Canadian Underwriter August 2011

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a u gu s t 2 0 1 1 A Business Information Group Publication #40069240

Expanded Horizons

By Vanessa Mariga

Untangling Your Supply Chain

By Ken Lavigne

TIEAs and Canada

By Mark Allitt, Jason Carne and Nunzio Tedesco

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CANADIAN UNDERWRITER

VOL. 79, NO. 8, August 2011 Canada’s Insurance and Risk Magazine. Published by Business Information Group

www.canadianunderwriter.ca

Cover Story

Expanded Horizons

38 features

12

Untangling Supply Chains Today’s business practice of offloading processes onto others can save money, but leave you vulnerable to supplier property losses.

By Ken Lavigne

52

22 Captivating Canadians Tax Information Exchange Agreements (TIEAs) allow Canadian captive insurance firms to re-domicile their operations to alternative jurisdictions.

By Mark Allitt, JASON CARNE and NUNZIO TEDESCO

63 Fish in a Barrel

Defamation liability risk has increased exponentially in the era of social media.

Some insurance fraud coverups just aren’t very well covered-up.

By Brian Rosenbaum and Michael C. Smith

By Donna Ford

By Vanessa Mariga

18 Claim Technology

48 Easy to Be Green

Today’s technology makes it possible to take a more holistic approach to claims management.

The CSIO process for EDI policy document attachments is helping to ‘green’ the industry.

By Kirsten M. Early

By Brenda Rose

26 Big Brother

58 One-Stop Shopping

Recent events highlight the employment consequences for personal actions undertaken outside of the realm of employment, as exposed by the omnipresent social media.

Canada’s Tax Information Exchange Agreement (TIEA) with Bermuda has reduced the cost for Canadian companies to gain access to cutting-edge risk management products from Bermuda’s insurance centre.

By J.M. Reynolds

By David Fox

32 Valuing Resiliency

66 Crashing in Florida

In a value-driven approach to managing supply chain resiliency, risk is viewed in the context of how the organization makes money.

If your insured is involved in an auto accident in Florida, and your policy contains an exclusion expressly forbidden by Florida law, is the exclusion void?

By Steve Osselton and Daniel Galvao

Defamation Risk

Risk managers are using a new strategic risk management approach. Strategic risk management takes the knowledge gained through a company’s enterprise risk management (ERM) model and projects that out to the future, so that the company can make strategic decisions based on its anticipated risks. Adavances in technology have been a key driver of this approach.

By Michael L. Forte

August 2011 Canadian Underwriter

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VOL. 79, NO. 8, august 2011 profile

CANADIAN UNDERWRITER Art Director Pylon.ca, Sascha Hass

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

10 Strengthening the Base RIMS president Scott B. Clark is a big believer in strengthening the organization’s local chapter base and expanding the political influence of risk managers.

By david gambrill

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Canadian Underwriter August 2011

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editorial

A

The New Class of Disab

the Court of the Queen’s Bench of Alberta Godot’s Farewellpparently the Crisis hasto carved out a Financial new category of ‘disabled’ people —

David Gambrill Editor david@canadianunderwriter.ca

EDITORIAL

What once was a ‘credit’ crisis has now been re-branded a ‘sovereign debt’ crisis. Either way, insurers’ investment income remains threatened.

David Gambrill, Editor david@canadianunderwriter.ca

6

nadianunderwriter.ca • March 2008

6

Canadian Underwriter August 2011

treatment of the victims who nent and catastrophic — in those who have suffered minor whiplash injuries in For this class of people wit “It ain’t over ‘til it’s over.” and eurozone countries. And Does the sovereign debt car collisions — who have as apparently discriminated Cdn$4,000 litigation cap do — Yogi Berra, 1973 these wordsbeen are being issue have any relevance to against analysts in ways which typed, other the marginalized in Onemany of the main differen Industry haveinoften United Statesgroups Canada, where of the referred to the globalcan financial politicians have reached a country’s property and Canadian society only imagine. oflargest auto collision victims is th crisisWitness as ‘the 2008-09’ crisis, last-minute agreement to casualty insurers have parent this passage from Court of the Queen’s Bench ‘disability’ is more often tha as if by putting ‘09’ after the increase the country’s debt companies in Europe?

Associate Chief Justice Neil Whittmann, who recently oblitercatastrophic cases, the injuri 2008 we have closed the door limit, thus staving off a loomIf anything, the impact of ated Alberta’s Cdn$4,000 cap on damages for minor injuries nent disfigurement and/or d on a miserable chapter of the ing default situation. the sovereign debt issue on sustained in car collisions: evidence me suggests disability the severity of globe’s financial woes and have“The Why is this anbefore issue for Canadian branchesand would strongly particularly those suffering the victim makes moved on.that minor injury victims, insurance companies? be indirect.

Ultimately the the differen But one could easily make Because insurers have lots determination of solvency in ordinary from a whiplash associated disorder, are subjected to stereoIt’s doubtful an the argument the global fiof money invested in governCanada is based on whether typing and prejudice. In sum, they are often viewed as malin- stitutionally unjust or ‘discri nancial crisis isn’t really over. ment bonds. Should countries the local branch has enough gerers who exaggerate their injuries or their effects in an effort these two classes of victim In fact, it’s ongoing, even if it default on their financial capital to support its own to financially.

The fact that these injuries are often not minor injury hasgain morphed into a different obligations, insurers may risks, asexample, well as thethat branch’s objectively verifiable may contribute to this perception.” financial compensation as c form. What once was a ‘credit’ not receive full value for the ability to access capital from crisis, for did example, has now come amount they have invested accordthe parent How this stereotype to pass?

Apparently, no company. one would argue that ca been re-branded a ‘sovereign in bonds.

And thus insurers’ A sovereign debt crisis ing to the court, proof by assertion is all it takes to be a minor- be subject to a Cdn$4,000 lit debt’ crisis. Either way, investment portfolios would could affect branches or ity group suffering Charter discrimination. “I would simply Where the Alberta Court insurers’ investment income sustain yet another financial subsidiaries if their parent note that the existence of a stereotype does not require that it pare the offices right groups.

And n remains threatened. hit. Recall that insurers’ companies/head were be“Sovereign universally Whittmann points thatinwill be raised on risk accepted,” is curinvestment wrote. income Maybe is alreadyso, but materially affected terms rently the main source of suffering as a result of governof access toInsurers capital should more evidence of negative stereotyping should exist than and politicians concern victims for the financial ment to lower interthe need arise.reasons, “Accessing merely declarating that it isstrategies so. policy the court no stability of the European est rates (this was intended capital” means having access Regardless, Alberta’s Cdn$4,000 minor auto injury dam- keep everyone’s auto insura Insurance and Occupational to stimulate economic growth to full value of investment age cap is no more — swept away as unconstitutional because of the minor injury victims, Pension Sectors,” according as a means to overcome the income tied up in governit discriminates against a new sub-category of people with But the court says this do to the European Insurance scarcity of global credit in ment bonds. disabilities.

Never mind the 2008-09). fact that the court incorrectlyThe spectre discrimination against mino and Occupational Pensions of U.S. loan Authority (EIPOA), which Throughout the global credit defaults is likely of more im-the only fa compared minor whiplash victims to a supposedly analogous claims costs aren’t regulates European Union’s crisis, insurers spoke of their concern to Canadian group ofthe injury victims who apparently have Charter rightsmediate to about cycle management as financial and insurance secability to insulate themselves insurers. Canadian compasue insurers for more money.

“Simply put,” Whittmann logic goes, minor injury vic tors. “The process towards from the worst of the fallout, nies have only moderate U.S. wrote, “thedebt [appropriate] groupthey consists by insurance companies tha sustainable levels for comparator largely because chose of those government investment, it’s accident are not within the defness when it come sovereigns,injury both invictims Europe whosetoinjuries invest prudently.

This true. But thedecisions ripple effect and globally, will determine prudence meant avoiding of U.S. loanWhatever defaults would inition of minor injury.” one thinks of whether, which extent, risky,to potentially high-yield most certainly felt by Alas,and thetolearned judge seems have a better grasp of the about be predictability of cost these risks will materialise to investments like credit deCanadian insurers sleeping population of this category than most. Exactly who is this their claims go from pred adversely impact the financial fault swaps. Instead, money next to the elephant. group ofofpeople not covered under Alberta’s legislative regimeWe often unpredictable Cdn$21,000 a situation the sectors.” was parked with supposedly say the economic forA cursory minor glance auto injuries, but who nevertheless could have sued no real sense of at the safer, lower-yield investments crisis of 2008 stopped in how high the newspapers theseCdn$4,000? days sugsuch as government bonds. ’09 simply because insurfor more than without a cap are heard. Th gests “the process towards Alas, the crisis has exposed ers’ financial results started It’s quite possible the court decision here is conflating impossible for the Alberta go sustainable debt levels for the highly leveraged nature improving in 2009. But the injury classes. Is the court saying, for example, that the comout how high these damage a sovereigns” is not going well. of many countries’ ecolingering effects of the global parator class includes catastrophic injury victims? Why would might go, resulting in rate Just before press time, Greece, nomic strategies, and now credit contraction now live it be appropriate thedependable treatmentinvestments and legal rights province. teetering on the edgeto of compare a dethe on in the form of a sovereign afforded to these classes autolooking collision fault, received a loantwo fromdistinct the into bondsofaren’t very injury debt crisis. The interesting thing wil International Monetary Fund ‘safe’ anymore.

It ain’ting over it’sin over. victims? to‘til trial Atlantic Canad Indeed, the point of Alberta’s 2004 auto reforms was to and say minor injury victim differentiate the treatment of the pain and suffering of under the Charter because o “minor” auto collision victims, as defined in law, with the to make it to the Supreme C

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marketplace

Canadian Market Slave Lake wildfire ranks second-costliest insured disaster in Canadian history Insured damage caused by wildfires that ravaged much of the town of Slave Lake, Alberta in May has hit the $700-million mark, according to the Insurance Bureau of Canada, citing PCSCanada data.

That makes the Slave Lake wildfire the second-costliest insured disaster in Canadian history. The most expensive insured disaster in Canadian history remains the ice storm that hit Quebec and Ontario in 1998, which cost insurers more than $1.8 billion (figure adjusted for inflation).

Canada holds public consultations on P&C demutualizations The Department of Finance Canada wasted no time winding up its public consultation on the demutualization of Canadian property and casualty insurance companies, giving the public and the industry a month to make submissions.

The Finance Department committed to establishing regulations for the demutualization of a Canadian P&C insurance company in its budget, released on June 6.

The government officially launched public consultations on June 30 and set the 8

Canadian Underwriter August 2011

deadline for July 31. Finance Minister Jim Flaherty has said publicly that no Canadian property and casualty insurer will be allowed to demutualize until regulations are in place.

The public consultation was the first step in that process.

Signs of market hardening in some Canadian commercial segments: Marsh Overall Canadian market conditions remain favourable across most commercial lines through the end of the 2011 Q2. But signs of a firming market are beginning to appear in segments of the marketplace, according to Marsh.

“It is too early to tell if the second half of the year will bring any overall increases to commercial insurance rates in Canada,” said Alan Garner, president and CEO of Marsh Canada Limited. “Marsh expects that pure Canadian commercial accounts will see rates remain flat well into the third quarter of 2011, and possibly beyond.”

In its Canadian Insurance Market Midyear Update, Marsh examined data from transactions brokered by Marsh through early July 2011.

The report’s findings suggest the majority of commercial property, casualty, and financial and professional insurance buyers are not experiencing significant rate increases.

Property insurance rates are increasing in individual sectors such as energy and min-

ing, and 2011 catastrophe losses could further affect rates for some buyers.

Also, underwriters are starting to look more closely at contingent business interruption and contingent exposures following the Alberta wildfires.

They are requiring more information from insureds before offering such coverage, the report says.

Insurers, reinsurers planning to adopt more aggressive investment strategies Nearly half (46%) of 38 North American insurers and reinsurers surveyed by Towers Watson, a global professional services company, say they plan to be more aggressive in their respective investment strategies over the next year.

Additionally, insurance executives participating in the May/June online survey asserted that low interest rates (83%) represent the greatest investment challenge.

The majority of respondents in the online study, conducted in April and May 2011, had general account assets invested of more than $1 billion.

While an emphasis on fixed income investments is to be expected among insurers, nearly 40% said they expect to increase their allocation relative to alternative investments and look to other high-risk, high-yield vehicles.

Only 9% of respondents said they expect to be more conservative in their investment strategies. “It’s meaningful that a substantial number of

insurers expect to embrace a more aggressive investment strategy at a time when they are clearly worried about the economy and financial market volatility,” said Christopher DeMeo, Towers Watson’s head of investment for North America.

Regulation Alberta Insurance Act changes to take effect in July 2012 Alberta’s department of finance and enterprise has outlined changes to the Alberta Insurance Act that will go into effect on July 1, 2012.

Legislative amendments to the act include the following: • Legislation will require statutory conditions to be incorporated into multi-peril property contracts.

• The timeframe to initiate an action has been increased from the current one-year timeframe to two years.

This is consistent with the Limitation Act. • The dispute resolution process, currently referred to as the “appraisal procedure,” will be amended to strengthen consumer protection in a claims dispute.

• Electronic transactions will be allowed, permitting insurers and policyholders to use modern business practices and technology. (There will be some exceptions where written transactions will still be required to protect consumer interest. For example, the cancellation of an insurance policy or the change of

marketplace

a beneficiary.)

A full list of legislative amendments and regulatory changes can be found at: http://www.finance.alberta.ca/ publications/insurance/alberta-insurance-act.html

B.C. changes legislation to protect innocent co-insureds B.C. has changed its Insurance Act to protect innocent co-insureds from coverage exclusions if a loss is caused by the criminal act of another person co-insured on the same policy.

Based on the wording of the law, a policy exclusion would apply to a person who: • committed the act or omission that led to the loss or damage; • abetted or colluded in the act or omission; • consented to the act or omission and knew or ought to have known that the act or omission would lead to loss or damage; or • is in a class prescribed by regulation.

The amendment says a policy exclusion would not apply to an innocent co-insured who does not fall under the above criteria. Nonetheless, the innocent co-insured may not collect “more than their proportionate interest in the lost or damaged property.”

Also, the innocent coinsured is obligated by law to cooperate with the investigation of the insurer, whether by submitting to an examination under oath and/or producing relevant documents to the insurer.

privacy law. Commissioner Elizabeth Denham’s investigation comes after ICBC offered its facial recognition technology to help police identify British Columbia’s informaparticipants in the Stanley tion and privacy commisCup riot in Vancouver on June sioner is investigating the 15. The riot led to millions Insurance Corporation of of dollars worth of property British Columbia’s (ICBC) use damage. of facial recognition technology ICBC has committed to to ensure that it complies with co-operate fully with the

B.C. privacy commissioner investigates ICBC’s use of facial recognition technology to aid police

privacy commissioner’s investigation.

ICBC said it would support a police investigation by confirming if there is a match between identified rioters and a name in the ICBC’s photo license database, but will not disclose personal information until the police obtain a subpoena, warrant or order.

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9

profile

Strengthening the Base David Gambrill Editor

RIMS President Scott B. Clark is a big believer in strengthening the organization’s local chapter base and expanding the political influence of risk managers, which may be of benefit to Canadian RIMS chapters in the future.

Risk and Insurance Management Society (RIMS) president Scott B. Clark describes himself as an “odd duck.” Certainly he is a rare breed in the sense that he knew from a very early age he wanted to go into the insurance and risk management business.

Clark was literally following in the footsteps of his father, who took over from his own father’s insurance business in 1961. At that time, Clark said, he “became somewhat interested” in the work of his father and grandfather. He subsequently went on to become the youngest person in the area to obtain his insurance license. Clark

10 Canadian Underwriter August 2011

later received his Bachelor of Science in Business Administration from the University of Illinois.

