Canadian Underwriter November 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

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Expect the Unexpected 2012 Reinsurance Market Outlook

Cats and New Coverage

By Glenn McGillivray

IP Insurance: A Bright Idea

By Robert Fletcher

The forces of nature can strike at any time.

Let’s discuss how to plug our defenses.

As the Earth’s climate is changing, so are the frequency and intensity of floods and storms. What’s the answer: retreat from the most hazardous locations? Protect vulnerable areas with sea walls, drainage systems and better building codes? Or take measures to transfer the financial risk and rebuild? All we know at Swiss Re is that, as our climate changes, we must adapt apace. Which is why we’re helping countries and communities develop strategies to protect themselves against the forces of nature. Risk is the raw material we work with; what we create for our clients is opportunity.

Plug into www.swissre.com

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VOL. 78, NO.11, NOVEMBER 2011 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY BUSINESS INFORMATION GROUP

www.canadianunderwriter.ca

COVER STORY

2012 Reinsurance Market Outlook

32 FEATURE

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12 Canadian Earthquakes Canadian insurers have a moral obligation to price earthquake premium appropriately.

BY ALISTER CAMPBELL

Disastrous Year

Multi-generational Ethics

Reinsurers’ losses piled high in 2011 and alternate forms of reinsurance cover have emerged to handle the specific nature of the losses.

A truly multi-generational workforce introduces an entirely new dimension to ethics and mentoring.

BY THE CIP SOCIETY

GLENN McGILLIVRAY

26 Covering the Wind

22 NICC Conference Canada’s insurance industry has been buffeted by changes in capital requirements, interest rates, increased regulation, consumer purchasing habits and class action liability trends.

Intellectual Property Cover

Canada’s wind industry presents a unique and complex set of risks.

Businesses are facing life-anddeath legal battles over intellectual property disputes without knowing about IP insurance.

BY ROB CRUICKSHANK

BY ROBERT FLETCHER

better connect with their carriers and young consumers.

BY DAVID GAMBRILL

48 Coaching Leaders Structured coaching and mentoring programs can help Canada’s P&C industry leaders raise the next generation of the best and brightest.

BY CAREY-ANN OESTREICHER

52 RIMS Coverage

A J.D. Power study illustrates the importance of sharing information with consumers, most notably in the area of billing.

Privacy breaches, the extension of the U.S. regulator’s reach into Canada and the expansion of municipalities’ responsibility to pay for the mistakes of imperfect drivers made headlines at RIMS.

BY LUBO LI

BY VANESSA MARIGA

BY DAVID GAMBRILL AND VANESSA MARIGA

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‘Expect the unexpected,’ Canadian reinsurers say, having endured one of the most disaster-prone periods in years. Thanks to a wildfire in Alberta and catastrophes abroad, losses by mid-year had already reached record levels.

Senior reinsurance executives discuss what lessons they have learned in 2011 and how they will apply them in 2012.

28 Customer Satisfaction

40 IBAO Conference The 91st Annual Convention of the Insurance Brokers Association of Ontario (IBAO) addressed ways for brokers to

November 2011 Canadian Underwriter

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VOL. 78, NO.11, NOVEMBER 2011

PROFILE

Editor David Gambrill david@canadianunderwriter.ca (416) 510-6796 Associate Editor Vanessa Mariga vanessa@canadianunderwriter.ca (416) 510-6793

10 Derivative Route Robert G. Harrison, president elect of the Toronto Insurance Conference (TIC), took a derivative route into commercial P&C insurance.

BY DAVID GAMBRILL

Senior Publisher Steve Wilson steve@canadianunderwriter.ca (416) 510-6800 Associate Publisher Paul Aquino paul@canadianunderwriter.ca (416) 510-6788 Account Manager Michael Wells michael@canadianunderwriter.ca (416) 510-5122

SPECIAL FOCUS

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Editorial

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EDITORIAL

United We Stand

Information sharing among insurers is required to resolve some of the key dilemmas the industry faces going forward.

David Gambrill, Editor david@canadianunderwriter.ca

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Canadian Underwriter November 2011

Canada is due for a national renovation in the collection of its property and casualty insurance claims data.

At the centre of the renovation should be a way to share data for the purpose of benefiting the entire P&C insurance industry as a whole.

No doubt individual insurers will continue to do battle with each other in a competitive arena, trying to find the best means to slice and dice data so they can offer comprehensive insurance products at competitive, affordable and profitable rates.

But these gladiatorial combats between individual companies can favour the secrecy of data collection at the expense of sharing data that may help the industry understand wider claims patterns — take, for example, auto fraud, flooded homes or increased construction costs due to demand surge. Sometimes data required to isolate these broader patterns are not available, because insurers feel to give up the information would create a competitive disadvantage.

But in the example of auto fraud in Ontario, the issue confronting all auto insurers simply became too broad to ignore. Thus, a model for industry-wide data sharing was born: Health Claims for Auto Insurance (HCAI). All Ontario health care providers are required under regulation to submit their treatment plans to the province’s auto insurers through HCAI, an electronic database. By doing so,

insurers, health care providers and the regulator can better monitor who is claiming how much for what claims and treatment plans.

With this information, insurers, regulators and stakeholders will have a better handle on industry-wide trends in the province’s auto insurance industry.

It will take some time before the HCAI database contains enough historical information to ascertain where auto insurer’s claims dollars are going. In the meantime, it would be interesting to see how this provincial example of data-sharing for the benefit of all P&C insurers (and policyholders) might be extrapolated into other areas of the business.

For example, it doesn’t take much imagination to envision a national form of HCAI that extended beyond the borders of Ontario. Just as the nonprofit organization HCAI Processing has been established to oversee the HCAI project and database, a similar armslength national organization could be established to oversee a national electronic database for auto insurance.

This would allow for a much broader pool of auto claims information, and give insurers a better sense of local as well as national trends.

Another possibility would be to create a similar sort of electronic database for use in the home insurance area. The analogy would be for contractors and renovators to submit their expenses to a national electronic database, so that insurers (and regulators)

could get a better handle on home insurance claims patterns, and more specifically a sense of which repairs are costing insurers how much.

Such aggregated home insurance claims data would no doubt be of great use in determining more precisely the effects of “demand surge” (the increase in costs related to paying more for labour and materials during times of scarce supply).

A similar database could help the industry in its discussions with the federal government, provincial and municipal governments about flooding issues.

In the same way HCAI can identify potential areas for fraudulent auto insurance claims, a national database for home insurance claims would help monitor where the industry (and consumers) might be paying too much to repair or replace damaged or lost homes.

This is especially important since Canada has guaranteed replacement costs in its home policies. Having a database of these costs nationally would be helpful in determining whether or not GRC policies should be capped.

The key here is that information sharing among insurers is required to resolve some of the key dilemmas the industry faces going forward. In order to share the data, technology is required to allow that to happen. We have examples of how such systems might work — HCAI, for example — and the key is to see whether they can be extrapolated for the benefit of the insurance industry and consumers across the country.

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MARKETPLACE

Canadian Market BANKS BANNED FROM PROMOTING UNAUTHORIZED INSURANCE ON WEB SITES Canada’s new regulations prohibiting banks from promoting unauthorized insurance products and services on their Web sites are now official.

The regulations came into force with very few amendments to the pre-published draft of regulations posted for public comment on Feb. 12, 2011.

The only changes were to clarify that the new regulations apply to the banks’ “business in Canada.” Also, the ban on Web site insurance promotion does not apply if the banks are promoting insurers that deal “only” in authorized types of insurance (as defined by statute).

Under the section ‘Web Promotion,’ the regulations state: “[A] bank shall not, on a bank Web page, provide access to a Web page — directly or through another Web page —through which there is a promotion of a) an insurance company, agent or broker that does not deal only in authorized types of insurance; or b) an insurance policy of an insurance company, agent or broker, or a service in respect of a policy, that is not of only an authorized type of insurance.”

8 Canadian Underwriter November 2011

The regulations are published in the Canadian Gazette at: http://www.gazette.gc.ca/rppr/p2/2011/2011-1012/pdf/g2-14521.pdf.

PROPOSED CHANGES TO NOVA SCOTIA AUTO INSURANCE COULD INCREASE PREMIUM BY $6 TO $7.50 PER DRIVER A proposal to increase Nova Scotia’s standard accident benefits package up to the higher limits contained in a Section 48 endorsement would result in an average premium increase of between $6 and $7.50 per driver.

The Nova Scotia Utility and Review Board made the estimate in response to specific questions posed by the province’s finance minister.

The minister asked the board to calculate the costs of various proposals to raise the limits, as outlined in the CFN Consultants (Atlantic) Inc.’s Final Report Addressing: The Nova Scotia Automobile Insurance Review.

The board’s full report can be found at: http://www.nsuarb.ca/images/stories/pdf/Decisions/ 11Sep/195646%20insurance%20reforms.pdf

Regulation OSFI ADVISES AGAINST EARLY ADOPTION OF SOME IFRS AMENDMENTS Canada’s financial solvency regulator has advised against early adoption of some new or amended International

Financial Reporting Standards (IFRS) issued in May and June 2011, including the IFRS 13 Fair Value Measurement.

The Office of the Superintendent of Financial Institutions (OSFI) sent a letter to all federally regulated financial companies dated Oct. 31, 2011. The letter itemizes eight financial standards and says federally regulated entities (FREs) “should not early adopt the new or amended IFRSs outlined in this letter.”

The standards listed in the letter are: • Consolidation and related standards; • IFRS 10 Consolidated Financial Statements; • IFRS 11 Joint Arrangements; • IFRS 12 Disclosure of Interests in Other Entities; • IAS 27 Separate Financial Statements; • IAS 28 Investments in Associates and Joint Ventures; • IFRS 13 Fair Value Measurement; • Amendment to IAS 19 Employee Benefits; and • Amendment to IAS 1 Presentation of Items of Other Comprehensive Income; Instead, OSFI says, “FREs should adhere to the mandatory effective dates as stated in each of the respective IFRSs.”

IBC HOLDS UP ITS VOLUNTARY CODE ON CREDIT SCORING AS THE BASIS FOR POTENTIAL REGULATORY FRAMEWORK Insurance Bureau of Canada (IBC) is holding up its voluntary Code of Conduct for In-

surers’ Use of Credit Information as the basis for a possible regulatory framework on credit scoring. Such a framework would be an alternative to banning the use of credit scoring outright.

IBC made the suggestion in a submission responding to an issues paper issued by the Canadian Council of Insurance Regulators (CCIR) in June 2011. The CCIR’s paper calls for industry and consumer feedback on seven potential risks to consumers related to insurers’ use of credit scoring.

In its submission, IBC says its voluntary code of conduct addresses each of the seven potential risks to consumers of credit scoring outlined in the CCIR issues paper. It also notes companies representing 85% of the personal lines market share of IBC and Canadian Association of Direct Response Insurers (CADRI) members have made a formal commitment to adhere to the code.

CANADA AMENDS PRIVACY ACT TO ALLOW INSURERS TO SHARE INFORMATION RELATED TO POTENTIAL INSURANCE FRAUD Intended to help insurers suppress fraud, Bill C-29 amends Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) to allow disclosure of personal information without a person’s consent under certain circumstances.

PIPEDA generally prohibits companies from releasing a person’s private information

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MARKETPLACE

without his or her consent.

Clauses 6 to 8 of the proposed bill, which has passed first reading in the House of Commons, outline a number of exceptions to consent requirements.

One new exception is if the personal information is contained in a witness statement and is needed to assess, process or settle an insurance claim.

A second new exception would allow insurers to exchange a person’s personal information with other companies or government bodies “when an organization has reasonable grounds to believe that a contravention of the laws of Canada, a province or a foreign country is being, has been, or is about to be committed.”

two-day period in September 2009, and in July 2011, a heavy cloudburst dumped about 160 mm over Copenhagen in less than 24 hours.

The Hull flooding resulted in $270 million in insured

losses. Istanbul losses were $430 million and Copenhagen could cost more than $800 million.

“Cities are especially vulnerable to heavy cloudbursts,” the Swiss Re post

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Risk Management INSURERS UNDERESTIMATE THE RISK OF CLOUDBURSTS: SWISS RE Insurers underestimating the risk of cloudbursts, particularly in urban areas, are putting themselves at risk, Swiss Re cautioned in a release.

A cloudburst is a sudden, very heavy rainfall.

In a posting on its Web site, The ripples of heavy cloudbursts, Swiss Re notes that Hull, United Kingdom endured rainfall levels of between 100 mm to 135 mm over a three-day period in June 2007. Istanbul saw levels of up to 130 mm in a

says. “One factor is high concentration of buildings and other assets. Average claim size for residential structures is typically low, but substantial for commercial and industrial businesses.”

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November 2011 Canadian Underwriter

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PROFILE

A Derivative Path to Insurance David Gambrill Editor

Toronto Insurance Conference (TIC) president elect Robert G. Harrison came to insurance by way of the financial services world, in which he traded in options, securities and derivatives.

Toronto Insurance Conference (TIC) president-elect Robert G. Harrison took a derivative route into the commercial insurance industry — literally.

Once a trader in financial options and futures for CIBC Wood Gundy in the early 1980s, Harrison worked in Bermuda for 10 years at The Bank of N.T. Butterfield & Son Limited, Bermuda’s first and largest independent bank and a specialist provider of international financial services.

After returning to Canada with his family in 1999, the Charter Financial Analyst (CFA) landed at Martin Merry & Reid Limited in Toronto, where he is currently an account executive.

Harrison describes the transition from the financial services world of trading in futures, options and derivatives to the property and casualty industry as “very straightforward.”

10 Canadian Underwriter November 2011

“The thing about derivatives in the financial business is that it’s all about risk management,” he says. “The basic concept of a derivative is a risk transfer vehicle. So you have someone with an exposure — take a mortgage lender, they have exposures such as changes in interest rates — and derivatives are to ameliorate that kind of thing.”

Stated simply, derivatives are contracts between parties that specify conditions under which payments or payoffs are to be made between parties.

Harrison said risk management in the financial world is all about knowing how the various contracts work. This entails a legal understanding, and also basic mechanical understanding of what the derivatives contracts can do and what they can’t.

“Like any risk problem, you break the risk down into its constituent parts and then you apply what you can in terms of contracts with third parties to mitigate — to transfer that risk to a place,” he said. “So the transition from the financial management to the insurance management [of risk] was one of nomenclature more than it was one of attitude and background and objectives. So really, the transition was not that difficult.”

If there is a difference, it may be that the risks in the financial world of derivatives are quantifiable (arbitraging between two different curren-

cies or interest rates, for example), whereas the risks in the world of property and casualty insurance are fortuitous and therefore less predictable.

“As I like to tell people, in the financial marketplace, I can take two interest rates and two currencies and arbitrage them with certainty,” says Harrison. “I know exactly what I’m taking out of the middle,

The transition from the financial management to the insurance management [of risk] was one of nomenclature more than it was one of attitude and background and objectives. what my exposures are and what the payouts are.

“In insurance, while I can break down the risk, insurance is based on a fortuitous event.

It’s something foreseeable, but not predictable. So it translates, but not perfectly. Today, at the end of the day, the only arbitrage one can do on the price of insurance is look for somebody else’s price. And at the end of the day, you are a price-taker — as a client and as a broker, for that matter — rather than as a price-giver.”

