certainly that claims service definitely matters when the car is smashed or the house is ablaze. Claim service is emerging as an important selling tool for the independent broker. - Fred Plant, Plant Hope Adjusters Ltd.
channels have been long-established. But things are changing; independent brokers have perhaps felt that shift most profoundly.
www.canadianunderwriter.ca • January 2008
ADJUSTERS As an independent adjuster, I know how brokers feel. Over the last decade, independent adjusters have seen a significant drop in the call for our service. A large portion of the more basic work we do has been moved to other service providers or has been taken inside to be handled direct by insurer staff. This happened because our customers lost faith in us. We had them, but we got complacent and lost focus on what we were selling. Unsatisfied they were getting good value for what they paid us, our customers left and sought alternatives. As those customers filed out the door, we spent a lot of time and effort telling insurers that what they were doing wasn’t right and that they’d be sorry. Then we realized what we needed to do was stop bashing the other service providers and concentrate on what we do that does add value, and to work hard to deliver that value.
many of the independent brokers in this country. When they go, so does a lot of revenue. In addition, as they leave, they take with them the opportunity for brokers to build the portfolio of files required to train new staff — staff that would go on to become experienced brokers capable of dealing with more complicated matters. This at a time when, according to Peter McCann, the president of the Toronto Insurance Conference (TIC), knowledgeable brokers are needed more than ever to deal with emerging risks and the complexity of available coverages. Brokers know this is a real issue and many are concerned for their future. So how do independent brokers stem the tide and cause their clients, even the ones with basic needs, to put value on the service they provide? One response has come from New Brunswick, where, in early October, the Insurance Brokers Association (IBANB) launched a new campaign: New Brunswick Insurance Brokers, keeping you covered. The slogan is smartly supported by a covered bridge logo, a heritage symbol long identified with safety and refuge in eastern Canada. Media coverage
ments New Brunswick brokers had made earlier in the month. However, he did agree with the brokers’ observation that the consumers’ use of the direct channel was increasing. The bulk of Evans’s letter was dedicated to the policy-buying experience for consumers. However, he also offered these words regarding claims service: “When consumers need to make a claim, the process [with direct writers] is similar to [that of] any other insurance company.” This statement implies consumers should expect similar claim service from all insurers. I do not know how every insurer deals with claims, but based on my experience, claim service can vary substantially from one insurer to another. But historically, when insurance is purchased by way of a 1-800 number, claims service is delivered the same way, at least to some extent. Emphasis has been on how to get the consumers premium dollars in the door. What is the best way for the insurer to interact with the consumer for the sale? The independent broker route suggests personal contact between consumer and broker. The direct route is less personal
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and folksy. But if a large number of customers don’t really care for or place value on personal and folksy, then those elements will be judged of no value and the consumer will buy solely on price. From my experience, basic personal lines insurance purchased direct tends to command lower premiums. If independent brokers are left to their own devices to attract and hang onto those consumers who have only basic insurance needs, they are going to have to add more to the value equation than
www.canadianunderwriter.ca • January 2008
advice and impartiality. For years, I have heard brokers say customers don’t care about claims service when they buy their insurance. But I can tell you most certainly that claims service definitely matters when the car is smashed or the house is ablaze. Claims service is emerging as an important selling tool for the independent broker. ADDED VALUE THROUGH CLAIMS Today’s consumer is better educated than ever before. If the purchase process is viewed as homogeneous, they will look to the other part of the equation and factor claims service into their buying decision. If claims service is also seen to be the same, then price will be all that remains to sway the buyer. Independent brokers cannot allow price alone to be the deciding factor; they must engage their markets to ensure the availability of knowledgeable and experienced local adjusters who are available 24/7 to grab the service ball and run with it. If the price is more, the customer expects more. Not more claim payment, but more service. Brokers need keep the experience for their clients personal throughout; they can’t collect premium in a personal way and then deliver 1-800 claims service. Peter McCann was quoted in the Nov. 5 Globe and Mail: “A broker is there to help from the initial purchase decision right through the claims process.” Danny Harrigan, IBANB chairman, says: “Getting support through the claims process is also important.” Brokers need to act on these words to support the value proposition. Our industry will continue to evolve through change within its various sectors. Some will drive the evolution, others will ride it out. Independent broker vs. direct sell? Which is best? That depends — on you.
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Reconstructing the Your Product Exclusion
By Michael S. Teitelbaum, Senior Partner, Hughes Amys LLP (Toronto)
www.canadianunderwriter.ca • January 2008
Hughes Amys is a member firm of The ARC Group Canada Inc.
n Axa Insurance v. Ani-Wall Concrete, Ontario Superior Court Justice Paul Perell adopted an approach to interpreting the “Your Product” Exclusion which, depending on the factual circumstances, further restricts its scope. When applying the Your Product Exclusion, the courts usually find the cost of repairing or replacing the insured's own product is excluded by a Commercial General Liability policy, but any damage going beyond the insured's own product is covered. The leading example of this
approach is the Ontario Court of Appeal's decision in Alie v. Bertrand & Frère Construction Co., in which the court found the cost of replacing the defective concrete was not covered. In Ani-Wall, Perell found the product supplied by the insured was so fundamental to the entire structure that holding the cost of its repair or replacement was excluded would defeat the purpose of the coverage. ANI-WALL: FACTS AND ISSUES Ani-Wall is a concrete-forming contractor for the construction of homes in the Greater Toronto Area. It constructs concrete footings and concrete foundation walls by building forms into which concrete is poured. The forms allow the concrete to harden or “cure,” at which time the forms are removed. Ani-Wall does
not manufacture the concrete, but purchases it from suppliers. Ani-Wall in 2002 constructed concrete footings or foundations for various builders using concrete supplied by Dominion Concrete. The concrete footings or foundations were defective as a result of deficiencies in the components used to produce the concrete. Axa insured Ani-Wall under a Commercial General Liability Policy for sums that Ani-Wall is legally obliged to pay as compensatory damages because of “property damage” that occurred during the policy period. Axa denied coverage
In light of Ani-Wall, depending on the particular facts, the court has indicated that if the product is such that it is the foundation, so to speak, of the overall product, then the...Your Product Exclusion will have no effect whatsoever.
www.canadianunderwriter.ca • January 2008
under its policy relying on three exclusions: the Your Product Exclusion, the “Your Work” Exclusion and the “Rip and Tear” Exclusion. Axa applied to the court for a declaratory order that it had no obligation to indemnify Ani-Wall for its liability to the builders. Axa conceded the property damage sustained by the builders comes within the insurance coverage provided to Ani-Wall. Nevertheless, the company submitted that the three exclusions operated to remove coverage. The court addressed whether it was premature to determine whether indemnity was payable before a trial. Relying on the Ontario Court of Appeal decision in Bridgewood v. Lombard, among other decisions, the court held that in an appropriate case, an insurance contract could be interpreted on an application in order to determine whether indemnity is available under it. Since the focus here is on the court's reasoning and finding in respect of the Your Product Exclusion, we will only briefly address its conclusions in respect of the Your Work and Rip and Tear Exclusions. Insofar as the Your Work Exclusion is concerned, the court followed the Bridgewood decision, which held that the sub-contractor exception to that exclusion was applicable because the exclusion “does not apply where Ani-Wall's work was performed by a subcontractor.” [Here the definition of work includes work performed on its behalf and materials furnished in connection with the work.] In this instance, the work was performed by the subcontractor that supplied the defective concrete, Dominion Concrete. With respect to the Rip and Tear Exclusion, the court found it was not applicable because it was ambiguous; therefore, it must be read in favour of the insured. Relying on the same principle —
what Perell termed the “principle against repugnant exclusions” — the court found the Your Product Exclusion was not applicable. Perell found that if the Rip and Tear Exclusion, which was said to exclude any liability arising out of the repair or replacement of defective concrete, was applied, then it would leave a “gaping hole in the coverage.” It would therefore be “repugnant to the insurance coverage” and should not be enforced. THE YOUR PRODUCT EXCLUSION The court's analysis in respect of the Your Product Exclusion elaborates on the “principle against repugnant exclusions.” At the outset, Perell observed the Your Product Exclusion would have applied to oust some coverage. But this was altered by two points: • the interpretive principle that an exclusion to coverage should not be enforced when the result would be to defeat the main object of the contract or virtually nullify the coverage sought for anticipated risks; and • an exemption in this exclusion for an insured's product that is “real property.” The Your Product Exclusion provides that “the insurance does not apply to property damage to your product arising out of it or any part of it.” The phrase “your product” is defined, in part, to mean “any goods or products, other than real property, manufactured, sold, handled, distributed or disposed by: • you; • others trading under your name; or • a person or organization whose business or assets you have acquired.” Justice Perell considered the Alie decision and cited its finding that “when the insured’s own defective product becomes incorporated into the property of a third party, the damage is to the property of the third party.” In Alie, the insurers argued
that the defective concrete supplied by Bertrand consisted of the foundations themselves; this was rejected by the trial judge's finding that the damage to the foundations and other parts of the houses went beyond Bertrand’s own product and constituted damage to the property of others. In the present case, Ani-Wall's product was clearly the footings and foundations. Therefore, the court noted, the Your Product exclusionary clause would remove coverage for the cost of Ani-Wall's footings and foundations, but it would not remove coverage for the cost of the damage to the houses that went beyond the cost of the footings and foundations. However, the court continued, this was not the proper conclusion for two reasons. First, Perell found this result would “offend” the principle from Weston Ornamental Iron Works Ltd. v. Continental Insurance Co. In that 1981 decision, the court stated the exclusion clause in that case should not be interpreted “in a way which is repugnant to or inconsistent with the main purpose of the insurance coverage but so as to give effect to it.” Therefore, “even if the exemption clause were found to be clear and unambiguous, it should not be enforced by the courts when the result would be to defeat the main object of the contract or virtually nullify the coverage sought for protection from anticipated risks.” In addition, Perell cited the Ontario Court of Appeal’s 2002 decision in Zurich Insurance Co. v. 686234 Ontario Ltd., in which the court recited what was said in Weston Ornamental and then added that an exclusion clause will not be applied “where to apply it would be contrary to the reasonable expectations of the ordinary person as to the coverage purchased.” In applying this rationale to the facts in Ani-Wall, the court stated at Paragraph 70: “In the case at bar, where the costs of repairing or replacing the insured’s defec-
tive product (the footings and foundations) likely approaches [sic] the costs of repairing the third parties’ damaged property (the homes), applying the Work Product [sic, it appears the reference should be to Your Product] exclusion in the manner suggested by Axa Insurance would be contrary to the reasonable expectations of the ordinary person as to the coverage purchased. A review of the declaratory order sought ... by Axa Insurance reveals an enormous hole in the blanket of insurance coverage for property damage caused to third parties. Applying the principle from Weston Ornamental Iron Works, I would not apply the Your Product exclusion.” Perell stated at Paragraph 71 his second reason for finding the Your Product Exclusion did not apply. This reason, he added, was “mutually exclusive of the Weston Ornamental Iron Works factor.” According to Perell, the “real property” exemption contained within the definition of Your Product saves the coverage. The court noted that under this exemption, “when the insured’s product becomes part of the real property, then the Your Product Exclusion does not apply.
www.canadianunderwriter.ca • January 2008
Ani-Wall’s footings and foundations are real property, and the definition of ‘your product’ does not include real property.” The court observed that Canadian and American courts have “recognized that products incorporated into buildings are ‘real property’ and therefore do not fall within the definition of ‘your product.’” The court continued: “The exemption for ‘real property,’ in effect, redresses any problem of the insurance coverage being more apparent than real when the insured’s defective product is incorporated into the property of a third party.” COMMENT This decision has potentially far-reaching implications because of the effect it
has on what has become understood practice — although coverage might be available for the damage resulting from an insured’s defective product, the cost of repairing or replacing the product itself is not covered. In light of Ani-Wall, depending on the particular facts, the court has indicated that if the product is such that it is the foundation, so to speak, of the overall product, then the common understanding is no longer operative and the Your Product Exclusion will have no effect whatsoever. The consequences of this decision for both construction claims and other types of claims — for example, product liability cases — are obvious. The court’s decision demonstrates the potential for the further “whittling away” of what was left of the Your Product Exclusion. It was arguably unnecessary for the court to go as far as it did, given the finding made in respect of the “real property” exemption in the Your Product definition, which would have addressed the particular circumstances. This decision is under appeal and it will be interesting to see how the Court of Appeal addresses it.
