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March-April 2018

Smart technology:

Trojan horse or workhorse? Official Journal of the Canadian IndeÊpendent Adjusters’ Association


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Contents March-April 2018 • VOLUME 12 • NUMBER 1

Spotlight 10 Small is beautiful


NSA Claims aims to stay true to its founding principles BY EMILY ATKINS

Cover Feature 12 Trojan horse or workhorse? Automation is gaining in popularity, but can it be trusted in the home or business? BY EMILY ATKINS

News Features 16 Zombies on the sidewalk BY ADAM CAMPBELL

18 Business interruption losses



20 Extreme weather paves the way for new claims management options BY SHANE SWINSON

22 Myth busting: Three-day drying, Part 1 BY KRIS RZESNOSKI



Departments 4 First Notice 24 On the Scene

Columns 7 President’s Message

• first notice FN

Competition urged for B.C. auto CEOs should report data breach By David Gambrill insurance by Greg Meckbach

Insurance Corporation of British Columbia’s (ICBC) monopoly should end, Insurance Bureau of Canada (IBC) said recently, but the province’s attorney general contends competition will not result in lower premiums for B.C. vehicle owners. Opening up auto insurance to competition “does not guarantee lower insurance rates, as Ontario shows,” attorney general David Eby stated. “While there are significant financial and operational challenges to be addressed, we believe that public automobile insurance offers British Columbians excellent protection and access.” The average auto premium in B.C. is $1,680 per year, compared to about $1,437 in Ontario and $1,209 in Alberta. ICBC announced it lost $935 million during the first nine months of 2017. The insurer had net losses of $257 million in 2015 and $280 million in 2016, Ernst and Young (EY) noted in a B.C. government-commissioned report released this past July, Affordable and Effective Auto Insurance – a New Road Forward for British Columbia (which was covered extensively in Claims Canada’s Winter 2017-18 issue). “ICBC is on the fast track towards insolvency with rapidly rising premiums,” Sutherland said. ICBC has a monopoly on mandatory auto insurance in B.C. With its Basic Autoplan product, ICBC writes third party liability, under-insured motorist protection and accident benefits, among other coverages. Private for-profit insurers can write optional additional auto coverage (such as collision and upset) in B.C. In January IBC released a report – The Benefits of Competition in the Provision of Automobile Insurance in B.C. – written by MNP LLP. In it, MNP estimated how premiums could change for different groups of drivers. MNP gathered quotes from Alberta and Ontario for 33 driver profiles and for 13 driver profiles in B.C. MNP referred to what EY called “required premiums” in EY’s report. In essence, EY calculated how much ICBC would have to charge in order to be financially viable. MNP listed EY’s “required premiums,” by age group and compared them to what MNP estimates private-sector insurers would charge for the same age groups. About 60% of ICBC policyholders are 45 or older and these people would pay less if the market were opened to competition, and insurers based rates on age, which ICBC does not do. MNP estimated the 40% of drivers younger than 45 would pay higher rates if competition were opened up.” ● 4

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March-April 2018

CEOs, not chief information officers (CIOs), should be making the call on whether to report a data breach when a company falls victim to a targeted cyberattack, a former privacy commissioner told a cyber loss management seminar organized by Crawford & Company (Canada). While some companies may have their CIOs making such a determination, the responsibility properly lies with the CEO, said Chantal Bernier, who served as assistant and interim privacy commissioner at the Office of the Privacy Commissioner of Canada. “Why should it be on the CEO’s desk, instead of the CIO?” asked Bernier, currently counsel at Dentons LLP. “The reputational status, the financial status of an organization is too significant for it not to be a decision of the CEO.” Mandatory data breach reporting under Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) requires an organization to report a data breach if it poses a “real risk of significant harm” to any individual whose information was involved in the breach. A risk assessment must consider the sensitivity of the information involved, and the probability that the information will be misused. ●

Quake coverage in Que. not a priority By David Gambrill

Canadian insurers are not rushing in to correct a gap in earthquake coverage in eastern Canada right now, an industry representative told the C4 2018 conference in Ottawa. Eastern Canada, particularly the Ottawa-Montreal corridor, is an area with a lot of seismic activity. About 450 earthquakes happen in eastern Canada every year, although people would not notice them because of their low magnitude. “To be candid, since 2009, the insurance industry has faced a remarkable decade of nat cat losses in this country, and the insurance industry has considerable exposure given the uptake [of earthquake coverage] in British Columbia, so I’m not sure companies are falling all over themselves to increase exposure in Quebec at this time,” said Craig Stewart, vice-president of federal affairs, Insurance Bureau of Canada. “Certain companies are promoting it, but I don’t think there is an overt campaign at this point. Catastrophe modeler RMS found that if a 1-in-500-year period earthquake struck Quebec today, the economic damage would be roughly $15 billion in residential economic losses, and about $18 billion in commercial and industrial economic losses, amounting to total economic losses of roughly $33 billion. “There’s a huge insurance gap” between the economic losses and the insured losses, said Justin Moresco, senior product manager of model product management RMS. “RMS estimates a 97% gap on the residential side, and about a 60% gap on the commercial and industrial side. ●

• first notice FN

Insurer wants dope testing protocol

Drones and home insurance

by Greg Meckbach

by Greg Meckbach

As Canada’s senators debate a bill that would legalize recreational marijuana, Canada’s largest property and casualty insurer is concerned about the “potential” for more auto collisions arising from the actions of stoned drivers. In its management discussion and analysis of its financial results for the fourth quarter of 2017, Intact Financial Corp. noted some concerns over marijuana legalization including “higher frequency and severity of auto insured losses as a result of impaired driving.” In the United States, in states where pot is legal, there has been some “pressure” on auto insurance claims arising from marijuana impairment “from a frequency standpoint,” suggested Darren Godfrey, senior vice-president of personal lines for Intact, during a conference call on February 7. “To the extent that we start to see potential pressures around the rate of car accidents and so forth…we are very active with [the Insurance Bureau of Canada] in talking with governments around the policing and so forth of cannabis usage,” Godfrey said during the call. Canada does not have a federally approved device for police to test the level of tetrahydrocannabinol (THC, the active ingredient in marijuana) in the blood. However, Public Safety Canada has tested such devices. Intact officials want to ensure “a level of enforcement is there relative to cannabis use” of drivers, similar to testing drivers for alcohol impairment, Godfrey said. “With alcohol there is already an approved [roadside testing] process that has existed for some 40 years,” federal justice department lawyer Greg Yost said February 7 before the Standing Senate Committee on Legal and Constitutional Affairs. That committee is studying Bill C-46, a “companion bill” to the marijuana legalization bill. If passed into law, Bill C-46 would give Canadian police the power to use saliva testing devices at the roadside. These devices would indicate whether or not there is THC in the blood, but they do not indicate whether the driver is above the legal limit, which Bill C-46 proposes to set by regulation. Drivers who test positive for THC at the roadside could be ordered to undergo blood testing or evaluation by a police drug recognition expert. ●