Harrison’s experience in commercial insurance began in 2003, when David A. Browne, a principal at Martin

Merry & Reid Ltd., recruited him into the commercial insurance brokerage’s Toronto office. Among Harrison’s specialties is D&O and E&O insurance for financial executives.

“Trading in the Canadian futures market, it’s a thin marketplace with a limited number of providers,” he says. “[The business involves] negotiation skills and, at the right time, brinkmanship. So when it comes to a client — I have an affinity for financial clients, be they fund managers, hedge fund managers or brokers — I can translate their insurance risks into what their [insurance] underwriter needs and vice versa.”

In the same way the Denver Broncos professional football team has a knack for recruiting elite running backs, Martin Merry & Reid seems to have a history of churning out TIC executive members. Browne was a past board member of the TIC and most recently Justin MacGregor was president of the TIC in 2005. “So when Justin was leaving the TIC, they were looking for another member,” Harrison said. “I thought it would be a great way to get some contacts and learn a bit more, so I joined the TIC in ’06 or ’07.” All things going according to plan, Harrison will formally take over as president of the TIC at the organization’s annual general meeting in March 2012.

Harrison said most of the issues he expects the TIC to

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PROFILE

face next year are already “out on the table.”

Once employed by a bank, Harrison certainly has an acute sensitivity when it comes to banks entering the world of commercial insurance. “I believe they are beginning to move into that area,” he says. “We know that Royal Bank is talking about commercial insurance and TD Bank is moving slowly into small commercial side of things. That will continue to be something that we need to monitor.”

To date, Harrison adds, banks have been “more contemplative” than active when it comes to entering the commercial insurance arena. This

caution may stem from getting a handle on how best to enter the commercial marketplace.

“It’s a different arena,” Harrison said of the difference between commercial and personal lines, where banks have more of a presence.

“Personal is regulated. It’s pretty straightforward. You find a price point, do some research in the programs, look for your losses, define where you want to be, the programs you want to look at, who you want to do it with.” Pricing in commercial lines, in contrast, is not as straightforward, and thus banks are taking their time doing their research before dipping their toes into the waters.

When they do, the key is to make sure a level playing field exists between banks and commercial insurance brokerages, Harrison said. “We are happy to have competition.

Competition is good for everybody. But the issue of a level playing field, [highlighted by] the announcement of the ministry in terms of the Internet banking and insurance issues, that will obviously be an ongoing concern.”

Another area of interest for the TIC is solidifying the entrenchment of a public emergency endorsement in commercial insurance contracts. The TIC successfully worked with the Insurance Bureau of Canada (IBC) to create

a public emergency endorsement intended to protect consumers when their policies are about to lapse during a public crisis. IBC’s board approved the resultant document in September 2009. Among other things, the endorsement extends the term of an expiring policy or suspends the notice period for a pending cancellation after the declaration of an emergency.

The TIC is now acting to make sure that the endorsement is adopted in insurance contracts as a matter of course, and not in a piecemeal basis.

“Buy-in from the executives of all of the insurers seems to be done, but it’s executing now and making [the endorsement] occur or appear in all of the contracts without having to remember to reflect and endorse in every policy,” Harrison said. “There’s work to be done to make that a fait accompli, as opposed to everybody agreeing it’s necessary but not everybody is adding it in there.”

Education is a third priority for Harrison. He noted TIC accomplishments in this area, such as a financial sponsorship with Fanshawe College in London, Ontario. “We provide funding for a student in their insurance program who has expressed a real interest in commercial insurance,” he said.

“That dovetails with the new MBA in insurance, and also the IBAC Elite Broker program.

November 2011 Canadian Underwriter

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Earthquakes and Our Moral Duty Opinion/Analysis

Canada’s insurance industry has a moral duty to consumers to price earthquake exposures properly.

Alister Campbell President, CEO, Zurich Canada

Awful. Horrific. Beyond imagination. It is hard to describe fully in words the true destructive power of earthquakes. And recently we have seen them happening far more often than we are accustomed to in the past. In the past two years, we have witnessed earthquakes in Turkey, in Chile, in New Zealand, in Japan and in Haiti. Any way you look at it, earthquakes are grim. And someday Canada will have a big one. How prepared are we?

As an industry, we plan for the worst, but what happens in real life is often much worse than the worst-case scenario. For instance, in Japan they conservatively built structures for the worst case, an 8.0 quake on the Richter scale. However, the Tohoku quake in Japan registered 9.0 on the Richter scale and was followed by a huge tsunami. In Christchurch, New Zealand, a quake happened on a fault line that was previously unidentified. But it happened nonetheless.

So, as an industry, can we trust our models?

The financial crisis of 2008 amplified power-

12 Canadian Underwriter November 2011

fully the lesson that over-reliance on models is dangerous. In that instance, the banking industry relied too heavily on models and failed to properly manage and mitigate the impact of a 1in-100 year event — a downturn of housing prices in the United States. As an industry, insurers can be proud of how strongly our balance sheets withstood the financial crisis when other pillars of the financial services industry crumbled. But it is unwise for us to be smug. We too have our models and to rely on them exclusively would also be a grave error.

SIMULATIONS: MORE THAN YOU BARGAINED FOR At Zurich, we have turned to simulations to provide increased depth to the third party models we employ. In a recent “fire drill,” we recreated the repercussions of a large earthquake on the West Coast of Canada, complete with aftershocks, conflagration, civil disturbance by postal code, loss of water and power and sprinkler damage.This kind of drill is a tool to help us visualize the scope of these kinds of events.

Underwriters price and establish coverages, but what are the actual costs associated with settlement? In our “fire drills,” we have claims

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professionals settle the losses theoretically. In such an exercise, insurers may find they are covering dramatically more than expected. In our drill experience, in certain cases, the claims professionals determined settlement amounts up to double what the underwriters predicted. For example, in a recent drill exercise, we learned sprinkler damage could cause as much or more loss as fire following an earthquake.

As a result of these exercises, Zurich has adjusted coverages, wordings, sub-limits and exclusions.

MANAGING ACCUMULATIONS BETTER First off, we all need to manage accumulations better. The Risk Browser Tool from Risk Management Solutions (RMS) Inc. is available to all insurers and it enables us to identify all risks in one geographic area in real time. As new business submissions are quoted, the tool maps out the accumulations of risk.This enables us to see how many risks are accumulating in particular spots. It is a disciplined and rigorous model and needs to be implemented with sensitivity to broker and market conditions. But during the catastrophes of the last few years, it has paid off for Zurich and helped us manage our accumulations effectively.

But are we managing quake risk properly in Canada?

It’s not clear to me that, as a market, we’re properly pricing quake risk in Canada, particularly when we think about it regionally. The models show the risk for quake in British Columbia is greater than Los Angeles for the 1-in-2,000 year earthquake event. But at least on the West Coast, in the commercial market, we are collecting some premium for it.

Although other climate perils in Canada, such as blizzards and ice storms, are more frequent and dominate the risk at a shorter return period, earthquakes are the primary tail risk for Canada. RMS models indicate the largest loss events could occur in Eastern Canada. However, in Quebec, competitive forces in the commercial market

14 Canadian Underwriter November 2011

today have reduced the market price for earthquake coverage to effectively zero.

ARE BALANCE SHEETS BIG ENOUGH? At Zurich, we manage our balance sheet to withstand a 1-in-2,000 year event. In Canada, all carriers are required to manage to an OSFI target that is climbing 10 years each year, towards an eventual 1in-500 year requirement. But regardless of region, there are grounds to be concerned that the regulatory requirement from OSFI, with its current 1-in390 year event provision, may not be fully adequate. That is because carriers are offering guaranteed replacement coverage or “extended replacement values” that can gross up to more than 130% of the insured value. That increased exposure in the context of a

Underpricing quake coverage does not do Canada any favours. By doing so, the industry unintentionally opens the door for consumers and companies to engage in riskier behaviours than they intend to. post-quake demand surge means a theoretically unlimited exposure after a major event. This may not seem like a big deal now, but if the worst-case scenario occurs, it would be. I do not believe these increased exposures are currently reflected in the Dynamic Capital Adequacy Testing analysis done by all insurers, or in the individual composite risk scores OSFI allocates to each carrier.

BUILDING CODES MATTER As we all know, the size of an earthquake does not necessarily predict the resultant damage and fatalities. Building codes matter. The recent earthquakes in Chile and Haiti offer excellent proof of this fact. Although the Chile earthquake was materially larger than the one in Haiti, a staggering 395 people died in Haiti for every one person who died in Chile. Santiago is a modern city with

building codes and design requirements that properly take quake risk into account. Haiti was just not built for the event that it so tragically experienced.

When buildings are retrofitted and built with earthquakes in mind, lives and assets are saved.

Closer to home, Montreal is an older city and, unlike Vancouver or Santiago, Chile, it has many buildings that are not retrofitted to modern building codes. I do not believe this risk is adequately factored into industry pricing today.

OUR MORAL DUTY The insurance industry has two moral obligations.The first is to deliver on our promise to pay. Insurers perform a wonderful service to humanity by providing a way for people to live day to day without ongoing fear of the unknown.When catastrophe strikes, insurers will be there to help.That is expected, and rightly so.

But we have a second duty to society — to properly price risk. The price of risk serves as a signal to consumers and corporations, enabling them to assess and trade off between risk and reward and to invest appropriately when required. By pricing risk properly, we send the right signals to society regarding the adequacy of building codes, the need for protective actions and the true size of the risks we face.

Underpricing quake coverage does not do Canada any favours. By doing so, the industry unintentionally opens the door for individual consumers and corporations to engage — improperly, and without fully realizing it — in riskier behaviours than they intend to. When pricing does not reflect the need to upgrade building codes or retrofit buildings, for example, individuals and corporations fail to take all the actions they need to protect their employees and their assets.

Our duty to society to get the price right matters.When the inevitable quake comes in the West or the East, I am confident our industry will respond with professionalism and compassion. By pricing properly now, we can ensure the tragic costs are less than they would otherwise be. Our duty is clear.

Crawford Cares...And So Do You We would like to thank everyone who visited our booth at this year’s RIMS Canada Conference in Ottawa and filled out a card in support of the Women in Insurance Cancer Crusade (WICC). For every card that was completed, Crawford donated $5 to this worthy charity. Thanks to you, we raised a total of $2,500, and are one step closer to winning the fight against cancer.

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

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Reinstatement covers and cat excess aggregation covers provide a way to ease the pain of $1-billion cat losses over each of the past three years.

Glenn McGillivray

Managing Director, Institute for Catastrophic Loss Reduction (ICLR)

Years 2009, 2010 and 2011 will go down as the first time ever that the Canadian insurance industry has experienced three consecutive years of billion-dollar catastrophe losses. And to help transfer the risk of these losses, buyers of reinsurance should be aware of two reinsurance products — reinstatement covers and cat excess aggregation cover.

RECORD LOSSES The world has been in the midst of an exceptionally active period for natural catastrophe losses in recent years, the last two globally, the last three in Canada.

The first quarter of 2010 saw devastating earthquakes in Haiti (Jan. 12) and Chile (Feb. 27).

16 Canadian Underwriter November 2011

Later in the year (Sept. 2), a Magnitude 7 earthquake hit Christchurch, New Zealand.

But the record for insured losses set in 2010 Q1 would prove to be short-lived. Christchurch was hit by yet another quake on Feb. 21, 2011.

Though less powerful than the first, the second quake (a Magnitude 6.3) proved devastating, razing structures weakened by the first event.

And while the first quake took no lives, the 2011 event killed 181 people. Insured damage has been estimated in the $9-billion to $12billion range.

Similar to the one-two punch that came with Haiti and Chile in 2010 Q1, the second Christchurch quake combined with the Japan earthquake/tsunami event of Mar.11, 2011 delivered yet another left jab-right hook combination. The event in Japan claimed more than 15,000 lives and triggered insured losses of approximately $30 billion.

In addition to the seismic activity in 2011, (re)insurers have had to contend with a spate of spring tornadoes in the United States, with insured losses estimated to be as high as $5.5 bil-

Illustration by Philippe Beha/www.i2iart.com

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lion. Hurricane Irene losses are also estimated at up to $5.5 billion. In terms of other miscellaneous losses, there have been additional hurricane losses, wildfire events in Texas and elsewhere, as well as typhoon losses in Asia, to name just a few.

All told, 2011 currently sits in second place for insured losses due to natural catastrophes with $67 billion in claims, says Swiss Re.The year 2005 — the year of Hurricanes Katrina, Rita and Wilma — still holds the top spot, of course, with a total of $90 billion in claims. However, the year 2011 does go down as the most expensive for economic losses, with 2005 in second place.

The notable thing about the records set in 2011 is that the records were equaled before the year was even half over. This was the case globally and for Canada as well.

This year will go down as the worst on record for Canadian insurers since 1998, the year of the ice storm. The May 15, 2011 wildfire in Slave Lake, Alberta triggered insurance claims of $700 million, making it the second most expensive insured natural catastrophe in Canadian history and the most expensive wildfire in Canada by far.

Storms in Ontario in March; in Ontario

18 Canadian Underwriter November 2011

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and Quebec in April; spring flooding and hail, tornadoes and wind in the Prairies; a tornado in Goderich, Ontario on August 21; and Hurricane Irene all put Canadian insured catastrophe losses up over the $1 billion mark, and the year is not yet over.

All told, 2011 currently sits in second place for insured losses due to natural catastrophes with $67 billion in claims. Year 2005 still holds the top spot with $90 billion.

BLIP, TREND OR THE NEW NORMAL? Although the Canadian insurance industry experienced a $1 billion-plus catastrophe year in 2005, the next three years — 2006, 2007 and 2008 — proved to be quiet. Then in 2009, the industry experienced another billiondollar year, again repeated in 2010.

Thus, 2009, 2010 and 2011 will go down as the first time ever that the Canadian insurance industry has experienced three consecutive years of bil-

lion-dollar catastrophe losses.

As a result of this string of catastrophes, two reinsurance products have factored in to many discussions between insurer, reinsurance intermediary and reinsurer. They are worthy of brief discussion here.

REINSTATEMENT COVERS The first product relates to reinstatement covers. At renewal, insurers not only have to make decisions about first event cat covers, they must also decide whether to purchase reinstatement cover(s) as well. Reinstatements afford the company another ‘go-ground’ on their first event covers should they “blow through” their limits before the year is up.

Don Callahan, president and CEO of Guy Carpenter Canada, explains. “Essentially, reinstatement provisions trigger an additional premium to the reinsurer equal to the original layer premium, pro-rated by how much the loss bears to the limit of the layer,” he says. “So if the layer is fully hit, the reinstatement premium is 100%. If only half the layer pays — for example, a $15-million, ground up loss to a $10million-excess-$10-million layer — then half of the original premium is

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payable. Reinstatement provisions are designed to be an immediate payback vehicle for the reinsurer.They are also a means of limiting the total amount payable. In exchange, the full limit is reinstated. But usually only once.”