As Clark’s professional career developed into the mid-1980s, he developed a background in insurance sales and marketing, underwriting and select claims work. He particularly took a liking to drafting insurance contracts. When asked if he ever considered going into law because of his interest in drafting contracts, he laughs and observes he often directed counsel on how to interpret contract terms; hence, he didn’t feel he needed to become a lawyer to understand them.

Clark also developed an interest in creating selfinsurance programs. This led him to discover the world of public education. About 25 years ago, the superintendent of the Miami-Dade County School Board tried to recruit Clark into the public service fold. “I said I would give him two years,” Clark said. “That was 25 years ago.”

Clark is currently the risk and benefits officer for the School Board of Miami-Dade County, Florida. The school board is the fourth-largest in the United States, with more than 50,000 employees and 340,000 students. Clark’s responsibilities at the board

include the management of its traditional risk operations, including property, casualty, employee benefits and loss prevention programs, in addition to the creation of an Enterprise Risk Management platform.

There is discussion about whether RISK PAC might be a possible model to implement in Canada.

Clark said his initial attraction to working for the school board was the ability to “mould” a risk management model for the school board rather than inherit an existing one. Over his 25 years at the board, he has worked with 14 different superintendents, each of whom Clark describes as generally supportive of his efforts.

Clark likens his work in the public sector to doing risk management in the private sector. Except whereas the “bottom line” for risk managers in the private sector is measured by stockholder equity, Clark’s “bottom line” is the safety and education

of the children, as well as developing a benefits program for a wide spectrum of school board workers, from bus drivers to cafeteria employees.

Clark says one of his biggest challenges is to develop a program to protect students, employees and almost $82-billion worth of school board facilities in an area highly exposed to hurricane risk. He noted after Hurricane Andrew hit in 1992, two domestic insurance carriers pulled out of the area, causing the board to change its insurance-buying strategy.

The board proceeded to seek out insurers in the global market with more geographically diverse portfolios.

Clark’s experience in harmonizing the needs of a diverse array of people within the larger school board mirrors his efforts to support a stronger representation of various South Florida areas within RIMS. He is a founder of RIMS Greater Miami Chapter, where he served as president in 1992-93 and 2003-04.

In working to create the Greater Miami Chapter, Clark found himself working closely with the RIMS organization in New York. This experience put him in a position to serve as a member of the RIMS board since 2000. He became the treasurer of RIMS in 2007-08, secretary in

profile

2009 and president in 2011.

As president, Clark’s priority is to strengthen the national organization’s chapter base.

These efforts might in fact have a spillover effect in Canada.

For example, Clark notes that RIMS in the United States has created a political action committee called RISK PAC. This was done at Clark’s first meeting as RIMS president in January 2011. RISK PAC will raise money to be used for helping RIMS lobby efforts on Capitol Hill as well as electing public officials sympathetic to the advancement of risk man-

agers’ goals. At the moment, RIMS is creating “chapter toolkits” to be submitted to each RIMS chapter. These will make chapter presidents and members aware of the goals of RISK PAC and the purposes to which its funds will be used.

“The RISK PAC, the political action committee and the work that we’ve done on [Capitol Hill] doesn’t really resonate that much in Canada,” Clark says. “But there is discussion about … seeing if that would be a possible model to implement in

Canada. That’s possibly on the horizon and obviously we will be working with RIMS Canada to look at what pieces of our [RISK PAC] structure we could use in Canada to further the RIMS name in the Canadian provinces as well. Canadian [RIMS] board members felt we would have to augment it a bit, but it very well could take the legislative platform [of RIMS PAC] and emulate that in Ottawa.”

One could imagine a type of Canadian RISK PAC operating at the federal level in Ottawa. Provincial RIMS chapters would help provide direction to the federal PAC, based on their provincial legislative agendas.

“It would seemingly be a pretty good fit,” Clark said of the analogy between the structure of RISK PAC and the potential provincial/federal structure of a proposed Canadian model. “You’ve got to make sure that the right subject matter and the right support are provided so we don’t go up there with an initiative [in Canada] and have it fail.”

In the meantime, RIMS has a number of political issues on the go. Supply chain risk is a key issue facing risk managers now. The March 2011 earthquake and tsunami in Honshu, Japan brought the concern into high relief, says

Clark, who arrived in Japan for a visit with the Japan RIMS chapter the day before the earthquake happened.

“We’ve all seen with the economy changing, there’s been a major change in how our members’ corporations — in manufacturing, in particular — have changed their supply chain methodology,” says Clark. “The risk of that became very apparent after the earthquake and tsunami in Japan, when their suppliers didn’t have much inventory from which to draw. Obviously that had a worldwide effect on automobile manufacturing, computer chip manufacturing — all of those things we’ve seen fall out because everybody was manufacturing and shipping without much inventory.”

Cyber risk is another hot issue. “We believe in working very strongly with both the insurance markets and IT professionals and being able to look at the core causes of data breaches. What should our risk mangers, our members, be involved in within their organizations to bring this to the forefront and not just rely on IT people to do the right thing? There needs to be a much more strategic approach. This is a great place for a risk manager to be, quarterbacking the cyberrisk emerging risk.”

August 2011 Canadian Underwriter 11

Untangle Your

Ken Lavigne Senior Vice President, Canada Division, FM Global

Geopolitical, regulatory, financial and other risks tend to dominate the supply chain conversation, leaving supplier property risk as a potential blind spot.

Today’s business strategies are great for minimizing costs and increasing profitability. They can also snarl your supply chain beyond recognition. Interestingly, geopolitical, regulatory, financial and other risks tend to dominate the supply chain conversation, while supplier property risk has been a potential blind spot. As the world gets riskier, here are three basic steps risk managers can take to work out the kinks. A case study demonstrating the use of these techniques appears on Page 16.

Step 1: Identify and prioritize key suppliers Your company may have a few suppliers or perhaps hundreds. How will a disruption along that chain, somewhere in that constellation of participants, affect the profitability of 12 Canadian Underwriter August 2011

your business? To understand your potential vulnerabilities, you must first understand your supplier network — how each supplier is connected not only to your operations, but also to other suppliers.

The first step is to identify key suppliers. This requires a thorough analysis of your revenue streams, and a focus on the most significant in terms of current income as well as future strategic growth. Keep in mind a product’s profitability is a better indicator than the size of the revenue stream alone. After you determine the key suppliers driving the selected revenue streams, you’ll want to evaluate alternative sourcing options for each supplier. Using that information, you can winnow the list of suppliers down to those that are multiple-, single- and sole-sourced. Because supply chain analysis can grow onerous quickly, multiple- and singlesourced suppliers with confirmed, adequate alternatives and having no notable concerns may be exempt from further analysis. The goal is to evaluate only the suppliers presenting the greatest risk to your organization.

Suppliers should then be prioritized according to their financial impact on your organization. For example, what products or services

Illustration by Mary Zhao

Supply Chain

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to consider asking your supplier might include: Is your production based on a single location or multiple locations?

What are the physical threats to these locations? How long will it take for your business to recover from a disaster? Can the loss be mitigated through alternative locations or producers? Do you have a comprehensive business continuity plan?

would not be sold in the event of a supplier loss? One way to determine priority is to use annual business income value, calculated by subtracting variable costs from the related product line revenues.

The sometimes-tenuous link between risk management and procurement can threaten to impede the identification of key suppliers. Today’s risk manager should be prepared to forge new relationships or to strengthen existing ones with corporate procurement to clarify the financial implications of individual supply chain exposures.

Step 2: Analyze your suppliers’ risk exposure Once you’ve identified key suppliers, the next step is to develop an awareness of the fundamental threats to those suppliers and manage the associated risk. This requires a deeper understanding of the supplier’s business operations and its ability to recover from a major disruption. Of course, it is possible the supplier will be highly resilient to a disruption — perhaps owing to a solid business continuity plan — and present a smaller risk than initially thought. For example, a supplier thought to be the sole source of a critical component may in fact have 14 Canadian Underwriter August 2011

the ability to produce that component at one or more additional locations — locations that are either owned by the supplier or contracted elsewhere.

The good news is that if your company follows strict property loss prevention standards in its own facilities, it can choose to do business with like-

Cultivating alternative sourcing arrangements is typically the best way to mitigate supply chain risk. minded suppliers. If your business is important enough to a supplier, that provider even may allow you to audit its facilities or agree to make risk improvements to achieve preferredsupplier status. Current business trends indicate suppliers are becoming much more willing to share information. However, this may hinge on the amount of influence your company has on a given supplier.

Provided access to a supplier location can be obtained, the goal is to understand the key facilities or processes needed to produce the supplier’s products or services. Some questions

Step 3: Mitigate your supply chain risk Supply chain risk can be mitigated in several ways. It can be done through risk improvement efforts, by switching to suppliers with less risk exposure or by spreading the financial impact across multiple suppliers. Cultivating alternative sourcing arrangements, where possible, is typically the best way to mitigate supply chain risk. Recall, however, that a sole-source supplier with a highly protected facility and effective business continuity management practices may not represent a significant risk. Businesses are trending toward leaner, more streamlined supply chains, which means not only fewer suppliers and more sole-sourcing, but also closer working relationships.

Expanding the supply base for alternatives is just one — and often a very expensive — mitigation strategy. Others call for: • increased inventory levels (of raw material or finished goods); • internal production capabilities; • merger with, acquisition of or increased equity investment in the supplier to better ensure control over supply and reduce potential threats; • business continuity planning requirements for all suppliers; • substitute products and services; or • redesigned products, to allow for greater supplier flexibility.

Where risk cannot be sufficiently reduced, you can explore risk-transfer options. To be prepared in the event of a supply chain-related loss, check with your insurer to understand how your property insurance policy will respond to this type of loss event.

Crawford Global Technical Services

For large, complex losses, trust Crawford GTS Crawford Global Technical Services (GTS) is home to many of Canada’s leading loss adjusters and offers an unparalelled range of expertise nationwide for large and complex losses. In addition to their technical skills, many of Crawford’s adjusters have backgrounds in accounting, architecture, engineering, law and medicine. This blend of expertise delivers outstanding results that are unmatched in the industry.

For more information, please contact Paul Hancock, National Director, Crawford GTS, at Paul.Hancock@crawco.ca or visit www.crawfordgts.com.

www.crawfordandcompany.ca Crawford & Company (Canada) Inc. is an equal opportunity employer

Case Study: Chain Reaction Recovery from a Supply Chain Disruption Today’s companies look to minimize costs while increasing productivity.

They also want to get to market quicker, without stockpiling inventory or tying up capital. Businesses are contracting for material and services that are no longer cost-effective to produce themselves, building new alliances with suppliers. Any break in D&O/island size 8/3/11 10:09 AM the chain can cause the entire system

to collapse, resulting in lost sales, customers and market share; delayed or missed deliveries; a drop in operating income; damaged market credibility and reputation; and investor and shareholder uncertainty.

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of LCD screens for a major consumer company’s new product line of mobile phones, computers, video games, TVs, satellite radios and GPS devices. The multi-level deal stretched resources to their limit, affecting many companies along the supply chain. Production orders were assigned to various original equipment manufacturing (OEM) partners; they in turn relied on smaller companies to supply component parts.

Within the first year of the contract, the electronics company was hit with what could have been crippling events.

A landslide in Korea destroyed a factory that was the main component supplier to a key OEM. A fire broke out at a critical supplier’s chemical plant in Europe — a large producer of liquid crystals — putting a stop to LCD production. A typhoon in southeast Asia shut down several ports, stranding a container ship scheduled to carry 200,000 new video-game systems to the United States.

Though difficult and costly, in each circumstance, the company responded, mitigating the impact on its operations. For example, it helped the supplier in Korea shift component production to another local factory, arranged temporary housing for workers and negotiated a rush order to replace equipment. It arranged for liquid crystals to be supplied by several smaller companies, located in different countries. It re-routed the video games, by rail, to a port city in another country, and shipped them from there.

Fortunately, the company had prepared for the unexpected. It had identified and assessed the potential for risk all along its supply chain, and collaborated with its suppliers to develop an inclusive strategy for improving that risk. It even conducted a comprehensive review of the economic, social, political and environmental conditions in the regions in which it did business. It understood its exposure, and made the decision to protect itself. It learned that risk management in a global marketplace requires more than just insurance. More importantly, it put itself in a better position to compete, even if disaster were to strike.

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suffered by our industry.”

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Too s to Tame Claims Kirsten M. Early

Assistant Vice President, Global Claims Practice Leader, ESIS Inc.

Today’s technology makes it possible to take a more holistic approach to claims management, by providing detailed and timely information on individual claims and the ability to learn from the loss experience of the broader industry.

Information is the key to risk management. The more accurate and timely the information, the more successful the risk management strategy.

The same principle applies to claims management. Better information makes it possible to deal more efficiently with current claims and to work more effectively to mitigate future losses.

Whether they operate in financial services, manufacturing, natural resources or other industries, companies face an increasingly complex landscape when it comes to claims management. Dealing with claims from one location can be challenging enough. It becomes much more difficult when it’s necessary to track and manage claims from multiple locations, in different provinces or even across national borders.

Add in the differences in regulations, languages and currencies, and it can become overwhelming. Fortunately, advances in technology make the process far more manageable.

Today, technology makes it possible to take a more holistic approach by providing detailed and timely information on individual claims, an enterprise-wide view of a company’s claims experience and the ability to learn from the loss experience of the broader industry.

18 Canadian Underwriter August 2011

More Powerful Tools To manage claims and losses more effectively, companies must have access to more detailed and timely information, and more powerful ways to analyze that data. Among the capabilities risk managers should look for in managing global claims is the ability to run reports and obtain consistent updates on a real-time or daily basis. The system should make it possible to drill down into individual claims to see detailed claims notes from an adjuster, rather than just basic information and summaries.

Financial data should be available in multiple currencies. For instance, a risk manager whose company operates across North America should be able to see the figures in Canadian dollars as well as U.S. dollars.

Claims information should also be available in multiple languages, which for most Canadian companies means English and French.

The system should enable the company to aggregate claims and claim information from multiple platforms and systems into one central repository. In addition, it should be Webbased, with secure encryption to protect data and enable managers to access information when and where they need it about claims individually and in the aggregate.

Real-Time Updates In today’s world, having up-to-date information is a necessity, not a luxury. Risk managers should not have to wait days, weeks or even months between reports. Some current systems only update on a 15- or 30-day cycle. But there is no reason not to insist on real-time updates. The system feeds should include all loss information, claimant information, reserves, payments and claims notes at a minimum.

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Alongside the capability to drill down on individual claims, it’s important to be able to take a wider view of the claims landscape. This means evaluating claims and losses for one or multiple locations, across provincial borders and even globally.

Getting detailed information about an individual claim is another important tool. As archaic as it seems, in many cases, information is still collected on paper files and later entered into a central repository system. This may include only basic information such as the claimant’s name, a very brief description of the claim and the financial data. Risk managers should have access to the full and updated claims notes as soon as they are entered into the system by the adjuster so they can better assess where a claim stands and what progress is being made toward resolution.

A Wider View Alongside the capability to drill down on individual claims, it’s important to be able to take a wider view of the claims landscape. This means evaluating claims and losses for one or multiple locations, across provincial borders and even globally.

Companies relying on multiple loss adjusting firms may find it difficult to collate data from the different firms to obtain information such as overall claims expenditures, reserves and claims volumes. In addition, the reports may be coming in at different times.

A robust risk management information system (RMIS), provided in a partnership with a third-party administrator, can help to overcome these hurdles. These systems make it easier to track and analyze individual claims.

In addition, they offer the capability 20 Canadian Underwriter August 2011

to analyze a company’s overall claim experience and identify patterns and trends that will help in deciding on steps to reduce claims and expenses.