When consumers fly unmanned aerial vehicles as a hobby, will their home insurance policies cover them for any lawsuits arising from property damage or personal injury caused by the drones? For the most part, aircraft is excluded in the wording of home insurance policies, Christina Polano, partner with Thomas Gold Pettingill, suggested to the annual joint conference of the Ontario chapters of the Canadian Insurance Claims Managers Association (CICMA) and the Canadian Independent Adjusters’ Association (CIAA). She said she had reviewed three homeowners’ policies from carriers she did not name and all three had exclusions related to aircraft. “Perhaps a crafty coverage lawyer might argue that the exclusion was intended to make sure that if somebody goes off and flies their private plane and gets in an accident, that’s excluded,” Polano. “But do [exclusions in home insurance] really mean to exclude a 16-year-old boy who goes and flies a small drone and he accidentally causes injury?” “If you are drafting homeowners policy, you might want to specifically put in there ‘recreational drone’ because it’s clear that it means recreational drone,” Polano said. ●

Hailstorm could cost $13.5 billion By David Gambrill

In a low-probability, worst-case scenario, a single major hailstorm in Canada could result in insurance claims of up to $13.5 billion, says a new research paper from the Institute for Catastrophic Loss Reduction (ICLR). “Of concern is that hail may become a greater issue in the future due to climate change, potentially increasing the frequency of severe thunderstorms and urban development increasing exposure,” says the February 2018 report, entitled Hail Climatology for Canada: An Update. It was written by David Etkin, associate professor of disaster and emergency management at York University. Hail days in Alberta are on the rise, the report states, unlike in Ontario, where hail days between 1977 and 2006 showed a slightly downwards trend. But there is a large variability of hailstorms year-over-year, the report cautions. Hailstorms have a “fat-tailed distribution,” meaning “very rare extreme events account for a relatively large fraction of total impacts.” The ICLR’s report observes that Canada’s insurance industry had more or less put hail research on the backburner after very few hail events between 1991 and 2008. ●

The cost to recover from security Cyber breaches in Canada averages $3.7 milbreaches lion in direct and indirect costs per organization, including network down cost employee work days, lost files $9.6 billion time, and compromised information, accordlast year ing to a new survey. Of that amount, the majority – about $3.5 million – is lost in revenue and productivity, while $215,080 is spent in direct dollars addressing the breaches. The study, The Cyber Security Readiness of Canadian Organizations, by IDC Canada for Scalar Decisions, said that the average company finds itself under attack by hackers more than once a day. Almost nine in 10 (87%) of 420 polled organizations suffered at least By Jason Contant one breach in the past year. In Canada alone, cybersecurity breaches cost companies a total of more than $9.6 billion in recovery in the past year, Scalar Decision’s chief security architect, Theo Van Wyk, wrote in a related blog post when the study was released. Along with that huge financial hit, these companies experienced a total of more than 813,000 days of down time and had over 100-million sensitive data records stolen. ● March-April 2018

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Rebuilding should be part of crisis planning By David Gambrill

Insurers should be giving more thought to planning how to rebuild economies in the aftermath of a crisis, a reinsurance executive urges. “To my mind, what is often seemingly forgotten is the piece of economic resilience,” says Alex Kaplan, head of North America and senior vice-president of global partnerships at Swiss Re. “The aftermath, what does the recovery look like? If we haven’t resolved the economic future, the economic vibrance of our communities diminishes over time [after a catastrophe].” Kaplan made his remarks in Ottawa at C4 2018, organized by Catastrophe Indices and Quantification Inc. (CatIQ). The workshop called on participants to think of ways to prepare communities to be more resilient against damage caused by largescale catastrophe events. Canadian property and casualty insurers have paid out at least $1 billion annually in six of the past 10 years for damage arising from severe weather. Kaplan said he thought about climate resilience as a “threelegged stool.” There is physical resilience, which describes when risk mitigation is undertaken through land-use planning, improved building codes, and rebuilding homes so that they can better withstand storm events. There is also social resilience, which is how di-

verse, elderly, and low-income communities are protected from bearing the brunt of catastrophic damage. But building economic resilience is fundamentally important to making sure communities can withstand the damage they sustain following a post-loss recovery, he said. He cited the example of New Orleans, where Hurricane Katrina – a Category 3 hurricane when it hit – caused approximately $125 billion in property loss damage and roughly $50 billion to $62 billion in insured damage in 2005. “New Orleans was a robust community pre-Katrina,” Kaplan said. “Still today, 12 years later, it is at 85% of its pre-Katrina population. All of that wealth of knowledge, that professional class, moved away from the city, and what does that mean?” Pointing to another example of the economic dislocation created by natural catastrophes, Kaplan noted that the city of Oakland, California “exists solely” because of the 1906 San Francisco earthquake. A large part of San Francisco’s population simply had to move away after the disaster. “So, when we think about these disasters, a risk anywhere is a risk everywhere,” Kaplan said. “And we have to be thinking incredibly holistically.” ●

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Sandra Parente Director, Business Development (416) 510-5114 Official Journal of the Canadian Indeépendent Adjusters’ Association

Karen Samuels Production Manager (416) 510-5190 Gerald Heydens Art Director Subscription inquiries (416) 614-5831 Produced by the publishers of Canadian Underwriter magazine

A bi-monthly magazine (6x per year), Claims Canada is published by NEWCOM Media Inc. is located at: 80 Valleybrook Drive, Toronto, ON, M3B 2S9. Claims Canada magazine is the Official Publication of the Canadian Independent Adjusters’ Association [CIAA] and through its editorial content and circulation brings together the ‘entire property & casualty insurance claims market nationally’ with information and insight into the profession, business and people of insurance claims and loss adjusting. All key claims process stakeholders are reached as part of our readership community – including: both CIAA member and non-member independent claims adjusting firms; insurance and reinsurance company executive, claims management and


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Message from the President La Plume du président