Some insurers had burned their first and second layers at Slave Lake, paid the full reinstatement premium and were sitting with much of the year remaining — including the often-active summer wind and hail season — with a single limit left, Callahan noted. “If they were to blow these limits in a July storm, their capital would be fully exposed to the layers they had exhausted,” he says. “Furthermore, reinsurance capacity would be down and the cost of buying a new cover in the middle of the year could potentially be multiples of the original premium. So a few insurers wisely purchased a second reinstatement in April to avoid being in that vulnerable position. I’m not aware of any insurers who chose not to purchase an additional reinstatement and were left exposed after the Alberta hailstorm, but it’s possible that there were one or two. We had clients that purchased the reinstatement of the second limit right after Slave Lake and I think they clearly did the right thing.The year was not over.”

A simple Reinstatement Protection contract makes decision-making easier for reinsurance buyers, Callahan says.

“With this, an insurer can pay a premium at inception for protection that pays the reinstatement premium in the event of a cat,” he says. “We also have cat option covers that let a company choose to buy protection at the start of any quarter at a predetermined premium.

This can lower the cat retention during the course of the year and provide protection when upper-layer reinstatements are exhausted.We’ve been working with these sorts of ideas for many years and have tailored a few for savvy clients. I think we will see more interest in this going into 2012.”

20 Canadian Underwriter November 2011

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PREVENTING ‘DEATH BY A THOUSAND CUTS’ A second, oft-discussed reinsurance product of late is cat excess aggregation cover.The years 2005, 2009, 2010 and 2011 typically featured one large loss event worth several hundred millions of dollars and a collection of other events of various sizes. The big events

It is encouraging to see reinsurance intermediaries and reinsurers are working closely to ensure that buyers of cat cover have many customizable options and new products available to manage risk in an age of unpredictable natural catastrophes. were usually large enough to trigger cat reinsurance. But many of the smaller events, dubbed ‘mini’ cats or secondary cats, were not and consequently many insurers took them net on the balance sheet.

One solution to the mini-cat problem can be a product known as an aggregate XS cover, which is explained in detail by CCR’s Rob Finnie in Canadian Underwriter’s

November 2010 issue. The need for a reinsurance product to address the mini-cat problem is still in its infancy.

Although it will take time to gain traction, it appears interest in the product is gaining speed.

“Aggregate covers can help in high frequency cat years,” Callahan says.

“These contracts let the insurer choose how many ‘mini-cats’ it can tolerate.

Once these cats reach a certain aggregation, the reinsurance kicks in, often on a layered basis. So, for example, we might structure an aggregate that pays once cat events greater than $2 million but less than $10 million accumulate to a total of $40 million. From that point forward, the aggregate contract pays for the additional activity subject to its own limits and layering. The idea is to protect the client from aberrational cat frequency. I’m aware of about eight aggregate contracts in this market and I think every one of them got hit this year.These are obviously proving difficult to price and structure and they are going to be tough to renew. Reinsurers are on the fence as to whether 2011 is an exceptional year or just the new normal.”

ONLY TIME WILL TELL No one can ever say for certain how a year will play out from a cat loss perspective. Is it a ‘blip,’ a trend or is this the way it’s going to be — at least until another ‘new normal’ rears up?

The decision-making surrounding the purchase of cat cover is not always clear or easy.

Yet, it is encouraging to see reinsurance intermediaries and reinsurers are working closely to ensure that buyers of cat cover have many customizable options and new products available to them to address the uncertainty that comes with managing risk in an age of unpredictable natural catastrophes.

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of Change

2011 National Insurance Conference of Canada (NICC)

David Gambrill Editor

Vanessa Mariga Associate Editor

Canada’s P&C industry has been buffeted by changes in capital requirements, interest rates, increased regulation, consumer purchasing habits and class action liability trends.

Pricing adequacy, interest rates, increased regulation, consumer purchasing trends and class action strategies were among several topics addressed at the National Insurance Conference of Canada (NICC) in Vancouver on Sept. 26.

PRICING ADEQUACY The global property and casualty insurance industry faces an unsustainable financial future if it does not soon consider rate increases, a panel of reinsurers told NICC delegates.

Global reinsurers are conversationally discussing catastrophe price increases of between 5% and 15% for the upcoming renewal period, the panelists noted. Still, many have been slow to increase pricing in other lines, perpetuating an “unsustainable” financial path in light of a bad year for insurers generally.

“It’s a little bit perplexing as to how far the industry needs to sink in terms of its earnings or

22 Canadian Underwriter November 2011

its return on equity before you start to get some sense of action around adequate pricing,” said panelist Marty Becker, president and CEO of Alterra Capital Holdings Ltd. The panel itemized the high costs associated with earthquakes in Japan and New Zealand, storm events in the United States and the wildfire in Slave Lake, Alberta that cost the Canadian insurance industry $700 million in damages.

Becker said globally the industry started the year overcapitalized at between $80 billion and $100 billion. It has since lost $70 billion in the first nine months of the year.

Even so, he observed, there are no signs of growth or appreciable price strengthening across the private lines. “The question in my mind is: What is the compilation of conditions that finally tilts it toward change?” Becker said. “We're not making any investment income. There's no place to put your money today to get any kind of reasonable return. Accident year combined ratios on virtually any product line are approaching 100% or above it. We're not earning any kind of an investor-enticing ROE. If we were, these stocks would not all be trading at 70% or 75% or 80% of book value.

“So when are we going to have the collective will to basically earn a reasonable return —not

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even a serious return — for our product and our product lines? Because the path we are going on is unsustainable.”

INTEREST RATES Insurers can expect to see interest rates remain low for a long time, global economist Josh Feinman told NICC delegates.

“There’s no sugar-coating it, we live in dangerous times,” said Feinman, global chief economist for DB Advisors/ Deutsche Asset Management. “The economic [issues] we face around the world are very, very challenging. It’s going to take years to repair the damage that’s been done over the last three years.”

Feinman acknowledged a low-interest-rate environment is a major concern for insurers in a “post mortgage bubble world.” But insurers should not expect to see a quick recovery of investment rates because some of the economic issues in the market today are systemic and require long-term solutions.

The sovereign debt issue in Europe, for example, currently at the heart of investors’ fears about another global economic recession, is not going to be resolved until fundamental issues can be resolved, Feinman said.

For example, core and peripheral countries in the European Union are sharing a single currency, the euro, which makes it impossible for the European countries to address their individual economic woes through independent monetary policies, Feinman said.

Thus, peripheral countries in the EU can’t regulate their currency to address the fact that they are producing more than they are consuming at home, whereas core countries in the EU like Germany can’t adjust their currency to account for the fact that they are consuming more than they are producing at home.

A long-term resolution would be a closer financial integration between the EU countries, but this is a tough sell politically, because it would require some loss of sovereignty, Feinman said. In the meantime, lowering interest rates to promote economic

growth remains a short-term solution for many countries.

“We cobble together a solution to resolve these strains, but it doesn’t resolve these issues in the short-term, so we get these flare-ups, these crises, on and off in these coming months and quarters,” Feinman said. “Muddling through is better than managing a system meltdown but renewed flare-ups [can be expected].”

CANADA’S REGULATORY PENDULUM Canada’s property and casualty insurers are concerned about the latest trajectory of the regulatory pendulum towards the path of over-regulation. “Our [regulatory] regime in Canada is among the best in the world, but I believe it is important to recognize that the regulatory pendulum is swinging, and arguably swinging too far,” said Don

November 2011 Canadian Underwriter

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Forgeron, president and CEO of the Insurance Bureau of Canada (IBC).

Forgeron could not attend the Sept. 26 NICC meeting in person because he was at an international forum on insurance regulation in Seoul, South Korea. Instead, he appeared in a 20-minute video presentation shown during a luncheon at NICC. Forgeron made his remarks in the context of discussing the dangers inherent in a risk-by-risk review of capital charges.

In light of the global market meltdown in 2008, it is not surprising regulators are taking a closer look at insurers’ capital requirements, Forgeron said. “OSFI is taking steps that will substantially increase the capital that Canadian insurers must hold in order to conduct business,” he said. “And we welcome the regulator’s emphasis on better risk management and the efficient use of capital by insurers. We accept this focus. “[But insurers’] concerns, and I share them, have always been about a Canadian risk-by- risk-by-risk review of capital charges, an approach that may end up increasing capital requirements for our industry and compels insurers to hold more capital while earning less revenue. Some critics, a few of whom are insurers, simply see this approach as a problem on the horizon....”

In support of his statements, Forgeron cited figures from reports by J.P. Morgan and Standard & Poor’s. These studies suggest European insurers facing a similar regulatory approach would need to increase their capital requirements by 30% to 50% on the conservative side, and to an upper limit of 65% to 75%. At the same time, qualifying available capital would be restricted by anywhere from 20% to 50%, Forgeron said.

Reduced capital mobility would increase the cost of holding capital. And because of the heavy capital charges applied to certain classes of investments, insurers might be forced to ship their portfolios heavily towards low-yield government bonds, Forgeron noted.

This presents a new risk because of the sovereign debt issue.

24 Canadian Underwriter November 2011

PROVINCIAL REGULATORS AND MARKET CONDUCT Provincial regulators will likely focus on regulating market conduct of insurers, according to Doug McLean, executive director of British Columbia’s Financial Institutions Commission’s insurance department.

McLean spoke as a panelist at the NICC.The panel discussed the modernization of the international and Canadian regulatory regimes.

When asked, “What changes are likely to result to the Canadian regulatory framework as a result of international changes?” McLean noted that regulating market conduct is cited in the International Association of Insurance Supervisors [IAIS]’s core principles for the insurance market.

When are we going to have the collective will to basically earn a reasonable return for our product and our product lines? Because the path we are going on is unsustainable.

“We as a regulator [at FICOM] are interested in those principles dealing with market conduct,” McLean said. “In the past, this organization [IAIS] has focused on solvency, but they’ve changed their focus to include market conduct as well. “So what does that mean for us as a provincial regulator? We will probably see increased scrutiny of market conduct of insurers by provincial regulators.”

CONSUMER PURCHASING TRENDS Canadians are researching their personal insurance online, but fewer are completing the transaction online, Robert Merizzi, executive vice president and chief information officer at Aviva Canada, told delegates at the NICC. He spoke at a panel on managing business system transformation. During his presentation, Merizzi described changing consumer habits and cited

results from the 2011 InsurPOLL. “A customer actually completing a transaction online has not grown in the last four years,” Merizzi said. “Actually, during 2010-11, it started to decrease for the first time in years, which is an interesting trend.”

Merizzi said one explanation might be that customers still value the advice from their broker or tele-insurer before they go and buy their insurance.

But the power of “self-service” in personal lines cannot be denied, he added, pointing to the proliferation of mobile apps in recent years. “Ease of access to digital media is creating a much higher price sensitivity in the marketplace,” he said. “The trend toward ‘self-servicing’ is happening faster and faster.”

CERTIFYING CLASS ACTION LAWSUITS Certification of class action lawsuits is on the rise, raising tactical questions about whether defendant insurers should even bother fighting certification, or keep their powder dry and fight the good fight at the trial.

Laura Cooper, partner at Fasken Martineau, discussed class action statistics and legal strategies at the NICC. “With respect to class actions generally, I’m sorry to say the news isn’t great,” Cooper said. “Certification of class actions is definitely on the upswing. In the past year, in Ontario, where I primarily practice, out of 24 certification motions that were contested, 20 of them were certified. That was a change from the previous record of some 60% certification.”

Cooper said, the costs to fight class actions are increasing, because defendant insurers are trying harder and harder to defeat class certification or at least narrow its scope.

Strategically, Cooper said there aren’t many opportunities for defendant insurers to accept certification and just go ahead and fight at trial. “As I say, that’s not going to happen very often, but you should always think about it,” she said.

Two words a broker should hear more.

Thank You.

Thank you for making sure your customers get the coverage they really need.

Thank you for doing whatever it takes to get your customers back on track.

Thank you for supporting the community where you live.

Thank you for pushing us and asking what’s next.

Thank you for recommending a Canadian company.

Certain conditions, exclusions and restrictions may apply. The BIP logo is a registered trademark of the Insurance Brokers Association of Canada (IBAC) used with permission. All other trademarks are properties of Intact Financial Corporation used under license. © 2011 Intact Insurance Company. All rights reserved.”

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Who Has Insured the

Wind?

Canada’s emerging wind industry presents a unique and complex set of risks.

Rob Cruickshank Director of Construction and Renewable Energy, RSA Canada

Canada’s growing wind energy industry presents a world of opportunities for project stakeholders and, for insurance, an interesting set of risks for each stage of a wind project from cradle to grave.

Wind energy is big business: it encompasses planning, parts manufacturing, supply and repair, transportation, turbine construction and operation and repair, right through to disposal.

Each of these project aspects is associated with a unique and multifaceted set of perils to be considered in the underwriting process. Here are some things to consider about the dynamic and complex business of insuring wind.

sessment, land acquisition, obtaining permits, public consultation, economic and financial analysis, manufacturing and eventually site preparation. Each of these steps entails rigorous approval and administrative processes involving legislation, multiple stakeholders, consultants and government bodies. Although insurance — including physical and liability-related risks — comes into effect once the project is started, understanding this rigorous process and the potential delays is part of knowing the client’s business and the challenges they face.

According to the Canadian Wind Energy Association (CanWEA), the total cost of a large-scale wind farm ranges from US$2.2 million to US$2.8 million per installed megawatt of generating capacity. The wind turbine makes up 70% to 75% of the cost, and engineering, site service and construction accounts for the rest of the balance.

For a project of this scale, the comprehensive planning phase alone generally takes more than two years and presents a long list of potential pitfalls. Given so many moving parts, project delays are possible at any stage of the planning process.

Leading up to construction, project development includes municipal consultations, wind resource assessment, design, environmental as-

26 Canadian Underwriter November 2011

Once all approvals are satisfied, the site is ready to be prepared and insurance comes into play.

The site preparation process can include constructing access roads for transporting parts and clearing areas where turbines will be erected.

This includes preparation of the foundations, excavation, formworks installation and pouring concrete and rebar.When a turbine is ready to be erected, construction happens on-site, assuming all turbine parts — from the tower to the nacelle (a cover housing for engines, fuel or equipment) and blades — have arrived on time and are ready for attachment. In addition, specialized construction equipment must be on hand to undertake turbine assembly.

The massive turbine parts can be a significant

Illustration by Philippe Beha/www.i2iart.com

INSURANCE AND SITE PREPARATION PERILS AND PLANNING

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burden for transport ships, trailers and the routes on which they travel, creating a significant risk for damage or loss en route to the site. Issues arising during water transportation of a wind turbine might include a load shifting on a ship, which can cause damage to the blades, or a piece of equipment falling into the water at the port. Potential snags with land transportation include truck-hauling equipment getting stuck in soft soil, a landslide or road collapse due to the weight of the equipment. Also, a trailer could overturn during transport, causing equipment to fall off the trailer entirely. It is critical to identify the necessary turning radius and make sure roads are suitable for handling the weight of the equipment.

As wind projects increase in scale, turbines are getting bigger, and so is the equipment required to build them. Currently, a limited supply of contractors’ equipment meets the needs of the wind sector within Canada and around the world. Supply chain issues related to availability of turbine parts and construction equipment are added risk factors to be considered. A wellthought-out site delivery plan, including contingencies for unavailable equipment, is imperative. It is also important to have a good knowledge of experienced construction companies, contractors and well-made construction equipment.

