Canadian Underwriter January 2011

C A N A D A’ S I N S U R A N C E A N D R I S K M A G A Z I N E . C A N A D I A N U N D E R W R I T E R . C A

JAN U ARY 2 0 1 1 A Business Information Group Publication #40069240

Claims Innovation by david gambrill

Loosening the Cap

By VAnessa mariga

Demutualizing The Economical By david gambrill

Every file is different

From city to city, shore to shore – no two insurance claims and litigation files are ever the same.

In addition to natural case differences, regional rules and nuances often come to bear and shape outcomes.

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VOL. 78, NO.1, JANUARY 2011 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY BUSINESS INFORMATION GROUP

www.canadianunderwriter.ca

COVER STORY

Necessity Breeds Invention Motivated by a desire to reduce claims costs, Canadian property and casualty insurers are working with their vendor partners to come up with innovative ways to deliver efficient, streamlined, costeffective service to claimants, while at the same time generating profit for both insurers and vendors alike.

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BY DAVID GAMBRILL

FEATURES

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46

12 Psyched Out

reforms, is limiting health professionals’ ability to assess injured claimants’ needs.

Injury victims are more frequently making claims for psychological injuries in addition to physical injuries.

BY ROCCO GUERRIERO

BY CRAIG HARRIS

Waivers at Work

Loosening the Cap

Ethan signed a waiver he did not read and that does not include the name of the winter ski camp he is attending. He then injures himself on the camp’s ski run. Can Ethan sue?

Health care providers, insurance defence lawyers and insurers are all feeling the pinch of Ontario’s new $2,000 cap on medical assessments.

BY VANESSA MARIGA

38 Troubled Waters

16 More Marine

Municipalities have taken creative approaches to curbing water damage due to sewer backup and basement flooding, opening up new opportunities for collaboration between insurers and municipalities.

Commercial brokers owe their clients a duty of care to communicate negotiations with insurers to their clients.

BY DAVID McEWEN AND FRITZ GAERDES

BY LORNE FOLICK

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50

A New Path

Online Auctions

The board of the Economical Mutual Insurance Company is recommending a plan to demutualize, a rare path for Canadian mutual property and casualty insurance companies.

Online auto auctions can entice a large group of international bidders, thereby generating more money for insurers salvaging damaged vehicles.

BY VINNIE MITZ

20 Differential Diagnosis Health care professionals believe aspects of Ontario’s auto insurance reforms contravene the Canadian Health Act principles of universality and accessibility.

BY TERESA RIVERSO

BY VANESSA MARIGA

55 Stair Falls Careful investigation of stair falls is an important first step in reducing the risk of injuries in the future.

BY RICHARD NELLIS AND BAILEY GUTKIN

26 True Costs of Reform Independent assessment centres say the $2,000 cap on assessments, part of Ontario’s auto insurance

BY DAVID GAMBRILL

January 2011 Canadian Underwriter

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VOL. 78, NO.1, JANUARY 2011

PROFILE

10 Information Highway Geoff Sullivan says the theme of his presidency at the Ontario Independent Adjusters Association (OIAA) will be how to drive in technology’s fast lane.

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

Art Director Gerald Heydens Art Consultation Pylon.ca

Associate Editor Vanessa Mariga vanessa@canadianunderwriter.ca (416) 510-6793

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BY VANESSA MARIGA

SPECIAL FOCUS

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Editorial

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Marketplace

58 Moves & Views 60 Gallery

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

President Bruce Creighton Vice President Alex Papanou

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EDITORIAL

Holiday Shopping Season

Canadian property and casualty companies were clearly in a shopping mood, with several major deals or potential deals announced in December.

David Gambrill, Editor david@canadianunderwriter.ca

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Canadian Underwriter January 2011

This holiday shopping season was a busy one in Canada — and not just for consumers.

Canadian property and casualty companies were clearly in a shopping mood, with several major deals or potential deals announced in December.

As we go to press, Desjardins Financial Group, including its property and casualty insurance company Desjardins General Insurance, announced a $443million cash offer for Western Financial Group.

Heading into the deal, Desjardins is the leading P&C insurer in Quebec and the seventh-largest property and casualty insurer in Canada. It has a portfolio of 1.8-million policies in force, a business volume of $1.5 billion and assets of $2.9 billion.

Western Financial owns ‘The Network,’ composed of several western Canadian-based insurance agencies, including SecuriCan General Insurance and Falkins Insurance, to name a few. It also manages Western Financial Insurance, underwriters of pet insurance. Combined, The Network and Western Financial Insurance reported operating income exceeding $25 million as of 2010 Q3.

That deal is expected to close in 2011 Q2.

Just prior to Desjardins’ big announcement, broker Hub International had two busy days on Dec 20 and 21. Hub acquired the assets of hospitality insurer Leeds Insurance Brokers in Toronto and certain operations of the Phoenix Insurance Group operations in Alberta.

Hub expected to acquire the Grande Prairie operations of Phoenix by the end of 2010, and the Edmonton, Red Deer, Hinton and Drayton Valley operations of Phoenix in the first quarter of 2011. Phoenix Group Risk Management Inc. is not included in the transaction.

Also in December, the CG&B Group Inc. announced it is acquiring D. M. Edwards Insurance Group Limited and Car Insurance Brokers of Canada Inc. With that acquisition, the CG&B Group will have 195 employees and an annual premium volume expected to reach $160 million in 2010.

Not to be outdone, in the world of independent insurance adjusting, the full-service national claims management firm McLarens Canada acquired Upper Canada Adjusters Inc. In doing so, McLarens promised to increase its footprint in the Canadian insurance adjuster marketplace over the next two years.

All of these deals happened about two months after RSA Canada announced in October that it would be acquiring GCAN Insurance Company for $420 million. At that time, it was the second-largest Canadian P&C acquisition over the past decade.

And these are all of the done deals.

However, one of the biggest deals announced in December is one that hasn’t happened yet. The Economical Mutual Insurance Company announced in December it is planning to demutualize,

which, if it happens, would unlock approximately $1.2-billion in policyholder surplus. This might involve an initial public offering or — you guessed it — a merger or acquisition. (For more on this, see Page 42.)

What does this flurry of mergers and acquisitions (M&A) activity mean?

It means many things.

For one thing, it means the market is saturated with capital and Canada has not had many major claims to which to apply it. (An absence of catastrophes isn’t a bad thing, by the way.)

It means it is difficult for companies to gain market share by growing their books of business through increased premium sales. That leads to growth by acquisition as an alternative.

M&A activity has been predicted in Canada for the past five years, but never really happened. So what’s changed?

Some believe the market crash of 2008-09 affected companies’ bottom lines unevenly, which put some companies in a position to buy others. With investment income slowly returning to form, companies on the prowl for acquisitions can shore up their underwriting results — which are still not all that great, as the federal solvency regulator reports — while simultaneously employing surplus capital to leverage a deal.

Whatever broke the logjam, M&A activity has clearly arrived by storm. Perhaps it’s fitting we have suddenly seen this explosion of buying during the holiday shopping season.

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MARKETPLACE

Canadian Market PROPOSED CHANGES TO CAPITAL TEST WOULD DECREASE P&C INSURERS’ MCT SCORES BY 14% Proposed changes to the 2012 Minimum Capital Test (MCT) would decrease federally regulated Canadian property and casualty insurers’ aggregate MCT ratio by 14%, to 212.6%, according to the Office of the Superintendent of Financial Institutions (OSFI).

When applied to the Branches Adequacy of Assets Test (BAAT), foreign property and casualty branches would see their aggregate BAAT ratio drop by 31.9% to 284.5%.

OSFI is initiating industry consultations regarding the results of its impact study during the remainder of 2010 and early 2011. By spring 2011, it hopes to issue a formal draft guidance regarding the proposed changes.

A final guideline and annual return documents will be released in September 2011 for a Jan. 1, 2012 implementation date.

BROKER CHANNEL LOSING 0.43% MARKET SHARE ANNUALLY: PWC REPORT The independent broker channel is losing market share to the direct channel at a rate of roughly 0.43% per year, according to PwC's Insurance Review: A Canadian Perspective.

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Canadian Underwriter January 2011

At that rate, the independent channel’s market share of 64% in 2009 will drop to about 60% by 2019.

This is based on data obtained by applying linear regression to net premiums written in Canada over the last 11 years, PwC reports.

When breaking down the data by line of business, the independent broker channel is gaining market share in some lines of business, while losing market share in others.

For example: • Independent brokers are losing approximately 0.81% market share per year in automobile insurance lines.

• Independent brokers are losing roughly 1.27% market share per year in personal property lines.

• Brokers are gaining approximately 0.13% market share in commercial property insurance lines.

• Brokers are gaining roughly 0.82% market share in liability insurance lines.

TRIPLING NOVA SCOTIA’S AUTO CAP WOULD INCREASE BI LIABILITY CLAIMS COSTS BY 17%: PROVINCE The Nova Scotia Utility and Review Board says the province’s decision to triple its minor auto injury cap from $2,500 to $7,500 will result in a 17% increase in third party liability-bodily injury claims costs.

IT also found the province’s industry-wide rates are adequate to absorb the costs.

The board held a hearing on the effects of the cap, the final submissions of which

were heard on Oct. 28, 2010.

The board’s numbers were in marked contrast to those submitted to the board by an actuary contracted by the Insurance Bureau of Canada.

Ron Miller of Exactor Insurance Services estimated the impact of the province’s higher cap would increase claims costs in the third party-bodily injury area by 49.3%.

The board did note it was premature in 2010 to determine the effects of the cap reform on loss costs and loss trends. It therefore concluded it will “hold a formal paper hearing in the fall of 2012 to examine any impact of the minor injury reforms.”

Essex County noted many other counties in Ontario have witnessed premium increases in their 2010 renewals, including Lakeshore (a 40% increase), Kingsville (35%), Amherstberg (28%), Leamington (20%), Lasalle (12%) and Tecumseh (5%).

Also, Perth County Council approved a 54% increase to its 2011 municipal insurance premium, which rose to $445,056.

Risk Management

Damage estimates related to severe weather events and one earthquake in Canada likely topped $700 million in 2010, extrapolating from information contained in Aon Benfield’s November 2010 Monthly Cat Recap report.

The report lists damage estimates, both insured and uninsured, related to 10 specific severe storm events and one earthquake in Canada in 2010.

When known damage estimates for the above events are added together, all of these events caused at least $700 million in damages.

However, the total is likely much higher, and may have even approached $1 billion.

For example, for four events contained in the Aon Benfield report — including Hurricane Igor’s landfall in Newfoundland, as well as Hurricane Earl’s impact on Nova Scotia — the report simply says damage

JOINT AND SEVERAL LIABILITY HAS ONTARIO MUNICIPALITIES PAYING MORE Ontario municipalities are seeing substantial premium increases in their 2011 municipal insurance renewals, a fact linked to the joint and several liability (or 1%) rule.

The tort principle of joint and several liability essentially exposes a municipality to pay up to 100% of any damage award in a civil liability case involving multiple defendants — even if the municipality itself is found to be only 1% liable for the damage — if the other defendants cannot pay their share of the damages.

Municipal risk managers in 2010 identified joint-and-several liability as a pressing issue.

Claims SEVERE WEATHER EVENTS IN CANADA CAUSED MORE THAN $700 MILLION IN DAMAGE IN 2010

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estimates are “unknown.”

These estimates are not included in the $700-million figure cited above.

Aon Benfield estimated the Magnitude 5.0-earthquake that hit near Ottawa and Quebec in June caused more than $16.3 million in damages.

ONTARIANS DON’T KNOW INSURERS ARE USING CREDIT SCORES: IBAO About 75% of Ontario consumers do not know their credit scores are used to determine how much the pay for their home insurance, according to a survey commissioned by the Insurance Brokers Association of Ontario (IBAO).IBAO commissioned MRP Market Research Professionals Inc. to poll more than 802 Ontarians during the first week of November.

under the definition of an “automobile” under Ontario’s statutory accident benefits scheme.

A FSCO arbitrator found the relevant part of the Statutory Accident Benefits Schedule (SABS), Section 224(1), has

a two-part test for defining an “automobile.”

One part says a vehicle counts as an automobile if it is required under “any” act to be insured. Bray argued the ATV is an automobile because the B.C. Motor Vehicle

(All Terrain) Act requires ATVs to be insured.

But FSCO found the “any act” refers only to Ontario legislation, which does not require ATVs to be insured; hence, an ATV is not an automobile.

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AN ATV IN B.C. IS NOT AN “AUTOMOBILE” IN ONTARIO LAW An all-terrain vehicle (ATV) driven in B.C. does not count as an “automobile” under Ontario law, the Financial Services Commission of Ontario (FSCO) has determined.

In Alana Bray and ING Insurance Company of Canada, Alana Bray was injured in June 2001 as a result of falling from an ATV she was operating in British Columbia, near the Whistler Ski Resort.

As a dependent of her mother, Bray applied for accident benefits from her mother’s insurer, ING Insurance Company of Canada.

ING denied benefits, saying the ATV in B.C. did not fall

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January 2011 Canadian Underwriter

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PROFILE

Life in the Fast Lane Vanessa Mariga Associate Editor

For Geoff Sullivan, driving along the ‘Information Highway’ is the key theme of his presidency at the Ontario Insurance Adjusters Association (OIAA).

First impressions can be deceiving. For example, Geoff Sullivan, president of the Ontario Insurance Adjusters Association (OIAA), had to give an adjusting career a second chance before he discovered just how much he loved it.

Sullivan is branch manager and senior general adjuster at the Thunder Bay, Ontario office of Crawford & Company (Canada). He was born in Newmarket, Ontario, just north of Toronto. Early in Sullivan’s life, his father worked for a law firm in downtown Toronto. Each day, his father would drive 70 kilometres, one-way, from the family’s home in Newmarket to get to the office. Finally, the

10 Canadian Underwriter January 2011

commute got to be too much of a grind; when the law firm offered Sullivan’s father an opportunity to relocate to Thunder Bay, he took it.

Sullivan laughs at the thought the move was meant to be temporary. “He promised my Mum it was only going to be for two years, but they both fell in love with it,” he says.

“That was 38 years ago.”

Sullivan completed much of his schooling in Thunder Bay, save for a few years he spent in a high school on the West coast, where he played junior hockey.

When he finished high school, he returned to Thunder Bay to work on a general Bachelor of Arts degree at Lakehead University.

By this time, Sullivan’s father had used some of the connections he made as a law clerk to also start a career as an adjuster. He got Sullivan an interview with a local adjusting firm in 1989. “I was there for about a year and it just wasn’t a good fit, so we parted ways,” Sullivan recalls.

He returned to Lakehead for two years. During this time he also played hockey for the Thunder Bay Twins Senior AAA team. His father told him of a

posting at Continental Insurance to cover a maternity leave as a telephone adjuster. He got the job, and hit his stride. The feeling was mutual; at the end of the term, Continental did not want to let Sullivan go. The company found a place for him in its Toronto office.

After working for a year in Toronto, Sullivan moved to Adjusters Canada. He ultimately moved back to Thunder Bay to

Sullivan remembers a fake ad for an insurance adjuster, listing a long string of careers such as a doctor, lawyer, engineer and psychiatrist.

You don’t have to be all of those things to be an adjuster, but it helps. manage the firm’s office there.

“I have been here [Thunder Bay] ever since,” Sullivan says.

