C A N A D A’ S I N S U R A N C E A N D R I S K M A G A Z I N E . C A N A D I A N U N D E R W R I T E R . C A
M A R CH 2 0 1 6 PM#40063170
Aggregation Aggravation BY GREG MECKBACH
Uber Risky BY PHILOMENA COMERFORD
Beyond Distraction BY ROBYN ROBERTSON & KATHY BARDSWICK
Another industry first Aviva Canada now offers personal coverage for ride-sharing drivers. First to market with this type of coverage, Aviva is committed to evolving our insurance solutions to respond to changing consumer needs. We can now provide part-time drivers and passengers with absolute peace of mind that they have insurance coverage while ride-sharing. We offer a simple solution that is easy to explain to customers and an affordable option for part-time drivers. Find out more. Contact your Aviva Business Development team.
Aviva, proud Canadian partner to 1500 independent brokers from coast to coast.
avivacanada.com/ride-sharing Insurance – Home | Auto | Leisure & Lifestyle | Business | Surety Aviva and the Aviva logo are trademarks used under licence by the licensor. Certain conditions, limitations and restrictions apply. Only available in Ontario.
CANADIAN UNDERWRITER
VOL. 83, NO. 3, MARCH 2016 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY NEWCOM BUSINESS MEDIA INC.
www.canadianunderwriter.ca
COVER STORY
Aggregation Aggravation
30
While risk managers for large manufacturers tend to be aware of the vulnerability of their supply chains to major incidents affecting business partners, the same cannot necessarily be said for small to mid-sized organizations. The impact of aggregation of risk must be understood. BY GREG MECKBACH
FEATURES
12 40
16 Market Conduct Supervision Canada’s insurance regulators have taken an important step forward with a co-operative supervision framework for market conduct that suits rapidly changing times.
Aggregation Aggravation
MAR CH 2 01 6
UberX Risks
BY GREG MECKBACH Distracted Driving
UberX risks are hiding in plain sight. Even so, the service’s advance into Canadian cities shows no signs of slowing down.
Stakeholders seem sold on Uber Risky tackling distracted driving, BY PHILOMENA COMERFORD 22 Background Checks but data consistency and There is a need for enhanced Beyond Distraction quality challenges remain. BY ROBYN ROBERTSON & KATHY BARDSWICK international, multicultural BY ROBYN ROBERTSON & KATHY BARDSWICK information services as part of the insurance industry’s current anti-fraud efforts.
PM#40063170
BY PHILOMENA COMERFORD
18
48
BY PATRICK DÉRY
BY DEBBRA MACDONALD & JASON MANDLOWITZ
26 Causation Test
Cyber Security
Ethics: Client Service
Ransomware and malware disguised as advertising tools for web browsers are just some of the computer security threats that can trigger losses.
Adjusters dealing with a busy environment, demanding workload and unexpected meetings cannot allow conditions to adversely influence service to clients.
BY GREG MECKBACH
BY THE CIP SOCIETY
While the material contribution test was favoured until fairly recently for accident benefit claims, a new ruling supports the return of the “but for” test.
44 ERM Survey A new survey of financial executives across Canada shows more can be done to recognize and manage risk. Aligning strategy and risk appetite is key. BY FINANCIAL EXECUTIVES INTERNATIONAL CANADA & CHARTERED PROFESSIONAL ACCOUNTANTS OF CANADA
52 CICMA/CIAA & OIAA Conference Wrap The CICMA/CIAA Ontario Chapter Joint Conference and OIAA’s 2016 Professional Development and Claims Conference offered info on issues from cyber security to drones and adjuster training. BY ANGELA STELMAKOWICH & GREG MECKBACH
BY ASHLEIGH LEON & MEGAN WHALEN
March 2016 Canadian Underwriter
3
astelmakowich@canadianunderwriter.ca
PROFILE PROFILE
Editor
Senior Publisher
Senior Publisher (416) 510-6800 Art Director INSURANCE – astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Twitter: Angela Stelmakowich Steve Wilson Angela Stelmakowich Steve Wilsonwe have Angela@CU_Greg Stelmakowich Steve Wilson gmeckbach@canadianunderwriter.ca Gerald Heydens it covered. Consultation (416) 510-6793 Twitter: @InsuranceMedia (416) 510-6793 @InsuranceMedia (416) 510-6793 the marketers industry, providing marketers with aArt range of specialized Twitter: @InsuranceMedia the industry, providing with aTwitter: range of specialized (416) 510-6796 astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Twitter: @CU_Greg
VOL. 81, NO. 2, FEBRUARY 2014 and
VOL. 83, NO. 3, MARCH 2016 PROFILE
steve@canadianunderwriter.ca
Angela Stelmakowich Steve Wilson Canadian Underwriter’s Insurance Media Group committed Underwriter’s Insurance Media is committed (416) 510-6793 Group @InsuranceMedia the industry, providing marketers with aTwitter: range ofis specialized astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca (416) 510-6800 (416) 510-6793 Twitter: @InsuranceMedia Associate Editor timely to providing the most and relevant news, information to providing the most timely and relevant news, information and highly effective marketing communications opportunities. Editor
VOL. 2, FEBRUARY 2014 VOL. 81, 81, NO. NO. 2, 2, FEBRUARY FEBRUARY 2014 2014 Canadian PROFILE PROFILE
Senior Publisher EditorMeckbach Greg
Associate Editor Angela Stelmakowich Wilson Angela Stelmakowich Steve Wilson Angela Stelmakowich Steve Wilson and resources to insurance professionals from all segments of resources professionals from all segments Steve of gmeckbach@canadianunderwriter.ca Gerald Heydens Editor Senior Publisher Editorto insurance Senior Publisher Editor Senior Publisher Greg Meckbach Art Director
Sascha Hass (416) 510-6800 (416) 510-6800 (416) 510-6800 Art Consultation (416) 510-6793 PROFILE Greg Meckbach ArtSenior Director Harmeet Singh Associate Editor Editor Publisher Associate Editor Associate Editor Angela Stelmakowich Steve Wilson Online Editor White gmeckbach@canadianunderwriter.ca to providing the mostGary timely and relevant news, information Gerald Heydens gmeckbach@canadianunderwriter.ca Gerald Heydens gmeckbach@canadianunderwriter.ca Gerald Heydens hsingh@canadianunderwriter.ca Production Manager Angela Stelmakowich Steve Wilson Greg Meckbach Art Director Greg Meckbach Art Director Greg Meckbach Art Director astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Harmeet Singh (416) 510-6760 Twitter: @CU_Greg Twitter: @CU_Greg Twitter: @CU_Greg and resources to insurance professionals from all segments of astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Twitter: @CU_Harmeet Gary White gmeckbach@canadianunderwriter.ca Gerald Heydens gmeckbach@canadianunderwriter.ca Gerald Heydens gmeckbach@canadianunderwriter.ca Art Consultation Gerald Heydens Art Consultation (416)510-6796 510-6793 Twitter: @InsuranceMedia Art Consultation hsingh@canadianunderwriter.ca (416) (416) 510-6796 (416) 510-6796 (416) 510-6793 (416) 510-6800 (416) 442-5600 ext. 3652 the industry, providing marketers with a of specialized (416) 510-6760 Subscriptions/Customer Twitter: @CU_Greg National Twitter: @CU_Greg Twitter: @CU_Harmeet @CU_Greg Sascha Hass Sascha Hass (416) 510-6800 Sascha Hass rangeService Twitter: Art Consultation Art Consultation ArtArt Consultation Associate Editor Associate Editor Director Gail Page (416) 510-6796 (416) 510-6796 and highly effective marketing communications opportunities. Online Editor (416) 510-6796 Online Editor Online Editor Claims (416) 442-5600 ext. 3652 Associate Publisher Subscriptions/Customer Service Sascha Hass Canadian Underwriter’s Media isis committed Sascha Hass Canadian Underwriter’s Insurance Media Group is committed Production Manager Sascha Hass Greg Meckbach Production Manager Canadian Underwriter’s Insurance Media Group Group committed Greg Meckbach Gerald Heydens ArtInsurance Director Production Manager 14 Leading by Example gpage@bizinfogroup.ca Harmeet Singh Harmeet Singh Harmeet Singh Paul Aquino Gail Page Online Editor Manual Online Editor gmeckbach@canadianunderwriter.ca Online Editor Gary White gmeckbach@canadianunderwriter.ca Gary White Gerald Heydens Gary White to providing the most timely and relevant news, information to providing the most timely and relevant news, information Associate Publisher to providing the most timely and relevant news, information James Cameron, president of Art Consultation (416) 510-5187 hsingh@canadianunderwriter.cahsingh@canadianunderwriter.ca Production Manager Production Manager hsingh@canadianunderwriter.ca Production Manager 14 Leading by Example paul@canadianunderwriter.ca gpage@bizinfogroup.ca (416) 510-6796 Harmeet Singh InsuranceMarketer.com Harmeet Singh Harmeet Singh (416) 510-6760 Twitter: @CU_Greg (416)professionals 510-6760 (416) 510-6760 Sascha Hass Paul Aquino and professionals from to insurance from to all segments of Cameron & Associates and resources resources to insurance insurance professionals from all all segments segments of of Twitter: @CU_Harmeet Twitter: @CU_Harmeet and resources Gary White Gary White Twitter: @CU_Harmeet Gary White Art Consultation Twitter: @InsuranceCanuk James Cameron, president of (416) 510-5187 Circulation Manager hsingh@canadianunderwriter.cahsingh@canadianunderwriter.ca hsingh@canadianunderwriter.ca (416) Editor 510-6796 Online paul@canadianunderwriter.ca Production Manager (416) 442-5600 ext. 3652 Insurance Consultants Limited, the industry, providing marketers with a range of specialized (416) 442-5600 ext. 3652 (416) 510-6760 the industry, providing marketers with a range of specialized (416) 510-6760 (416) 442-5600 ext. 3652 Subscriptions/Customer the industry, providing marketers with a rangeService of specialized (416) 510-6760 Sascha Hass Subscriptions/Customer ServiceMary Subscriptions/Customer Service (416) Cameron & Associates Garufi Jason 510-6788 Contant Twitter: @CU_Harmeet Twitter: @CU_Harmeet National Twitter: @CU_Harmeet National Twitter: @InsuranceCanuk Karen Samuels Circulation Manager Online Editor was recognized by the CIP Gail Page Gail Page and highly effective marketing communications opportunities. Gail Page and highly effective marketing communications opportunities. and highly effective marketing communications opportunities. jcontant@canadianunderwriter.ca mgarufi@bizinfogroup.ca Claims (416) 442-5600 ext. 3652 Claims Insurance Consultants Limited, (416) 442-5600 ext. 3652 Associate Publisher (416) 510-6788 442-5600 ext. 3652 Associate Publisher Subscriptions/Customer Service Subscriptions/Customer ServiceMary National Associate Publisher (416) 510-5190 Production Manager Subscriptions/Customer Service (416) Account Manager Garufi 14 Leading the insurance industry’s social network g by Example Society Leading by Example its Harmeet Singh gpage@bizinfogroup.ca gpage@bizinfogroup.ca whenby heExample (416) 442-5600, Ext. 3652 gpage@bizinfogroup.ca Claims (416) 442-5600 ext. 3545 Paul Aquino Paul Aquino was recognized byreceived the CIP Gail Page Gail Page Paul Aquino Gary WhiteManager Gail Page Manual Manual Michael Wells Circulation mgarufi@bizinfogroup.ca Associate Publisher Associate Publisher James Cameron, president of hsingh@canadianunderwriter.ca presidentEstablished of Leading Associate Publisher (416) 510-5187 (416) 510-5187 James Cameron, president of Manual (416) 510-5187 Award.its Account Manager Associate Publisher 14 by geron, by Example Leading by Example paul@canadianunderwriter.ca paul@canadianunderwriter.ca gpage@bizinfogroup.ca gpage@bizinfogroup.ca paul@canadianunderwriter.ca (416) 510-6760 Society whenLeader heExample received gpage@bizinfogroup.ca InsuranceMarketer.com Mary Garufi ext. InsuranceMarketer.com InsuranceMarketer.com InsuranceMarketer.com michael@canadianunderwriter.ca (416) 442-5600 3545 Print Production Manager Paul Aquino Paul Aquino Twitter: @CU_Harmeet Paul Aquino Cameron & Associates Cameron & Associates Associates Paul Aquino Michael Wells STELMAKOWICH Twitter: @InsuranceCanuk James Cameron, president Twitter: @InsuranceCanuk eron, presidentBY ofANGELA (416) 510-5187 mary@newcom.ca (416) 510-5187 Twitter: @InsuranceCanuk James Cameron, president of Circulation Manager (416) 510-5187 Circulation Manager Circulation Manager Established Leader Award. of (416) 510-5122 Phyllis Wright paul@canadianunderwriter.ca paul@canadianunderwriter.ca (416) 442-5600 ext. 3652 paul@canadianunderwriter.ca paul@canadianunderwriter.ca Subscriptions/Customer Insurance Consultants Limited, Consultants michael@canadianunderwriter.ca Insurance Print Production (416) 614-5831ManagerService (416) 510-6788 (416) 510-6788 Cameron & Associates (416) 510-6788 Mary Garufi Associates Limited, Mary Garufi Cameron &Consultants Associates Limited, Mary Garufi BY ANGELA STELMAKOWICH INSURANCE Twitter: @InsuranceCanuk (416) 510-6788 Twitter: @InsuranceCanuk Twitter: @InsuranceCanuk Circulation Manager Circulation Manager Gail Page Circulation Managerthe insurance industry’s social network (416) 510-5122 was recognized by ized by the CIP Account Manager Phyllis Wright was recognized by the the CIP CIP President Associate Publisher mgarufi@bizinfogroup.ca Print Production Manager mgarufi@bizinfogroup.ca Insurance Consultants Limited, mgarufi@bizinfogroup.ca Consultants Limited, Insurance Consultants Limited, National National National (416) 510-6788 DIRECTORY 14 Leading by Example (416) 510-6788 Account Manager (416) 510-6788 Account Manager Mary Garufi gpage@bizinfogroup.ca Mary Garufi Account Manager Account Manager the insurance Mary Garufi the insurance industry’s social network the insurance industry’s social social network network Elliot Society when received its en hebyreceived Bruce Creighton Society when he heby received its Phyllis Wrightindustry’s Paul Ford Aquino insBlogs Claims (416) 442-5600 ext. 3545 Claims ext. (416) 442-5600 3545 Claims (416) 442-5600 ext. 3545 was recognized the CIP ized the CIPits Account Manager was recognized by the CIP President Michael Wells Michael Wells James Cameron, president of Michael Wells mgarufi@bizinfogroup.ca (416) 510-5187 mgarufi@bizinfogroup.ca Michael Wells mgarufi@bizinfogroup.ca INSURANCE eford@canadianunderwriter.ca Manual Established Leader Award. Manual Account Manager denLeader Award.its paul@canadianunderwriter.ca Account Manager Established Leader Award.its Account Manager Manual President Elliot Ford Society when he he received michael@canadianunderwriter.ca Bruce Creighton Society when he received received its InsuranceMarketer.com Vice President DIRECTORY InsuranceMarketer.com michael@canadianunderwriter.ca michael@canadianunderwriter.ca (416) 442-5600 ext. 3545 InsuranceMarketer.com (416)Production 442-5600 ext. 3545 michael@canadianunderwriter.ca Cameron & Associates Print Production Manager (416) 442-5600 ext. 3545 Print Manager Print Manager (416) 510-5117 Michael Wells Twitter: @InsuranceCanuk Michael Wells BY JimProduction GlionnaManager LMAKOWICH Michael Wells Circulation BY ANGELA ANGELA STELMAKOWICH STELMAKOWICH (416) 510-5122 eford@canadianunderwriter.ca Leader Award. d Leader Award.Established Alex Papanou (416) 510-5122 Established Leader Award. (416) 510-5122 (416) 510-5122 Phyllis Wright Phyllis Wright Insurance Consultants Limited, Phyllis WrightManager 10 Feet on the Ground Insurance Blogs hosted by Canadian510-6788 Underwriter President (416) michael@canadianunderwriter.ca michael@canadianunderwriter.ca insBlogs Vice michael@canadianunderwriter.ca Mary Garufi Print Production Print Production Manager Print Production Vice President &Manager General Manager (416) 510-5117 Account Manager BY ANGELA STELMAKOWICH LMAKOWICH BYwas ANGELA STELMAKOWICH INSURANCE the Property &INSURANCE Casualty Insurance Newswire the insurance industry’s social network theinsurance insuranceindustry’s industry’ssocial socialnetwork network recognized by theRIMS CIP SPECIAL FOCUS With the upcoming Alex Papanou (416) 510-5122 (416) 510-5122 Account Manager Property & Casualty Insurance Newswire (416) 510-5122 mgarufi@bizinfogroup.ca Account Manager Phyllis Wright Joe Glionna Phyllis Wright Account Manager President Phyllis Wright President President Christine Giovis Account Manager DIRECTORY DIRECTORY Society when he received its Elliot Ford (416) 442-5600 ext. 3545 Elliot Ford Canada Conference in Elliot Ford Creighton christine@canadianunderwriter.ca Bruce Creighton Bruce Creighton insBlogs Bruce insBlogs SPECIAL FOCUS Michael Wells Connect with Canadian Account Manager Account Manager Account Manager President PresidentUnderwriter President Leader INSURANCE 6Established Editorial (416) 510-5114 INSURANCE eford@canadianunderwriter.ca eford@canadianunderwriter.ca INSURANCE eford@canadianunderwriter.ca insBlogs.com Calgary, among theAward. Alberta michael@canadianunderwriter.ca Elliot Ford Elliot Ford PrintPresident Production Manager Elliot Ford Bruce Creighton Bruce Creighton Vice DIRECTORY Bruce Creighton Vice President DIRECTORY Insurance Blogs hosted by Canadian Underwriter Vice President DIRECTORY Connect with Canadian Underwriter BY ANGELA STELMAKOWICH (416) 510-5117 (416) 510-5117 (416) twitter.com/CdnUnderwriter facebook.com/CanadianUnderwriter (416)510-5117 510-5122 6 communities Editorialaffected eford@canadianunderwriter.ca eford@canadianunderwriter.ca Phyllis Wright eford@canadianunderwriter.ca Alex Papanou Alex Papanou AlexPresident Papanou Insurance hosted by Insurance hosted byUnderwriter Canadian Underwriter Insurance Blogs hosted by Canadian Underwriter InsuranceBlogs BlogsBlogs hosted byCanadian Canadian Underwriter Vice President insBlogs Vice 8 during Marketplace Vice President insBlogs what ended up (416) 510-5117 (416) 510-5117Property (416) 510-5117 twitter.com/CdnUnderwriter facebook.com/CanadianUnderwriter & Insurance Newswire Property & Casualty Insurance Newswire Property & Casualty Casualty Insurance Newswire Account Manager President SPECIAL US Alex Papanou .ca SPECIAL FOCUS FOCUS Alex Papanou Alex Papanou Property Newswire Property & Casualtylinkd.in/CanadianUnderwriter Insurance Newswire instouch.com/group/CanadianUnderwriter Property && Casualty Casualty Insurance Insurance Newswire InsuranceMediaGroup.com Canada’s largest-ever 8 being Marketplace Elliot Ford Bruce Creighton 56 Moves & Views SPECIAL FOCUS US SPECIAL FOCUSloss Connect with Canadian UnderwriterInsuranceMediaGroup.com insurable for a natural Connect with Canadian Underwriter Connect linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter eford@canadianunderwriter.ca Published bywith Canadian Underwriter 6 Editorial orial insBlogs.com www.CanadianUnderwriter.ca/MediaGroup insBlogs.com Vice President 56catastrophe Moves &event, Viewsthe (416) 510-5117 Insurance Blogs hosted by Canadian Underwriter Insurance Blogs hosted by Canadian Underwriter Insurance Blogs hosted by Canadian Underwriter Connect with Canadian Connecttwitter.com/CdnUnderwriter with Canadian Underwriter Connecttwitter.com/CdnUnderwriter with Canadian Underwriter Underwriter facebook.com/CanadianUnderwriter facebook.com/CanadianUnderwriter 58 Gallery twitter.com/CdnUnderwriter Alex Papanou facebook.com/CanadianUnderwriter 6 “resilience” Editorialtheme seems orial Canadian BUSINESS UnderwriterMEDIA iswww.CanadianUnderwriter.ca/MediaGroup published NEWCOM INC. thirteen times yearly (monthly + the Annual Statistical Issue) by Insurance hosted Canadian Underwriter Insurance Blogs hosted by Canadian Underwriter InsuranceBlogs Blogs hostedby by CanadianMEDIA Underwriter 8 Marketplace ketplace NEWCOM BUSINESS INC. twitter.com/CdnUnderwriter SPECIAL twitter.com/CdnUnderwriter facebook.com/CanadianUnderwriter facebook.com/CanadianUnderwriter 58 Gallery twitter.com/CdnUnderwriter facebook.com/CanadianUnderwriter to be aFOCUS perfect fit for the is at thirteen 80 Valleybrook Drive,(monthly Toronto, Ontario, M3B Statistical 2S9 .ca .ca Canadian Underwriter Underwriter is located published times yearly + the Annual Issue) by linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter linkd.in/CanadianUnderwriter Canadian instouch.com/group/CanadianUnderwriter linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter InsuranceMediaGroup.com InsuranceMediaGroup.com InsuranceMediaGroup.com 8 city,Marketplace Phone: (416) 442-5600. ketplace NEWCOM BUSINESS MEDIA INC. the times and the risk Connect with Canadian Underwriter Moves & Views es & Views 56 All rights reserved. Printed in Canada. contents of this publication mayM3B not be reproduced or transmitted Canadian Underwriter is located at 80 The Valleybrook Drive, Toronto, Ontario, 2S9 InsuranceMediaGroup.com InsuranceMediaGroup.com linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter instouch.com/group/CanadianUnderwriter 6management Editorial linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter Published by Published linkd.in/CanadianUnderwriter by Published byeither in any form, in part or in full, including photocopying and recording, without the written consent of the Phone: (416) 442-5600. profession. www.CanadianUnderwriter.ca/MediaGroup www.CanadianUnderwriter.ca/MediaGroup www.CanadianUnderwriter.ca/MediaGroup
– INSURANCEINSURANCE – we have it covered. we have it covered.