The Holistic Approach In addition to assessing claims data from within the organization, risk managers may want to compare their own experience with the broader industry to see areas where improvements can be made. For instance, a

In addition to assessing claims data from within the organization, risk managers may want to compare their own experience with the broader industry to see where improvements might be made. company may be experiencing a large number of slips and falls at a particular location. A third party administrator (TPA) should be able to compare the company’s experience to that of its industry clients as a whole. Such an analysis may show, for instance, that the company’s employees are getting back to work more slowly after such incidents than at its rivals. That information can help risk managers

develop a program to reduce slips and falls and to get workers get back on the job more quickly.

Along with technology that makes it easier to manage claims, a company should look for a system that makes it easier to understand the costs involved. A TPA should be able to provide centralized account management as well as inclusive pricing on a per-claim basis. A company on a deductible may want to consider moving to a self-insured retention, offering the ability to save money while increasing control over claims and being able to obtain more detailed information.

Rein in Cost and Complexity Today, companies are seeking to rein in both the cost and complexity of claims. This requires moving beyond simply managing individual claims as they arise and taking a more holistic view of the organization’s claims.

Technology has a vital role to play by providing risk managers with more timely information and more powerful tools. New technology makes it possible to analyze a company’s claims, identify patterns and trends, compare them with the wider industry and highlight areas where steps can be taken to mitigate losses and control costs. Better information can help a risk manager make better decisions that will make managing claims more efficient and improve the company’s loss experience going forward.

Captivating Canadians with Tax Agreements

Mark Allitt

Senior Manager, KPMG Advisory Limited (Bermuda)

Jason Carne

Partner, Insurance, KPMG Bermuda

Nunzio Tedesco

Partner, Tax, KPMG Toronto

Tax Information Exchange Agreements (TIEAs) provide an opportunity for Canadian firms, many of which have located captives in countries sharing a double-taxation treaty with Canada, to redomicile their operations to alternative jurisdictions offering commercial and tax advantages.

The subject of Tax Information Exchange Agreements (TIEAs) is a hot topic within the captive insurance industry, and for good reason. To date, Canada has ratified three TIEAs with captive jurisdictions, including Bermuda and The Cayman Islands. These new TIEAs open the choice of captive domicile available to Canadian organizations. They also provide an opportunity for Canadian firms, many of which have located captives in countries sharing a double-taxation treaty with Canada, to re-domicile their operations to alternative jurisdictions that may provide many commercial benefits while enjoying a comparable or potentially more efficient tax position.

22 Canadian Underwriter August 2011

What is a TIEA? TIEAs outline a framework for exchanging information between countries to help administer and enforce tax laws. These agreements are typically based on Organization for Economic Cooperation and Development (OECD) standards.

They are seen as an important tool to prevent tax evasion in circumstances in which no comprehensive tax treaty is in place between the countries concerned. While this is their primary purpose, a number of TIEAs, such as the one between Bermuda and Canada, provide additional benefits for Canadian companies.

Under Canada’s tax regulations, a “designated treaty country” includes a jurisdiction with which Canada has a TIEA in effect. This enables Canadian foreign affiliates resident and carrying on active business in a TIEA jurisdiction to be eligible for “exempt surplus” treatment on their earnings, enabling them to repatriate profits to Canada without incurring Canadian tax. Previously, active business income earned by foreign affiliates in non-treaty countries was subject to Canadian tax when repatriated to Canada as “taxable surplus.”

Additionally, other forms of income earned in the TIEA jurisdiction — such as interest received from another foreign affiliate resident and carrying on an active business in a third jurisdiction (also being a TIEA or treaty jurisdiction) — may be repatriated on a tax-free basis to the Cana-

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dian parent, so long as the amount is deductible in computing active business income of the first affiliate.

Such benefits have previously been conferred only to affiliates carrying on business in countries with a double-tax treaty with Canada — Barbados, for example. The new TIEAs therefore establish more of a level playing field in comparison to treaty jurisdictions.

By extending such tax benefits to countries that enter into TIEAs with Canada, the Canadian federal government is offering an incentive to attract more jurisdictions to join its TIEA network. At the same time, it discourages investment in countries that do not come to the table. If Canada does not enter a TIEA with a country within five years following the initiation of negotiations or a written invitation to enter into negotiations, active business income earned by a foreign affiliate in that country is taxed in Canada on an accrual basis (i.e., the income is taxed as it is earned as “foreign accrual property income”).

When do TIEAs take effect?

Generally, a signed TIEA comes into force once both countries have ratified it. In the example of the Bermuda TIEA, the ratification process was completed in June 2011 and the agreement formally entered into force on July 1, 2011. Although the TIEA entered into force only midway through 2011, its benefits can be enjoyed by foreign affiliates of Canadian organizations for their entire tax year that includes this date. Similarly for the Cayman Islands TIEA, both countries ratified the agreement in June 2011 and came into force on June 1, 2011.

TIEA v. Double-Tax Treaties Traditionally Barbados has been the jurisdiction of choice for many Canadian organizations operating a captive because of its double-tax treaty with Canada. But we expect to see an increase in Canadian captives in TIEA jurisdictions going forward.

Due to differences in residency requirements to qualify for exempt sur-

plus treatment under Canada’s tax treaties and TIEAs, under current policy, it may be easier to qualify for residency (and thus exempt surplus treatment) under TIEAs than treaties.

For example, to qualify under a treaty, a foreign affiliate must meet two tests. A test under common law based on mind and management, and a residency test under the treaty, which is based on liability for tax in the country due to domicile, residence or place of management or incorporation. Any special provisions that deem certain entities not to be treaty-resident also need to be considered. In contrast, to qualify under a TIEA, the foreign affiliate only needs to meet the common law mind and management test.

Furthermore, unlike Barbados, where captives can be taxed on profits at rates ranging from 1.75% to 2.5%, many TIEA jurisdictions have a zero corporate income tax rate and do not impose capital gains tax or withholding tax.

Therefore, by establishing a captive in a

A large loss

TIEA jurisdiction, a Canadian corporation may benefit from the additional tax savings available to it. This could represent a substantial benefit for companies generating a sizeable active business income.

TIEA jurisdictions may also provide other commercial benefits such as specialized and advanced business infrastructure, convenient locale to the Canadian parent and, in the case of Bermuda, the presence of commercial insurance and reinsurance companies that allow captive owners and operators to access open-market underwriting capacity not found in other captive domiciles.

Why Establish a Captive Now? As a result of the fallout from the recent financial crisis, cost control and effective risk management is now higher on the agenda for most organizations than it has been for some time. Captives can help reduce the cost of insurance programs by mitigating or avoiding commercial insurers’ administrative

overheads, as well as by recapturing underwriting profits and investment income that would have otherwise gone to the commercial marketplace. Other potential savings can be made by using a captive to access the reinsurance markets, which operate on a lower cost structure than direct insurers.

In addition to tax planning advantages, additional financial benefits of using

captives include allowing the parent company to earn investment income on unpaid loss reserves, and enabling a captive owner to benefit from its own individual loss experience rather than pay higher premiums based on industry-wide losses. A well-run captive can also create a focal point for enhanced risk management and claims control and thus make significant further contributions to the bottom line.

Captives help provide a greater degree of flexibility and control over the risk management function by allowing programs to be designed in response to specific coverage, premium and retention requirements. These programs can be designed to offer individual operating units of a company the coverage and deductibles they require, while at the same time the overall control and design of the insurance program is maintained at the corporate level. Thus captives can help centralize the financial and administrative operation of a corporate insurance program.

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Recent events have highlighted the issue of employment consequences for personal actions undertaken outside the realm of employment, as exposed by the omnipresent social media.

J.M. Reynolds Social Media Consultant

Organizations need look no further than the City of Vancouver to find an example of a vigorous response to reputational risk arising when a firm’s brand becomes associated with individuals or groups who conduct damages or seriously undermine public confidence in the organization’s values, products or goals.

More than just a game was lost when the Boston Bruins beat the Vancouver Canucks in the final game for the 2011 Stanley Cup. The postgame rioting in the streets, injuries and property damage unleashed a storm of controversy over the City of Vancouver’s management of public safety. The riots threatened to send Vancouver’s brand — i.e. a sparkling gem of a city that is safe and well managed — up in flames, as well. B.C. Premier Christy Clark lost no time defending the province’s values. She publicly stated the consequences for the rioters’ actions as follows: “We are going to do everything we can to make sure the public understands who you were. Your family, your friends, your employer will know you were a part of it.”

Enter the social media, today’s technological answer to the omniscient government in George Orwell’s novel 1984.

26 Canadian Underwriter August 2011

Social Media: Always Watching, Always Speaking The ubiquity of cell phone cameras and personal digital assistants has created an environment in which Premier Clark could be fairly certain of identifying culprits and punishing them. After all, what employer wants to see its brand name associated with such activities? Almost in real time, images of the destruction and its perpetrators were uploaded to social networking sites. The virtually worldwide exposure forcefully propelled into the public consciousness the issue of employment consequences for personal actions undertaken outside of the realm of employment.

The Vancouver riots highlighted the evolving expectations of privacy, the significant impact of social media on organizations and the lack of legal clarity about the rights of employees and employers. Camille Cacnio, who was caught stealing in a three-second video clip filmed during the Stanley Cup riots, was fired by her employer in the aftermath of the riot. Similarly, Connor Mcilvenna, a carpenter who posted on his Facebook page that the riots were “awesome,” was promptly dismissed. Arguably, the

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employers had the right to act to protect their organization’s brand by disassociating the business from any connection to the riot, however tenuous.

In the minutes and hours following the riots, thousand of pictures were posted online by rioters and spectators caught in the post-game melee.

While Mcilvenna and others initially celebrated the riot, within 24 hours the mood had turned grim. In a statement to the Toronto Star, Mcilvenna’s superior at RiteTech claimed he received hundreds of emails and didn’t want the company’s reputation linked to Mcilvenna. The “link” was that

The Vancouver riot case illustrates the risk of an employee’s off-duty conduct negatively affecting an organization. Many examples exist of employee conduct exposing an employer to legal risks.

Mcilvenna had listed RiteTech under his employment information on Facebook. Burrard Acura’s dealership manager Patrick Almeida expressed similar sentiments regarding the termination of Cacnio, telling CBC news, “It’s been pretty ugly.”

What Does the Law Say? Canada does not have any laws specifically related to regulating the use of social media and its impact on the workplace. In law, any non-unionized employee can be fired for any reason, at any time, so long as they have been provided adequate notice or pay in lieu of notice. However, “if an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to 28 Canadian Underwriter August 2011

the employer’s business, or if he has been guilty of willful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.”1 Ironically, had Cacnio and Mcilvenna conducted themselves in a similar manner during the 1994 Stanley Cup riots in Vancouver, their actions would likely not have met the standard for termination with cause. But in an age when cameras are omnipresent, online privacy is non-existent and the ability to communicate with a wide audience is instantaneous, the fallout for both — as well as for their employers — has been significant.

The Vancouver riot case illustrates the risk of an employee’s off-duty conduct negatively affecting an organization. Many examples exist of employee conduct exposing an employer to other legal risks such as libel, intellectual property infringement and defamation.

In a highly publicized case, rock star Courtney Love agreed in March to pay $430,000 to a fashion designer she allegedly defamed in 140-character twitter posts. The designer claimed the posts ruined her business and reputation. Legal firm Border Ladner Gervais LLP called the ruling a ‘wake-up call.’

“We’re likely to see an increase in defamation suits related to social media, but we’re also going to see people become a lot more careful in what they say online once the exposure to defamation suits is more widely understood,” said Michael Smith, a lawyer who specializes in defamation law at BLG.

Mitigating Factor: Social Media Policy In the absence of specific legislation to address employee activity on social media, companies should develop their own social media policies to prevent and address incidents as they arise. This is a critical element in successfully defending any disciplinary action taken as a result of an incident.

Although in the instance of the Vancouver riot, there appears to be a direct link between the actions of the employees and prejudice to the employer, in other instances the link may not be so clear.

We’re likely to see an increase in defamation suits related to social media, but we’re also going to see people become a lot more careful in what they say online once the exposure to defamation suits is more widely understood.

A case involving freelance reporter Damain Goddard is one such example. Goddard was released from Rogers Communications in May 2011 following a contentious tweet on his personal account. In his tweet, the sportscaster announced: “I completely and wholeheartedly support Todd Reynolds and his support for the traditional and true meaning of marriage.” In a press release responding to the termination and announcing a complaint to the Human Rights Commission, a lawyer acting on behalf of Goddard characterized the termination as “a clear violation of Damian’s freedom of speech and his freedom of religion.”2 At first glance, the basis for the Human Rights complaint seems clear.

Mr. Goddard’s statement, though disagreeable to some, does not violate any laws and was made through a personal account. However, given his role in publicly representing Rogers and the broadcast-style nature of Twitter, the comment may be viewed in a different light. As in the case of the 13 Virgin Atlantic staff fired for attacking customers on Facebook3,

Social media’s relative newness does not mean previous legal principles or employment policies cease to apply or become less important.

A comprehensive social media policy serves as a partial remedy if an employee virally damages the company’s reputation. making comments that some consumers may see as disparaging their values, choices or beliefs can have serious negative repercussions. The impact on sales, as well as reputational risks, can be considerable. Conceived in this way, the Rogers decision appears to be more an effort to protect the Rogers brand and reduce negative impacts rather than an attack on rights and freedoms.

Like many large organizations actively using social media, Rogers relies on a social media policy for staff. Given the upcoming case against them, and the position that Goddard has taken with respect to his rights, this social media policy and other employment related policies will no doubt play a large role in determining the outcome of the case.

In all instances discussed above — the Vancouver riot, Courtney Love’s court case and Damain Goddard’s tweet — the legal principles in play are not novel. Social media’s relative newness does not mean previous legal principles or employment policies cease to apply or become less important. However, the nature of social media is such that there are no guarantees: an otherwise ordinary day could result in an organization’s interests being damaged virally through the actions of an employee taking place either inside or outside the workplace.

Having a comprehensive social media policy serves as an inoculation against such event and a partial remedy if lightning does strike.

Companies looking to draft a social media policy should begin by working with a social media expert and a lawyer to identify the primary risks social media pose. Once risks are identified, standards can be established to address them. By identifying the primary focus of the policy, and the degree to which employees will be held responsible, businesses can establish a minimum standard that is clear and effective. It is the best defense.

Ontario Court of Appeal, Port Arthur Shipbuilding Co. v. Arthurs. http://www.newswire.ca/en/releases/archive/June2011/23/c8846.html 3 http://www.independent.co.uk/news/uk/home-news/virgin-atlantic-sacks-13-staff-for-calling-itsflyers-chavs-982192.html 1 2

30 Canadian Underwriter August 2011

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Valuing Resilien c y In a value-driven approach to managing supply chain resiliency, risk is viewed in the context of how the organization makes money.

Daniel Galvao Leader, Financial Products Practice, Marsh Canada

Steve Osselton

Canadian Practice Leader, Marsh Risk Consulting

Even before the Mar. 11, 2011 earthquake, tsunami and nuclear crisis in Japan, many organizations were operating with a heightened level of concern about vulnerabilities to suppliers in remote locations.

The Asian financial crisis of 1997 and the global credit crisis of 2008-09 prompted many businesses to secure alternative suppliers to protect against the possibility that key suppliers would go bankrupt or stay “offline” for a prolonged period of time because of suspended financing arrangements. In Canada, where our manufacturing and service platforms are increasingly integrated with emerging markets, many business leaders are growing concerned about their organizations being overexposed to a single vendor or a concentration of vendors in a particular region. This is particularly true for organizations that have been affected by recurring natural disasters or political disruptions.