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PPG/CertifiedFirst Network ‘Winning Through Performance’ Conference, November 2007, Toronto
Becoming a Preferred Collision Repair Shop
By David Gambrill nsurers are starting to work with a smaller number of collision repair centres, and so it’s imperative for repair shops to focus on collecting and supplying hard-core data and statistics that would justify them cracking the line-up of an insurer’s preferred shops. This was the central theme of the November 2007 PPG Canada/CertifiedFirst Network ‘Winning Through Performance’ conference held in Toronto. And yet, when push comes to shove, one insurer dropped a hint that performance may be only one among several factors that come into play when insurers deal with collision repair shops. Other factors, for example, could be loyalty and/or whether claims numbers support the number of shops participating in an insurer’s preferred networks. Certainly, collecting and analyzing performance data ranked as the highest priority for collision repair shop owners attending the PPG conference. This is especially important as insurers shrink the number of shops participating in their
I www.canadianunderwriter.ca • January 2008
Is it strictly performance-based, or are there other factors in becoming an insurer’s preferred collision repair shop? collision repair shop networks, noted Nancy Ng, the insurance services manager for PPG Canada Inc. Ng observed in a seminar that insurers such as Aviva, State Farm, Wawanesa, ING Canada and other insurers have all sought to shrink the number of shops with which they work. Insurers say one benefit of such a move is to develop closer relationships with the shops with which they do business. KNOWING YOUR NUMBERS Ng said insurers are increasingly interested in using numbers such as key performance indicators (KPIs) to justify their decisions. KPIs include data on, for example, how long it takes to repair a car, how many cars can be repaired within a specific time frame, how much it costs to undertake specific repairs, the labour hours required to repair a car, etc. “Insurance companies are now monitoring our performance numbers closely and on an ongoing basis,” Ng said at a conference seminar. “So knowing your
numbers, and being able to have a discussion with that insurance company [about those numbers] when they come in to chat with you, you should never have a curveball thrown at you. If they’re coming at you with numbers, you need to know enough about your business that you can have a discussion about those numbers, versus a deer-in-the-headlights experience.” George Avery, a claims consultant for State Farm, noted a small change in a repair shop’s numbers could mean a big difference for an insurer’s bottom line. Avery noted that State Farm, which spends US$8 billion each year on auto body repairs, has reduced its pool of auto repair facilities from 20,000 Service First repair facilities to 11,200. The move was made because the huge number of facilities had simply become too difficult to mange, he noted. Avery said even small numbers have huge financial implications for State Farm. He said if the collision facilities with which State Farm works were able to
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increase cycle times by even as little as 12 minutes a day, that would represent huge savings for the insurance company. Avery said the cost crunch for an insurer comes when policyholders rent cars while their own ones are in the shop being repaired. “Our average company rental time is 11 days,” Avery observed. “Companywide, if you do the math, the average cycle time, per day, is two hours a day. If we could improve the cycle time from two hours to 2.2 hours per day — I’m not talking about moving it from 2 to 7, but from two to 2.2 — that would move my rental average from 11 days to 10. Does anyone want to ask what one day of rental [costs] is worth to State Farm company-wide?
Given that insurers have been consolidating their pools of preferred shops into smaller numbers, “outperforming is key” for any shop to become part of an insurer’s stable of preferred shops, Heroux said. He added “the losers” will be “those that want to recreate the past,” in which insurers used to base the choice to work with a repair shop based mainly on proximity or a personal relationship with the shop’s principal. But in answering a question from a member of the audience, Heroux may have inadvertently raised some questions about the priority of performance numbers in the assessment of who belongs to its Rely Network.
your best opportunity. The more you know, the more intelligence you have on what’s happening in the insurance community around you, will help you to target the low-lying fruit and put your effort where you want to put it.” And yet, sometimes outperforming one’s competition in terms of key performance indicators still might not be enough for a repair shop to become an insurer’s preferred vendor, Heroux of ING suggested in a dialogue with a delegate in the audience. During a question period at the end of his speech, Heroux discussed ING’s move to go from 400 to 150 shops in its Rely Network. Heroux noted that the shops in the network were very loyal to the
“Insurance companies are now monitoring our performance numbers closely and on an ongoing basis. So knowing your numbers, and being able to have a discussion with that insurance company [about those numbers] when they come in to chat with you, you should never have a curveball thrown at you.” Nancy Ng, insurance services manager, PPG Canada Inc.
[US]$43 million is what one day of rental time is worth.”
www.canadianunderwriter.ca • January 2008
THE INSURER’S CONTEXT Canada is an extremely competitive environment for insurers, which makes performance numbers all the more important, observed Louis Heroux, the claims manager for ING Insurance Company of Canada. He noted in Canada the Top 5 property and casualty insurers represent 35% of the market, whereas in the banking sector, for example, the Top 5 banks control 90% of the market. As a result of the competition in Canada, Heroux noted, if insurers can’t change performance figures on the service side, they won’t be able to succeed. Like State Farm, ING has also moved towards working with fewer collision repair facilities. ING in 2006 spent close to Cdn$4.2 billion on claims-related repairs, said Heroux. The insurer’s Rely Network of collision centres, which started in Quebec in 1992, originally numbered 400; now it stands at 150 shops.
Leading up to Heroux’s speech, the conference mantra was all about producing quality data to quantify performance, and disclosing these numbers to insurers to demonstrate superior performance. For example, Ng and others suggested that by knowing not only your own numbers, but those of a competing repair centre, a repair centre could be more strategic about going after the business of a smaller number of insurers. “As a collision repair shop, you are either working hard to stay on a program or working hard to get onto a program,” Ng advised. “Our future goals [at PPG] in addressing that are to help you to understand your KPIs and your competitor’s ability to compete and win in your area… “You need to know what your competitors are doing. They [may be] working with certain insurance companies in a particular area because [the insurer has] ongoing, longtime relationships with two shops that are just around the corner. And if you spend the time and energy and effort on that company, that may not be
network and that “we don’t get a lot of shops leaving us.” Similarly, almost 8% of the shops that first started in ING’s Rely network are still there. ING demonstrates loyalty to the shops in its network, Heroux said, by working out any issues through mutual co-operation and discussion. “We don’t stop doing business with a lot of shops [in the Rely Network],” he noted. “If something doesn’t work, we discuss.” Heroux’s comments prompted a question from the audience, asking if there is much change or turnaround among the shops participating in the Rely Network. Heroux noted the purpose of reducing the number of shops was so that ING didn’t get into a situation in which the number of claims did not support the number of shops in the network. “Even if my shop outperforms one of the shops already in the network?” the questioner asked. Heroux hesitated before answering, “No.” He maintained the number of shops participating in the network “has to be about sustainable relationships.”
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On the Trail of Missing Policies Lawsuits can arise from an era in which cell phones didn’t exist and insurance policy documents were produced by typewriters. What happens when these papers go missing? By Julie A. Dabrusin, Associate, Rogers Partners LLP Note: The information contained in this article is not meant to represent or replace legal advice. t is no longer unusual to hear of lawsuits stemming from events that occurred long ago, when typewriters were in frequent use and no one had a cell phone. But such claims pose some thorny problems for insurers. For example, an individual or organization might state an insurer has historically provided coverage, but the insurer may not have any record of such a policy. If the policy cannot be located, the insurer needs to consider two separate issues: (a) Did the company issue a policy to this “insured”? (b) If it did issue a policy, what were the terms of coverage?
www.canadianunderwriter.ca • January 2008
DID THE INSURER ISSUE A POLICY? In the event no one has a copy of the policy, the next step is to look
for any information from other sources. The investigation requires the parties to be insurance sleuths following historical clues that may or may not reveal evidence of coverage. A starter’s list of evidence that can assist in determining whether a policy was issued to the “insured” includes: • Information from the insurance broker’s file. This would include, for example, cover letters stating that a policy has been issued; memoranda to the insurer confirming premiums and/or risk factors; slips confirming a premium had been paid and letters or applications to other insurers outlining the insurance history for the individual/organization; • Evidence from members of the insur-
ance brokerage about their recollection of the coverage secured for the insured. If, for example, the “insured” was a large account for the brokerage, and there was a history of coverage with one insurer, some individuals might be able to remember some details of historical coverage; • Minutes from the board of directors of the insured; • Budgets or accounts at the insurance company indicating payments of the premiums; • Any letters between the insured and the insurer (or through the broker); and • Claims files held by the insurer regarding claims made closer to the time of the policy period. The onus is on the insured to establish
the existence of the policy (and its terms), but an insurer should be prepared to answer questions as to the efforts made to locate a missing policy if the matter ever ends up in court. WHAT WERE THE COVERAGE TERMS? Even if everyone agrees that an insurer issued a policy for the relevant time, the terms of coverage might not be known. A court will not “write” a policy for the parties. If the terms cannot be established, a person or organization could be left with no coverage at all. The onus to establish the terms is on the insured. The insurer has a duty of good faith to attempt to locate information that assists in determining the terms of coverage for a policy it issued. The duty of good faith does not change the onus on the insured; nevertheless, the insurer must be ready to establish it has made a reasonable effort to assist its insured in the search for the missing policy. Locating policies issued within the same time frame to similar institutions might be helpful in establishing the terms of coverage. But if there is any evidence
www.canadianunderwriter.ca • January 2008
suggesting the insured was issued a manuscript policy, then policies issued to other institutions will be of limited (if any) value. Many of the sources reviewed to establish the existence of the initial policy are also helpful in determining terms of coverage. Brokerage files, brokers or underwriters who worked at the relevant period of time on the account, historical claims files and the insured’s own business records can all help to illuminate the coverage trail. THE INVESTIGATION IS AFOOT! A case involving a missing policy brings out the opportunity for everyone involved to be Miss Marple or Sherlock Holmes. We take out our magnifying glasses and search for clues in all available records. Unfortunately, even with tremendous ingenuity, the trail may turn cold, leaving everyone in a state of frustration. Despite this possibility, and keeping in mind some of the major sources of information available to crack this type of case, the insurer can fulfill its duty of good faith by committing itself to a complete and
thorough search. Given the potential difficulties in establishing historical coverage, insureds may want to consider holding onto policies rather than sending them to the garbage or shredder as we might with credit card invoices and bank statements. Even better than properly investigating missing policies is to eliminate the need to do an investigation at all.
Mobile Claims Handling Resolving claims where people live, as well as empathic adjusters, go a long way towards retaining policyholders
One of Royal & SunAlliance's claims response vehicles arrived from the manufacturer just as the remnants of Hurricane Noel were hitting the East Coast. Claims adjuster Chris Tuma (right) offered to drive the vehicle from Toronto to the Maritimes to get into the hardest-hit communities right away.