instouch.com
insBlogs Ontario instouch.com instouch.com instouch.com Ontario
Photo: Mikaela MacKenzie
Photo: PatrickThompson Thompson Photo:Thompson Patrick Thompson Photo:Patrick Patrick Thompson Photo: Patrick Photo: Patrick Photo: Thompson Photo: Patrick Thompson
Photo:Thompson Patrick Thompson Photo: Patrick
Twitter: (416) 510-6793 Twitter: @InsuranceMedia Associate Editor (416) 510-6796 510-6793 Associate Editor Twitter: @InsuranceMedia @InsuranceMedia Associate Editor (416) Online Editor and highly effective marketing communications opportunities. and highly effective marketing communications opportunities. EditorMeckbach Senior Publisher Sascha Hass Canadian Underwriter’s Insurance Media Group is committed Production Manager (416) 510-6800 (416) 510-6800 Greg Art Director Greg Meckbach (416) 510-6800 Art Director
insBlogs insBlogs insBlogs Ontario Ontario
instouch.com instouch.com Ontario Insurance Blogs hosted by Canadian Underwriter
insBlogs
Ontario
insBlogs.com insBlogs Insurance Blogs hosted by Canadian Underwriter
Insurance InsuranceBlogs Blogshosted hostedby byCanadian CanadianUnderwriter Underwriter
.ca
insBlogs.cominsBlogs.com
InsuranceMediaGroup.com
Moves & Views es & Views 56BY ANGELA STELMAKOWICH 58 ery 8 Gallery Marketplace 58 Gallery ery 56 Moves & Views SPECIAL FOCUS 58 Gallery
6 Editorial 8 Marketplace 56 Moves & Views 58 Gallery 4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014
Canadian 44 2014 Underwriter February Canadian Underwriter Underwriter February February 2014 2014
Canadian 44 2014 Underwriter February Canadian Underwriter Underwriter February February 2014 2014
4 Canadian Underwriter February 2014
4
Canadian Underwriter March 2016
.ca
.ca
copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted facebook.com/CanadianUnderwriter prior writtentwitter.com/CdnUnderwriter consent. in any form, either in part or in full, including photocopying and recording, without the written consent of the www.CanadianUnderwriter.ca/MediaGroup www.CanadianUnderwriter.ca/MediaGroup Canadian Underwriter is thirteen times yearly ++ Annual Statistical Issue) by www.CanadianUnderwriter.ca/MediaGroup Canadian Underwriter is published thirteen times yearlyowner. (monthly the Annual Issue) by NEWCOM BUSINESS MEDIA INC. NEWCOM BUSINESS MEDIA INC. © Published monthly as apublished source news, technical information comment, and as link between Canadian Underwriter is published thirteen times yearly (monthly the Annual Statistical Issue) by NEWCOM BUSINESS MEDIA INC. copyright Nor +may any partofStatistical of this publication be (monthly stored inand a the retrieval system of aany nature without NEWCOM BUSINESS MEDIA NEWCOM BUSINESS MEDIA INC. NEWCOM BUSINESS MEDIA INC. INC. all segments of the insurance industry including brokers, agents, insurance and reinsurance companies, prior written consent. linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter adjusters, risk managers and consultants. Canadian Underwriter is located at 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 Canadian at thirteen 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 Canadian Underwriter is published thirteen times yearly (monthly + the Annual Statistical Issue) by Canadian Underwriter is located at 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 Canadian Underwriter Underwriter is is located published times yearly (monthly + the Annual Statistical Issue) by © Published monthly as source ofthirteen news, technical information comment, as a link between Canadian Underwriter is apublished times yearly (monthlyand + the Annual and Statistical Issue) by Phone: (416) Phone: (416) 442-5600. NEWCOM BUSINESS MEDIA NEWCOM BUSINESS MEDIA INC. Phone: (416) 442-5600. NEWCOM BUSINESS MEDIA INC. INC. all segments of442-5600. the insurance industry including brokers, agents, insurance and reinsurance companies, Privacy Notice adjusters, risk managers and All rights reserved. Printed in Canada. The contents of publication may not reproduced All rights reserved. Printed in Canada. contents of this publication may not or transmitted Canadian Underwriter is at 80 Valleybrook Drive, Toronto, Ontario, 2S9 Canadian Underwriter is located at 80 The Valleybrook Drive, Toronto, Ontario, M3B 2S9 All rights reserved. Printed inconsultants. Canada. The contents of this this publication mayM3B not be be reproduced or or transmitted transmitted Canadian Underwriter is located located atbe 80reproduced Valleybrook Drive, Toronto, Ontario, M3B 2S9 www.CanadianUnderwriter.ca/MediaGroup to either time make subscription list available select companies and organizations whose of in any form, in part or in full, photocopying without the in any form, in part or in full, includingFrom photocopying andwe recording, the written consent to ofand the recording, Phone: (416) 442-5600. Phone: (416)either 442-5600. in anytime form, in part orour inwithout full, including including photocopying and recording, without the written written consent consent of the the Phone: (416)either 442-5600. product or service may interest you. Ifthis you do not wishwithout your contact information to beof made available, copyright owner. Nor may any part of publication be stored in a retrieval system any nature without copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without Privacy Notice All reserved. Printed in Canada. The contents All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or of transmitted All rights rights reserved. Printed in Canada. Themethods: contents of this this publication publication may may not not be be reproduced reproduced or or transmitted transmitted please contact us via one of the following prior written consent. prior written consent. prior written consent. From time to time we make our subscription list available to select companies and organizations whose Canadian Underwriter is published thirteen times yearly (monthly + the Annual Statistical Issue) by any part full, photocopying in any form, either in part or in full, includingin andin recording, the written consent ofand the recording, inphotocopying any form, form, either either in part or or in inwithout full, including including photocopying and recording, without without the the written written consent consent of of the the Phone: 1-800-668-2374 416-442-2191 product or service may interest you. Ifnews, you do not wish your contact to beas available, NEWCOM BUSINESS MEDIA INC. © Published monthly as aaFax: source of technical information and comment, and aany link between © Published monthly as a any source technical information comment, and as aany link between copyright owner. Nor may any part of this be stored in aainformation retrieval system of nature without copyright owner. Nor may partofofnews, this publication be stored inand amay retrieval system of publication nature without © Published monthly as source of technical information and comment, and as aany link between copyright owner. Nor any part ofnews, this publication be stored in retrieval system ofmade nature without E-mail: jhunter@businessinformationgroup.ca please contact via one of the following methods: all segments of the insurance industry including brokers, agents, insurance and companies, all segments of the insurance industry including brokers, agents, insurance and reinsurance companies, prior written consent. prior written consent. all segments ofus the insurance industry including brokers, agents, insurance and reinsurance reinsurance companies, prior written consent. Canadian Underwriter is located at 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 Mail to: Privacy Officer, 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 adjusters, risk and consultants. adjusters, risk managers and consultants. adjusters, risk managers managers and consultants. Phone: 1-800-668-2374 416-442-2191 (416) 442-5600. © Published monthly as aaFax: source of news, information © Published monthly as a source of news, technical information and and as atechnical link between ©Phone: Published monthly ascomment, source of news, technical information and and comment, comment, and and as as aa link link between between E-mail: jhunter@annexnewcom.ca all segments of insurance including brokers, agents, insurance companies, all segments of the insurance industry including brokers, agents, insurance and reinsurance companies, allAll segments of the the2013 insurance industry including brokers, agents, insurance and reinsurance companies, GST Registration number 890939689RT0001 Subscription Rates: Canada rights reserved. Printed inindustry Canada. The contents of this publication mayand notreinsurance be reproduced or transmitted Mail to: Notice Privacy Officer, 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 adjusters, risk managers and consultants. Privacy Notice adjusters, risk managers and consultants. Privacy Privacy Notice adjusters, risk managers and consultants. Class Mail Number: any$49.95 form, either in part or in full, includingSecond photocopying andRegistration recording, without the08840 written consent of the 1 in Year plus applicable taxes time time we our subscription list available to select companies and whose From time to time we make our subscription From list available to select companies and organizations whose From time to to time we make make ourpart subscription list available to select companies and organizations organizations whose copyright owner. Nor may any of this publication be stored in a retrieval system of any nature without Publications Mail Agreement #40069240 2 Years $73.95 plus applicable taxes you do not GST Registration number 890939689RT0001 Subscription Rates: 2015 Canada you. or service may interest wish your information to product or service may interest you. If you doproduct not wish contact made available, product oryour service mayinformation interest you.toIfIfbe you do not wish your contact contact information to be be made made available, available, prior written consent. Privacy Notice Privacy Notice Privacy Notice us Return Canadian addresses Secondundeliverable Class Mail Registration Number:to:08840 please contact via one of following methods: please contact us via one of the following methods: 1please Year Copies $51.95 plus applicable contact$10 us via one of the thetaxes following methods: Single plus applicable taxes time time we our list available to select companies and organizations whose From time to time we make our subscription From list available select companies and organizations whose From time to toto time we make make our subscription subscription list available to select companies and organizations whose © Published monthly as a source of news, technical information and comment, and as a link between Circulation Dept. Publications Mail Agreement #40063170 2 Years $75.95 plus applicable taxes 1-800-668-2374 Fax: Phone: Fax: 416-442-2191 product or service may interest you. you do wish contact information be product1-800-668-2374 or service may interest you. If you doPhone: not contact information made available, Phone: 1-800-668-2374 Fax: 416-442-2191 416-442-2191 product oryour service may interest you.toIfIfbe you do not not wish your your contactinsurance information to be made made available, available, all wish segments of the insurance industry including brokers, agents, andto reinsurance companies, Elsewhere Canadian Underwriter Return undeliverable Canadian addresses to: E-mail: jhunter@businessinformationgroup.ca E-mail: jhunter@businessinformationgroup.ca please contact us via one of the following please contact us via one of the following methods: E-mail: jhunter@businessinformationgroup.ca please contact us via one of the following methods: adjusters, risk managers and consultants. Single $10 plus applicable taxes methods: 80 Valleybrook Drive, Toronto, Ontario 1 Year Copies $73.95 Circulation Dept. M3B to: Officer, 80 Ontario, Mail to: Privacy Officer, 80 Valleybrook Drive,Mail Toronto, Ontario, M3B 2S9 Mail to: Privacy Privacy Officer, 80 Valleybrook Valleybrook Drive, Drive, Toronto, Toronto, Ontario, M3B 2S9 2S9 M3B 2S9 1-800-668-2374 Fax: Phone: 1-800-668-2374 Fax: 416-442-2191Phone: Phone:Statistical 1-800-668-2374 Fax: 416-442-2191 416-442-2191 Canadian Underwriter Elsewhere Annual Issue E-mail: jhunter@annexnewcom.ca E-mail: jhunter@annexnewcom.ca E-mail: jhunter@annexnewcom.ca Privacy Notice We acknowledge the financial support 80 Valleybrook Drive, Toronto, Ontario 1 Year $71.95 (included with above subscription) GST Registration number Subscription Rates: 2013 Canada GST Registration number 890939689RT0001GST Registration number 890939689RT0001 Subscription Rates: 2013 Canada 890939689RT0001 Subscription Rates: 20132S9 Canada to: Privacy Officer, 80 Drive, Toronto, Ontario, M3B 2S9 Mail to: Privacy Officer, 80 Valleybrook Drive,Mail Toronto, Ontario, M3B Mail to:time Privacy Officer, 80 Valleybrook Valleybrook Drive, Toronto, Ontario, M3B 2S9 through From to time weapplicable make ourNumber: subscription list available to select companies and organizations whose of the Government of Canada M3B 2S9 or separately $38 plus taxes Second Class Class Mail Registration 08840 1 Year $49.95 plus applicable taxes Second Class Mail Mail Registration Registration Number: Number: 08840 08840 1 Year $49.95 plus applicable taxes 1Second Year $49.95 plus applicable taxes Annual Statistical Issue product or service may interest you. If you do not wish your contact information the Canada Periodical Fund of the to be made available, Publications Mail Agreement #40069240 Publications Mail Agreement #40069240 Publications Mailthe Agreement #40069240 2 Years $73.95 plus applicable taxes 2 Years $73.95 plus applicable We acknowledge financial support 2 Years $73.95 plus applicable taxes (included with above subscription) GST Registration number 890939689RT0001 Subscription Rates: 2015 Canada Inquiries/Customer Service GST Registration number 890939689RT0001 Subscription Rates: 2015 Canada taxes please contact us via one of the following methods: Department of Canadian GST Registration numberHeritage 890939689RT0001 Subscription Rates: 2015 Canada ISSN Print: 0008-5251 of the Government of Canadaaddresses through Return Canadian undeliverable Canadian to: or separately $39 plus applicable taxes Second Class Number: 08840 Bona Lao (416) 442-5600 ext addresses 3552 Second Class Mail Registration Number: Return undeliverable Canadian addresses to: 1Single Year $51.95 plus applicable taxes Secondundeliverable Class Mail Mail Registration Registration Number:to: 08840 1 Year Copies $51.95$10 plus applicable taxes Single Copies $10 plus applicable taxes 1Return Year $51.95 plus applicable Single plus applicable taxes Copies $10 plus applicable taxes 08840 Phone: 1-800-668-2374 Fax: taxes 416-442-2191 the CanadaDept. Periodical Fund of the Circulation Circulation Dept. Publications Mail blao@bizinfogroup.ca Publications Mail Agreement #40063170 Circulation Dept. Publications Mail Agreement Agreement #40063170 #40063170 ISSN Digital: 1923-3426 2 Years $75.95 plus applicable taxes 2 Years $75.95 plus applicable taxes 2 Years $75.95 plus applicable taxes E-mail: jhunter@businessinformationgroup.ca Subscription Inquiries/Customer Service Department of Canadian Heritage Elsewhere Canadian Underwriter Elsewhere Canadian Underwriter Elsewhere Canadian Underwriter ISSN Print: 0008-5251 Return undeliverable Canadian MailLao to: Privacy Officer, 80Ext. Valleybrook Drive,80 Toronto, Ontario, M3B 2S9 addresses Return undeliverable Canadian addresses to: Bona (416) 442-5600 3552 Return undeliverable Canadian addresses to: to: Single Copies $10 plus applicable taxes Single 80 Valleybrook Drive, Ontario 1 Year $73.95 Single Copies $10 plusToronto, applicable taxes 1 Year Copies $73.95$10 plus applicable taxes 80 Valleybrook Valleybrook Drive, Drive, Toronto, Toronto, Ontario Ontario 1 Year $73.95 ISSN Digital: 1923-3426 Circulation Dept. Circulation Dept. blao@annexnewcom.ca Circulation Dept. M3B 2S9 M3B 2S9 M3B 2S9 Elsewhere Canadian Underwriter Elsewhere Canadian Underwriter Annual Statistical Issue GST Registration number 890939689RT0001 Subscription Rates: 2013 Canada Elsewhere Canadian Underwriter Annual Statistical Issue Annual Statistical Issue We acknowledge the financial support We acknowledge thesubscription) financial support 80 Valleybrook Drive, Toronto, We acknowledge the financial support Valleybrook Drive, Toronto, Ontario 1(included $71.95 Second Class Mail Registration Number: 08840 (included with 1 Year $71.95 80 Valleybrook Drive, Toronto, Ontario Ontario (included with above subscription) 1Year Year $49.95 plus applicable taxes 180 Year $71.95 with above above subscription) of the Government of of the Government of Canada through M3B 2S9 of the Government of Canada Canada through through M3B 2S9 Publications Mail Agreement #40069240 or separately $38 plus applicable taxes M3B 2S9 or separately $38 plus applicable taxes or2separately $38 plus applicable taxes Years $73.95 Annual Statistical Issue Annual Statistical Issue the Annual Statistical Issue Fund of the the Canada Periodical the Canada Canada Periodical Periodical Fund Fund of of the the We acknowledge the financial support We acknowledge thesubscription) financialService support Return undeliverable We acknowledge theCanadian financialaddresses support to: (included with above Subscription Inquiries/Customer (included with above subscription) Subscription Inquiries/Customer Service Department of (included with above subscription) Single Copies $10 plus applicable taxes Department of Canadian Heritage Subscription Inquiries/Customer Service Department of Canadian Canadian Heritage Heritage ISSN ISSN Print: 0008-5251 of the ISSN Print: Print: 0008-5251 0008-5251 the Government ofapplicable Canada through Circulation Dept. of of the Government Government of Canada Canada through through or separately $39 plus taxes Bona Lao 442-5600 ext or separately $39442-5600 plus applicable taxes Bona Lao (416) ext 3552 orof separately $39 plus applicable taxes Bona Lao (416) (416) 442-5600 ext 3552 3552 the Canada Periodical Elsewhere the Canada Periodical Fund of the Canadian Underwriter ISSN the Canada Periodical Fund Fund of of the the ISSN Digital: 1923-3426 blao@bizinfogroup.ca ISSN Digital: Digital: 1923-3426 1923-3426 blao@bizinfogroup.ca blao@bizinfogroup.ca Subscription Inquiries/Customer Service Subscription Inquiries/Customer Service Department of Canadian Heritage of Canadian Heritage 80 Valleybrook Drive, Toronto, Ontario Subscription Inquiries/Customer Service 1Department Year $73.95 Department of Canadian Heritage ISSN ISSN Print: 0008-5251 ISSN Print: Print: 0008-5251 0008-5251 Bona Bona Lao (416) 442-5600 Ext. 3552 M3B 2S9 Bona Lao Lao (416) (416) 442-5600 442-5600 Ext. Ext. 3552 3552 ISSN Annual Statistical Issue ISSN Digital: 1923-3426 blao@annexnewcom.ca ISSN Digital: Digital: 1923-3426 1923-3426 blao@annexnewcom.ca blao@annexnewcom.ca We acknowledge the financial support (included with above subscription) of the Government of Canada through or separately $38 plus applicable taxes the Canada Periodical Fund of the Subscription Inquiries/Customer Service Department of Canadian Heritage ISSN Print: 0008-5251 Bona Lao (416) 442-5600 ext 3552 ISSN Digital: 1923-3426 blao@bizinfogroup.ca
InsuranceMediaGroup.com InsuranceMediaGroup.com
Providing Security, Strength and Innovative Solutions to the Canadian market for 35 Years
At TransRe, a mix of innovative programs, proven expertise and considerable capacity, on a foundation of financial strength, has created a new standard for reinsurance. As we celebrate the 35th Anniversary of our Canadian operation, we thank you for your confidence. With our international network of offices, we are committed to being a long-term partner in meeting your reinsurance needs.
For more information on TransRe, please give us a call at 416-649-5300 95 Wellington Street West, Suite 1110, Toronto, Ontario M5J 2N7 Visit our website at: www.transre.com S&P rating A+ AM Best Rating: A
EDITORIAL
Dare to Prepare
Dealing with how much government is providing through disaster financial assistance is critically important; rising costs are untenable long term. Angela Stelmakowich Editor Canadian Underwriter astelmakowich@ canadianunderwriter.ca
6
Canadian Underwriter March 2016
All this talk of the “big one” and its potential ramifications for individuals, governments and the insurance industry is taking hold — sort of. A wider swath of stakeholders are buying into the idea of resilience, part of which demands having everyone assume their respective roles, upping infrastructure funding and beefing up preparedness. Dealing with how much government is providing through disaster financial assistance is critically important; rising costs are untenable long term. The Parliamentary Budget Officer recently reported the Disaster Financial Assistance Arrangements program liabilities have “increased substantially” as a result of a number of weather events causing heavy damage. While flooding rules with regard to expenditures, a major quake would surely have an even more dramatic impact. Unlike floods, though, earthquake is a tougher sell given the dearth of events in Canada that have cost people, governments and the insurance industry here cold hard cash, something that puts a peril top of mind and keeps it there. Although different parts of Canada could suffer quake damage, British Columbia and its proximity to the Cascadia subduction zone make it a natural focal point. The provincial government seems to be responding, putting its money where its mouth is. The latest provincial budget includes building new projects and expanding and
sustaining existing infrastructure, such as $1.7 billion to maintain, replace, renovate, expand and seismically upgrade K-12 school facilities. British Columbia is also making a $5 million investment in Ocean Networks Canada. The funding will add more offshore strong motion sensors and help integrate them with land-based sensors for more robust collection and analysis of seismic activity. The aim is to foster early detection and support notification tools for the public. The seconds “of advance warning can allow people and systems to take appropriate actions to protect life and property,” says Dave Cockle, president of the B.C. Earthquake Alliance. As well, the province will lead its first-ever, full-scale major quake and tsunami response exercise this year. The exercise, which will test elements of the new B.C. Earthquake Immediate Response Plan in Port Alberni, will also involve the real-time deployment of the Provincial Co-ordination Team and Vancouver’s Heavy Urban Search and Rescue team. “More than 3,000 earthquakes occur in British Columbia each year. Most are too small to be felt, but the risk of one big enough to cause major damage is real,” Cockle said last fall in advance of the 2015 Great British Columbia ShakeOut. But more than money from specific governments and preparedness testing is needed. Wider involvement,
specifically individuals and businesses, remains key. Sparking that interaction — through use of technology that is part of most daily lives — is an interesting prospect. Consider the free Android app, recently released by scientists at the University of California Berkeley. The app taps into a smartphone’s ability to record ground shaking from a quake, relaying appropriate vibrational information and the phone’s GPS co-ordinates back to the Berkeley Seismological Laboratory for analysis. The ultimate goal is to create a worldwide seismic detection network to help warn users of impending jolts from nearby quakes. This sort of research and other initiatives need to be supported if improved buy-in from ordinary people — those who governments, insurers, reinsurers and emergency services are looking to protect — is to be achieved. Legislation, regulation and bylaws also need to be part of the mix. Last fall in Los Angeles, for example, a mandatory ordinance requiring seismic retrofitting for two of the most vulnerable types of buildings passed city council with unanimous support. Similar protections — coupled with all actions that help bolster resilience — should be sought here at home, even beyond the borders of beautiful British Columbia. The approach will help foster a regard for perils, whatever form they take, that makes good sense for all.
WE KNOW
WHAT WE KNOW You can depend on our 140 years of experience, ďŹ nancial strength, specialized underwriting and claims expertise as we partner with brokers and agents to deliver innovative solutions to target customers. Know more at theguarantee.com
Excellence, Expertise, Experience ... Every time
MARKETPLACE
Risk DFAA PROGRAM CLAIMS COULD BE $902 MILLION The Parliamentary Budget Officer (PBO) has released a report estimating that the Disaster Financial Assistance Arrangements (DFAA) program can expect claims of $902 million from 2016-2017 to 2021-2022. The annual total includes $229 million a year as a result of hurricanes, convective storms and winter storms, and $673 million for floods. “This report is an affirmation of our research at Insurance Bureau of Canada (IBC), which shows that climate change is a real and present danger costing government — and Canadians — hundreds of millions of dollars every year,” says Craig Stewart, IBC’s vice president of federal affairs. “Canada is not prepared for the increase in damage caused by climate change and primarily flood. As the only G7 country without a national flood program, Canadians, our governments and the insurance industry are dangerously exposed to severe weather risks.” In an earlier speech, IBC president and chief executive officer Don Forgeron called for a national collaborative flood program. Forgeron proposed a framework for financially managing flood risk, with shared responsibilities between the insurance industry, all tiers of government and consumers. 8
Canadian Underwriter March 2016
IBC recently completed flood risk mapping across all 10 provinces, showing 19% of households at risk of flood.
HALF OF RESPONDENTS HAVE HAD LOSS, EXPOSURE OF SENSITIVE INFORMATION More than half, 51%, of Canadian respondents to a cyber security study have experienced an incident involving the loss or exposure of sensitive information within the last 12 months, reports Scalar Decisions Inc. The firm’s study involved a survey of 654 IT and IT security practitioners (at or above the supervisory level) in Canada, with research done by Ponemon Institute. Respondents report an average of 40 cyber attacks per year, 17% more than in last year’s report. In all, 70% say their organizations had situations where exploits and malware have evaded their intrusion detection systems, and 82% report cyber attacks evaded antivirus solutions. On average, over the last 12 months, organizations spent the following: damage to reputation and marketplace image ($2.6 million); damage or theft of IT assets and infrastructure ($1.6 million); disruption to normal operations ($1.1 million); lost user productivity ($950,625); and clean-up or remediation ($766,667).