MONICA KUZYK Ontario’s provincial election is just weeks away. The Ontario Liberals have been in power almost 15 years. According to a 2017 CBC news article, only three provincial parties have stayed in power longer than the Liberals in Ontario. There are several significant issues for Ontario residents to consider this election cycle: Housing availability; minimum wage; hydro rates; auto insurance rates, and infrastructure (climate change, transit). For the insurance industry, auto insurance and climate change are relevant and timely issues. The Ontario Liberal Government remains focused on reducing insurance premiums by combatting fraud, undertaking a review of risk factors used by insurers to calculate premiums and delivering on the recommendations set out in the Marshall Report of April 2017. The report reinforces the need to ensure that at the time of claim, insurance dollars go to those injured rather than to assessments and dispute processes. While industry opinions vary, most believe there is opportunity within the Fair Auto Insurance plan to stabilize auto insurance and address public concerns. The New Democratic Party promises Ontario drivers would see a 15-percent savings, while protecting benefits. They also promise to tackle the regional inequities in auto insurance which, they say, “disproportionately affect low-income and racialized communities, and continue to drive toward greater affordability.” The Progressive Conservative Party also promises to bring an end to “geographic discrimination” for auto insurance, while not allowing insurance companies to raise rates in other parts of the province. In addition, they want to crack down on fraud and uninsured drivers. Severe weather events like floods, wildfires and microbursts are happening with greater frequency and severity. These events strain critical infrastructure and become economic tragedies for homeowners and communities. Recognizing climate change is already having lasting impacts on communities throughout Ontario, the insurance industry has lobbied for improved planning, enhanced understanding of regional vulnerabilities, and more resilient infrastructure. The Liberal government’s Long-Term Infrastructure Plan was released in November 2017 and provides $190 billion in public infrastructure investment over 13 years. The focus is on life-cycle assessments as part of planning and an improved decision-making framework to ensure appropriate land-use planning and robust infrastructure. The New Democratic Party outlines a commitment to update Ontario’s Environmental Bill of Rights and ensure proceeds from carbon pricing help those regions most affected by climate change. In their vision, “The People’s Guarantee”, the Progressive Conservatives promise to build $5 billion worth of subways in the Greater Toronto Area. As well, they will “fulfill the existing commitments to all-day, two way GO train service and to complete projects already underway,” such as LRT in Hamilton, Kitchener-Waterloo, and Ottawa. This document also outlines initiatives with respect to cleaning up the Great Lakes, taking action against sewage dumping into lakes and streams. They purpose to cancel the Climate Change Action Plan and withdraw from the Western Climate Initiative. Instead they will opt into the Federal carbon price backstop.

Nous ne nous qu’à quelques semaines des élections provinciales ontariennes. Les libéraux de l’Ontario sont au pouvoir depuis près de 15 ans. Selon un article de la CBC publié en 2017, seulement trois partis provinciaux sont restés au pouvoir plus longtemps que les libéraux de l’Ontario. Les résidents de l’Ontario ont plusieurs problèmes importants à considérer dans le cadre de ce cycle électoral : le salaire minimum, les tarifs d’électricité, les tarifs de l’assurance automobile et les infrastructures (changements climatiques, transit). Pour l’industrie de l’assurance, l’assurance automobile et les changements climatiques sont des questions pertinentes et très à propos. Le gouvernement libéral de l’Ontario continue de réduire les primes d’assurance en luttant contre la fraude, en examinant les facteurs de risque utilisés par les assureurs pour calculer les primes et en respectant les recommandations énoncées dans le rapport Marshall d’avril 2017. Le rapport renforce la nécessité de s’assurer qu’au moment de la réclamation, les dollars d’assurance vont aux personnes blessées plutôt qu’aux processus d’évaluation et de règlement des différends. Bien que les opinions de l’industrie varient, la plupart des gens croient que le système d’assurance automobile équitable pourrait permettre de stabiliser l’assurance automobile et répondre aux préoccupations du public. Le Nouveau Parti démocratique promet que les conducteurs de l’Ontario auront droit à des économies de 15 pour cent, tout en gardant leurs avantages. Il promet également de s’attaquer aux inégalités régionales en matière d’assurance automobile qui, dit-il, «affectent de manière disproportionnée les communautés à faible revenu et racialisées, et continuent de mener à une plus grande accessibilité». Le Parti progressiste-conservateur promet également de mettre fin à la «discrimination géographique» en matière d’assurance automobile, tout en ne permettant pas aux compagnies d’assurance d’augmenter les taux dans d’autres parties de la province. En outre, ils veulent lutter contre la fraude et les conducteurs non assurés. Les phénomènes météorologiques violents tels que les inondations, les feux de forêt et les microrafales sont de plus en plus graves et fréquents. Ces événements surmènent les infrastructures essentielles et deviennent des tragédies économiques pour les propriétaires et les collectivités. Reconnaissant que les changements climatiques ont déjà des répercussions durables sur les collectivités de l’Ontario, l’industrie de l’assurance a fait pression pour améliorer la planification, mieux comprendre les vulnérabilités régionales et rendre les infrastructures plus résilientes. The Liberal government’s Long- Term Infrastructure Plan was released in November 2017 and provides $190 billion in public infrastructure investment over 13 years. The focus is on life-cycle assessments as part of planning and an improved decision-making framework to ensure appropriate land-use planning and robust infrastructure. Le plan d’infrastructure à long terme du gouvernement libéral a été dévoilé en novembre 2017 et prévoit un investissement de 190 milliards de dollars dans les infrastructures publiques sur 13 ans. L’accent est mis sur les évaluations du cycle de vie dans le cadre de la planification et sur un cadre décisionnel amélioré pour assurer une planification appropriée de l’utilisation des terres et une infrastructure robuste. Le Nouveau Parti démocratique souligne son engagement à mettre à jour la Charte des droits environnementaux de l’Ontario, et à veiller à ce que les produits de la tarification du carbone aident les régions les plus touchées par les changements climatiques. Dans leur vision, «La garantie du peuple», les progressistes-conservateurs promettent d’injecter 5 milliards de dollars dans la construction de métros dans la Région du Grand Toronto. De plus, ils «respecteront les engagements actuels en matière de service ferroviaire de GO Transit toute la journée, dans les deux sens, et de réalisation de projets déjà en cours», comme le train léger sur rail (TLR) à Hamilton, Kitchener-Waterloo et Ottawa. Ce document présente également des initiatives visant à nettoyer les Grands Lacs et à prendre des mesures contre le déversement d’eaux usées dans les lacs et les cours d’eau. Ils visent à annuler le Plan d’action sur les changements climatiques et à se retirer de la Western Climate Initiative. Au lieu de cela, ils vont opter pour l’appui fédéral relativement au prix du carbone. Une élection est l’occasion pour les citoyens de déterminer le chemin vers l’avenir. Les élections sont de plus en plus définies par les dirigeants plutôt que par des idées ou des politiques. Au cours des prochaines semaines, les dirigeants de chaque parti March-April 2018

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An election is the opportunity for the citizens to determine the path to the future. Elections are increasingly defined by leaders rather than ideas or policies. In the weeks ahead, the leaders of each party will endeavor to connect with Ontario residents and share their vision for a better Ontario. With the electoral process well underway, our televisions and social media feeds will be filled with the latest political information, insight and scandal. Let’s remember, since 2016, we have learned that democracy is vulnerable. In Canada, we face the same risks as other countries; those in power use the same social media services and voting systems which are increasingly vulnerable to digital interference. Stewart Prest, a Vancouver-based political scientist, reminds us: “Canada and other countries need to prepare for foreign operations and put their democratic houses in order. Now, it’s time to act. We need streamlined, trustworthy processes to inform the public when foreign information operations are occurring. We need serious reforms of campaign spending and other electoral regulations to address the digital interference by foreign actors. We need media platforms to better address hate speech and harassment online. Canadians must prepare themselves for campaigns that seek to turn us against each other as well.’ It can be overwhelming to think that Canadian democracy is at risk. However that should not deter us from heading to polls this June. In fact it should embolden us to exercise our right with more enthusiasm than ever before, knowing that in less fortunate countries, citizens stand in line for hours to cast a vote in democratic elections. In Ontario, most employers provide time for employees to vote – we have no excuse. It is our absolute responsibility to listen, learn, get involved, ask questions about issues relevant to us and then, with great pride, take action, get out and vote. ■ Sincerely Monica Kuzyk