Although it may be tempting to categorize the events in Japan as highly improbable, they do serve to emphasize that organizations operating in global economies are exposed to increasingly complex and interrelated risks.

Since the beginning of 2010, in addition to the devastation in Japan, the world has experienced: • a series of destructive earthquakes in Christchurch, New Zealand; • political and social revolution in the Middle East and North Africa; • massive flooding in Australia; • an outbreak of tornadoes and other severe weather events in the United States;

32 Canadian Underwriter August 2011

• volcanic eruptions in Iceland and Chile; • pirate hijackings of supertankers off the coast of Africa; and • the largest oil spill in the history of the petroleum industry in the Gulf of Mexico.

For many organizations, the Japan disaster has been a risk awareness “tipping point,” prompting them to examine risks that were previously off the radar and uncover potential “blind spots.” Events in Japan caused many to realize that business continuity and supply chain risk management programs are inadequate to respond to today’s riskier, more global and connected environment.

Since we cannot reliably predict the probability of events considered “remote,” organizations should rethink their business models and strategies to reduce their vulnerability to a single event.

They should build organizational resilience.

Managing remote risks that are not addressed in conventional business decision models and planning horizons can be challenging. Hence “degree of resilience” needs to become a key risk indicator. This phrase alludes to the reduction of single dependencies or points of failure, and the degrees of preparedness an organization has developed to assure objectives and strategic imperatives are met. By better understanding their business, value chains and critical points of vulnerability, as well as ensuring appropriate contingencies are in place, organizations can enhance the resiliency of their supply chains to prepare for the next disruption, whatever the source.

Value-Driven Approach to Resiliency To remain competitive, organizations have progressively “leaned” their supply chains. In other words, they have removed excess inventory and capacity, pushed non-core services to lower-cost providers, shedded and consolidated physical assets and reduced third-party providers or suppliers. Two sectors hit hardest by the Japan earthquake, automotive and high-tech, have led the way in this effort. These actions have driven efficiency, reduced costs and improved speed to market. But in consolidating inventory, leveraging single-source suppliers and accessing suppliers in geopolitically and socially riskier environments, many organizations have taken on greater sourcing risk.

Managing resiliency today is as much about avoiding or minimizing risk through design as it is about expediting recovery. The supply chain risk management strategies used by most organizations today can be divided into four main categories: • insurance-driven programs, typically based on specific assets (such as facilities or key machinery, for example); • compliance-driven or functionalbased programs; • threat-driven or event-based strategies; and • value-driven or flow-based programs.

The first three strategies, driven by insurance, compliance and/or specific threats and events, tend to make up the majority of practices organizations use today. But in reality, these only take into account a small portion of risks and exposures.

A value-driven approach represents an integrated, end-to-end view of the extended supply chain and strives to account for the organization’s total exposures. In this approach, which is increasingly being embraced by organizations around the world, risk is viewed in the context of value, or how the organization makes money.

34 Canadian Underwriter August 2011

The value-driven approach begins with an articulation of the market, and product or service families or categories that are of greatest value to the organization. Value might be determined based on revenues, brand strength, strategic importance or other factors. Essentially, the value-driven approach requires an organization to ask itself: If all of our capabilities were to be destroyed tomorrow, forcing us to start from scratch, which areas would we build out first?

Once clear priorities are defined, value and supply chain networks can be mapped, single points of failure can be identified and potential im-

Essentially, the value-driven approach requires an organization to ask itself: If all of our capabilities were to be destroyed tomorrow, which areas would we rebuild first? pacts quantified. This enables the organization to prioritize additional investments needed to manage the risk.

The organization can then explore a variety of potential solutions. These might include diversification, inventory allocation, repurposing, alternative or multi-sourcing, the purchase of additional insurance or even exiting a particular market if the risk is deemed too high. This process supports decision making by providing the organization with quantitative and qualitative data that demonstrates the return on investment of a given strategy, or its effect on recovery time. As always, leadership is critical. Leadership is a major factor in recognizing needs and vulnerabilities, and in supporting the investments required to improve organizational resilience.

Solutions Contingent business interruption When a business suffers a direct physical loss to its own assets, a standard property policy will likely be triggered and provide coverage.

But disruptions to supply chains can come in many forms. These include indirect interruptions suffered by suppliers or as a result of events where no physical damage is incurred. To mitigate these risks, organizations should consider contingent business interruption (CBI) insurance and supply chain insurance.

The broadest form of CBI insurance provides coverage for actual losses sustained for interruption to both direct and indirect suppliers and receivers. A more restrictive form of coverage applies only to named suppliers and receivers listed on the policy. This coverage often varies by policy, carrier, the territory in which the policy is issued and where the contingent exposure exists.

Typically, CBI coverage is triggered by an insured peril such as a natural catastrophe and ensuing physical damage to the property of the suppliers and/ or receivers. However, businesses are increasingly seeking coverage for other trigger perils, such as the insolvency of a key supplier (credit risk) or the inability to receive goods or services due to political disruptions when purchasing CBI insurance.

Before purchasing CBI insurance, buyers should carefully consider the following: • Coverage may be subject to geographic or peril restrictions. For example, if the territory of the underlying property policy is Canada only, then the CBI coverage might not apply to suppliers outside of Canada.

• CBI coverage will typically be subject to a sub-limit and may be subject to an annual aggregate.

• Time element extensions taken for granted as part of direct business interruption coverage — such as ingress/ egress and service interruption — typically do not apply to contingent business interruption losses at supplier lo-

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cations, unless coverage is specifically negotiated on this basis.

In addition to CBI, trade disruption insurance has emerged as a viable option over the past two years. This provides coverage for a broader set of exposures tailored to address an organization’s specific supply chain risks.

pliers’ locations or through the mode of transportation, and could happen up until such time as the organization receives its supply from the third-party suppliers. This coverage for non-physical loss events is critical to successful risk transfer of supply chain risk. Examples of covered events include strikes, riots and civil commotion, quarantines, supplier bankruptcies, port or border closures and service interruptions with no physical damage. Coverage can be obtained for both direct and indirect third-party suppliers.

A key underwriting element — and for some insurers, a requirement — for supply chain insurance is that the insured perform a supply chain risk assessment in conjunction with a review of the organization’s current insurance programs. Such an assessment can benefit an organization whether it is looking to purchase supply chain insurance or not. The assessment enables better, risk-informed decisions regarding the suppliers, supplies and services that comprise its product family supply chain.

Such an assessment typically includes: • a value segmentation analysis to help select the key product or service for supply chain risk identification; • development of a detailed map of the suppliers, with geocoding, financial information and alternative suppliers for same/similar goods or services; • identification of single points of failure, triggers and current mitigation strategies, with a quantification of the impact of disruptions to suppliers, supplies and services; and • prioritization of supply chain risks so that mitigation and transfer options can be efficiently allocated.

Using discipline, analytics, decision modeling and appropriate risk management and risk transfer mechanisms, organizations can gain control of their supply chains and become more resilient in advance of and in the face of the next disruption.

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Expanded Horizons Risk management has evolved since the financial crisis. Historically, its purpose has been perceived narrowly as a means to protect value. Now, however, its practitioners conceive risk management as a means to create value over a longer-term horizon. Concomitant with this evolution, technology has expanded, allowing risk managers to delve deeper into their companies’ risk portfolios.

By vanessa mariga

38 Canadian Underwriter August 2011

T

here’s an old adage in the risk management circle that says, ‘Never waste a good crisis.’ In fact, the financial crisis emanating from events in 2008 proved to be a great catalyst for organizations to shine a spotlight on risk management.

For years, risk managers struggled to gain the ear of the C-suite. Many times, they had to overcome a perception within the organization that risk management is about putting “pins in balloons” and placing hurdles in front of the long-term goals and objectives of the organization. But things have changed.

Since the unwinding of the credit crisis, risk practitioners have recalibrated, re-thought and re-energized some of their approaches to the profession. And the executive and board level is listening. A shift has occurred: the focus of risk management has broadened, moving away from simply protecting an organization’s value through loss prevention and towards actually creating value.

At its annual conference in May in Vancouver, British Columbia, the Risk and Insurance Management Society (RIMS) dubbed this shift as the emergence of Strategic Risk Management (SRM), the next step in the evolution of Enterprise Risk Management (ERM).

August 2011 Canadian Underwriter 39

COVER STORY

Expanded Horizons The expansion of the risk professional’s horizon isn’t just conceptual.

The toolbox of risk managers has also evolved since the financial crisis, allowing them to delve deeper into their organization’s risk analysis. Technology now allows risk managers to conduct a more thorough risk analysis and gain deeper insights into their company’s risk portfolio using less money, effort and time.

As a result, risk managers are now able to move beyond administrative duties that previously bogged them down and really develop a laser-like view into their risk profile. Consequently, when the time comes to meet with their executives or underwriters, they’re armed with a much stronger set of information to make their case and assist management in making informed decisions about the direction of the company.

Defining the new horizon A definition of SRM and how it differs from ERM is tricky to pin down. Some say SRM is a part of a robust, mature ERM program. Others say it’s something that can be practiced separate and distinct from ERM. Generally speaking, SRM involves a risk manager taking a longer view of the risks facing an organization. In contrast, ERM focuses primarily on the immediate risks facing the operation of a company.

For example, a risk manager taking an ERM approach program might ask questions like: If an event were to occur tomorrow, how would this affect our organization’s ability to function, deliver its products or services to market? What would that mean for our reputation?’

A risk professional practicing SRM, on the other hand, might ask: What are the long-term objectives of the organization? What risks might challenge those objectives? What opportunities can the organization exploit to reach or surpass its goals?

“Risk managers may feel they have made good strides towards implementing ERM and managing the downside of risk,” says Nowell Seaman, manager of risk management and insurance at the University of Saskatchewan. “But orga40 Canadian Underwriter August 2011

nizations still want to know how they can effectively deal with the opportunity side of risk. We know that taking an integrated approach to our risks has really helped on the operational and financial side, but organizations are still saying: ‘Look, we don’t feel we’re doing enough to use risk management to help us achieve our strategic objectives.”

Understanding an organization’s capacity to take risk is a very important element of identifying opportunities that are right for the organization, he continues. “Strategic risk management

The focus of risk management has broadened, moving away from simply protecting an organization’s value through loss prevention. can help an organization effectively take risks and opportunities and I think that’s where there’s a lot of drive for SRM.” Susan Meltzer, vice president of enterprise risk management at Aviva North America, agrees. “For today’s risk manager, the new skill set is to be more forward-looking in [assessing] the risks that could impact the organization,” she says. “For example, you don’t want to be the U.S. auto industry saying ‘Americans will never buy Japanese cars.’”

There is more emphasis on the need to be a strategic thinker, to be able to connect the dots and to help the business understand the risks inherent in its strategic plan, Meltzer said.

Seaman illustrates the point using examples of strategic risks facing the University of Saskatchewan. “When I think

of the strategic risks of the university, they would relate to where we intend to go as a medical doctoral research university. What are our long-term strategies? What are the areas of excellence we are pursuing? And what are the risks that could affect that strategy? ERM would be looking at everything from operational compliance, investment risks, human resources risks, recruitment and retention.

But the more strategic [risks] would [relate to] broader, longer-term trends.”

Garry McDonell, Aon Global Risk Consulting’s national director, describes a “fundamental shift” he’s observed in the past few years. He said when he first started out as an ERM consultant, his clients used to ask him how they might prevent some of the losses they were experiencing. “That’s of little or no interest to the people we’re talking to today,” he said. “Now, it’s: ‘Tell me how you as an ERM consultant can help my organization earn more money.”

Carol Fox, RIMS’ strategic and enterprise risk practice director, says now you can use risk management to create value as well as to protect value. “When the risk practitioner is perceived within the organization as a business partner, risk is no longer just a barrier.”

Making this transition is not necessarily a matter of examining and analysing a new set of risk factors, Fox continues.

Rather, it’s about becoming a part of — as opposed to taking over — the strategic planning process.

She tells the story of how at a previous job she approached the strategic planning department and asked for a seat at the table. “I told them, ‘I know you have a great process, but I think we can enhance it. Here are some of the methods and tools we can bring to the table. Would you mind if I joined your team to help you succeed in meeting your objectives?’”

It wasn’t a matter of storming the castle, but rather a way of becoming a part of the castle’s infrastructure, she says.

Once inside the castle, risk managers can then describe what they are doing to executive management, and managers are able to see the value in it. This

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Visit us at booth #415.

COVER STORY

Expanded Horizons brings risk managers into the company’s strategic planning process.

“SRM is really distilling potential trends — not necessarily events — and also looking at the organization’s knowledge base around those trends and how certain it can be about what will occur,” she says. This is where the risk management function needs to work closely with the strategic planning team. A company’s strategic planning team is already looking at social changes, economic indicators and market indicators. “It’s a matter of taking those indicators they’re already looking at, and building a discipline around the potential implications. That allows the people actually executing the strategy to adapt to quickly changing conditions,” she says.

Wes Gill, SAS Institute (Canada) Inc.’s executive lead of enterprise risk management, describes an SRM package that allows people to visualize a “cascading from, ‘Here’s your vision, here’s your strategy, and here are your initiatives and processes around it,’ and peel it back to: ‘Here are the risks that could affect you.’ If a risk [materializes], it can cascade up to ‘Here’s what’s at risk’ and we can create dashboards for management for that.”

Ultimately, SRM is using risk to a company’s advantage, he says. “By having predictive capabilities, risk now becomes a tool. Risk is not just a compliance thing to look at the downside, but a tool that allows you to manage your business better and possibly take advantage of opportunities, as well as to mitigate losses.”

SRM and Data: Technological Tools of the Trade SRM was not the only aspect of risk management to have evolved over the past few years. As the profession emerged from the financial crisis, a growing emphasis was placed on the accuracy, timeliness and completeness of data used in the models and methodologies.

“At the time of the financial crisis, a lot of companies were comfortable they had a risk management program in 42 Canadian Underwriter August 2011

place,” says Gill. “And there was a lot of good risk management activity that had taken place in-house in firms. But I think many parties found the information they needed to get wasn’t always available in the timeframe they needed to get it.”

We know that taking an integrated approach to our risks using ERM has really helped on the operational and financial side, but organizations are still saying: ‘Look, we don’t feel we’re doing enough to use risk management to help us achieve our strategic objectives.’

This led to a greater awareness and interest in analytics, says Angela Iannetta, Canadian national practice leader for Marsh Business Analytics. “The collection, storage and manipulation of data today have evolved. Technology is cheaper today and there is easy online accessibility and connectivity. There is more system integration and there is an increase in computer speeds.”

Craig Rowe, president and CEO of ClearRisk Inc., recalls his frustration when he was a risk manager for a municipality that didn’t have current, up-to-date technology. “Today, I can identify all of my risks, put them in a risk map and what it is I’m doing to

address them all, all in one place,” he says. “I can do that so quickly and easily, it’s not funny. So when I go to talk to an underwriter or manager, I have a much better understanding or picture of our risk. It’s formalized and it’s organized. Not long ago, we weren’t able to do that.”

Typically, big powerhouse companies have robust analytical systems in place.

But as technology evolves, it’s becoming much more accessible for the smaller and mid-market.

“Many are looking to put the foundations in place to enable analytics to be used,” Iannetta says. “And organizations collecting information are looking for new ways to use this information to better manage strategic operational, financial and hazard risks.”

Gill notes many organizations found they had disparate information systems across the company. These systems weren’t always integrated or reconciled.

“Basically, organizations found out through the [financial] crisis that they needed to get better information, be it on the financial risk side, the credit risk side, the market risk side and even the operational risks. Someone had to pull all of that information together in a timely fashion so that they can get all of that information to the parties in charge of decision-making, so that they could make a decision in a short timeframe.”