SECURITY VULNERABILITY ON 75% OF SCANNED APPS About three-quarters of mobile applications scanned for a recent Hewlett Packard
Enterprise (HPE) cyber risk report exhibited at least one critical or high-severity security vulnerability. Looking at the top security threats over the past year, HPE Cyber Risk Report 2016 notes 75% of the scanned apps exhibiting vulnerability compared to 35% of non-mobile apps. “Mobile applications’ frequent use of personally identifiable information presents significant vulnerabilities in the storage and transmission of private and sensitive information.” Software vulnerability exploitation is a primary vector for attack, but mobile exploits are gaining traction. The report’s recommendations include defending “not just the edge, but the interactions between users, applications and data regardless of location or device.”
Canadian Market 2015 CANADA’S QUIETEST CAT YEAR SINCE 2010 2015 was the quietest Canadian catastrophe year since PCS Canada launched in 2010, with insured losses from three cat events of about $510 million, reports Property Claim Services (PCS), part of Verisk Analytics. PCS designated three cat events in Canada in 2015, down from five in 2014. Catastrophe losses fell 41% year over year from about $860 million in 2014, just up from the previous annual
low of $800 million in 2010. Alberta and Saskatchewan were the only provinces affected by cat events in 2015, whereas PCS-designated cat events struck five provinces in 2014: Alberta, Saskatchewan, Manitoba, Ontario and Quebec.
COMBINED OVERLAND WATER, SEWER BACK-UP PRODUCT LAUNCHED Gore Mutual Insurance Company has announced it is expanding its water damage coverage with a new combined overland water and sewer back-up product. The coverage is available as an endorsement to all eligible Ontario personal property insurance policies that have sewer back-up protection in place, effective March 1. Eligible customers account for 80% of Gore Mutual’s existing personal property policies, and all of these customers will receive the enhanced coverage right away, the company notes. The enhanced coverage seeks to protect from fresh water flood damage resulting from the accumulation of surface water, including rainfall that enters the property, protection not currently available from all insurers.
TRADE CREDIT, POLITICAL RISK PRODUCTS RELEASED Switzerland-based Allied World Assurance Company Holdings, AG reports its suite of trade credit and political risk insurance products are now available in Canada as part of the Global Crisis
MARKETPLACE
Management Division (GCMD). The coverage is meant to help clients mitigate the risk of non-payment from customer insolvency, protracted default and/or international political risk. Kent Paisley, GCMD’s senior vice president, will serve Canada from its Toronto offices. “As global economies become more complex and interconnected, it’s prudent for companies to protect their balance sheets from the risk of non-payment and other critical financial risks,” Paisley says.
Claims SLIGHT HIKE IN AVERAGE CANADIAN PROPERTY RECONSTRUCTION COST Opta Information Intelligence reports that the average Canadian reconstruction cost increase over the 2015 calendar year was 1.46%. Canada’s 2015 reconstruction consumer price index as a whole was just under 1.5%. The company uses 86 cities across the country identified as “centres of influence” based on multiple factors, including location, population and general conditions. Data is compiled from more than 300 licensed contractors, generating over 7,750 data points annually. British Columbia had the highest increase at 2.07%, CPI increases were lowest in Québec, with an average increase of 0.97%, and Prince Edward Island experienced higher increases than its Atlantic neighbours.
Technology
Seismological Laboratory for analysis.
INSURER INVESTS IN PAY-PER-MILE PROVIDER
Regulation
Intact Financial Corporation (IFC) has made a “strategic investment” in Metromile, a provider of pay-per-mile car insurance in the United States. “The venture is in line with IFC’s long-term strategy to invest and partner with emerging and innovative businesses,” notes Metromile. The pay-per-mile insurance option can save low-mileage customers $500 annually on average, the company adds.
APP SEEKS TO CREATE WORLDWIDE SEISMIC DETECTION NETWORK Scientists at the University of California (UC) Berkeley have released a free Android app that taps into a smartphone’s ability to record groundshaking from an earthquake, with the goal being to create “a worldwide seismic detection network that could eventually warn users of impending jolts from nearby quakes.” The app is available from the Google Play Store (an iPhone app is also being planned) and runs in the background with little power so that a phone’s onboard accelerometers can record local shaking any time of the day or night, reports UC Berkeley. For now, the app collects information from the accelerometers, analyzes it and, if it fits the vibrational profile of a quake, relays it and the phone’s GPS co-ordinates to the Berkeley
ONTARIO TO MANDATE DISCLOSURE OF CLAIMS HISTORY ON USED VEHICLES Ontario’s Licence Appeal Tribunal will begin accepting applications to deal with auto insurance claims disputes April 1, and the provincial government will set up an office to focus on auto insurance fraud, notes the budget document from Ontario’s ruling Liberals. “The government will establish a serious fraud office with a special focus on auto insurance fraud,” it states, but it is not clear when the office will be up and running. In addition, the government is “prepared to amend the Insurance Act to ensure that consumers are provided with complete information about the history of used vehicles,” the document notes. Those amendments would “allow for regulations to be made to require insurers to provide claims and repair history information to motor vehicle dealers for disclosure to prospective used vehicle purchasers,” it adds.
CALGARY APPROVES TNC BYLAW AMENDMENTS Calgary city council has approved bylaw amendments to allow Transportation Network Companies (TNCs), such as Uber and Lyft, to operate in the city. The bylaw, which comes
into force April 4, allows established taxi and limousine providers to negotiate and charge fares through a smartphone app on the same basis as TNCs, the city notes. Once in effect, TNC drivers will be able to operate in Calgary if they have, among other things, an annual operating licence from the city; a Valid Class 4 driver’s licence; an annual Calgary Police Service background check; and proof of valid commercial insurance as required by the Government of Alberta.
IBC APPLAUDS BC’S PLAN TO INVEST IN EMERGENCY PREPAREDNESS Insurance Bureau of Canada has given the thumbs up to British Columbia’s plan to invest tens of millions of dollars to make communities more resilient and protect them from the impact of severe weather. A budget backgrounder notes that $85 million will be used to establish the Forest Enhancement Society of B.C.; $10 million will go towards the Strategic Wildfire Prevention Initiative for community wildfire protection plans, fire smart planning activities and fuel management projects; $55 million will be put into emergency preparedness and prevention initiatives, such as upgrades to dikes and flood protection; and $10 million will go towards helping bolster training, administrative support and equipment renewals for volunteer ground search and rescue organizations. March 2016 Canadian Underwriter
9
PROFILE
Feet on the Ground Angela Stelmakowich Editor
Long-time risk professionals Phil Corbeil and Janet Stein know there is likely no better place to talk resilience than Calgary, home of the 2016 RIMS Canada Conference. Phil Corbeil and Janet Stein may both work in Calgary — one of the southern Alberta communities hit hard by severe flooding three summers ago — but each saw the devastation from decidedly different points of view. From his downtown office, Corbeil, manager of risk management and claims for the City of Calgary, would have been able to see the damage out his window; Stein, director of risk management and insurance for the University of Calgary, mere kilometres away, could not see the accumulating loss, but certainly felt its impact. “Phil is down there having to be as resilient as possible... trying to figure out a million things at once about people and buildings; I’m at the other end of this thing, saying, ‘Well, what are we 10 Canadian Underwriter March 2016
going to do with a thousand people displaced,’” who need to be housed? Stein relays. For the city, “not only did we have to worry about the damage to civic infrastructure, but it was our own personal offices. We were out of our municipal building for a couple of months. I couldn’t even access my insurance policy because our broker was also evacuated,” Corbeil says. The first office meeting, in fact, took place at “somebody’s kitchen table,” he says. “You have to be able to move to the issue quickly,” Stein says of unfolding risks. Corbeil wholeheartedly concurs. “You have to be able to think on your feet, there’s no question.” Despite the long hours, the stress and the need to readjust on the fly, Corbeil and Stein shared another common experience during the flooding. Both went home to areas untouched by loss, populated by those simply carrying on with daily life. Though odd, there may be a lesson in responding by getting back to normal. Synonymous with loss, the story of the southern Alberta floods is now being retold to include not just what was lost, but what was found: understanding of the importance of resilience. It is a message that risk professionals — regardless of location, industry or loss history — are increasingly taking to heart and one that
serves as the theme of the RIMS Canada Conference this September in Calgary. The idea is for the conference to appeal to everyone from newer to very senior risk professionals, offering a wide spectrum of risk topics, Corbeil says. As well, Stein adds, resilience will likely be worked in from a number of perspectives, perhaps including topics like cyber, economic conditions, severe weather and personal issues.
“You can’t just be the ‘no’ person in your corporation; they’ll stop coming to you for questions. So you really have to understand the risk a little bit better,” Corbeil suggests. “That whole resilience theme is about more than just a flood or more than just a fire. There are so many pieces to it,” including what can be done within both personal and business lives, says Corbeil, who is serving as conference chair (he was also involved in Calgary’s 1998 and 2006 conferences), along with Stein, who is working as special advisor. Their involvement in RIMS has been long and fruitful, allowing each to meet many people and to make great
contacts. Both Corbeil and Stein have served on the RIMS Canada Council and held positions within SARIMS (southern Alberta) chapter. Corbeil has served as SARIMS president; Stein has been a member of SARIMS and RIMS since 1996 and is currently on the RIMS board. “I think resiliency is so much a part of risk management because we constantly have to change priorities, perspectives, how we think about things,” Stein says.
STAYING FOCUSED The focus on resilience is partly by necessity, but there is also a somewhat hopeful element. Perhaps, this is because of increasing buy-in from stakeholders of all stripes and the enhanced role of risk professionals. Historically, the risk manager’s role was to identify risks, mitigate risks and then “once we got it down to that residual piece, do we insure that risk?” says Corbeil, whose 27 years with the City of Calgary includes working as an adjuster, risk analyst and risk manager before his current post. “I see changes now where the risk people are being asked more to raise risk,” he says. “You can’t just be the ‘no’ person in your corporation; they’ll stop coming to you for questions. So you really have to understand the risk a little bit better and know that there’s times when
Photo: Mikaela MacKenzie
PROFILE
you actually have to assume some risk,” Corbeil reports. Cyber risk is one topic now in the news. With some very high-profile and expensive losses on the books globally, Corbeil notes, the issue has been pushed to the forefront. “It’s not just an IT guy saying, ‘You know, we don’t have the right firewalls.’ Now, you have chief security officers for companies, as you do chief risk officers, who are reporting directly to the upper echelon of the C-suite,” he relays. “Insurance products are just one way to transfer some of that risk, but far more people are looking at it and understand that it’s a big, big risk for them.” It is key to consider not just the organization itself, but also suppliers and partners, Stein suggests. “The strings between us, everyone that uses our
services and everybody’s services that we use, are many and complicated, and cyber is in all of them, because we all use it to communicate and pass information,” she says of the university. She also sees as a risk on the radar screen changing technology, including selfdriving cars and drones. “There’s always something new out there being invented and we’re all trying to catch up with what that technology looks like,” says Stein, with the university since 1988 and with its Division of Risk Management, Safety & Security since its inception. For “somebody who wants to stay at the forefront of identifying risk that affects their businesses,” she says, “you’ve got to be able to think outside that box and see the new stuff coming.”
CHANGING TIMES Thinking outside the box is something that is becoming expected of risk professionals, who today have an opportunity to become more involved in the decision-making process of companies, organizations and institutions. With regard to cyber risk, for example, Corbeil emphasizes that risk professionals are not security experts; they need to work with the experts. “We help with the identifying of that risk, we can help with the benchmarking, we can help with looking at worst-case scenarios, and working with the insurance industry for lessons learned that they’ve had from some previous events,” he says. That approach can be applied whatever the risk may be, with risk professionals supporting, rather than
driving, actions, says Stein. With the higher profile for risk management, there is no shortage of phone calls for risk professionals being asked advice and opinions. Fine with Stein.“I love being involved in the whole discussion of risk before something happens. It’s so much better to be at the leading end,” she says. Stein reports that one of the university’s departments has started working on trying to identify and map out its own risk, something she sees as the pinnacle of success. “If there are departments that have the ability to do it themselves, the better off we all are,” she emphasizes. “It is more work, but we’re hitting it at the front end, rather than at the back end.” Overall, says Stein, things have changed a lot since she became involved in risk management more than 20 years ago. “I see the words, risk management, in all kinds of things that have nothing to do with the risk professional. I see that conversation going on at the board constantly. What are the risks? What are the top risks? What do we need to manage? How do we make sure that information floods through to us?” Corbeil agrees. Before, risk professionals numbered one, two or three. “Now every report that’s written has a risk component, identifying what those risks are and steps to mitigate it.” March 2016 Canadian Underwriter
11
In Plain Sight Opinion/Analysis
The experience to date with UberX may offer a perfect example of significant risks hiding in plain sight. The service’s advance into Canadian cities shows no signs of slowing down, perhaps leaving core issues around risk, cost, coverage and public safety in the dust.
President and Chief Executive Officer, Baird MacGregor Insurance Brokers LP
12 Canadian Underwriter March 2016
INCREASED TRACTION On the heels of the City of Calgary’s recent injunctions against UberX drivers on account of insurance deficiencies and violations of taxi bylaws, Uber refused to stop operating in Toronto, stating there were 20,000 UberX drivers in the city. This figure is double the estimate of 10,000 UberX drivers in the City of Toronto’s September Metro Licensing & Standards staff report. The Toronto Star reported that Aviva Canada took a hard line in November 2015, cancelling and voiding policies of UberX drivers who had hidden their UberX activities. Other insurers have taken actions as well. It has been reported that, last December, Wawanesa Insurance began asking its automobile policyholders in a renewal questionnaire whether or not they would use their personal vehicles to drive for Uber or Lyft. Desjardins Insurance is on record as having denied a claim, as is The CoOperators, the latter reported in a blog last year by Goldfinger Personal Injury Law. If UberX drivers lie on an auto application or fail to disclose UberX activity started after the application is filed, they are in violation of the statutory conditions of their policies as this con-
Illustration by Scot Ritchie
Philomena Comerford
When changes in technology trigger changes in human behaviour, the societal implications can be far-reaching. The well-publicized and popular Uber app that matches UberX drivers with paying passengers has been launched in several Canadian municipalities, causing headaches for insurers, brokers, regulators, law enforcement and politicians because carrying paying passengers is excluded under auto policies in all jurisdictions in Canada and because this activity violates provincial and municipal bylaws governing taxis. Had the use of the app been brought within both municipal and provincial regulatory frameworks before its launch, the controversy could have been curtailed. Instead, the app has been rolled out in Canadian communities using a network of personally insured vehicles that explicitly exclude the carrying of paying passengers. This not only puts UberX passengers, cyclists, pedestrians and other motorists at risk, but also puts the UberX driver’s personal assets on the line should his or her personal insurer deny a claim or void the policy when it is discovered after an accident that the vehicle is being used to carry paying passengers.
Keith Timothy, Property Claims Field Adjuster
property
|
auto
|
business
“Economical Insurance is a good group of people to have on your side.” We’re proud of how our adjusters make our customers feel: taken care of and reassured. Thanks, Keith, for all you do to get our customers back on their feet again. Because their story is ours too. economicalinsurance.com/stories
The Economical brand includes the following property and casualty insurance companies: Economical Mutual Insurance Company, Perth Insurance Company, Waterloo Insurance Company, The Missisquoi Insurance Company. ©2016 Economical Insurance. All rights reserved. All Economical intellectual property, including but not limited to Economical® and related trademarks, names and logos are the property of Economical Mutual Insurance Company and/or its subsidiaries and/or affiliates and are registered and/or used in Canada. All other intellectual property is the property of their respective owners.
stitutes non-disclosure at the point of applying and material change in risk if the activity begins after coverage is arranged. These are clear grounds for voiding or cancelling the policy and denying claims. In spite of the glaring coverage deficiency, UberX drivers continue to take their chances, relying on personal automobile insurance, likely because facility premiums are just too expensive. An UberX driver is absolutely on the hook for getting commercial insurance, policies which can range from $4,000 to $10,000 a year. A facility price for an UberX driver without access to fleet insurance prices could be about $23,000 a year for high-risk coverage.
customer user app absolves Uber of responsibility for customer injury.
LEGAL QUESTIONS UberX is illegal in most Canadian municipalities. Section 39.1 of Ontario’s Highway Traffic Act, for example, requires a person carrying passengers for compensation to be licensed to do so. The Ontario Automobile Policy’s statutory condi-
COST IMPACT Left undisclosed and undetected, this growing public vehicle exposure could conceivably push the cost of personal auto insurance up given the risk of multiple passenger injuries and increased road exposure.The property and casualty insurance industry could face a backlash if premiums increase on account of this growing risk and if uninsured catastrophic or multiple injury claims hit the media, especially if industry’s efforts to inform the public about the risks are found wanting. While the Financial Services Commission of Ontario has posted a warning of the uninsured risk, this is not enough. Surprisingly few insurers have informed policyholders about the uninsured risk or their stance on claims. Insurers and brokers alike need to continue to raise public awareness that carrying paying passengers, regardless of the technology used, is excluded under personal auto policies. Both Uber app users and UberX drivers either do not care about the uninsured risk posed by using the service or they are ill-informed. Uber’s $5 million Non-Owned Automobile Policy (SPF #6) does not fill the void; it covers Uber, not the driver. This is a peculiar apathetic phenomenon, particularly because the UberX driver contract clearly shifts the accident and injury risk to the UberX driver — with a hold harmless and indemnification clause in favour of Uber — and the 14 Canadian Underwriter March 2016
tions stipulate under “Prohibited Use” that the vehicle not be used for any illicit or prohibited trade or transportation. In two separate suits south of the border — these relating to Uber’s use of “industry-leading” and “best in class” in reference to safety measures — has resulted in the company proposing to pay $28.5 million to about 25 million riders who made trips in the United States between January 1, 2013 and January 31, 2016. The deal still needs to be approved. Response of insurers It remains to be seen if insurers prepared to underwrite UberX will insure what is presently an illegal form of transportation in all Ontario municipalities, or if they will wait until a regulatory framework is in place. In most municipalities, taxis and limousines must carry and certify to the municipality a $2 million liability limit, including a “Permission to Carry Paying Passengers Endorsement” without limitation to part-time use. As it stands, it is not yet known if UberX
will come under a similar regime. Aviva Canada recently launched a product designed to cover part-time transportation network drivers who use their personal automobiles, which have a maximum seating capacity of eight and are used to carry paying passengers not exceeding 20 per week. The insurer will not cover retail or wholesale delivery of goods or any other commercial use other than carrying paying passengers leaving UberEats — an app that allows users to access the instant menu of curated meals from participating restaurants — delivery outside the scope of cover offered under the new endorsement. While Aviva Canada’s product is intended to cover part-time UberX drivers, it covers neither taxis nor full-time UberX drivers. Uber drivers can — and do — take passengers who are not booked on the app. This will not be recorded for underwriting audit purposes nor is it covered. Some taxi drivers are throwing in the towel because of the un-level playing field, opting to drive for UberX. Like it or not, Aviva Canada will be insuring taxi drivers who have crossed the floor. Limit considerations UberHOP — a driver can share a trip with other commuters along Toronto’s most popular routes during peak hours — presents unique challenges. If regulators ultimately classify UberX vehicles as public vehicles, the passenger hazard bodily injury limit required under Ontario’s Public Vehicles Act for vehicles with a seating capacity of eight to 12 is currently $5 million and $5,000 for “Passenger Hazard Property Damage.” UberHOP’s activities will likely come under increasing scrutiny because the passenger exposure is greater, it potentially interferes with public transit, and opposition from transit unions. At this juncture, it is difficult to predict if the provincial and municipal laws will be harmonized or if UberX will be legalized and, if so, in which municipalities. Last July, Ontario taxicab and limousine drivers, taxicab and limousine owners, taxicab brokers and limousine service companies licensed, permitted or au-
thorized to operate in Ontario launched a class action seeking $400 million in compensatory damages, $10 million in punitive damages and an injunction prohibiting UberX from continuing to operate in Ontario. The suit alleges Uber Technologies, Inc., Uber Canada Inc., Uber B.V., Rasier Operations B.V. and UberX drivers using their own cars are illegally taking market share and violating the Highway Traffic Act. Using UberX drivers is “diverting millions of dollars of revenue away from licensed taxicab, limousine owners and drivers in Ontario and injuring their ongoing legitimate business interests,” notes Sutts, Strosberg LLP, which filed the suit on behalf of class members. The taxi industry is also seeking an injunction against Uber, now licensed as a Toronto taxi brokerage, for dispatching unlicensed taxis in Toronto. City enforcement officers have issued more than 600 fines to Uber for dispatching unlicensed taxis.
There are also eight charges against UberX drivers, laid by Toronto police, before the courts for violations of Section 39.1 of Ontario’s Highway Traffic Act.
RISKS IGNORED The Uber app has grown in popularity because of its convenience and because fares are cheaper than traditional taxis, but the risks are being ignored by users and UberX drivers alike. Taxis are required to carry commercial insurance with permission to carry paying passengers, obey vehicle age limitations, submit to police background checks and vehicle inspections, complete training, pay licensing fees, meet accessibility targets, and charge only city-approved tariff rates and the harmonized sale tax. Surge pricing is not permitted under city bylaws. UberX drivers are not paying licensing fees, rely on cheaper personal insurance and surge pricing is common. They now outnumber licensed Toronto taxi
drivers two to one, and their vehicles outnumber licensed taxis four to one. The Toronto Police Service has been peculiarly passive about this growing public risk. Some taxi brokerages are trying to compete with customers apps. In an effort to level the playing field, the Toronto Taxi Alliance has asked the City of Toronto’s Budget Committee to stop charging annual taxi industry licensing fees, which total $15 million, because UberX drivers pay nothing. Given the financial challenges that the city currently faces, the taxi industry’s request is unlikely to be taken seriously. Uber announced February 22 it will pull out of Calgary because it rejects the city’s proposed regulatory framework requiring UberX drivers to pay licensing fees and submit to background checks and maintenance inspections. Only time will tell what lawmakers will or will not do to address this growing public risk and whether Uber will co-operate in a lawful playing field.
Specialist risks needs specialized expertise Lloyd’s unrivalled reputation for insuring unusual and complex risks is underpinned by its underwriting expertise, strong financial ratings and global licensing network. In a world of emerging and evolving threats, Lloyd’s has your risks covered. Lloyd’s – the world’s only specialist insurance and reinsurance market.
Visit Lloyd’s at booth 107 at the RIMS Canada Conference in Calgary www.lloyds.com/canada
Follow us on Twitter: @LloydsofLondon March 2016 Canadian Underwriter 15
Conduct
Becoming
Insurance regulators in Canada have taken an important step forward with the recent adoption of a new, co-operative supervision framework for market conduct. The framework provides the foundation required to continue the central mandate to serve consumers at a time when the insurance marketplace is evolving and experiencing rapid change. In November, the Canadian Council of Insurance Regulators (CCIR), a forum for the provincial and territorial insurance supervisory authorities from across the country, released its Framework for Cooperative Market Conduct Supervision in Canada.
MEETING INTERNATIONAL BEST PRACTICES
Patrick Déry
Chair, Canadian Council of Insurance Regulators, and Superintendent, Solvency, Autorité des marchés financiers
The performance of the approach to insurance regulation in Canada was the subject of a review conducted by the International Monetary Fund (IMF) in 2013. The review assessed the degree to which insurance regulation in Canada is aligned with international regulatory standards — insurance core principles (ICPs) — one of the sets of standards used to assess the health of the country’s financial sectors. The ICPs place an emphasis on ensuring that consumers are treated fairly and are free from abusive business practices. In line with the principles, supervisory authorities are expected to have comprehensive regulations to address risks to consumers throughout the insurance product life cycle. As a result, the ICPs set standards for not only an insurer’s market conduct practices and fair treatment of consumers, but also establishes standards for the supervisory authorities and their approaches to regulation.