By Irene Bianchi, Vice President, Claims & Corporate Services, Royal & SunAlliance
www.canadianunderwriter.ca • January 2008
s insurers compete for market share, they are looking for innovative products and services that differentiate them from competitors. We know there is a direct correlation between claims service and retention, so focusing on the customer experience is one way that insurers can differentiate themselves. Research tells us 88% of customers cite the service they received after they filed a claim as the sole reason for renewing their policies with a particular insurer. That’s a powerful metric that led to a greater focus on the customer experience. In response, Royal & SunAlliance unveiled in June 2007 a Claims Response Vehicle — a mobile claims centre that travels to communities hit by severe weather to help policyholders deal with the aftermath. The mobile unit has been introduced along with a training program to help claims teams exceed customer expectations.
The claims response vehicles are 2007 Dodge Sprint vans set up with wireless offices — including claims estimating and processing technology, a workstation, computer, Internet connectivity, onboard databases, photocopier, fax machine, printer, GPS navigation and tracking capabilities. These vehicles allow the claims adjusters to be in the clients’ communities when they are needed most; they also allow adjusters to start processing claims right away, so that policyholders can get on with their lives. Royal & SunAlliance has employed claims response vehicles in the West, Ontario and Atlantic Canada. The claims response vehicle made its first outing in Ontario in December 2007, when a severe fire destroyed a portion of Barrie’s downtown. A positive claims experience drives customer loyalty, and customer research can measure exactly what insurers can do to maximize their impact. Survey results conducted following the introduction of the claims cruisers showed that policyholders believed their claims were handled appropriately, and that they were
happy with the service they received. But what they really wanted was an empathetic claims adjuster who demonstrated that he or she really cared about the needs of the policyholder. TRAINING EMPATHY In many instances, policyholders had just gone through a traumatic life event, and they expected insurers to help them through it. As a result of this feedback, at least one insurer has revisited its customer service philosophy to ensure it is giving customers what they want and need. Royal & SunAlliance, for example, has introduced a program that emphasizes five key tenants of claims handling: explaining the process, showing empathy, delivering on promises, ensuring prompt and equitable settlements, and meeting and exceeding customer expectations. By providing customers with better claims service and working to exceed their expectations, insurers are proving the value of choosing an insurance broker and company that will be there when they need us the most.
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By May Gibillini, President and CEO, InHealth Solutions Inc. he insurance industry as a whole has historically used process optimization to improve performance. Generally, this strategy has served it well in its effort to cut costs and improve customer satisfaction. The typical approach has been to locate a source of high costs or customer dissatisfaction, measure the elements that contribute to the problem and then implement corrective measures such as automating, in whole or part, a formerly manual process. This type of process optimization has helped companies incrementally improve performance across many areas of operation. It has also enabled businesses to endure the demands of a competitive environment. But for many companies, it turns into an endless cycle of process re-optimization in order to remain competitive. As competitors re-engineer processes and become more efficient, organizations are consistently forced to re-examine and update their approach in order to keep up. What has been the end result of process optimization, when discussed in the context of accident benefit (AB) claims? Process optimization has not resulted in sufficient innovation in accident benefit (AB) business models in recent years. This has resulted in insurers struggling to squeeze every penny of cost possible out of key business processes in a seemingly endless quest for optimized processes and lower costs.
Beyond Process Optimization
www.canadianunderwriter.ca • January 2008
THE AB CHALLENGE Legislative changes have created unprecedented challenges for AB claims
Process optimization has not resulted in sufficient innovation in accident benefit (AB) business models in recent years. teams in Alberta, New Brunswick and Ontario. In Ontario, no-fault limits are the highest; forward-thinking regulatory changes since 2003 that have tried to balance cost effectiveness and efficiency remain challenging. Even when claim frequencies were at their lowest, claim costs continued to rise. These costs are now being compounded by the cost of new claim growth. Such growth is driven by two factors: an increase in frequency, and an increase in non-traditional coverages such as attendant care. The precepts of efficiency and costeffectiveness are impeded with broader obstacles. AB claims systems are challenged by application form-driven access to benefits, resulting in form proliferation
that overwhelms claims teams. Forms for both new claims and aging claims are prioritized by adjudication teams based on regulated response times. A typical AB claim file today comprises of a multitude of decision points, created by claim forms. These key decision points impact claim timelines, costs and ultimately customer service. For example, claim forms requesting assessment and treatment are key cost drivers. Claim teams, struggling to keep up with the glut of paperwork and associated decision points, have precious little time available to engage in case management activities that are critical to achieving outcome consistency, customer satisfaction and cost control objectives. As a result, insurers are still facing critical obstacles to efficient claims management.
TOP 5 OBSTACLE Response Timelines Timelines continue to present opportunities for AB claim teams. Claim form proliferation has resulted in an increase in mail volume, creating further bottlenecks in managing response times for adjusters. The problem is two-fold. First, missed deadlines cause most forms to be ‘deemed approved’ and have compliance and cost consequences. Second, when claims teams lose the opportunity to validate information contained within the request and verify needs, this often perpetuates the longevity of the claim. Form Validation These key decision points carry liability when either the timeline is missed or an opportunity to validate need is lost. Further, time constraints foster “approve-or-deny” practices, affecting the quality of case management and restricting the time available to engage in validation activity. Workflow Claim teams’ reliance on third-party opinions to validate the need for the goods and services adds further cost to the
process and eats up precious time allocated to meet the regulatory time requirements. Increased expenditures in this area indicate that shifting the decision-making responsibility is a favoured method of validation. Leveraging third parties creates new challenges surrounding timing of the opinions, interpretation of the clinical findings and applying the opinions to case management overall. Forms Tracking Tracking multiple forms per claim is onerous in a paper-based environment. Claim teams need to see history of forms,
www.canadianunderwriter.ca â€˘ January 2008
approval periods, follow-up requirements and changes from form to form. Visibility Visibility into the type and number of forms, the complexity of the associated impairment and goods and service requested on a form-by-form basis is not readily available. This information is contained in paper-based files presenting audit and management challenges. With trends emerging at a rapid rate, visibility into form submissions and performance would assist greatly in managing workflow to effect change and provide claims team
with decision support. OVERCOMING OBSTACLES Collective industry initiatives such as the central processing agency [HCAI] will bring claim forms to claim teams quicker and in an electronic format, helping to streamline data entry. However, while this is a positive step forward, the critical element of decision-making will not be supported. Organizations have worked to standardize business processes around forms-handling; while HCAI may advance these efforts, a different approach is required. Insurers now need to take the next step and look at the implementation of workflow that is specific to the abundant decision points within claims forms. Decision support systems that analyze and manage form and case information are required to alleviate the burden on adjusters. These systems provide intelligent, rules-based analysis and workflowsurrounding forms to help remove obstacles to efficient accident benefit claims management. Consider a decision support system that provides straightthrough processing on a form-by-form basis to alleviate administrative burdens on simple cases. These systems go beyond automating manual processes to facilitate new and innovative business models in AB claims. The ultimate goal of any claim team is to deliver on customer service promises, while also providing consistent outcome decisions and managing costs. The addition of a knowledge base that helps teams capture, retain and recall experience provides not only a wealth of information and insight for management across regions and teams, but also gives adjusters invaluable support. Adjusters are able to act on complex decision points quickly and consistently, validating their decisions against historical knowledge. The aforementioned obstacles can be overcome with decision support systems that include a knowledge base providing technology-enabled relief to decisionmaking in order to gain speed validating claim forms. Adding workflow to assist the claims team in making approval decisions is a key component of such systems. The time is now to embrace innovation beyond basic process optimization and create new ways for claims teams to manage accident benefit claims.
Burning Issue Are Canada’s insurers prepared for a catastrophic wildland fire?
By Paul Kovacs, Founder, Executive Director, Institute for Catastrophic Loss Reduction he expert community has been warning with growing alarm of the rising risk Canada will experience large, intense wildland fires. Are Canadians and Canada’s insurers prepared for a catastrophic wildland fire?
www.canadianunderwriter.ca • January 2008
THE WILDFIRE THREAT Fire is a natural process essential to maintain healthy forests and wildland ecosystems. It can also be a terrifying peril that threatens loss of life and destruction of property. Sustainable management of our lands to balance the benefits and the consequences of fire is a daunting but vital challenge. Canada and the state of California have similar populations and property values. We have also shared an approach to wildland fire management that until recently had contributed to relatively little loss of life and only moderate property damage. Indeed, the vast majority of fires — about 97% in Canada — are contained to less than 200 hectares; the largest insured loss to date from a Canadian wildland fire was Cdn$200 million from the 2003 Kelowna wildfire. Over the past five years, however, three California fires have caused more than US$1 billion each in property damage, evacuations of more than 500,000 people and an alarming loss of life (including firefighters). Decades with little loss of life and minimal property damage led to excessive confidence that a catastrophic wildland fire would not occur. The recent large losses are an important reminder to all stakeholders, including insurers, about
the risk of catastrophic wildland fires. The 2007 California fires burned 200,000 hectares. The area burned in Canada each year fluctuates between 300,000 and 7.5 million hectares. Fires exceeding 1 million hectares have been recorded, primarily in the remote northern regions of western and central Canada. The 1825 fire in Miramichi, New Brunswick destroyed an area more than eight times greater than the 2007 California fires. The area burned in Canada has been increasing. As in California, Australia and elsewhere, the increase in area burned in
Canada reflects a build-up in fuels and a shift to older forests due to decades of fire suppression and fire exclusion near populated areas. Success in suppressing a fire leaves fuel for more and larger potential future fires. Climate change is bringing warmer and drier conditions; initial research indicates the area burned in Canada will likely double by 2040. Moreover, the health of Canada’s forests is affected by insect infestations — such as the mountain pine beetle and spruce budworm — that in turn are affected by the weather and further add to the risk of large, intense fires.
The insurance industry has a proud tradition of promoting urban fire safety, including fire brigades and enhanced building codes. Yet insurers have largely been absent to date in promoting wildland fire loss reduction.
Moreover, climate change has brought more severe wind events that have taken down many trees in British Columbia, Ontario’s cottage country, Nova Scotia and elsewhere, providing potential fuel for large, intense wildfires. Indeed, the Muskoka region of Ontario may present the largest current wildland fire threat in Canada, given the increase in property values at risk, lack of fire awareness and build-up of fuels. Wildland fire on average affects 20 communities and 70,000 people each year in Canada. In 2003, 334 homes and 10 businesses were destroyed in British Columbia, and more than 45,000 people were evacuated. The potential impact in Canada, as has been demonstrated in
California, is much larger and growing rapidly. Massive investments have been made in recreational properties in Ontario and Quebec. Permanent and seasonal residences in British Columbia and Alberta have been increasing dramatically. Also aboriginal communities are growing rapidly. The property values at risk are large and rising. Annual fire suppression costs in Canada are also rising. They currently average about Cdn$500 million, and in some years have exceeded Cdn$1 billion. The provincial and territorial governments own the vast majority of forests in Canada. British Columbia, Alberta, Ontario and Quebec account for 80% of fire management spending in Canada.