“I liked Toronto, but once you have lived the lifestyle you live up here — everyone knows you; anywhere you go, you’re

welcome — it’s a drawing card for sure.”

As for the return to the adjusting business? “I think I was immature when I started and I didn’t realize what I had,” he says. “The thing about working in claims is that it’s different every day. You’re dealing with a different situation every day.

Really, how far or how high you want to go is up to you.”

Over the years, Sullivan has focused on industrial and large commercial losses. He specializes in the forestry industry and adjusts claims in the full spectrum of the business, “right from the cutting of the wood to the final production of the product, be it in hardwood, softwood, pulp or paper.” His work has taken him all over Canada. He also has international work experience, travelling down to the Caribbean following Hurricane Ivan in 2004. There, he assessed damage to condominium buildings resulting from the storm.

Sullivan appreciates the variety associated with adjusting work. He recalls a mock newspaper ad that once hung on a former boss’s office wall. “It was a fake want ad for an insurance adjuster,” he recalls. “It

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PROFILE

read: ‘Must be a doctor, lawyer, engineer, psychiatrist…’ It went on to list a string of careers. When you think about it, it’s true. You don’t have to be all of those things to be a good adjuster, necessarily. But it helps to have a broad general knowledge of a whole bunch of different things to do this job.”

ASSOCIATION INVOLVEMENT During his short tenure in Toronto, Sullivan joined the OIAA to keep abreast of industry issues and network. Upon returning to Thunder Bay, he got involved at the local level as a director, and then as a chapter delegate. “I thought it would be good for experience and for networking,” he says. “It’s turned out to be great for a lot more than just those two reasons.”

Sullivan says the theme guiding his term as president is ‘Information Highway: The Road to the Future.’ He worked alongside OIAA vice president Steve DelGreco to round out the theme.

In today’s environment, everything is driven by technology, Sullivan says. He points to his own experience at Crawford & Company (Canada), where all adjusters are outfitted with

tablets. “When we’re out in the field, our adjusters have a laptop, they write on the screen — all of that info is taken and put into a report format. The adjuster can literally go to their car, where they have a WiFi stick giving them a connection to the Internet, wherever they may be, and send that report in an email format to the insurer from the claimant’s driveway.”

These technological advances, coupled with the increased use of ‘smart phones,’ are designed to ease the process of doing business and improve productivity. But the developments and advances can be a bit of a double-edged sword, he says. The ease of doing business and increased productivity creates increased expectations and demands from clients, he says. Plus, smart phones allow 24/7 access to the office, blurring the line between time at work and time off work. “It’s easy for work hours to become 24/7,” he says.

“When you’re sitting at home on the couch with the kids at the end of the day, sometimes it’s hard not to reach for your BlackBerry to check on emails.”

Nevertheless, technology is a necessity. As the industry

evolves and younger generations become its primary customers, they will expect — and demand — the ability to connect with an insurance industry rep at any time via the Internet.

The OIAA’s conference in February 2011 will focus on this balancing act, he says.

Conference seminars will teach

stress management and worklife balance techniques, as well as how to optimize the use of technology to make life easier.

“There are some great new tools being developed in the profession, and our goal is to help adjusters understand how to leverage them and not be disadvantaged by them.”

January 2011 Canadian Underwriter

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ut

Psyched

O Craig Harris Freelance Writer

More frequently, insurers are seeing physical injury claims accompanied by claims for psychological injuries.

sive reforms have increased the economic incentives associated with these types of claims.“

SUBJECTIVITY OF PSYCH CLAIMS Physical injury claims today are frequently accompanied by associated allegations of psychological or psychiatric impairment, particularly anxiety, stress and depression disorders.

In the legal arena, questions abound as to whether or not these psychological-related claims are compensable. What is a “recognized” psychiatric impairment? How “reasonably foreseeable” was the psychiatric injury caused to a plaintiff? What is expected of the average citizen’s state of mind or “fortitude and robustness?”

INCREASED FREQUENCY OF PSYCH CLAIMS In the accident benefits sphere, particularly in Ontario, psychological injury claims have jumped significantly over the past 10 years, according to sources. Hard evidence is scattered across multiple insurance companies’ claim files, but many note a clear trend towards more psychological injury cases. “Without doubt, the frequency of these claims has been increasing in recent years,” says lawyer Lee Samis, principal of Samis & Company Barristers & Solicitors.

“My sense is that this increase in activity is largely related to changes in the Ontario automobile injury compensation models. Succes-

12 Canadian Underwriter January 2011

Lisa Fazzari, claims technical advisor for accident benefits at The Economical Insurance Group, says many legitimate psychological injuries arise out of car accidents. At the same time, she observed, “we have so many claimants who are in accidents that result in $300 damage to their cars’ bumpers, and there is a psychological injury claim. Often it is for post-traumatic stress.

I thought the diagnosis for post-traumatic stress was a bit more stringent than that. We have soldiers coming back from Afghanistan who don’t necessarily have that diagnosis.”

A clear challenge with psychological claims is the cause and scope of the disorder in question.

“The problem lies in the subjective nature of the injuries,” notes Fazzari. “A fracture you can see on an X-ray. With psychological claims, it really comes down to a psychiatrist or psychologist saying:‘You have to trust what I’m saying.’ From my standpoint, it is difficult to know how objective these assessments are.”

Many psychological claims involve multiple causes and overlapping impairments. “Prior susceptibility is very often an issue,” Samis says. “The heavy reliance on self-reporting makes this area vulnerable to magnification, embellishment or fraud.”

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PSYCH CLAIMS IN TORT On the tort side, courts have attempted to clarify the kinds of psychological claims compensable through negligence.

One landmark case heard by the Supreme Court of Canada was Mustapha v. Culligan (2008), the so-called “fly-inthe-water-bottle” lawsuit. Waddah “Martin” Mustapha had discovered a fly in his water cooler, supplied by Culligan. He claimed psychological trauma, including nervous shock and depression, and was originally successful when a trial judge awarded him $341,000 in damages. Culligan appealed and the Ontario Court of Appeal dismissed the case.

The Supreme Court dismissed the appeal in May 2008, although it found the plaintiff did suffer legitimate psychological damage. But “the law expects reasonable fortitude and robustness of its citizens and will not impose liability for the exceptional frailty of certain individuals,” the court ruled. It also found Culligan, while it had breached a duty of care to Mustapha, could not be found liable since the company could not have “reasonably foreseen” the customer’s psychiatric injury.

Legal professionals have since lauded the Supreme Court judgment for its common-sense approach. Nevertheless, more recent rulings have clouded the issue.

One example is Frazer v. Haukioja (2010). In this case, Grant Frazer lost control of his motorcycle and suffered injuries to both ankles. Dr. Haukioja initially diagnosed a left ankle fracture and a soft-tissue injury to the right ankle.

However, weeks later, a radiologist examined the plaintiff’s x-rays and discovered a talar fracture in the right ankle. Dr. Haukioja did not tell Frazer about the x-ray result until later.

When Frazer realized the full extent of his injuries, the court noted, he became focused on Dr. Haukioja’s alleged misdiagnosis and the delay in informing him of the injury’s severity. Frazer saw a psychiatrist, who found that Frazer suffered from an anxiety disorder with features of panic disorder. A trial judge found Frazer’s psychiatric diagnosis was the result of Dr. Haukioja’s failure to

14 Canadian Underwriter January 2011

properly treat his patient. Frazer was awarded more than $2.6 million in damages and costs. The doctor appealed to the Ontario Court of Appeal, which upheld the original ruling in its judgment released in April 2010.

Legal tests in these cases revolved around negligence issues. But other factors included whether or not the injury was a recognized psychiatric impairment, and if the injury would be expected of an individual with reasonable robustness and fortitude.These rules are interpreted on a case-by-case basis, lend-

In the accident benefits sphere, particularly in Ontario, psychological injury claims have jumped significantly over the past 10 years. ing some unpredictability in interpretation of negligence for psychiatric injury.

“I perceive there is some desire from the courts to limit the nature of the claims that will receive compensation, whether by measurement of compensation in relation to ‘reasonably robust’ victims or by limiting compensation to ‘recognized’ impairments,” says Samis.

“These concepts are helpful as far as they go, but they are far from being clear rules.”

In cases in which compelling evidence exists and the claimant is credible, there is often a favourable ruling on psychiatric injury, says lawyer Kadey Schultz, a civil litigation specialist and partner at Hughes Amys Barristers & Solicitors. “I think this is true even over and above the opinions of medical experts,” she says. “It really comes down to the claimant — it is a subjective test based on the plaintiff’s credibility.”

ONTARIO ACCIDENT BENEFITS On the accident benefits side of auto insurance, insurance companies and lawyers have seen a significant rise in the number of psychological injury claims, especially in Ontario. “If you look at the rate of psychological claims by jurisdiction, it doesn’t make sense,”

Fazzari says, citing a pattern noted by other sources. “I work with claims across the country and the numbers in Alberta and Atlantic Canada are not nearly the same as in Ontario. Does that mean there are fewer psychological injuries in those jurisdictions, or that more health care practitioners are diagnosing these in Ontario?”

Some have also noticed a condensed time period for the filing of psychological claims. “One thing we have seen on the AB side is . . . the initial claim for anxiety or depression comes in two to three weeks after the accident,” says Schultz. “This is alarming. Normally, you wouldn’t see that develop until after a period of time.That can really trigger how insurance companies have to deal with this.”

In fact, many argue adjusters and insurance company claims handlers have to deal with psychological claims in a different and much more proactive manner. “Handling these claims really comes down to best practices,” says Schultz. “One thing you have to do at the start is what we call ‘front-loading’ the claim file.That is gathering relevant information about pre-existing mental health issues of the claimant before the accident.”

Insurers should also consider the appropriate use of surveillance if there are inconsistencies in a psychological claim, Schultz says. “In many cases, claimants say they are too depressed to shop or too anxious to drive a car,” she says.

“Working together with a private investigator, insurers can use surveillance as an appropriate option.”

An insurer can also request an examination under oath under Section 33 in Ontario, which allows for a formal statement to be taken under some conditions. Issues such as the nature of the injury, the type of compensation and whether or not any psychological assessment has taken place can be verified through this examination.

Fazzari stressed there are legitimate psychological injuries. “But this should not be the case for as many claimants as we are seeing,” she says. “The number of these types of claims should be fewer and farther between.”

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Duty to Report David McEwan Q.C.

Associate Counsel, Alexander Holburn Beaudin & Lang LLP

Fritz Gaerdes

Associate, Alexander Holburn Beaudin & Lang LLP

A broker owes a duty of care to let a client know about negotiations concerning policy endorsements/exclusions, but a plaintiff that benefits from the negotiations will not be able to recover damages in court in the event the broker did not keep the plaintiff in the loop, a B.C. court has found.

The British Columbia Supreme Court’s recent decision in More Marine Ltd. v. AXA Pacific Insurance Company, among other issues, deals with the duty of care of an insurance broker to its clients.

BACKGROUND

The insured plaintiff, More Marine, owned Alexander Holburn Beaudin a fleet of ships and marine equipment. One of More Marine’s vessels sank in 2007. & Lang LLP is a member The defendant insurers, Axa Pacific Insurance of The ARC Group Company and Continental Casualty Company, Canada. David McEwan claimed the total loss (TL) was subject to an anacted as counsel for the nual aggregate deductible (AAD) of $250,000. insurers in More Marine Ltd. v. AXA Pacific Aon Reed Stenhouse, the plaintiff’s broker, Insurance Company. specifically agreed to the inclusion of the AAD in

16 Canadian Underwriter January 2011

the policy on behalf of the plaintiff. More Marine claimed the AAD was added to the policy improperly, without its knowledge, and absent any consideration.

The defendant insurers provided hull and machinery (H&M) insurance coverage for the plaintiff’s marine fleet. Aon was a marine insurance broker acting as agent for the More Marine in negotiating and placing insurance coverage with the defendant insurers between 2000 and 2007.The plaintiff had H&M coverage in place that included a per vessel deductible (i.e. an “each and every deductible”).

POLICY COVERAGE During 2004, More Marine had two H&M policies running in parallel. Coverage for the entire fleet was rolled into a single H&M policy for the fleet in January 2005. Immediately before this rollover occurred, the respective policies each provided for an AAD of $100,000. Evidence established the addition of the AAD clause was reflected in a reduced premium to the insured.

However, at that time, the AAD clause did not include any wording limiting the claims to which the respective AADs would apply.

Aon emailed the defendant insurers in November 2004 to clarify the application of the AAD clause. The broker’s email included proposed wording for a revised AAD clause that excluded constructive total loss (CTL) and TL claims from the AAD. The defendant insurers agreed to the broker’s proposed AAD wording in a reply email in December 2004.The broker immediately prepared a draft endorsement. However, the person preparing the endorsement copied a different

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precedent from the one that the defendant insurers approved — a wording that did not exempt CTL and TL claims. The broker carried this language forward into an endorsement the insurers ultimately signed. By the time the matter came to be determined by the court, the lead underwriter had passed away; her personal files could not be located. Neither the following underwriter, nor the marketer at the insurance broker could recall what, if any, discussion took place in respect of the change between the draft and the final endorsement.

There were further developments in mid-January 2005. The broker advised the defendant insurers that More Marine’s account was under attack from another broker.As a result, the broker managed to successfully negotiate a reduction in the plaintiff’s AAD from $100,000 to $75,000. Later that year, at the next annual renewal, the AAD was increased to $150,000.There were several further endorsements in 2005 and 2006. However, none of the plaintiff’s policies and endorsements excluded TL or CTL claims from the operation of the AAD clause.

Another significant change occurred at the August 2006 renewal. By that time, the More Marine account had a loss ratio of approximately 245% over five policy years.As a result of this claims history, the defendant insurers seriously considered not renewing in 2006. However, after negotiations, the broker and defendant insurers agreed on an increased premium rate and also an increased AAD of $250,000 that specifically applied to CTL and TL claims. This wording was incorporated into Clause 23 of the renewed 2006 policy. Clause 23 was in place when the plaintiff’s vessel sank in 2007.

COURT RULING ON THE AAD More Marine alleged Clause 23 and prior AAD endorsements were inconsistent with the alleged agreement reached through the November and December 2004 email exchange by the broker and defendant insurers. This agreement expressly excluded CTL and TL claims from the reach of the AAD clauses. The court accepted that if this was so, then Clause 23 and prior AAD endorsements materi-

18 Canadian Underwriter January 2011

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ally reduced the available coverage for such claims. However, the court found the e-mail exchange did not culminate in a final agreement. It was only a preliminary step in reaching an agreement on the terms of an AAD endorsement to form part of the policies. The amendment to the contract was not finalized until the actual endorsements were signed and returned.

The court held Clause 23 was clear and therefore dismissed the claim against the insurers. The court then dealt with the claim against the insurance broker. The court considered whether the broker owed any duty to the plaintiff to inform it of the underwriter’s stated agreement

The court accepted the broker should have communicated with the plaintiff about its negotiations with the defendant insurers.

However, it was not pursuaded the plaintiff suffered any loss as a result. in the email exchange to language that excluded CTL and TL claims from the AAD clause. In answering this question, the court analyzed the broker’s duty to negotiate, whether it breached its duty and, if so, whether the alleged failure caused More Marine to suffer any losses.