16 Canadian Underwriter March 2016
The findings of the IMF review concluded the approach adopted in Canada was largely consistent with international standards. However, the IMF recommended that provincial and territorial supervisory authorities be proactive in enhancing consistency in the network of supervisory regimes governing insurance across the country.
REGULATION FOR AN EVOLVING MARKET The co-operative framework was developed in order to modernize existing practices and better respond to the IMF recommendations. It introduces greater consistency and a more co-ordinated approach to insurance supervision and consumer protection through increased co-operation and information-sharing among the provincial and territorial supervisory authorities. The authorities have been collaborating and exploring issues of mutual interest for more than 100 years through the CCIR. However, similar to other aspects of modern life, the insurance marketplace is evolving and experiencing significant and rapid changes. Technology, social media, interconnectedness of financial institutions and insurance innovation have made market conduct regulation more complex than ever. In addition, consumer understanding and expectations regarding protection and the role of
supervisory authorities have also matured. That being the case, an increased collaboration and co-operation among supervisory authorities is key in modernizing the insurance regulatory framework to keep pace, ensure consumers are being treated fairly and foster effective, proactive identification of risks. Updating the MOU The first priority in light of the IMF’s recommendations was to update and modernize the CCIR’s Memorandum of Understanding and Protocol on Co-operation (MOU) so that regulators across the country could communicate and share information more effectively. The number of signatories for the new MOU currently stands at 10, and the remaining three jurisdictions are in the process of getting approval to join. The MOU will ensure supervisory authorities can more easily and effectively co-operate and share information on market conduct of regulated entities across Canada, which is also expected to benefit the industry and consumers. It is anticipated increased informationsharing will work to limit the potential for duplicative regulatory action across provinces and territories, as well as provide supervisory authorities with a broader and more comprehensive understanding of practices and conditions in the country’s insurance market. Developing the co-operative framework The development of the co-operative framework was the second priority for CCIR. It builds on the foundation established through the MOU, detailing how supervisory authorities will work more closely together. Effectively, the framework codifies a co-operative approach that bolsters partnerships among the provincial and territorial authorities and establishes a supervisory model that is akin to a regulatory college. The framework clarifies how CCIR members will work together on market conduct issues across provinces and territories. It describes the kind of information that members will share with one another and how that information
will be used by the regulators and CCIR collectively. Fundamentally, the co-operative framework is a direct response to the IMF’s call for supervisory authorities to be proactive in enhancing consistency. It identifies the types of information to be shared and partnered activities in which supervisory authorities will engage to bring about greater regulatory consistency across provinces and territories.
CO-OPERATIVE SUPERVISION Supervisory authorities will now share responsibilities and leverage their resources in regulating the insurance markets by identifying common regulatory concerns and developing co-operative supervisory plans to address those concerns. Partner-
It is anticipated increased information-sharing will work to limit the potential for duplicative regulatory action across provinces and territories. ships and project teams will be established across provinces and territories so that multiple jurisdictions can engage in co-ordinated supervisory activities, including insurer-specific reviews, thematic reviews and reviews of systemic risks. For example, when two or more provinces are interested in investigating the same insurer or market issue, they will co-ordinate and conduct a single investigation, and then share the results with other MOU signatories, thereby minimizing the chance of duplicative reviews being undertaken. For the industry, that co-ordination and co-operation means responding to one request for information, investigation or review from supervisory authorities instead of upwards of 13. The increased information-sharing outlined in the co-operative framework also paves the way for provincial and territorial supervisory authorities to work more closely on collecting and analyz-
ing data, which should result in a more comprehensive approach to market analysis. Regulators will now have access to not only more data and resources for assessment, but also a deeper, national context regarding the practices and trends within their own jurisdictions. The increased information-sharing and co-operative supervision of the insurance market is expected to provide for more effective regulation, improved use of regulatory resources, better identification of market conduct risks and more proactive regulatory responses, as well as similar levels of consumer protection across provinces and territories.
NEXT STEPS With most of the provincial and territorial supervisory authorities being MOU signatories and agreeing to the co-operative framework, efforts are under way to ensure the new co-operative and coordinated approach to insurance regulation is implemented starting this year. Supervisory priorities for the next year are currently being assessed to identify commonalities among the provincial and territorial supervisory authorities. Common priorities will be used to develop co-ordinated plans of action and provide the basis for co-operative supervisory activities in the coming year. The CCIR is also working to develop a harmonized annual information return for insurers across the country. Consultations with industry representatives regarding the content and delivery of the harmonized form — meant to reduce duplication and eliminate the need for insurers to provide similar or identical information to multiple supervisory authorities — began in late 2015. The information collected will provide CCIR members with the information needed to monitor market conduct practices. The CCIR and its members have a longterm commitment to the fair treatment of consumers and ensuring consumer protection remains the focus. The CCIR will maintain its open dialogue with industry stakeholders as its work to redefine the approach to co-operative market conduct supervision continues.
March 2016 Canadian Underwriter 17
Tech Threat
Associate Editor
Computer programs designed to snoop through retailers’ point-of-sale (POS) systems for sensitive customer information — or to encrypt files so that criminals can extort money — are among the cyber threats Canadian businesses face. But a major hurdle to overcoming such threats, suggest information technology security experts, is a lack of awareness among non-technical employees. While very few threat reports “focus on or cover Canada,” the data available indicates that the most prominent IT security threat here is the
18 Canadian Underwriter March 2016
NUISANCE OR THREAT? Adware includes “threats that cause advertisement pop-ups and unwanted information,” IT security vendor Symantec Corporation points out in its 2015 Internet Security Threat Report. For adware, “the biggest impact to an organization would be help desk calls — people complaining about their computers running a little bit slower, or that their computers are behaving in ways that they feel they shouldn’t be,” explains Bruce Snell, cyber security and privacy director for Intel Security. “Those help desk calls start adding up really quickly, in terms of costs. How much time are your help desk people spending on pulling adware out of somebody’s web browser versus actually trying to stop a malicious threat from going around on your network?” Snell asks. Adware that does not contain malware is “more of a productivity impact than anything,” says James McCloskey, senior director of security risk
Illustration by Scot Ritchie
Greg Meckbach
Ransomware and malware disguised as advertising tools for web browsers are just some of the computer security threats that can trigger losses. Experts advise organizations, especially those with sensitive data, to educate their non-technical staff on defending against threats from cyberspace.
OpenCandy toolbar, Natasha Hellenberg, senior threat researcher for Tokyo-based vendor Trend Micro Incorporated, suggests in a blog post. “Users are tricked into installing this onto their machine, which is then used to also download malware onto it,” says Ottawa-based Hellenberg. OpenCandy is “typically targeted at consumers, although employees may also download this type of malware,” Michael Bruemmer, vice president of data breach resolution for Experian PLC in Dublin, notes in an email to Canadian Underwriter.
BURNS &
PROVIDE THE ANSWERS TODAY
WILCOX
SPEED IS OUR MIDDLE NAME.
Illustration by Scot Ritchie
Our vast global market relationships speed up our quoting and binding process, quickly providing insureds the solutions they need. When it comes to the hard-toplace, think fast. Think Burns & Wilcox Canada.
888.591.9125 | burnsandwilcox.ca Commercial | Professional | Personal | Wholesale | Binding | Risk Management Services
38250 Burns Canadian Underwriter Update Location APPROVED.indd 1
8/13/15 1:16 PM
and compliance at Info-Tech Research Group of London, Ontario. That said, “the reality is that very little adware is simply adware itself,” McCloskey cautions. “Often [adware is] the visible portion of the iceberg and what’s below the surface is something that is much more malicious and will have not simply a productivity impact, but, unfortunately, either an availability or a confidentiality impact of some kind,” he says. The threat of a breach of confidential information is the “primary issue” caused by malware, including adware, attacks on retail POS systems and ransomware, says McCloskey. With ransomware, Symantac reports, attackers “use malware to encrypt the data on victims’ hard drives.” An attacker then demands a payment to unlock the files, the company adds. Overall, Snell says Intel Corporation’s McAfee Labs reports it detects five new IT security threats every second. With respect to ransom, the number of individual incidents in 2015 was 155% greater than in 2014, he reports. “When ransomware first started, we were able to create a stinger, which is kind of a self-contained executable, which will go in and remove a particular virus or a particular piece of malware,” Snell explains. “So, for a lot of the initial families of ransomware, you could create a stinger that had the decryption key included and it could just go in and unencrypt it for you,” he points out. However, over the past six to nine months, there has been “an increase in dynamically generated decryption keys that are generated based on the device, so you can’t actually use a generic key to unencrypt these pieces of malware and decrypt these systems that are infected,” Snell says. As a result, he suggests that more ransomware victims are having to pay to decrypt their systems. When hit with ransomware, small business owners “are typically more inclined to pay, because they have a lot invested in that system,” Snell says. “They maybe have only one or two systems that they are using to run their entire 20 Canadian Underwriter March 2016
business, so for them, it’s not really an option to pay or not.”
RETAILERS BEWARE The cost to a business “can go from a few hundred dollars... or your entire business being at risk in terms of being a target of ransomware or advanced (distributed denial of service) attacks,” notes Deepak Patel, director of security strategy at Imperva Inc., a Californiabased manufacturer of computer security products. Malware designed to be installed on retail POS systems is “getting extremely sophisticated,” Patel says, citing as an example Target Corporation, hit hard by a data breach in late 2013. That breach “compromised approximately 110 million credit and debit cards and personal information of Target
give you the range of costs, depending upon the size of business,” says Patel. In the Home Depot breach, which occurred between April and September 2014, “hackers stole the personal and financial information of approximately 56 million Home Depot customers,” reports LexisNexis. The retailer faces a class action lawsuit filed by financial institutions claiming that they incurred more than US$150 million “in reissuance costs, and possibly billions of dollars in total fraud losses” due to the breach, adds the legal information provider. The Target breach “started with the compromise of a trusted service provider” working on the retailer’s heating, ventilation and air-conditioning system, says McCloskey. “The expectation for more and more organizations is that any of the partners that they’re working with are going to be held to an increasingly high security standard as well, and, essentially, being brought by association into that higher threat landscape mindset.”
HIDDEN THREAT
customers, including addresses, phone numbers and email,” reports law firm Zimmerman Reed LLP, which is representing plaintiffs in a class action lawsuit filed in the United States. “Banks and financial institutions have incurred substantial losses in addressing and remediating this breach on behalf of their banking customers,” the firm reports. Five banks filed a class action claim against Target, with a settlement, valued at US$39 million, “preliminarily approved” by a U.S. court in December. “Target and Home Depot are the two existing examples in recent history that
One threat that targets POS systems, Cherry Picker, is designed to evade security controls, IT security vendor Trustwave notes in a recent blog post. Snell explains that Cherry Picker uses “advanced obfuscation techniques” to avoid detection by anti-virus products. To counter such threats, Intel Security advises that retailers use “application white listing” on their POS systems. Essentially, the “white list” is a complete list of applications that can be loaded on to a machine, so the software will block any computer program not on that white list from accessing the computer’s memory, Snell explains. “It’s really a good way for systems that you actually shouldn’t be doing a lot of installing and uninstalling of applications on,” he says. “If it’s a singlepurpose point of sale device, odds are you are not doing a lot. You are not running a web browser or reading email on it, so locking it down via white-listing is a really good way to go.” Of course, retail is not the only sector at risk. Companies that are “highly intel-
lectual property-driven” are also at risk of having sensitive internal information being breached, says McCloskey, adding “advanced persistent threats” tend to target healthcare organizations, which have large pools of identity data, and financial services. “Why would you attack a bank or financial institution electronically? Because their product is money and there’s a good opportunity there.”
EDUCATE STAFF Surveys by market research firm IDC Research Inc. show the “top three roadblocks” to improving IT security are budget, lack of knowledge among nonIT staff, and “an increase in speed and types of attacks,” says Kevin Lonergan, IDC Canada’s senior analyst for infrastructure solutions. “Despite admitting that a lack of employee security knowledge is the number two roadblock to improving security, the majority of organizations provide no training to their staff on a yearly basis,” Lonergan notes.
“I think a lot of security teams have a good understanding of what’s happening, but there are far more non-security people in the business world than there are security people,” Snell says. “Maybe do educational training on the types of things to look out for in a suspicious email or when you should or should not click a link,” he suggests. One hurdle to gathering Canadian statistics for malware attacks on businesses, McCloskey advises, is the fact that it is “tough to get people to come clean on their level of incidents.” The federal government recently “made some announcements with respect to facilitating some judgment-free sharing of incident information across industries.” For example, the Canadian Cyber Incident Response Centre (CCIRC) “shares technical information on threats, vulnerabilities, risks and incidents with its partners to enhance collective understanding of cyber threats and incidents, and help ensure organizations have the
information required to make informed decisions,” Public Safety Canada reports on its website. Organizations “can report cyber incidents to the [federal government] through CCIRC,” adds a spokesperson for the federal department. In December, several firms noted that, this year, they will launch the Canadian Cyber Threat Exchange (CCTX), which will work to share information about cyber threats and vulnerabilities among businesses, government and research institutions. CCTX’s nine founding members are Air Canada, Bell Canada, Canadian National Railway, Hydro One, Manulife, the Royal Bank of Canada, TELUS, Toronto Dominion Bank and TransCanada Corporation. “You can’t expect others to share their information if you’re not willing to share, but it’s understandable why no one wants to go first,” McCloskey says. “I think the conditions are being put in place where there may actually be some progress on that in the near future.”
Delving
Deeper Debbra Macdonald
President, 3C Investigations Inc./ International MultiCultural Background Information Services
Jason Mandlowitz
Chief Executive Officer and Vice President, Administration, 3C Investigations Inc./ International MultiCultural Background Information Services
There is a need for enhanced international, multicultural information services as part of current efforts by those in the property and casualty insurance industry to combat fraud. Casting a wider net on what information is collected and considered may be one way to address what looks to be a growing problem. With the growing number of people new to Canada, or those who are personally and/or professionally linked to other countries, the property and casualty industry in Canada potentially faces yet another challenge in obtaining credible information to ensure the legitimacy of claims initiated by individuals and in safeguarding against organized crime and fraud. The insurance industry is not alone, of course; employers and corporations are facing the same
22 Canadian Underwriter March 2016
challenges in their hiring practices, while legal services firms and law enforcement agencies are being confronted with identifying and addressing fraudulent activity. It is not uncommon for these groups to undertake research into the background of claimants and to construct a “scope of activity� analysis to determine broader trends and developments. However, this activity has proven to be limited, given that it focuses on easily and readily available sources of information, including standard social media and open sources. Fraud has no borders, especially through social media in the World Wide Web. It has become extremely important to take a competitive approach to combating fraud by eliminating language and cultural barriers through translation of blogs, social media and other forms of online communication. The issues that adjusters and investigators face include not knowing the proper websites to search to identify postings of the target or its group. For example, one of the most popular sites for social media in Europe is VKontakte, which has capability of content in several languages.
NEWS FROM CANATICS Announcements from the newest tool in the fight against organized auto insurance fraud:
Proud to receive Privacy by Design (PbD) Certification from Ryerson University CANATICS recently received recognition in the form of Privacy by Design Certification from Ryerson’s Privacy and Big Data Institute following a 3rd party assessment. This recognition means CANATICS meets the rigorous tests of a globally recognized privacy standard. Our motto has always been “privacy smart from the start”. We’re proud to receive this 3rd party confirmation of our efforts.
Partnering with Insurance Bureau of Canada (IBC) for faster results In January 2016, we began forwarding a subset of our alerts, on behalf of our members, to the Insurance Bureau of Canada. CANATICS is the early warning system for organized fraud detection, and IBC is the industry’s investigative body. This partnership will help members identify fraudulent behaviour, and bring the bad guys to justice sooner. Collaboration and early detection are essential in the fight against organized crime.
Looking ahead… Over the course of 2016, we will: •
Work to continue to grow our membership
•
Increase our sources of data (while always remaining leaders in privacy protection)
•
Work with subject matter experts to continue to fine-tune the tool
•
Explore expansion into other provinces
•
Spread the word about the power of data analytics at conferences such as the National Insurance Conference of Canada and the Canadian Life and Health Insurance Association annual conference
ABOUT CANATICS Canadian National Insurance Crime Services, or CANATICS, is a non-profit organization focused on fighting insurance crime by providing the industry with superior intelligence derived from analytics performed on pooled industry data. CANATICS maintains an unwavering focus on data quality, privacy and security. Its members represent 75% of the Ontario auto insurance market. Learn more at www.canatics.ca.
It would be more difficult and costly for an outsider to find the information where cultural barriers are present. A person who speaks the language can access the information with ease. Furthermore, finding the connections and social activities online and through media may allow adjusters to make informed decisions and mitigate the claim appropriately. Insurance companies, insurance advocacy organizations, think tanks, governments and consumers all know there is some fraud involved in claiming benefits from insurance or government programs. The extent of the fraud is difficult to quantify, but it has reached billions of dollars in Canada, as reported by organizations such as KPMG Forensic and Insurance Bureau of Canada. In addition, Statistics Canada has reported individuals other than employees committed most frauds against business establishments in the country in 2008. Stats-Can figures show that for health and property insurance establishments, 45% of respondents cited there was fraud. In a 2001 study prepared by the Canadian Coalition Against Insurance Fraud, the group determined that general insurance fraud costs Canadian insurers $1.3 billion each year. Property and casualty insurers paid $500 million for personal injury insurance claims that contained some form of fraud. Based on a review of 4,066 closedwith-payment claims in the Atlantic provinces, Ontario, Manitoba, Saskatchewan and Alberta, the study found at least 26% of all personal injury claims that were examined contained elements of fraud. Opportunistic fraud (exaggerating the extent of an otherwise legitimate injury for financial gain) exceeded premeditated fraud (for example, a staged accident or deliberately caused accident). The cost of fraudulent claims at the time was found to be highest in Ontario, at 21% to 31%, and lowest in Alberta, at 7% to 12%. The 2012 report of the Ontario Automobile Insurance Anti-Fraud Task Force notes that automobile fraud in Ontario is between $769 million and $1.56 bil24 Canadian Underwriter March 2016
lion annually. Of this amount, opportunistic fraud accounts for $593 million to $1.285 billion and organized fraud costs $175 million to $275 million. The IBC-commissioned report by KPMG Forensic found that although the study could not provide the precise costs of auto insurance fraud in Ontario, it did suggest 9% to 18% of annual claims costs are fraud-related. Using the $769 million to $1.56 billion estimate, KPMG calculated that the impact of fraud on the average auto insurance premium in Ontario would be between $116 and $236. These trends are unsustainable and make it very difficult for participants in the insurance marketplace to control or lower consumer costs.
To be even more effective, investigations should be carried out and sources of information pursued in as many languages and dialects — up to 150 different languages and dialects are spoken internationally — as possible. Fraud programs must adapt accordingly and broaden the scope of research to include multicultural, indigenous sources. ADDING MUSCLE TO FRAUD PREVENTION There are a number of issues of concern evident in current fraud programs. One is the insurance industry’s fraud detection paradigm has not evolved quickly enough to counter the escalation and scope of fraud. The scope of fraud is changing through communication online and organized efforts to commit fraud, fraud efforts have no borders,
and communication has become easier with the flow of information through the Internet. Claims adjusters and special investigators are generalists. While they may have access to internal and external resources, language barriers may exist and search terms may be different as a result of cultural barriers. Much time can be wasted if search criteria is incorrect. For example, a search of Facebook may be useless if the person is from Russia and is using social media websites specific to the language and location. There are also social groups on the Internet that may be familiar to the same social groups, but not to others. Having a better understanding of the cultural and demographic context that underpins fraudulent activity is key. Limited reach Up to now, where investigations are being conducted by external resources, such as private investigation agencies, they have tended to be limited. In general, the investigations focus on public documentation, surveillance, witness locations/statements, claim applications and easily accessible web-based technologies (usually sites such as Facebook and Twitter). To be even more effective, investigations should be carried out and sources of information pursued in as many languages and dialects — up to 150 different languages and dialects are spoken internationally — as possible. Fraud programs must adapt accordingly and broaden the scope of research to include multicultural, indigenous sources (for example, country- and/or locationspecific media sources, social media and open sources). Information derived from these types of sources, in turn, should form part of the investigation plan. Improved access Effective investigations are enhanced by professionals able to communicate in more than one language. The experience of 3C Investigations, for example, has been that international
multicultural services, including fraud programs, must match investigators with vetted, professional, capable and, wherever possible, accredited interpreters and translators to enhance the ability to acquire information. The partnership between investigators and interpreters/translators provides the opportunity to uncover and track “leads” which can then be verified through other tools such as surveillance and “home” social media reviews. The idea is to foster partnerships to bring a “cultural” understanding to the investigation, which further points to emerging investigative avenues such as non-traditional social media.
in Canada. For example, a 2014 survey of 1,500-plus Canadians, carried out by Leger Marketing, found that 12% of respondents would put unrelated damages on an auto accident claim, 11% would inflate what was stolen from their vehicles, 13% would exaggerate the value of items lost in their stolen luggage while on vacation, and 25% would keep payment for an insured object even if it
Spotting the red flags International multicultural services should be considered when red flags are evident, such as the following: • a general issue of concern is where fraudulent behaviour can be linked to organized rings that have international activities; • with automobile claims, a red flag would be staging of a collision with other individuals who are known claimants and where the activity is determined to have occurred in several jurisdictions, or premium payment has been avoided by reporting a false Canadian address or identifying a foreign location as the primary address; • for property and theft claims, concern would be evident if the insured had a history of multiple claims and, in the course of the claim-settlement process, tended to push for a quick settlement, displayed extensive knowledge of insurance terminology or insurance claims processes, settled quickly for a smaller amount and directed the payment to an off-shore account or address; and • with regard to organized scams or pitches, a red flag would be the point of origin of the originating call or email.
FUTURE ACTIONS National Network of Independent Law Firms There isA significant empirical evidence to support the need for fraud prevention
was found after the claim was paid. To combat fraud, insurers are taking a number of actions. These range from legal remedies to using analytics and technology, including predictive modelling and fraud network analysis. The adoption of international multicultural background services should be considered an additional tool in this offensive.
If you’re in Manitoba, this is considered an automobile. Surprised? ARC isn’t.
Your customer has a list of the vehicles that are covered by your fleet policy. You have a list of the vehicles that are covered by ARC Group Canada is a national that policy. network of independent law firms, And your lists aren’t theintimately same. each connected to their local market. When the one vehicle that is involved in Insurance risk appear management an accident is the one thatand doesn’t on experts. Regionalnext? strength. both lists, do you know what happens National scope. ARC does. That is the ARC Group.
ARC Group Canad network of indepen each intimately the
Insurance and ris experts. Reg N
That is t
Go to A
ARC Group Canada is a national network of independent law firms, each intimately connected to their local market. Insurance and risk management experts. Regional strength. National scope. Go to AskARC.com
The ARC Legal Reporter Winter Issue – Article #1 A National Network of Independent Law Firms
When is a medical examination considered a second examination under Rule 36 of the New Brunswick Rules of Court?