Current fire suppression capacity, however, is eroding due to aging aircraft and equipment, provincial and territorial budget constraints and the retirement of experienced staff. WHAT INSURERS CAN DO More fires and less suppression capacity means greater risk of large-scale, intense wildland fires. This is a crucial time for Canada’s insurers to reassess management of their wildland fire exposure. Below are three ideas to consider. First and foremost, the job of insurers is to conduct the business of insurance. Measure the risk of loss, charge a premium that reflects the risk and pay claims when they arise. One important lesson
2007 - 2008 CAIW EXECUTIVE & DIRECTORS FRONT ROW, LEFT TO RIGHT: Michele Malo - Past President, Debby Johnson - First Vice President, Linda Lacroix - President, Joyce Chalanchuk - Second Vice President, Gloria Balls - Secretary, Lori Duclos - Treasurer BACK ROW, LEFT TO RIGHT: Linda Thompson, Jody McMillan, Christina Masters, Tara Lynn Talsma, Tracy Fata, Madeleine Gravel
See you June 11-15, 2008 in Brandon, Manitoba.
www.canadianunderwriter.ca • January 2008
CAIW would like to say a very special THANK YOU to the Sponsors & Donors of our 2007 Convention held June 6-10, 2007 in Hamilton Ontario. Without your continued support, our events would not be successful. AMI Autoglas Maintenance Inc. Montreal Insurance Womens Association G Whitehall G Belron Canada G Royal Sun Alliance G Munich Reinsurance Company of Canada G Toronto Insurance Womens Association G ING Canada G Steamatic Canada G Winmar G London Insurance Professionals Association G G
Calgary Association of Insurance Professionals G Al Care Restorations G AXA Insurance Company G Encon G Nova Scotia Insurance Womens Association G Insurance Brokers of Hamilton G Swiss Reinsurance Company Canada G Economical Insurance Company G Pilot Insurance Company G Portage Mutual Brant Mutual G
Insurance Women’s Association of Western Manitoba G Servicemaster G Discount Car & Truck Rental G Manitoba Association of Insurance Professionals G AVIVA Insurance Company G Zellen’s Autobody Mall G Lombard G Insurance Institute of Canada G Kingsway/ York Fire G CAFO G Boiler Inspection Insurance Co. of Canada G
PAL Insurance Brokers Canada Insurance Brokers Association of Ontario G Dominion Insurance Company G Hamilton District Insurance Association G Statefarm G Young Drivers of Canada G Carstar G Ford and Chamber Insurance Brokers G G
ment practices need to change. These efforts have been successful over several decades in minimizing loss of life and destruction of property, but the losses in Kelowna and in California warn of a growing risk across Canada. Property owners, community leaders and other stakeholders need to become more involved in wildland fire management through the use of fire-resistant roofing, maintenance of a defensible space around each building and community regulations to control development. We need healthy forests supported by prescribed burns, thinning and proactive management of
insect infestations. We need firefighters trained and equipped to suppress fires that threaten our communities. And the insurance industry needs to actively manage its wildland fire exposure and work with other stakeholders to promote loss control. Community leaders, policyholders and fire management professionals would welcome the active involvement of the insurance industry in the management of wildland fire risk. Together, we can effectively and sustainably manage the risk of a catastrophic wildland fire in Canada.
Identifying Investigating Resolving ... for over two decades
53 LOSS ADJUSTERS
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www.canadianunderwriter.ca • January 2008
from the recent large California wildland fires is this: the absence of wildland fire loss claims in the past does not mean that there is no risk of future fire losses. Canada’s insurers need to invest in models and other tools to provide an accurate measure of the risk. This information should provide support for decisions about the appropriateness of their reinsurance coverage; pricing, deductibles, replacement values and other elements of coverage. Second, there is great scope for insurers to participate proactively in loss prevention efforts, ideally in partnership with public agencies and other stakeholders. The insurance industry has a proud tradition of promoting urban fire safety, including fire brigades and enhanced building codes, yet insurers have largely been absent to date in promoting wildland fire loss reduction. Most insurance policyholders do not appear to be aware of the growing risk of fire loss. As a result, some are making dangerous decisions about location and maintenance of buildings that further increase the risk. Programs like FireSmart detail specific actions that property owners and communities can take to best manage their exposure to wildland fire. Insurers should be more active in promoting the sharing of this knowledge; also, they should seek to provide incentives to policyholders and communities that take action. In particular, policyholders with increased fire risk should be charged more for insurance coverage, while policyholders who proactively work to reduce their risk of loss should pay less. Third, insurers should actively support policy initiatives to promote modern wildland fire management. In particular, insurers should support the wildland fire strategy developed by the Canadian Council of Forest Ministers. The strategy provides a bold vision to make Canada’s approach to wildland fire management “among the most progressive in the world.” The strategy is built around three core elements: • resilient communities and an empowered public; • healthy and productive forest ecosystems; and • modern business practices. Perhaps the greatest challenge is accepting that current wildland fire manage-
KPMG's 16th Annual Insurance Issues Conference
Wishing for Basel 2
Canada’s property and casualty insurance industry wants to adopt Basel 2 capital regime standards similar to those recently adopted by the nation’s banks — but be careful what you wish for, OSFI says
54 www.canadianunderwriter.ca • January 2008
By David Gambrill anadian property and casualty insurers enthusiastically watched banks implement Basel 2 capital solvency requirements on Nov. 1, 2007. But even though they might envy the banking industry’s new capital standards, insurers shouldn’t underestimate the amount of work involved in establishing a form of Basel 2 for the insurance industry, Canada’s Superintendent of Financial Institutions, Julie Dickson, cautions. “Basel 2 is a journey, it is not like Y2K,” Dickson told insurance industry representatives attending KPMG's 16th Annual Insurance Issues Conference.“With Y2K, as you know, we all knew a few seconds after
midnight whether we had succeeded or not. “That’s not the case with Basel 2. We are only going to know how successful we’ve been as risk management practices and processes become rigid, as formally expressed testing improves, as more data is generated and as decisions about risk management are being made.” In fact, the journey may take as long as five years before the P&C industry is ready to initiate the implementation phase, Dickson guessed. Implemented in 1988, Basel 1 was designed to strengthen the soundness and stability of the international banking system as a result of the higher capital ratios
it required. Basel 2 is a revision of the existing capital framework, aiming to make it more risk-sensitive and representative of modern banks’ risk management practices. Dickson was clearly impressed by the Canadian property and casualty industry’s desire to move towards its own version of a Basel 2-style framework. “I like to tell the banking industry, when they start to complain: ‘Well, the insurance companies seem to think this is a good idea.’” But the road to Basel 2 “is not an easy road to travel,” she added. Dickson listed 10 obstacles Canadian
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banks faced in implementing the Basel 2 framework last November. “You [insurers] will have exactly the same challenges,” she predicted.
Property and casualty insurers are falling into the same trap, Dickson said. She said she has heard Canadian insurers say in informal discussions that European insurers are “already there” when it comes to implementing Basel 2 forms of capital models. “There is a major overstatement,” Dickson said. “They have really just started doing dynamic stress capital testing.” In fact, the demand of incorporating risk management analyses into capital testing required major “organizational and cultural shifts” and is “certainly not a slam dunk,” Dickson said. The associated
OBSTACLES Perhaps the most glaring difficulty for the banks was their own overconfidence, Dickson said. She said banks worldwide initially said “adopting Basel 2 was not a big deal, not a problem,” and therefore seriously underestimated the amount of time it would take in order to comply with the new risk management requirements incorporated into the Basel 2 framework.
C hoarn g e f C h a n g e 2008 CHANGE the statistics on Cancer by collecting SPARE CHANGE for Cancer Research!
“Change for Change Challenge 2008” Permanent "Coin Collection Boxes" are a convenient and attractive way to collect change and are available for $20 each.
www.canadianunderwriter.ca • January 2008
WICC Ontario Chapter encourages you, along with your associates and colleagues, to participate in this worthwhile cause. The smallest contributions collectively make a significant difference. Over the past 10 years the insurance industry and its associates' donations have totaled over $2.4 million for cancer research. This year, with your help, the industry can make a difference with hopes of raising over $20,000 from this challenge, for cancer research. The Change for Change Challenge is easy! 1. Purchase your WICC coin collection box for $20 and display in a prominent area. Order your collection box today! Complimentary Shipping Sponsored By ICS Courier 2. Designate WICC ambassador(s) who will help determine your fundraising strategy and fundraising ideas, co-ordinate campaign communications throughout your company and delivery of funds to WICC.
3. Determine Fund Raising Strategy and goal. Consider having a multi-office, department or branch challenge to see who can raise the most money! 4. Brainstorm possible fundraising ideas. Some success stories raised funds from these activities: G
Displaying the coin box in a high-traffic area, and encouraging everyone to contribute spare change from purses, pockets, desk drawers and penny jars. G Collection from dress-down days G BBQ events, bake sales, or similar G 50/50 draws G Proceeds from a hockey or golf pool, or other similar sporting pool G Charge a nominal amount for guests to participate in a Beat the Pro or Beat the Boss Challenge (in a sporting or team event) G Purchase a popular item and sell raffle tickets, with the proceeds to WICC.
5. On a monthly or quarterly basis, the WICC ambassador will co-ordinate collecting funds raised from all the offices and report your contribution. Payment can be made by credit card in a secure environment online, or submit a cheque or money order for the total amount collected.
WICC will be recognizing all participating companies at our annual Dinner Gala.
Order Your Coin Box Today! Online at wicc.ca! visit wicc.ca and click the Change for Chance banner or go directly to: www.wicc.ca/changeforchange.asp
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Contact WICC at email@example.com if you have any questions.
change management required “took a lot of time and a lot of resources, and the scale of implementation was much bigger than anyone had anticipated.” And banks didn’t just underestimate the impact of the cultural shift, added Dickson. She noted bank executives pinned the costs of implementing Basel 2 in a certain range, but the costs were in fact much higher than originally anticipated, primarily because risk management systems had to be integrated with financial systems. Data integrity proved to be a challenge in the implementation of Basel 2. Legacy systems are a real issue when trying to do a Basel 2 type of approach, Dickson said, because you need “a sufficient quantity and quality” of data “and that’s in a form that can be easily used and reconciled. You need that in order to run your models and to support your assessments of risk and use of capital, so legacy systems, with potential overlaps and duplications in data sources, can make that extremely difficult.” In addition, large Canadian banks are international and operate in many different countries, creating a huge challenge for Solvency II-style approaches, Dickson noted. “Adopting advanced capital approaches in countries with far-flung material operations is a huge challenge,” Dickson observed. And the problem of consolidating credible data across jurisdictions is magnified when regulators in different jurisdictions are at different states of readiness when it comes to implementing Basel 2. Once the data is compiled, there is always the problem of meeting the Basel 2 model’s capital use test. “The use test is extremely difficult to meet,” Dickson said. “What I mean by the use test is that [a company] actually has to use the results of its models in its decision-making. It’s like eating while you cook.” Once the models are created, there is a challenge in establishing what Basel 2 requires as an “independent review process for the models” in the context of the bank and insurance sectors, Dickson said. For the banks, the issue “boiled down to what constituted an independent group within the bank — what skills would be sufficient, what scope would be necessary,” she noted. Moreover, the role of the internal audit wasn’t always clear.” For example, who
“Basel requires that your senior management and board know what the process is all about. If it’s considered to be the domain of rocket scientists safely ensconced in the bowels of the institution, you will not get a passing grade.” - Julie Dickson, Superintendent of Financial Institutions
should do the audit? Should it be done internally, or by external auditors? How important is data accuracy in the minds of both internal and external auditors?
why your assessment of risk for a commoditized product is different from the estimates of your competitors,” Dickson cautioned.