Historically, technology has been a limiting factor when trying to run models in a timely fashion. Developments such as ‘in-memory’ computing have helped to overcome that barrier.

The Financial Times describes in-memory computing as storing data in the main random access memory (RAM) of specialized servers instead of in complex relational databases running on relatively slow disk drives. “[Organizations] such as banks, retailers and utilities can [now] analyse huge volumes of data on the fly, detect patterns quickly and adjust their operations almost immediately,” the Financial Times reported.

Given this new development, Gill says, “we can take these massive models, which used to take literally days to

M

There’s aolot to Swiss Re than reinsurance. remore thfound Isn’t it time you an out how much more?

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Financial tools like insurance-linked securities and catastrophe bonds. Yet every service we offer and every challenge we face for our clients receives the same commitment and the same hands-on expertise. As in everything we do at Swiss Re, risk is our raw material; what we create for you is opportunity.

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Visit us at booth #415.

COVER STORY

Expanded Horizons run, put them in these new integrated software/hardware configurations, and we’re seeing those [analysis] times drop from days to hours — and in some cases minutes.”

Iannetta suggests less-sophisticated risk management programs, in which information is still stored in databases or Excel spreadsheets, also benefit from advances in computing speeds. “When you have these really large databases, which are thousands and thousands of lines of information, a lot of times it can be tedious to extract the information,” she says. “With programs like Excel or any SQL-type database platform, there shouldn’t be a hiccup because these tools are so readily available to organizations today.”

Rowe notes the emergence of cloudbased platforms has changed the mode of delivery of risk management systems, expanding accessibility for risk managers with reduced resources. “A cloud-based platform doesn’t have to be installed onto your mainframe and your servers and won’t cost hundreds of thousands of dollars,” he says. “Also, the pricing models are changing. There are no longer-term licences or one-time purchases. Now you’re getting SAAS (software as a service), so the construct has changed. It’s no longer an upfront capital cost. It becomes part of your operating budget and becomes very affordable.”

Rowe adds it’s a lot easier to make a pitch to the C-suite for something that’s going to cost between $15,000 and $20,000 a year, rather than saying, ‘I need half a million dollars.’

“And the levels of authority are different,” he adds. “You don’t need to go up so high to get that kind of authority’s approval to make those kinds of really big purchases.”

Striking a balance One debate emerging out of the financial crisis was whether companies over-relied on models that had limits or blind spots, thus leading to major, undetected losses. Meltzer says models are better today, giving us faster 44 Canadian Underwriter August 2011

answers with more reliable numbers.

But properly modelled data is only one of three elements required in truly understanding a risk. “We have better computing power to better understand the frequency and severity of a possible event,” she says. “We have great computing power to understand a 1-in-25 year event, or a 1-in-300 year event in

We can take these massive models, which used to take days to run, put them in these new software/hardware configurations, and we’re seeing those risk analysis times drop from days to hours — and in some cases minutes.

British Columbia. But I am still looking backwards, not forwards. I’m still using past data to make presumptions about the future.”

The challenge is to supplement the modelled historical data with some kind of educated analysis about how the historical patterns might project out into the future. “We have a catastrophe every year and they’re never the same, so the numbers don’t reflect that,” as Meltzer puts it. “[Strategic risk management] requires adding in and combining what you get from those numbers with that more forward look.”

Fox adds the tools need to support the information. They should not be the sole source of information given

to the decision makers. “Data should be used to uncover trends,” Fox says.

“Then you allow the decision makers to use that to either support their vision, or to re-think that gut feeling. Data can never give you the creative element necessary for innovation, which is necessary for growth. It can only help inform.”

From Iannetta’s perspective, a lack of understanding of the function, intended purpose and the limitations of the models led to misuse of them or a reliance on overly simplistic approaches. “Some organizations didn’t use robust models, or any models at all for that matter,” she says. “In many cases, more advanced, robust techniques were always available as an alternative, but they weren’t used.

They took too much time to use, they needed an additional cash investment or there was a lack of knowledge of the benefits and limitations. I don’t necessarily think it’s the models to blame. It’s more the lack of understanding of what the robust models could add over the simple approaches. If you understand what they can do and how they’re supposed to be used, then it would reduce the fear of using them.”

Fox says education is a key priority before turning to any of the new technological tools available on the market today. “I could give you a whole list of new tools,” she says. “But the message we want to deliver to risk practitioners is that they need to explore all different types of risk assessment tools [and] to make this increasingly complex world understandable to management, so that managers can make good decisions.

We want to make sure risk practitioners aren’t using data analytics just to use data analytics. Think about what it is you’re seeking and then go and find the right tool.”

Measuring the Value of SRM Measuring the success of a risk management plan and then conveying that value to management has always been a tricky area for risk managers. In the past, risk professionals struggled with how to illustrate the value of their programs. There was no way to show how

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COVER STORY

Expanded Horizons

We have a catastrophe every year and they’re never the same, so the historical numbers don’t reflect that. Strategic risk management requires adding in and combining what you get from those historical numbers with a more forward look. much a claim didn’t cost the company, because their ERM program prevented it from happening in the first place. In the SRM space, the task is even trickier, experts say.

Historically, the profession relied on benchmarking as one of the primary tools used to gauge its risk management success. “Benchmarking is the one you most commonly see, but benchmarking is peer-to-peer,” says Gill. “This issue becomes [a question of whether] ‘we are no better or worse than the industry.’ But there are always reasons as to why a direct comparison [with the industry] may not be suitable. It could be a difference in product offerings, geographic areas in which the companies are operating, etc.”

One “big change” is a move away from historic measurements only. The basis for determining value might be benchmarking, value-at-risk analysis or capital measures based on current positions. But the idea is then to “move forward in terms of having a view as to what this looks like on a predictive basis, and understanding what the sensitivities to this are,” Gill says.

A quantitative approach to SRM is still a fledgling notion in many industries — particularly outside of the financial industry or commodities-based industries, adds Seaman. “We have metrics to track how we are doing on our strategic 46 Canadian Underwriter August 2011

risks and indicators we have developed, but they’re not tremendously sophisticated,” he says. “In our sector, we are looking to learn how some of the approaches taken in other sectors might help us.”

McDonell describes research Aon is currently undertaking on the subject.

The Aon ERM team has been tracking roughly 200 companies over a fiveto-seven-year timeframe. By surveying how mature each company’s ERM program is, using a scale of one-to-five, McDonell’s team will be able to compare each company to other companies within its industry class. But researchers are taking it one step further: they will also track the companies’ stock value, profits, revenue or margins (depending on whether they are public or private companies) over the course of several years. This will help determine definitively, one way or another, whether or not the implementation of an ERM program (which frequently includes the practice of SRM) adds value to the organization.

“Within a short period of time, I’m hoping to be able to say: ‘Here’s what our clients found when they measured what was relevant to them — i.e. their key performance indicators and longterm objectives,’” McDonell says.

“Supported by real data for the first time, we as consultants will be able to

say with some certainty: ‘Here are the components of an ERM program that truly add value.’ By the same token, we will be able to say our research shows little correlation between these components and your KPIs. That should be of tremendous benefit to organizations wondering what all the ERM hype is about.”

In the meantime, Meltzer feels risk managers can show their true value by bring strategic thinking to management’s table.

“You can’t look at the past and say, ‘This will happen again,’” she says.

“You can’t look at the numbers and say, ‘This will happen again.’ You have to connect the dots.

“When I write down what my contributions have been, I will include that I have done risk reviews that confirm what management is doing. Or I will write that I have done risk reviews and made recommendations of things to do that are different from management’s direction. Or I might write that management has decided to not do something because after the risk review, it understood the risk differently.

“It’s not difficult to show that you’ve added value if you can show one of these three outcomes. Clearly, you have added value if you have been able to influence management’s decision on the direction of the company.”

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At Liberty International Underwriters (LIU) we understand the unique characteristics of Canadian financial institutions and their related service providers. From banks to financial advisors to asset managers, this sector is dynamic and demands in-depth expertise. LIU has demonstrated that we have the capacity, the products and the talent to entrust your business to us. And in the event of a claim, LIU has dedicated in-house claims counsel with a proven track record in handling professional and management liability claims.

LIU takes its mandate seriously – to protect your corporation’s executives and capital.

To obtain more information about our Specialty Casualty products, contact Robert Marsh at (416) 307-4667 or visit www.liucanada.com

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100041CA 08/2011

Getting Easier Being Gree Brenda Rose

Vice President, Firstbrook Cassie & Anderson

The insurance business has a long way to go before truly qualifying as “green,” but initiatives such as the CSIO process for EDI policy document attachments are encouraging.

If green is the new black, then what colour is the insurance business in Canada?

Even with a society-wide mandate to minimize environmental impact, the industry has hardly set the pace. Of course, many insurance workplaces strive for environmental responsibility, blue boxes abound and every email urges the reader to think twice before printing. New policy forms even enable clients to rebuild damaged properties to new ‘green’ standards. But with its hidebound traditions of inch-thick policy wordings, redundancy as an innate form of risk-management and a deep reluctance for change, the Canadian industry’s shade might be a kind of mottled grey, at best.

No doubt improving the environmental scorecard of the insurance industry will be accomplished through innumerable separate, individual efforts. Such changes are more easily accepted, too, when they save time, expense and natural resources. One example is a recent enhancement to insurer-broker electronic data interchange (EDI).

This will save substantial time and money for brokers and companies alike, but ultimately it may help to spare a forest or two.

48 Canadian Underwriter August 2011

One time-honoured insurance practice is for vast amounts of paper to travel daily from insurer offices to brokerages all over the country. A large fraction of this cargo is policy documents — including copies destined for clients or other interested parties, and copies for brokers’ own records.

Previously, broker copies were physically filed away for later reference. However, nowadays they are very often scanned and filed electronically in the broker’s management system. The originals are shredded and, optimally, recycled.

FROM PAPER TO ELECTRONIC IMAGES This vast effort to move and handle paper only to scan and shred it wastes resources.

Certainly current economics create incentives to find greater savings in all insurance operations. Consequently, some insurers, especially in the United States, have started to generate electronic images of policy documents to replace previously printed broker copies. The electronic images are then made available on insurer Web sites to be retrieved by the broker.

This approach, however, while ‘green’ and reducing an insurer’s paper, printing and transport expenses, creates some unfortunate, unintended consequences. For example, the perceived benefits evaporate quickly when the changed process impairs brokers’ ability to serve customers or compromises the records brokers maintain on their behalf.

Brokers interact with any number of insurers while working with their customers. As they do so, brokers safeguard clients’ information within a centralized repository of dedicated manage-

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ment systems (BMSes). To provide the best service, either now or at some later point, brokers must maintain their own complete records so they can access relevant data and documents accurately from that single source.

Clients expect one-stop-shopping; they will not accept brokers wasting their time, navigating through multiple insurer portals to find their information. Furthermore, if at some future date the broker no longer has a relationship with an insurer, brokers are still legally responsible for preserving customers’ information, regardless of insurer system changes, mergers and contract terminations.

Until now, when an insurer eliminated printed broker copies, brokers were forced to choose between two unacceptable options. First, brokers could compromise and rely on insurer systems for customer record retention.

Second, brokers could institute painfully laborious, inefficient workflows.

Brokerage staff would be paid to spend their days retrieving images from insurer Web sites and transferring them manually into the broker’s systems.

The ideal solution would be an efficient, environmentally friendly mechanism that spares insurers printing and transport costs, but that still respects the nature of brokerage operations.

Surprisingly, the industry already has an efficient process in place, in the form of the CSIO EDI upload-download. Each day, the complete details for thousands of policies are transferred electronically between insurer systems and the individual client files held in broker management systems. The only thing missing is the image of the policy document itself. In 2010, CSIO started work on adding that missing piece.

The Missing Piece In Spring 2010, CSIO created new standards for file attachments in EDI. A specially convened working group confirmed the developing capacity of the existing CSIO network for increased volume and discussed how a policy image can be attached to the specific 50 Canadian Underwriter August 2011

data transaction it represents for the purpose of transmission. This attachment is the most useful means for images to be routed to client files within a brokers system during a download session. Although the standards do allow for a potential variety of file formats, the group also agreed the almost universally accessible Adobe PDF format is probably the most practical.

Subsequently, CSIO circulated an open letter to its brokerage audience.

CSIO called on readers to “just imagine” the following scenarios (as quoted verbatim from the letter): • “No longer having to wait for the mail or courier to receive … Dec pages.

• “No longer having to scan Dec pages … and file them in the client file.

• “Being able to upload appraisals, certificates or photos to … carriers.

• “Savings on mail and courier costs.

• “Not having to log on to … carriers websites to download …Dec pages.”

Brokers across the country share CSIO’s enthusiasm. The Insurance Brokers Association of Canada (IBAC) approved a White Paper on the Transmission of Electronic Documents between Insurers and Brokers in June 2011. The paper outlines the following principles to be used when evaluating technology initiatives that eliminate broker copies of paper documents: • In place of paper documents, insurers should produce electronic images of those documents and transmit them to brokers.

• The transmission of those documents should be accomplished in as efficient a manner as possible, making use of established standardized industry batch transport methods such as CSIO EDI batches.

• BMS systems should be capable of accommodating these transmissions as an automated process.

• Insurers should not unilaterally impose discontinuation of paper broker copies until a standard batch process is available in conjunction with CSIO EDI. Some insurers have already moved to discontinue paper broker docu-

ments. IBAC has expressed hope that, under these circumstances, brokers can depend on these insurers for access to their systems indefinitely and to confirm continued access in the event that a broker and insurer cease to do business together.

Brokers are most encouraged by the success some industry stakeholders have already found experimenting with the CSIO attachment standards.

CSIO, Power Broker and SGI, working with Mastercom, happily announced on July 22, 2011 their successful test

An ideal solution for eliminating printed broker copies would be an environmentally friendly mechanism that respects the nature of brokerage operations. of “a download transaction providing a no-touch inclusion of a Dec page attachment.” In this instance, the image of the policy document “moved to the client’s database automatically with no broker intervention.” Although no other official announcements have yet occurred, other BMS software vendors and insurers have identified EDI document attachments as a key development area; brokers strongly support prioritizing the implementation of a common EDI process to include transfer of documents.

The insurance business has a long way to go before truly qualifying as “green,” but initiatives such as the CSIO process for EDI policy document attachments are encouraging. All participants will benefit and at the same time genuinely reduce their consumption of paper. Given the size of the challenge throughout the industry, there are equally large opportunities to find efficiencies and eliminate wasteful redundancy. With each new idea implemented or old barrier removed, the only question is: ‘What’s next?

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Ties that Bind, Tweets that Defame Defamation liability risk has increased exponentially in this brave new world of social media.

Brian Rosenbaum

Director of the Financial Services Group, (Legal Research and Practice) Aon Reed Stenhouse Inc.

Michael C. Smith

Partner, Borden Ladner Gervais LLP

Many of us have realized, with the blood draining from our faces (notwithstanding a quickened heartbeat), that the ‘undo’ button does not work after the ‘send’ or ‘post’ button has been pressed. Many of us have written things and quickly sent them into cyberspace, only to spend a long time afterwards wishing we could take those things back because, on even a bit of reflection, the comments were inappropriate, harsh, etc. Anecdotally, it seems people generally do not put as much consideration into what and how they write in email and social media tools as they do with conventional forms of communication. Perhaps this is due to the immediacy of the medium and the lack of inherent opportunity for sober second thought prior to publication.

The use of social media is commonplace and growing. It is now interwoven with most online

52 Canadian Underwriter August 2011

applications. It is available on your phone in your pocket or purse when, say, you have had a few too many cocktails. You can hardly find a product online that does not have consumer reviews attached to it.