The ARC Legal Reporter v. Crowther and Kelly Case: Winter IssueReported – Article #1 Blyth 2009 NBCA 80 Citation:
ARC_Fleet ad_1/2 page.indd 1
Blyth v. Crowther and Kelly 2009 NBCA 80
Surp
Go to AskARC.com
At Issue:
When is a medical examination considered a second examination under Rule 36 of the New Brunswick Rules of The Court? Court: Reported Case: Citation:
If y Manitob consid auto
Judgment Rendered: Factual Summary:
When both the plaintiff’s physical and mental condition are in issue in an action, a the plaintiff undergoes a physical examination, will a subsequent application fo psychiatric examination be considered an application for a second med examination?
Should medical examinations that are ordered as part of the discovery process characterized as ‘independent’ medical examinations? Court of Appeal of New Brunswick October 13, 2009 (Reasons delivered November 2015-02-14 26, 2009) 1:05 PM The plaintiff suffered injuries in a motor vehicle accident and commenced an ac seeking damages. Both the plaintiff’s physical state and mental state were in issue the action. The plaintiff submitted to a physical examination by the defendant’s exp but subsequently refused to submit to a psychiatric examination.
Testing the Waters Ashleigh Leon
Partner, Miller Thomson LLP
Megan Whalen
Student-at-Law, Miller Thomson LLP
The great debate surrounding causation in accident benefit claims continues with an arbitrator’s ruling out of Ontario. While the material contribution test may have been favoured until fairly recently, the new decision seems to support the return to the use of the “but for” test as the default in such matters.
The debate surrounding the appropriate test for causation in accident benefit matters was addressed once again in the recent decision by the Financial Services Commission of Ontario (FSCO), Kofi Agyapong v. Jevco Insurance Company. In rendering his decision and determining causation, arbitrator John Wilson analyzed the appropriateness of the current dominant use of the material contribution test in the accident ben-
26 Canadian Underwriter March 2016
efit context compared to the historical use of the “but for” test, which remains the standard analysis is other personal injury/tort matters.
BACK… AND FORWARD Case law over the past few decades has wavered with respect to determining the appropriate test for causation for accident benefits claims. After a period of time favouring the material contribution test, a string of Supreme Court of Canada, Court of Appeal for Ontario and tribunal decisions has once again led stakeholders back to the “but for” test as the default causation analysis. Traditionally, the test for causation throughout Canada has been the “but for” test, placing the onus on the plaintiff to prove on a balance of probabilities that his or her injury would not have occurred but for the defendant’s negligent conduct. Exceptions to the “but for” test were rare. However, in the 1990s, two leading cases in causation — Snell v. Farrell in 1990 and Athey v. Leonati in 1996 — introduced the possibility of using a material contribution test in place of the “but for” test. The material contribution test requires a plaintiff to prove only that the negligent conduct of the defendant materially contributed to
the injuries sustained by the plaintiff. In the accident benefit context, the test requires the plaintiff to prove that the accident materially contributed to his or her injuries. The accident need not be the only contributing factor. In Snell, the Supreme Court of Canada recognized that the “but for” test risked depriving injured victims in circumstances where deprivation was unwarranted. Snell kept the onus on the plaintiff to prove the defendant’s negligence caused or contributed to the plaintiff’s injury, however, it also demonstrated that causation need not always rely on scientific proof. Snell established that it is the trier of fact, not the medical witnesses, who make the legal determination of causation. Ultimately, Snell showed that the court was prepared to apply a less rigid standard of causation when appropriate. In Athey, the courts applied a less rigid test of causation as discussed in Snell, adding flexibility to the analysis. The
high court stated that the general, but not conclusive, test for causation is the “but for” test. However, where it is unworkable, the material contribution test may be applied. Athey allowed for the plaintiff to prove causation by meeting the “but for” test or the material contribution test, as well as using future or hypothetical events to determine degrees of probability, as long as the causation of the injury is determined to be proven, or not proven. At that point in time, it was uncertain whether or not the “but for” test was the primary test for determining causation. In 2007, Resurfice Corp. v. Hanke, shed some light on the standard of causation dilemma. Once reaching the Supreme Court of Canada, Hanke confirmed that the test for determining causation remained the “but for” test with only two rare exceptions. In order for the material contribution test to be properly applied, two requirements must be met. First, it must
be impossible for the plaintiff to prove that the defendant’s negligence caused the plaintiff’s injury using the “but for” test. The impossibility must be as a result of factors that are outside of the plaintiff’s control. Second, it must be clear that the defendant breached a duty of care owed to the plaintiff, thereby exposing the plaintiff to an unreasonable risk of injury, and the plaintiff must have suffered that form of injury. In other words, the plaintiff’s injury must have fallen within the ambit of the risk created by the defendant’s breach. When these two requirements are met, it may be possible for liability to be imposed, even though the “but for” test was not satisfied. In 2008, Justice Eleanore Cronk of the Court of Appeal for Ontario addressed causation in accident benefit matters in Monks v. ING Insurance Company of Canada. Justice Cronk reasoned the material contribution test has been utilized to resolve
Take your Leadership Defined.
Leadership skills to new heights
The Fellow Chartered Insurance Professional (FCIP) designation gives you the strategic skills and insights to become an effective leader in any role within your organization. FCIP graduates confirm that they have directly benefited from the broad perspective they gained from the FCIP program’s comprehensive business education with a p&c focus. Are you ready to become an industry leader? Take our short FCIP self-assessment quiz and hear FCIP grads talk about the program at:
www.insuranceinstitute.ca/fcip 1-866-362-8585
March 2016 Canadian Underwriter 27
Given the difficulty of proving that it is impossible, due to factors out of his or her control, for the plaintiff to prove the “but for” test, courts have almost never found a situation to apply the material contribution test over the “but for” test.
causation issues in accident benefit disputes in a long line of arbitral decisions. The causation analysis in Hanke was addressed, but Justice Cronk did not believe the outcome of Hanke applied to accident benefit decisions. She found that applying the material contribution test was reasonable because ING had offered no valid reason for why the material contribution test should not be applied. This essentially shifted the onus for proving that the “but for” test should be applied to the defendant insurer, whereas, historically, the burden was placed solely on the plaintiff to prove that the material contribution test should be applied because the “but for” test was unworkable.
SHIFTING VIEWS For some time, the material contribution test prevailed in accident benefit matters as a result of the decision in Monks. While citing Monks in 2011, arbitrator Robert Kominar concluded in the FSCO decision, Kump v. Economical Mutual Insurance Company, “it is clear that the law, as it relates to accident benefit claims in Ontario, requires only that the applicant prove causality on a material contribution basis.” The requirement to show the “but for” test was impossible to utilize in the circumstances had disappeared completely. Since Monks in 2009, many decisions have raised suspicion about the application of the material contribution test as the default for accident benefit matters. Clements v. Clements, a 2012 decision by the Supreme Court of Canada, ad28 Canadian Underwriter March 2016
dressed the uncertainty of applying the material contribution test and exactly when it is “impossible” for a plaintiff to prove causation using the “but for” test. Clements noted that despite the confusion over the years, Snell, Athey,Walker Estate v.York Finch General Hospital and Hanke were all resolved on an application of the “but for” test. Clements concluded that the general rule in the state of the law at the time was that a plaintiff could not succeed unless shown as a matter of fact that he or she would not have suffered the loss “but for” the negligent act(s) of the defendant. Although the judge was to take a pragmatic approach in determining if negligence had been established, scientific proof of causation was not needed. In exceptional circumstances, a plaintiff could show the defendant’s conduct materially contributed to his or her injury where (a) the plaintiff had established the loss would not have occurred “but for” the negligence of two or more tortfeasors; and (b) the plaintiff was unable to show that any one of the possible tortfeasors was the “but for” cause of the injury, because each could point to the other as the “but for” cause.
BACK IN FAVOUR As a result of Clements, the “but for” test was once again the default test in Canada. Given the difficulty of proving that it is impossible, due to factors out of his or her control, for the plaintiff to prove the “but for” test, courts have almost never found a situation to apply the material contribution test over the “but for” test.
It appears from recent accident benefits decisions that courts and arbitrators are beginning to lean back to the “but for” test as the default causation analysis in these matters as well. In a 2015 accident benefits matter, Blake v. Dominion of Canada General Insurance Company, released by the Court of Appeal for Ontario, the “but for” test was applied by the trial judge. Although the use of the “but for” test was later disputed on appeal, the appeal was quickly shut down as the plaintiff had not disputed the “but for” test during the trial stage. The implication is that unless the plaintiff objects to the use of the “but for” test with legitimate reason, it is applied as the default causation analysis. Agyapong has most recently supported the return to the use of the “but for” test as the default in accident benefit matters, with arbitrator Wilson stating “the days of the ritual application of the material contribution test in accident benefit matters are numbered at best.” A shift in causation for accident benefits matters back to the more rigid “but for” analysis comes at the same time as a number of other significant changes in the no-fault regime, with changes unfolding in both the dispute resolution process and benefit entitlement. It appears that claimants are not only going to be dealing with smaller benefit limits payable over a shorter period of time and a new process for resolution of disputes, but also with more stringent causation requirements than have been seen over the past several years of accident benefit jurisprudence.
Aggregation Aggravation While risk managers for large manufacturers tend to be aware of the vulnerability of their supply chains to major incidents affecting business partners, the same cannot necessarily be said for risk professionals at small to mid-sized organizations. Some experts warn the latter may not be aware of the full impact that aggregation of risk, including relating to cyber and critical infrastructure, can have. GREG MECKBACH
30 Canadian Underwriter March 2016
R
isk professionals, particularly those at small organizations, may not fully appreciate “interdependencies” with partners and suppliers and, as such, may not have a firm grasp of the full impact of a related failure. The cascading impact can begin with a number of incidents, including a cyber security breach, a terrorist attack or the failure of critical infrastructure. Whether or not risk managers understand the impact to their own organization, aggregation of risk “really depends on the sophistication of the organization and how critical it really is,” suggests Michael Loeters, vice president and regional practice leader, risk management (Ontario) for BFL Canada. Fortune 500 firms tend to be “well-aware of interdependencies, especially from a business interruption standpoint,” says Kent Pitkin, national director for commercial lines at managing general agent April Canada, part of the France-based April Group. Pitkin cites the ice storm that hit southern Ontario shortly before Christmas 2013 as an example of an event that could lead to aggregation of risk. Environment Canada notes that freezing rain fell most of the day on December 21, with 16.6 millimetres of rain reported at Toronto Pearson International Airport and another 13.6 millimetres of precipitation (mostly freezing rain) the following day. During the height of the storm, Toronto Hydro reported about 300,000 of its 726,000 customers were affected, mainly as a result of branches and trees falling on power lines. “The small to medium-sized guy doesn’t really understand the interdependencies of how these events affect not only their insurance, but their business in general,” Pitkin suggests. Events like the ice storm can prevent a business from receiving materials or even opening, he points out. That differs from large manufacturers, especially those in the aviation and auto sectors, who know full well that an event affecting business partners may prevent them from shipping or receiving components, Pitkin says. Regardless of company size, however, these incidents can affect not only a specific company, but multiple suppliers or multiple components in the supply chain, he explains.
March 2016 Canadian Underwriter 31
COVER STORY
Aggregation Aggravation INVENTORY VULNERABILITY “Just-in-time inventory was a boon to supply chain because you only have parts in front of you that you need for that day, or that week,” says Darius Delon, associate vice president of risk services at Mount Royal University. “So if you have a supply of parts for seven days, and your worst possible scenario for shutting down the factory is only seven days long, you’re good,” Delon says. However, organizations relying on just-in-time delivery “need mechanisms in place to actually identify the supply chain risk and how it impacts the larger entity,” he cautions. “Identifying aggregation of risk and interdependencies is an important component of your overall approach to determining the risk profile of your organization,” Nowell Seaman, director of global risk management for Potash Corporation of Saskatchewan, says, commenting in his capacity as vice president and board member of RIMS, the risk management society. “You are trying to look at all significant sources of risk and aggregation could certainly be overlooked. Not surprisingly a small or mid-sized firm — used to looking at the risks of its own operation — might not be thinking that far,” Seaman suggests. Andrew Graham, an adjunct professor at the Queen’s University School of Policy Studies, is of the view that most organizations do not have a robust understanding of their interdependencies. “It’s not [only] risks to their businesses, but risks in other businesses that will affect them,” states the former senior deputy commissioner for Correctional Service Canada and former warden of the Kingston Penitentiary. Citing information from the federal government, Graham notes in Canada’s Critical Infrastructure: When is Safe Enough Safe Enough?, published by the MacdonaldLaurier Institute, critical infrastructure includes electrical power, water treatment, sewage treatment, hospitals, the blood supply, banking and securities. Other examples are telecommunications and broadcasting, chemical manu32 Canadian Underwriter March 2016
facturers, railways, natural gas, oil production and transmission systems. Critical infrastructure, Graham notes, includes “those physical and information technology facilities, networks, services and assets, which, if disrupted or destroyed, would have a serious impact on the health, safety, security or economic well-being of Canadians or the effective functioning of governments in Canada.”
Risk managers should carry out “a very critical assessment of their infrastructure and their susceptibility,” suggests Mount Royal University’s Darius Delon. It is important to know “what it is that is susceptible — whether that’s hacking, attacking or just vandalism — because a lot of those infrastructure pieces are critical to the day-to-day life of a Canadian.” Risk managers should carry out “a very critical assessment of their infrastructure and their susceptibility,” Delon suggests. It is important to know “what it is that is susceptible — whether that’s hacking, attacking or just vandalism
— because a lot of those infrastructure pieces are critical to the day-to-day life of a Canadian,” he points out. Pitkin says an interruption of financial networks, for example, can cause liability risk. “It could cripple an area of the economy, especially if it was more on the point-of-sale side where your average person can’t go to the bank and get $20 out for lunch,” he notes. “People could lose money based on [securities] trades that they could have made.” One major concern to risk managers is the potential for “a very large successful malicious attack that brings down, say, all of the infrastructure necessary to make the financial transfers that we all rely on,” Seaman warns. “We rely heavily on the government and large organizations that run those financial systems have the controls and the means in place to prevent such an attack, but I think the concern is a large malicious attack and I don’t think we have necessarily experienced something of the magnitude that people are concerned about,” he contends.
NIGHTMARE SCENARIOS “The highest level of threat to Canada’s [critical infrastructure] rests in the areas of natural disasters and system degradation, both of which lend themselves to investment in resilience and redundancy,” Graham writes in his report, adding that other threats include terrorism and vandalism and hacking. “I think that one of the problems is a lot of firms lack imagination with respect to what could happen to them or what could affect them if something went wrong with pipeline infrastructure or anything like that,” Graham told Canadian Underwriter. “By lack of imagination I mean there’s a certain point at which you have to sit down and say, ‘What’s the worse thing that could happen?’” One bad thing that could happen is a cyber attack on the power grid, AIR Worldwide notes in the report, Aggregated Cyber Risk:The Nightmare Scenarios. Such an attack “could lead to business interruption losses across a large geographic area,” the report states.
Insuring the impossible. possible.
With new offerings like Client Centric Analytics, smart partnerships, and investments in forward-thinking solutions like wearable devices for improved worker safety, AIG is helping clients embrace innovative technology and every new opportunity. To learn more, visit AIG.com/innovativetech
AIG Insurance Company of Canada is the licensed underwriter of AIG property casualty insurance products in Canada. Coverage may not be available in all provinces and territories and is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Š American International Group, Inc. All rights reserved.
CDNL00000451 Innovative Tech Canadian Underwriter 8.125x10.75 FEB16.indd 1
26/02/16 2:10 pm
COVER STORY
Aggregation Aggravation “It is plausible that such a power outage could cause an extreme aggregation loss and could be caused by the types of malware and viruses that hackers have already produced.” Critical infrastructure “has a cyber component,” agrees José Fernandez, a computer engineering professor at École Polytechnique de Montréal, whose areas of expertise include the security of critical infrastructure control systems and malicious software. “It’s not somebody going to a hydro power distribution and putting a bomb and blowing it up,” Fernandez says, but, instead, something like someone sending the wrong computer commands to an electrical utility. “The electrical grid is very sensitive to perturbations,” he says. “We saw that in 2003,” Fernandez reports, referring to the August 14 outage when large portions of the Midwest and Northeast United States and Ontario experienced an electric power blackout. “The outage affected an area with an estimated 50 million people and 61,800 megawatts (MW) of electric load in the states of Ohio, Michigan, Pennsylvania, New York, Vermont, Massachusetts, Connecticut, New Jersey and the Canadian province of Ontario,” the joint U.S.-Canada Power System Outage Task Force notes in its report, released in 2004. The computer supervisory control and data acquisition alarm and logging software of FirstEnergy, which is comprised of seven U.S. electrical utility operating companies, failed some time after 2:14 pm that day, reports the task force, chaired by the U.S. secretary of energy and Canada’s natural resources minister. “I hear people say that can’t happen again,” Graham says. “I don’t believe it. It could easily happen again. The more complex a system is, the more vulnerable it is to breaking down in a way that makes it harder to put back together again,” he contends.
GRID MANIPULATION Although the outage was caused by an accident, “the same thing could have happened by somebody sending the 34 Canadian Underwriter March 2016
wrong commands or the wrong information, and that is definitely a possibility,” Fernandez cautions. If that were to take place, such an incident could affect critical infrastructure for “days, if not weeks,” he maintains, pointing out that miscreants could carry out such an attack using existing technology.
“I hear people say that can’t happen again,” Andrew Graham of Queen’s University says of the 2003 power blackout. “It could easily happen again. The more complex a system is, the more vulnerable it is to breaking down in a way that makes it harder to put back together again.” “As we are moving towards smart grid and smart meters, one of the groups that will be interested in manipulating those smart grids will be the pot growers who are doing hydroponic growing of marijuana because it consumes a lot of electricity, which is a telltale sign of an illegal operation, so they have been manipulating the old-style meters,” Fernandez expects. “We don’t have proof of this yet, but [grow-up operators] will definitely be interested in manipulating the smart
meters to hide their consumption, and as they do that, they will develop tools that could eventually be used to manipulate not only the meters, but the grid and actually force the control systems to make the wrong decisions and create brownouts and blackouts,” he ventures. That being the case, a technology used for one purpose can later be used for a more destructive purpose, which is “exactly” what happened with spam email, Fernandez recounts. “Most of the hacking tools, the malware technologies, were developed in the early to mid-2000s to support the spam industry because they needed to have some infected machines to generate the spam,” he points out. “But the same technology is now being used for denial of service, for extortion, for much more nefarious cyber crimes.” Malware can also enter an organization’s computer system when a business partner is infected, suggests Greg Markell, Toronto-based account manager, cyber/directors and officers for HUB International HKMB, part of HUB International Ltd. “System integration is incredibly complex, and any connected end points that aren’t evaluated can be potential vulnerability points for threat actors to potentially find a back door into client systems,” Markell warns. “Right now, the biggest challenge that we have is educating our clients on the potential for interconnectivity issues, in terms of what that means,” he says. “To do due diligence and audits on every single integrated system and end point that is connected to other organizations or their supply chain can be a very heavy lift, in terms of time spent, money spent,” he reports. With regard to electrical power failure, “from an aggregation standpoint, many departments will look at the institution — whether it’s the City of Calgary or a big building downtown, or a campus — and say, ‘Oh, okay. If power goes out for my department, I have refrigeration that relies on back-up power and we have it. And that power is infinite and large and powers the entire institution or the entire building,’” Delon says.
Stay focused on the big picture
While we manage the details
Partner with Crawford and streamline your business with our full suite of services catered to risk managers Crawford Risk Management Services (RMS) offers a range of services that meet the specific needs of the risk management community. Our services include: • Third Party Administration/ Program Management
• Workers’ Compensation
• Legal Services
• Trust Account Management
• Disability & Absenteeism Services
• Litigation Management
• Appraisal Management Services
• Subrogation
• Contractor Connection™ Vendor Management Program
• Audit Services
• Data Management • CLAIMSALERT®
Contact us at info@crawco.ca for more information on RMS or any of our services.
www.crawfordandcompany.ca
CdnUnderwriterCrawford-RMS-4.indd 1
2/25/2015 1:02:10 PM
COVER STORY
Aggregation Aggravation “So people’s misconception of the risk controls that are in place makes it a bigger risk,” he comments. This is because for many organizations, their back-up power systems provide “a fraction” of the power they actually use daily, he explains. So while back-up power may keep the building lights and ventilation going, “all the other power that is used — like refrigeration and all that other stuff — is usually not on back-up power,” he adds. That is one reason there needs to be “oversight and aggregation of all those risks,” in a large organization, says Delon. “Once you see everyone relying on the same risk control method, it should tweak you to say, ‘Hold on, all those departments and all those floors don’t have back-up power.’ So you either then go best practice, and actually have emergency generation that’s capable of giving you full power — which is an expensive proposition — but if you do that, then you actually have full back-up power,” he says.
DARK CLOUDS Cloud computing — whereby an organization uses someone else’s computer server and storage hardware for its own applications — is another way that cyber incidents can cause aggregation of risk, Loeters suggests. “A lot of organizations today are outsourcing the backup of their data to third parties and certainly a lot more organizations today are starting to use software as a service,” he points out. “Critical applications that they are using in their business are not installed in their server room like it used to be. They are being hosted by the software company — like a salesforce.com, for example — and I don’t think a lot of organizations realize that if that software vendor or that back-up vendor is in one location and that location goes down for whatever reason, and that data or that application is not replicated, duplicated, redundant mirrored, et cetera at another location, then they are really scooped,” Loeters says. 36 Canadian Underwriter March 2016
A key question around cyber risk is where is the data being hosted, he says. “I don’t think a lot of risk managers are asking that question, in that particular context, but it’s becoming a much bigger issue because if something does happen to that facility where that software is being hosted, and you no longer
“Most of the hacking tools, the malware technologies, were developed in the early to mid-2000s to support the spam industry because they needed to have some infected machines to generate the spam,” says José Fernandez of École Polytechnique de Montréal. “But the same technology is now being used for denial of service, for extortion, for much more nefarious cyber crimes.” have access to the data and you no longer have access to the application, it can have a very, very significant impact on your organization,” Loeters warns.
“You might not be able to order product, for example. You won’t have access to your accounting system. You won’t have access to your prospects, your customer database,” he goes on to say. In general, Delon suggests, aggregation of risk is an issue “that hasn’t really hit the spotlight,” among risk managers. “A lot of effort in the past, with regards to risk management transitioning into enterprise risk management, into strategic risk management, has been focusing on the top risks and dealing with the top risks, and not necessarily diving into the minutia to see, ‘Well, these low-level risks are also top risks if you look at it from a different perspective,’” he explains. “Identifying aggregation of risk and interdependencies is an important component of your overall approach to determining the risk profile of your organization,” Seaman suggests. “You are trying to look at all significant sources of risk and aggregation could certainly be overlooked,” he points out.
CYBER TERROR THREAT Fernandez suggests it is likely “within a half-generation, maybe even less than that, maybe five to 10 years,” that terrorists will attempt a cyber attack on critical infrastructure. Right now, that is “definitely the most likely to create insurable damage,” he says, although he notes cyber terrorism is “fundamentally incompatible” with the idea of terrorism for some religious extremists. “You don’t go to heaven by pressing ‘enter’ on the keyboard,” he comments. A requirement for an “air gap” between networks controlling electrical power systems and the public Internet is stipulated in a lot of critical infrastructure regulations, Fernandez says. “The problem is, nobody follows that principle because there are too many advantages of not following it, like in terms of when you have a service call, you don’t have to have the guy fly in from Germany,” he adds. In general, Pitkin suggests that the aggregation of risk from terrorism is more of an issue for insurers than for actual insureds.