57 www.canadianunderwriter.ca • January 2008
COMMUNICATIONS Dickson gave three additional matters for insurers to consider in their quest to see a form of Basel 2 introduced into the insurance industry; all of them relate to communications. For example, insurers need to be clear about the messages they are relaying to the companies’ executive committees and policyholders. These messages are likely to be mixed so long as insurers remain confused as to the real purpose of implementing Basel 2. “There is a confusion about goals,” Dickson noted. “Some say the goal of Basel 2 is capital reduction, while others think it is about compliance. Still others think it’s about internal use and controls.” This needs to be worked out, Dickson noted, because Basel 2 calls on better communications with senior executives — and improved disclosure to the public — about how the company is arriving at its financial risk estimates and figures. “Explaining to senior management and directors what you are doing is not easy,” Dickson noted. “Basel requires that your senior management and board know what the process is all about. If it’s considered to be the domain of rocket scientists safely ensconced in the bowels of the institution, you will not get a passing grade.” Certainly explanations the board doesn’t understand will not pass muster with the public. One speaker at the KPMG conference noted a European insurer company implementing Basel 2 had an annual report so thick, the company had to make a special arrangement with the postal carriers’ union in order to address the carriers’ workplace safety concerns about having to lug the heavy reports to the mailboxes of shareholders.
And would the policyholder be able to read, much less digest and understand, such a thorough disclosure? “Do not underestimate the challenge of explaining
North American Insurance Conference, November 2007, Florida
Road to IFRS Canadian insurers should heed lessons European insurers have learned in the implementation of IFRS — especially the need to leave enough time to rebuild data sets. By Vanessa Mariga anadian insurers need to keep their eyes on the clock as the 2011 deadline for Canada to adopt International Financial Reporting Standards (IFRS) quickly approaches. Neil Parkinson, the national director of KPMG’s insurance industry practice, told delegates of the North American Insurance Conference in Florida that Canadian insurers preparing for IFRS might learn from the experience of European insurers. In particular, he observed that European insurers took two to three more years than initially planned to rebuild data models in order to comply with the IFRS standards.
www.canadianunderwriter.ca • January 2008
WHEELS BEGIN TO TURN IFRS is a single set of globally-accepted, high-quality accounting standards issued by the U.K.-based International Accounting Standards Board. What sets IFRS apart is its principlesbased set of standards, as opposed to the rules-based standards employed in both the U.S. and Canadian GAAP systems. However, the Canadian Accounting Standards Board in 2005 announced a directional change, favouring the use of IFRS standards over the use of U.S. GAAP standards. Canada established a fixed deadline of 2011 to adopt IFRS standards, and although the U.S. Federal Accounting Standards Board has announced an “intention to converge” with IFRS no deadline has been set. Parkinson suggest-
ed that if the U.S. were to jump on the still trying to build systems after using IFRS bandwagon officially, that could spreadsheets and similar stopgap measslow down and delay Canada’s progress to ures to get through implementation.” implementation by possibly a year or two. For Canadian insurers, the lesson The U.S. Securities and learned is to get started Exchange Commission (SEC) preparing for IFRS now. has issued statements indicating Parkinson said by the it is leaning towards convermiddle of this year, gence with the IFRS method, Canadian insurers should Parkinson said. These statealready have assessed ments include: training and systems • a message that a single set of needs, as well as the globally accepted accounting impact on internal control standards is desirable; certifications and “planned a Neil Parkinson • a proposal to eliminate the conversion path.” requirement to reconcile to U.S. GAAP for By 2009, a project team should be foreign IFRS filers; and mobilized, training and communications • consideration of allowing domestic plans developed, and the required S.E.C. registrants to use IFRS. resources identified, quantified and secured, Parkinson said. Between 2009 and 2010, these plans and changes should LESSONS LEARNED be put in place. Insurers should be reneFROM EUROPE When financial results began to be gotiating agreements and modifying issued on an IFRS basis in Europe, ana- internal structures, converting budgeted lysts liked the additional disclosures results and building and upgrading the required by IFRS, Parkinson noted. But in necessary tools, Parkinson said. Once some instances, since the IFRS only these steps are completed, the insurer still requires restatement of prior-year figures, has the final year before the 2011 deadline European insurers had to rebuild their to test the conversion and make any necmodels; this has resulted in losing some essary tweaks and adjustments. “This is the single biggest change ever compatibility with their historic data. In many cases, Parkinson said, European to financial reporting, so don’t underestifirms that moved to the new system “are mate the scale of the undertaking,” Parkinson cautioned. “It affects educators, preparers, auditors and the investment community.”
WICC Ontario – 12th Annual Gala Dinner
Tuesday March 25th, 2008 – Toronto Westin Harbour Castle Conference Centre Metropolitan Grand Ballroom 5:00 p.m. – Cocktails and Silent Auction 6:30 p.m. – Dinner and Entertainment There’s no masking our excitement! Tickets $180 each $1,800 for a table seating 10 guests. Tax receipts in the amount of $80 will be issued per ticket.
Event sells out early. Ticket registration ONLY available on-line at www.wicc.ca. Payment terms: Cheque, VISA, MasterCard, American Express. E-Tickets will be sent to the Registrant approximately 2-3 weeks prior to the event.
Come experience our exotic carnivale! Design donated by Informco
Lloyd’s 75th Anniversary Party in Canada
Birthday W shes Lloyd’s of London celebrated its 75th anniversary in Canada with a Cdn$100,000 donation to a global hazards research program and a call for a private-public terrorism backstop in Canada By David Gambrill
loyd’s of London in November 2007 celebrated 75 years in Canada with a call for a publicprivate risk-sharing pool to help backstop business losses arising from a terrorist attack. In addition, Lloyd’s announced at its 75th Anniversary Party in Canada that it would be donating Cdn$100,000 to the Institute for Catastrophic Loss Reduction (ICLR). The money will be used to establish a new program designed to advance scientific, international climate change research. In honour of Lloyd’s 75th birthday in Canada, Lloyd’s chairman Lord Peter Levene flew to Canada to deliver an address to the Empire Club in Toronto entitled “Terrorism and Political Risk— A Key Challenge for Global Business?” In it, Levene lamented that, unlike markets in Australia, France, Germany, South Africa, Spain and the United States, Canada is “noticeably alone” in not having a terrorism pool in place. “Long-term threats require wellthought-out, long-term solutions,” said Nicholas Armour, the British ConsulGeneral in Toronto, reading the speech for Levene. [Levene had to quit in mid-
www.canadianunderwriter.ca • January 2008
speech due to a case Canada’s borders that support an of laryngitis that cut extremist jihadi ideology,” Levene said. his trip to Canada On a more optimistic note, Lloyd’s short.] capped its celebration with an “From an insurance announcement in support of research perspective, this often means on climate change. Wendy Baker, presihaving a formal public-private partner- dent of Lloyd’s America Inc., announced ship in place to provide businesses with Lloyd’s was making a Cdn$100,000 coverage against the risk of terrorist donation to the Canadian Institute attacks. Britain has had for Catastrophic Loss such a partnership in Reduction. place for decades, where ICLR’s executive the commercial insurdirector, Paul Kovacs, ance market particiand his fellow commitpates in a pool scheme tee members on the with the government Intergovernmental acting as the ultimate Panel on Climate reinsurer if the loss is Change (IPCC) recentvery severe.” ly received a Nobel And lest Canadians Prize for their work think they are safe from in climate change any threat of terrorist research. In accepting attacks, Levene cited the donation on behalf “intelligence” saying of the ICLR, Kovacs Lord Peter Levene, that Canada’s role has said the money would Lloyd’s of London changed from that of a be used to establish a hub for fundraising and planning new Global Hazard Research Program. attacks outside the nation, to a credible He said the program would produce target in its own right. “We are told that, scientific research on hazards prevenby this year, there were thought to be tion to the international stage through some 60 groups operating within the IPCC.
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M A R K E T WAT C H
in the face and stole the keys to the truck. Coburn drove away, but Henwood was somehow able to hop into the passenger side of the vehicle while it was moving. According to Henwood, Coburn was drunk and would not listen to Henwood’s attempts to tell him to stop the vehicle and slow down. The vehicle left the road, crashed into a field and Henwood was injured. The issue is who is vicariously liable for Henwood’s injuries. A motions
www.canadianunderwriter.ca • January 2008
judge applied Section 192(2) of the Insurance Act, which states: “the owner of a motor vehicle is liable for loss or damage sustained by any person by reason of negligence in the operation of the vehicle unless the motor vehicle . . . was without the owner’s consent in the possession of some person other than the owner or the owner’s chauffeur.” The motions judge found as fact that the owner was liable because the vehicle was in possession of the operator with the owner’s consent and dismissed the
owner’s application for summary judgment. However, the Court of Appeal judge found that the motion judge “exceeded his role under Rule 20 by granting summary judgment when there were material facts to dispute. In my view, it is no answer to say that Henwood invited the motion judge to make findings of fact.” The judge set aside the order of motion that Henwood was in possession and remitted the matter to trial. ■
Canadian Market Auto thieves targeting high-end vehicles he Insurance Bureau of Canada (IBC) says its investigations over the past few years illustrate an alarming trend in Canada of organized auto theft rings targeting highend or desirable vehicles with the intention of exporting them overseas or chopping them for parts. It made this observation during the release of its list of the most frequently stolen vehicles in 2007. Luxury vehicles appear prominently in the IBC’s 2007 Top 30 list of stolen vehicles. For example, three 2001 Audi Quattro models appear in the list. “These models have moved up an average of 26 spots from their positions in the 2006 list, showing that the relative demand for these high-end, desirable models is increasing,” said Rick Dubin, vice-president of investigations at IBC.