The court confirmed an agency relationship between an insured and an insurance broker. As principal, the insured is responsible to the insurer for its broker’s actions. Accordingly, while an insured may have a claim against a broker for acting outside of his authority, the insurer is entitled to rely upon the broker’s agreement to a particular term in the policy. Even if a broker exceeds his or her authority, an insured may ratify the broker’s acts.Taking any of the benefits from the broker’s act is evidence of ratification.

The court further affirmed that since subtle differences in the forms of coverage available are frequently difficult for the average person to understand, and since agents and brokers are trained in

these differences — and expected to provide individualized insurance advice — it is both reasonable and appropriate to impose upon agents and brokers a stringent duty to provide both information and advice to an insured.

The court found the course of events in January 2005, which culminated in a negotiated reduction in the amount of the AAD, indicated the terms of the AAD clause were still open to further negotiation with respect to the amount. The court considered the implications of the broker not discussing the proposed exclusions to the AAD clause with the plaintiff. It held that even if More Marine had lost the opportunity to pursue negotiations to exclude CTL and TL claims from the 2004 and 2005 policy endorsements, the defendant insurers were not prepared under any circumstances to agree to any different terms to the AAD clause at the time of the 2006 negotiations. The court also noted that, considering the plaintiff’s loss record, there was no evidence any other underwriter would have offered an AAD that excluded CTL and TL claims.

The court accepted the broker should have communicated with the plaintiff about its negotiations with the defendant insurers in November 2004 and early 2005. However, it was not persuaded the plaintiff suffered any loss as a result of the broker not communicating the initial email exchange to the plaintiff.

The court next dealt with the allegation that the broker breached its fiduciary duty in failing to review the content of the 2004 email exchange with the plaintiff, or by not pursuing the exclusion of CTL and TL claims during the course of negotiation with the defendant insurers.

The court held that to recover damages from the broker, the plaintiff must prove the coverage they sought was available.

Both of the present underwriters swore they would not have agreed to renew the policy if the CTL and TL were excluded from the AAD. There was no evidence that any insurer would have offered the coverage excluding CTL and TL from the AAD clause.The action against the broker was accordingly dismissed with costs payable by the plaintiff.

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Differential Part I of a Two-Part Series

Diagnosis

This two-part article discusses the real, potential and anecdotal effects of Ontario’s auto insurance reforms on access to health care for auto injury claimants. Part I of the article, reproduced below, analyzes the impact of the Minor Injury Guideline (MIG) and the Minor Injury Cap from the perspective of health care providers. Part II of the article, to be published in February 2011, will analyze the new $50,000 med-rehab benefit, independent examinations and attendant care benefits.

Teresa Riverso President, Supportive Environments Inc.

The Coalition Representing Health Professionals in Automobile Insurance Reform is in ongoing discussions with insurers, the Insurance Bureau of Canada and FSCO to address a number of emerging issues related to the Sept. 1, 2010 implementation of Ontario’s auto insurance reforms.

A great deal has been written about what is contained in the Ontario insurance reforms.This article presents some concerns raised by the rehab community about the impact of the reforms on people’s health care. Some openly question whether the new Statutory Accidents Benefits Schedule (SABS) might be in contravention of the Canadian Health Act principles of universality (access to same level of care) and accessibility (reasonable access to health care). It also raises questions as to the power of adjusters to make judgments related to people’s health care needs.

This article raises the questions, but does not purport to answer them. Rather, its purpose is to shed some light on these emerging issues in an attempt to promote further discussion, monitoring, and problem-solving among all the stakeholders.

20 Canadian Underwriter January 2011

MINOR INJURY GUIDELINE (MIG) & MINOR INJURY CAP Claimants suffering minor injuries as defined in the new SABS are only entitled to receive a maximum of $3,500 for medical and rehabilitation expenses. These include medications, assessments, treatment and any other reasonable goods and services such as an ambulance and/or assistive devices.

Within this $3,500, a pre-approved amount of $2,200 for the implementation of the Minor Injury Guideline (MIG) provides treatment blocks and payable fees without the need for prior insurer approval.There is $400 allowed for supplemental goods and services.

If a claimant requires more treatment than that outlined in the Guideline, an OCF-18 (Treatment and Assessment Plan) must be submitted with a total cost of goods and services of no more than the difference between the $3,500 and the $2,200 — in other words, $1,300 minus the cost of the OCF-18 ($200), leaving $1,100.This $1,100 would in fact be further reduced by ongoing costs such as medications. It is quite obvious how quickly the dollars for rehabilitation dwindle.

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If a claimant with an initial diagnosis of a predominantly minor injury requires further treatment because a preexisting condition, ongoing symptoms or other diagnostic findings — for example, a fracture, new neurological symptoms, depression, anxiety, panic attacks or Post-Traumatic Stress Disorder — present a barrier to maximal recovery within the $3,500, a claimant’s treatment would still fall within the $3,500 cap unless the health care provider gives compelling evidence that these are barriers to rehab.

There is no current definition of “predominantly” or “compelling evidence,” so an adjuster can determine if there is a predominantly minor injury and if evidence to take him/her out of the MIG is compelling or not.

It seems adjusters are frequently denying OCF-18s despite compelling evidence that physical and/or psychological barriers are preventing maximum recovery. Adjusters seem to be making medical judgments irrespective of the medical evidence before them. This of course raises many ethical and legal issues the scope of which could not be done justice within the confines of this article.

On occasion, the adjuster may have an Insurer’s Examination (IE) done to clarify diagnoses. However, this does not necessarily mean that if the IE supports the need for additional treatment for a physical and/or mental condition, the OCF-18 will therefore be approved.

If it is not approved, the claimant’s only recourse is mediation — usually a sixmonth wait.

ASSESSMENTS Under the new SABS, all assessments/ examinations, and related reports and expenses — including travel — are capped at $2,000, including those for catastrophic determination.

The only items not included in this cap are transportation expenses for the claimant and attendant and translation expenses.

In some cases, adjusters are including the $200 cap for the OCF-18, the new integrated request for assessment and treatment plan, as part of the $2,000

Page 29

cap. Doing this allows only $1,800 for the assessment and all its related expenses.

In a couple of cases, adjusters did not want to pay the $200 for the OCF-18, telling the service provider it should not have taken the provider more than one hour to do the preliminary screening and complete the form (even though it did). As a result, the adjuster was only willing to pay the provider’s professional hourly rate. This is another example of adjusters making medical judgments.

The travel issue is especially critical for professions providing assessment and/or treatment services in the claimant’s home, school, job site or other community location. It appears in some instances, service providers have been asked to do specific assessments because of their expertise, but they were not able to take the referrals due to the cost of travel (e.g. flight, train, gas) and travel time. This limited access to services the claimant required.

Some openly question whether the new SABS might be in contravention of the Canadian Health Act principles of universality and accessibility.

For example, a occupational therapist was asked to travel up north to perform an attendant care assessment on a claimant deemed to have suffered a catastrophic injury. Airfare was $900. The trip door-to-door would take approximately 12 hours. On top of this, the therapist received this referral from a rehab company which of course had to earn its share of the cost. The therapist refused the referral.

Are claimants in remote/rural areas therefore now being denied access to health care?

The general sense seems to be providers are being asked to “water down” their assessments and treatment services. Some providers are finding creative ways of addressing the needs of claimants and their respective College’s requirements for minimum standard of practice while trying to work within

the new system. For example, providers might take a close look at their assessments and take out components that could be addressed in a separate, future assessment, or perhaps be performed more appropriately by another professional at a lower cost (such as “testing.”). In other cases, initial assessments are becoming a “screening” tool rather than full assessments.

Some providers are contacting claimants and their legal representatives to request coverage of the additional cost beyond the $2,000 cap. If they agree, full assessments are done and the cost is covered under the tort side of the claim. If not, the referral is potentially refused or only a partial assessment or screening is done. In response to this assessment dilemma, some but not all rehab associations have produced guidelines for assessments or screening to assist their members.

Some say the $2,000 cap appears to be limiting or delaying access to the more complex assessments and subsequent specialized treatment performed by various professional groups.This observation is alarming because claimants requiring these types of assessments often have serious and usually multiple injuries.

Also of great concern is the anecdotal evidence of under-qualified providers agreeing to do some of these types of assessments within the $2,000 cap. One particular professional group has gone as far as to recommend to its members that if these providers are professional peers, they are to be reported to their College for review of competency. All rehab professional groups know to do this according to their standard of practice.

Overall, in the area of assessments, the potential impact of the reforms might be threefold: 1) an increase in number of assessments by different providers that might have been done by just one provider in the pre-reform era; 2) access to specific therapy might be delayed extensively because of this drawn-out process of assessment; and 3) valuable time and dollars are taken away from essential treatment because assessment components are being integrated into treatment sessions.

January 2011 Canadian Underwriter

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Waivers at Work

Lorne Folick

Senior Partner, Dolden Wallace Folick LLP This article was prepared with the assistance of Trevor R. Thomas, associate at Dolden Wallace Folick LLP

During the holidays, the fictional character of Ethan participates in Huxley’s Ski Camp at Crystal Mountain. Prior to starting his lessons, he is told to sign a form entitled “Release of Liability, Waiver of Claims, Assumption of Risk & Indemnity Agreement.” The form mentions Crystal Mountain, but Huxley’s Ski Camp does not appear anywhere.The form also states: “This waiver includes our liability in negligence.” Eager to begin his first lesson, Ethan signs the form without reading it and proceeds to the chair lift. On a steep run, Ethan loses his balance, falls and sustains severe injuries. Can he successfully sue Huxley’s Ski Camp?

ANATOMY OF A WAIVER The form Ethan signed is a waiver. This is standard fare in any commercial or recreational sporting activity. Waivers are used as a mechanism to shield organizations from liability. The enforceability of a waiver depends on the factors discussed below.

22 Canadian Underwriter January 2011

Although the waiver did not explicitly mention Huxley’s Ski Camp, courts generally accept that this type of waiver can protect the agents, employees, representatives and members of Crystal Mountain against any liability, where the waiver includes these terms.

For example, in one British Columbia case1, a plaintiff sustained personal injuries in an all-terrain-vehicle (ATV) accident during a guided tour operated by the defendant resort.

The plaintiff sued the resort, alleging the waiver was unenforceable because the tour company was not named. The court found the waiver clearly stated that the waiver extended to agents of the resort. The resort contracted on behalf of the tour company, the tour company authorized the resort to obtain waivers on its behalf, and the tour company provided a service to the plaintiff in exchange for his signature on the waiver. Therefore, the court enforced the waiver to defeat the plaintiff’s claim.

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The enforceability of waivers depends on a variety of factors determined by the courts, including principles of contractual interpretation, the circumstances in which waivers are read (or not read) and the age of the people signing them.

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As a general rule, the unnamed entity must demonstrate four criteria to obtain the benefit of the waiver: 1) the waiver makes it clear the unnamed entity is intended to be protected by the terms that limit liability; 2) if the unnamed entity is acting as an agent, the waiver must provide that agents are included in the waiver; 3) the unnamed entity authorized the creator of the waiver to obtain signed waivers on its behalf, and; 4) the unnamed entity provided something in exchange for the signature on the waiver.

A lack of specific and explicit reference to the type of accident or injury sustained is not fatal to the enforceability of the waiver. This principle is demonstrated in a recent British Columbia case2 involving a snowmobile race. In this case, the plaintiff sustained an injury during a pre-race practice run, when he drove over a large piece of metal. His snowmobile was propelled into the air, resulting in serious injuries to the plaintiff.

The plaintiff argued the waiver only covered the race; not pre-race activities.

The plaintiff relied on the ambiguity in the phrase “…arising out of or related to the event(s).” The term “event” was not defined, and the plaintiff argued it could only mean the race itself. The court disagreed.The court gave effect to the term in its ordinary and natural meaning, finding that it was clear the waiver extended to a practice for the race as well as the race itself.

CONTRACTUAL INTERPRETATION In considering waivers, courts rely on general principles applied in contractual interpretation. A waiver will be considered in its entirety, without strained interpretation, and the terms of the waiver will be given their ordinary and natural meaning. Technical errors in grammar or sentence structure will not void the terms of the waiver. Unresolved ambiguities are, however, construed against the entity seeking to rely on the waiver.

Failing to read the waiver prior to signing does not automatically void the waiver, except in certain circumstances.

For example, in a case involving an injury during a martial arts course3, the

24 Canadian Underwriter January 2011

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plaintiff had failed to read the waiver.

The court found the plaintiff had not intended to be bound by the particular terms of the waiver. The waiver constituted a very small portion of the entire contract; it appeared in extremely small print, with no emphasis to direct the reader to its importance; and no provision drew the student’s attention to the fact that by signing the waiver, he or she

Special circumstances arise when parents or guardians sign waivers on behalf of their children. In a British Columbia case4, the infant plaintiff suffered injury when he was violently thrown to the ground during a sparring match at a Hapkido school owned and operated by the defendant martial arts centre. The defendant sought to rely on a waiver signed by the child’s mother.

The court determined the waiver was unenforceable because of the British Columbia Infants Act5. This legislation states a parent or guardian cannot enter into any binding agreement, other than the specific excepted contracts stated in the Act, unless the contract is approved by the Public Trustee.This case demonstrates that in British Columbia, parents or guardians cannot bind their children to an agreement waiving the children’s right to bring an action for damages in tort.

ETHAN’S CASE

A waiver will be considered in its entirety, without strained interpretation, and the terms of the waiver will be given their ordinary and natural meaning. was waiving his or her legal rights. As a result, the defendant martial arts studio had a duty to bring the terms of the waiver to the attention of the plaintiff, which it failed to do, and the court refused to enforce the waiver.

Generally, it is immaterial that the waiver is not read, except in three situations: 1) if the person signing the waiver believes it to be something completely different than what it is; 2) if there has been misrepresentation of the purpose or nature of the waiver, or; 3) if the defendant knows the person signing does not intend to be bound by the waiver, thus creating a duty on the entity seeking to rely on the waiver to bring the terms of the waiver to the attention of the person signing the waiver.

So, can Ethan successfully sue Huxley’s Ski Camp? It is unlikely. Huxley’s will most likely be able to demonstrate that the waiver extends liability protection to them as an agent of Crystal Mountain.

Further, Ethan’s accident would be captured by the term “negligence.” Ethan’s failure to read the waiver will not assist him because the heading of the waiver is clear that the purpose of the waiver was to limit liability.

The answer would most likely be the same if Ethan’s accident occurred in another jurisdiction in Canada. Other provinces, notably Alberta and Ontario, rely on British Columbia cases for guidance. A significant difference is that courts in Alberta and Ontario will also consider if additional reasons exist for why the waiver should be voided, including unconscionability or fundamental breach.

Too bad, Ethan.

1 Goodspeed et al v. Tyax Mountain Lake Resort Ltd. et al, 2005 BCSC 1577.

2 Dixon v. British Columbia Snowmobile Federation, 2003 BCCA 174.

3 Parker v. Ingalls, 2006 BCSC 942.

4 Wong v. Lok’s Martial Arts Centre Inc., 2009 BCSC 1385.

5 R.S.B.C. 1996, c. 223.

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The Real Cost of Opinion/Analysis

Reform

Medical health assessors in Ontario say the province’s auto insurance reforms are unintentionally hurting accident victims because the cap on assessments is limiting the ability of health care professionals to determine injured claimants’ needs.