PREVENTATIVE MAINTENANCE When a wind turbine is operational, ongoing preventive maintenance is vital to sustained production and business continuity. At this point, it is necessary to have access to equipment and spare parts for repair when available or required. Common operating issues include breakdown within the nacelle, including the generator, gearbox or transformer units — all are critical to turbine function. Timely access to

Supply chain issues related to availability of turbine parts and construction equipment are added risk factors to be considered. cranes and replacement parts is crucial in the event of equipment breakdown.

Failure to obtain access to a crane or replacement equipment in a timely manner can seriously affect business continuity, since turbine replacement can take up to an average of two years. To minimize the business interruption element as much as possible, it is important to understand what parts are stored nearby, or at least in the country, as opposed to parts that may have to be sourced from Europe or other overseas warehouses. As the industry grows in Canada, some European parts manu-

facturers have established Canadian operations, making it easier to meet supply needs. To anticipate potential shipping delays, it is useful to know which manufacturers have set up shop in Canada, as opposed to those who operate overseas only.

If the list of considerations seems daunting, keep in mind a few key questions: How remote is the location and what are the limits to access? What supply chain issues exist with parts and construction equipment? What is the transportation method, and should additional considerations — i.e. building road access — be factored in? Who are the manufacturers, construction companies and contractors? Do any issues exist related to the quality or availability of parts or services?

CONCLUSION It’s important for an underwriter to be familiar with the multitude of factors influencing each phase of a wind farm’s life cycle. Potential challenges outlined in this article are certainly not exhaustive. Each project is unique and we continue to build our knowledge and expertise in this emerging industry. Along with these challenges comes vast opportunity. Given increasing government support and investment in Canadian wind power, this sector will continue to grow, promising a diverse and interesting set of risks to write.

THE SCALE OF A WIND PROJECT To put the scale of a wind turbine project into perspective, consider the following specs for a 1.8 MW turbine, provided by the Canadian Wind Energy Association (CanWEA): The nacelle (generator components) is the size of a small motor home and weighs 63,000 kg (138,891 pounds).

Each blade is 39 metres (128 feet) long – the same length as a Boeing 737, and the 3-blade rotor weighs 35,000 kg (77,162 pounds).

The 65-metre (213-foot) tower is made up of rolled steel and comes in three pieces. The entire tower weighs 132,000 kg and contains enough steel to manufacture 206 average cars.

The foundation concrete is nine to 10 metres (33 feet) deep and 4 metres (13 feet) across. One hundred and two tension-type bolts run the full depth of the foundation.

The swept area of the blades is 5,024 square metres (16,483 feet) the size of 3 NHL hockey rinks combined or about 1.25 acres.

Total weight of the entire turbine is 230,000 kg (507,063 pounds) – about the same as two fully fueled 3,200 horsepower diesel electric locomotives.

November 2011 Canadian Underwriter

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Managing

Consumer JD Power’s 2011 Canadian Home Insurance Study

Satisfaction Key performance indicators point to the importance of sharing information with consumers, most notably in the area of billing.

Lubo Li

Senior Director and Practice Leader, J.D. Power and Associates (Toronto)

J.D. Power and Associates has been measuring home insurance customer experience in Canada for the past four years, providing insurers with a benchmark to help improve their services and to help consumers make purchase decisions.

In 2011, our survey shows it is vital for insurers to share information with customers effectively. A good starting point for insurers is to examine their billing statements, which are sometimes the primary touch point with their policyholders. Four out of our Top 10 key performance indicators (KPIs) centre on this critical process. The most important is to make sure customers understand their bill. Including helpful information on the bill is one of our key KPIs. Our reading of this key metric indicates there is much room for improvement: only 40% of customers report receiving helpful information on their bills.This KPI also has a wide range of performance among the regions — from 33% in

28 Canadian Underwriter November 2011

Western Canada to nearly 66% in Quebec.

Although a majority of homeowner policies is currently being sold through the agent/broker channel, many customers rely on call centres to service their policies. Thus it is imperative customers feel they can easily communicate with call centre representatives, and that all parties acting on behalf of the insurer are following up with them when expected. Both of these practices have the highest compliance rates in the industry (93% and 95%), and will lead to steep decline in satisfaction when they are missed.

KPIs AND INDUSTRY PERFORMANCE In addition to assessing customer satisfaction, the annual industry benchmark study identifies and measures insurers’ performance against several KPIs.These KPIs connect the specific behaviours insurers can influence throughout various customer-facing activities with the ultimate customer experience metrics, including their commitment, loyalty and advocacy. KPIs also provide industry best practices that insurers can leverage to align their current customer service processes and standards, identify performance gaps against such best practices, and set improvement priorities that are highly actionable and quantifiable.

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Figure 1 (please see Page 30) shows the Top 10 KPIs, including a comparison of the industry performance on each KPI. We also look at the impact of not implementing the KPI on our Customer Satisfaction Index (CSI), which is measured in 1,000-point scale.

IMPACT OF KPI ON CUSTOMER SATISFACTION As shown in Figure 2 (Please see Page 30), a customer can miss experiencing one of the KPIs and still have a high overall satisfaction with their insurer.

CSI scores average nearly 840 when one KPI is missed. When two KPIs are missed, the score declines to 803; as each additional KPI is missed, satisfaction further declines by approximately 40 points. Satisfaction is considerably lower (640 points and below) among customers who say that their insurer failed to deliver on five or more of these KPIs. This score is nearly 200 points lower than among customers whose insurer missed one KPI or none.

Including helpful information on the bill is one of our key KPIs. Our reading of this key metric indicates there is much room for improvement. Only 40% of customers report receiving helpful information on their bills.

repeat when contacting their insurer.

These customers also place more importance on their insurer’s ability to limit overall problems experienced.

Problem incidence is fairly low in Western Canada. Customers in the other two regions place more importance on insurers executing other service practices. For example, customers in the Atlantic/Ontario place more importance on receiving online access to policy in-

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REGIONAL EFFECTS AND KPI While these KPIs represent key drivers for the industry overall, they do not necessarily have the same impact across all three regions. Insurers need to tailor their services to meet the unique needs of customers within their own market.

To provide an example of how service practices differ between the regions, in Figure 3, the KPIs are displayed for each region in order of importance (Please see Page 30). Not unexpectedly, the KPIs in each region focus on similar issues, but have a different order of importance.

Many billing KPIs are consistent in importance across all three regions. Being offered multiple discounts is the only other KPI to be included across all three regions. This KPI is met less than 50% of the time, indicating insurers have an opportunity to better communicate the value of each policy to their customers.

KPIs unique to the Western region focus on servicing issues, such as limiting the information customers may have to

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29

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Figure 1

formation — a KPI that is met for only one in six customers. Customers in Quebec place more importance on avoiding difficulty understanding the CSR when contacting the call centre. A representative speaking with an accent is a frequent complaint among those experiencing problems, although this KPI is met at a very high compliance rate.

Delivery of Top 10 KPIs_ Regional Comparison Industry Average

Atlantic/Ontario

Western

Ensure customers understand bill

Quebec

Impact on CSI if KPI is missed

67%

(111) 40%

Include helpful information on bill

(96) 91%

Limit billing errors

(88) 59%

Provide bill explanations when needed

(100) 48%

Offer multiple discounts

(64) 85%

Provide payment options

(50)

Offer annual policy reviews

32%

Provide print or electronic mailings

32% 93%

Avoid difficulty in understanding CSRs

(73)

KPI DELIVERY BY REGION

(60)

Not only do the most important KPIs influencing customer satisfaction differ by region, but also the compliance rates of insurers executing these KPIs differ widely among the regions (Please see Figure 4). Insurers in Quebec are the most successful in delivering these KPIs, which might be expected given the much higher overall satisfaction scores in this region.Thirty per cent of customers in Quebec report receiving all of the

(161) 95%

Agent/Broker follow-up when expected

(180) 20%

40%

60%

80%

100%

% Meeting KPI

Figure 2

Delivery of Top 10 KPIs and Impact on Overall CSI 2011

2011

60%

900

50%

803 800

759

40%

724

30% 20%

18%

20%

700

22%

21% 639

19%

600

Overall CSI Index

% of Total Customers

838

KPIs represent key drivers for the industry overall, but they do not necessarily have the same impact across regions.

Insurers need to tailor their services to meet the unique needs of customers within their own market.

10% 500

% All KPIs delivered or Miss 2 only 1 missed

Miss 3

Miss 4

Miss 5 or more

Figure 3

Top 10 KPIs by Region_ In Order of Importance Importance Rank Order

Western Region

Atlantic/Ontario Region

Quebec Region

1

Include helpful information on bill

Limit billing errors

Ensure customers understand bill

2

Ensure customers understand bill

Ensure customers understand bill

Agent/broker follow-up when expected

3

Avoid repeat information

Include helpful information on bill

Offer multiple discounts

4

Limit billing errors

Provide bill explanations when needed

Avoid difficulty in understanding CSR

5

Limit overall problems experienced

Offer multiple discounts

Provide bill explanations when needed

6

Offer multiple discounts

Provide payment options

Multiple policy penetration

7

Provide bill explantions when needed

Provide print or electronic mailings

Include helpful information on bill

8

Offer annual policy reviews

Offer online policy access

CSR follow-up when expected

9

Provide print or electronic mailings

CSR follow-up when expected

Offer annual policy reviews

Agent/Broker follow-up when expected

Resolve issues on same day

Provide payment options

10

KPIs unique to each region

KPIs similar across all 3 regions

Figure 4

Delivery of Top 10 KPIs_ By Region Western Western Index

Atlantic/Ontario Atlantic/Ontario Index

Quebec Quebec Index 900

50% 800

40% 30%

30% 20% 10% %

19%

29% 21% 17%

29% 23% 22% 23%

22% 17%

10%

All KPIs delivered or only 1 missed

700

20% 13%

600 5%

Miss 2

30 Canadian Underwriter November 2011

Miss 3

Miss 4

Miss 5 or more

500

Overall CSI Index

% of Total Customers

60%

KPIs, or that they are missing only one.

That is three times the rate measured in the Atlantic/Ontario region (10%). Furthermore, insurers in both the Western and Atlantic/Ontario regions have much higher rates of missing five or more KPIs, which results in extremely low satisfaction scores — a finding consistent across all three regions.

Given that lower satisfaction leads to higher policy lapse rates and lower customer referral rates, insurers should be highly motivated to optimize their service to match the expectations of their customers. Insurers must adapt their processes to maintain a competitive edge, and deliver a superior customer experience through consistent services across all channels and all touch points.

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Expect the Unexpected We asked executives in the Canadian P&C reinsurance industry what lessons they learned from the devastating global catastrophes of 2011 and how their knowledge might be applied in 2012.

32 Canadian Underwriter November 2011

Global

catastrophes of epic proportions dominated headlines all over the world in 2011. Now that the year is almost over, Canadian Underwriter asked senior executives of Canadian reinsurance companies to reflect on the lessons they have learned during this especially tough year, and how they might apply what they learned going forward into 2012.

The lessons ranged widely. Some saw the need for further refinement of catastrophe models. Others questioned whether reinsurers had made the most of a strategy to diversify their risks across the globe. Many cited the need for increased underwriting discipline, noting the increased frequency and severity of insured losses in 2011 was exacerbated by the financial instability of the global economy.

A few summed it all up in a single phrase: Expect the unexpected.

With that, we present the reinsurers’ answers to our question: ‘What lesson(s) have you learned over the past year that you will be bringing with you into 2012?’

The answers are printed in alphabetical order by last names.

1

Hervé Castella Head of Canadian Operations, PartnerRe

The year 2011 saw a series of significant catastrophes both in Canada and worldwide. In particular, the New Zealand and Japan earthquakes brought renewed respect for the very same remote catastrophe risk that threatens Canada.

First, these events have highlighted the large modeling uncertainty around earthquake risk, since their magnitude

and impact — e.g. through liquefaction— fell outside of the current science and cat models.

Second, the recent earthquakes demonstrate the challenge of trying to mitigate tail risk through diversification. With only a handful of real peak earthquake zones around the world, each priced to long return periods, you need to look to other lines of business to diversify; even that becomes challenging as client retentions continue

to increase. This lack of diversifying risks is particularly pronounced in Canada, where the premium ceded to reinsurers fell to roughly $1.7 billion in 2011, while British Columbia quake limit bought through local catastrophe and per-risk programs reached an alltime high of $18 billion.

Finally, the industry needs to ask itself if it has properly addressed aftershocks both from an accumulation standpoint and a pricing perspective.

November 2011 Canadian Underwriter 33

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In our view, all these factors point to a price strengthening of property reinsurance at a time when the primary commercial market is still flush with excess capacity and competition.

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2

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4

André Fredette Senior Vice President, Caisse Centrale de Réassurance

Over the past year, we have seen an insurance market that continues to be stagnant in commercial lines. Some slight improvement in personal lines pricing has occurred. Auto claims seem to have stabilized for now.

An increase in the number of surety claims may be due to government stimulus spending starting to end.

The most prominent factor to date is that reinsurers have seen a significant increase in both the frequency and cost of property catastrophe claims. Large individual fire losses have been the next most significant factor.

We see gradual increases in claims reserves, indicating a kind of inflation factor occurring in the background or, in some instances, a weak reserving policy.

The frequency and cost of catastrophe losses experienced in the last two years may now be the new normal.

Unfortunately, pricing has not yet caught up with the claims. Many reinsurers are running combined ratios over 100% at third quarter. Aggregate cat covers have been particularly hard hit.

Large residential fires like Slave Lake will again bring into question the amount of exposure insurance companies assume when putting unlimited Guaranteed Replacement Cost in their homeowner policies. It will probably be two years before we know the true cost of Slave Lake.

The above results, along with a difficult investment climate, will put pressure on pricing in 2012. Given that most companies are in a comparatively rich capital position, it will be interesting to see which companies maintain current covers when prices go up and which will instead move to larger net retentions.

34 Canadian Underwriter November 2011

3

Caroline Kane Senior VP, Chief Agent in Canada, Toa Reinsurance Company of America

One key lesson learned in 2011 is that we should expect the unexpected.

Global catastrophe activity, both with respect to the frequency and magnitude of the events, will be remembered for many years to come. Canada, too, has had its fair share of loss activity during 2011.

The forest fires in Slave Lake, Alberta, which caused Canada’s second-largest insured disaster, reminded the industry about the importance of insuring to value and guaranteed replacement cost.

We saw an increase in the number of buyers and sellers of catastrophe aggregate covers in 2011. No doubt this trend will continue in 2012, subject of course to adequate pricing for reinsurers’ capacity (given the fact that some of these covers took a beating this year).

For reinsurers, another lesson learned is that it is becoming increasingly important to understand the business models and risk exposures of each of our ceding companies in order to offer practical solutions and fair pricing. We are fortunate enough to have a talented, creative and professional reinsurance broking community in Canada that plays a key role in assisting in this regard. Due diligence is crucial on both sides. Insurers should be evaluating their reinsurance partners more closely and vice versa. We need to take a measured approach in deploying our capital, managing risk and selecting business partners where there is an appropriate strategic fit.

Henry Klecan Jr. President, CEO, The Americas, SCOR

Lesson unexpected Lesson 2: 1: Expect Stay thethe course We strive for consistency and continuity in our business approach, thereby minimizing uncertainty. Our clients have appreciated this approach over time and we don’t intend to change this approach anytime soon. Predictability is a key successful factor for us.