s’efforceront d’établir des liens avec les résidents de l’Ontario et de partager leur vision d’un Ontario meilleur. Alors que le processus électoral est bien en cours, nos téléviseurs et flux de médias sociaux seront remplis avec les dernières informations, idées et scandales politiques Depuis 2016, nous avons appris que la démocratie est vulnérable. Au Canada, nous sommes confrontés aux mêmes risques que les autres pays; ceux qui sont au pouvoir utilisent les mêmes services de médias sociaux et les mêmes systèmes de vote qui sont de plus en plus vulnérables aux interférences numériques. Stewart Prest, un politologue de Vancouver, nous rappelle que : «Le Canada et les autres pays doivent se préparer aux opérations à l’étranger et mettre de l’ordre dans leurs maisons démocratiques. Maintenant, il est temps d’agir. Nous avons besoin de processus rationalisés et fiables pour informer le public lorsque des opérations d’information étrangères sont en cours. Nous avons besoin de réformes sérieuses des dépenses de campagne et d’autres réglementations électorales pour contrer l’interférence numérique des acteurs étrangers. Nous avons besoin de plateformes médiatiques pour mieux lutter contre les discours haineux et le harcèlement en ligne. Les Canadiens doivent aussi se préparer à des campagnes qui chercheront à nous dresser les uns contre les autres.» Il peut être accablant de penser que la démocratie canadienne est en péril. Cependant, cela ne devrait pas nous empêcher de nous rendre aux urnes au mois de juin. En fait, cela devrait nous encourager à exercer notre droit avec plus d’enthousiasme que jamais auparavant, sachant que dans les pays moins fortunés, les citoyens font la file pendant des heures pour voter dans le cadre d’élections démocratiques. En Ontario, la plupart des employeurs accordent du temps aux employés pour voter – nous n’avons aucune excuse. Il est de notre responsabilité absolue d’écouter, d’apprendre, de nous impliquer, de poser des questions sur les enjeux qui nous concernent et ensuite, avec une grande fierté, d’agir, de sortir et de voter.. ■ Salutations, Monica Kuzyk

NATIONAL EXECUTIVE 2017 - 2018 PRESIDENT Monica Kuzyk, FCIP, CRM Curo Claims Services 125 Northfield Dr. W., P.O. Box 218 Waterloo, ON N2J 3Z9 Phone: (866) 952-2876 Fax: (519) 888-9704 E-mail: 1ST VICE-PRESIDENT Troy Quigley, BBA, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 - 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-0775 E-mail:

TREASURER Jeff Edge, CIP, CFEI Leading Edge Claims Services Inc. P.O. Box 1399, 78 Highway 20 West Fonthill, ON L0S 1E0 Phone: (289) 897-8676 Fax: (289) 897-8677 E-mail: PAST-PRESIDENT Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail:

2ND VICE-PRESIDENT Sarah Hirst, CIP, CRM, FCIP ClaimsPro #101, 5083 Windermere Blvd. S.W. Edmonton, AB T6W 0J5 Phone: (800) 565-3128 Fax: (780) 489-8841 E-mail:

EXECUTIVE DIRECTOR Patricia M. Battle Canadian Independent Adjusters’ Association/L’Association Canadienne des Experts Indépendants Centennial Centre, 5401 Eglinton Avenue West, Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Toll Free: 1-877-255-5589 Fax: (416) 621-7776 E-mail:

SECRETARY Christopher Bartlett, BA, CIP Crawford & Company (Canada) Inc. 400 – 90 Matheson Blvd. West Mississauga, ON L5R 3R3 Phone: (905) 602-9511 Fax: (905) 602-7297 E-mail:

DIRECTOR Caul Féron, FCIP, CRM ClaimsPro 210 – 746 Baseline Rd. East London, ON N6C 5Z2 Phone: (519) 645-6500 Fax: (519) 645-2250 E-mail:


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March-April 2018

DIRECTOR Sean Forgie, BA, CIP, CFEI ClaimsPro 1550 Enterprise Road, Suite 310 Mississauga, ON L4W 4P4 Phone: (877) 753-0753 Fax: (905) 565-0009 E-mail: DIRECTOR James B. Eso, CIP, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: DIRECTOR E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: DIRECTOR Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail:

DIRECTOR Troy Quigley, BBA, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 - 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-0775 E-mail: DIRECTOR Marie C. Gallagher, FCIP, CRM Kernaghan Adjusters Limited 602 – 1 St. Paul Street St. Catharines, ON L2R 7L3 Phone: (289) 786-1074 Fax: (289) 723-1979 E-mail: DIRECTOR Gary Ellis, BBA, FCIP, RF, FCLA, FCIAA, FIFAA AMG Claims Inc. P.O. Box 2102 Sherwood Charlotteton, PE C1A 9E3 Phone: (902) 628-9091 Fax: (902) 628-9093 E-mail: DIRECTOR Balu Naidu, B. Comm., FCIP, CRM Claims Tech (Canada) Inc. 2800 Skymark Ave., Suite 300 Mississauga, ON L4W 5A6 Phone: (905) 568-8060 Fax: (888) 239-3234 E-mail:

CIAA REGIONAL PRESIDENTS 2017 – 2018 NEWFOUNDLAND & LABRADOR Gejapathy Gopal, CRM ClaimsPro 27 Duffy Place, P.O. Box 8686, Station A St. John’s, NL A1B 3T1 Phone: (866) 726-7815 Fax: (709) 726-6106 E-mail: NOVA SCOTIA M. Kenneth MacLeod, CIP Crawford & Company (Canada) Inc. 210 – 500 Kings Road Sydney, NS B1S 1B1 Phone: (902) 564-4519 Fax: (902) 539-0071 E-mail: NEW BRUNSWICK & PRINCE EDWARD ISLAND Greg Potten, BPE, CIP, CFEI, CRM, CLA AMG Claims Inc. 212 Queen Street, Unit 308 Fredericton, NB E3B 1A8 Phone: (506) 458-9000 Fax: (506) 458-9595 E-mail: QUEBEC/AESIQ Michel Lacelle, PAA/CIP ClaimsPro 255 Crémazie Est, 2e étage Montréal, QC H2M 1M2 Phone: (514) 340-8959 Fax: (514) 342-5474 E-mail: ONTARIO Niki McConnell, BA (Hons.), CIP, CRM TC Insurance Adjusters Ltd. 6-2400 Dundas Street West, Suite 388 Mississauga, ON L5K 2R8 Phone: (877) 663-0701 Fax: (905) 916-0242 E-mail: MANITOBA Craig Shanks, BA, CIP Wheat City Claims Services Ltd. 64 Regent Cres. Brandon, MB R7B 2W9 Phone: (204) 725-7436 Fax: (204) 725-7437 E-mail: SASKATCHEWAN Lee Dixon, B. Comm., CIP Midwest Claims Services #3 – 2217 Hanselman Court Saskatoon, SK S7L 6A8 Phone: (306) 668-0873 Fax: (306) 249-4114 E-mail: WESTERN Jody Schmidt, B. Comm., CIP Crawford & Company (Canada) Inc. 203, 3114 Calgary Trail NW Edmonton, AB T6J 6V4 Phone: (780) 486-8024 Fax: (780) 486-9001 E-mail: PACIFIC Pat Lodewijkx, FCIP, CRM Discovery Claims Services Ltd. P.O. Box 36009 Hillcrest Village RPO Surrey, BC V3S 7Y5 Phone: (604) 579-0191 Fax: (604) 579-0192 E-mail:

National Standing Committees 2017-2018 ADVISORY Troy Quigley, BBA, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 - 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-0775 E-mail: Sarah Hirst, CIP, CRM, FCIP ClaimsPro #101, 5083 Windermere Blvd. S.W. Edmonton, AB T6W 0J5 Phone: (800) 565-3128 Fax: (780) 489-8841 E-mail: Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Paul Féron, FCIP, CRM ClaimsPro 210 – 746 Baseline Rd. East London, ON N6C 5Z2 Phone: (519) 645-6500 Fax: (519) 645-2250 E-mail: Sean Forgie, BA, CIP, CFEI ClaimsPro 1550 Enterprise Road, Suite 310 Mississauga, ON L4W 4P4 Phone: (877) 753-0753 Fax: (905) 565-0009 E-mail: James B. Eso, CIP, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: E. Grant King, BA, B.Ed., CIP Crawford & Company (Canada) Inc. 120 – 237 Brownlow Avenue Dartmouth, NS B3B 2C7 Phone: (902) 468-7787 Fax: (902) 468-5822 E-mail: Albert Poon, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 – 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-3485 E-mail: Marie C. Gallagher, FCIP, CRM Kernaghan Adjusters Limited 602 – 1 St. Paul Street St. Catharines, ON L2R 7L3 Phone: (289) 786-1074 Fax: (289) 723-1979 E-mail: Balu Naidu, B. Comm., FCIP, CRM Claims Tech (Canada) Inc. 2800 Skymark Ave., Suite 300 Mississauga, ON L4W 5A6 Phone: (905) 568-8060 Fax: (888) 239-3234 E-mail: CAREER RECRUITMENT PLANNING Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3, P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail: COMMUNICATIONS Richard Swierczynski, BA, CIP AZ Claims Services Inc. 1500 Upper Middle Rd., Unit #3, P.O. Box 76041 Oakville, ON L6M 3G3 Phone: (905) 825-0027 Fax: (905) 825-5543 E-mail:

John D. Seyler, CIP Integrated Insurance Resources 5080 Timberlea Blvd., Suite 214 Mississauga, ON L4W 4M2 Phone: (905) 238-4985 Fax: (905) 238-2735 E-mail: CONSTITUTION & RULES Paul Féron, FCIP, CRM ClaimsPro 210 – 746 Baseline Rd. East London, ON N6C 5Z2 Phone: (519) 645-6500 Fax: (519) 645-2250 E-mail: CONVENTION TTroy Quigley, BBA, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 - 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-0775 E-mail: DESIGNATION/EDUCATION GGary Ellis, BBA, FCIP, RF, FCLA, FCIAA, FIFAA AMG Claims Inc. P.O. Box 20102 Sherwood Charlottetown, PE C1A 9E3 Phone: (902) 628-9091 Fax: (902) 628-9093 E-mail: Robert V. Pearson, CLA, FCIAA CIAA Honorary Life Member c/o CIAA National Office 5401 Eglinton Ave. W., Suite 100 Etobicoke, ON M9C 5K6 Phone: (416) 621-6222 Fax: (416) 621-7776 E-mail: Lorne Montgomery, CIP, FCIAA, FCLA Crawford & Company (Canada) Inc. 300-123 Front St. W. Toronto, ON M5J 2M2 Telephone: 416-867-1188 Fax: 416-867-1925 E-Mail: EDITORIAL Mary Charman, CIP Crawford & Company (Canada) Inc. 1 – 120 Mulock Dr. Newmarket, ON L3Y 7C5 Phone: (905) 898-0008 Fax: (905) 898-1705 E-mail: John M. Sharoun, FCIP, FCIAA, CRM Crawford & Company (Canada) Inc. 300 – 123 Front Street West Toronto, ON M5J 2M2 Phone: (416) 867-1188 Fax: (416) 867-1925 E-mail: EMERGENCY MEASURES Richard Van Horne Action Investigations Inc. 2 Catelina Court Dartmouth, NS B2X 3G9 Phone: (902) 462-1222 Fax: (902) 462-3688 E-mail: FINANCE JJeff Edge, CIP, CFEI Leading Edge Claims Services Inc. P.O. Box 1399, 78 Highway 20 West Fonthill, ON L0S 1E0 Phone: (289) 897-8676 Fax: (289) 897-8677 E-mail: Monica Kuzyk, FCIP, CRM Curo Claims Services 125 Northfield Dr. W., P.O. Box 218 Waterloo, ON N2J 3Z9 Phone: (866) 952-2876 Fax: (519) 888-9704 E-mail: Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail:

IBC: LIAISON, LEGISLATIVE & FORMS LLee Powell Vericlaim Canada 5915 Airport Road, Suite 201 Mississauga, ON L4V 1T1 Phone: (905) 671-7834 Fax: (905) 671-7819 E-mail: LICENSING J. Miles O. Barber, B.Comm. (Hons.), FCIP, CRM, RF Network Adjusters Ltd. 67 Folkestone Blvd. Winnipeg, MB R3P 0B4 Phone: (204) 897-5793 Fax: (204) 897-5797 E-mail: MEMBERSHIP & QUALIFICATIONS Marie C. Gallagher, FCIP, CRM Kernaghan Adjusters Limited 602 – 1 St. Paul Street St. Catharines, ON L2R 7L3 Phone: (289) 786-1074 Fax: (289) 723-1979 E-mail: NOMINATING Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Monica Kuzyk, FCIP, CRM Curo Claims Services 125 Northfield Dr. W., P.O. Box 218 Waterloo, ON N2J 3Z9 Phone: (866) 952-2876 Fax: (519) 888-9704 E-mail: Paul Féron, FCIP, CRM ClaimsPro 210 – 746 Baseline Rd. East London, ON N6C 5Z2 Phone: (519) 645-6500 Fax: (519) 645-2250 E-mail: Troy Quigley, BBA, CIP Cunningham Lindsey Canada Claims Services Ltd. 1102 - 50 Burnhamthorpe Rd. W. Mississauga, ON L5B 3C2 Phone: (905) 896-8181 Fax: (905) 896-0775 E-mail: Balu Naidu, B. Comm., FCIP, CRM Claims Tech (Canada) Inc. 2800 Skymark Ave., Suite 300 Mississauga, ON L4W 5A6 Phone: (905) 568-8060 Fax: (888) 239-3234 E-mail: PRIVACY James B. Eso, CIP, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Drive Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail: Keith P. Edwards, FCILA, CLA, FUEDI-ELAE ClaimsPro 120 Adelaide St. W., Suite 2401 Toronto, ON M5H 1T1 Phone: (416) 777-4479 Fax: (416) 360-7335 E-mail: PROFESSIONAL PRACTICES Heather Matthews, CIP, CRM, CIOP Crawford & Company (Canada) Inc. 539 Riverbend Dr. Kitchener, ON N2K 3S3 Phone: (519) 578-5540 Fax: (519) 578-2868 E-mail:

March-April 2018

Claims Canada


• spotlight S

Small is beautiful

NSA Claims strives to maintain an intimate, easygoing business BY EMILY ATKINS


t's fair to say that Nick Stagliano and Scott Mastromatteo dislike bureaucracy. In fact, their need to get out from under the load of meetings, paperwork and layers of management was a principal motivator in the founding of NSA Claims. After an early career in claims, working his way up to management, Nick formed the company (NSA is short for Nick Stagliano and Associates) in 2009, based from a cubicle in his one client's office. With their support he decided to expand and find more clients, moving into his own space and bringing Scott in as his right-hand man shortly afterwards. Now NSA Claims, based in Mississauga, Ontario, has grown to a staff of nine, including Nick and Scott. But the customer-centric philosophy on which Nick founded the business has not changed. “When we get a claim, it's imperative that we treat every claim as if it's a new client,” he says. “You can't take your existing clients for granted. And so myself, and Scott, and the rest of the other staff that I employ, we all understand how imperative it is to receive a claim, and handle it professionally, with respect, and with customer service. At the end of the day, we're in that customer service industry, whether it's to your clients, or to your claimants, or to the policyholders.”

Lasting lessons This notion of how the claims business should be done was instilled from early on in his career. Nick started 10 Claims Canada

March-April 2018

working in the business as an intern while he was enrolled in the insurance program at Toronto's George Brown College. On graduation he received a bursary for receiving top marks in his class, and landed a job at Pilot Insurance. His first job with an IA firm was with Ponton Coleshill Edwards & Associates where he “was literally driving one of the partners around to their claims calls while they dictated in the back seat. And I would go get their cars washed, and pick up laundry.” But it wasn't all chauffeur and errand boy: “It opened me up to all lines of adjusting. Which really, moving forward to today, was a blessing in disguise in that I got the great opportunity of handling automobile claims, property claims, trucking claims, liability claims.” Being able to handle all lines in today's environment is a huge asset he says. Likewise, Scott says his own time at Ponton Coleshill Edwards & Associates was “the best experience I've ever had.” The company “was like a family,” Nick says, with a caring group of people, which set the tone that he wanted to maintain when he started NSA Claims, after a 17-year run with the various iterations that his mentor company went through.

A network of trust When Scott agreed to join Nick in the fledgling NSA Claims, one thing he insisted on was a CIAA membership. “That was my mandate to Nick. I'm like, 'We got to become members,'" he laughs.

He finds a lot of value in the association through the connections and networking it brings. “It's great because there's a lot of firms similar to us all over the country. Depending on the clients' needs, it's not uncommon for me to get a call, 'Do you know a good adjuster in Vancouver?' A lot of it is referenced through the members, the companies that are 50 members or less. You get to know people in certain parts of the country, and then you trust them. I have no problem referring clients to anybody. We've done it in the past, and we'll continue to do it in the future,” he says. Nick agrees that the association brings value as a voice for the independent adjuster. “I think they should be commended for the exposure they bring us,” he says.

Challenges Now on their own for the past nine years, Nick and Scott find technology is both a boon and a bugbear. Both point to the accelerated pace that email demands, especially in the claims business. “You feel obligated, when you receive an email from a client, you feel compelled to respond,” Nick says. It makes business move “so fast that it's hard to produce a furnished report and keep it up to date with the e-mails and the communication,” Scott adds. But, they understand that adaptation is key to meeting customer needs. Technology goes far beyond email these days, Nick says. It doesn't matter the cost, he notes, you have to ensure that your systems allow for client access to

Left to right: Nick Stagliano, Julie Parry, Rosemary Smith, Erin Cristofoli, Scott Mastromatteo; Absent – Stan Thomas and Ray Bird

files, and that means there is a neverending requirement for system updates. Nick also ruminates on the changing environment, in which smaller IA companies are competing against national firms. He notes that the small IAs need to stick together by developing reciprocal relationships to allow better geographical coverage. “Those sort of one-off claims that we were accustomed to having received in the years gone by are no longer there. I would say it's not a constant struggle, but it's certainly challenging going out there to market yourself,” he adds.

Staying true He relies on his staff to reflect his values of customer service. “It's crucial in that the company, the office, the staff, whether it's administration or adjusters, should reflect your company's character and commitment to professionalism… which is what Scott and the rest of the adjusters do,” Nick says.

Scott likes to put it into the context of what changed when their previous employer grew into a large firm: “We were both of the mindset that we work for the client, so the underlying client, the insurer or whoever it may be, they're the one that tells us what to do, rather than, internally, you've got to follow all these procedures.”

Staying intimate “My intent is always to stay small,” Nick says. “I've always believed that if you service the existing clients that you do have, they will support you. While you always want to go out and get more business, it doesn't necessarily mean it's a good thing. Because you want to continue doing good quality work for your existing clients that have always supported you.” He notes that growing, taking on more clients, just adds stress, “because whether it's hiring additional staff support or adjusters, you need to maintain

that same level of quality. And nevermind the expenses incurred by way office administration, office space and equipment.” “I didn't intend to grow as big as I did, where I am today. I'm up to eight people, but it's just the joy of accomplishing without any help, or any partners, or any financial assistance,” he says. As it is – running his own company, working longer hours and for not much pay – Nick says he does it because he loves knowing that his decisions are his alone. “It's just rewarding to be able to walk into the office every day and know that any decision you make, it's yours and nobody can tell you otherwise. You can get an opinion from your staff and they can tell you that you're an idiot [which, he adds, they would, in a friendly way] but while I take on every opinion, sarcastic or not, it's my decision at the end of the day.” • March-April 2018

Claims Canada 11

Trojan horse or workhorse? Is smart automation a boon Byor bane? By Emily Atkins

“Open the pod bay doors, Hal.” “I’m sorry, Dave, I’m afraid I can’t do that.” With this ominous exchange a nightmare begins. The artificially intelligent computer, HAL 9000, has malfunctioned and refuses to take orders from the crew of the spaceship Discovery One in the cult sci-fi film 2001: A Space Odyssey, ultimately trying to kill them. While certainly an effective antagonist for a movie plot, having a HAL 9000 scenario inside our own homes would be less than ideal.

Yet with the surge in popularity of smart home devices, alongside the growing influence of automated and intelligent processes being employed in industry and commerce, we need to ask if we are creating new risks by putting so much trust in automation. Could Alexa, the voice of Amazon’s Echo home automaton hub, and her ilk be a Trojan horse, just waiting to unleash an army of hackers, errors or malfunctions into our homes’ vital operating systems?