Rocco Guerriero President, The Association of Independent Assessment Centres (AIAC)

After layers of submissions, months of study and review, Ontario’s auto insurance reform came into effect this past September. The province was adamant these changes were the answer to containing costs and giving drivers more “choice.”This has not been our experience.

In fact, far from it.

Although we have only just started to implement the reforms, Ontario has already announced the reforms have succeeded in “stabilizing” auto insurance rates. The reality is that auto insurance is far too complex for most drivers to comprehend the implications — that is, until they’re seriously injured.

As front-line health care providers, we are often the first to see victims of auto crashes to assess their injuries and determine their entitlement to benefits. It is becoming increasingly

26 Canadian Underwriter January 2011

clear that auto insurance reform is having serious unintended consequences for Ontario drivers. The reform penalizes the most severely injured and those who live in remote areas of Ontario. This is because the $2,000 cap on assessments does not cover transportation costs for assessors. The cap also means there is insufficient funding to carry out medical assessments for paediatric and serious, traumatic brain-injured claimants, in addition to others with multisystem trauma.

The Association of Independent Assessment Centres (AIAC) conducted an online survey in August 2010 to determine the impact of auto insurance reform on the ability of independent examiner (IE) assessors to perform critical assessments. We heard from 605 assessors, who confirmed the $2,000 cap on assessments will

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severely limit their ability to perform Independent Medical Examinations (IMEs). In fact, over 59% of respondents say they will be forced to greatly reduce the number of IMEs they perform. Instead, they plan to devote more time to private practise. Almost 10% say they will stop performing insurer examinations altogether. Over 44% say it will be extremely difficult to provide catastrophic injury assessments on behalf of insurers. Most assessors, 58%, say they will limit or stop performing assessments requiring travel to rural areas.

With fewer reasonably qualified assessors now available, assessments are far more limited or even inaccessible for those who are institutionalized and/or live in remote underserviced areas.

Auto accident victims are experiencing

Corrections In the second paragraph of the story, “Investigating AB Claims,” Canadian Underwriter, December 2010, the article incorrectly says s. 33 of the Ontario Statutory Accident Benefits Schedule (SABS) relates to insurer examinations. In fact, it relates to requests for reasonable information by the insurer. This was an editing error and not that of the author, Donna Ford. Canadian Underwriter apologizes for this error.

Also in the December 2010 issue, a typographical error appeared in the article “Minding the Farm,” by David Simpson. The second paragraph has a sentence that reads: “We asked each other if we believed auto insurance in Ontario, and auto residual marks in particular, were really different this time (emphasis added).”

To clarify, the word “marks” should have been the word “markets.”

Again, Canadian Underwriter apologizes for making this error.

CANADA’S LEADING SPECIALTY INSURER

We heard from 605 assessors, who confirmed the $2,000 cap on assessments will severely limit their ability to perform Independent Medical Examinations (IMEs). Over 59% of respondents say they will be forced to greatly reduce the number of IMEs they do. increasing delays in having their injuries assessed and ultimately treated. Severely injured claimants are also being forced to travel to get assessed, even when it isn’t medically advisable.

In our view, Ontario’s auto insurance reforms have costly consequences for Ontario drivers. It’s too late to shift into reverse. The only choice now is “assessing” the road ahead and proceeding with extreme caution. There are solutions. We believe consensus can be reached to overcome barriers to reasonable access. Good will and time will tell the outcome.

AIAC represents Ontario-based organizations that provide medical and allied health experts used by insurers to complete Section 42 assessments in Ontario.

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January 2011 Canadian Underwriter

27

Necessity Breeds Innovation Insurers are working with their claims-handling partners to find news ways to reduce the $18 billion in claims costs Canadian property and casualty insurers paid out as of 2010 Q3. Innovation comes in various forms, including billing arrangements, more efficient business or best practices, reducing administrative costs and even changing the nature of the insurervendor partnerships themselves.

By DAVID GAMBRILL

28 Canadian Underwriter January 2011

There

is an old saying that Necessity is the Mother of Invention.

Without a doubt, insurers are facing a time of necessity. They are currently focused on finding ways to reduce their claims costs. Up to the end of the third quarter of 2010, federally regulated Canadian property and casualty insurers paid out slightly more than $18 billion to resolve claims. That’s up from the $17.4 billion they paid out for claims over the same period in 2009.

Of course, insurers are always looking for methods to contain loss costs. But investment losses after the market crash of 2008-09 brought this imperative into high relief. From a consumer’s perspective, when an insurer refers to “the need to reduce loss costs,” the conversation starts to sound pretty abstract. Consumers may not appreciate the complications for an insurer arising from having to deal with several different kinds of companies and networks of companies — known as ‘vendors’— in order to resolve policyholders’ claims. A vendor is anyone who supplies or sells goods or services to a company. Examples of vendors in the property and casualty insurance industry include car collision repair centres, medical and rehabilitation clinics, restoration firms, engineering firms, legal firms, independent adjuster firms, as well as many other professionals who help insurers restore some degree of normalcy to the life of a policyholder in the event of a claim.

January 2011 Canadian Underwriter 29

COVER STORY

Necessity Breeds Innovation Talking about “innovation” in the property and casualty industry is not easy: sensitive relationships are at play.

Insurers need vendor partners in order to help make good on the promise to replace or repair a damaged car, home or business. Likewise, vendors need insurers to buy their goods or services.

When insurer-vendor relationships are strong, they are mutually supportive and can help the claimants ride out difficult times. But when times are tough, no family wants to air out their dirty laundry in public. Family matters are sensitive and hence rarely publicly discussed.

For various reasons, several sources understandably shied away from speaking about innovative, concrete ways to reduce loss costs, not wanting to upset the apple cart and destabilize solid vendor relationships. Other concerns relate to the competitive nature of the business: an insurer competing with another on claims service is not going to spill the beans about a method that gives it a competitive advantage over the other. For these reasons and others, many sources, if they did talk to us about innovation, did so on condition of anonymity.

Sensitivities aside, insurers and vendor partners have been working on a number of initiatives to reduce claims costs over the past couple of years, and they have done so in ways that are profitable for both insurers and vendor partners alike. In the spirit of proving that financial necessity has indeed borne the fruit of some innovate ways to reduce loss costs, Canadian Underwriter sought out new approaches to conducting business in an atmosphere of cost containment.

Definitions Before moving on, it is worth mentioning words like “invention” and “innovation” have many different meanings to players in the claims business. “Innovation is a loose term,” observes Glen Martin, senior vice president of claims strategy and claims services at Aviva Canada. “It could be transformational or it could just be continuous improvement. Everybody defines it differently. We see 30 Canadian Underwriter January 2011

it more as a continuous improvement.

I don’t think there’s been any Big Bang innovation in procurement.”

Procurement What, exactly, is procurement?

Like “innovation,” it is a loose term with many possible meanings. Simply defined, procurement is an ap-

My view is that if you trust your partner, then you have to enable them and give them the tools and the authority to go out and do your work for you. If you’re giving the vendor the work, but then you basically say, ‘Yeah, but you have to tell me every time you want to write a cheque for $50,’ then you’ve really lost any efficiency you sought to gain proach to acquiring goods and services. An online dictionary definition of procurement refers to a “complete process of obtaining goods and services from preparation and processing of a requisition through to receipt and approval of the invoice for payment.

Also called sourcing, it commonly involves (1) purchase planning, (2) standards determination, (3) specifications development, (4) supplier research and selection, (5) value analysis, (6) financing, (7) price negotiation, (8) making the purchase, (9) supply contract administration, (10) inventory control and stores, and (11) disposals and other related functions.”

For insurers, procurement helps predict how much a claim will cost.

Predictability of price and service is important, because this allows the insurer to estimate how much premium to charge a policyholder. (Insurance is a rare business in that the true cost of a policy is not known until well after the purchase of the product.)

For many, the word ‘procurement’ conjures images of requests for proposals (RFP), requests for information or requests for quote (these are all commonly lumped under the general category of an ‘RFP’). In the RFP process, a vendor is asked to outline services to be provided to the insurer, who will be providing them and how much these services will cost.

RFPs are a relatively new phenomenon. There is some controversy around them, because they often call for some variant of a flat fee from professionals who more commonly bill by the hour.

Sources in the area of insurance defence law, for example, can name at least four flat-fee — or hybrid — billing arrangements emerging over the past several years. In some instances, insurers may ask a legal firm for a single quote to handle all of its claims defence work, including trigger mechanisms that put lawyers back on the hourly clock. Variations of this include flat-fee requests for certain steps in the claims defence process. How much would it be, for example, to charge an insurer for opinions? How much would it charge for a defence? How much for a discovery?

The above approach effectively asks professionals such as lawyers or engineers for their ‘average’ rate to accomplish specific tasks. This isn’t an easy task: in the legal world, for example, some discoveries will be three weeks,

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while others could be three hours, making it difficult to fix an ‘average’ price. Some procurement contracts may spell out a per diem rate instead of an hourly rate.

Also, some RFPs explicitly spell out a “roster” identifying the professionals who will be paid for supplying a service. In doing so, insurers may stipulate that no junior or student members work on a file, or those not on a roster will not get paid for their services. The contract may also specify cost levels for incidentals such as photocopying or a process for travel arrangements.

Procurement is not for everybody.

Nevertheless, some vendors see procurement as a way for larger businesses to streamline their services, thus benefiting both the vendor firm and the insurer. “It works for us because we are big, and we can leverage on junior people,” says Chris Giffin, president and co-founder of the forensic engineering firm Giffin Koerth. Giffin notes many firms are afraid of being asked to come

up with an ‘average rate,’ but this is really just a matter of determining who is the best person to perform a given task.

In coming up with a flat rate for service, a firm is being asked to make sure the right people are assigned for the right tasks. Viewed in this way, procurement not only saves money for the insurer, but it streamlines the vendor’s operations.

“You don’t need a guy at $250 per hour going out to measure the crush damage on a vehicle,” Giffin says, by way of example. “You send out a guy at $150/hr to do that.That’s what I mean by efficiencies.

A larger firm can do that. But if you have a one-man shop like some of our competitors, an engineer will get assigned a file and do the whole job from start to finish.

That particular expert is doing the highend analytics, but he’s also measuring the crush on a vehicle. It’s just not efficient.”

For a vendor, RFPs may be the first step towards the prized goal of business volume from an insurer. Some sources see this happening on the accident benefits side in Ontario, in the medical

and rehabilitation area. Assessment centres offer discounted rates for assessment services, thereby reducing their profit margins. In exchange, the insurer channels thousands of claims through the assessment centre.

Volume deals do not benefit all vendors equally. It would take a larger assessment centre to have the structure and personnel in place to process thousands of claims. As one source put it: “If you’re only making half a cent on a widget, the answer isn’t necessarily to produce more widgets if your costs outweigh that.”

And if the arrangement does not take into account the quality of the work being performed, there is always a risk that doctors simply will exit the realm of accident benefits claims.

Jamie Trimble, a partner at Hughes Amys LLP, agrees effective procurement contracts include safeguards to uphold a high quality of work to be performed.

Also, they include escape clauses, lest the agreement does not benefit the insurer, the law firm or both.

A large loss

r

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Certainly vendors proposing alternative fee arrangements must have a good handle on the services they offer and how much those services will cost. “The question is: ‘Can we do this on a flat fee ‘X’?’” says Trimble. “In order to say yes or no to that, you’ve got to understand your business and the costs associated with it, and that requires statistical information.

And then you have to make sure there’s enough margin built in. If you think you can do it—if you can give the client what it needs in terms of price certainty, or at least predictability, over a defined period of time and for a certain price—and still make a reasonable rate of return for the investment of your time, effort and money, then you give it a whirl and see.”

Leveraging Technology Many vendors are leveraging technology to improve the efficiency of their business. Improved efficiency is an indirect way to save money, because it frees capacity to deal with more claims over a fixed period. Over the long run,

more work done in the same amount of time reduces insurers’ claims costs, sometimes significantly. Two examples of this can be seen in the car collision and reconstruction firm areas.

In the car collision area, car repair centre networks are applying technology to improve the efficiency of their business.

In one example, the CARSTAR network of collision repair centres has started to apply pre-existing technology in a new way. The end result helps to reduce insurers’ repair times and costs.

“CARSTAR launched a major initiative in the beginning of 2010 to use a rather unique approach to repairing plastic parts versus replacing them,” says Larry Jeffries, executive vice president of CARSTAR Automotive Canada. It started when a technical manager found a new application for existing technology used to re-manufacture plastic bumper covers on a large scale. CARSTAR modified the technology for use in a smaller, repair facility environment. Now, instead of outright replacing a damaged

plastic bumper, a bumper cover can be repaired for between $300-$700, depending on the make and the model of the vehicle. That, in turn, reduces labour costs to just three or four hours.

Fewer labour hours mean a damaged car is repaired quickly, returned to the claimant promptly and thus spares the insurer daily car rental costs.

Approximately how much is saved in the repair process by repairing plastic parts instead of replacing them, using this technique? “I’m going to say in the 30-50% range, so pretty significant,” Jeffries says.

New technology has also helped car collision repair centres expedite the process for ordering new car parts, says Marty Reddick, president of Supreme Collision Centre. “We’re working with two different Web-based, part-sourcing companies with two of our bigger insurance partners,” Reddick says. “One of the [part-sourcing] companies is called AOF Vision. The other one is called APU Solution. Basically, these programs allow us to order our parts Web-based. It

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COVER STORY

Necessity Breeds Innovation gives us one source of contact to order our parts, as opposed to having to call two or three different suppliers. Rather than playing phone tag, it allows us to order parts electronically. It substantially reduces our administration time.”

Again, reducing administration time means faster repair or “cycle” times, a key goal for both collision repair centres and their insurer partners. “I had a meeting with one of our larger insurance companies, which said if they could eliminate one day of rental cost on a per-claim basis, it could save them $2 million a year,” Reddick says. “If you go from 10 [day rental times] to six, there’s $8 million.”

Restoration and adjusting firms are similarly benefiting from the use of Web-based technology. “One of the biggest things that has changed is the administrative burden to our business,” says Stephan Roy, business leader of disaster restoration of ServiceMaster of Canada. “Liability is a large issue and [insurance] carriers obviously want to protect themselves [in litigation]. In order to protect themselves, they will need documentation. Supporting information is becoming that much more critical.”

Creating documentation is no easy task. In the restoration business, many different reports must be produced and measurements taken. If a waterdamaged home is being restored, for example, a home restoration firm will be taking atmospheric measurements, including the temperature of the home, the relative humidity and how wet the area is (measured by the grains per pound area being dried and the moisture levels of that area). Estimates for new or replacement materials must be generated. Also, the firm will be tracking the packing and removal of the home’s contents prior to restoration. Reports will be created to account at all times for the whereabouts of the contents (known in the business as a “chain of custody.”)

For the past two years, ServiceMaster has been using a new technology to create reports and send them to insurers. “We have a hand-held computer system that is for onsite field use, but Canadian Underwriter January 2011

synchronizes information with a Webhosted platform that delivers all of these outputs,” Roy says.

The system collects signatures much like a courier service does. It employs a bar code system and a built-in camera to take digital photos.The device drives the process of collecting data related to atmospherics, managing equipment and equipment sizing, following all of the industry’s certification standards.