Lesson 2: Expect the unexpected Tornadoes, hurricanes, floods and destructive fires destroying an entire town have made 2011 a year to be remembered. We have seen concentrated severity mixed with some frequency factors.

Is there more to come in 2012? How does one underwrite in such an environment? Prepare for the unexpected.

Lesson 3: Underwriting integrity We have seen a lot of movement in the primary market (insurer) sector to protect or gain market share at almost any cost. This disturbing trend has the potential for a long-term negative effect.

Investment yields are poor and we can’t look into that bucket to supplement poor pricing. Where do we go from here? To cite an overworked concept, “back to basics.” Let’s assume a more disciplined approach to our business.

Lesson 4: Economic woes Canada has been spared many of the economic meltdowns recently experienced in Europe and the United States. We should consider ourselves very fortunate. However, at the risk of being accused of political grandstanding, it is sad to see political agendas superseding or usurping the priorities and needs of citizens. We operate in a global economy and, notwithstanding a strong Canadian regulatory framework, Canadians remain at risk of facing economic turbulence if partisan politics are not checked. Within such a scenario, we continue to practice our profession, be it underwriter or intermediary.

I’m optimistic about the business prospects for 2012. What about you?

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COVER STORY

Expect the Unexpected

5

7

Sharon Ludlow,

Lambert Morvan Senior Vice President,

President, CEO, Swiss Re Canada

Events of the past few years have given us textbook examples of global interdependence. Whether it was the financial crisis and its domino effect on banking, or the tragedy in Japan that disrupted supply chains, we have certainly been exposed to a number of hard lessons with their consequences.

As soon as we think we have the last crisis figured out, there’s a new one, and this time the dynamics are far different.

We know about low growth and low interest rates. When insurable assets and financial assets are stagnant or retreating, insurers worry about their bread and butter: premium and investment income.

The difference this time is a stiff political headwind. The debt crisis in Europe is a tough one to figure. One stock analyst said: “We’re used to evaluating companies, economies, industries. Now we’re being forced to evaluate politics. That’s a very uneasy proposition for most investors because it’s not what our background is.”

And don’t look to governments to develop ”friendly” policies for our sector, since they have more pressing issues to address.

The threat of a second recession is everyone’s problem. We are all interconnected. Yet, being global is also an advantage for reinsurers and insurers.

There’s strength in our diversification. Let’s use that to our advantage.

Remember that technical underwriting and risk selection are our core strengths. We are a resilient industry in unsettling times.

6

Cam MacDonald Vice President, Transatlantic Re

There can be no denying the frequency of large (cats) and small (kittens) losses produced by Mother Nature is on the rise both locally (Slave Lake, Goderich) and around the globe 36 Canadian Underwriter November 2011

Chief Agent, Odyssey America Re

5

6

7

8

(Japan, New Zealand etc.). These dramatic increases in large losses, many of the catastrophic variety, are having a significant negative impact on the industry’s loss and expense ratios. What is being denied, and what underwriters should take with them into 2012, is the concept of a large loss load or cat load included in their rate making process. Current rating practices barely address attritional losses, with little or no forethought given to the impact of these large losses on a company’s combined ratio. As an industry, we must address this lapse in our rating philosophy if we hope to gain control of deteriorating loss ratios.

While global economic issues dominate international headlines, here at home we are constantly reminded that Canada weathered the financial crises better than most industrialized countries. Be that as it may, as move throughout 2012 and beyond, it is imperative that we continue to focus on capital management, investment policies and ERM practices, all in an effort to ensure the future financial health of our industry. Having the proper resources in place to manage these critical issues cannot be overlooked. Many organizations have appointed a chief risk officer or similar position to address our ever-changing risk environment. Political risk, economic risk and regulatory risk are but a few of the ERM challenges facing our industry as we move through the second decade of the new millennium.

A typical question everyone should ask after facing adversity is: What lesson have you learned and what are you doing about it? As far as reinsurers in Canada are concerned, likely the most significant lesson learned is to be aware of the “unknown” when evaluating potential exposure to losses in a reinsurance contract.

The Canadian insurance industry incurred significant losses over the past 14 years as a result of what would have been unforeseen catastrophic events. These include the 1998 ice storm, which is still the largest catastrophic loss in Canada, the 2003 forest fire in Kelowna that cost the industry roughly $300 million, as well as this year’s forest fire in Slave Lake, which will likely be the secondlargest catastrophic loss for the industry.

This should be a wake-up call to insurers and reinsurers. We need to continue to enhance our risk management and risk quantification techniques to go beyond the currently available off-the-shelf catastrophe models. I find it encouraging that the insurance industry generally embraces the use of catastrophe models to manage property aggregate exposures and to quantify the risk transferred to reinsurers. But we must not forget these models have an incomplete set of events from which they simulate probable losses; they do not capture the full array of potential risks or perils that we face in Canada. With three major “un-modeled” catastrophe events in the last 14 years, it begs the question as to how frequent should we expect those surprises to occur? Certainly more frequently than every 50 years.

8

Steve Smith President, CEO, Farm Mutual Reinsurance Plan

This year presented several opportunities to experience and learn. It was year of extraordinary losses, globally and domestically, and unprecedented investment market volatility. The year created an awareness of generational differences

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HOLDS ITS COURSE

Global reinsurer

SCOP008_8,125X10,875_CAN-UNDER_GB.indd 1

The fifth largest reinsurer in the world, SCOR has a balanced business model with three powerful engines: SCOR Global Life (Life reinsurance), SCOR Global P&C (Non-Life reinsurance) and SCOR Global Investments (asset management). With the acquisition of Transamerica Re, SCOR has further accelerated its development in 2011, as part of its strategic plan for the period 2010-2013, “Strong Momentum”.

Despite an uncertain and difficult environment, SCOR is on track in terms of the objectives of its strategic plan and the four cornerstones of its business model: a strong franchise, a controlled risk appetite, high diversification and a robust capital shield. With a pro-forma premium income of EUR 8.6 billion in 2011 and net assets of EUR 4 billion at 30 June 2011, SCOR therefore continues to reinforce its position among the leading global reinsurers, as well as the added value it brings to its clients. www.scor.com

18/10/11 16:35

COVER STORY

Expect the Unexpected

in the workforce; and it was year that turned the industry focus to underwriting profit and discipline.

The lessons were multifaceted, including lessons of consistency, commitment to core values, commitment to fundamentals, as well as commitments to face change and adaptability.

Following the financial crisis of 2008, discipline and policy came under the microscope. Implementation of sound fundamentals emerged and corrections took place. As 2011 unfolded, these fundamentals and principals were put to the extreme test.

Companies that maintained their discipline mitigated the losses from weather events and the market volatility. Risk management policies that identified risk, risk appetite and tolerance, as well as risk mitigation strategies, became essential to navigating the onslaught of adversity. Long-term views needed to prevail, since reaction-generating, short-term remedies would compromise the integrity of future stability and profitability. This compromise to integrity might have threatened distributors’ and consumers’ confidence in their insurers. The integrity of relationships between insurers, distributors and consumers is imperative for ensuring profitable portfolios, proper risk selection and predictable outcomes. Placing values on these business relationships and strategic partners and making them a true priority will outpace difficult cycles, periods or events.

Another lesson arising in 2011 relates to human resources. It became abundantly clear that generational issues and differences were emerging.

What motivates young employees is very different from what motivates long-term, experienced employees.

The commitment to train, develop and invest in young people is being tested.

The “Gen X” and “Gen Y” employees view their employment in an average of five-year increments. As an industry, our commitment to training and de38 Canadian Underwriter November 2011

9

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velopment needs to continue to ensure the succession of the future leaders of our industry.

9

Matt Spensieri Vice President, Reinsurance, Catlin Canada Inc.

We are all taught from an early age to “learn from experience.” With that in mind, we embrace the 2012 renewal season with lessons learned over the past year.

Catastrophic events began early in 2011 with an earthquake in Chile; an earthquake and tsunami in Japan; earthquakes in New Zealand; and typhoons in Asia. Closer to home, we had hurricanes in the southern United States and Caribbean, and tornadoes in the U.S. Midwest. In Canada, we had flooding, hail, windstorms/tornadoes and the Slave Lake fires.

Just tabulate individual catastrophic losses from around the globe and it becomes clear their frequency is definitely increasing. Cumulative losses from all these various events are also increasing. While 2011 is not yet fully behind us, it is sizing up to be one of the worst years on record — if not the worst — from a catastrophe perspective.

Some of these losses were predicated/predictable. However, in many instances, we are observing that certain exposures may not have been modeled, underwritten or priced. In other situations, the magnitude of losses was dramatically undervalued, as in the case of the Japanese tsunami, or return periods were severely understated, as was the case in New Zealand.

The important details taken from each event allows all of us to make ad-

justments to the analytical tools used to manage and price our portfolios. While likely not available for the 2012 renewal season, we should expect to see updated or revised models available from the various vendors, incorporating latest lessons learned.

Lesson learned: models are necessary and wonderful tools, but they are not failsafe, so use accordingly.

10

Brian Udolph Senior Vice President, Regional Manager (Canada), XL Re

There is an old saying, “Don’t look where you fall, but where you slipped.”

We learned in 2011 that exposure to catastrophes continues to increase in frequency and severity in Canada and abroad, with the resultant losses eroding reinsurers’ capital bases. This trend is expected to continue and lead to demands to improve exposure modeling and to protect balance sheets from catastrophic events, leading to allocation of aggregate capacity to markets with the highest returns. Class action certifications have increased in Ontario this past year, which may affect loss trends, and this needs to be factored into current underwriting. We view Ontario auto as improving, but it is still an unprofitable product. Despite the acknowledged strength and resiliency of Canadian financial institutions and the reinsurance market throughout the recent worldwide financial crisis, increased regulation and capital requirements will be likely in the near term. All of which could mean reduced profit margins in a low-interest environment. Indeed, we recognize the reinsurance business is becoming more complex and difficult due to increased regulation, the prospect of higher capital ratios, current and short-term low investment yields, combined with the high level of competition.

As usual, market response to these difficult challenges ahead remains unpredictable: some lessons are never learned until it is too late.

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David Gambrill Editor

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the Making onnection C IBAO’s convention addressed methods for brokers to better connect with their carriers and their young consumers.

Chasing the “Utopia” of a common, industrywide technology solution for broker-carrier connectivity, tips for communicating with Generation Y consumers and advice on how to find good producers all took centre stage at the 91st Annual Convention of the Insurance Brokers Association of Ontario (IBAO) on Oct. 21.

CEO PANEL: BROKER-CARRIER CONNECTIVITY Brokers should not hold their breath waiting for a common, industry-wide technology solution to help resolve the ongoing conundrum of broker-carrier connectivity, a panel of insurance company CEOs suggested at the convention.

Brokers have long called for some form of standardized, industry-wide technology solution that would allow brokers to connect to all of their insurance company markets through a single interface and within their broker management systems (BMS).

40 Canadian Underwriter November 2011

For the past several years, brokers have been critical of insurers for adopting individual “portal” technology solutions that allow brokers to connect with individual carriers in real-time, but complicate the broker’s workflow since brokers have to deal with various different company technologies and passwords.

However, when asked whether a common, industry-wide tool would be preferable to individual portal solutions, insurance company CEOs expressed skepticism about the realization of such a project.

George Cooke, president and CEO of The Dominion, said insurers and brokers all want a tool that makes carriers’ interactions with the broker channel more efficient. But he expressed reservations about undertaking an industry-wide approach because of the failure of such projects in the past, including SYNCRON and the CSIO Portal (the latter of which cost millions of dollars in development). “Any time you try to work on these industry-wide initiatives, they fail miserably,” Cooke said.

Alister Campbell, president and CEO of Zurich Canada, likened the search for an industry-wide solution to the ongoing quest by physicists for a theory that would unite Einstein’s general the-

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ory of relativity with the seemingly mutually exclusive principles of quantum mechanics.

“The constant aspiration to get to a simple system is like physicists trying to get their ‘unified field’ theory working out,” Campbell said. “It’s likely to happen some day, but it’s not likely to happen in our lifetime.”

In the meantime, Campbell said, the industry has taken a step forward with the Centre for the Study of Insurance Operation (CSIO)’s creation of XML standards. The project facilitates a standard data exchange between brokers and carriers through the broker BMS. Maurice Tulloch, president and CEO of Aviva Canada, agreed chasing a single tool is somewhat like chasing after a “utopia.” In the meantime, he said, the industry has taken some “good interim steps.”

For example, Tulloch cited the ongoing progress of the data exchange project launched by the Insurance Brokers Association of Canada (IBAC). IBAC is currently working with insurers and vendors to create a basic framework for data exchanges between brokers and insurance companies through the broker BMS. Like many other panelists, Jean-Francois Blais, president of Intact Insurance, said the fact that brokers and insurers have different technological systems and needs necessarily slows down the development of a common solution.

“Obviously, when we build internally, it goes faster,” he said. “When we try to build a common solution, and bridging it with all of the members out there, we need their support and we need to synchronize all of it and it’s more timeconsuming.”

One CEO observed that when the CSIO Portal project stopped in December 2005, the failure actually expedited the development and creation of portal solutions between brokers and individual carriers.

Karen Gavan, president and CEO of The Economical Insurance Group, cautioned that if the success of an industrywide tech solution means companies must all follow the same underwriting rules, the differentiation between prop-

42 Canadian Underwriter November 2011

erty and casualty companies would disappear.

“The key differentiation between our products [in the P&C industry] is the product design, the underwriting rules,” she said. “And based on that level of complexity, you are trying to say [by creating a common tool], ‘Make everyone the same.’

“But we might as well all give our business to the direct writers now if we don’t want to differentiate on that basis.”

TEXTING GENERATION Y CONSUMERS Ontario brokers need to start communicating with Generation Y consumers using the means with which they prefer to communicate — text primarily, then email.

Otherwise, they risk losing out on communicating with a large chunk of the province’s consumer demographic.

The constant aspiration to get to a simple system is like physicists trying to get their ‘unified field’ theory working out. It’s likely to happen some day, but it’s not likely to happen in our lifetime.

Jason Ryan Dorsey of the Centre for Generational Kinetics issued the clarion call during his keynote address at the IBAO convention. He defined Generation Y consumers as people in the age category of 16-34.

Even though slightly more than twothirds (67%) of Ontario’s home and auto insurance is sold through the broker channel, only 19% of Generation Y consumers — representing almost onethird (32%) of all of the province’s consumers — buys home and auto insurance through a broker, Dorsey said.

To change these statistics, brokers need to start communicating with Gen Y consumers using the methods with which they prefer to communicate.

“The most important form of communication?” Dorsey said. “Text.”

Second is email, although Dorsey qualified that email communication is generally more effective the closer it comes to replicating focused, quick text messages.

“Gen Y only reads the subject line of an email,” Dorsey said. “The subject line does not get us [Gen Ys] to open the actual email. It’s not worth sending the email if the subject line is no good or is unfocused.”

In their communications, Generation Y consumers are generally looking for three things, Dorsey said. Video clips, pictures and bullet points.