One consequence is a remarkable increase in the opportunity to defame others, and to do so instantaneously to the entire world, permanently. Defamation liability risk has increased exponentially in this brave new world. The magnitude and prevalence of that risk may not be fully appreciated by insurers and insureds alike because, we suspect, many cases considering these issues are being settled before courts consider them and report their decisions. There is still a dearth of reported cases and guidance from the courts today. But only a few high-profile judgments, settlements or class actions are required to increase that consciousness. Victims

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of online defamation will become aware of their rights, increasing claims volume. Businesses and individuals will start asking for protection, if they are not already. Brokers need to develop an understanding of the risk/coverage equation in this space if they do not already have it. Opportunities likely exist for insurers to introduce new products offering appropriate coverage to the various classes of insureds they service — from the family with social mediacrazed teenagers in the house to large multi-national corporations.

The Risk The tort of defamation protects a person’s reputation from false statements.

Libel (written words and broadcasts) and slander (spoken words) are subsets of defamation. A statement is defamatory if it lowers the subject’s reputation. The relative ease with which at least prima facie liability for defamation can be established is not widely appreciated. The only thing the victim of defamation has to prove to establish liability is that the defendant published a statement — in the sense that a third party heard or read the statement — concerning the victim that, in its literal meaning or by innuendo, had a tendency to lower the reputation of the victim. Then the onus shifts to the defendant to prove the elements of one of the defences to the tort [e.g. justification (truth), fair comment (opinion), qualified privilege or responsible communication on matters of public interest]. The defendant’s intention is largely irrelevant. Liability can be established even if the defendant did not intend to defame the victim. Liability is determined based on the words used and the fact of publication.

Any repetition of defamatory statements makes the person repeating them liable as a publisher just as if they had made the statements originally.

This is where the law needs to catch up with the Internet Age and provide guidance as to whom is a “publisher” 54 Canadian Underwriter August 2011

in cyberspace. For example, are Internet service providers “publishers” and liable simply because defamatory comments pass over their servers for publication?

What about a blog host? What about the employer from whose laptop and servers an employee sent a defamatory statement? What about someone who hyperlinks to or passes on the address to a defamatory Web site? (A decision

is currently pending from the Supreme Court of Canada on this point.) What about a travel review Web site that contains defamatory reviews?

Until we have more definitive answers to these questions, and as long as there remains an omnipresent desire to find “deep pockets” to pay for the court awards or the costs of the litigation, we will see victims including anyone who could potentially be a “publisher” as a defendant in their lawsuits. Employers will likely be implicated in lawsuits stemming from an employee’s defamatory postings from work assets.

Damages for defamation are not subject to the “cap” on general damages for pain and suffering (currently around $345,000). The damages are “at large.” Some awards have exceeded $1 million. The courts have recognized the reach and permanency of Internet defamation and have signaled that damage awards will be higher as a result.

With the risk outlined, let’s look

briefly at the coverage provided by common types of liability policies and the coverage issues that may be raised.

Homeowner’s Policy If the communication is made in the social networker’s individual capacity, then his or her homeowner’s policy could provide some coverage for defense costs and judgments/settlements arising out of a defamation action.

However, a number of provisions in the typical homeowner’s policy could preclude coverage.

In order for the personal liability coverage to trigger in a homeowner’s policy, a “bodily injury” must result from an “occurrence.” An occurrence is generally defined as an accident.

Many U.S. and Canadian courts have determined the intentional posting of defamatory or offensive messages is not accidental in nature and therefore would not qualify as an occurrence.

Recently, however, a number of courts have ruled the intentional posting of defamatory remarks can constitute an occurrence if the effects of such a posting were unintentional and accidental.

Assuming the occurrence requirement is met, a bodily injury must still result from the defamatory statements.

Certainly if a plaintiff alleges a physical injury, such as a heart attack, such an allegation would constitute bodily injury under the policy definition. However, many courts have ruled that mental anguish alone, the most common allegation in defamation actions, would not meet the bodily injury requirement.

Even if the occurrence and bodily injury requirements have been satisfied, a number of exclusions might preclude coverage. The expected or intended injury exclusion would eliminate coverage if the social networker’s defamatory posts could be considered as intentional or made with an expectation to injure someone. Further, the business exclusion would preclude coverage if the defamatory remarks resulted in bodily injury arising out

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Any repetition of defamatory statements makes the person repeating them liable as a publisher just as if they had made the statements originally.

This is where the law needs to catch up with the Internet Age and provide guidance as to whom is a “publisher” in cyberspace.

of or in connection with a business conducted from an insured location or engaged in by an insured, irrespective of the ownership of said business.

Other fact-specific exclusions in the typical homeowner’s policy could also limit or preclude coverage.

It should be noted some insurers can provide defamation coverage that is not conditional upon establishing bodily injury.

Commercial General Liability Policy A Commercial General Liability policy (CGL) is designed to provide general liability coverage to business entities. It can potentially provide coverage for defense costs and settlements/judgments resulting from an employee’s defamatory statements, but only if the remarks were made in the scope of employment. Two standard coverages under a CGL policy come into play when considering defamation.

Coverage A Coverage A deals with bodily injury and property damage. It is very similar to the homeowner’s policy, so the above analysis is applicable in determining coverage limitations. Bear in mind that many CGL policies contain a personal and advertising injury exclusion pertaining solely to Coverage A that forces any claims of bodily injury arising out of personal injury into Coverage B. 56 Canadian Underwriter August 2011

Coverage B Coverage B deals with personal and advertising injury. It is considerably broader than Coverage A, in that there is no bodily injury or occurrence requirement to trigger coverage.

However, in order to access the policy, the personal injury must arise out of a specifically defined wrongful act that might include the posting of libelous statements or remarks violating another’s privacy.

A CGL policy can potentially provide coverage for defence costs/settlements from an employee’s defamatory statements, but only if the remarks were made in the scope of employment.

Also, a number of specific exclusions can limit or eliminate recovery. If a statement is published with the knowledge that it is false, coverage may be precluded. In addition, defamation allegations are often coupled with invasion of privacy allegations. This can create coverage difficulties under Coverage B due to an exclusion for knowingly violating another’s rights.

This provision would preclude coverage when the personal injury was

caused with the knowledge that the act would violate the rights of another and would inflict personal injury.

Recovery could also be eliminated if the personal injury arises out of an electronic chatroom or bulletin board the insured hosts, owns or over which the insured exercises control.

Media Liability Policy Other insurance policies might provide slivers of coverage for defamation in the social media arena. However, the most robust coverage available for this risk is contained in a media liability policy. This insurance is specifically designed to protect businesses and their employees against claims arising out of the communication of information and would include broad defamation coverage. Companies and their employees use social media for a whole host of purposes and not all media liability policies are created equal, so it is important to review the policy definitions, terms, conditions and exclusions with an insurance specialist in this area. Of particular importance is the definition of covered media. To a large degree, this will determine the breadth of coverage. However, since media liability insurance is specifically crafted to cover defamation, there are fewer obstacles to recovery than those in homeowner’s and CGL policies.

Stay tuned (or logged on). If, as we predict, defamation claims volume increases as social media users gain rights awareness, so to will come an increase in coverage demands and coverage issues.

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One-stop Insurance Shopping Opinion/Analysis

David Fox

Director, Information Services, Bermuda Insurance Development Council

The Tax Information Exchange Agreement (TIEA) has immediately reduced the cost for Canadian companies to gain access to cuttingedge risk management products from Bermuda’s insurance centre.

An agreement between Canada and Bermuda quietly came into force this summer that provides for an exchange of information between the two countries on tax matters. It creates a framework within which tax authorities of one country may obtain information relating to their citizens or corporations in the other.

As a by-product, the Tax Information Exchange Agreement (TIEA) has immediately reduced the cost for Canadian companies to gain access to cutting edge risk management products from Bermuda’s insurance centre.

Background The TIEA1 was actually signed in Bermuda by the two countries in June 2010. It officially came into effect in July 2011.

The agreement bears some resemblance to others signed by a host of nations as part of a “tax harmonization” initiative of the Organisation for Economic Co-operation and Development (OECD). But none of the others will provide to Canadian companies the same comprehensive, “one-stop-shop” insurance advantages they can now derive from the Bermuda market as a result of the TIEA. 58 Canadian Underwriter August 2011

A key initiative today is “tax harmonization.”

This June, OECD secretary general Angel Gurria urged tax officials from the world’s leading nations to begin discussing how they can dovetail their tax regimes. Bermuda has negotiated 25 TIEAs with other nations, including one with Mexico that has also removed an artificial barrier to Mexican companies doing business in Bermuda.

The new pact with Canada provides many business and financial advantages to Canadian entities, including fund managers and investors.

Growth is expected in cross-border trade with more than 1,100 Bermuda companies with Canadian interests.

Benefits of TIEA The TIEA’s value in risk management circles and for other financial services industries is related to Canadian income tax regulations. These were changed in 2008 to open up opportunities previously available only to the country’s tax treaty partners. The TIEA with Canada allows active business income earned by a foreign affiliate of a Canadian corporation resident in the TIEA country and carrying on business there to be included in exempt surplus. It means dividends paid to the Canadian corporation by the affiliate are not subject to Canadian tax.

The regulations make the exempt surplus favourable treatment available for the taxation year of a foreign affiliate in which the TIEA enters into force. Therefore, if a particular TIEA is ratified in 2011, a foreign affiliate that has a taxation year based on the calendar year will be eligible to earn exempt surplus for its entire 2011 taxation year.

Bermuda’s Captive Market Many Canadian and Mexican companies have operated captive insurance companies2 in Bermuda, but the numbers are limited today because of historical tax barriers. Still, the advantages of captive insurance in the Bermuda market are so useful that 27 Canadian-owned captives have elected to live with any fiscal burden.

They are operating in Bermuda with assets approaching $10 billion. They are among about 850 captives with parent corporations in many countries enjoying the benefits of being not just in a captive domicile, but in a true insurance centre.

Captive insurance companies in Bermuda had about $120 billion dollars in assets in 2009 and wrote about $33 billion in premiums. It is just a part of the overall insurance and reinsurance sector. No jurisdiction demonstrates more knowledge about captive insurance than Bermuda. It is the bedrock upon which the “Insurance Island” was built.

The Bermuda industry is significant, especially with regard to big risks.

Almost any time a major catastrophe occurs in the world today, at least one Bermuda reinsurer is on the hook.

Catastrophe claims cost Bermuda reinsurers more than $6 billion in the first quarter of this year alone. They are paying claims to insurance companies to help rebuild towns and cities. In Australia, a 650-kilometre-wide, killer cyclone Yasi, the largest in the country’s history, tore through Queensland in February. That same month, an earthquake leveled parts of Christchurch, New Zealand. A massive earthquake and tsunami struck Japan’s northeast coast in March. It takes a significant market to handle these exposures.

The overall Bermuda international insurance market had combined aggregated assets of $500 billion dollars in 2009, with premiums totaling about $120 billion. The broad expanse of insurance opportunities has made Bermuda compelling as a captive domicile for companies from around the world.

60 Canadian Underwriter August 2011

One major advantage for companies accessing the Bermuda market for their reinsurance needs is that they can essentially “one-stop-shop.”

Companies can cover off their commercial market needs and captive meetings in the same trip — less than three hours out of Toronto and about 600 miles off the coast of North Carolina.

Setting a Regulatory Example In the face of a changing global regulatory climate, owners of Bermuda captives have been heartened by Bermuda’s role in defending the interests of all captive owners in all captive domiciles. Bermuda regulators, for example, led the campaign to have captive insurers treated differently from commercial insurers under the impending regulatory changes associated with the European Union’s new solvency regime.

No jurisdiction demonstrates more knowledge about captive insurance than Bermuda. It is the bedrock upon which the “Insurance Island” was built.

Solvency II involves the European Union’s move to facilitate the development of a single market in insurance services in Europe. It seeks to update regulatory requirements for insurance firms that have European risks. The measures would establish a single licence for insurers, an “EU passport,” that would be recognized by all member states.

Captives, regardless of where they are located or where their owners are based, would be subject to Solvency II if they already have European risks or if they assume such risks in the future. The proposed reporting requirements and solvency standards

could be onerous for captives.

The Bermuda Monetary Authority (BMA), Bermuda’s financial services regulator, has been working towards obtaining an equivalency status. This would allow Bermuda to be recognized as adhering to the regulatory standard and principles of Solvency II and in the same regulatory league as EU passport countries.

The BMA’s various representations have helped European Union officials understand why captives need to be treated separately from commercial insurance companies. The BMA has supported similar representations by others, including the Bermuda umbrella captive management organization, the Bermuda Insurance Management Association.

Bermuda has long been considered a blue-chip financial services centre by leading businessmen from Fortune 500 companies. And most recently, despite a checkered history of some public policymakers suspiciously viewing all “offshore” markets as “tax havens,” policymakers have made a clear effort recently to separate the “wheat from the chaff.”

For example, even knowledgeable politicians today are aware of the robust nature of the Bermuda regulatory process. The BMA is not just a comprehensive financial services regulator on the island; it is a charter member of the International Association of Insurance Supervisors.

Also, Bermuda’s ministry of finance does not hesitate to join the deliberations of international standardssetting bodies for financial services.

In June 2011, they hosted 100 representatives – including government ministers from G20, G8, EU and OECD countries — for the third meeting of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes.

Bermuda is vice chair of the global forum’s steering group.

1 2

www.fin.gc.ca/treaties-conventions/berm-entry-eng.asp www.bermuda-insurance.org/x-defined.htm

INSURANCE BROKERS ASSOCIATION ONTARIO

91 st Annual Convention Wednesday, October 19th – Friday, October 21st , 2011

The Fairmont Royal York Hotel, Toronto, Ontario Thursday October 20, 2011 IBAO’s Annual KEYNOTE SPEAKER: Convention is Jason Ryan Dorsey, The Center for Generational Kinetics the biggest and Selling Across Generations: Specific Tactics that Drive Sales Whether You Text, Tweet, or Actually Talk On Your Mobile Phone most exciting Close a deal at Starbucks or invite them to your office? Plastic membership cards or Facebook. Fan Page? Never before have one generation’s hot buttons been so similar to another generation’s deal breakers. To compete and win you must know how to sell to all four generations insurance selling in today’s marketplace – and prepare for an emerging fifth generation. In Selling Across Generations, best-selling author Jason Ryan Dorsey broker event on reveals what you need to know about Gen Y, Generation X, Baby Boomers, and Traditionalists to drive sales results in the marketplace. You will learn each generation’s buying mindset, purchasing pathway™, loyalty hot buttons, and ideal customer experience. Jason even explains why the Canadian Gen Y will “ink” a deal with a text message while Boomers want to actually sign (and with a pen!). With a keen understanding of each generation’s buying preferences, Jason then shares numerous best practices and practical sales strategies collected from his work with companies and sales insurance leaders around the world. These ready-to-use strategies are designed for fast implementation and long-term results. You leave this engaging industry presentation ready to increase your sales with each generation of customer– whether they text, tweet, or actually talk on their mobile phone. calendar. EDUCATION PROGRAM AT A GLANCE:

There is simply no other event quite like it!

CSR SEMINAR: The Art of Powerful Conversation

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MEMBER’S SEMINAR: CEO PANEL This year’s CEO Panel will be moderated by Evan Solomon - CBC Television Broadcaster, Journalist and Author. The Panel will be comprised of five top executives from leading property and casualty underwriters. Our line-up of industry CEO’s who will be participating in this popular event are: Alister Campbell, President & CEO, Zurich Canada; George Cooke, President & CEO, The Dominion; Louis Gagnon, President, Intact Insurance; Karen Gavan, President & CEO, The Economical Insurance Group; and Maurice Tulloch, President & CEO, Aviva Canada.