It also provides documentation and charts validating the work had been

2QH RI WKH ELJJHVW things that has changed is the administrative EXUGHQ WR RXU EXVLQHVV /LDELOLW\ LV D ODUJH issue and [insurance] FDUULHUV REYLRXVO\ ZDQW WR SURWHFW WKHPVHOYHV In order to protect themselves, they will QHHG GRFXPHQWDWLRQ Supporting information LV EHFRPLQJ WKDW PXFK PRUH FULWLFDO completed. “It provides documentation charts identifying this is what it was [like] when we arrived, and it met dry standard when we left,” says Roy. “It creates charts, forms and electronic signatures on authorization forms, providing responsibility and release from liability.”

It also integrates into Exactimate, a system insurers use to estimate replacement costs for insurance repairs.

“What we perform in the field and the data collected in the handheld, we export to our Web-hosted platform and then export the information into the [insurer’s] estimating system,” Roy says. “So it reduces all of the duplication of having [to produce documentation] that’s handwritten in the field.”

Independent adjusters are also starting to use handheld technology, allowing them to spend more time in the field and less time trying to generate administrative reports in the office. “Rather than walk into someone’s house after they’ve been robbed with a suitcase full of forms and papers, you can work paperlessly from your tablet PC,” Martin notes. “It’s sent wirelessly to the head office and the claim is already starting to be worked on before [the adjuster] even leaves the premises. That’s a big change from where we are today.” To permit these electronic exchanges of data and information, insurers will need to update — and are updating — their technology systems, he notes.

Best Practices, New Protocols In some instances, “innovation” could mean something as simple as trying a new approach. This may be codified in the form of best practices or protocols.

In the medical-rehab area, for example, VIP vpi has put out a white paper calling for med-rehab professionals to work together with insurers to intervene earlier in the auto accident injury treatment process. Early intervention in this context involves assessing injury victims for psychological or social factors that might inhibit recovery. This is in contrast to the standard “case management” or “medical management” approach, in which the insurer stands by while the health care provider treats the physical ailments almost exclusively.

“We’ve proven that unless you are talking about a very severe catastrophic injury, for people who are disabled for more than eight weeks, the injury or the pain is not the primary barrier to recovery,” says Gail Rieschi, president and CEO of VPI vpi Inc., a firm specializing in employment and HR management services. “It’s really the psycho-social factors that are in play. After eight weeks, the chances for getting people back to work are reduced significantly.

You really have to [assess and treat] people in the 8-12 week period, or your ability to resolve a claim reduces to 50%.” vpi’s strategy is to get as much inVPI’s formation about the claimant as early as possible in the claims process.“Consider

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Necessity Breeds Innovation any psycho-social risk factors, get as much information about the employment situation as possible, and actually direct the medical practitioners in terms of applying the appropriate treatment,” Rieschi says. “It’s really taking that control. It does change the way the insurer handles the claim, because they are getting different assessments done much earlier. The claims adjuster would be saying: ‘I want to talk to the individual. I want to get some more information about them and their response to the accident. I want to get some more information about their employment situation. I want to use that information, get it to the medical treatment providers, and they need to incorporate this.’”

Early intervention protocols are also being developed for personal property claims involving fire damage. “During the first week after a fire, you are able to reduce the damage,” says Richard Lavallee, vice president of claims experience and claims development at Desjardins General Insurance Group [DGI]. “If you clean the house during the first 24-48 hours, you will be able to clean [things such as plastic window frames, household fixtures and structural items]. If you wait, you will have no choice but to replace all of that stuff. That’s a really important cost for the insurer. It will take more time to replace all of that stuff for the client.”

DGI has been working with its vendor partners to develop an early-intervention strategy and protocol for dealing with fire damage. The program is called LargerLoss.

It outlines expectations of the insurer, the vendor and the policyholder after a home is damaged by fire. “The protocol is put in place with our partners and says: ‘Okay, during the first hour, you have to do that and that and that,’” says Lavallee. “The second day, we have to do that, the third day we have to do that.”

The DGI protocol also outlines expectations of the policyholder. “That means at the first moment of the claim, we explain to the client what he has to do on his side,” Lavallee says. “Because for sure clients have something to do, including helping the advisor to build 36 Canadian Underwriter January 2011

a list of the contents lost or damaged.”

The client will also need to know how to help in the cleaning process, what types of permissions they will need to sign, how often they will be expected to leave the house and help in the process of finding alternate accommodation. “That’s the kind of protocol we would like to put in place,” says Lavallee. “What helps insurers reduce the cost of the losses is to do things quickly and properly.”

New Degree of Trust Success in the endeavors described will often require taking new approaches to the relationships between insurers and vendors. For example, Lavallee advocates doing away with the terms “vendors” or “suppliers” altogether. “The first change we have done when I arrived in January [2010] was to change the word ‘vendor’ to ‘insurer partner,’” he says. “It’s more of a partner, because we serve the same client [i.e the policyholder].

The partner supplier does not provide the services to DGI. They provide the services and product to the same client (as DGI). When you begin to think like that, that changes your relationship with the partner, because you are working together to try and find the best way to have the best client experience during the time we have to serve the client and settle the claim.”

For some, this may be a mere question of semantics. For others, the language reflects a new degree of trust between insurers and their claimshandling partners. This new trust itself

can open the door to new forms of cost containment. Take non-reporting agreements, for example. Here, insurers give partners the authority to perform tasks without coming back to the insurer for authorization.

Craig Duncan, vice president of claims at CNA Canada, explains how the system works. “You would have a template [of standards],” he says. “There would be dollar figures as well as claims figures [indicting when] the claim would be reported. But, if it didn’t meet any of those triggers, then it could be considered non-reporting and then the vendor could handle it on that basis. You are almost making the vendor an extension of your own claims department.”

The non-report arrangement intends to reduce paperwork passed back and forth between vendors and insurers — a huge time-waster. In some instances, in the area of independent adjusting, for example, it may mean vendors are entering payments into an insurer’s system directly, thus eliminating duplicate data entry. The payments processed must of course be within pre-approved limits and are subject to audit. Still, these arrangements certainly require a great deal of trust between insurers and their vendor partners. But such trust is an implicit part of a good working partnership, Duncan notes. “My view is that if you trust your partner, then you have to enable them and give them the tools and the authority to go out and do your work for you,” he says. “If you’re giving the vendor the work, but then you basically say, ‘Yeah, but you have to tell me every time you want to write a cheque for $50,’ then you’ve really lost any efficiency you sought to gain.”

In the end, “time is money,” Lavallee notes. “At DGI, everything is about the client experience and the client. What we try to do with the client is try to figure out a way to serve the client quickly and give him everything he should have. And at the same time, we want to help all of our clients pay less premium. The only way to pay less is to be able to work on the costs of the losses generally for everybody.”

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e O g d ver i r

B Troubled Waters Vanessa Mariga Associate Editor

Absent funding for re-building entire infrastructures, municipalities are taking creative approaches to help curb water damage due to sewer backup and basement flooding. This opens up new opportunities for collaboration between insurers and municipalities.

Aging infrastructure and the role it plays in basement flooding has been a thorn in the side of municipal governments and insurers for some time now. Torrential rains in the Ottawa and Hamilton regions on July 24-26, 2009, resulted in $196 million in insurance payouts. A short, intense rainfall in the GTA in 2005 lead to more than 13,000 sewer backup insurance claims, causing $247 million in insured losses. And the City of Edmonton suffered two severe rainfall events in 2004, leading to 9,500 sewer backup insurance claims, costing the insurance industry $143 million.

In response to these events, upgrading and bolstering city infrastructure is a high priority.

But it is also exorbitantly expensive, especially during a time when funding sources are scarce.

38 Canadian Underwriter January 2011

In the meantime, governments and insurers are encouraging homeowners to take steps to prevent damage arising from sewer backup and flooding. Of course, public buy-in is not always an easy thing to achieve.

As a result, some municipalities have developed creative approaches to the problem of mitigating water damage.

Dan Sandink, manager of resilient communities and research at the Institute for Catastrophic Loss Reduction, sees more opportunity for insurers to collaborate with municipalities on this issue. “There could be more coordination between what insurers are recommending to keep premiums low or ensure no caps on coverage, and what municipalities are instructing homeowners to do,” he says. “Especially since municipalities recommend different measures to different neighbourhoods, depending on flood history, the infrastructure and the age of the infrastructure. It would be great if, when insurers are recommending steps, they find out what municipalities are recommending in a specific neighbourhood.”

CREATIVE APPROACHES Kitchener, Ontario approved Canada’s first “impervious area-based rate structure” in June 2010. Revenue generated by the program will go directly to the municipality’s stormwater management program.

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Grant Murphy, Kitchener’s city engineer, says after some of the city’s stormwater ponds failed in 2004, the municipality struck a joint stormwater advisory committee with its sister city of Waterloo. After years of consultation with stakeholders, including representatives from the public, private, residential and commercial sectors, the city drafted a new rate structure. Property owners would pay a higher rate based on the percentage of their property that is covered with impervious material. “The more hard surface — roof area or pavement — they have on their property, the more they’re going to pay,” Murphy says.

Currently, the city’s stormwater management program is funded by a tax levy. “But because the cost of service is based upon property value, there is a disproportionate amount being paid by the residential sector over the non-residential sector,” Murphy says. By moving to a full rate-based approach, that portion of the levy will be shifted away from the tax base and onto the rate base, meaning people won’t have to pay twice.

The second component of the program, a credit program, will be implemented later in 2011, Murphy says.

“The credit program focuses in on property owners that address the amount of run-off of their properties in terms of volume or the quality of the water that runs off their property.”

For larger property owners, credit will be given to those that have a storm water management pond, underground infiltration galleries, or oil grit separators that treat the water before it gets discharged into the city’s infrastructure.

For smaller properties, simple measures like installing a rain barrel or disconnecting a downspout will earn property owners credit.

Saskatoon and Toronto offered their citizens a subsidy program reimbursing homeowners for work done to their properties — including installation of backwater valves, sump pumps and pipe severance and capping. Saskatoon has a limit of $3,000. Toronto offers up to 80% of the cost of each job, with limits ranging between $400 and $2,800, depending on the job.

40 Canadian Underwriter January 2011

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The subsidy program is one small piece of an expansive program the City of Toronto has implemented. One city councillor proposed taking aim at homeowners with illegal parking pads.

Howard Moscoe, city councillor for a ward in the city’s midtown area until he retired on Dec. 1, 2010, conducted a pilot project in a corner of his ward that was built in the 1920s, ’30s and ’40s — long before it was commonplace for households to have cars. Over time, homeowners in the area paved over their front lawns to create parking areas for their vehicles. The City of Toronto

Public subsidy programs for protecting personal property from water damage can get expensive, and it’s difficult to get homeowners to do these sorts of things. If insurers are also requiring them or recommending them, it’s another means to help the process along. moved to regulate this activity, implementing a $300 application fee for a parking pad permit and a $125 annual fee to hold that permit. In issuing the permit, the city required a certain percentage of the property to be permeable. However, the bylaws over the years were not properly enforced, and the illegal pads persisted. When Moscoe surveyed a sample area, he discovered roughly 50% of the parking pads were illegal and did not meet the environmental code.

“We picked that as our pilot project area, with the intention of going to the homeowners and saying: ‘You have an illegal pad,’” Moscoe says. “‘You can apply to retain it and we won’t charge you the application fee to retain it. If you cannot meet the environmental standards to retain it, we will go in and tear out the pad at the city’s expense, resod the area, and give you an on-street parking permit for free for one year.’”

Moscoe’s term came to an end before

the pilot project could get into full swing. He hopes his successor will carry on with it, but he admits it will be a tough sell to the public.

HOMEOWNER BUY-IN Getting homeowners to buy into making material changes to their properties or paying higher rates can be a tricky tightrope to walk. People get protective of their property. They seldom appreciate being taxed at a higher rate, or being told that the illegal parking pad that came with the house will be torn up — especially when pads add approximately $30,000 to the value of the house.

Here Sandink sees an opportunity for collaboration between insurers and municipalities. “Subsidy programs can get expensive, and it’s difficult to get homeowners to do these sorts of things,” he says. “If insurers are also requiring them or recommending them, it’s another means of helping the process along.”

Murphy says it is imperative to make sure people understand the details about the programs. “We talked about the rate structure quite a bit in the early days of this process, but we didn’t get into as much detail as we should have, or could have, related to the credit program,” Murphy says. One key challenge is to keep the expectations of property owners, particularly residential ones, in check. “I think sometimes they have an expectation that if they install a pervious pavement or a rain barrel, they should get 100% reduction on their stormwater rate,” he says. “The reality is, it’s just not that way. A rain barrel only captures a fraction of the amount of run-off on a property.”

At the end of the day, Moscoe believes implementing these measures are part of government’s role. “We tell people when they’re building a house, they have to build it to meet a code. Otherwise, we would have ramshackle shacks. So this is a variation on a theme: the theme is deeply ingrained in our society that the government sets the common standard.

People won’t necessarily be happy about it at first, but we have to change the mindset so that taking these sorts of measures becomes a pattern.”

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Demutualizing The Economical Editor

Following the path of Canadian life insurers, The Economical Mutual Insurance Company is publicly contemplating a strategy to demutualize, but the path for P&C insurers may lie in a different regulatory direction.

The Economical Mutual Insurance Company is publicly exploring a path of demutualization, potentially leading to a new ownership of the mutual insurer, be it through an initial public offering (IPO) or a sale involving another, “strategically aligned” company.

The company’s board of directors announced its recommendation in a press release dated Dec. 14, 2010.A final recommendation on demutualization and a schedule for completion is to be presented to mutual policyholders at the company’s next annual general meeting, scheduled for May 26, 2011. Mutual policyholders will subsequently be asked to decide whether or not to demutualize.

The board’s recommendation to its mutual policyholders has the industry’s punditry burning the midnight oil. Analysts at BMO peg The Economical as the country’s sixth-largest property and casualty insurer. The company wrote a little more than $1 billion in premiums as of the end of 2010 Q3, based on data from the Office

42 Canadian Underwriter January 2011

of the Superintendent of Financial Institutions (OSFI). In the same period, it reported an underwriting loss of $70.9 million, a net income of about $7.4 million and a healthy minimum capital test score of 226%.

Most importantly, the company has equity. In its latest OSFI filing, The Economical reported equity of $1.22 billion, based strictly on retained earnings. The company confirmed to Canadian Underwriter and other media this equity is spread out among “approximately 1,000” mutual policyholders. And while this does not actually translate into each mutual policyholder being worth $1 million, it does highlight the burning interest right now in how mutual policyholders can unlock the true value of their policies.

DEMUTUALIZING A P&C INSURER The Economical’s proposed path of demutualization re-kindles a longstanding debate about a mutual insurance company system that has been part of the industry’s fabric since the late nineteenth century. A 2010 report authored by Ronald C. Hitchlock, an insurance broker and chartered accountant, Demutualization a Canadian Insurance Challenge, notes the farm mutual insurance system, owned by mutual policyholders, arose in the late 1800s at a time when rural consumers did not have access to needed insurance coverage at reasonable rates.

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David Gambrill

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The ownership structure of a mutual insurer is identified in company bylaws, and is determined through the issuance of policies. Under some ‘open’ models, anyone holding a policy counts as an owner. Other ‘closed’ models distinguish between mutual policyholders and policyholders who are not owners and do not participate in the profits or surplus of the company. (The Economical operates under the latter model, referring to non-owner policyholders as ‘wholly cash plan members.’)