POACHING PRODUCERS FROM TARGET MARKETS Brokers looking to acquire good producers should consider poaching association executives from the brokerage’s target markets.

Al Diamond, president of Agency Consulting Group, offered the tip in his seminar entitled Paying for Productivity-Acquiring, Compensating and Managing Producers in the 21st Century and Incentive Compensation for Brokerages.

While a majority of the seminar dealt with growth-focused compensation methods for producers and non-producers alike, Diamond’s presentation contained a few tips for brokerages looking for new producers. One was to find well-connected experts in the brokerage’s target market.

“Association execs from our target markets are prime candidates,” said Diamond. “They hate where they are.They are under a great deal of stress, and they are looking for some place where they can use the skills or relationships that they have.

“So if you insure in construction, and there is a construction trade association,” approach an executive on the association, Diamond suggested. “They are respected, and they know everybody [in that trade].”

Diamond added that people who aren’t from the insurance industry have the potential to be good producers. “We can train insurance,” he said. “We can’t train sales.”

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The Future of Integrity A truly multi-generational workforce introduces an entirely new dimension to ethics and mentoring.

The landscape of today’s workplace is changing as four generations come together for the first Insurance Institute of time. The dynamics imposed by a multigeneraCanada tional workforce are already challenging traditional workplace structures and will continue to reshape how we work together. Reaching beyond The CIP Society represents more that 16,000 graduates what we already know about cultural diversity and personality styles, multigenerational diversity of the Insurance Institute of introduces an entirely new dimension requiring Canada’s Fellow Chartered Insurance Professional (FCIP) all generations to re-think, learn, grow and adapt and Chartered Insurance Pro- to an increasingly complex work environment. fessional (CIP) Programs. The Does this multigenerational diversity influence professional ethics? Do four generations of workCIP Society, through articles ers view or understand ethics differently? such as this, is working to In the past, senior industry professionals acted bring ethical issues to the forefront and provide learning as informal mentors for junior professionals and new recruits and helped them navigate complex opportunities that enhance ethical issues. Does this mentorship continue in the professional ethics of all today’s workplace environment? If so, will it insurance professionals. continue for years to come?

We asked four seasoned professionals and one young professional to comment on whether or not they see the industry changing and, if so, how.

The CIP Society

44 Canadian Underwriter November 2011

LESSONS LEARNED Maurice Audet, Aon Reed Stenhouse Inc. Many years ago, I was told that an unethical person was one who stole money.That definition was just as inadequate then as it is now.

Thirty-eight years ago, when I started as a broker, we learned how to deal with underwriters by working with more senior people. The procedure was effectively an ad hoc mentoring system, although no one actually considered himself or herself to be a mentor. We learned what was appropriate by working with others and learning from our mistakes.

We soon realized not all mentors were equal.

A senior broker advised me that I was always to stress the positive aspects of an account and never to show the warts. If the underwriter did not ask, volunteering unflattering data was unacceptable. When I pursued the matter with my manager, I was advised that there were two approaches to being a broker. In the first, we could provide bare bones information; if the underwriter did not ask for additional information,

Illustration by Philippe Beha/www.i2iart.com

The CIP Society Ethics Series

shame on him. On the other hand, we could provide all of the information, warts and all. I was then told that if I was not prepared to provide all of the information, I should seek employment elsewhere.

When we consider the lessons from Enron, Lehman Brothers, the sub-prime fiasco and so many similar situations that have been prevalent in recent times, we have to wonder if there is any such thing as a concept of business ethics. But when we consider the consequences of these activities, we have to realize we cannot survive without a clear concept of what is acceptable and what is not.

GREAT TRADITION OF MENTORING Bradley Wells, Blaney McMurtry LLP Over the past few decades, a push has been underway to change the perception of the insurance industry from a process to a profession. Associations and regulating organizations offer continuing education programs and designations for achievement (i.e. CIP, FCIP, CAIB, CRM), which add more depth to the industry’s long-held principles of professionalism. This is evidence of a shift in the multigenerational self-perception of the insurance industry, as well as an outward indication of a more structured professional education.

The industry has a great tradition of mentoring. Even as the most senior professionals retire from the workforce, there is no reason this tradition cannot continue. Just as today’s senior professionals learned from the previous generation, they must be encouraged to pass their knowledge down to the new generation of professionals.

And as the ranks of junior professionals gain knowledge and experience, they are no longer “junior.” They should be encouraged to participate in the mentoring process, thereby continuing the existing cycle on its endless loop.

Many years ago, I was told that an unethical person was one who stole money.

That definition was just as inadequate then as it is now.

FUTURE OF INTEGRITY Paul Griffith, Humber College A changing business environment doesn’t have to translate into changing values or a different understanding of what is right and wrong. During the past decades, we have experienced transformations in business methodologies, technology, rules, regulations,

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

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

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

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

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

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

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

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

Canadian Underwriter November 2011

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

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

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

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

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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

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 Guarantee Company of North America “Specialized insurance products...professional service” www.gcna.com

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SPECIALTY INSURANCE Wawanesa Insurance Earning your trust since 1896. www.wawanesa.com

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products and services. Although some dishonest people have been caught in their wrong-doings, the majority of business people are honest and hardworking.

As this business evolves, many senior people are exiting the industry because of retirement or career changes, and these folks have served as mentors for new recruits. Does this mean ethics and values will be departing with them?

This is not necessarily so, for a couple of reasons. Primarily, these people will have left an enduring impression on younger professionals. The indelible mark left on those who remain will be visible in their actions and words. Secondly, these newer participants will carry the torch and become tomorrow’s role models.

Without doubt, every generation has similar concerns about the future of integrity within their society and/or business world. It is not necessarily a bad thing that we ponder these issues.

It demonstrates our collective concern for a fair and ethical industry.

NO SHORTCUTS TO PROFESSIONALISM Nadine Austin, Registered Insurance Brokers of Ontario (RIBO) I entered the insurance industry in the 1970s, when jobs were plentiful and university degrees were not a prerequisite for being hired. I learned from people with lots of knowledge and the patience to ensure the principles of the profession were properly explained and completely understood. There were no shortcuts. It was a slow progression to becoming an insurance professional.

My concern for ethics training and understanding today stems from living in an economic-driven world, in which ethics may be compromised in order to remain competitive and stay employed.

The fast pace of living is being instilled from birth. It is encouraged through education, promoted in the workplace and deemed to be the way to achieve success. Global population integration

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Mentorship is often an unstructured form of learning. It has within it an element of accountability that arises from an emotional and personal attachment to the experienced and knowledgeable mentor. has introduced concerns into our society with respect to ethics. Ethics must be taught in order to be practiced. It is intrinsic to the health of our profession that we make business ethics as important an educational requirement as we do teaching coverage courses.

PROFESSIONALISM IN ALL GENERATIONS Marissa McMahon, Crawford and Company As a younger professional in the insurance industry, I’ve observed that today’s workplace presents a vast landscape of knowledge, understanding and experience based on the demographics of the industry’s workforce. As generations progress, differentiation is natural and seemingly more obvious between today’s so called “freshmen” and those

in their “graduating” years.

Today’s young professionals have from a very early age been surrounded with computers, cell phones, the Internet and the birth of social media. In the areas of practical skills and educational knowledge, the younger generation has been exposed to an impersonal but structured form of learning and development. Modern technology provides a more efficient way of learning, but removes the personal and emotional aspect associated with a mentorship.

Conversely, mentorship is often an unstructured form of learning. It has within it an element of accountability that arises from an emotional and personal attachment to the experienced and knowledgeable mentor. The arrangement of a mentorship allows for a higher threshold of professional ethics, since the learning foundation is personal and a role model exists as the benchmark for what is right and wrong.

More mentorship opportunities should be made available for the young generation entering the insurance profession. Ethics training should combine the formal, personal connection of a mentorship with structured coaching to ensure professionalism in all the generations to come.

THE LAST WORD Informally, it is anticipated that senior professionals will continue in the tradition of mentoring junior professionals.

Senior professionals won’t leave a void in ethical practice when they retire if they have had the opportunity to impart their knowledge and to create an enduring impression on the next generation.

Formally, it may behoove employers to formalize mentoring roles to ensure that junior professionals have access to experienced professionals who can offer the guidance and ethical advice they need.

Engaging employees at all levels in the mentoring process will ensure knowledge is transferred, ethical principles are applied and the mentee-mentor cycle is sustained.

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Every Team Needs a

Coach Structured coaching and mentoring programs can help Canada’s P&C industry leaders raise the next generation of the best and brightest.

Carey-Ann Oestreicher

CEO, Potential Unlimited

Imagine what a professional sports team would be like if it did not have a coach. There would be utter chaos. Now think about your own team at work. Who is the coach?

I work with leaders within the property and casualty insurance industry, and I can tell you there is a lot of pressure on people in top positions to do more with less. These individuals want to spend time mentoring and coaching their staff, but in reality they are so busy with their own jobs, they often do not have time to effectively coach staff too. As a result, I become an extension of these top leaders. Not only do I coach them, but I am called upon to act as a

48 Canadian Underwriter November 2011

mentor and coach to their staff as well.

This is perfectly reasonable: anyone who knows the economic theory of comparative advantage understands that people will reap the greatest profits by spending time doing what is their area of expertise and outsourcing the rest.

But in terms of having adequate time to coach their employees appropriately, leaders within the insurance industry have been hit with a double whammy. Organizations are already very lean due to the economic downturn, and now the insurance industry is grappling with the financial effects of an extraordinary number of catastrophes around the world this year. The industry’s senior leaders feel the need to be stronger, more efficient and better mentors. But the reality is that we can’t be all things to all people.We know that stretching our resources too thin doesn’t work in terms of our product offerings in business, so it is ridiculous to think that people can overextend themselves and still be effective in their jobs — or happy in their lives, for that matter!

If we don’t have time to coach emerging leaders ourselves, then we need to ensure a program is in place to provide them with support.

I am concerned for organizations that do not have effective coaching programs in place, either

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In terms of having adequate time to coach their employees appropriately, leaders within the insurance industry have been hit with a double whammy. Organizations are already very lean due to the economic downturn, and now the insurance industry is grappling with the financial effects of an extraordinary number of catastrophes around the world this year.

internally or through a third party. In September 2011, the Association for Professional Insurance Women, based in New York, released a study that it produced in partnership with the Insurance Networking News.The Women in Insurance Leadership Insight Report suggests progress has stalled in key areas for women in leadership. It says women require mentoring and coaching to acquire and sustain top positions within the insurance industry. “This data offers a new window on women’s professional development in an industry primarily comprised of men in top positions,” Pat Speer, chair of the Women in Leadership Forum, said of the report. “The groundbreaking perspective it delivers on the constraints women face in advancing will help organizations make informed choices about corporate led initiatives in the future.”

There is a desperate need for mentorship and coaching in the Canadian industry as well. And I can tell you from the work I do within the industry, this issue is not exclusive to women. I have male clients who come to me because they are looking for an external person to be a sounding board regarding issues that come up on the job. They know what they tell me is confidential so there is no risk of them getting caught up in office politics. They just need someone to listen to them and help coach them through their own decision-making process.

CREATING AN EFFECTIVE COACHING PROGRAM • Coaching programs need to be supported at the top level.This means senior executives, including the CEO, should have a coach themselves.

• There is a benefit to having both internal and external coaches at your organization. An internal person is accessible quickly and is very familiar with specific company issues. An external coach can give the client perspective that comes from dealing with a variety of different individuals from different organizations.

• Choosing a qualified coach is key.

Coaches training is not a regulated activity; anyone can say they are a coach regardless of their training and expertise. So look for a professional trained by either the Coaches Training Institute or The International Coaches Federation.

• Ensure the coach is working with you and/or your employees on a measurable action plan (a scorecard, for example).

• If the company pays for the coach (as opposed to the participants themselves), the participants are more likely to work with a coach long enough to see tangible improvements.

• Give your staff enough time and a dedicated space to have a coaching conversation. If employees have a coaching session scheduled but are told by their boss to cancel it to attend

another meeting, the coaching will lose its credibility and not be effective.

• Ensure your employees have a conversation with the coach in advance of the coaching relationship to ensure a good fit.

• A coach with executive experience will help to embed a coaching culture, since he or she provides credibility for the coaching profession within the corporate world.

• Allow the coaching process to be confidential between the coach and the client. The boss should not be privy to the personal details of the sessions so as to not erode trust within the coaching relationship. His or her concern is about the performance outcome of the employee(s). That being said, it can enhance the coaching culture within the organization for the coach to have a conversation with the boss at the onset of the sessions. The coach can then receive and discuss employee scorecards, which can help to map out areas of employee strength and weakness.

This will ensure the coach keeps corporate objectives in mind throughout the coaching process.

• Coaching based on an assessment tool helps to build a credible and effective ‘coaching action plan.’ This is what I use in all of my corporate/executive coaching. It sets the foundation, along with the individual’s corporate scorecard, for our coaching action plan and therefore the coaching sessions.

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Taking Care of Business

Robert Fletcher President, Intellectual Property Insurance Services Corporation (IPISC)

Many companies are simply unaware that the insurance they routinely purchase excludes coverage for their valuable intellectual property (IP) assets, especially patents.These assets often make up 80% of a company’s value and are protected by intellectual property rights. These rights are found in the form of patents, trademarks, copyrights and trade secrets, as well as in the making, using, selling, offering for sale or importing of a product or service. The tremendous value of these assets alone warrants the necessity of specialized IP insurance products. Intellectual property insurance must be a critical part of any company’s risk management plan. The inability to protect IP through funding the high cost of litigation is a leading cause of failure for companies.

Companies are either purposely or inadvertently self-insuring their IP risks. Companies can no longer afford to ignore the importance of insuring this asset, which gives them a competitive advantage. Companies that are successful or have innovative IP are more likely to be involved, either offensively or defensively, in an IP lawsuit.

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Specialized IP insurance policies are the only risk transfer tool available to make sure money is available for funding the high cost of litigation.

According to the American Intellectual Property Law Association’s most recent survey, the average litigation expense incurred by each side — plaintiff and defendant — through a patent trial is $2.8 million, assuming the amount in controversy is between $1 million and $25 million.

This number does not even include damages, which could easily reach several millions of dollars.

Without specific IP insurance in place, companies are often left with no real alternatives to cover the cost of litigation. Weak alternatives include:

Commercial General Liability (CGL) Policy Coverage CGL policies do not offer any meaningful IP coverage, since these policies are completely devoid of any IP enforcement coverage.The limited defensive coverage offered to an insured under a CGL policy is found in the “Advertising Injury” section of the policy, but it is limited in scope.

Illustration by Philippe Beha/www.i2iart.com

Many businesses are facing life-and-death legal battles over intellectual property disputes without knowing about IP insurance.

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The alleged infringement must be a direct result of the actual advertising itself.

be purchased to cover potential damages or settlements as well.

Professional Liability Policies These policies are designed to cover defects in design and performance, thus leaving a very narrow opportunity for an insured to secure defensive coverage for IP infringement.

Enforcement Insurance Enforcement insurance is a unique plaintiff’s policy that reimburses the litigation expenses to enforce IP against alleged infringers.

Companies’ Credit and Working Capital Reserves Given litigation costs and damages reported in the millions of dollars, many start-up companies find it impossible to adequately fund IP litigation. Thus, it is wise for companies to evaluate their borrowing capacity and their investor’s appetite to contribute to litigation.