Theft of newer, four-wheel drive vehicles is also increasing, the IBC notes. According to the IBC, the Top 10 stolen vehicles in Canada in 2007 were: • 1999 Honda Civic SiR 2-door • 2000 Honda Civic Sir 2-door • 2004 Subaru Impreza WRX/WRX STi 4-door AWD • 1999 Acura Integra 2-door • 1994 Dodge/Plymouth Grand Caravan/Voyager • 1994 Dodge/Plymouth Grand Caravan/Voyager AWD • 1994 Dodge/Plymouth Caravan/Voyager • 1998 Acura Integra 2-door • 2000 Audi TT Quattro 2-door coupe • 1994 Dodge/Plymouth Shadow/Sundance 2-door hatchback ■
Transport Canada proposes to relax rules for importing U.S. cars without immobilizers ransport Canada is proposing an amendment to the Motor Vehicle Safety Regulations (MVSR) to make it easier for Canadians to import vehicles from the United States that are either already equipped with an electronic immobilization system “or can be fitted with one.” As of Sept. 1, 2007, motor vehicle safety regulations require that all new cars, vans, light trucks and SUVs sold in Canada or imported into Canada come equipped with electronic, anti-theft immobilizers. “Canada requires these systems in
response to the public’s desire to reduce the trend of thefts for convenience and to protect innocent parties from serious accidents, injury and death,” the government announced. Currently, the government does not register cars made in the United States that do not meet Canadian standards for anti-theft immobilizers. But the government said its new proposal would “offer more flexibility to Canadians wishing to import vehicles and maintains efforts to ensure safety on our roads.” “Our government is committed to
ensuring safety on Canadian roads and highways,” said Lawrence Cannon, the minister of transport, infrastructure and communities. “This amendment will simplify and clarify the process for Canadians importing U.S. vehicles, to ensure those vehicles meet our requirements with respect to anti-theft immobilizers.” The government noted imported vehicles might have to be modified to meet requirements for daytime running lights, child tether anchorage systems and antitheft immobilization devices. ■
IBC to track domestic oil spills in Atlantic Canada he Insurance Bureau of Canada (IBC) has launched a project that will accurately track domestic oil spills in Atlantic Canada for the first time. The data will be provided to governments as part of an effort to introduce and strengthen legislation for the installation, maintenance and replacement of domestic oil tanks. “IBC is undertaking this project because there is a clear need to understand the extent of the growing problem of domestic oil spills,” said Don
Forgeron, vice president, Atlantic, of IBC. “While individual insurance companies have collected data on domestic oil tank spills for some time, this project introduces consistent reporting across the industry. “We believe that this is the first step in demonstrating the need for stronger legislative action to prevent spills in the future.” Currently, Prince Edward Island and Newfoundland and Labrador have legislation dealing with the installation and replacement of domestic oil tanks. Nova
Scotia and New Brunswick do not have such legislation. IBC said it would be advocating for similar legislation in New Brunswick and Nova Scotia, while at the same time providing valuable data that can be used to potentially improve current programs in Prince Edward Island, Newfoundland and Labrador. Most domestic oil tanks hold around 1,000 litres of oil. Just one litre of leaked oil can contaminate 1 million litres of drinking water, IBC notes in its release. ■
Alberta farmers file record number of hail-related storm claims
quotes Gilbert Goudreau, AFCS’ manager of adjusting services as saying. “Usually, certain areas will get hit by hail but this year, whether it was Peace River or Lethbridge, there was heavy hail across the province.” Some farmers got hit five times, the Journal noted. The paper also reported that many farmers have both a hail endorsement on their crop insurance, as well as straight hail insurance. “The total number of farmers filing claims was around 5,500, more than one-third of the insured farmers,” Goudreau told the Journal. ■
Beware of business interruption goblins
Canadian Insurance Regulation Reporter General Editor: Stuart Carruthers
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www.canadianunderwriter.ca • January 2008
nderwriters should be aware that seemingly “harmless” business interruption (BI) coverages — such as for interdependent and contingent losses, power outages and the financial consequences of prevented access — might accumulate into a big payout should a claim occur, Swiss Re warns. In its report, The Vitzliputzlis of Business Interruption Insurance, Swiss Re likens these kids of BI coverages to a “Vitzliputzlis” — a quirky stage ghost in plays or mischievous hobgoblins at Halloween that appear to be harmless, but will seek revenge on anyone who mistreats them. Many supplementary covers with potential side effects appearing in BI policies may similarly come back to haunt insurers later, Swiss Re notes. Stand-alone or supplementary insurances are sometimes seriously underestimated in three ways: • premium calculations; • analysis of the cumulative risk potential; and • loss assessment and claims settlement. The report says some of the most “severely underestimated vitzliputzlis” include: • business interruption following damage at customers and suppliers; • covers following power outages or other utility failure; • impaired attractiveness of the location; and • shutdown or restriction of operations due to losses other than property damage. ■
M A R K E T WAT C H
griculture Financial Services Corp. [AFSC] paid out a record of more than 7,200 hail-related claims this year. The Alberta crown corporation (with a private-sector board of directors) provides farmers and agribusinesses with crop insurance and farm income disaster assistance. The Edmonton Journal reported that a record 89 hailstorms flattened farmers’ fields in the summer, resulting in a Cdn$150-million loss for AFCS. “It was a bad year for farmers and a bad year for us,” the Journal
INSURANCE INTERNET DIRECTORY online at www.canadianunderwriter.ca ACCIDENT REPORTING CENTRES ACCIDENT SUPPORT SERVICES INTERNATIONAL LTD. Collision reporting to Insurers & Police, promote claims programs, fight fraud, photo imaging damage, electronic delivery & total customer service to insureds. www.accsupport.com ACCOUNTANTS WILLIAMS & PARTNERS INC. Forensic and Investigative Accountants. www.williamsandpartners.com ASSOCIATIONS CANADIAN INDEPENDENT ADJUSTERS' ASSOCIATION (CIAA) "The voice of Independent Adjusters in Canada" www.ciaa-adjusters.ca
MCLARENS CANADA International Loss Adjusters and Surveyors www.mclarens.ca P.C.A. ADJUSTERS LIMITED Property Casualty All-Lines Adjusters. www.pca-adj.com SCM ADJUSTERS CANADA LTD. Committed to providing leading edge claims management services. www.scm.ca COLLISION SERVICES CERTIFIEDFIRST NETWORK Consider it done.™ www.certifiedfirst.com CONSULTING FIRMS
I N S U R A N C E C O M PA N I E S AMERICAN INTERNATIONAL COMPANIES "The Strength to Be There". www.aigcanada.com AVIVA CANADA INC. Home Auto and Business Assurance. www.avivacanada.com/ 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
CANADIAN STANDARDS ASSOCIATION Developing standards to enhance public safety and health for business, government and consumers. www.csa.ca
BROKER BUILDER CORP. Convert receivables into revenues with an in house premium finance program www.brokerbuilder.ca
HONOURABLE ORDER OF THE BLUE GOOSE - ONTARIO POND Our fraternal organization has been dedicated to fellowship and charity since 1908. www.bluegooseontario.org
CAMERON & ASSOCIATES INSURANCE CONSULTANTS LTD. Claims consultants to the insurance & reinsurance community. www.cameronassociates.com
PILOT INSURANCE COMPANY Over 80 years of Protection Through Local Brokers. www.pilot.ca
KEAL TECHNOLOGIES Complete technology solutions for insurance brokers. www.keal.com
ROYAL & SUN ALLIANCE INSURANCE COMPANY OF CANADA Forward thinking since 1710. www.royalsunalliance.ca
THE INSURANCE INSTITUTE OF CANADA The professional educational arm of the industry. www.insuranceinstitute.ca REGISTERED INSURANCE BROKERS OF ONTARIO (RIBO) Self-regulatory body for general insurance brokers in Ontario. www.ribo.com RISK & INSURANCE MANAGEMENT SOCIETY INC. Dedicated to advancing the practice of effective risk management. www.rims.org RISK MANAGEMENT CONSULTANTS OF ONTARIO (RMCO) Self-regulatory body for independent, fee-for-service risk management and property/casualty consultants operating in Ontario. www.rmco.ca BUILDERS RISK INSURANCE WINTONIAK & MOTARD INSURANCE Build your own Builder's Risk Insurance Quotation/Cover online - as easy as 1..2..3. www.canadabuildersrisk.com CLAIMS ADJUSTING FIRMS CGI ADJUSTERS INC. The one-stop risk shop for all your insurance needs. www.cgi.com 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
DIRECTORS, OFFICERS & TRUSTEES LIABILITY INSURANCE EXECUTIVE RISK SERVICES LTD Mitigating Risks for Directors, Officers and Trustees www.execurisk.com 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 WALTERS FORENSIC ENGINEERING INC. Uncovering the Truth www.waltersforensic.com GRAPHIC COMMUNICATIONS INFORMCO INC. Integrated Graphic Communications Specialists. www.informco.com INSURANCE BROKERS CANADA BROKERLINK INC. Ontario: CANADA BROKERLINK (ONTARIO) INC. Alberta: CBL OXFORD INSURANCE Insurance In Person www.brokerlink.ca
KINGSWAY GENERAL INSURANCE COMPANY The Specialty Insurer www.kingsway-general.com
SOVEREIGN GENERAL INSURANCE COMPANY Since 1953 www.sovereigngeneral.com SPORTS-CAN INSURANCE CONSULTANTS LTD. Specialist in Annual and Term insurances for Recreational Sports, Fitness, Leisure & Tourism activities www.sports-can.ca WAWANESA INSURANCE Earning your trust since 1896. www.wawanesa.com www.insurancepositions.ca I N S U R A N C E L AW THE ARC GROUP CANADA INC. Your Partner in Insurance Law & Risk Management www.thearcgroup.ca 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 & brokers in Canada & USA www.trifin.com PREMIUM FINANCING AIG CREDIT CORP. OF CANADA The leader in Financing Commercial Insurance Premiums by offering innovative products & services allowing our Broker Network to experience an instant payment alternative. www.aigcredit.ca
INSURANCE INTERNET DIRECTORY online at www.canadianunderwriter.ca BROKER BUILDER CORP. Convert receivables into revenues with an in house premium finance program www.brokerbuilder.ca THIRD EYE SOLUTIONS INC. Provides internet enabled premium financing/payment plan software solutions. www.thirdeyesolutions.com REINSURANCE
TRANSATLANTIC REINSURANCE COMPANY For all your reinsurance needs. www.transre.com RESTORATION SERVICES WINMAR Property Restoration Specialists Coming Through For You! www.winmar.on.ca
PROPERTY CLAIMS ADJUSTER
GUY CARPENTER & COMPANY The world’s leading reinsurance intermediary. www.guycarp.com MARINE RE OF CANADA (MRIL) MRIL are a managing general underwriter that specializes in marine reinsurance. www.mril.net MUNICH REINSURANCE COMPANY OF CANADA Complete reinsurance coverage from Canada’s largest reinsurer. www.mroc.com
THE ARC GROUP CANADA INC. Your Partner in Insurance Law & Risk Management www.thearcgroup.ca SPECIALTY INSURANCE WILLIAM J. SUTTON & CO. LTD. Insuring Special Risks since 1978 www.wjsutton.com WHOLESALERS THE WHOLESALE INSURANCE GROUP
SWISS REINSURANCE COMPANY CANADA The leading p&c reinsurer in Canada. www.swissre.com
Canada's First Choice For Timely Wholesale Insurance Solutions www.twig.ca
To advertise your website in the Insurance Internet Directory: Steve (416) 510-6800; Paolo (416) 510-6788; Mike (416) 510-5122 Christine (416) 510-5114 ADVERTISERS’ INDEX ACE INA Insurance...............................................................4 The ARC Group Canada .....................................................11 Aviva Canada Inc.........................................................2 (IFC) CAIW...................................................................................52 Canadian Disaster Restoration Group (CDRG) ..................51 canadianunderwriter.ca ........................................................85 Carcone’s Auto Recycling ...................................................26 CASRSTAR Automotive Canada ........................................13 CertifiedFirst Network of PPG Canada Inc.............88 (OBC) CGI ......................................................................................41 Chubb Insurance............................................................15, 87 CIP Society....................................................................66, 70 Claims Canada magazine ....................................................85 Crawford & Company (Canada) Inc. ..................................29 CSN (Collision Solutions Network)....................................55 Cunningham Lindsey...........................................................21 Economical Insurance .........................................................31 FIX Auto..............................................................................27 Giffen Koerth Forensic Engineering and Science .......2 (IFC)
The Guarantee Company of North America .......................23 Guy Carpenter ...............................................................44, 45 i-hire.ca ................................................................................57 InHealth Solutions, Inc........................................................37 Insurance Institute of Canada ..............................................47 Kingsway General Insurance Company ..............................39 Lexis Nexis ..........................................................................63 McLarens Canada ................................................................35 Ontario Insurance Directory ................................................80 Pilot Insurance .......................................................................7 PolicyWorks.........................................................................49 Quelmec Insurance Adjusters ..............................................53 RIMS ...................................................................................61 Riverfront Medical Services................................................32 ServiceMaster ......................................................................40 WICC.............................................................................56, 59 WINMAR ............................................................................33 York Street Dispute Resolution Group................................48 Zurich Canada .....................................................................43
Get the job. Done. TM
CU Seminar ad January 08
Putting the pieces together.
Events and Seminars Calender You work hard to protect your clientsâ€™ property. Now, itâ€™s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.