COVER STORY
Aggregation Aggravation
“The biggest challenge that we have is educating our clients on the potential for interconnectivity issues, in terms of what that means,” says Greg Markell of HUB International HKMB. “To do due diligence and audits on every single integrated system and end point that is connected to other organizations or their supply chain can be a very heavy lift, in terms of time spent, money spent.” After the hijacking of four passenger airplanes by al-Qaeda operatives on 9-11, “people actually realized... that they had a lot of value in one area,” he says. “If you are talking about some type of manufacturing or some type of process industry, usually they are centered around certain areas,” Pitkin adds. For example, automotive assembly plants tend to be located near parts manufacturers, he says, suggesting that an incident in a certain area can affect multiple organizations. Delon regards terrorism as more of a reputational risk. “You can say all you want, whether [the risk is] high or low, from a true risk perspective, but if the population says, ‘Hey, I’m worried,’ and that precludes them from coming to your downtown office building… that issue is then just sitting there unaddressed and it’s weighing in the minds of others,” he explains. “It needs to be addressed, regardless of what you consider the true risk to be.” The risk from terrorism is “very different from the kind of risks typically insured,” such as auto, the Insurance Information Institute reports. “There have been few terrorist attacks, so there is little data on which to base estimates of future losses, either in terms of frequency or severity,” the institute notes. 38 Canadian Underwriter March 2016
That said, “terrorism losses are also likely to be concentrated geographically, since terrorism is usually targeted to produce a significant economic or psychological impact,” it adds.
OPEN TO IDEAS A risk manager considering aggregation of risk needs to have “a fairly open imagination about things, but it has to be grounded in a strong sense of probability,” says Graham. “In other words, a terrorist act is entirely possible, but... more probably, you are going to get a vandalism act or a theft act or a negligence act that’s going to have a major effect on you,” he says. Graham cites as an example the May 2000 tragedy in Walkerton, Ontario, where seven people died and more than 2,300 became sick when drinking water was contaminated with E. coli. An official inquiry found operators at the local Public Utilities Commission (PUC) “engaged in a host of improper operating practices, including failing to use adequate doses of chlorine, failing to monitor chlorine residuals daily, making false entries about residuals in daily operating records, and misstating the locations at which microbiological samples were taken,” Justice Dennis O’Connor, then Ontario’s associate chief justice, noted in the Report of the Walkerton Inquiry.
In the inquiry, O’Connor found it was “not unusual” for PUC employees to mislabel bottles taken for testing. The Walkerton incident is “seared in our memories,” Graham comments. Risk managers “have to have a realistic and open understanding of the risks they are facing, and that conversation is a difficult conversation within industry, let alone at a public level,” he suggests. Some risk managers “tend to treat it more like a process and avoid getting people in a panic,” Graham says. “Fair enough, I don’t want people panicking, but that gets in the way of research and analysis and serving the industry they are a part of,” he maintains. “If we never identify [critical] infrastructure weaknesses, we can never then fix them, because if we perceive we have no weakness, then we don’t do anything about it,” Delon suggests. “I think we have to be okay with ourselves to say, ‘You know what? We do have some weaknesses. We don’t necessarily know, but let’s go out and find them, and once we do, let’s not be critical of those who perhaps didn’t find them in the past,’ because this is not a witch hunt. This is, ‘Hey, how can we do continuous improvement to our infrastructure, to our organization?”
THE COMPLEX LOSS EXPERTS WE SERVE YOU BETTER WITH 18 OFFICES COAST TO COAST
SPECS provides the insurance industry with expert, impartial, and comprehensive structural consultation. Our customers beneďŹ t from: precise valuation of damages, accurate reserves, a reduction in claim cycle times and enhanced claimant satisfaction. You can trust SPECS for pre- and post-loss consultation with any residential, commercial, industrial or CAT claim. And now we provide the same great expertise for contents, and large technical claims.
2016ŠAll rights reserved. Specialized Property Evaluation Control Services Limited
888-73-SPECS (77327)
Drive On President and Chief Executive Officer, Traffic Injury Research Foundation
Kathy Bardswick
President and Chief Executive Officer, The Co-operators
In the past decade, distracted driving has emerged as one of the highest-profile road safety issues around the globe. It is now recognized as a substantial contributor to fatal road crashes comparable to other priority issues such as impaired driving and speeding. Yet, just how big the problem is remains difficult to determine.
40 Canadian Underwriter March 2016
It is estimated that distraction is a factor in 20% to 30% of crashes in North America, and since 2006, distraction-related fatalities in Canada have increased by 26%, reports the Canadian Council of Motor Transport Administrators. In 2012, distraction was a contributing factor in an estimated 23% of fatal and 27% of major injury crashes; in 2014, at least three Canadian jurisdictions reported that the role of distraction equalled or even exceeded impaired driving. It is a positive development that considerable attention and resources are now being devoted to increasing understanding of the problem and developing mitigation strategies.
MAPPING INDUSTRY’S COURSE Despite the significant research now under way, however, it is very difficult for insurers to quantify the problem since distracted driving is not tracked as part of an insurance claim. Nevertheless, the property and casualty insurance industry’s concern with the issue is reflected in the way distracted driving convictions affect drivers’ premiums. While the details vary from one province to another, a driver’s first convic-
Illustration by Scot Ritchie
Robyn Robertson
It is a positive that stakeholders country-wide, including insurers and road safety organizations, are sold on the need to tackle distracted driving. But challenges, particularly around data quality and consistency, need to be addressed if the goals of safer roads, fewer accidents and lower related costs are to be realized.
Please join us for
The TwenTy Second
Best exotic
Starlight
InSurance Gala
tion for the use of a hand-held wireless communication device while driving usually translates into a 5% to 10% premium increase. Stakeholders, including insurers, are seeking ways to help clients drive distraction-free. One way this can be done is by leveraging the very technology that has contributed to the problem and focused attention on distracted driving in the first place. Apps that block phonerelated distractions are among the tools being used by stakeholders to address the problem. The Co-operators, for example, is promoting an app as one part of the solution. As with any complex problem, distracted driving can be most effectively addressed by road safety stakeholders equipped with a more in-depth understanding of both its causes and the effectiveness of counter-measures being undertaken.
ACTIONS IN CANADA Positively, the scan revealed that distracted driving was a top priority across jurisdictions and action had been taken on multiple fronts to combat it. Most notably, almost every jurisdiction in Canada had implemented legis-
PARTNERING FOR SUCCESS In 2014, the Traffic Injury Research Foundation (TIRF) partnered with Drop It And Drive (DIADD) to better understand how distracted driving was being addressed in Canada. They conducted a national environmental scan that compiled recent data and information about initiatives undertaken over the past two years by various stakeholders across the country who are working to reduce distracted driving. More importantly, the scan sought to gather lessons learned from these initiatives, and identify strategies that were being considered for the future. The scan consisted of a brief online survey that was shared with 45 individuals representing organizations across sectors in seven different provinces: Alberta, British Columbia, Manitoba, Newfoundland & Labrador, Nova Scotia, Ontario and Prince Edward Island. Completed by 40 individuals, the results were further bolstered through interviews with select participants who provided additional context to interpret the results. Results were published in the TIRF report, Distracted Driving in Canada: Making Progress,Taking Action, made possible with funding from The Co-operators. 42 Canadian Underwriter March 2016
While some data were collected, the level of detail and quality of data remained limited, primarily because the range of distracting behaviours was broad and related factors are difficult to detect in crash investigations. lation to prohibit hand-held cellphone use; Alberta further prohibited additional distracting behaviours. Moreover, based on evidence that drivers were not changing their behaviours, initial penalties were subsequently increased in most jurisdictions over the past year to enhance the deterrent effects of legislation. Awareness and education campaigns had similarly been introduced across Canada, often based on partnerships within
individual jurisdictions among governments, police agencies, the insurance industry, non-governmental organizations and media. While initial awareness efforts often emphasized new legislation and penalties, more recent campaigns underscored the risks and consequences of distracted driving. Of greatest importance, governments worked to improve data collection, which was viewed as a linchpin to better understand the problem and develop effective prevention strategies. While some data were collected, the level of detail and quality of data remained limited, primarily because the range of distracting behaviours was broad and related factors are difficult to detect in crash investigations. What was readily apparent in all jurisdictions was that distracted driving was a concern across sectors and industries. Governments have been playing a lead role in driving activity, but a broad cross-section of stakeholders is now taking part, including law enforcement, health professionals, various industries, non-governmental organizations, media and researchers. Agencies have mobilized to address this issue in a fairly short timeframe, relative to other road safety issues.
CHALLENGES TO ADDRESS While activities to address distraction were considerable within individual jurisdictions, with parallels in approaches, efforts to co-ordinate strategies across jurisdictions were limited or non-existent. This has occurred, in part, because highway safety and transportation are the purview of provinces and territories, and, in part, because of the diversity that Canada represents. The most pressing aspects of distracted driving requiring attention were also uniform across jurisdictions. First, more efficient and effective enforcement strategies were much-needed. Police agencies lacked the resources and capacity to intensively enforce distracted driving laws. Results of the scan revealed the frequency of enforcement was quite variable;
just 30% of total respondents reported targeted distracted driving enforcement occurred in their respective jurisdiction on a monthly basis, 21% indicated on a quarterly basis, and 24% pointed to bi-annual activities. Moreover, officers reported that, despite well-publicized and visible enforcement, large numbers of drivers continued to receive distracted driving violations. They noted fines were perceived as the “cost of doing business,” which suggested penalties were insufficient and drivers were not getting the message. Second, better data were deemed essential to inform prevention strategies. Distracted driving has been defined differently across jurisdictions in accordance with legislation, and collected data have been variable and inconsistent. Two common data gaps were the specific types of distractions most related to crashes, and the characteristics of collisions or types of crashes that occurred. Recognition and awareness regarding data sources was also low, with data difficult to interpret and compare. A welldesigned plan is needed to strengthen and co-ordinate data initiatives to create a national perspective on this priority problem. Third, educational initiatives targeting drivers and other road users were fragmented in terms of content and delivery. In essence, many messages were used, but few were well-recognized. This may have undermined the effectiveness of education campaigns as a behaviour-change strategy. Greater consistency in messaging and more relevant messages to motivate safer habits, combined with lessons learned from efforts to date, should provide important guidance to drive changes in social norms.
NEXT STEPS Looking forward to the next decade, the co-ordination of comprehensive strategies to reduce distracted driving is a prerequisite to achieving progress. Despite the high level of consensus regarding core activities to reduce distracted driving, important gaps remain. A priority
insBlogs
task is to identify and develop specific ing a centralized, accessible repository mechanisms to optimize and co-ordinate of research and resources on distracted the different strategies that are imple- driving, and exploring the opportunities mented across jurisdictions. offered by new tools and technologies A new working group, funded by The to reduce distractions on the road. Co-operators and led by TIRF in partnerUltimately, a blend of proven road ship with DIAD, will undertake activities safety strategies combined with new and such as developing co-ordinating and novel approaches may hold the greatest information-sharing mechanisms that potential to reduce fatalities and injuare informed by Insurance lessons learned, creat- ries resulting from distraction. Blogs hosted by Canadian Underwriter
insBlogs
Recent Blog Posts Featured on
insBlogs.com
Insurance Blogs hosted by Canadian Underwriter Too Good to Be True? Life in the Gig Economy by Catherine Smola – Feb 23
Sewer backup: Blaming infrastructure for the wrong reason by Glenn McGillivray – Feb 23
Electronic Proof…Still Not in Canada by Willie Handler – Feb 19
New Policy or OPCF 16: There is no In-Between by Daniel Strigberger – Feb 16
Random Thoughts: Things to Read by IBV by Christian Bieck – Feb 15
Doctors, Insurers and Trust by Christian Bieck – Feb 8
As the direct channel expands, how should brokers respond? by Peter Morris – Feb 5
Why ‘just-in-time’ insurance would be a non-starter by Glenn McGillivray – Feb 4
FSCO Approves Aviva’s UberX Product by Daniel Strigberger – Feb 2
March 2016 Canadian Underwriter 43
Getting a
Grip on Risk
A new survey of financial executives across Canada reveals that more can be done to both recognize and manage risk. Aligning strategy and risk appetite is crucial because, when managed correctly, this can serve as a driver of new possibilities, growth, expansion and innovation. Financial Executives International Canada Chartered Professional Accountants of Canada
While many surveyed senior financial executives say they are only “somewhat confident” in their organization’s ability to effectively manage risk, most also say the risk strategy of their organization is either mostly or fully aligned with its risk appetite, suggests the report, The State of Enterprise Risk Management in Canada, jointly conducted by Financial Executives International Canada and Chartered Professional Accountants of Canada Although the majority (66%) of the 320 online survey respondents from across Canada describe themselves as “somewhat confident” in their organization’s ability to manage risk, just 20% of the chief financial officers (CFOs) and other senior financial executives who participated in the survey report being “extremely confident.” Of the remaining respondents, 8% say they are “neutral” and 6% say they are “not very confident.” However, more than half (56%) of the executives surveyed note their organization’s risk strategy is “mostly aligned” with its risk appetite and 16% say it is fully aligned. While the vast majority of surveyed executives report the senior management team and corporate directors have a solid grasp on the risks facing the organization, fewer than one-third note they feel the same about front-line employees, indicating a gap between management and staff.
44 Canadian Underwriter March 2016
Released in February 2016, the survey’s main respondents were CFOs (30%), controllers (23%) and vice presidents of finance (12%). The leading industries represented included manufacturing (21%), finance and insurance (18%), and mining, quarrying and oil and gas (9%).
UNDERSTANDING OPPORTUNITIES AND RISKS The study clearly identifies a need to close the gap between upper management, corporate directors and front-line employees, all of whom have different perceptions of risk. Some executives report that risk management is not top of mind for most employees. “We have several business units across several geographic areas, almost 300 organizations and partnerships, and a few hundred employees,” Jeff Shickele, Amacon’s vice president of accounting, notes in the report. “Most of our employees don’t really think in terms of risk management.” Robert McFarlane, former executive vice president and CFO for TELUS, suggests it may be that front-line employees simply view risk differently than senior executives. McFarlane recommends using an in-house risk assessment tool to help close the gap between front-line staff and senior executives, for whom the Top 10 risks were typically strategic risks.
Has a major impact Business continuity is called into question Don’t know
Has no or very minor impact Has a minor impact Has a moderate impact
Extent of Understanding Risks Relevant to the Organization 100% 90% 80%
1%
2%
6%
2%
18%
23%
21%
70% 60% 50%
47%
40% 30% 20% 10%
25%
72% felt that Board of Directors either mostly or fully understood risk
49%
31%
80% felt that senior management team either mostly or fully understood risk
44%
31%
Only 31% felt that employees either mostly or fully understood risk
0% Board of Directors Fully understands Understands a little
Senior Management Team Mostly understands Does not understand at all
In the case of TELUS, for the front line, top-rated risks were typically more operational, such as customer servicerelated risks or process-related concerns.
Employees Somewhat understands
“I think it (the assessment) was a tool that actually allowed the organization to say, ‘We have to do a lot more than provide lip service to our stated priority,’
and the entire organization has to put customers first and improve customer service,” he notes. “Unless you have a cross-section throughout the organizational hierarchy of a large organization, as opposed to merely a survey of senior management, then you’re not going to really have a good understanding of the true risks the organization faces.” While the majority of financial executives did say their Boards of Directors (BoD, 72% of participants) and senior management teams (80%) either mostly fully or fully understood the risks relevant to their organizations, knowledge of risks among corporate directors is not necessarily viewed as comprehensive. In addition, that level of comfort falls dramatically among small organizations (revenue of less than $100 million), with 10% of respondents reporting that their boards have little or no understanding of threats and opportunities, roughly double the percentage among other revenue groups. When viewed by employee count,
mid-sized organizations (101 to 500 employees) rate their boards lower, with 66% mostly or fully understanding risks compared to small (72%) and large organizations (78%). “Oversight is 100% the board’s responsibility,” Dean Cosman, CFO and vice president of finance and administration for the Canada Deposit Insurance Corporation, emphasizes in the report. “For me, the role of the chief executive officer and the executive management team is the management of the risk,” Cosman continues. The survey shows that the senior management team perceives itself to have a somewhat stronger grasp of the risks facing organizations than its BoDs. Overall, participants state 80% of the responding organizations’ senior management teams mostly (49%) or fully (31%) understood the risks associated with their respective businesses (see chart on page 45). Confidence in senior management was somewhat lower in small revenue-based organizations, namely those with revenue of less than $100 million (79%). The type of corporate structure (private, public, government/NGO) indicated some variation. For instance, 28% of respondents from private companies and 25% from government and Crown corporations say their senior management team “fully understands” the risks to the organization compared to 41% of NGOs. “With the speed of change in today’s economy, identifying, understanding and addressing risks in a timely fashion is critical to an organization’s success,” says Laura Pacheco, vice president of research for FEI Canada. “It’s also essential to communicate these risks to employees. The study results indicate a communication gap exists in companies today with regards to risk. This communication is increasingly part of the role of today’s CFOs,” Pacheco adds.
RISK ALIGNMENT When asked about the organization’s strategy being aligned to its risk appetite, most respondents say they feel the company was either fully (16%) or mostly
(56%) aligned. However, 24% say the company’s strategy was only somewhat aligned to its risk appetite and a further 4% say it was not very aligned at all. Aligning strategy and risk appetite are important, since there are plenty of real and potential risks that organizations must identify and plan for, yet risk, when managed correctly, can be a driver of new possibilities, growth, expansion and innovation. “We keep reminding ourselves that it is about the opportunities and the threats, but as accountants, our inclination is to think about the threats first,” Bev Davies, vice president of enterprise risk management (ERM) at Investors Group Inc., says in the report. “That’s the benefit of ensuring we bring more operational, sales and marketing people into the room, to remind ourselves it goes both ways,” Davies adds. Robust, institutionalized ERM programs are common among bigger companies. For these large and public companies, it is typical that risk management forms part of their overall business strategies, where almost half have a strategy in place, although the percentages decline for smaller and private companies. The survey indicates that despite the myriad threats facing businesses today, 20% of respondents reveal their organizations do not have a documented risk management plan. And even a docu-
mented plan is just a starting point for actual implementation, says Carol Raven, a CPA Canada principal in research, guidance and support. “Having a risk management program in place isn’t enough,” Raven argues. “You need to be putting it into practice and ensuring you have the right people overseeing it.” The 2008 financial crisis reinforced the need for risk management while highlighting the threat of unexpected occurrences. More recently, high-profile cases of cyber attacks on corporations have raised awareness even further. Many of these same executives confirm that many risks could have a “major impact” on their particular business, or even threaten the ability of the business to function. For instance, 28% of financial executives surveyed report that cyber risk represents a significant risk, defined as having a major impact or even posing a serious threat to business continuity, to their organizations in the next 12 months. What risks are Canadian organizations most wary of? Getting the strategy wrong, it turns out. Beyond general economic and industry conditions, organizations worry about leadership, enterprise reputation and enterprise strategy, identifying these risks and others as major impacts or business continuity risks to their organizations.