Generally speaking, under closed models, mutual policyholders have agreed to assume additional responsibility for the stewardship of the company.

For example, mutual policyholders may buy into longer-term, three-year policies. In addition, they may receive dividends or be liable for the losses of the company. One weakness commonly associated with the mutual insurance model generally is that the mutual system limits efforts to raise capital. If a mutual insurance company requires additional capital, its chief option is to find more policyholders by selling more policies. But the Canadian insurance industry has evolved into an increasingly competitive marketplace; it has therefore been increasingly difficult to achieve growth in the marketplace strictly through the sale of policies.

Demutualization is intended to remove this restriction on raising capital.

It would do this in one of two ways.

One is through an initial public offering. Members are issued shares and keep their policies “Then we can issue more shares through the capital markets, which will allow us to raise additional capital so we can grow earnings and revenues at a faster pace and do larger acquisitions than what we would otherwise be able to do,” says Karen Gavan, chair of a special committee The Economical formed to examine its future options for growth.

A second way is “a sponsored demutualization, which would involve a transaction with another strategicallyaligned company that would invest in Economical to acquire a significant ownership position, perhaps as much

Page 29

as 100%,” as the company puts it.

Of course, this second potential path has fully engaged the industry rumour mill. Analysts such as BMO and the CIBC speculate that such a “strategically aligned company” might include the nation’s largest property and casualty insurer, Intact Financial Corporation.

Others see a more likely partner being an institutional investor, rather than an insurance company investor.The policyholders will be receiving more informa-

tion about this aspect of the proposal prior to the May 2011 meeting, Gavan notes.

REGULATING THE PROCESS The rumour mill may be working overtime, because the regulatory process for demutualization is itself in a state of flux. Demutualizing a property and casualty insurance company in Canada is as rare as a total solar eclipse, if not unique.

Life insurers in Canada went through the demutualization process a little

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more than a decade ago. Parliament passed new legislation followed by regulations from the Department of Finance.

But life insurers do not sell the same kinds of policies as property and casualty insurers.Therefore, some would argue the value of P&C policies must be calculated differently. For example, life insurance contracts basically have one insured peril (life/death), whereas the P&C contracts cover a multitude of insured perils. Life insurance contracts are long-term (typically 10 years), and premiums are actuarially sound and fixed for the life term of the contract. P&C premiums, however, are market-driven and based on actual loss experience across the line of insured perils. These considerations would affect how the policies are valued.

The Economical has thus entered into discussions with OSFI and the Department of Finance Canada to discuss how to fairly value the company’s policies.

The Department of Finance would be the ultimate arbiter of the demutualization plan, assuming the mutual policyholders decide to go that route. The fact that the process is new for the regulators raises the possibility new legislation is required to proceed. “We did discuss whether or not the life company demutualization regulations could be utilized, but there are enough differences between the life insurance policies and property and casualty company policies that a specific P&C company demutualization regulation is likely required,” said Gavan, who has experience on the life side.

OSFI says it is “premature” to know how the negotiations will unfold. “You may be aware that although demutualization of a mutual P&C insurer in Canada is permitted under the Insurance Companies Act, regulations need to be developed,” OSFI spokesman Rod Giles said in an emailed response. “Developing the regulations is a federal government responsibility (Department of Finance) and consultations with stakeholders would be done.The regulations would need to provide fair and equitable treatment to policyholders and preserve the safety and soundness of

44 Canadian Underwriter January 2011

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the demutualizing insurer.The decision on demutualization resides entirely with mutual policyholders and their respective board of directors.”

DEBATE ABOUT THE BOARD But who will these board members be?

One complicating factor is that a public debate about the future composition of The Economical’s board of directors has become entwined in the debate about demutualization. One Toronto firm,VC & Company, placed ads in newspapers starting Nov. 12, 2010, collecting signatures

from mutual policyholders calling on the current board to be replaced. The proposed new board would then consider the option of demutualization.

Despite the current board’s recommendation to demutualize, VC& Company has collected the 100 signatures it requires to put the option of a new board before the mutual policyholders.

Michael Woollcombe, a lawyer and executive vice president of VC & Company, suggests the mutual insurer’s current board took too long to consider demutualization, treating the option initially as a kind of “elephant in the room,” not to be discussed. In his view, the board was motivated by the actions of VC & Company and therefore cannot be relied upon to follow through on its strategy now.

For its part, the company sent out a letter dated Nov. 29, 2010, urging mutual policyholders not to sign up with VC & Company. Basically, The Economical suggested VC& Company’s call for a new board was unnecessary, since the insurer’s special committee, chaired by Gavan, was already considering the path of demutualization anyway.

On the issue of leadership, the company says the current board can be

trusted to complete the job. “The board is committed to demutualization,” says Katherine Kipper, vice president of marketing and communications at The Economical Insurance Group (TEIG). “We believe that it is the right path.We are on record with a very clear direction. They [the current board members] have a responsibility to make sure that what’s done is in the best interests of the mutual policyholders.They [the mutual policyholders] will have the opportunity to approve that.”

Woollcombe also raises the issue of transparency, claiming the current board should have been more transparent during the process towards demutualization. Specifically, he notes the current board is withholding the exact number of its mutual policyholders.

But linking mutual policyholder value to the exact number of mutual policies is a misleading oversimplification, according to Gavan. Given the rules for determination of individual value have yet to be established, knowing the precise number of mutual policyholders will not provide any more useful guidance to individual policyholders today, she says, adding this is not in fact an issue. Gavan notes the company is not legally required to disclose the number of its mutual policyholders. In addition, the company has not disclosed the specific number to prevent the possibility of people benefiting from inside information of the VC & Company actions.

“The reason we are not disclosing it is that VC & Company have been quoted in the media as saying they’ve been working on this [plan to replace the current board with one that would consider demutualization] for a period of six months,” she says. “We are certainly undertaking a detailed audit to ensure that no policies were issued using inside information. We’re not subject to securities regulations, but it would not be in anyone’s best interests if someone had acted upon some inside information about what VC&Co were exploring doing.”

Following VC & Co’s first public solicitation, the company said it immediately “instituted a moratorium on the issuing of new mutual insurance policies.”

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Loosening the Cap Associate Editor

Four months into Ontario’s auto insurance reforms, health care professionals, insurance defence lawyers and the insurance industry’s trade organization have all noticed the effects of the province’s $2,000 cap on assessments.

When the Financial Services Commission of Ontario (FSCO) placed a $2,000 limit on AB assessments under its Minor Injury Guideline (MIG) in September 2010, it intended to restrict a ballooning area of expense for insurers. But now, four months into the reforms, a debate has opened about whether the restriction is in fact too tight.

Both insurers and assessors are openly expressing frustration that the cap is serving as a barrier to treatment and benefits for those with more complex injuries, discriminating against those in rural or under-served areas and creating an uneven playing field in arbitration. Some experts

46 Canadian Underwriter January 2011

note creative approaches to billing and funding assessments have developed in attempts to circumvent the cap. These approaches fly in the face of the spirit or letter of the regulation, and put insurers at an increased risk of litigation, experts warn.

ISSUES WITH THE CAP Karen Rucas, an occupational therapist and member of the Alliance of Community Medical and Rehabilitation Providers, says the $2,000 assessment cap is not needed. She says a number of other changes in FSCO’s auto insurance reform package took assessment costs out of the system. These include: • the introduction of a new hard cap of $3,500 and the creation of the MIG for patients with soft tissue injuries. Under the MIG, claimants are no longer permitted access to attendant care benefits or assessments or in-home assessments; • med/rehab assessment costs are now deducted from the new $50,000 benefit limit for non-catastrophic claims (reduced from the previous $100,000 limit); and • the elimination of housekeeping, home maintenance and caregiving benefits for all non-catastrophic claimants. “This not only eliminates

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Vanessa Mariga

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the costs to insurers of paying these benefits, but also eliminates the assessments to determine entitlement to these benefits,” she says.

These three changes alone represent significant savings to insurers, Rucas says. “There was no need for the $2,000 assessment cap too.”

Rucas further contends the benefits serve as a barrier to treatment. “It’s akin to saying to a surgeon who assesses a patient and identifies the need for bypass surgery — a surgery that takes roughly six hours to perform — the surgeon will only be given four hours of operating room time,” she says. People most likely affected by the cap include those with complex injuries, particularly children with mild to moderate brain injuries, or people who have sustained multiple traumas and have been in the system for several years.

This isn’t just an issue for health care providers. Insurers are also struggling with this new, tight set of parameters.

Ralph Palumbo, Insurance Bureau of Canada (IBC)’s vice president of Ontario, says the cap has put IBC’s membership “between a rock and a hard place.” The easier or more straightforward assessments can be done for $2,000, he says. “But with the more complex cases, cases requiring assessments by neuropsychologists or pediatric specialists, it is very difficult to find an assessor that can perform an assessment for $2,000.”The cap, he adds, “is really playing havoc with trying to keep the costs reasonable while making sure that people get the care to which they’re entitled.”

In complex or serious cases, a claimant can potentially spend above the cap and then recoup their assessment costs in a tort claim. Insurers, on the other hand, are restricted to the $2,000 cap prescribed in the Statutory Accident Benefit Schedule (SABS). As a result, “the insurance company wouldn’t be able to fight apples-with-apples in arbitration,” observes Kadey B. J. Schultz, an insurer defence lawyer and partner with Hughes Amys LLP. “Insurers would be fighting with a $2,000 re-

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port against a report that’s more expensive. In theory, and probably in practice, the person who prepared the more expensive report is likely more experienced and more qualified.You get what you pay for is essentially the principle behind this.”

Palumbo agrees. “If the insurers don’t have a good report or a report that looks at all of the issues in a claim, they get killed at arbitration,” he says. He stresses the need for a level playing field for reports, meaning both claimants and insurers are held rigidly to the cap.

With the more complex cases, cases requiring assessments by neuropsychologists or peditric specialists, it is very difficult to find an assessor that can perform an assessment for $2,000.

bility assessment performed for less than $4,000. “You’re not going to be able to get a specialist to form an opinion on a complicated case for under $2,000,” she says.

A claimant with a complex file could come with three or four banker’s boxes of material for the assessor to read.

Adding in the amount of time it takes to perform the assessment and write a report, the time an assessor spends on a complex case could easily reach the 30-hour mark yet $2,000 does not pay for a specialist to spend this length of time, she says.

In order to conduct some of the more complex assessments for $2,000, a health care professional would have to jeopardize the guidelines its own regulating body has established, Rucas says.

“Here’s the unintentional barrier: if the $2,000 fee cap prevents the injured person from getting a comprehensive assessment, then de facto it prevents that person from accessing benefits such as home and vehicle modifications or treatment.”

Adding insult to injury, an assessor’s travel expenses are included in the $2,000 cap. Schultz warns this discriminates against people living in underserviced or rural areas. “A person living in South Porcupine or Kenora is not going to have the same access to experts that a person living in a large urban centre would have,” she says. “The flights and possible hotel expenses alone eat up most of that $2,000.”

Schultz adds she thinks it’s only a matter of time before this aspect of the regulation is challenged on constitutional grounds.

ACCESSING HEALTH CARE

CIRCUMNAVIGATING THE CAP

Rucas warns a rigid application of the $2,000 cap will make it extremely difficult to attract specialists to assess patients in the first place. She says this is particularly true of finding experts to determine catastrophic benefits or to address other benefit entitlements such as treatment. In her experience, she has never seen a neuropsychological assessment or an architectural home accessi-

The issues noted above appear to have spurred creative billing approaches that essentially circumvent the cap, experts say. One such billing option is called block-fee funding.

Schultz provides a fictitious example of how block fee funding works. She conjures the image of a clinic with a multidisciplinary team of five assessors.

Three of them — a chiropractor, phys-

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iotherapist and a non-catastrophic occupational therapist, for example — normally charge less than $2,000 each.

Let’s say the assessment clinic bills a flat fee of $10,000 for five assessments.

The difference between the cap and those three cheaper assessments are put towards a more expensive expert, like a neuropsychologist, who typically charges $3,500.

“There are a few issues that concern me about this practice,” Schultz says.

She points to FSCO’s November 2010 Costs of Assessments and Examinations Guideline. Section 25 (5) (a) of the SABS prohibits an insurer from paying more than $2,000 in total for all fees and expenses for any one assessment or examination.

This includes all fees and expenses for preparing and delivering reports in connection with an examination or assessment.

“It might sound naïve, but I like to keep my practice and my advice to my clients quite simple,” Schultz says. “My advice is that the language is pretty clear: you are not to pay more than $2,000 for any assessment or examination. I would suggest the idea of paying an assessment company $10,000 for five assessments, but then the assessment company going and paying any of the assessors anything in excess of $2,000, is a breach of the prohibition on an insurer to pay more than $2,000 in total for all fees in relation to an assessment or examination.”

Other sources believe insurers and/or assessment centres could be breaking down complex assessments into component parts — and paying/charging $2,000 (or less) per component. For example, an insurance company might pay an assessment centre $2,000 to read and study a case file, $2,000 to conduct an examination and $2,000 to write the final report. A variation of this strategy is that a claimant suffers from multi-trauma, and assessments are done for each of the injuries — with each assessment coming in under the $2,000 cap.

Palumbo warns these creative billing procedures may potentially run afoul of the spirit and letter of the regulation.

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Schultz adds an insurer’s file might be produced during claims proceedings up until an application for mediation is filed at FSCO, at the very least. Such files would include insurers’ accounts, retainer letters to assessors, email communications, draft reports and raw test data.

“I think in this post-Sept. 1, 2010 climate we have to accept that the plaintiff’s bar is just as irate about the $2,000 cap as the insurance industry,” Schultz says. “Where the plaintiff’s bar may not have been aggressive in the past in insisting upon the complete production of an insurer’s file, now, just as

If you level the playing field, some assessors may opt out, but not all of them will. It’s part of their income. I think a lot of them will stay in the game. a procedural compliance issue, they will be asking for everything. I wouldn’t be surprised if some lawyers asked for a copy of the cheque that was issued to the assessor. As case law emerges, and if there is an appropriate case to have a dispute on this issue, I believe the language of the regulation will be interpreted quite rigidly.”

A SOLUTION FOR THE SOLUTION It seems ironic that within the first quarter of implementation of Ontario’s auto reforms, the industry is already seeking a solution for the proposed so-

lution. “We’re hopeful the government and FSCO will realize this $2,000 cap limit does not fit across the board,” Rucas says. “For many claimants, it’s fine. But for that 1-in-10 file, it can’t be done.”

Some health care professionals are advocating for a graduated cap system.

For example, new and additional cap levels might be introduced as a means to introduce nuance between minor and catastrophic determinations, depending on the severity of the injury.

But Palumbo warns this type of scenario would open the door to abuse of the system. “Without disparaging all health care professionals, as long as you have higher benefits available, there will always be practitioners who will try to get their patients bumped up into the higher limits when perhaps it’s not necessary or appropriate to do so. Putting in five more steps, for example, would only create five more opportunities for those types of abuses.”

Instead, Palumbo says he would like to see FSCO draw up clear qualifications for assessors submitting OCF-19 (Application for Determination of Catastrophic Impairment) forms. “We’re seeing a lot of OCF-19s being submitted by general practitioners,” he says.