PROedge Full-Day Seminar: Fraud Awareness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 29
Annual Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 21
PROedge Full-Day Seminar: Finance for Non-Financial Professionals Toronto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 31 Mississauga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 6 Markham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 7 Leading Insurance Coverage and Liability Cases (2006 - 2007) Markham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 21
Annual Symposium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 29
Vancouver PROedge Full-Day Seminar: Risk/Relationship Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 30 CIP Society Luncheon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 12
Keeping you at the forefront of the P&C industry. The CIP Society. MEMBERS BENEFIT. www.insuranceinstitute.ca/cipsociety
Upcoming Events: for a complete list please see: www.canadianunderwriter.ca and click ‘My Events Calendar’ in the nav. bar on the homepage.
Willis Group Holdings Limited is strengthening its presence in the Canadian energy sector by appointing Cees Van der Slikke to executive vice president of the company's energy business in Canada. Van der Slikke will also serve as managing partner of Willis’ Calgary office. He will be working closely with Willis’ global energy senior management team to further the company’s profitable growth and client retention, in addition to working with the leadership of Willis Canada to ensure the Calgary office provides all available resources to clients and prospects. Prior to joining Willis in April 2006, Van der Slikke was the national business leader of energy at Aon in Calgary. There, he was responsible for the development and execution of the company's growth strategy for their energy, oil and gas business. ■
The Insurance Institute has re-designed and re-launched its Web site. The new site offers more information on the Institute’s programs and services; moreover, it makes the registration process more convenient by offering students and members the ability to sign up, pay and receive automatic confirmation online. “Initial feedback has been very positive,” said Carey-Ann Greenham, the Institute’s vice president of business development and communications. “Our members and students appreciate the simplicity and ease of being able to research, register and pay for courses and seminars all at once in the convenience of their own homes. It also allows those discovering the Insurance Institute for the first time to gain a more complete sense of who we are, what we offer and how we can help advance their career.” Members who update their online profiles by Mar. 1, 2008 have a chance to win a Cdn$100 gift certificate to The Keg, a car safety kit and a deluxe BBQ set. Visit www.insuranceinstitute.ca to explore the new offerings today. ■
67 www.canadianunderwriter.ca • January 2008
The Risk and Insurance Management Society (RIMS) has pledged US$30,000 to the William H. McGannon Foundation. The Canadian foundation is dedicated to providing financial resources and career development opportunities to risk management students and practitioners. The funds provided by RIMS will go towards the development of risk and insurance management student enrichment programs and grants, a RIMS release reports. “As the leading association for risk professionals, RIMS feels an obligation to support and educate the next generation,” Janice Ochenkowski, RIMS president and managing director for Jones Lang LaSalle Inc., said in the release. “RIMS is impressed with the William H. McGannon Foundation’s dedication and successes in supporting risk management education, and we are confident this donation will be used to continue and expand the foundation’s fine work in supporting promising students in the discipline.” Joe Restoule, the president of the William H. McGannon Foundation and the risk management leader for NOVA Chemicals Corp, added: “The foundation is truly honored to receive recognition and support from the premier risk management association. This donation is testament to RIMS’ commitment to educating and advancing the next generation of risk professionals.” ■
MOVES & VIEWS
(TSX:KFS) announced its founder, William G. [Bill] Star, has retired from his position as Kingsway's president and CEO. Shaun Jackson is Star's successor. Star remains as chair of the board. “It is, of course, very difficult to step down from leadership of the company that I founded and was p r iv i l e g e d to see grow successfully over many years,” Star commented in a stateWilliam G. (Bill) Star ment. “But the time is right to make the transition. We have great leaders throughout the organization who I know will work together to ensure a strong future for the company and its shareholders.” Jackson has been with the company since 1995; most recently he served as the company’s senior vice president and chief financial officer. “Kingsway is a strong, Shaun Jackson entrepreneurial company with leadership talents at all levels of the organization and significant growth potential,” Jackson said of his appointment. “It has weathered many storms in a highly cyclical industry. I am honoured to have been given the opportunity to lead this next phase in the company's evolution, working with the senior team to find new ways of continuing Kingsway's tradition of growth and building shareholder value.” ■
CUW Jan-08-Ins Svcs
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Winifred "Wendy" Baker, who in 1990
tant superintendent, corporate services sector, with the Office of the
became the first woman to lead a reinsurance company, stepped down after nine years as president of Lloyd’s America Inc. at the end of December 2007, A.M. Best has reported. Baker managed Lloyd's offices in Montreal, New York, Chicago, Los Angeles, Kentucky and the Virgin Islands. Baker, who reportedly has stepped down to pursue other interests, has overseen corporate marketing and communications, broker development, distribution and compliance and regulatory issues in the Americas. A.M. Best notes the United States is Lloyd’s largest market, accounting for US$8.5 billion or around 40% of its business in 2004. Before joining
Lloyd's in 1998, Baker had a long career at Continental Corp., advancing to become president of Continental Re in 1990. She joined Minet Re North America, New York, as senior vice president in charge of developing new business opportunities for its reinsurance intermediary and retail and wholesale insurance brokerage operations in North America. In a statement, Lloyd’s highlighted Baker’s “significant role” in greatly increasing the insurer’s U.S. market presence and leading American operations through difficult periods such as the Sept. 11, 2001, attacks and the 2005 windstorms. A replacement for Baker will be announced “in due course,” Lloyd’s has announced. ■
Aon Re Global Fac has launched a reinsurance private clients suite model consisting of facultative insurance professionals in 15 different locations around the world. This approach to global cedants is a component of the Aon Re Global's Integrated Capital Solutions and Services strategy. “By offering the Private Clients Suite, we can focus on
building strategic and consultative relationships with our clients, and be better positioned to create innovative and valuable facultative solutions for global cedants,” Elliot Richardson, CEO of Aon Re Global Fac, said in a statement. “This unique initiative creates a truly independent, local fac broker with unparalleled global reach.” ■
Superintendent of Financial Institutions (OSFI). Most recently, Volk
held the position of assistant deputy minister, corporate services branch with the Department of Finance. While there, she directed corporate services for Finance Canada and the Treasury B o a r d Secretariat,
sitting on Coleen Volk the executive management committees of both departments. Before joining the Department of Finance, Volk held several corporate finance positions at Canada Mortgage and Housing Corporation (CMHC), including
deputy treasurer, treasurer, managing director, securitization and assistant vice president of finance and corporate services. ■
The Insurance Brokers Association of Ontario (IBAO) has launched a new feature of its online function, ‘Locate a Broker,’ which now allows consumers to search for a broker
representing a specific insurance company. “Using a broker is all about having access to choice, and by expanding the search criteria on our web site, we are inviting consumers to find a local broker with a relationship and the expertise of dealing with an insurance company that they were familiar with,” IBAO operations manager Paul Taylor said in a press release. The Locate a Broker function is available at www.ibao.com. It
enables consumers to find a broker through various search criteria such as location, keyword, type of insurance needed, broker name, and now, by insurance company represented. “Sometimes consumers prefer to use a certain insurance company because they've been satisfied with its products,” IBAO CEO Randy Carroll said in a press release. “For example, they move to a different city and need help finding out which local broker offers that company’s products. The new Locate a Broker function will give them access to that information within seconds.” ■
69 www.canadianunderwriter.ca • January 2008
Coleen Volk has been appointed assis-
MOVES & VIEWS
announced a new preferred vendor partnership. The partnership gives the PPG CertifiedFirst Network of collision repair centres access to the full package of Keystone products and services. “This is an excellent opportunity for our CertifiedFirst customers,” said Jeffery Murphy, the marketing programs manager of PPG Canada Inc. “Keystone offers a wide variety of aftermarket automotive parts. Being able to provide our customers with preferred access will be very beneficial to their business.” ■
Giffin Koerth has added two new engi- Phoenix, AZ. Chlistovsky brings 18 neers to the roster — James Wheeler years of experience with him, most and Val Chlistovsky. “Both gentlemen recently as approvals and quality engibring our property division strong neer with Crown Food Service expertise and continue to fulfill Giffin Equipment. ■ Koerth’s desire to always improve our level of service to the insurance, construction, and legal industry,” the company notes. Wheeler brings with him 22 years of experience in the electric and electronic engineering fields, most recently as a senior forensic electrical Val Chlistovsky James Wheeler engineer with EFI Global in
PPG Canada Inc. and Keystone Automotive Industries have
Insurance Institute Ontario - CIP Society is pleased to present
Symposium 2008 Emerging Landscapes: Insurance, Finance & Media The CIP Society is proud to host its fourth annual industry symposium. This year’s one-day forum, Emerging Landscapes: Insurance, Finance and Media, will feature dynamic keynote and seminar speakers. These industry leaders will provide invaluable insights and vision needed to navigate the ever-changing metrics of today’s economy. Breakfast Keynote Speaker: Luncheon Keynote Speaker:
Diane Francis, Columnist, The Financial Post & Best Selling Author Mark Ram, President & CEO, Northbridge Financial Corporation
Choose from a variety of interactive, cutting edge workshops to design your own personalized program. A cocktail reception and forum will conclude the day, and delegates will be able to discuss issues with an outstanding leadership panel from the insurance, financial and media sectors. SEMINARS • Mergers & Acquisitions: What are Your Options? • Insurance Trends through Financial Eyes • Communication in a Changing World: Are You at Risk? • Soft Market – Strong Growth? • Made in China – Insured in Canada • Here Today, Gone Tomorrow: Changing Distribution Models a must?
LEADERSHIP PANEL • Dan Courtemanche, President & CEO, GCAN Holdings Inc. • David Gambrill, Editor, Canadian Underwriter magazine • Rick Gulliver, President, Hub International • Robin Spencer, President & CEO, Aviva Canada • Alain Thibault, President & CEO, TD Meloche Monnex • Jeffrey T. Bowman, President & CEO (incoming), Crawford & Co.