The only alternative may be accessing working capital reserves. Obtaining insurance specific to this exposure leaves working capital available for growing and capturing market share and maintaining profitability.Therefore, if a company finds itself in court as a plaintiff or a defendant, funds are available to thoroughly and vigorously litigate.

Companies without IP insurance may be forced into litigation with larger competitors that have plentiful resources to litigate, leaving companies with the following alternatives to insurance: • abandon the products or IP rights.

• attempt to enter into a license agreement from a weaker financial position.

• sue the alleged infringer, or be sued by the IP owner, possibly depleting any available cash reserves in legal costs.

• incur a burdensome royalty payment.

• Be forced to settle due to lack of funds to litigate, instead of fighting the case on the merits.

Consider instead the following IP insurance policies available to help manage a company’s IP risk:

Defence Insurance Defence insurance reimburses the litigation expenses to defend against charges of infringing another’s IP rights by the products or services being sold. It might

Unauthorized Disclosure Insurance Unauthorized Disclosure insurance reimburses the litigation expenses to defend against charges of the unauthorized or unintentional disclosure of a third party’s entrusted confidential information.

Insurance coverage can even the playing field in IP litigation and afford smaller litigants the opportunity to defend their intellectual property rights.

any disputed matter is necessarily dependent upon the client’s willingness and ability to pay for the cost of adequately preparing and positioning their case for a favorable resolution,” Francis says. “When a case is built on a strong foundation, risk is minimized and the matter becomes more likely to be resolved early, favourably and in a manner that is less adversarial. Given the current economic climate, small and mid-sized companies are understandably more reluctant than ever to litigate and more willing to accept infringement as simply part of the cost of doing business.”

When companies are forced into litigation, their very survival is often at stake, Francis further observes.The lack of a war chest for funding litigation can force companies to minimize litigation costs to the point that preparation is undermined and the company is forced to negotiate from a point of weakness rather than strength.

“When there is a significant difference in the size of adverse parties, stronger litigants often depend on outspending their smaller adversaries in an effort to force a resolution that favours the party with the deeper pockets,” Francis says. “This is where I have found IP insurance to be an invaluable asset for any IP client. Insurance coverage can even the playing field and afford smaller litigants the opportunity to defend their intellectual property rights and force a more favorable resolution than would otherwise be possible against a larger adversary.”

CONCLUSION Multi-Peril Insurance Multi-peril is first-party coverage for a decrease in value of the insured’s assets resulting from losing IP litigation. It reimburses money directly to the policyholder beyond the legal costs and damages (awards) of the underlying case.

Jim Francis, a seasoned IP litigator with Francis Law PLLC in Lexington, Kentucky, recognizes the benefits of holding an IP insurance policy. “No matter how valid a client’s position or how skilled the attorney, the success of

Surprisingly, despite the established availability of IP insurance policies, most business owners have not been made aware of their existence. Equally surprising is the number of business owners who think they are covered for IP risk under their GL policy. Companies can no longer afford to ignore the importance of insuring this asset. It is important to discuss IP insurance with an insurance professional who is knowledgeable about intellectual property insurance.

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Arm

The of the Law

2011 Risk and Insurance Management Society (RIMS) Canada Conference

Vanessa Mariga Associate Editor

Privacy breaches, the extension of the U.S. regulator’s reach into Canada and expansion of the municipalities’ responsibility to pay for the mistakes of “ordinary drivers” made headlines at RIMS. Privacy breaches, the long arm of the U.S. law and “ordinary drivers” were all hot topics during the Risk and Insurance Management Society (RIMS) Canada Conference held in Ottawa from Sept. 18 to Sept. 21.

Panellists at the conference explored the scope and potential implications of a U.S. legal decision that suggests “mental anguish” can sustain thirdparty actions for a privacy breach. Economic loss used to be the key ground for such legal actions.

The conference also included discussion about risks emanating from south of the border. For example, delegates heard experts discuss regula-

52 Canadian Underwriter November 2011

tory developments in the United States that place Canadian businesses — even those with remote links to the United States — at risk of prosecution by the U.S. government under the Foreign Corrupt Practices Act. In addition, cases advancing through the U.S. courts are establishing what panellists described as a blueprint for expanding civil liabilities here in Canada.

Finally, panellists suggested Canadian regulators and courts are interpreting Canadian law so as to expand the definition of what constitutes an “ordinary driver,” thus increasing the standard placed on municipalities for maintaining and ensuring the conditions of roadways.

PROOF OF MENTAL ANGUISH SUSTAINS PRIVACY BREACH LEGAL ACTIONS Victims of a privacy breach may no longer have to rely on proving economic loss as a result of the privacy breach to sustain a third party action.

They can also show the breach caused mental anguish.

Aaron Konarsky, director of risk management and integrated controls at Canada Lands Co., spoke about the matter as a panel member dur-

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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:

Convocations:

London – Annual Speakers’Breakfast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 22 London – CIP Society Olympics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 23 Hamilton/Niagara – Annual Speakers’Breakfast . . . . . . . . . . . . . . . . . . . . . . December 1 Vancouver – Annual Speakers’Breakfast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 1

CIP Society members are encouraged to welcome our new grads to the Society at convocations and awards functions across the country:

CIP Society PROedge Seminars:

British Columbia – Victoria Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 25

Toronto – Advanced Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 22 Ottawa – Meet the Risk Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 1 London – Advanced Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 18 Hamilton/Niagara – Leading Liability Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . January 25 Calgary – Influence with Ease with Jeff Mowatt . . . . . . . . . . . . . . . . . . . . . . . January 26

Quebec City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 9

Southern Alberta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 23 British Columbia – Vancouver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 24

IIO – Toronto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 26 IIO – Kawartha . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 3 IIO – Hamilton/Niagara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 16 Montreal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 18

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

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

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ing the seminar, Privacy Update: Hot Issues for Risk Professionals.

“Traditionally, in a third party action against an organization, you have to prove the loss of information would result in economic loss of the individual,” Konarsky told delegates. “So basically, someone took your information, they put a bogus mortgage on your property or they used your identity to borrow — those are economic losses that would generally sustain a third party action.”

But now the tide has turned. U.S. case law is on the books suggesting that victims need only prove the breach caused them mental anguish, Konarsky said.

In the United States a few years ago, the Department of Veteran Affairs accidentally released medical records of their veterans.The case eventually settled for $20 million.

But the case was not about those records being used for economic advance, Konarsky observed.

“The case was around these veterans’ personal medical information being out there, and the mental anguish they suffered from worrying about what would happen to it,” he said. “Would they be embarrassed? And whose hands would that information fall into? There is the blue print for what we see going forward as far as civil exposure for organizations. You don’t have to prove economic loss. If you suffered mental anguish, that’s actionable as a third party loss.”

CAUSAL LINK TO PROSECUTE CANADIAN COMPANIES Regulators around the world are cracking down on corrupt practices, putting companies at increased risk of “crippling” prosecution. And in some situations, the causal link between a company and the claim need only be “minute” for a foreign regulator to flex its muscle.

Jay Cassidy, senior vice president at Marsh Canada, made the observation as a panel member during a seminar that

explored the theme Regulatory Expansion: Could it lead to an increased D&O and governance exposure at home and abroad?

Cassidy noted the United States adopted the Foreign and Corrupt Practices Act in 1977, and the act remained virtually dormant over the decades. But as a result of the Bernie Madoff financial pyramid scandal, as well as the global economic downturn, authorities are more aggressively pursuing companies and individual directors allegedly engaged in illegal practices, he said.

For Canadian companies, the causal link to the United States required for the U.S. Securities Exchange Commission

We municipalities have to protect the driver, although there was some degree of contributory negligence. That is a very, very difficult standard to meet.

(SEC) to enforce the Foreign and Corrupt Practices Act is “minute,” Cassidy said.

“From a Canadian perspective, we need to keep our eyes on this,” he said.

“There doesn’t need to be a close proximity geographically. A Canadianowned and operated company that doesn’t even have its feet in the U.S. is at risk. If funds flow through a U.S. bank, or if your servers are hosted in the U.S., the SEC can exert its enforcement.”

And it’s not just the penalties and fees that will wreak havoc on a Canadian company. “If there are $63 million in penalties, you’ve probably spent double that to investigate and defend the claim,” Cassidy said.

As a result, risk managers are encouraged to re-visit their Directors and Officers liability program, study their internal controls to prevent illegal activities and consider buying separate coverage to cover the costs of the investigation and defending of the claim, so as not to drain the limits of the D&O policy before a penalty is even levied.

ONTARIO COURTS EXPAND INTERPRETATION OF “ORDINARY DRIVERS” The interpretation of ‘ordinary driver’ in Ontario’s courts has expanded to include drivers who “sometimes make mistakes.” This has increased municipalities’ exposure to liability for not keeping safe roads, according to Steven Stieber, a managing partner at Stieber Burlach LLP. Stieber spoke as a panel member during The Rising Cost of BI Claims: Why You Should Be Concerned, a seminar held at the RIMS Canada 2011 Conference.

Stieber referenced the 2010 Ontario Superior Court of Justice case Deering v Scugog. In this case, a novice driver was driving a group of friends down a rural road at night to see a movie. As she drove up over the crest of a hill (10 km-h faster than the speed limit), the headlights of an oncoming vehicle appeared to be in her lane. She swerved and lost control of the vehicle.

Both she and her sister, a passenger in the car at the time, were left quadriplegic.

Both sisters sued the municipality of Oshawa and Scugog. They alleged the municipality had failed to keep the road safe because no speed limit was posted and the road had no painted centre line at the time of the accident.

Citing the written decision from the case, Stieber said the court ruled: “The ordinary motorist includes those of average range of driving ability — not simply the perfect, the prescient or the especially perceptive driver or one with exceptionally fast reflexes but the ordinary driver who is of average intelligence, pays attention, uses caution when conditions warrant, but is human and sometimes makes mistakes.”

“So we [municipalities] have to protect that driver, although there was some degree of contributory negligence,” said Stieber. “That is a very, very difficult standard to meet. Apart from the [issue of the] resources available to meet it, the costs make it very difficult to meet it.”

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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

The Insurance Institute of Ontario announced four recipients of the John E. Lowes Insurance Education Fund Scholarships for 2011. The John E. Lowes Insurance Education Fund is a charitable trust dedicated to assisting Ontario students to complete full-time, post-secondary education, including the study of property and casualty insurance. The fund annually offers financial assistance in the form of two scholarships worth $2,000 each, and up to two scholarships worth $1,000 each. The 2011 recipients are: Melissa Monaghan, Conestoga College; Stacey O’Brien, Conestoga College; Patricia E. Edwards, Mohawk College; and Steven Masse, Wilfred Laurier University.

2

Canpro King-Reed LP has announced its new brand name, CKR Global. Canpro Global Services Inc. and King-Reed & Associates LP amalgamated in June of 2011 to create Canpro King-Reed LP, a full-service risk mitigation and investigation company. The new brand and logo is intended to reflect the uniformity of one harmonized organization with distinct business verticals. CKR Global’s operating companies are: CKR Global Investigations, CKR Global Risk Solutions, CKR Global Safety & Rescue, CKR Global HRservices and

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CKR Global Labour Risk Management. Each CKR company now operates across Canada with uniform service delivery models.

3

The Quarter Century Club will be funding an annual $1,000 student scholarship through the Insurance Institute’s John E. Lowes Education Fund in the name of Douglas H. Hurlbut [3]. The Quarter Century Club presented a cheque at the Insurance Institute’s Lowes Fund Breakfast on Oct. 26. Hurlbut, a Quarter Century Club member, passed away suddenly in December 2010 at the age of 64. A past president of the Canadian Insurance Claims Managers Association (CICMA), Hurlbut was a claims manager with Aviva Canada for many years. Hurlbut began his career with The Cooperators in 1969. Prior to his time at Aviva, he was a claims manager with the Canadian General Insurance Company.

4

Compu-Quote (CQ) is introducing Sales Focused Broker (SFB), a new product designed to help brokers make the most of sales initiatives. It lets brokers monitor and track activity in their sales pipeline by identifying: the most effective marketing channel; the peak volume of activity by hour and

Canadian Underwriter November 2011

3 day of the week; the relative competitiveness of each of their insurers; the effectiveness of their abeyance and orphan account mining (by producer and line of business); the quote volume by producer (by policy, risk and dollar volume); how long it takes a risk to flow through their acquisition funnel; the most effective producer in their office (by conversion rate, policy count and volume); and the average premium volume quoted and sold per producer.

5

Don Ireland has joined CKR Global as a special investigations unit investigator based in Calgary, Alberta. Ireland spent 24 years with the RCMP, retiring as a corporal. He also spent 18 years with the Insurance Crime Prevention Bureau (later named the Insurance Bureau of Canada, Investigative Services). In his new role, he will conduct training on behalf of insurers and law firms on a litany of topics, including auto theft investigations; acci-

6 dent benefit and bodily injury ring investigation; and coordination claim investigations between insurance companies.

6

Granite Global Solutions has appointed Dennis Schembri as executive vice president of relationship management. In this expanded role, Schembri will assist all of Granite’s divisions with their key client relationships and develop new group sales and service opportunities. He brings more than 30 years of experience to the position. “In 1993 he founded Vanler Insurance Adjusters Ltd., expanding to more than 50 full time employees and multiple locations around Ontario,” a Granite release says.

Schembri has been with Granite Claims Solutions (formerly McClarens Canada) since 2007, when his firm was acquired. During this time, he has been involved at the senior management level with sales, marketing, strategic direction and most recently as managing director of Canada.

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7

Pembridge Insurance Company was honoured with the 2011 Interface Partner Award. Applied Systems presented the award to honour achievements in and dedication to real-time communication. Pembridge was recognized for interface advancements in download and real-time rating for the Broker Connectivity technology solution, according to a Pembridge release. The solution allows brokers to begin and end a transaction in their own broker management system without the use of a portal, whether inquiring on policy or billing information or uploading new auto business.

8

Policy Works Inc. has entered into an agreement with The Dominion of Canada General Insurance Company (The Dominion) to deliver a commercial lines data exchange solution for small commercial business, integrating Policy Works’ Commercial Management System (CMS) and The

11a Dominion’s commercial systems. The solution offers notouch, straight-through processing in real time, enabling brokers to send submissions to and receive quotations from The Dominion electronically, all while staying within the Policy Works desktop environment.

9

Totten Insurance Group has welcomed John Rhuland [9], who will be opening a new HalifaxDartmouth service office as part of its Atlantic region team. As manager of the new Halifax office, Rhuland will be doing commercial business for Totten Group in both an underwriting and marketing role. Rhuland has several years’ worth of personal and commercial lines experience in the Maritimes. For the past three years, he has been supervisor of an insurer’s commercial division, overseeing offices in Dartmouth and St. John. Also, Totten announced the addition of Alicia Kane and Aimee Lockie

protection customized for the real estate sector covering property, casualty and specialty risks, we aim to greatly reduce the risk of coverage gaps or the expense of overlapping coverages,” said Randy McFarlane, head of real estate for Zurich Canada.