Friday October 21, 2011 EDUCATION SEMINARS: Managing Organizational Change Ross McBride, Management Performance Centre (RIBO CE - 3 Management Hours)

The 2011 IBAO Annual Convention is a tweet-friendly event and we are encouraging attendees to tweetaway!! The hashtag for the event is #IBAOConvention11.

For complete program details and to register online, visit our website: ibao.org and click on Events.

Paying for Productivity – Acquiring, Compensating and Managing Producers in the 21st Century and Incentive Compensation for Brokerages Al Diamond, Agency Consulting Group Inc. (RIBO CE - 3 Management Hours)

How to Deal with Difficult People and Resolve Conflict Ross McBride, Management Performance Centre (RIBO CE - 3 Management Hours) Strategic Planning… Your Roadmap to Success Barry Nelson, Practical Management of Canada Inc. (RIBO CE - 3 Management Hours)

Competing and Winning…Beyond Price Lorie Guthrie Phair, LePhair Associates Ltd. (RIBO CE - 3 Personal Skill Hours)

Platinum Sponsors:

Banquet & Ball

featuring: 4th Annual Award of Excellence Gala

This year, don’t question whether or not you should stay for our closing night. IBAO will be hosting its 4th Annual Award of Excellence Gala where we will be recognizing brokers for their contributions to the industry and community.

Also featuring the entertainment featuring a performance by: The Caveners Audiences have been raving about the all Canadian tribute to the Beatles known as THE CAVENERS..

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

CLAIMS ADJUSTING FIRMS ClaimsPro Inc. Committed to providing leading-edge claims management services. www.scm.ca Crawford & Company (Canada) Inc. Enhancing the customer experience, every day. www.crawfordandcompany.com CRU Adjusters Calm in the face of a storm. www.cruadjusters.com Cunningham Lindsey International independent claims services. www.cunninghamlindsey.com Kernaghan Adjusters Doing What Is Right®. www.kernaghan.com McLarens Canada International Loss Adjusters and Surveyors. www.mclarens.ca

May 2011 54 Canadian Underwriter August 62 2011

PCA Adjusters Limited Adjusting to Meet your needs™ www.pca-adj.com Quelmec Loss Adjusters Identifying, Investigating, Resolving...for over a quarter century! www.quelmec.ca

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

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

Walters Forensic Engineering Inc. Providing scientific answers to complex engineering incidents. www.waltersforensic.com

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

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

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

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

INSURANCE COMPANIES Aviva Canada Inc. Home Auto and Business Assurance. www.avivacanada.com Catlin Canada Underwriting Ambition. www.catlincanada.com Chartis Insurance Company of Canada Your world, insured. www.chartisinsurance.com FM Global The leader in property loss prevention. www.fmglobal.com

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

INSURANCE LAW

Grain Insurance and Guarantee Company Commercial Lines Underwriters www.graininsurance.com RSA Leading car, home and business insurer. www.rsagroup.ca Sovereign General Insurance Company of Canada Since 1953 www.sovereigngeneral.com The Guarantee Company of North America “Specialized insurance products...professional service” www.gcna.com Wawanesa Insurance Earning your trust since 1896. www.wawanesa.com

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

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

RESTORATION SERVICES WINMAR Property Restoration Specialists Coming Through For You! www.winmar.on.ca STRONE Your emergency & restoration professionals www.strone.ca

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

Shooting Fish in a Barrel Some insurance fraud cover-ups just aren’t very well covered-up.

Much of my professional career has involved the investigation of insurance claims. And I can tell you the life of an accident benefits investigator is never boring. Here is a small sampling of the variety of different claims you can expect to see in this line of business on any given day.

Now you see it… Now you don’t In one assignment, I took statements from three claimants at the office of their lawyer in Toronto.

I followed the same procedure with each claimant. The claimant and I were left alone in an office. I wrote each statement by hand. The claimant and I read the statement together and I made sure he agreed with every word.

I then gave the unsigned statement to the law clerk. She advised me she had insufficient time to have the claimant sign the statement that day.

I had to leave my original statements with her, but took photocopies with me.

When I received the signed statements, the originals had been materially altered. Here are just a few examples: The phrase “Unless I’m stiff, I don’t need help getting dressed and undressed” had been changed to: “Unless I’m stiff, I need help getting dressed and undressed.” (Huh?) The alleged service provider of one claimant was his girlfriend, Amy. The sentence “Amy did

some cooking for me before the accident” in the original statement was simply crossed out in the signed statement.

Again with respect to Amy, the original statement read: “Our agreement is I’ll pay her if we get anything from insurance, if not, then I won’t.” The words “if not, then I won’t” were crossed out. “We have no agreement on hourly rate” was changed to: “We have an agreement on hourly rate, $100/week.”

All three claimants gave me the wrong name for the rehab clinic where they were allegedly receiving treatment. One claimant gave me the wrong name six times. In the revised version of the statements, the name of the clinic listed on the treatment plans had been substituted for the names that had been given to me.

I was told, “I am not still going to the clinic.” In the revised version, the word “not” was crossed out.

One claimant told me his friend Jamal was his service provider and “in the month of September, he would have worked about eight hours for me.” The number “8” was changed to “48” in the signed statement. (Did they think I wouldn’t notice?)

To top it all off, when I interviewed the thirdparty driver, he told me there were only two men in the other car, not three.

Donna Ford Licensed Private Investigator, Northwood and Associates

August 2011 Canadian Underwriter 63

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.

CIP Society Golf Tournaments:

CIP Society PROedge Seminars:

Regina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 7

Toronto - Facility Association in Depth: History, Trends & Implication . . . September 15

Ottawa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 9 (revised date)

Kitchener - Leading Insurance and Liability Cases 2010 . . . . . . . . . . . . . . September 20

Toronto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 13

Kitchener - Advanced Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 22

London . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 23

Toronto - Finance for the Non-Financial Professional . . . . . . . . . . . . . . . . . September 30

Other Events:

Edmonton - Finance for the Non-Financial Professional . . . . . . . . . . . . . . . . . October 12

Hamilton – Annual CIP Society Beach Volleyball Tournament . . . . . . . . . . September 1

Kitchener - Nuclear Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 12

Toronto – CIP Society Wine and Cheese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 12

Ottawa - Advanced Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 13

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

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

In one assignment, I took statements from three claimaints at the office of their lawyer in Toronto. All three claimants gave me the wrong name for the rehab clinic where they were allegedly receiving treatment. One claimant gave me the wrong name six times.

The Loud, Annoying Interloper In this assignment, I was retained to take statements from a driver and passenger. A man identifying himself as their paralegal called the adjuster. I spoke to the self-described ‘paralegal’ and it was obvious he was an imposter. When I called the real paralegal, his assistant told me the imposter was the “agent” who had brought the clients to their office in the first place. The imposter then apparently created a major disturbance at the paralegal’s office.

The claimants thus found themselves without a legal rep and they agreed to meet with me at my office to provide statements. I specified I would take a statement first from the driver and then immediately after from the passenger.

The driver’s statement proceeded slowly because he wouldn’t give me a straight answer. He told me he had had the same family doctor for 25 years, but he did not want the insurer to contact his doctor because his doctor knew nothing about this accident.

He asked for a five-minute break and left for 20 minutes. Shortly after he returned, there was a commotion in the waiting room. The imposter had turned up at our office, shouting and cursing. He said the statement was taking too long and hustled both of the claimants out of the office. He refused to give me his name.

The adjuster insisted the claimants provide statements so we rescheduled the date.

We finished the driver’s statement. I explained I would not be giving them copies of their statements until they had both signed their statements. He refused to sign it until he could take a copy with him and he then left the office.

The passenger was late, so I checked for him outside. The two claimants were huddled together talking around the side of the building; when they saw me, they scattered.

I invited the passenger, who looked like a deer in the headlights, into my office. About an hour into his statement, the driver re-appeared in my office, allegedly to discuss a transporta-

they saw me. The imposter asked for 10 minutes alone with the passenger.

I refused and ordered him out of the building. He left, but not before calling me the “B” word. We finished the passenger’s statement.

He signed it and left. I made a copy of the signed statement and also a copy of the unsigned statement of the driver. Moments later, the driver returned and said he was ready to sign his statement. He read it over and said that he wanted to make some changes, small changes, like the street name where the accident had occurred. I allowed him to make any changes he wished. He signed the statement, took a copy with him and left.

As you might imagine, there were vast discrepancies between the statements of the two claimants and between their statements and the information contained in the Collision Reporting Centre report.

tion issue. He started talking in Farsi to the passenger. I told him to stop doing that because I could not understand what they were saying. He did it again and I asked him to leave.

I resumed the passenger’s statement.

About half an hour later, our receptionist — not the same one who had been working on the day of the last aborted statement — came in and said a man in the waiting room needed to give the claimant a key. The passenger left my office. When I checked for him in our waiting room, he was gone.

I walked down the hall and saw the passenger and the imposter huddled in an alcove. The imposter was doing all of the talking. It startled them when

And the Academy Award goes to…

In this Oscar-winning performance, I was taking statements in the home of the claimants. Their paralegal invited me to sit on the floor and to use the coffee table as my work surface, because the claimants were so injured they could only sit in one particular stuffed chair in the living room. They moaned and sighed and put on quite a performance, apparently unaware that surveillance had been conducted on them for several days before the accident. This same surveillance showed them doing all of the activities they claimed to be unable to do now.

How sweet it is.

August 2011 Canadian Underwriter 65

Sunshine

Auto Coverage If your insured is involved in an auto accident in Florida, and your policy contains an exclusion expressly forbidden

by Florida law, is the exclusion void?

Michael L. Forte Rumberger, Kirk & Caldwell, P.A. (Tampa, Florida)

Florida’s warm climate draws visitors from all over the northern United States and Canada.

More than 3 million Canadian citizens visited Florida in 2010.1 When your Canadian insured is involved in a Florida auto accident, one of the first items of business is determining whether coverage exists.

What if your insured is sued for the accident in a Florida court, and your policy contains an exclusion expressly forbidden by Florida law? Does the mere fact that the accident happened in Florida mean your exclusion is void and you now must afford coverage?

The answer is: “It depends.” Florida courts adhere to a doctrine called lex loci contractus.

Under this doctrine, the law of the state in which the contract was executed is applied to coverage analyses.2 So in general, the ex-

66 Canadian Underwriter August 2011

clusion would apply to a Florida accident assuming the exclusion is permitted under Canadian law.

But Florida courts have established an exception to the lex loci doctrine. Under this exception, Florida law can invalidate an exclusion when needed to (1) protect a Florida citizen and (2) further a paramount Florida public policy.3 Fortunately, this exception has been applied very narrowly thus far. On only one reported occasion, a Florida court has applied the public policy exception to the interpretation of a nonFlorida auto insurance contract. That case was Gillen v. USAA.4 In Gillen, the insureds bought auto policies in New Hampshire and then moved to Florida. The court noted that although New Hampshire law ordinarily applied to the inter-

pretation of the contract, the public policy exception mandated the application of Florida law.

The court outlined three main reasons for this ruling. First, the insurance policy contained an “other insurance” clause in violation of Florida public policy. Second, the insureds were in the process of becoming permanent Florida citizens. And third, the insureds notified the insurer of their move to Florida.

Only once did a Florida court analyze the public policy exception in relation to a Canadian insurance policy.

Although that occasion did not involve auto insurance, an examination of the court opinion is nevertheless instructive. Ultimately, the court decided Canadian law applied (i.e., the public policy exception was not applicable).

In CAE USA Inc. v. XL Ins. Co. Ltd.5, a worker sued his employer for injuries resulting from the employer’s intentional conduct, and the employer made a claim to its Canadian insurance company. The insurer denied coverage “because Canadian law provides that an insurer is never liable to compensate for injury resulting from the insured’s intentional fault.” In the resulting declaratory judgment lawsuit, the employer sought application of Florida law, which presumably would have been more favorable to the employer. In ruling Canadian law applied, the court found the employer “has not shown that the application of Canadian law will result in an inequitable insurance contract that is contrary to some specific public policy of Florida.” Canadian auto insurers should not be scared

off by Florida’s public policy exception to the lex loci contractus doctrine. But they would do well to obtain a periodic update of Florida law on this issue to be sure the courts have not expanded the scope of the exception.

VISITFLORIDA.org, Research (visited June 13, 2011) http://media.visitflorida.org/research.php>.

2 State Farm Mut. Auto. Ins. Co. v. Roach, 945 So. 2d 1160, 1163 (Fla. 2006) (“[T]he law of the jurisdiction where the contract was executed governs the rights and liabilities of the parties in determining an issue of insurance coverage.”); MidContinent Cas. Co. v. Basdeo, 742 F. Supp. 2d 1293, 1321-22 (S.D. Fla. 2010); Kenneth Cole Prods., Inc. v. Mid-Continent Cas. Co., No. 10–21732–CIV, 2010 WL 5684403, at *2 (S.D. Fla. Nov. 30, 2010); Valiant Ins. Co. v. Progressive Plumbing, Inc., No. 5:06-cv-410-Oc-10GRJ, 2007 WL 2936241, at *3-4 (M.D. Fla. Oct. 9, 2007).

3 State Farm, 945 So. 2d at 1168-69; U.S. Fidelity & Guar.

Co. v. Liberty Surplus Ins. Corp., 555 F.3d 1031, 1033 (11th Cir. 2008).

4 300 So. 2d 3 (Fla. 1974).

5 No. 8:11–cv–64–T–24 TBM, 2011 WL 1878160, at *2 (M.D. Fla. May 17, 2011).

1

With the right team by your side, no goal is unattainable.

Strength and Support to keep you in the game.

For more than a century, CNA has helped businesses prepare for any challenge. Our “A” rating for financial strength, breadth of coverages, exceptional claim service, global presence and local underwriting authority enable us to support you, however and whenever you need it. When you are looking for a carrier with the experience and insight you need to keep you competitive in the face of risk … we can show you more.

Sm

For more information, please contact your local underwriter or visit www.cnacanada.ca.

www.cnacanada.ca CNA is a registered trademark of CNA Financial Corporation. Copyright © 2009 CNA. All rights reserved.

MOVES & VIEWS

upcoming events: for a complete list visit

www.canadianunderwriter.ca

and click ‘my events calendar’ on the home page

1

Michael McLeod [1] has been promoted to branch manager of the company’s Toronto West office. McLeod will be responsible for the daily operations of the branch office, maintaining relationships and leading a team of more than 40 professionals and administrative staff.

Jennifer Tims has been named branch manager of operations for Crawford & Company (Canada) Inc. on Vancouver Island. Tims has been with Crawford for more than 10 years, previously working with the company’s Edmonton claims operation.

2

Dean Grigoruk has been appointed CNA Canada’s assistant vice president and branch manager for Montreal.

Grigoruk joins CNA from AXA Assurances, where he was responsible for leading a team of commercial lines underwriters for AXA’s larger mid-market division.

He has close to 20 years of experience in the industry. Previous roles include driving business growth, creating strong broker relationships and managing day to day business operations.

68 Canadian Underwriter August 2011

3

LAWPRO, the legal malpractice insurer for Ontario lawyers, has made a number of appointments in its two claims departments. In its specialty claims area, effective Sept.

1, 2011, Simon Bernstein will become vice president of specialty claims. This area is responsible for handling TitlePLUS and excess insurance claims, as well as claims involving coverage issues. Prior to joining LAWPRO, Bernstein was assistant vice president of financial and professional services claims (Canada) at St. Paul Travelers Insurance Company. Bernstein succeeds Jerzy Adamowicz, who will be retiring at the end of August. Mitchell Goldberg has been appointed to the position of unit director and counsel in the specialty claims department. Victoria Margolin and Joseph Juda are appointed to the positions of claims counsel. Both have recently completed their articles with LAWPRO. In the primary professional liability claims department, which manages most of LAWPRO’s portfolio of errors and omissions claims, Jennifer Ip and Cynthia Martin are each

taking on more senior assignments, heading the two PPL litigation units. Dale Herceg will assume the role of senior claims counsel in the PPL new claims group.