Significance of Different Types of Risk on Organizations Today 100% 90%
2%
80% 70% 60%
55%
50%
Business continuity concern or major impact 61%
47%
1% 3%
6%
7%
6%
Business continuity concern or major mmpact 54%
40%
Business continuity concern or major impact 46%
33%
35%
40% 30% 20% 10% 0%
8%
36%
35%
27%
23%
15% 2%
Strategy Risks
10%
1%
Operational Risks
Has no or very minor impact Has a minor impact Has a moderate impact
3% Financial Risks
5% External Risks
Has a major impact Business continuity is called into question Don’t know
46 Canadian Underwriter March 2016
Extent of Understanding Risks Relevant to the Organization
Business continuity concern or major impact 36%
An
QUARTER QUARTER CENTURY CLUB QUARTER CENTURY CLUB UARTER CENTURY CLUB RTER CENTURY CLUB QUARTER CENTURY CLUB QUARTER CENTURY CLUB Announcing the the Announcing the Announcing thethe Announcing theAnnouncing Announcing Announcing the Announcing the
th 57 Annual Reception 56th Annual Reception 56th Annual Reception 56th Annual Reception 56th Annual 56th Annual Reception 56th Annual Reception 56thReception Annual Reception
Wednesday, May 11th, 2016 thth th th th th The Albany Club WEDnesday, May 20 ,, 2015 May 20 WEDnesday, May 20 2015 th, 2015 WEDnesday, May 20 , 2015 WEDnesday, MayWEDnesday, 20 , 2015 WEDnesday, May 20 , 2015 WEDnesday, May 20 , 2015 91 King Street East
Toronto, ON,Club M5C 1G3 The Albany Club The Albany The Albany Club TheThe Albany Club The Albany Club Albany Club The Albany Club 91 King Street East 91 King Street East 91 King Street East 91 King Street East 91 King Street 91East King Street East 91 King Street East Reception – 12:00 p.m. Toronto, ON, M5C 1G3 Toronto, ON, M5C 1G3 Toronto, ON, M5C 1G3 M5C 1G3 Toronto, Toronto, ON,Toronto, M5CON, 1G3 ON, M5C 1G3 Toronto, ON, M5C 1G3 Cost - $75.00
–– 12:00 p.m. Reception – p.m. Reception 12:00 p.m. Reception – 12:00 p.m.p.m. Reception –Reception 12:00 p.m. – Reception 12:00 th Reception – 12:00 12:00 p.m. 57 Annual Cost -- $75.00 Cost -- $75.00 Cost $75.00 CostCost - $75.00 Cost - $75.00 Reception Committee: - $75.00 Cost $75.00
John Cherrie - 416-737-7525 56th Annual 56th Annual 56th Annual 56th Annual 56th Annual 56th Annual John Sharoun - 416-957-5001 56th Annual Reception Committee: Reception Committee: Reception Committee: Reception Committee: Reception Committee: Reception Committee: Ford Blow - 416-457-7072 Reception Committee:
John Cherrie --416-737-7525 John Cherrie - 416-737-7525 John Cherrie 416-737-7525 Cherrie - 416-737-7525 John Cherrie John - 416-737-7525 John Cherrie - 416-737-7525 John Cherrie - 416-737-7525 Stewart Ponton --905-740-1100 Stewart Ponton 905-740-1100 Stewart Ponton 905-740-1100 Stewart Ponton 905-740-1100 Stewart Ponton - 905-740-1100 Stewart Ponton - Stewart 905-740-1100 Ponton - 905-740-1100 Send Contact Info and Cheque Ford Blow 416-457-7072 Ford Blow 416-457-7072 Ford Blow 416-457-7072 Ford Blow 416-457-7072 Ford Blow - 416-457-7072 Ford Blow - 416-457-7072 Ford Blow - 416-457-7072
Payable to (or VISA, provide exp. date):
Featuring…
Send Contact Info and Cheque Send Contact Info and Cheque Send Contact Info and Cheque SendSend Contact Info and Cheque Send Contact Info and Cheque Contact Info and Cheque John Sharoun Send Contact Info and Cheque Payable to (or VISA, provide exp. date): Payable to (or VISA, provide exp. date): Payable to (or VISA, provide exp. date): to (or provide date): Payable toPayable (orPayable VISA, provide exp. date): to VISA, (or VISA, provide exp. date): Quarter Century Club Payable to (orexp. VISA, provide exp. date): Stewart Ponton Stewart Ponton Stewart Ponton Stewart Ponton Stewart Ponton Stewart Ponton c/o Crawford Stewart Ponton & Company (Canada) Ltd. Quarter Century Club Quarter Century Club Quarter Century Club ‘The Roasting of Quarter Century Club Club Quarter Century Club Quarter Century Quarter Century Club 300 123 Front St, Suite Granite Claims Solutions Granite Claims Solutions Granite Claims Solutions Granite ClaimsClaims Solutions Granite Claims Solutions Granite Solutions Granite Claims Solutions Toronto M5JRoad, 2M2 Paul Handcock 5915 Airport Road, Suite 5915 Airport Suite 200200 5915 Airport Road, Suite 200 Road, Road, Suite 200 5915 Airport 5915 Road,Airport SuiteAirport 200 5915 Suite 200 5915 Airport Road, Suite 200 Featuring… Mississauga, L4V Mississauga, ON,ON, L4V 1T11T1 Mississauga, ON, L4V 1T1 Email: John.Sharoun@crawco.ca Mississauga, Mississauga, ON, L4V 1T1ON, L4V Mississauga, ON,1T1 L4V 1T1 ‘The Roasting ‘The Roasting of ‘The Roasting of The Roasting of Mississauga, ON, L4V 1T1 asting of ‘The Roasting of ‘The Roasting of Phone: ‘The Roasting ofof Phone: 905-740-1100 Phone: 905-740-1100 Phone: 905-740-1100 905-740-1100 Phone: 905-740-1100 Phone: 416-957-5001 Phone: 905-740-1100 Phone: 905-740-1100
Featuring… Featuring… Featuring… eaturing… ring… Featuring… Featuring…
Fax: 905-671-2088 905-671-2088 Fax: 905-671-2088 Brad Ebel’ Fax: 905-671-2088 Fax: 905-671-2088 Paul Handcock Fax: 905-671-2088Fax: Paul Handcock Paul Handcock Paul Handcock andcock Fax: 905-671-2088 Paul Handcock Paul Handcock Email: stewart.ponton@graniteclaims.com Email: stewart.ponton@graniteclaims.com Email: stewart.ponton@graniteclaims.com Email:Email: stewart.ponton@graniteclaims.com Email: stewart.ponton@graniteclaims.com stewart.ponton@graniteclaims.com
Thank you for the
Email: stewart.ponton@graniteclaims.com
Thank you for the support of these generous event sponsors: Thank you for the support of generous event sponsors: Thank forthese thesponsors: support ofevent these generous event sponsors: Thank you for the support ofthese these generous event sponsors: Thank you for the support ofyou these event Thank you for theThank support of these generous event you for the support of generous Thank you forgenerous the support of sponsors: thesesponsors: generous event sponsors:
Once again this year, the Quarter Insurance Institute Scho
Once again this year, the Quarter Century to to aadonation to Once again this year, the Quarter Club plans continue make to the Once again this year, the Quarter Century Club plans toacontinue continue to make donation tothe the Once again this year, the Quarter Century Club plans toCentury continue toClub make ato donation toto n this year, theagain Quarter Club plans to continue to make a donation to the Once this Century year, the Quarter Century Club plans to continue toplans make donation tomake theaa donation Once again this year, the Quarter Century Club plans to continue tothe make donation to the Insurance Institute Scholarship Fund, in memory of our claims colleagues Insurance Institute Scholarship Fund, in memory of our claims colleagues Insurance Institute Scholarship Fund, in memory of our claims colleagues Insurance Institute Scholarship Fund, in memory of our claims colleagues nsurance Institute Scholarship Fund, in memory of our claims colleagues Insurance Institute Scholarship Fund, in memory of our colleagues Insurance Institute Scholarship Fund, in claims memory of our claims colleagues Design and Space Compliments of: Compliments Design and Space Compliments of: of: Design andSpace Space Compliments of: and Space of:Design Design and SpaceDesign Compliments of: Design andCompliments Space Compliments of:and Design and Space Compliments of:
Design and Sp
Rock and a Hard Place The CIP Society Insurance Institute of Canada
The CIP Society represents more than 17,000 graduates of the Insurance Institute of Canada’s Fellow Chartered Insurance Professional (FCIP) and Chartered Insurance Professional (CIP) Programs.The CIP Society, through articles such as this, is working to bring ethical issues to the forefront and provide learning opportunities that enhance the professional ethics of all insurance professionals.
Adjusters are required to juggle multiple tasks. But a busy environment, demanding workload and unexpected meetings should not influence interactions with clients. As the first points of customer contact, adjusters must maintain a professional demeanour by listening, showing empathy and putting clients at ease. A timid claimant — having been in a recent car accident and currently undergoing rehabilitation — shows up at an adjuster’s office unannounced because she wants to make sure she understands her coverage and prefers not to speak on the phone or leave voice messages. The adjuster, who was assigned to the file, happens to be in the office and agrees to meet with the claimant. A second adjuster sitting within earshot can hear the two while they discuss the claim. The claimant nervously explains the circumstances
48 Canadian Underwriter March 2016
surrounding the accident and, thus, the reason for the claim. During the conversation, the first adjuster is impatient, trying several times to rush the claimant and end the conversation. His approach is assertive and matter-of-fact about the limitations of coverage. The claimant had hoped to appeal to the adjuster to help cover the health care costs of her lengthy recovery. The claimant tries many times during the meeting to argue her case, hoping there is room for negotiation. Apparently not. She accepts the adjuster’s offer, feeling that she has no choice but to do so. Having overhead the conversation, the second adjuster knows recent changes to Ontario’s Statutory Accident Benefits Schedule (SABS) and the adjusting firm’s own policies mean settlement ranges have been allotted in similar cases and, at the discretion of the adjuster, a fair settlement within or to the maximum of the range can be provided. He wonders why the first adjuster is holding so firmly to the base of the range, when latitude could be fairly provided under the circumstances. It is clear to the second adjuster that the claimant felt powerless to negotiate on her own behalf. What motives would the first adjuster have
Illustration by Scot Ritchie
The CIP Society Ethics Series
for being so aggressively steadfast and refuse to pay anything more than the minimum amount on the claim? Should the second adjuster raise the issue with his colleague and/or bring this situation to anyone’s attention? What would their employer think about this particular transaction? Ron Bouwmeister, FCIP Vice President, Claims The Commonwell Mutual Insurance Group There are many reasons an adjuster may take a harder line on the adjudication of a claim. In this particular case, it appears the adjuster is working for an adjusting firm, and in these situations, the independent adjuster is often handling files for more than one carrier. In the case of SABS claims, some adjusters are open to negotiation and others prefer to stick to the legislation, paying only the expenses owed and not making allowances for potential increased exposure down the road. Adjusters cannot settle SABS claims within the first year of the claim, which may be the motive behind the adjuster’s tougher position with the client, or perhaps he has communicated this earlier and was not pleased about the client showing up unannounced. It is not a requirement to consult with other adjusters in the office unless otherwise directed, but it is considered good practice to do so; servicing the client should be a top priority. The adjuster was not necessarily unethical, but certainly did not demonstrate empathy, and there is a big difference between the two. With respect to the adjuster overhearing the conversation, it is important for any company to work as a team to serve clients, insureds and the organization. The second adjuster has an obligation to have a conversation with his colleague to ensure they are clear on the company’s policies regarding settlement and updates in legislation. Additionally, raising the customer service observation to a co-worker would be of service to the individual since that person may not be self-aware of how he or she is coming across to clients.
The employer would not be particularly pleased by the customer service handling, as it is a reflection of the company. If the second adjuster raised the issue with a co-worker, the employer would be pleased that staff is taking the initiative to ensure fair adjudication of claims as a current practice. Just because there is legislation to rely on it does not prevent or restrict adjusters from treating customers with empathy. Michelle Baumann, CIP Accident Benefits Specialist Oatley Vigmond Insurance companies have a responsibility to act in good faith in all dealings with insured persons. Despite this, adjusters do sometimes lose sight of the need to be fair and honest in their interactions with claimants. Adjusters must ensure that claimants are well-informed about coverages and must assist claimants in the claims process. In these situations — the adjuster has the knowledge and the claimant is typically uniformed — the claimant is literally at the adjuster’s mercy during the claim experience. Most adjusters do not intend to be unkind or unreasonable. Adjusters are busy; there is a constant flow of new claims, phone calls, paperwork, meetings and more. These pressures may present as impatient or uncaring. Further, with the monotony of minor claims, adjusters may slip into a routine of dismissing these claims as minor or, worse yet, fraudulent. This, however, is unacceptable. Adjusters must remain attentive for claims that appear minor, but, in fact, are not. Minor traumatic brain injuries are an excellent example, and adjusters must be willing to listen to claimant concerns, read the pertinent reporting, arrange examinations as warranted, and give genuine consideration to every claim. In this situation, the adjuster was unethical. If he believed he was unable to increase the limits of coverage, but the claimant continued to push, he could have consulted with management to confirm the determination. Otherwise, the
adjuster should have ensured the claimant understood her rights to dispute the determination. As for the adjuster overhearing the exchange, this individual should have provided peer coaching afterward. If the secondary adjuster felt that the handling adjuster erred significantly, then he should have reported his concern to management. The employer should be concerned about the lack of professionalism and the display of bad faith by the handling adjuster. Insurers should attend to the professionalism of their staff to ensure that interactions are fair, respectful and compassionate.
Adjusters who act inappropriately in their claims handling should be directed to develop their customer service skills and technical abilities, or otherwise receive disciplinary action. Pam Pabla, CP Dipl., CIP Accidents Benefits Claims Advisor Desjardins General Insurance Group Adjusters are trained and expected to maintain ethical conduct in all interactions, encourage an equitable resolution and leave lasting and positive impressions with the client. As a first contact advisor, it is important to set the quality of service expectations to encourage open dialogue and trust moving forward. In this scenario, the adjuster’s conduct was unfair. The adjuster had an opportunity to understand the emotional pro-
March 2016 Canadian Underwriter 49
cess the client was experiencing, show empathy and adopt the appropriate behaviours to ensure a successful client interaction. While there may be a few reasonable motives for the adjuster to behave in such a manner (including an attempt to minimize the claim cost and/or manage the file from a purely monetary perspective), it was unfair from the perspective of the client and the insurer. The adjuster could have discussed the file with a higher authority or senior colleagues for input, or accessed other available resources. The actions of the adjuster may be viewed as unethical as he did not take time to address the client’s concerns or show empathy. The adjuster should have provided the client with further explanation regarding any additional necessary information. In regards to the adjuster who overheard the conversation, this individual should have talked to his colleague directly, and offered the opportunity to provide his colleague with insight and understanding of the client’s needs.
The employer would not be pleased with the attitude, passiveness and judgment of both personnel involved. The organization would likely recommend more training on client experience to help develop both participants’ customer service skills through coaching and active listening, and improving communication skills. Adjusters should follow a collabora-
50 Canadian Underwriter March 2016
tive approach that is friendly and shows a willingness to negotiate and appreciate the client’s challenges and inconveniences, as well as their vulnerability in certain circumstances. Commitment to a support plan shows sincerity, respect and professionalism, while moving the client towards active participation in his or her health plan outcome. Greg Smith, MBA, FCIP, CRM Senior Vice President, Administration Crawford & Company (Canada) Inc. Representatives who are entrusted to act on behalf of the insurer have a legal and ethical obligation to act fairly, professionally and with empathy when adjusting a claim. Adjusters help policyholders with queries every day, and in the majority of cases, they do an excellent job delivering on the insurance carrier’s promise to pay during these moments of truth. Unfortunately, this scenario highlights several behaviours and actions that companies strive to prevent through education, training, coaching, and quality and audit. It is clear that the insurance carrier and adjusting firm have policies and procedures in place to ensure appropriate settlements are achieved — the description of settlement ranges that can be used at the discretion of the adjuster shows they understand that each claim is different and allows adjusters to apply their professional judgment to work within those ranges. The adjuster’s motivation for trying to achieve a settlement at the low end of the range might be driven by a lack of understanding of the insured’s injuries or rehabilitation requirements and/or the coverages afforded under the insurance policy in place. Regardless of the reason, it is unfair. The adjuster should have consulted with a manager or supervisor to find the most positive outcome possible — even if the financial limits of a settlement are exhausted, there is knowledge and expertise that can be applied to help maximize how those benefits are utilized. Clearly, the adjuster’s colleague is familiar with the company’s claims-handling
philosophy and guidelines, and does not see them being followed. The colleague should speak up immediately and address the situation with the supervisor so that the claim can be reviewed and the adjuster’s behaviour corrected. There are also some privacy issues to address with the initial adjuster conducting a meeting in an area that could be overheard by colleagues. A supervisor or a manager needs to be aware of these issues so they can be corrected promptly. If the secondary adjuster is not comfortable speaking up, most companies have options for reporting unethical behaviour anonymously and confidentially.
THE LAST WORD Adjusters work in fast-paced environments and are regularly required to juggle multiple tasks. However, as one of the first points of customer contact, adjusters must maintain a professional demeanour by listening, showing empathy and ensuring clients feel at ease. While these attributes are not necessarily ethical codes of conduct in the insurance industry, they do display customer service that is required to create lasting relationships with clients. That being said, there are a few unethical actions occurring. The primary adjuster working with the client had an ethical obligation to bring this situation to the attention of the supervisor or manager — the client has the right to a second opinion. The second unethical action was with the adjuster overhearing the conversation; it is unethical for an employee to overhear an unethical situation and not take further action. The second adjuster could have spoken to his co-worker or he could have openly or anonymously reported the situation to the employer. Had either adjuster taken this situation to a higher level of management, the claimant may have left with more peace of mind regarding her case, and both adjusters may have received further customer service and new legislation training for better customer relations going forward.
Recent Insurance Press Releases featured on insPRESS.ca CRU Adjusters Completes Multiple Adjuster Training Seminars in January & February
CSIO Launches Scorecard Tool for Brokerage Technology Adoption
Mar 3 - by CRU - Catastrophe Response Unit
Feb 23 - by CSIO (Centre for Study of Insurance Operations)
Burns & Wilcox Canada - Medical Marijuana Market Update
Economical Insurance reports financial results for Fourth Quarter and Full Year 2015
Mar 3 - by Burns & Wilcox Canada
Feb 22 - by Economical Insurance
TU-Automotive announces keynote panel on autonomous cars and insurance conference
Origin & Cause Announces New Edmonton Office
Mar 2 - by Canadian Underwriter magazine
Markel launches Cyber risk insurance Mar 2 - by Markel Insurance Company of Canada
Insurance-Canada.ca Announces New Managing Partner Mar 1 - by Insurance-Canada.ca
ClearPay Brokerages to Provide Carriers Seamless Electronic Payments with Remittance, Directly from Applied Epic Feb 28 - by ClearPay
BrovadaOne division of Willis Towers Watson Appoints Michelle Poirier as Head of Sales, Canada Feb 28 - by Willis Towers Watson - BrovadaOne
Creechurch Promotes Rhea Turchinetz to Vice President of Western Region Feb 25 - by Creechurch International Undewriters
Creechurch Promotes Nancy Brady to Vice President of Professional Liability Feb 25 - by Creechurch International Undewriters
Jim Picken Takes on Branch Manager Role at STRONE Ottawa Feb 25 - by STRONE-Itech
FirstOnSite Expands to National Capital Region with Ottawa Branch Launch Feb 24 - by FirstOnSite Restoration
The Guarantee Toronto office rescues over 45,000 meals in Second Harvest Hero Campaign Feb 24 - by The Guarantee
Moose Jaw’s Largest Commercial PV Solar Array Powering Up Feb 24 - by WINMAR
Feb 19 - by Origin & Cause
Bradley Galster Joins DSB Claims, Canada’s Premier Claims Adjusting Firm Feb 17 - by DSB Claims
FirstOnSite Restoration Expands Operations with Victoria B.C. Branch Launch Feb 17 - by FirstOnSite Restoration
Free Live Webinar: ‘2016 – Year of Disruption: P&C Insurance Re-Imagined’ Feb 16 - by Canadian Underwriter magazine
Fix Auto Canada Welcomes New Senior Vice President, COO Feb 17 - by Canadian Underwriter magazine
Survey Finds Mental Health Strategies Needed in Canadian Workplaces Feb- by SCM Insurance Services
Landlords Renting Student Housing Need to Monitor Insurance Needs Feb 17 - by April Canada
DKI Canada welcomes Shannon Whitter as Director – Atlantic Canada Feb 16 - by DKI Canada
Snow Removal Operators Need Sufficient Liability Insurance Feb 16 - by April Canada
Taking control of “unwanted water” – GUARANTEE GOLD’s New Water Mitigation Program Feb 12 - by The Guarantee
To Read the Full Story for Each Press Release visit insPRESS.ca
49th Annual CICMA/ CIAA Ontario Chapter Joint Conference & OIAA’s 2016 Professional Development and Claims Conference Toronto
Making Adjustments
Toronto recently played host to the Canadian Insurance Claims Managers Association (CICMA)/Canadian Independent Adjusters’ Association (CIAA) Ontario Chapter Joint Conference and the Ontario Insurance Adjusters Association’s 2016 Professional Development and Claims Conference. New and emerging trends were on offer, from cyber security to drones, smart homes and adjuster training. Angela Stelmakowich Editor
Greg Meckbach
Associate Editor
IOT A BIG UNDERWRITING CHALLENGE One of the insurance industry’s biggest challenges on the underwriting side is “how to effectively and profitably transfer cyber risk with respect to machine-to-machine technology,” Brian Rosenbaum, national director of the Legal and Research Practice at Aon Risk Solutions, said during the CICMA/CIAA Ontario Chapter Joint Conference. “I really can’t overestimate how significant the risks associated with machine-to-machine technology are, despite the tremendous benefits that the Internet of Things (IoT) will confer,” Rosenbaum told conference attendees. Although the definition of IoT is broad, so are the associated risks. While it used to be, for the most part, that cyber risk and cyber risk insurance revolved around the protection of personal identifiable information, things are changing. “Arguably, the biggest risk we face today is the risk going forward with respect to property damage and personal injuries as a result of a cyber event,” Rosenbaum suggested. Real estate clients, for example, “are worried about a hack into their automated systems,” he said, adding the same goes for energy and commercial manufacturing clients. Consider that “41% of all hacks targeted to critical infrastructure have
52 Canadian Underwriter March 2016
been targeted to the energy sector,” he noted. “As the big first wave of claims for personal injury and property damage as a result of a cyber event emerge, we’re going to see a lot more litigation and a lot more pressure on the claims people to make good decisions with respect to that,” Rosenbaum predicted. “Are we providing this coverage on our policies now?” he asked, answering that, “in reviewing CGL (commercial general liability) policies, D&O (directors and officers) policies, cyber policies, the answer to that question is not clear.” For the most part, “insurance wordings are limited with respect to physical perils arising from a cyber event,” he said. “The majority of CGL policies contain what I would call a data or cyber exclusion,” Rosenbaum said, adding unless there is tailored wording or a watered down exclusion, there will generally not be “fulsome coverage if somebody is injured as a result of a cyber event.” For clients asking whether or not they have coverage for risks such as cyber terrorism, extortion, systems breakdown and mischief on any of their policies and, if not, what coverage is needed, “what I’m concerned about is that we don’t have the answers to these questions. We’re not keeping up with these emerging risks from a placement
ACCEPT THE BATON.
Join WICC Ontario at Relay For Life WHAT IT’S ABOUT: What: Canadian Cancer Society’s Relay For Life – the largest WICC fundraising event in Ontario. Why: To celebrate cancer survivors, commemorate those we’ve lost, and raise money for life-saving research. Where: Downsview Park. When: Friday June 17th, 2016 6:00pm – midnight. Who: You – be a captain and sign up your team right away. It’s easy – we’ll show you how. WHAT YOU DO: Build your team: Friends, family, colleagues, clients. Teams are often 10 people, but more or less is great too. Register: go to www.relayforlife.ca/wicc Choose your WICC Relay For Life event, either Downsview Park or any other Relay event around the province. Pick WICC! Select WICC under “Team Company” to make sure your funds count for the industry campaign.
Questions? Go to www.wicc.ca Design compliments of
READY. SET. WALK. 29554_RelayAd_Magazine.indd 1
3/29/16 9:24 AM
and underwriting point of view.” Things to consider include if any coverage is embedded in existing policies, and if there is any overlapping coverage.
AUTONOMOUS VEHICLES LIABILITY There will be a full-scale shift as autonomous car technology improves, James Dunn, a partner with Blouin, Dunn LLP, predicted at the CICMA/CIAA conference. “The companies that are developing these autonomous vehicles, they don’t want humans to have any override power,” Dunn said. “Ultimately, I think the technology will be refined to the point where that will be the case.” Once that occurs, it will become “an evaluation of all of the recording information that the cars have,” whether from inside the car or some outside database. “There won’t be any guessing as to what happened because all of the information will be technologically recorded.” Noting that it then becomes a product liability case, Dunn said that in the event of an incident, there is likely to be products coverage under a CGL policy, with the auto policy probably “reduced to little or nothing.” Chris Giffin, president and co-founder of Giffin Koerth, suggested in the next five to 10 years with autonomous vehicles, the industry is going to see significantly fewer accidents. In the short term, the technology already available with semiautonomous vehicles (like the tools to help avoid accidents) “will make up for the rampant distraction that, especially young people have when they’re behind the wheel of a vehicle,” Giffin said. “The litigation will change to vehicle manufacturer liability and road authority,” he suggested, although things like weather and road construction will need to be taken into account. Aon Risk Solutions’ Brian Rosenbaum suggested that “the interaction between the driver and the automated system is going to be very important from an underwriting point of view.” There will be a need to underwrite the driver, the car and the software manufacturer, Rosenbaum said, looking at the whole package. “The question for underwriters will 54 Canadian Underwriter March 2016
be in what circumstances can the driver impose their will on the vehicle once it’s in operation,” he said. If very little, the underwriting will be a technology underwrite; if a human element is retained, “there will be a human element of underwriting to it.”
NEW SKILL SET NEEDED Drones are a new technology that could lead to more claims, but also clearly illustrate the need for adjusters with a different skill set, said Paul Hancock, national director of global technical services for Crawford & Company. “Due to obstacles like the skills of operators, lack of training, untested technology and the liability associated with drones in crowded areas, I think there’s going to be more collisions, accidents, injuries and property damage,” Hancock suggested to joint conference attendees. “Do we have the skilled adjusters that understand the regulation, the technology, that are able to handle the claims?” For the most part, things like drones, the Internet of Things, telematics and driverless cars offer the promise of reducing claims, he said. But there is a “growing need for more and different complex loss adjusters. The future of adjusting will be engineering, IT professionals, data analysts, lawyers, accountants, quantification experts doing their thing, for the most part, 24/7, 365, remotely and virtually,” he added.
EXAMINE ALL AUTO CLAIMS A Supreme Court of Canada ruling last year illustrates the need for insurance adjusters in Ontario to examine all auto accident benefit claims they receive, even if their companies are not involved, it was suggested at the Ontario Insurance Adjusters Association’s (OIAA) Professional Development and Claims Conference, held following the CICMA/CIAA event. “If you get an OCF 1 and you are an auto insurer of any kind in Ontario, you have got to adjust the claim, do your priority investigation... and put those other insurers, whoever they are, on notice,” Kadey Schultz, a partner with Schultz Frost LLP, told attendees.