Tuesday, April 29, 2008 (Registration begins at 7:30 a.m.) Toronto Board of Trade, First Canadian Place, 4th Floor, Toronto ACCREDITATION: RIBO: Management & Technical Categories for a total of up to 6.0 hours. CPD Credits: 10 points Actual accreditation will depend upon seminars chosen. REGISTRATION: Due to a limited seating capacity, we ask that you please register by our early bird deadline, Feb. 29, 2008. To register, contact Tracey Ashman at: (e) email@example.com • (f) 416-362-8081 • (w) www.insuranceinstitute.ca
Five years ago, Nancy Thorne of Carnahan Taylor Fowler Insurance conceived the idea of organizing a “Fun Night,” during which insurance professionals in New Brunswick could demonstrate a collective effort in the fight against cancer through enjoyable grassroots fundraising efforts. The 2007 Fun Night proved to be a favourable combination of fundraising, industry camaraderie and tremendous energy — all in aid of WICC (Women in Insurance Cancer Crusade). Companies representing insurance services or services affiliated with insurance participated in the fifth annual Fun Night in Saint John by providing donations, prizes and sponsorships, volunteering or administering several “fun” booths. ■
MOVES & VIEWS 71 www.canadianunderwriter.ca • January 2008
MOVES & VIEWS
www.canadianunderwriter.ca • January 2008
WICC Golden Horseshoe Region (GHR) held its inaugural pub night, Cruisin’ Back to the ’50’s Sock Hop on Sept. 27, at Arney Pub of Mohawk College in Hamilton. People in the industry dusted off their poodle skirts, tied up their saddle shoes, greased up with pomade and became Rebels With A Cause to aid in the fight against cancer. A classic car show preceded the event, which featured entertainment by the insurance industry’s own The Accidental Benefits. Participants also experienced a host of fun surprises, a silent auction and a 1950s style buffet. This first-ever event for the GHR was deemed a success with some impressive results: 135 tickets sold; approximately Cdn$10,000 obtained in sponsorships and donations (taking into account a silent auction, raffle and ticket sales and donations). Net profit was Cdn$14,500 to be donated to WICC. WICC GHR has announced its next annual fundraiser event will be held on Sept. 25, 2008. ■
McKellar Structured Settlements Inc. held its Annual McKellar Charity Golf Day on June 19, 2007, raising Cdn$10,950 for WICC (Women in Insurance Cancer Crusade) in their fight against cancer. The ladies’ charity golf day was held at Rebel Creek Golf Club in Petersburg, Ontario. Participants from the legal and insurance claims communities enjoyed a fun-filled day of events including morning clinics with golf professionals, a buffet luncheon, golf, massages, prizes and a cocktail reception. ■
many of Joe and Carol’s professional and personal friends and family. The theme of the event was Soulmates. Jozef Milczarski was on hand to produce drawings, and copies of his art were sold to the public. Proceeds went to the charities listed above. Philomena Comerford produced a drawing named Mr. Bond and copies were sold as well. Total of proceeds collected from the sale of art was Cdn$4,359, with each charity receiving half of this amount. ■
73 www.canadianunderwriter.ca • January 2008
Bond Fountain First Annual Chaity Art Exhibit was held May 23-29, 2007, at the Bertossoni Gallery located at 792 Queen St. East, Toronto. Baird-MacGregor Insurance Brokers sponsored the event in memory of employee and friends Joe Bond and Carol Fountain. Proceeds from the art sale were donated to two charities (WICC and Red Door Shelter). There were two gala nights attended by
MOVES & VIEWS
Neil Crone, actor, comic, cancer survivor and national cancer spokesperson, provided his perspective on life, health and the power of laughter at the Nov. 7, 2007 Annual WICC Ontario Breakfast at the Arcadian Court in Toronto. Crone, “actor/improviser/writer/all-round good guy,” shared his very moving story of his battle with cancer. He focused on the power of laughter in healing and repeated his ongoing credo as a cancer survivor: “Nothing Is Worth More Than This Day.” Crone was recently named national spokesperson for the Colo-Rectal Cancer Association of Canada. Crone is an actor and writer who has performed in numerous television and radio commercials and TV shows. He is the voice of numerous cartoon characters every Saturday morning, including YTV’s new hit series ‘ErkyPerky’. His most recent feature film roles include Stir of Echoes 2–The Dead Speak with Rob Lowe and the recently-released Hollywoodland with Adrian Brody and Ben Affleck. Crone also appears in CBC’s hit sitcom Little Mosque on the Prairie and is scheduled to appear in the upcoming mini-series The Summit. ■
MOVES & VIEWS
The Toronto Insurance Women’s Association (TIWA)’s Annual Golf Tournament on Sept 5, 2007 provided some welcome relief from the mid-winter blahs. Held at Cardinal Golf Club in Newmarket, Ontario, the TIWA Golf Tournament raised approximately Cdn$15,000 for its charity of choice, the Cabbagetown Youth Centre (CYC). CYC has provided social programs for youth in Toronto’s inner city core since 1972. CYC has now developed into a large community facility operating from three locations and available to a diverse and under-serviced population. ■
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MOVES & VIEWS
www.canadianunderwriter.ca â€˘ January 2008
MOVES & VIEWS
SCOR in November celebrated the 2007 Beaujolais Nouveau Wine Release with insurance industry guests at an annual reception held at Toronto’s Rosewater Supper Club . ■
www.canadianunderwriter.ca • January 2008
Rod Hancock, Ph.D, CCIB
After graduating from the University of Western Ontario with a Doctor of Philosophy in Psychology, Rod taught psychology at Western and Brescia College in London. Rod decided to pursue a career in the insurance brokerage business and in 1979, joined the London branch of Rowlands Insurance Brokers Limited. In 1998, Rowlands Insurance and McFarlan Martin Insurance merged to form McFarlan Rowlands. Rod is now a President and CEO of the brokerage. McFarlan Rowlands Insurance is based in London and through its fourteen offices, has served the people of Southwestern Ontario for more than 100 years. Rod served on the Board of Directors of the London Insurance Brokers Association from 1982 until 1986 with the last three years as President. Rod achieved his CCIB designation in 1993. He served on the IBAO Board of Directors from 1997 until 2000 and chaired a number of committees including Education and Membership. From 2000 until 2003, he continued on the Education Committee and in 2004, joined the IBAO Board again as Education Chair. In 2005, he was elected to the Executive of IBAO and most recently has completed a term as Chair of Administration and Finance.
The Insurance Brokers Association of Ontario is a volunteer association representing over 10,000 independent property and casualty insurance brokers throughout Ontario. The association actively liaises with government and the insurance industry on behalf of its members and the insuring public. IBAO is the preeminent supplier of education to independent property / casualty insurance brokers throughout the Province of Ontario.
Your Best Insurance Is An Insurance Broker
77 www.canadianunderwriter.ca â€˘ January 2008
Rod and his wife Caroline have spent most of the last 38 years in London. In his community, Rod has been involved in fundraising for the United Way and has served as Treasurer and Chair of the Board of Stewards at Metropolitan United Church in London.
MOVES & VIEWS
Rod Hancock, Ph.D, CCIB was inducted as the 65th President of the Insurance Brokers Association of Ontario on October 19th, 2007 at our 87th Annual Convention held at The Fairmont Royal York Hotel, Toronto, Ontario. Rod assumed his role as President on January 1, 2008.
MOVES & VIEWS
Lloyd’s of London celebrated 75 years in Canada with a special presentation and reception held at the Four Seasons Centre for the Performing Arts in November 2007. ■
www.canadianunderwriter.ca • January 2008
PartnerRe has appointed Mr. Francis Blumberg to the position of Chief Agent and Head of Canadian Operations. In this role, based in Toronto, Mr Blumberg will be responsible for the non-life and life reinsurance business of PartnerRe in Canada. Mr. Blumberg joined PartnerRe in 2003 and since that time has held senior positions across the Group, most recently as Head of Life Reinsurance in Zurich. In addition to his broad and indepth reinsurance industry experience, he is a qualified actuary and has a Math Diploma from Switzerland’s ETH Zurich, as well as an MBA from the University of Rochester, New York.
79 www.canadianunderwriter.ca • January 2008
PartnerRe Ltd. is a leading global reinsurer, providing multi-line reinsurance to insurance companies. The Company through its wholly owned subsidiaries also offers alternative risk products that include weather and credit protection to financial, industrial and service companies. Risks reinsured include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, other lines, life/annuity and health, and alternative risk products. For the year ended December 31, 2006, total revenues were $4.2 billion. As of September 30, 2007 total assets were $16.2 billion, total capital was $5.1 billion and total shareholders’ equity was $4.2 billion.
MOVES & VIEWS
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S. Jeffrey Goy B.Comm.(Hons.), ACAS, CIP
The Wawanesa Mutual Insurance Company announces the recent appointment of S. Jeffrey Goy as Vice President, Insurance Products. In this new role, Mr. Goy will assume responsibilities for the Property line of business in addition to his existing responsibilities for the Automobile line of business. Mr. Goy joined Wawanesa in 1990 as an Actuarial Analyst. In 1999, he was appointed Manager, Actuarial Services - Pricing, and in 2003 was appointed Vice President, Automobile Underwriting.
The Wawanesa, established in 1896, is a Canadian-owned leader in the insurance industry. The Company conducts business throughout Canada, California and Oregon and has combined assets of over $5 billion and annual premiums exceeding $1.6 billion.
81 www.canadianunderwriter.ca • January 2008
Mr. Goy holds a Bachelor of Commerce (Honours) degree from the University of Manitoba and is an Associate, Casualty Actuarial Society (ACAS). In 2007, he earned his Chartered Insurance Professional (CIP) designation.
MOVES & VIEWS
W.J. Sutton & Company Limited, a special risk managing general underwriter, and Sportscover, a global sports insurer, joined forces to launch Sutton Sportscover Limited, a new player in the Canadian insurance industry that focuses on sports insurance. Sutton Sporscover recently held a launch reception at their offices in Toronto. The new venture will provide comprehensive, tailormade insurance of sports federations, associations and clubs, according to Bill Sutton, president of W.J. Sutton. He added the new venture with Sportscover is the result of similar histories of two long-time Lloyd's correspondents brought together by Steve Boucher. “Our respective experiences in professional and amateur sports from five different continents will provide a combination of products, services and knowledge not seen before,” Sutton said. “We look forward to working together with Sportscover.” Sutton Sportscover Limited will offer a broad range of sports insurance including personal accident, public liability, professional indemnity, directors and officers, property and contingency insurances through Lloyd’s. “We are delighted to be in Canada and teaming up with such a well-respected sports specialist in Sutton’s,” Sportscover director Chris Nash said. “We consider this joint venture in the Canadian market to be a significant step in our worldwide development.” ■
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Delegates of the North American Insurance Conference gathered at the Don Cesar Resort in Saint Pete Beach, Florida, in November 2007 to discuss regulatory, legal and industry trends affecting both the United States and Canada. Hosted by Bill Star, president and CEO of Kingsway Financial, attendees also got to soak in some rays, swing some golf clubs and go for a cruise. ■
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With aggressive corporate growth targets to double revenues and triple earnings per share by 2012, we are actively looking for dynamic, talented and motivated top performers to help us achieve these goals. We are currently searching for talent to join our mid-market Commercial Lines Underwriting team in Toronto. AXA’s mid-market team underwrites standard lines, small to large accounts including Wholesalers, Graphic Trades, Manufacturers & Contractors.
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83 www.canadianunderwriter.ca • January 2008
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MOVES & VIEWS
AXA is a global organization with 175 entities in 47 countries, employing over 122,000 people worldwide. We offer competitive Compensation & Benefits, Annual Incentive Program, Career Development, Stock Purchase Plan, Community Service Opportunities and a Corporate Wellness Program.
MOVES & VIEWS
SCM Adjusters Canada Ltd. recently held a cocktail reception to celebrate the opening of its new corporate office located at 120 Adelaide Street West, Suite 2401, Toronto, Ontario, M5H 1T1. ■
www.canadianunderwriter.ca • January 2008
Canada’s INSURANCE Information Source
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MOVES & VIEWS
The Honourable Order of the Blue Goose, Ontario Pond and Most Loyal Gander Chris Giffin welcomed attendees at “2007’s hottest Christmas party of the insurance industry.” The so-called “Galabration” was held Nov. 28, 2007 at The Boiler House, a cultural, culinary and entertainment destination in Toronto’s famed Distillery District. The Boiler House’s award- winning design includes a 22-foot wine rack, intimate private rooms and handcrafted, heavy timber tables. Guests danced the night away to the musical stylings of Terri Oliver and her band Shugga.
www.canadianunderwriter.ca • January 2008
integrity: n. incorruptible, complete. When writing insurance, you need to know that the policy is well defined and covers your clients needs completely. And you should have no doubts that the insurer will fully stand behind this policy. Chubb Insurance better defines its policies. This provides more certainty in coverage and more efficient claims service.
If your integrity is critical to your success, 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.
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Published on Jun 5, 2014
Published on Jun 5, 2014
Canada’s Insurance and Risk Magazine. Since 1934 Canadian Underwriter, Canada’s leading insurance journal, has provided insurance profession...