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March-April 2018


Or, do Apple’s Siri and the Google Assistant, which, along with Alexa are today’s most popular options, promise to be benign, helpful and ultimately cost-saving and productivityboosting tools for users and the insurance industry alike?

Moving in The advertising seems to working; the penetration of smart home devices is growing very quickly. In Canada right now, 13.9 percent of homes have adopted some form of smart automation. And, according to information from, that is projected to climb to 31.5 percent by 2022. What are people buying? Statista’s numbers cover digitally connected and controlled devices within a house that can be remote controlled; sensors, actuators and cloud services that support automation in any way; control hubs to connect sensors and actuators with remote controls and to each other; and, business to consumer (B2C) hardware and software sales as well as subscription fees. In other words, we are looking at the full array of smart devices and services from security systems, to thermostats, to smartphones with Siri, Google or Alexa on them. Breaking it down by usage, the market is segmented into security, lighting, entertainment, HVAC & energy management, and smart kitchen applications. So far, entertainment owns the market, and is expected to continue doing so until about 2025 thanks to high demand for home theatres, touchscreens, audio and video controls, and other entertainment controls, according to a late-2017 study by San Francisco-based Grand View Research. After that it is expected that smart appliances will drive kitchen applications into the lead.

The workhorse If you’ve see the commercials, Alexa is capable of brightening even the coldest Canadian winter day by helping a dull young woman warm her house, order paper towels and play summertime music. And that’s just the tip of the iceberg. Smart home apps are popping up every week. Now you can control your thermostat from wherever you happen to be using your smartphone. Lights, cameras and action can all be monitored and controlled remotely. Applications run from the slightly silly – feeding treats to your cat while watching from your desk at work – to the utilitarian – having your swimming pool kept clean and at the right temperature. Unexpected guests coming home with your from work? Send the robot vacuum for a spin to make sure the house is spotless. Your devices can keep you safe, locking and unlocking doors, warning of gas leaks, and knowing when smoke is from under-control cooking rather than a fire. Nothing seems far-fetched any more.

Keeping tabs to reduce the tab With all this tech comes data, big data. And insurers are looking for ways to use it. Just as telematics devices implanted into cars deliver data about your driving in order to generate usage-based insurance rates, so too can household devices. Water sensors, for example, are a simple and increasingly popular way for insurers to potentially reduce premiums. They relay information to the homeowner when water is where it shouldn’t be, allowing for an early intervention and thus reducing the risk of damage. Some insurers are offering free sensors, others a rebate for equipped homes. continued on page 14

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...continued from page 13

Pete Karageorgos, director of consumer and industry relations (Ontario) at Insurance Bureau of Canada (IBC) points out this is not a new model. As with home security systems, which have triggered discounted premiums for years, the new generation of technology may end up benefitting homeowners. “If it allows for a more accurate price model to be developed, there may be a benefit to technology in a vehicle, in a home,” he says. But, he cautions, “It’s a very competitive marketplace out there, so there is no uniform response. Some insurance companies are at the forefront of this and others are wait and see as technology develops and advances, improves itself. If there are people who want to move quickly, as quickly as technology is moving, they likely can find insurance companies that are aligned with that, too.” AXA, for example, is one of the early adopters in the home automation game, having launched its first insurance plan for the connected home in 2015. The company is looking at the opportunity technology affords from a big-picture perspective. In addition to making connected home services available at a discount, the company is partnering with smart technology providers to develop new apps and ensure communication is possible among the various devices in a home. “Data collected from across the connected-home user base will lead to development of algorithms able to identify risk independently via data collected from millions of sensors, from the homes of millions of users,” said Véronique Letellier, head of digital services and open innovation at AXA France in an article on the company’s website. “Sensors, IoT [Internet of Things] won’t be innovations for the sake of innovation, they’ll contribute to better, cheaper, more tailored home insurance.” AXA also envisions a reduction in claims as the data created by the in-home devices allows the creation of artificial intelligence that will be able to predict when loss-causing events – like fires – may happen. AXA is not alone, numerous others are getting their feet wet, researching and investing in home automation initiatives. Aviva invested in Cocoon, a security technology company; American Family Insurance invested in Ring, the smart doorbell app; and Hartford Steam and Boiler (HSB), which specializes in commercial and industrial cover has bought into industrial sensor manufacturer Helium, a mobile app platform start-up called Waygum, and predictive machine diagnostics company, Augury. There are many more examples.

Prevention and investigation A hallmark of the new technologies is their growing sophistication and ability to network together to provide complete oversight and management of household operating systems. For example, smart HVAC systems can all be interlinked and controlled. Water heater, air conditioner, and furnace will all be talking to one another to ensure home comfort. “The increasing complexity of these systems will have both benefits and deficiencies that can both cause and prevent losses,”

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says Robert Sparling, 30 Forensic Engineering’s principal, materials and product failure. “For example, a smart furnace may warn the homeowner that the fan motor is about to fail, so that a lack of heat event can be avoided, even when the home owner is on vacation.” When it comes to losses, both property and personal injury, investigators and adjusters can also turn to technology for help. Security systems are known to be helpful in the investigations of slips, trips and falls, as well as determining the origin of fires in commercial properties. Home security systems, such as Nest cameras, can also be useful in the investigation of water damage in homes. Video footage can provide information as to the exact origin of a water release and its timing. “More concrete visual data, rather than relying on only witness statements, allows insurers to more quickly assess the validity of a claim and shorten the time in determining whether a claim is worth of subrogation,” says Ben Desclouds, an associate, materials and product failure with 30 Forensic Engineering.

The Trojan horse The appeal for the user is hard to deny, as is the potential bottom-line benefit for insurers. For the homeowner it looks like less work, less worry, and answers and solutions to problems as close as the range of your voice or a swipe of your phone. And you can even save money on your insurance premiums by having all this convenience. What’s not to like? Lots, apparently. Several years ago industry analysts were all in favour, exhorting insurers to adopt and embrace the technologies. Brace new futures were envisioned where home property claims could be virtually eliminated. But then, as cyber attacks rose in severity and frequency, the brakes went on. Talk shifted to the perils of allowing smart devices to run our lives. The risks are numerous. Hacking, power failures, loss of data, and poorly interfaced devices and systems leading to failures – the list is long and the consequences potentially scary and damaging. Scenarios are not hard to imagine. Suppose the system turned the thermostat down on a frigid winter day and wouldn’t turn it back up. If the homeowner was not able to return immediately and override the system, frozen, burst pipes could be the result. Or the smart door lock that is supposed to secure itself again after a tradesman leaves gets confused and leaves the door open for anybody to enter. Prolonged power failures bring their own risks that many Canadians are familiar with. But when a home is entirely controlled by digital systems, what happens when the electricity supply is off for days? Or if a vacationing homeowner cannot control their homes devices because their smartphone hasn’t had a charge for three days, or it fell in the ocean, or is simply lost, what happens then? Smart automation users may also be opening themselves up to criminals. Devices can