In 2006, Sukhvinder Singh was in a single-vehicle collision involving a rented vehicle insured by Zurich Insurance Company. Singh declined to buy an accidental death and dismemberment policy from Chubb Insurance Company of Canada, which was being offered by the car rental company. But after the accident, Singh applied for accident benefits with Chubb Insurance, which denied her claim on the basis its policy was not a motor vehicle policy. Zurich Insurance argued before the Financial Services Commission of Ontario (FSCO) that Chubb Insurance should have administered the claim first. FSCO ruled against Zurich Insurance, a decision reversed by the Superior Court of Justice and, then, overturned by the Court of Appeal for Ontario. The Supreme Court of Canada ruled in favour of Zurich Insurance, citing dissenting reasons in the appeal court decision. The overriding public policy “is to provide timely delivery” of accident benefits to injured parties, the opinion noted. “That public policy would be seriously eroded by allowing an insurance company that writes motor vehicle liability policies in Ontario to argue, in a case in which the nexus test is satisfied, that it is a ‘non-motor vehicle liability insurer.’” The high court found a “nexus” between Chubb Insurance and the claimant, even though the policy was not auto.
SMART HOME BREAKDOWNS Just who is liable when it comes to a breakdown involving a smart home still needs to be fleshed out, although a European agency is pushing to get those issues clarified there, Aon Risk Solutions’ Brian Rosenbaum said during the joint CICMA/CIAA conference. The European Union Agency for Network and Information Security is pushing European Union (EU) privacy commissioners to come out and clarify, with respect to smart homes in EU countries, who is responsible for breakdowns, said Rosenbaum. “They have made it a primary directive to push these regulators in the EU to actually pass legislation to attribute liability in these circumstances.
They see it as a very significant risk that we haven’t sorted out that needs to be sorted out through regulations.” A number of stakeholders are involved and could be liable for a malfunction or security breach, he told attendees. “Is it the homeowner? Is is the manufacturer of the components of the smart home? Is it the certifier of the component?” Speaking about investigations in general, Chris Giffin of Giffin Koerth said “an innocuous upgrade or change to a process can often have very unanticipated consequences, resulting in some significant losses.” But it is unlikely these innocuous changes will be reported should a loss occur. “You can just appreciate the amount of code that might need to be gone through to understand what’s resulted in the loss.”
RESTRICTION ON USE NOT ENOUGH Insurance adjusters cannot always rely on legal precedents, now that the Court of Appeal for Ontario has overturned an earlier ruling by the same court, related to a vehicle owner’s vicarious liability for negligent operation of the vehicle, Ian Gold said at the OIAA conference. “If you are lending your vehicle to somebody and you are giving them some restrictions, and they don’t follow [those restrictions], at the end of the day, it’s still going to be your insurer that responds,” said Gold, a founding partner of Thomas Gold Pettingill LLP. He made the comments with regard to a court ruling last year — arising from an all-terrain vehicle (ATV) accident — in which Ontario’s appeal court declined to dismiss a lawsuit against Carlos Almeida, the ATV’s owner. Sara Fernandes was injured in 2007 while riding as a passenger on an ATV, driven by Eliana Araujo. Fernandes sued both Araujo and Almeida, whose insurer, Allstate Insurance Company of Canada, argued that Araujo was driving the vehicle without Almeida’s consent. Araujo acknowledged “she did not have express permission to take the ATV off the farm property,” but not that Almeida had “forbidden her from driving the ATV on the highway, and the motion
judge refused to draw that inference.” In Fernandes v. Araujo, the Court of Appeal for Ontario reversed Newman v.Terdik, issued by the same court in 1952. The court earlier found a vehicle owner was not vicariously liable for a driver’s negligence when the driver had the owner’s permission to drive on the owner’s property, but drove on the highway without permission.
Overruling Newman v. Terdik “would enhance, rather than undermine, the interest of clarity, coherence and predictability in the law,” the appeal court recently noted. When an owner has given a driver permission to possess his or her vehicle, “even if the vehicle is operated in a manner forbidden by the owner,” the owner can still be liable under Ontario’s Highway Traffic Act.
“GeT all THe rIGHT cOnnecTIOnS!”
2016
Ontario Insurance Directory This outstanding directory is your personal address and telephone book dedicated solely to the Ontario Insurance Industry… find the company contacts you need immediately! Used on a daily basis by all segments of the Industry — the O.I.D. is the Undisputed Source for Insurance professionals to make contact with companies quickly and easily.
The coil bound O.I.D. contains: • 400+ pages of information • 2,200+ company listings
• 130+ advertisers • 10 key industry sections:
• Insurance Companies / Wholesalers • Restoration Services • Brokers • Engineers / Accountants • Independent Adjusters • Bodyshops / Collision Repair • Appraisers • Insurance Industry Associations • Rehabilitation Services 2016 Ontario Insurance Directory: $59.00 each (plus $5.00 Shipping & Handling plus applicable taxes)
Order online:
www.bit.ly/oidorder Or call 416-510-6840
Completely Updated for 2016- over 10,000 changes!
March 2016 Canadian Underwriter 55
MOVES & VIEWS
UPCOMING EVENTS: FOR A COMPLETE LIST VISIT
www.canadianunderwriter.ca
AND CLICK ‘MY EVENTS CALENDAR’ ON THE HOME PAGE
1
Kathy Bardswick [1], president and chief executive officer of The Co-operators Group Limited, will retire at the end of 2016. Bardswick joined The Co-operators in 1978 and has led the company since 2002. From 1998 through 2002, she served as chief operating officer of Sovereign General — a subsidiary of The Co-operators that writes commercial, marine and special risk — and L’Union Canadienne, which The Co-operators sold to RSA Canada in 2012. The Board of Directors will initiate recruitment activities after the Annual General Meeting in April. The company has 43 member-owners.
2
Economical Insurance has announced that Karen Gavan [2] is set to retire as its president and chief executive officer (CEO), as well as from the company’s Board of Directors, at the end of the year. Gavan, a board member since 2008, took on CEO duties in 2011. Her previous roles include chief operating officer and chief financial officer of Transamerica Life and Aegon Fund Management Inc. A chartered accountant, Gavan has also worked for Imperial Life Assurance Company and Canada Life Assurance Company. A process to select 56 Canadian Underwriter March 2016
Gavan’s successor will be carried out by the board.
3
Serge Lavoie [3a], a former chief executive officer of Jevco Insurance Company, will be appointed chief executive officer (CEO) of Echelon Financial Holdings Inc., replacing Steve Dobronyi [3b], as of May 5. Currently Quebec president at GDI Integrated Facility Services, Lavoie was elected to Echelon Financial Holdings’ Board of Directors in 2014. His past positions include president and CEO of Jevco, and senior vice president of business development for Manulife Financial Corporation. In Canada, Echelcon Financial Holdings’ coverages include non-standard auto, classic vehicles, trailers and recreational vehicles, as well as commercial lines.
4
The Centre for Study of Insurance Operations (CSIO) has launched its new Technology Scorecard tool, which provides member brokerages with a snapshot view of their technology adoption compared to the provincial average. The tool builds on CSIO research used to develop its TLS eMail Security and Mobile Website adoption maps, notes a statement from CSIO. The scorecard tool also adds data
1
2
6
8
on industry forms, CSIOnet, eDocs, eSignatures, search engine optimization and social media.
written by Markel Syndicate 3000, a Lloyd’s underwriter managed by Markel Syndicate Management Limited.
5
6
Gina Bennett [5] was appointed president of Vancouver-based Allsport Insurance Marketing Ltd. as of January 15, reports the managing general agent’s (MGA) corporate parent, Markel Corporation. With Allsport Insurance Marketing since 2011, Bennett’s previous employers include Aviva Canada, where she was a Vancouver-based commercial lines underwriter, a company statement notes. Allsport Insurance Marketing’s coverage — commercial general liability coverage for sports organizations and participants — is
Jean Charles Dupuis [6] has been named senior vice president and chief operations officer for collision repair network Fix Auto Canada. Dupuis’s previous roles include chief information officer and vice president of information technology at MASS Insurance Brokers, Dale Parizeau Morris Mackenzie and TD Meloche Monnex, as well as president of Dutech Consultants Inc., notes a press release from Fix Auto Canada. The company has more than 225 locations across the country, the statement adds.
MOVES & VIEWS MOVES & VIEWS
of Calgary; Gordon Adams; Robert Cartwright, Jr.; Al Gorski; Leslie Lamb; John Phelps; Michael Phillipus; Frederick Savage; and Lori Seidenberg.
3 3a
9 9 positions have included general adjuster, branch manager, vice president of operations In February, and Lloyd’s DivisionZurich leader. announced the availability of a new mobileMacdonald app designed to help Chisholm clientsTrask respond to hazardous Insurance (MCT) material spills. With Zurich announced in early Environmental Emergency January that it will join propResponse, the insurer is erty and casualty brokerage targeting the transportation BrokerLink. The terms of the and manufacturing transaction were notindustries. disThe app allows users to report closed, notes a statement spillsBrokerLink. from a mobile device from BrokerLink and generate spill reports. companies, subsidiaries of AmongFinancial other things, Intact Corp.,the app can also84 letoffices users upload include serving data — such as insurance clients in Atlantic Canada, policy information spill Alberta and Ontario.and Dating location — into the report. back more than 60 years,
7 6
8
MCT has more than 110 inBernatchez suranceStéphan professionals in 18 chairman the offices.[8], Michael Brien,ofwho has led Insurance MCT over Brokers the last 12 Association of Canada, as has years, joins BrokerLink acquired Fort Insurance head of its Atlantic operations.
5 3b
10 11
7
Carolyn Snow [7] will Group Inc. Montreal. lead of RIMS as president Bernatchez’s current business for the 2014 term, is Assurances Bernatchez which took effect January 1. et Associés, which places, Snow, who has been on the among other things, liability, RIMS Board of Directors for contractor, and diseven years,surety is currently commercial coverage. for rector of riskauto management Customers of Assurances Humana Inc. She previously Bernatchez et Associés will served as RIMS’s treasurer, be integrated into Fort Financial secretary and director of Group. Madon, externalJames affairs. The RIMS president and chief board for 2014 alsoexecutive includes officer of Fort Financial vice president RichardGroup, will act asJr.; special advisor, Roberts, treasurer Julie with he and Sophie Madon Pemberton; corporate secreoverseeing transition. tary Nowellthe Seaman, director
9
of global risk management for Keung [9] PotashAlice Corporation of has been appointed Saskatchewan Inc.; Gloria senior vice president Brosius; Steve Pottle, director and chief informationservices of risk management officer at Economical at York(CIO) University; Jennifer Insurance. Keung joined the Santiago; Janet Stein, direcinsurer last November as its tor of risk management and interim CIO “and has been insurance at the University
8
As of January 8, Toronto insurance bro5 ker Jones DesLauriers Insurance Management Inc. instrumental in leading the (JDIMI) had acquired Whitley company’s IT organization Insurance and Financial Sersince time,” Economical vices. that Whitley Insurance has Insurance reported offices in Belleville,inOntario January. She has 25-plus and the nearby communities years of experience directing of Trenton, Deseronto and large-scale project implemenStirling. “The acquisition is tations and expected to negotiating build a solidwith external presencebusiness for JDIMIpartners. in Eastern
10
Ontario and position the firm Multi-line to better service their clients, Ontario commerbrokerwith strengthened age Cornerstone cial and personal insurance Insurance Ltd.and has a offerings inBrokers the region announced its purchase of new financial services diviKPL Insurance-Rates Inc.from sion,” notes a statement closed 29. KPL JDIMI. January President and CEO Insurance-Rate’s digital Shawn DeSantis will lead the online completeams approach from both will companies. ment Cornerstone Insurance Loris Clarke [8] has been Brokers’ existing locations named successor to Paul in the Ontario communities Whitley, president of Whitley of Woodbridge, Insurance, who Markham, will remain Aurora Barrie. “Our during and a transition period. approach to business is very similar and we are looking to expandKen our Rayner digital footprint,” [9] has Wendy joined DaSilva, Cornerstone Anderson Insurance Brokers’ chief McTague & Associates executive officer, says. Ltd. as its director of busi-
9
11
ness development, Central Shannon Region. “Ken brings Whitter a wealth [11] of experience to has our been comnamed director pany, having held various for Atlantic Canada senior management at positions restoration Canada, with insurersfirm andDKI other MGAs,”
says Chuck McTague, president of Anderson McTague & Associates, a familythe company reported in owned MGA based in New February. Whitter worked Brunswick. In January, Anfor FirstOnSite derson McTagueRestoration & Associates from 2011 through 2016, announced it was expanding, notes her LinkedIn profile, adding an office in Toronto to and before sheofwas with service the that, brokers Ontario Cunningham Lindsey Canada and Manitoba. Rayner’s Claims Services. She has appointment confirms the experience handling catastrocompany’s “commitment to phe claims in Australiamarketand the Ontario/Manitoba in the Ontario communities place, and to the building of of Toronto, Peterborough, a local support team to assist Goderich andtheir Thunder Bay. brokers with surplus
12
lines and difficult to place business,” Supreme McTague adds. Restoration Services Inc. is now part of the TheCommercial Guarantee Loss Experts Company (CLE) network. of Supreme Restoration North America Services “is a sister has announced that comTara pany to Maximum Property Wishart [10] became vice Services” andclaims has the president of for “expethe rience and certifications” insurer’s Toronto branch onto fix property2,damage December 2013. involving Having mould, fire, water, 21 yearsasbestos, of experience in The sewage and radon, Guarantee’s claimsnotes CLE.
10
13
department, Wishart will be responsibleFirstOnSite for the operations Restoration has of the Toronto Branch Claims. opened a branch She first joined The Guaranoffice Ottawa, will tee in in 1995 as anwhich adjuster be Dennis Luit. andled hasbyheld rolesVan of increasWith the company forcomseven ing seniority with the years, Van Luit now manages pany, including, most the Brockville, recently, claimsOntario manager for branch. Also working from specialty lines. Wishart is a the Ottawa branch will be member of both the Surety senior project Association of manager Canada and Stephane Fournier, who has the Canadian Association of 22 yearsininConstruction. restoration. Women Follow @CdnUnderwriter on http://twitter.com/CdnUnderwriter
March 2016 Canadian Underwriter 57 February 2014 Canadian Underwriter
57
Putting the pieces together.
Events and Seminars Calendar You work hard to protect your clients’ property. Now, it’s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.
ADVANTAGE LIVE Webinars:
CIP Society Events & PROedge Seminars
Overland Flooding ...............................................................................................April 7 Disaster and Emergency Planning..............................................................May 5
Victoria – Reefer Madness: The Underwriting & Claims Implications of Marijuana Grow Ops ...................... March 30
Demographic Influences on Insurance Products.........Week of June 6
Toronto – Symposium 2016............................................................................................................April 21
Professional Development Curriculum Vancouver – Think on Your Feet®..................................................... April 12-13 Vancouver – Building Better Relationships .......................................April 14
London – Shining the Light on the Solar Industry ..........................................................April 21 Hamilton – Shining the Light on the Solar Industry ......................................................April 27 Edmonton - Directors & Officers Liability Insurance: A Technical Overview..............................................................................................................................May 5 Edmonton - Don’t Let a Natural Disaster Turn into an Insurance Disaster.............May 5
Looking for information and research on the latest trends in the p&c industry? Go to insuranceinstitute.ca and visit the CIP Society’s INFORMATION SERVICES section for a free online library of Trends Papers, with topics like Uber, Airbnb, and Drones.
GALLERY
The Insurance Institute of Ontario held its 117th Annual Convocation & Awards Night January 22 at the Metro Toronto Convention Centre. Tim Shauf, president of the Insurance Institute of Ontario, served as emcee. J.R. (Bob) Tisdale, chair of the Insurance Institute of Canada’s Board of Governors, addressed the more than 200 Chartered Insurance Professional (CIP) and Fellow Chartered Insurance Professional (FCIP) graduates. The keynote speaker was George Kourounis, a renowned global adventurer, stormchaser, explorer and television presenter. Based in Toronto, his efforts to document nature’s worst weather conditions have taken him all over the globe, into places most normal people are fleeing from.
March 2016 Canadian Underwriter 59
GALLERY
With more than 250 attendees, McCague Borlack LLP hosted its 21st Annual “Christmas in January� party at The Design Exchange in Toronto January 26. McCague Borlack is the Ontario affiliated firm of the Canadian Litigation Counsel (CLC). As such, CLC members and The Harmonie Group, together with clients and guests from all facets of the insurance industry across Canada, welcomed the chance to get together, look to the year ahead and discuss the latest news and developments.
60 Canadian Underwriter March 2016
APPOINTMENT
GALLERY
QRIMA held its State of the market Conference January 21 at St-James Club in Montreal. The bulk of Montreal’s risk management industry, including a few partners who flew in for the occasion, gathered to hear from high-profile executives on economical and insurance market trends. Robert Bentley, CEO of Marsh USA and Canada, Paul Horgan, CEO of Zurich Global Corporate in North America, and Francis Généreux, senior economist of Mouvement Desjardins, gave their views on the state of the market and what to expect in the upcoming months.
Michelle Poirier
The BrovadaOne division of Willis Towers Watson, Canada’s top provider of insurance connectivity, announced today that it has appointed Michelle Poirier as Head of Sales, Canada. With more than 17 years of industry experience, Ms. Poirier is committed to improving service delivery for her clients, and to continue strengthening the Willis Towers Watson brand within the industry. In her role Ms. Poirier will maintain and enhance BrovadaOne’s existing client base, while building new and significant business relationships to further solidify BrovadaOne’s position as the market leader. Ms. Poirier brings significant experience within the insurer, broker and vendor space and will leverage her extensive background in business development and customer success management to drive value within the channel. Ms. Poirier began her career in underwriting and broker management and subsequently held senior roles with key solution providers within the industry. “Michelle is an accomplished sales leader and I am excited to add her skills and diverse experience to the team.” states Charlie Samolczyk, Global Head of Sales at Willis Towers Watson for BrovadaOne. Ms. Poirier can be contacted at michelle.poirier@willistowerswatson. com, or by telephone at 519-546-7007
March 2016 Canadian Underwriter 61
GALLERY
A record 400+ repairers, insurers and suppliers representing the insurance claims and collision repair industries attended the Canadian Collision Industry Forum (CCIF) meeting January 29 in Toronto. Leanne Jefferies, director of collision programs for the Automotive
62 Canadian Underwriter March 2016
Industries Association of Canada welcomed the group and introduced speakers of the day. These included Mike Anderson, Collision Advice; Pete Karageorgos, Insurance Bureau of Canada; Jim Dickson, Rino Tinto; Mike Kukavica, Porsche Cars North America; a
repairer panel moderated by Joe Carvalho, CCIF chairman; and an insurer panel, moderated by Larry Jefferies, CCIF pastchairman. A special presentation was made to Jefferies to honour his years of dedication, hard work and input to CCIF and its committees and as chairman.
APPOINTMENT
GALLERY
Mark Davidson Mr. Joe McCabe, Chairman and CEO of LMS PROLINK Ltd., is pleased to announce the appointment of Mark Davidson to the position of Chief Operating Officer, effective January 2016. Most recently, Mr. Davidson was Senior Vice President, Corporate Strategy. Mr. Davidson has served the financial services industry for over 30 years, with roles in general management, strategy consulting, sales, marketing, customer service and technology. He has held several leadership positions including those of Managing Director for Canada, Thomson Reuters, Head of Sales and Marketing, Morningstar Canada, and Principal of Marketing and Strategy Consulting, Financial Services and High Tech, KPMG Consulting. Mark holds an MBA from the University of Toronto, where he also served as a faculty member in the Executive MBA Program, and a B.A.Sc. in Engineering from the University of British Columbia. LMS PROLINK Ltd. is a Canadian general insurance brokerage that serves associations and their members, small- to mid-sized commercial enterprises, professionals, individuals and families to mitigate the impact of risk. We connect our clients to the best standard and tailored solutions available in the industry. We apply our judgment to enable our clients to make the right decisions. Our personalized, team-based approach makes us easy to do business with. Visit us online at www.LMS.ca or email INFO@ LMS.ca for more information about the PROLINK Group of Companies.
March 2016 Canadian Underwriter 63
GALLERY
Hundreds of claims industry guests attended the 10th Annual Post CICMA/CIAA Joint Conference Cocktail February 2. Entitled The Big Mingle, Giffin Koerth and Blouin Dunn LLP hosted the event at The Fifth Social Club in Toronto.
64 Canadian Underwriter March 2016
GALLERY
March 2016 Canadian Underwriter 65
GALLERY
More than 150 exhibitors from across Canada showcased their wares and services at the Ontario Insurance Adjusters Association’s (OIAA) Professional Development and Claims Conference in Toronto February 3. The event featured a trade show and seminars covering a wide variety of claims topics.
66 Canadian Underwriter March 2016
GALLERY
March 2016 Canadian Underwriter 67
GALLERY
The Toronto Insurance Women’s Association annual (TIWA) Wine and Cheese Reception was held at The Hyatt Regency in Toronto February 11. More than 700 guests attended the association’s annual signature event.
68 Canadian Underwriter March 2016
GALLERY
March 2016 Canadian Underwriter 69
GALLERY
The CICMA/CIAA Ontario Chapter’s 49th Annual Joint Conference was held February 2 at the Metro Toronto Convention Centre. The theme of the conference was “Technology Bytes Insurance.” Master of ceremonies was Brian Maltman, executive director of general insurance for OmbudService, who led an open forum by panelists covering disruptive technologies and potential exposures affecting the P&C industry. Speakers were James Dunn, Blouin Dunn LLP; Chris Giffin, Giffin Koerth Forensic Engineering; Paul Hancock, Crawford & Company (Canada) Inc.; and Brian Rosenbaum, Aon Reed Stenhouse. The keynote speaker was Jesse Hirsh, futurist, broadcaster and technologist.
70 Canadian Underwriter March 2016
We are Markel. Commercial general liability Directors and officers liability Environmental impairment liability Life sciences Professional liability Property and inland marine Security and protection industry Umbrella and excess liability
Helping brokers with effective insurance solutions since 1966 Calgary Montreal Toronto Vancouver www.markelinternational.ca
CA corp advert CU 8.125x10.75.indd 1
15/12/2015 11:57
ACE and Chubb are now one. On January 14, 2016, ACE Limited acquired The Chubb Corporation, creating a global insurance leader operating in 54 countries under the renowned Chubb name. The new company combines Chubb’s 130 years of underwriting insights and devotion to customer service with ACE’s three decades of technical underwriting excellence, broad risk appetite and global presence. Our goal is to provide the very best insurance coverage and service to individuals and families and businesses of all sizes — from small and mediumsized companies to the largest multinational corporations — all across the globe. As the world’s largest publicly traded property and casualty insurer, the new Chubb has the balance sheet strength and financial security of an AA rating from Standard & Poor’s and an A++ rating from A.M. Best. As craftsmen of insurance, we are devoted to meticulously conceiving, crafting and delivering extraordinary coverage to meet the needs of the modern world — a world that is epic in scale but by nature both personal and connected. To find out more, go to new.chubb.com.
Chubb. Insured.
SM
© 2016 Chubb. Coverages underwritten by one or more subsidiary companies. Not all coverages available in all jurisdictions. ACE®, Chubb®, their respective logos, and Chubb. Insured.SM are registered trademarks.