4

PPG Canada Inc. has appointed Rafael Hinojos as director of automotive refinish. Hinojos will be responsible for the continued growth of the Canadian PPG automotive refinish business unit. He has been with PPG since 1988, holding various positions throughout 13 years. They include territory manager, national account manager, business development manager and most recently American manager of national accounts.

5

FirstOnSite has expanded its Ontario management team with three new appointments. Steve Gregg [5] is now district manager of the GTA. In this role, he will oversee the operations and service delivery of several FirstOnSite locations across Southern Ontario. Jim Mandeville is now branch manager of Toronto East.

1

4

Mandeville will draw on his eight years of experience in the construction and restoration industry to lead this location. Len Perdic has accepted the title of project manager in Hamilton.

Perdic has established trusted relationships with the insurance industry in Hamilton and the surrounding area and will continue to respect those relationships and foster new ones in his new role, the company says in a release.

MOVES & VIEWS

2

5

6

The American National Standards Institute (ANSI) has approved the Risk and Insurance Management Society (RIMS) as an accredited standards development organization. This status enables RIMS to take a lead role in shaping and developing risk management standards, a RIMS release says. RIMS plans to begin standards development early in 2012. “Developing and distributing standards is

vital to ensuring consistently high levels of practice in organizations worldwide, and has been top of mind for RIMS since we formed our standards and practice committee in 2009,” said Lort Seidenberg, RIMS board member and vice president of enterprise risk management. “This approval, in conjunction with the efforts of our membership, will undoubtedly serve to foster a culture of risk management across sectors.”

7

RSA Travel Insurance Inc./Assurance Voyage RSA inc. (RSA Travel), part of RSA Canada, has completed its acquisition of the business assets and insurance expertise of travel distributor etfs and the etfs trademark. Adrian Hall, currently head of RSA’s personal specialty insurance business, has been named managing director of RSA Travel, which includes the etfs brand. Together RSA and etfs write almost $100 million in premium, service more than 1,000 distributors, and serve more than 1 million customers. The deal does not include Global Excel Management Inc. (GEM), the

former claims and assistance business of etfs. RSA will continue its long-term partnership with GEM, which will remain the claims and assistance provider for RSA’s travel business.

8

Jones DesLauriers Insurance Management Inc. (JDIMI), one of Canada’s largest independent brokerages, has finalized its succession plan with the announcement of a new executive team. Founding partners Robert (Bob) Jones and Rick DesLauriers have divested some of their ownership to allow perpetuation of the company as a privately held, independent firm.

Jones has moved from president and CEO to chairman and vice president of sales.

His new role will focus on the company’s growth plans, insurer relations, recruiting and mentorship of the sales teams. DesLauriers will maintain his role as senior account executive, concentrating on medium to large complex risks. Rounding out the new team are Danny Sgro, president. Sgro has been with JDIMI for 10 years. For six years, he has

been a partner and a member of the executive team. Aaron Nantais, CEO, has been a senior account executive and partner at JDIMI for 10 years and a member of the executive team for six. Glenn Murray, senior vice president, has also been a member of the executive team for six years. He will continue to head the transportation team.

JDIMI has five offices in Canada. They are located in Toronto (head office), Cambridge, Belleville, Collingwood and Ottawa.

9

Forensics Investigations Canada (FIC) has acquired Saskatchewanbased Stealth Investigations for an undisclosed amount.

Stealth’s three offices and 15 workers will continue to operate under the FIC brand. Stealth principal Stephen Clark will head up FIC’s Saskatchewan’s operations. “By joining FIC’s cutting-edge technology and Stealth’s reputation as the ‘provider of choice’ in the province, the organization will provide enhanced service... throughout the Canadian communities they serve,” an FIC release says.

August 2011 Canadian Underwriter 69

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

The Ontario Risk and Insurance Management Society (ORIMS) held its annual golf tournament on June 21 at Deer Creek Golf Club in Ajax, Ontario. Three hundred and thirty two golfers attended the event, which included a raffle that raised $3,410 in support of the Junior Achievement Risk Management Student Day Seminar.

70 Canadian Underwriter August 2011

GALLERY

APPOINTMENT

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

CARSTAR Collision Centres across North America broke their 2009 Guinness World Record for World’s Largest Car Wash—Multiple Venues on June 11, 2011. More than 140 events throughout Canada and the United States supported CARSTAR’s ‘Soaps It Up’ National Car Wash Fundraiser. At least 1,000 employees and volunteers participating in the event washed 4,918 cars, breaking the previous record of 4,105. “This year we are happy to report that, with the tremendous support of our franchise, insurance and vendor partners, and with the dedication of each community, we are donating more than $105,000 to Cystic Fibrosis Canada and local fundraising groups,” said Sam Mercanti, president and CEO of CARSTAR Automotive Canada. For the past eight years, Canadian CARSTAR Collision Centres have been participating in the ‘Soaps It Up’ fundraiser. With the funds raised from this event, CARSTAR’s total funds raised for the fight against Cystic Fibrosis is now more than $1.9 million.

Dean Grigoruk Gary Owcar, President and C.O.O of CNA Canada, is pleased to announce the appointment of Dean Grigoruk as Assistant Vice President, Branch Manager, Montreal, effective July 18, 2011.

Mr. Grigoruk joins CNA from, AXA Assurances, Montreal, where he had responsibility for leading a team of commercial lines underwriters for AXA’s larger mid-market division. Dean has close to 20 years of experience in the industry, with demonstrated success in driving business growth, creating strong broker relationships and managing day to day business operations. He is fluently bilingual in French and English, and brings an in-depth knowledge of the Quebec marketplace to this position.

Mr. Grigoruk is no stranger to CNA Canada, having worked in the Montreal branch from 2000 - 2006 as a Senior Property & Casualty Underwriter. I have every confidence that Mr. Grigoruk will provide excellent leadership and direction to the Montreal team and cultivate strong relationships with our distribution partners.

Serving businesses and professionals since 1897, CNA is North America’s seventh largest commercial insurance writer and the 13th largest property and casualty company. CNA’s insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages.

CNA’s services include underwriting, risk control and claims administration. CNA is a registered trademark of CNA Financial Corporation. For more information, please visit www.cnacanada.ca.

August 2011 Canadian Underwriter 71

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

Seventy Ontario young brokers attended the 7th Annual IBAO Young Brokers Council (YBC) Conference held in Niagara Falls on June 10, 2011. Speakers at the conference included Intact Insurance president Louis Gagnon, who spoke about the impact of Intact’s acquisition of AXA Canada on brokers.

The Economical president Katherine Mabe (who has since been succeeded by Karen Gavan) was on hand to talk about the company’s proposed demutualization.

Afterwards, delegates enjoyed a Casino-themed reception.

Fifteen exhibitors ran the casino tables, providing guaranteed (poker?) face-to-face interaction between delegates and exhibitors.

72 Canadian Underwriter August 2011

GALLERY

Disaster Restoration Services

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

More than 350 Toronto-area brokers attended a June 21 reception hosted by ENCON at the Steam Whistle Brewery.

Brokers had a chance to mix and mingle with underwriters and claims analysts from ENCON’s professional liability and construction division, as well as sale representatives from its group benefits division.

74 Canadian Underwriter August 2011

GALLERY

LawPRO® Appointment

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

The Sault Ste Marie Brokers Convention was held on June 15 in Sault Ste Marie, Ontario. Industry exhibitors met with attending brokers throughout the trade show portion of the event.

(Photos courtesy of Monica Dale of Dawson & Keenan Insurance

Simon Bernstein

Brokers and Pam de Boer of Paul Davis Systems of Canada.)

Lawyers’ Professional Indemnity Company (LawPRO) announces the appointment of Simon Bernstein to the position of Vice-President, Specialty Claims Department. In this capacity, Mr. Bernstein will be responsible for a team of claims professionals handling, among others, TitlePLUS and Excess Insurance claims and claims involving coverage issues.

Mr. Bernstein brings to his new role extensive experience in claims management, loss control, risk management and underwriting in the insurance industry.

A graduate of Osgoode Hall Law School, Mr. Bernstein practised in private practice before moving into the financial services sector where he held positions of increasing responsibility in claims management and risk assessment. As Assistant Vice-President, Financial and Professional Services Claims (Canada) at St. Paul Travelers Insurance, Mr. Bernstein directed a staff responsible for managing a diverse portfolio of claims and setting litigation strategies.

He is currently Assistant Vice-President, Underwriting at LawPRO. LawPRO provides malpractice insurance and risk and practice management programs to more than 22,800 Ontario lawyers, and title insurance in all Canadian jurisdictions. LAWPRO’s TitlePLUS® title insurance program is the only all-Canadian title insurance product on the market today.

www.lawpro.ca August 2011 Canadian Underwriter 75

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

Stephen Catlin, CEO of the Catlin Group, and Mike Hansen, CEO of Catlin Canada, hosted a cocktail party at the Thompson Landry Gallery in the Distillery District on June 23. Stephen Catlin was in Toronto for the International Insurance Society’s annual seminar and took time out to meet local brokers and suppliers, visiting with staff in Catlin’s Toronto office.

76 Canadian Underwriter August 2011

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

The annual FM Global/United Way Dodgeball Tournament was held on June 4. In the finals, ‘Charles Taylor Adjusters’ took on the ‘Average Winmars.’ Charles Taylor had taken the title for the past two years, but the Average Winmars won the 2011 tournament. The Average Winmars donated their $500 first place prize to the United Way. The tournament donated a total of $6,446.40 to the United Way, taking into account FM Global corporate’s ‘double match’ of tournament funds.

Mom, I am going to play in the pool in the basement?

CAPTION CONTEST Congratulations to our winner:

Nella Piazza

of PD Admin Group.

Thank you for all of your submissions.

Watch for next issue’s contest Debby Matz

Winmar the full service restoration specialists with service locations across Canada Toll Free: 1-866-4-WINMAR (494-6627) • www.winmar.ca August 2011 Canadian Underwriter 77

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

Great American Insurance Group set sail aboard the Captain Matthew Flinders on June 23 for a cruise around the Toronto Harbour. The day of fun, hosted by the Property & Inland Marine Executive Liability and Fidelity & Crime Divisions, was held in appreciation of their supporting brokers in the Greater Toronto Area.

advertisers’ index ACE INA Insurance Affleck Greene McMurtry LLP A.M. Best Company Applied Systems The ARC Group Canada Inc. AXIS Reinsurance Company (Canadian Branch) Canadian Litigation Counsel Chartis Insurance CNA Canada Cunningham Lindsey Canada Crawford & Company (Canada) Inc. Duck Creek Technologies e2Value Inc. Elliott Special Risks LP FirstOnSite Restoration FM Global The Guarantee Company of North America Guy Carpenter Great American Insurance Group IBAO Convention Impact Auto Auctions Insurance Institute of Canada Insurance Internet Directory Ironshore Canada Ltd. LawPRO – Lawyers Professional Indemnity Company Liberty International Underwriters Oil Casualty Insurance, Ltd. Paul Davis Systems (PDS) ProFormance Specialty Claims Inc. Risk Management Services (RMS) – An SCM Company RSA – Royal & Sun Alliance Insurance Company of Canada ServiceMaster of Canada Limited SIMAC (Superior Independent Medical Assessment Centre) Starlight Insurance Golf Tournament Swiss Reinsurance Company Toa Reinsurance Company Travelers WINMAR XL Insurance Zurich Canada

78 Canadian Underwriter August 2011

7 82 53 5 19 33 29 43 67, 71 9 15 51 49 35 24, 25 84 (OBC) 16 55 37 61 57 64, 83 (IBC) 62 45 75 47 30 36 21 17 2 73 79 59 41 31 23 77 13 27

announcement_CanadianUnderwriter:Layout 1

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

The Inaugural Belfor Cancer Ride took place on June 24.

The industry motorcycle event was organized to help raise funds for the Princess Margaret Hospital’s Weekend to End Woman’s Cancers event that takes place in September. The event took riders on a scenic route through the Buckhorn, Ontario district and ended in the town of Bancroft, Ontario for an overnight stay.

Participants helped raise more than $1,500 for the cause.

Sandra Buckberrough Director, Business Development SIMAC Canada Inc., a leading provider of Independent Medical Assessments, is pleased to announce the addition of Sandra Buckberrough to its business development team.

“Sandra’s energy, drive and extensive claims experience will further strengthen our ability to deliver superior solutions to our customers.” said Gloria Rajkumar, President & CEO. “This is an exciting time for SIMAC. We have worked hard to build a solid reputation for excellence, have won several awards and we continue to grow.

We’re very happy to have Sandra on our team.”

Sandra brings over 20 years experience to SIMAC and is known for her professionalism and uncompromising integrity. Having spent the past 13 years with Aviva Canada, Sandra’s most recent role was Manager, Learning & Development (Claims). Her natural acumen for the industry and her dedication to personal and professional growth are the characteristics that drive her to take on new challenges, and to find new ways to make a difference in the industry she has dedicated her career to.

“We are in a very competitive market and the need to understand and exceed the customers expectations has never been greater,” said Sandra. “What impressed me the most about SIMAC was their incredible commitment to quality and customer service. I am thrilled to be joining the SIMAC team and look forward to providing our customers a level of service that is sure to make a difference!”

Sandra will work closely with her Co-Director of Business Development Craig Smith. Together their focus will be to broaden SIMAC’s service reach within the insurance industry.

“Sandra is a great addition to the SIMAC team.

She brings a wealth of knowledge and experience, which will help SIMAC grow and continue to be the IME provider of choice,” said Craig Smith. “I’m excited at the prospect of working with Sandra, and look forward to creating new opportunities and synergies.”

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GALLERY The 2011 version of the Canadian Cancer Society’s Relay For Life featured the largest-ever number of insurance industry participants. The relay is a tribute to the lives of loved ones who have been touched by cancer. Teams of 10 people participated in the 12-hour, overnight, non-competitive relay, taking turns walking, running or strolling around a track. In Ontario, more than 785 friends and members of the insurance industry formed teams under the Team WICC banner in 13 different locations. More than 65 teams raised at least 5,000 donations totalling more than $368,000. Relay For Life is now WICC Ontario’s largest fundraising activity.

80 Canadian Underwriter August 2011

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

August 2011 Canadian Underwriter 81

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The Ontario chapter of the Canadian Insurance Claims Managers Association (CICMA) held its annual golf tournament at the Cardinal Golf Course in Newmarket, Ontario on June 24. This year, 296 golfers participated in the event, raising a total of $26,000 for Camp Oochigeas. The Ontario chapter of the CICMA has been supporting Camp Oochigeas for the past 16 years. The proceeds from the putting contest at the tournament were donated to the Douglas N. Hurlbut Award, a total of $750.

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agmlawyers.com Affleck Greene McMurtry LLP 365 Bay Street, Suite 200, Toronto, Canada M5H 2V1 T 416.360.2800 F 416.360.5960 Excellence in Commercial Litigation and Competition Law 82 Canadian Underwriter August 2011

Understanding how FM global is diFFerent is akin to seeing the

If you remember just one thing about FM Global, here it is: FM Global believes that most loss is preventable.

That’s why we link underwriting to loss prevention engineering. A proactive approach that helps us identify, minimize and assume risk before disaster strikes – and only FM Global does it.

© 2011 FM Global. All Rights Reserved.

With over 1,500 engineers around the world and a $100 million research campus, FM Global takes the time to learn about risk. So, our clients experience smaller and less frequent losses, ensuring business continuity. Maybe that confidence is why our client list includes one third of the top Fortune 1000. Underwriting through loss prevention engineering. Now, that’s insurance evolved.

To learn more, visit fmglobal.com/insuranceevolved/light