11b to its Moncton office. Kane will assume a personal lines underwriting role, while Lockie will be an underwriting assistant. Joy Ferguson, supervisor of Totten’s Atlantic region, will continue to work with the Moncton team in handling all of the personal lines business for Atlantic Canada. The second, smaller office in Halifax will enable the company to grow its business in all four eastern provinces in a more balanced fashion, the company says in a press release.

10

Zurich Canada has launched a product that focuses on the risk management needs of commercial real estate owners and managers in Canada. The Real Estate Advantage provides a bundled product including more than 35 additional property coverages, builder’s risk coverage and ‘Z-choice,’ a customizable environmental liability insurance product. “By offering insurance

11

Cunningham Lindsey Canada has created two new national director positions within its complex lossadjusting unit. Andrew Hernandez [11a] is the national director of property, commercial risk division and Doug Andrews [11b] is national director of liability, commercial risk division.

Hernandez was most recently CLC's regional manager for its Western operations. Andrews has more than 30 years of experience in the independent adjusting industry. “We’ve focused the management and leadership of our CRD unit by dividing it into property and liability, specifically under the direction of two new national directors,” said Mike Alwyn, CLC’s assistant vice president of the commercial risk division.

“By distinguishing between these two areas of expertise, we are better able to support our clients and our CRD adjusters when faced with these complex losses.”

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The ‘Cycle for Wishes’ team, comprised of members of the insurance industry, cycled from Toronto to Ottawa to the RIMS Canada Conference from Sept. 14 to Sept.

17, raising $52,349 for Make-A-Wish Canada. The Highlander Pub in Ottawa’s ByWard Market served as the finish line. John Haas, the initiative’s team leader and the managing principal at Integro Insurance’s Canadian office, said the initial fundraising goal was $20,000. But response from the industry was so positive, the team doubled the goal to $40,000 and raised more than $52,000.

A spokesperson for Make-AWish’s Toronto office said it’s the largest third-party fundraising effort she has seen. Haas said the team wanted to select a charity to benefit both cities. As the RIMS Canada Conference

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moves from city to city across the country, Haas hopes insurance industry members in the host regions follow suit to make it an annual event. “It’s been truly a team effort, right down to the different cyclists and the key sponsors that have gotten involved,” said Haas.

“It started out as an idea on a Sunday morning and grew into something bigger than I could have imagined. It’s because everyone is really working together for this cause.” Riders included Debbie Oleskiw, Zurich, TO; Kelly Tomenson, Chartis, TO; Michel Quatrale, Liberty, TO; Mike Wills, Ironshore, TO; Dane Hambrook, Ironshore, TO; David Tran, Ironshore, TO; Mark Rankin, Integro, TO; John Clements, Integro, USA; Ron Whyte, Integro, London; John Haas, Integro, TO; and Albert Bosch, Allianz, TO.

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Granite Claims Solutions, King-Reed Investigations, Canpro Global, Rochon Engineering and Sibley & Associates (Granite Global Solutions companies) held their annual RIMS Canada Ottawa Conference ‘Kick-Off’ reception on Sept. 17 at the Aulde Dubliner and Pour House in Ottawa’s ByWard Market, providing delegates with an opportunity to mingle and kick-start the conference.

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Crawford & Company (Canada) Inc. held its annual RIMS Canada Conference dinner on Sept.

17 at The National Arts Centre in Ottawa.

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Cunningham Lindsey held its annual RIMS Canada Conference dinner on Sept. 17 at Social Restaurant and Lounge in Ottawa’s ByWard Market area.

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SCM Insurance Services hosted a cocktail party on Sept. 17 to help kick-off the RIMS Canada Conference at the Ottawa Marriott Hotel.

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RIMS Canada Conference Ottawa delegates enjoyed an evening of risk-free gambling at the 15th Annual Casino Night, sponsored by RSA and GCAN. The Sept. 17 event provided a chance for delegates from across the country to connect early in the conference agenda.

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More than 70 companies and organizations filled the Exhibit Hall at the 2011 RIMS Canada Conference in Ottawa.

Exhibitors worked the show and showed their work, as delegates networked with colleagues and checked out the latest company offerings.

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Guests mingled at the official Opening Reception of the RIMS Canada Conference Ottawa on Sept. 18. Allianz Global Risks and Integro Insurance Brokers sponsored the event, which was held in the ballroom of the Fairmont Ch창teau Laurier Hotel.

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Catlin Canada hosted a reception at the RIMS Canada Conference at Mansion Nightclub in downtown Ottawa on Sept.

18. The event featured a night of drinks, dancing and appetizers. Suspended Animation, a team of acrobats, provided the entertainment.

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Zurich Canada kicked off the Ottawa RIMS Canada Conference on Sept. 18 by hosting a customer dinner at the Canadian Museum of Civilization in Gatineau, Quebec. The beauty of this room did not go unnoticed by guests. Across the river, the Parliament buildings provided a spectacular backdrop for attendees to engage in casual conversation.

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APPOINTMENT

GALLERY

Joseph El-Sayegh Senior Vice President, Treaty Underwriting for Canada

SCOR CANADA REINSURANCE COMPANY Mr. Henry Klecan Jr, Chairman, President and Chief Executive Officer of SCOR Canada Reinsurance Company is pleased to announce the appointment of Mr. Joseph El-Sayegh as Senior Vice President, Treaty Underwriting for Canada.

Mr. El-Sayegh joined SCOR Canada in 2000. Prior to this promotion Joseph was Vice President and Branch Manager of SCOR Canada’s Montreal P&C operations which included the development, underwriting and servicing of the Company’s Quebec based clients.

Joseph’s professional experience prior to joining SCOR Canada has included branch management responsibilities and underwriting with large international firms, both in Canada and abroad.

Joseph holds a Bachelor of Engineering degree from the Ecole Polytechnique de Montreal in addition to being a Chartered Insurance Professional (CIP) and CRM. SCOR Canada Reinsurance Company operates in Canada and is a subsidiary of SCOR Global P&C SE and is a member of SCOR SE, the fifth largest reinsurer in the world. SCOR SE has a worldwide network of over 2,000 professionals operating from 35 offices across 5 continents structured around 6 Hubs. SCOR was recently recognized by a leading global reinsurance publication as the Best Global Reinsurance Company for the second straight year.

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The RIMS Canada Conference started with a keynote address

by John Furlong, CEO of the Vancouver 2010 Olympic & Paralympic Winter Games. Known for his storytelling and innovative leadership style, Furlong recounted the lead-up to the Games and described how he handled seemingly insurmountable setbacks, including the death of Georgian luger Nodar Kumaritashvili, a global recession and the washed-out snow at Cypress Bowl.

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Delegates of the RIMS Canada Conference gathered to celebrate the achievements of their peers during the Award Lunch.

The Ontario chapter of RIMS (ORIMS) presented the Donald M. Stuart Award to Glen Frederick, director of risk management client services (Core Government and Crowns) in the risk management branch of the Government of British Columbia. Frederick, in addition to being an active member of RIMS for more than 25 years, implemented a successful enterprise risk management strategy for the Vancouver Organizing Committee (VANOC)

and the International Olympic Committee (IOC) to manage the risks associated with the 2010 Olympic Games. As a result of its success, the IOC now requires all future Olympic Games to implement an ERM strategy using a similar methodology. The annual Fred H. Bossons Award, which honours risk management professionals who earn the highest marks on three courses required to receive the Canadian Risk Management designation, went to Drew Collins of JEVCO Insurance. Donald Barrett became the fifth inductee of the Chartis/RIMS—Risk Management Hall of Fame.

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Seventy exibitors at the RIMS Canada Conference were among the first to grace the Exhibit Hall in Ottawa’s brand new Convention Centre.

The state-of-the-art structure allowed companies to showcase their wares and services in style.

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Chartis hosted its annual RIMS Canada cocktail reception on Sept. 19 in the historic Ballroom at the Fairmont Ch창teau Laurier in Ottawa. Guests were able to mix and connect at the reception before venturing out to other conference-related functions throughout the city.

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Elliott Special Risks hosted a cocktail reception at the Ottawa RIMS Canada Conference at the Fairmont Ch창teau Laurier Hotel on Sept. 19.

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

Ottawa-based ENCON Group Inc. held a reception on Sept. 19 at the RIMS Canada Conference in at The Exchange Pub & Restaurant in Ottawa.

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ARC Group Canada hosted a reception at the RIMS Canada Conference in Ottawa at The Blue Cactus Bar and Grill on Sept. 19. The event included entertainment and a networking opportunity.

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FirstOnSite Restoration’s commercial team hosted a Meet & Greet reception at the Ottawa RIMS Canada Conference on Sept. 20 at Luxe Bistro Restaurant in the ByWard Market area.

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AEGIS policyholders, brokers and underwriters attended a reception the insurer hosted during the RIMS Canada Conference at Restaurant Eighteen in the ByWard Market on Sept. 19.

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APPOINTMENT

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

The RIMS Canada Conference Gala Dinner on Sept. 20 featured a ‘Beatnik Block Party’ theme. Delegates got their groove on and danced the night away to the sounds of The Beatles! — a Beatles cover band.

Dennis Schembri Dennis Schembri has been appointed Executive Vice President of Relationship Management at Granite Global Solutions.

Murray Wallace, President and CEO of Granite Global Solutions said “With over 30 years experience, Dennis is a well known figure in the independent adjusting field. In 1993 he founded Vanler Insurance Adjusters Ltd, expanding to over 50 full time employees and multiple locations around Ontario. He has been with one of our divisions, Granite Claims Solutions (formerly McLarens Canada) since 2007 when we acquired his firm. During this time, he was involved at the senior management level with sales, marketing, strategic direction, most recently as Managing Director, Canada.

“As Granite Global Solutions grows, we needed someone who can assist all our divisions with their key client relationships and develop new group sales and service opportunities.With his existing relationships in the industry, Dennis is the ideal person.”

Wallace said.

“I look forward to working with both existing and new clients in this expanded role,” says Schembri,who is now based in the downtown Toronto offices of Granite Global Solutions.

Headquartered in Toronto, Ontario, Granite Global Solutions is a Canadian corporation operating business lines that are leaders in their respective markets: Granite Claims Solutions (formerly McLarens Canada), the country’s fastest growing niche claims adjusting organization; Sibley & Associates, Canada’s largest disability management company; Canpro King-Reed, Canada’s largest private investigation and risk mitigation agency and Rochon Engineering, a leading specialized forensic engineering business, among others. www.graniteglobalsolutions.com

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The Insurance Brokers Association of Ontario (IBAO) extended its annual sponsorship of the Ontario Minor Hockey Association (OMHA) to a brand-new goaltender equipment outreach program: The Best Insurance

Members of the Barrie-Simcoe Insurance Brokers Association (BSIBA) gathered this summer at Bear Creek Golf and Country Club

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is a Good Goalie. The program provides a set of goalie equipment to more than 40 children between the ages of 5 and 7 who have dreams of becoming a hockey goalie. Additionally, IBAO will provide

minor hockey associations with goaltending resources to aid coaches. The program was launched in Newmarket, Ontario on Sept. 21, 2011. Joining local OMHA goaltenders were Kay Whitmore, NHL

for their fourth annual fundraising golf tournament to raise awareness and funds ($13,000) for the Simcoe region Easter Seals and the

Children’s Aid Society. Members of the Golf Tournament Organizing Committee were on hand at the inaugural luncheon meeting of the

goaltending supervisor, Mike Naples, general manager of Insureit Group Inc., and Scott Tupling, president of Tupling Insurance Brokers Limited.

BSIBA on Sept 28 to present Simcoe region Easter Seals and the Children’s Aid Society with a cheque for $6,500 each.

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The Insurance Brokers Association of Canada (IBAC) held its 90th Annual General Meeting at the Fairmont Banff Springs Hotel in Banff, Alberta on Sept. 22-24, 2011. IBAC welcomed its new president, Dale Rempel, who succeeds immediate past president Fraser Lyle. In his inaugural address, Rempel called on brokers across the country to reach out to new MPs in Canada’s new federal government. In addition, IBAC recognized the dedicated work of several of its executive members.

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More than 75 exhibitors were showcased at the Insurance Brokers Association of Ontario (IBAO)’s 91th Annual Convention and Exhibition in Toronto at the Fairmont Royal York Hotel on Oct. 19-21.

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More than 1,000 people made their way through the exhibit hall at the Insurance Brokers Association of Ontario (IBAO)’s 91st Annual Convention and Exhibition in Toronto at the Fairmont Royal York Hotel on Oct. 19-21. The Canadian Underwriter magazine— Insurance Media Group, which also publishes The Ontario Broker magazine on behalf of the IBAO, took the opportunity to photograph visitors to its booth at the very busy show.

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

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Delegates of the 2011 National Insurance Conference of Canada (NICC) held in Vancouver, British Columbia enjoyed the opportunity to share refreshment and conversation during the opening night of the conference. The conference raised more than $21,000 through donations made in lieu of speaker gifts and a silent auction and raffle for WICC BC Chapter, the 2011 NICC’s charity of choice.

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The fifth annual National Insurance Conference of Canada (NICC) featured speakers such as Tiff Maclem, senior deputy governor of the Bank of Canada, Allan Gregg, a leading pollster, political analyst and social commentator, and Josh Feinman, global chief economist, DB Advisors/Deutsche Asset Management, to name a few. Speakers offered insights on current trends and the state of Canada’s property and casualty industry.

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ANNOUNCEMENT

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

Dr. Gordon McBean

Paul Kovacs, Executive Director of the Institute for Catastrophic Loss Reduction, is pleased to announce that Dr. Gordon McBean was elected Sept. 30 as President, the International Council for Science (ICSU). Dr. McBean is Professor in the departments of geography and political science at the University of Western Ontario, and serves as ICLR’s Director of Policy.

Paris-based ICSU is an NGO with a global membership of national scientific bodies and International Scientific Unions. Its mission is to strengthen international science for the benefit of society.

Dr. McBean received a B.Sc. in Physics and a Ph.D. in Oceanography from UBC, and holds a M.Sc. in Meteorology from McGill. He was a scientist at Environment Canada from 1970 to 1988 when appointed Professor and Chair of the Atmospheric Science Program at UBC.In 1992,he was appointed Head of the Dept. of Oceanography. From 1994 to 2000,he was the ADM responsible for the Meteorological Service of Canada.

Established in 1998 by Canada’s p&c insurers, ICLR is a centre of excellence for disaster loss prevention research and education. ICLR’s research staff is internationally recognized for pioneering work in a number of fields including wind and seismic engineering, atmospheric sciences, water resources engineering and economics.

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Munich Re Canada held a special cocktail reception on Sept 29 at The National Club in Toronto on the occasion of the retirement of Linda Warher. A CIP and FCIP, Wahrer has spent the last 20 years of her extensive reinsurance career with Munich Re. She has been involved with the Insurance Institute and various industry associations, including the Property Casualty Underwriters Club (PCUC), for many years. In addition, she was on the board of directors of WICC Ontario Chapter (Women in Insurance Cancer Crusade) and Co-Chair of WICC Ontario for several years.

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A designation at the

heart of our industry:

Leadership is about embracing the opportunity to inspire, make a difference and translate vision into reality through others.

Leadership Defined.

That is why the Insurance Institute has enhanced the industry’s pre-eminent qualification to provide future leaders in the insurance business with the knowledge and skill set they need.

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Registration is now open for the Winter 2012 semester.

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