“Once that form is submitted, the insurers really have an obligation to conduct their own examination. If you level the playing field, some assessors may opt out, but not all of them will. It’s part of their income. I think a lot of them will stay in the game. But you have to make sure that for those who stay, they are not only qualified to submit the OCF-19, but those who conduct the cat impairment assessments are actually qualified to do it.”

Palumbo ultimately feels the need to hold the line on the $2,000 cap.

“The assessors will either go out of business because they say they won’t do it anymore, or they’ll adapt,” he says. “I suspect it will be the second, but at some point I think the government will have to look at this and ask if it’s losing our best assessors to this, and what it is that we should be doing. ”

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Online vehicle auctions promise to help insurers get the most dollars for salvaged cars, trucks and recovered theft vehicles.

Vinnie Mitz President, Copart Inc.

For vehicle auction companies, the Internet has opened a new, untapped resource for accessing customers and markets. The introduction of virtual online vehicle auctions should be of particular interest to insurance companies. Insurers looking to get the most dollars from salvaged cars, trucks and recovered theft vehicles are now able to interact with buyers through an online vehicle auction technology that allows car buyers to compete in real-time. This ultimately leads to a speedier and more efficient process of moving inventory.

REAPING BENEFITS Virtual online auto auctions took foothold in 2003. The technology helps insurance companies sell salvaged vehicles faster and often for

50 Canadian Underwriter January 2011

higher recovery prices than through traditional physical auto auctions. More often than not, this increase in efficiency results in higher returns for insurers, translating into lower premiums for policyholders.

Prior to the advent of the Internet, salvage auto auctions spared insurance companies from having to negotiate separately with contractors, auto wreckers and salvage yards, thus saving insurance companies cost and hassle. Rather than continue with an inefficient, logistical nightmare, cars were pooled together and buyers were allowed to bid on them — and thus auto auctions were born.The virtual online auto auction has taken this process several steps further, streamlining the process to make it more efficient, while at the same time boosting the insurer’s return on investment (ROI).

THE INTERNATIONAL BUYER Since all bidding is done online, items on the auction block are available to buyers anywhere in the world. Insurance companies benefit from multiple advantages reaching and converting international buyers. For example, insurers see

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increased competition online, often resulting in higher returns. The more bidders involved in the auction, the better chance the item has to be sold — and for a higher price.

Unlike in the United States, many countries do not have their own — or at least a large — established domestic automobile production. This means they cannot meet all of their domestic demand. Many foreign countries therefore have to import their vehicles; this often comes with heavy tariffs. In some cases, the duty alone on importing new or used cars exceeds 100%. In many countries, salvaged automobiles are legally considered parts and are not subject to such duties. Buying salvaged cars at U.S. auctions, shipping them overseas, rebuilding them and then selling them is financially efficient.Today, some of the largest export markets for salvage vehicles in the United States are in Eastern Europe and Latin America.

AUCTIONS AND TRANSPARENCY Virtual online auctions can help eliminate some of the more unseemly aspects inherent in the auction process such as intimidation, collusion and “sniping.” Intimidation and collusion have plagued the auction world since it

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was invented. It occurs when bidders and/or the auctioneer conspire to “fix” an auction. Auctions are more susceptible to fixing if they involve bidders who cannot attend and the absent bidders use a “leave-the-bid-behind” method, which authorizes a third party to bid in their absence. Not only does collusion cheat the other bidders out of a fair auction, it also prevents the items on the block from being sold at their optimal price.

A virtual online auction takes the human element out of the process, establishing a more even playing field for all bidders. It eliminates opportunities for threatening or intimidating other bidders, thereby ensuring fair access to all vehicles.

CONCLUSION

Since all bidding is done online, items on the auction block are available to buyers anywhere in the world.

Insurance companies see increased competition online, often resulting in higher returns.

Online auctions have helped insurance companies recover money through the salvage process by broadening the scope of access and expediting the process of buying and selling automobiles.

Looking at how far the industry has come, we might expect to see continual improvement in the area of virtual auctions, as the industry migrates toward an entirely electronic format — with no paper, no red tape and significantly reduced bureaucracy.

FAST FACTS: Pros and Cons of Online Vehicle Auctions Virtual online vehicle auctions are an advanced way for insurance companies to sell off salvaged cars faster and achieve a higher recovery price. Here are some fast facts on the pros and cons of online vehicle auctions: Benefits • The pool of bidders is larger than that of physical auctions, maximizing the amount of money recovered from salvaged vehicles.

• Assists sellers in the vehicle claims evaluation process by providing online salvage value estimates. This helps determine whether to repair a particular vehicle or deem it a total loss.

• Insurance companies can enter a vehicle into an auction to establish its true value. This gives insurers a means to avoid dealing with estimated values when negotiating with owners who wish to retain their damaged vehicles.

• Offers sellers real-time data for processed vehicles,

52 Canadian Underwriter January 2011

including vehicle sellers’ gross and net returns on each vehicle, service charges and other data.

• The whims of Mother Nature do not affect online auctions; therefore sales are not lost due to inclement weather conditions.

Challenges • Some auction companies do not inspect cars before auctioning, which deters buyers. Insurance companies should ensure they partner with reputable auction companies that inspect each vehicle.

• Auctioned cars are bought “as-is.” Therefore, buyers may not purchase a car that has severe damage or looks like it needs a lot of additional work.

• Online auctions provide photos to view the vehicle, but buyers who want to “touch and feel” the car before they purchase it would still have to go to the facility.

• Auction sites are working to minimize risk, but the potential still exists for online fraud and scams.

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Crawford & Company (Canada) Inc. Enhancing the customer experience, every day. www.crawfordandcompany.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 PCA Adjusters Limited Adjusting to Meet your needs™ www.pca-adj.com

54 Canadian Underwriter January 2011

GRAPHIC COMMUNICATIONS

Quelmec Loss Adjusters Identifying, Investigating, Resolving...for over a quarter century! www.quelmec.ca

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

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

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

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

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

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

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

SPECIALTY INSURANCE William J. Sutton & Co. Ltd. Insuring Special Risks since 1978 www.wjsutton.com

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Catastrophic St

Richard Nellis

Vice President, Manager of Forensic Engineering, Kleinfeldt Consultants Limited

Any stair fall has the potential to be catastrophic (resulting in a severe injury or fatality). Contributing factors can include design, construction, maintenance and user behaviour.The investigating forensic engineer focuses on site examinations, reported information and reviews of the injuries to determine the most likely fall scenario and contributing factors.

This article looks at various stair fall scenarios and identifies contributing factors in each. A specific case study demonstrates how these scenarios and contributing factors can be used to mitigate risk related to catastrophic stair falls (CSFs).

STAIR FALL SCENARIOS CSFs can be either witnessed or unwitnessed, resulting from a trip, slip or misstep. They can happen in ascent or descent. Each and every stair fall assessment requires an objective and consistent approach, although ultimately each individual stair fall scenario will determine the course of the investigation.

Bailey Gutkin

Witnessed vs. Unwitnessed Typically a witnessed CSF has more information Engineer in Training, Member of Professional available from a number of sources to aid in the Engineers of Ontario and assessment.

Unwitnessed stair falls make up the majority of the Ontario Society of investigated cases.They can be difficult to invesProfessional Engineers tigate, since it is common for the injured party to have a limited recollection of the event.

It is crucial that all scenarios be considered and prudently accepted or rejected. Determining the most likely fall scenario requires considerable experience and knowledge in order to correlate the physical

ai

Falls

r

Careful investigation of stair falls is an important first step to reducing the risk of injuries in the future.

attributes of the stairs with the reported injuries.

Determining the fall method ultimately helps identify the cause and contributing factors and must be consistent with the injuries, physical attributes and reported information. A detailed methodology based on the engineer’s knowledge and experience, and which considers all aspects of the fall, lends credibility to the assessment.

Trips vs. Slips vs. Missteps Literature defines a slip as “a sudden loss of footing, the result of an unforeseen, unexpected and out-of-control slide of the foot.”

A trip is defined as “a sudden loss of footing, the sequela of an interruption in the natural, rhythmic movement of the swinging leg.”1 A misstep is an inaccurate placement of the foot, causing loss of balance.

Slips on stairs are less likely than trips or missteps, because most momentum is in the vertical direction rather than the horizontal. A contaminant or lubricant reducing the slip resistance of the tread surface, such as ice or snow, will typically be a contributing factor for a slip.

Generally, a slip will cause the person’s feet to come out from under them, and they will fall backwards or to the side.

Trips on stairs can occur as a result of a variety of factors such as trip edges, loose carpeting and inconsistent riser/tread dimensions.

Contrary to a slip, a trip will generally cause a person to fall forward.

A misstep can occur when a person places

January 2011 Canadian Underwriter

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CU Seminar ad January 2011

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Putting the pieces together.

Events and Seminars Calendar You work hard to protect your clients’ property. Now, it’s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.

CIP Society Events and Seminars Regina – Interview and Statement Techniques . . . . . . . . . . . . . . . . . . . . . . . . January 19

Regina – Introduction to Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 24

St. John’s – CIP Society Bowling Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 21

Ottawa – PROedge Seminar: Leading Insurance and Liability Cases . . . . . . February 24

Ottawa – PROedge Winter Luncheon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 27

Halifax – PROedge Seminar: Boiler and Machinery Insurance . . . . . . . . . . . February 28

Toronto – Fellows’Reception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 3

Toronto – CIP Society Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 2

Vancouver - New Insurance Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 3

St John’s – CIP Society Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 2

Victoria – Strata Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 3

Moncton – CIP Society Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 24

Saskatoon – Introduction to Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . February 9

Saskatoon – PROedge Seminar: Advanced Business Interruption . . . . . . . . . . March 28

Charlottetown – Annual Curling Bonspiel . . . . . . . . . . . . . . . . . . . . . . . . . . . February 11 Vancouver – CIP Society “Battle of the Insurance Bands” . . . . . . . . . . . . . . . February 17

Regina – PROedge Seminar: Advanced Business Interruption . . . . . . . . . . . . . March 29

Moncton – Maximizing Outlook for Personal Productivity . . . . . . . . . . . . . . February 17

Halifax – PROedge Seminar: Leading Insurance & Liability Cases . . . . . . . . . . . April 28

London – Annual Volleyball Tournament . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 18

Halifax – CIP Society Spring Fling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 28

Toronto – CIP Symposium 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . April 6

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

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

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their foot partially over the edge of a tread, or cannot identify where the stair begins or ends. This type of fall can be a result of inadequate stair geometry, unexpected stairs, confusing carpeting or user behaviour. A misstep will often, but not necessarily, cause a person to fall forward, in the direction of their momentum.

Ascent vs. Descent Understanding the differences in gait for ascending and descending stairs is essential to determining the causes and contributing factors in CSFs. During ascent, the centre of gravity is held slightly forward with the leading foot landing with the ball of the foot in a horizontal position. The heel may or may not touch the tread, as the rear foot pushes back against the lower tread and pushes off. The rear foot will swing up and over the leading foot to land in a horizontal position on the tread above.

With very little horizontal or lateral movement, slips are unlikely. If a slip occurs in ascent, it is likely due to the presence of a lubricant. Trips in ascent are likely, since the rear foot lifts up onto the next tread. If the riser height is greater than expected, or if the toe catches on the nosing of the lower tread, a trip can occur. A misstep is also possible if the leading foot is placed inaccurately on the edge of the tread.The contributing factors for a misstep in ascent could include inconsistent or excessive riser heights, or visual deception.

A fall in ascent causing a person to fall backwards can result in injuries to the head, which can be serious or fatal.

However, as the centre of gravity is held forward during ascent, it can be difficult to determine the fall origin, particularly if it is unwitnessed.

In descent, the centre of gravity is held back to maintain balance. The leading foot angles downward such that the ball of the foot will first contact the tread, allowing the foot and leg to absorb the impact.

Upon contact, the force is mostly vertical, making it unlikely that the foot will slip forward. If such a slip occurs, due to ice, for example, it will likely

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cause a person to land on their buttocks or back and bounce down the stairs. A misstep could occur if the ball of the foot lands on the nosing or over the edge of the stair. Inconsistent stair geometry or a visually confusing stair might cause this to happen. It is possible to trip in descent, if a trip edge is present, possibly caused by poor construction or maintenance practices.

Once the fall scenario is understood, it is necessary to identify the cause.This requires expertise relating to stair design, construction and maintenance, as well as a comprehensive understanding of building codes and bylaws, construction best practices, maintenance, industry standards and academic research.

The following case study illustrates the complexity of accurate determination of cause and contributing factors.

CASE STUDY: UNWITNESSED FALL IN ASCENT Background: A woman was found at the bottom of a stair in a restaurant where she was dining. Among other injuries, she was rendered a quadriplegic as a result of the fall.

Fall Scenario: The woman was found lying on her left side at the bottom of the stairs. Based on her injuries and her body position when found, it was determined the woman fell backwards while ascending the stairs.

It was difficult to assess whether the fall was a slip, trip or misstep because the incident was not witnessed.

Further, the injuries did not imply one specific fall scenario.

For the purposes of this CSF assessment, biomechanical engineering experts were retained. They reported the injured party had fallen backwards while ascending, possibly due to a misstep. Her body likely rotated during her fall, such that she landed with considerable force on the bottom landing, against the wall.

Once this fall scenario was determined, our role as the investigating engineer was to determine the cause of her fall.

Origin of Cause: Many code violations were identified including riser heights that exceeded the maximum in the

building code.The tread depth was also below the minimum criteria, creating a steep stair. Excessive, varied risers are unexpected and create trip hazards.

The handrail clearance was such that fingers could not maintain a continuous grasp of the handrail.

It was our opinion that the condition of the stair, specifically the excessive riser heights and variance of the risers and treads throughout the stair created an unsafe condition that contributed to the loss of balance and fall.

Assessment A search of building permit records, building codes and bylaws was conducted to determine contributing factors and cause. We reported the following conclusions: • The stair dimensions did not comply with the building code in effect at the time of renovations.

• The renovation drawings provided insufficient information, but the municipality accepted and issued a permit for the proposed work.

• A break in the hold of the handrail could result in loss of balance and stabilization.

• The building owners did not ensure the renovations conformed to safe building code standards.

• The stairs did not comply with the municipal property standards bylaw.

• The municipality should have identified construction deficiencies and building code compliance issues during the building permit approval and inspection process.

• The Building Code Act required the municipality to conduct a competent inspection upon completion of the renovations. The municipality should have noted the deficiencies and taken appropriate action.

An objective and consistent approach is required in every CSF investigation so that the conclusions are consistent with the reported information, injuries, fall scenario, site observations and site history.

1 Alex Sacher, “The Application of Forensic Biomechanics to the Resolution of Unwitnessed Falling Accidents,” Journal of Forensic Sciences, 41, no. 5 (1996): 776-781.

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MOVES & VIEWS

UPCOMING EVENTS: FOR A COMPLETE LIST VISIT

www.canadianunderwriter.ca

AND CLICK ‘MY EVENTS CALENDAR” ON THE HOME PAGE

1

McLarens Canada has acquired Upper Canada Adjusters Inc. Upper Canada Adjusters Inc. was established in 1995 and has a broad client base ranging from commercial insurers to self-insured corporate clients. Specializing in the high-end property and commercial liability market, Upper Canada Adjusters Inc. is now McLarens Upper Canada. The McLarens Upper Canada team is led by former Upper Canada Adjusters principals Greg Madill and John Valeriote. McLarens describes the acquisition of Upper Canada Adjusters as consistent with its aggressive growth strategy, with McLarens having tripled in size over the past four years.

2

XL Insurance Company’s Canadian branch has launched two new products offering cyber-liability protection for Canadian businesses. XL Eclipse offers the following coverages under one policy form: network security liability; media content services liability; privacy liability; extortion threat; crisis management; business interruption; credit monitoring; privacy notification costs; and regulatory fines. XL EclipsePro offers the aforementioned cyber-liability coverages.

In addition, it incorporates

58 Canadian Underwriter January 2011

technology Errors and Omissions (E&O) to address the professional liability needs of technology products and service providers.

3

Catlin Canada has hired Dave McAuley as its manager of risk engineering. He will be working from the insurer’s Calgary office. He most recently worked at Marsh Calgary’s Marsh Risk Control, where he did risk engineering consultation and surveys for energy risks. McAuley began his career in 1970 with the loss prevention department of Marsh & McLennan (Toronto). Nine years later, he transferred to Marsh Calgary to take over as manager for M&M Protection Consultants and became involved with energy risks. He also spent 17 years with Gerling Calgary, where his responsibilities included risk engineering review of submissions, risk surveys and claims review.

4

Scott B. Clark [4a] will serve as the president of the Risk and Insurance Management Society (RIMS) in 2011. Clark served as RIMS secretary in 2010 and has been a member of the RIMS board since 2000.

He is a founder of RIMS Greater Miami Chapter, where he served as president in

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1992 and again in 2003.

Joining him on the RIMS 2011 board of directors are: • Deborah M. Luthi (Vice President): Luthi is the risk manager, assurance and internal controls at San Fransisco's Public Utilities Commission; • John R. Phelps (Secretary): Phelps is the Blue Cross and Blue Shield of Florida's director of business risk solutions; and • Carolyn M. Snow (Treasurer): Snow is Humana's director of insurance risk management.

New and re-elected Canadian members of RIMS board include: • Kim Hunton [4b], the City of Ottawa’s corporate risk manager; and

• Nowell Seaman [4c], the University of Saskatchewan’s manager of risk management and insurance services.

5

The CG&B Group Inc. has acquired D.M. Edwards Insurance Group Limited and Car Insurance Brokers of Canada Inc. In a release, The CG&B Group says: “Edwards Insurance and Car Insurance Brokers have been pioneers in the use of the Internet for marketing insurance through their very successful Web site carinsurance.ca.” Denny and Claire Edwards and staff will continue to operate the brokerages under the Edwards Insurance Group and Car Insurance Brokers of Canada

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MOVES & VIEWS

who recently completed the first year of three in a diploma in Child and Youth Work at Loyalist College.

7 Inc. names. Plans include integrating the operations within CG&B’s Markham and Mississauga office. This is the 14th acquisition made by The CG&B Group in the last 12 years.

Including this acquisition, The CG&B Group will have 195 employees and an annual premium volume expected to reach $160 million this year. With offices in Markham and Mississauga, The CG&B Group Inc. is a full-service insurance brokerage, offering all lines of property and casualty insurance in addition to life, group, health, and accident and sickness insurance .

6

The KRG Scholarships program expanded in 2009-10 to include awards to youth in the Durham Children’s Aid Society and the Kawartha-Haliburton Children’s Aid Society. These awards are above and beyond the KRG Scholarship awarded to a Toronto youth. The Chil-

9 dren’s Aid Foundation received $10,000 from KRG Insurance, a division of RRJ Insurance Group Limited, and the KRG Children’s Charitable Foundation. It directed the funds to the following students (last names were withheld): • $5,000 KRG Grant awarded to Kofi B. in Toronto, who graduated in June 2010 with an Honours Bachelor of Arts in Psychology from York University and has applied for a Masters degree in Neuroscience at McMaster.

• $2,500 KRG Grant awarded to Jacqueline C., in the Durham Region, who recently completed her first year of an Honours BSC at Trent University, majoring in Psychology, as well as to Cassandra S., also in the Durham Region, who is working towards a Diploma in Food Services from Centennial College.

• $2,500 KRG Grant was awarded to Anya H., in the Kawartha-Haliburton Region,

7

Greg Thierman, branch manager of Crawford & Company (Canada) Inc.’s Kelowna, B.C. branch, is a recipient of the CIP Society’s 2010 Established Leadership Award. The award recognizes individuals who have shown exceptional leadership abilities and a strong commitment to upholding the CIP’s mandate of imparting knowledge and instilling professionalism within the insurance industry. Thierman is one of only three recipients to be named this year. “Greg has been a lifelong advocate of continuous learning and development, and the CIP Society has now officially recognized his success as a student, instructor and leader in the industry,” said Walter Waugh, vice president of operations for Western Canada.

“His work with charities and fundraising for worthy causes is exemplary.”

8

Marsh Canada and TreoScope Technologies have launched an insurance program for liquorserving venues, including nightclubs, bars and pubs.

The TreoScope Insurance Program is available exclusively through Marsh Canada

for current or future clients who adopt TreoScope’s EnterSafe software. Participants in the program receive a detailed risk assessment performed by Marsh Risk Consulting. The assessment benchmarks an organization’s procedures against established industry best practices. Clients also benefit from the EnterSafe’s ability to help organizations identify underage, violent or otherwise undesirable patrons.

These services allow hospitality organizations to improve safety and reduce their total cost of risk, a Marsh Canada release says.

9

XL Insurance has promoted Bob Shine to chief underwriting officer of North America Property & Casualty. Shine most recently served as the chief casualty underwriting officer.

His responsibilities have expanded to include underwriting oversight across all of XL Insurance's property and casualty lines in Canada and the United States. He is based in New York. Prior to joining XL in June, he headed the Zurich North America Casualty Group, Specialty Business Unit. In this capacity, he managed the complete casualty business, including the three units of excess casualty, railroad and wholesale lines.

January 2011 Canadian Underwriter

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ANNOUNCEMENT

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

Brosz & Associates celebrated the 40th anniversary of its business operations on Oct. 19 at the Hyatt Regency in Toronto.

Clients, colleagues and industry well-wishers joined Brosz for the festivities.

Peter M. Burns, BES

The Insurance Brokers Association of Ontario (IBAO) is pleased to announce that Mr. Peter M. Burns, BES has been elected as IBAO’s 68th President. Peter was officially inducted at the recent IBAO Convention held at the Sheraton on the Falls Hotel & Conference Centre in Niagara Falls and formally assumed his role as President on January 1, 2011.

Peter is currently President of Burns, Demeyere & Associates in Tillsonburg, Ontario.

Prior to his work as an insurance broker, he worked in the community newspaper business and was one of the founders of the Tillsonburg Independent, a community newspaper now owned by Sun Media. In 1991, Peter began his career in insurance when he joined Anderson & Benner, a small, three-person Insurance and Financial Services Brokerage in Tillsonburg. Shortly after, he served on the Board of Directors for the Oxford County Insurance Brokers Association for ten years, five of those being spent as President. In 2005, Peter was elected to the IBAO Board of Directors and in 2008 was elected to the Executive Committee of this board.

He has chaired Education, Membership, Broker Management & Long Range Planning in the past for IBAO & served on the IBAC BIP committee.

As a successful insurance broker, Peter is also aware of the importance of being involved in his community through various sponsorships and volunteering on board committees. “We are very grateful to have Peter as IBAO’s newest President,” stated IBAO CEO Randy Carroll. “His experience both in the insurance industry and his obvious commitment to his community make him the perfect candidate to the position.”

Peter is a graduate of the University of Waterloo with a Bachelor of Environmental Studies and is married with two children. Other community involvement includes Chamber of Commerce, local golf and curling clubs, Tillsonburg Lions Club as well as coaching numerous minor hockey & baseball teams.

“With the support of my wife and children,I am excited to take this next step in my career,” stated Peter.“IBAO represents a group of dedicated, informed and enthusiastic insurance brokers committed to the industry and devoted to consumers. I am so proud to be President of this incredible association.”

60 Canadian Underwriter January 2011

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

Accident benefits claim adjusters and managers attended the first part of an educational series hosted by vpi on Nov. 5. The theme of the day was: “The New SABS – Keeping the Adjuster in the Driver’s Seat.” Four speakers outlined strategic steps adjusters can take to reduce time and cost in claims management. Speakers included: Philippa Samworth, partner, Dutton Brock; Dean Tripp, associate professor, Queen’s University; Viivi Riis, senior health advisor, IBC; and Sean Slater, general manager of vpi.

Coming Through For You!

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24 HOUR ASSIGNMENT/EMERGENCY RESPONSE TOLL FREE 1-866-4-WINMAR (494-6627) Proud to be Canadian owned and operated.

For more information visit www.winmar.ca

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The ARC Group Canada held its Annual Seminar & Cocktail Reception on Oct. 28 at the St. Andrews Club & Conference Centre.

Delegates heard from insurers and lawyers about professional liability issues. Guests attended a reception immediately following the seminars.

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The 55th Annual Black Tie Dinner of the Toronto Insurance Conference (TIC) was held at the Four Seasons Hotel in Toronto on Nov. 11.

Award-winning golf writer Lorne Rubenstein, a columnist for the Globe and Mail, provided a keynote address.

Rubenstein has written eight books, his most recent being This Round’s on Me: Lorne Rubenstein on Golf.

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SCOR held its annual celebration of the Beaujolais Nouveau Wines release on Nov. 18, 2010 at the Rosewater Room in Toronto.

While enjoying the company of industry colleagues, guests sampled a selection of the 2010 Beaujolais Nouveau wines in addition to gourmet offerings prepared by the Rosewater.

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CARSTAR Automotive Canada announced its intention to build a 16,000-square-foot head office in Hamilton, Ontario during a special groundbreaking ceremony on Nov. 22. The facility will be called CARSTAR Vision Park, “reflecting the company's vision to be the leader in the Canadian collision repair industry.” The new facility will be located at 1460 Stone Church Rd. E, overlooking the Mount Albion Conservation Area. It will also be home to CARSTAR University, the company’s learning and research centre.

This facility will include a training centre with production bays and the latest repair equipment, allowing the corporate field team to test new processes. It will also be a central point for franchise partners to bring in their management and repair technicians to receive up-todate, hands-on training in addition to classroom learning.

“It is with great pride that I announce today the beginning of a new and exciting chapter in CARSTAR’s history,” said president and CEO Sam Mercanti.

“Although our success is a result of the hard work of more than 140 franchise partners from coast-to-coast, it all started in Hamilton and we are thrilled to make this major investment today in our hometown.”

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The Ontario Pond of the Honourable Order of the Blue Goose hosted its annual Christmas Galabration on Dec. 17, 2010.

More than 100 ganders and guests attended an elegant evening of fellowship, dining and dancing in the true spirit of the Christmas season. The event was held at the trendy Thompson Toronto hotel.

Disaster Restoration Services

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Lloyd’s hosted an event at the Art Gallery of Ontario in Toronto on Nov. 30, 2010, marking the release of its 360 Risk Insight Report: Reducing the risk of earthquake damage in Canada - Lessons from Haiti & Chile. Lloyd’s CEO Dr. Richard Ward introduced the report, saying: “360 Risk Insight brings together the views of the world’s leading business, academic and insurance experts to help stimulate thought and discussion about emerging risks.

We are delighted to have worked with the Institute for Catastrophic Loss Reduction (ICLR), based in Toronto, in producing this report.” Following the launch, attendees enjoyed a cocktail reception to celebrate the opening of Lloyd’s new office in Toronto.

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The Alberta Association of Insurance Adjusters (AAIA) Presents

The Roaring 20’s Gala Charity Fundraiser in aid of WICC and ARBI (Association for the Rehabilitation of the Brain Injured)

Date: Saturday March 5, 2011 Place: Hotel Arts, 119 12 Ave SW Time: Cocktails 6pm, Dinner 7:30pm Entertainment: FUZE, Urbandivide Dress to Impress!

Tickets are NOW ON SALE! $95 per ticket or $700 per table of 8 8dp =f^^`e Æ Xdp%]f^^`e7ZXegif^cfYXc%Zfd JXZ_X :Xi\p Æ jZXi\p7i\e]i\n$`ejliXeZ\%Zfd Jpcm`X A\ej\e Æ jpcm`X7[jZffb%Zfd

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Matson Driscoll & Damico Ltd (MDD) hosted its annual American Thanksgiving party on Nov. 25 at the Real Sports Bar & Grill in Toronto.

Approximately 350 industry guests attended, raising $3,000 for the Starlight Children’s Foundation.

Winning Strategies for the P&C Industry The CIAA Advanced Course Join industry experts and academics, along with guest speakers, in this week­long intensive program designed for managers and executives in the P&C industry. The course is only held every two years and is limited to 30 participants.

May 1 to May 6, 2011 Nottawasaga Inn Resort Alliston, Ontario

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Canadian Underwriter January 2011

Contact: Catherine Fleming at 416.971.7800 ext. 260 catherinef@taylorenterprises.com

Download brochure and registration form at www.ciaa.org

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Chubb Insurance Company of Canada

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

Paul Davis Systems Burlington location held a Holiday Open House on Nov. 4. Guests were able to take a tour of the new location, where they learned about different cleaning and drying techniques, among other restoration practices. Burlington Mayor Cam Jackson was on hand for the official ribbon-cutting ceremony.

Giovanni Damiano Senior Vice President Zone Claim Manager Ellen Moore, Chairman, President and CEO of Chubb Insurance Company of Canada is pleased to announce the appointment of Giovanni Damiano to the position of Canadian Claims Manager. Giovanni replaces Susan Watts who has accepted a senior position with the organization in the U.S. As the leader of Chubb’s national claims management team, Mr. Damiano is responsible for teams in four offices in Canada and for maintaining the company’s proud reputation for providing exceptional claims support for Chubb’s commercial and personal policy holders.

Mr.DamianobeganhiscareerwithChubbin Montrealin1987andhasprogressedthrough more senior positions in the company most recentlyasSeniorVicePresident,Marketing.

He is a graduate of Concordia University.

Giovanni has been a member of the CanadianSeniorLeadershipteamsince2000 and has been responsible for direction of many of the company's strategic initiatives.

Chubb Insurance Company of Canada has offices in Calgary, Montreal,Vancouver, and Toronto providing property and casualty insurance for personal and commercial customers through an exclusive network of more than 200 brokers across Canada.

The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb's global network includes branches and affiliates in North America, Europe, Latin America,Asia andAustralia.

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

Friends of Hughes Amys Barristers and Solicitors gathered at the Irish Embassy for the firm’s annual Holiday Party on Nov. 25.

Chuck Jackson, lead singer of Downchild Blues Band, provided tunes to keep the party hopping.

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Canadian Underwriter January 2011

If you’re the one with the ball,

make it count.

You can be an expert and play the game, or you can apply your expertise and win it. Choose a business partner with the strength, skill and agility to execute the strategy and you’ll take it to the goal every time.

Property & Inland Marine Division Executive Liability Division

GreatAmericanInsurance.com Scotia Plaza, Suite 2100 I 40 King Street West I Toronto, Canada M5H 3C2

Marine

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at 25.42°N 90.15°W, ACE insures progress

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It takes the right people, a strong balance sheet, worldwide capabilities and a flexible approach to address the complexities of marine insurance. These are the strengths of ACE. We take on the responsibility of your risks so that you can take on the responsibility of making things happen. We call this insuring progress. Visit us at www.ace-ina-canada.com.

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