March-April 2018 www.claimscanada.

be hacked, home networks joined and tricked into giving away information such as when someone is at home. Arson, blackmail, theft and extortion are all possible, suggested Earlence Fernandes, a Ph.D. student, systems and security, at the University of Michigan in a 2016 research paper. He and his colleagues were able to hack systems to change door locking codes, trigger fire alarms and disable a home’s vacation mode to change lighting patterns. They also devised a Trojan app that was masked as a battery monitoring tool but really allowed access to other devices on the network. It’s not just the home that may be imperiled. The Industrial Internet of Things (IIoT) is powering the new industrial revolution, leading to a high degree of automation penetrating into commercial operations. “There’s no doubt that it’s coming to manufacturers, and you’ve got machines talking to machines,” says Paul Hancock, Crawford’s vice-president, Global Technical Services (GTS) Canada. He sees a reduction in the small, frequency claims and a jump in severe and complex losses in this space. “They’re going to be tied to infrastructure breakdown, they’re going to be tied to cyber breaches, and they’ll probably be broader than just one machine. It’s probably going to be a conglomerate of machines that are all syncing to each other or networking together. It could be more than one factory. If they’re on the same network it could be in more than one country.”

He cites the example of a failing thermostat temperature sensor. If the thermostat then does not warn the homeowner, a lack of heat event could occur in a home. “Thus, there will always be some circumstances where a smart device manufacturer could be found responsible for an event,” he concludes. Pete Karageorgos looks at the failing smart door lock as another example. “If someone’s front door lock is unlocked and access is gained that allows for a theft to occur and they file a home insurance claim, how did an individual gain entry? It’s

“The producers of IoT devices like thermostats, smart furnaces, etc. will be open to liability where their devices do not identify problems before they happen.” – Robert Sparling, 30 Forensic Engineering

Adjusting new kinds of claims Claims related to smart tech are already rolling in. The team at 30 Forensic Engineering investigated one where a swimming pool ended up collapsing on itself as a result of automation. “A freeze-protection system activated and prevented freezing as intended, but due to improper interlocking of this system with multiple other systems from other suppliers (e.g. the safety cover retracting system), it ultimately caused the pool to cave in on itself,” recounts Desclouds. “So in the end, the automatic activation of a failure prevention feature ended up causing a different type of loss.” In another example, SaskPower, Saskatchewan’s electricity provider, had to scrap 105,000 smart meters in 2014 after more than six unexplained fires. After a review it was found that rain and contaminants had entered the units and caused the malfunction. The review also found, however, that the remote readers didn’t work properly from the outset and they created so many false overheating alarms that the company was unable to investigate them all. SaskPower said that malfunctions are “to be expected” and the company is embarking on another round of smart meter installations. These losses raise the question of liability. Will manufacturers of the devices be held liable for failures of their product? 30 Forensic Engineering’s Sparling thinks so. “The producers of IoT devices like thermostats, smart furnaces, etc. will be open to liability where their devices do not identify problems before they happen,” he says.

unclear. It’s uncertain,” he says. “It may require additional investigation by an adjuster, by an insurance company, into how that event occurred. Then, is there a component that goes back onto the manufacturer of that device? Does this become a product liability claim rather than a standard break-and-enter theft claim from the home?” Losses involving smart technology will certainly will require a new skills from adjusters. At Crawford, Hancock says in addition to boosting training, they are preparing by looking for new people with highly technical skill sets. “We’re looking at hiring different people. And if we have to be looking at hiring different people, you’re going to specialists, you’re going to engineers, you’re going to lawyers, you’re going to people that have that technology background…you’re trying to find those skillsets to bring them in and teach them how to adjust claims,” he says.

A gift horse Whether these new technologies turn out to be workhorses or Trojan horses will come down to the individual’s preference and tolerance for risk, says Karageorgos. Much will depend on the value placed on privacy and faith in new technology. For the early adopters there is lots to be gained and enjoyed in using smart automation technologies. But convenience will have to be balanced against the risks. In the short term there are “a lot more questions than answers and a lot of this is still in its relative infancy,” Karageorgos concludes. He is right, whether you look at it from the perspective of the homeowner, insurer or adjuster. As the technologies evolve and mature the risks and benefits will shift with them. Going back to the scenario from 2001: A Space Odyssey, for the moment there’s little more to be done than take HAL’s advice to “sit down, take a stress pill, and think things over.” •

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By Adam Campbell

Zombies on the


The science behind ‘Zombie Laws’ and their potential effect on the litigation of pedestrian collisions Spawning out of Honolulu, Hawaii, Zombie Laws took effect to curtail the use of mobile devices by pedestrians while crossing the road. The simple intent of Zombie Laws is to increase pedestrian safety. Yet, beneath the surface of these and similar forms of legislation are complexities that have the potential to reshape the landscape in managing claims brought forward by pedestrians involved in collision events, bringing to bear new science and new challenges for all parties involved.

Lurking around the corner The international response to Zombie Laws has been swift, as talk of similar laws has crossed the ocean, reaching mainland water-coolers, offices of the politically inclined and everywhere in between. In Ontario, Bill 171 (“Phones Down, Heads Up Act”) was proposed as an amendment to the Highway Traffic Act (HTA) with an escalating fine structure for repeat offender zombies. More importantly, for the first time, such a bill would make it illegal for pedestrians to be in a distracted state of mind. Whether Bill 171, or something akin to it, makes its way into law is an entirely separate matter in and of itself. It was recently reported that Toronto City Council’s move to amend the HTA was denied by the province; however, they may still establish bylaws with similar intent. Mayor John Tory of Toronto said the law would not be the “best use of resources.” Many cities and municipalities face similar challenges in legislating around a human health concern. But the concern for pedestrian safety itself is quite clear. During the period of 2008 to 2012 in Toronto, over 10,000 collisions resulted in pedestrian injury or death. In 2016 alone, there were 43 fatal events involving pedestrians, which was the highest in over a decade. There are certainly many elements needed to comprehensively address pedestrian safety. Legislation is but one of them. Humans transformed Humans shape-shift into dangerously limited versions of themselves when captivated by the attention-sucking capacity of mobile devices. Depending on your penchant for horror movies or Michael Jackson’s Thriller, your under16 Claims Canada

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standing of what makes a zombie a zombie, may differ. The Hollywood stereotyped zombie as a slow-moving, near-living, sometimes drooling, creature numb to logic or reason bears some unfortunate resemblance to their city-dwelling counterparts with a shiny mobile device in their hands. Combating the transformation to zombie-like form is precisely the basis for the Zombie Law. The science of otherwise ‘normal’ pedestrian behaviour is clear: non-distracted individuals look to where potential hazards can emerge both before and during roadway crossings. It is thought that by legislating a limit to the extent of mobile-device use before and while crossing the road, we will foster more attentive pedestrian crossings. In doing so, logic follows that pedestrians will more often make it to the other side of the road in safety. The consequences of distraction have long been a focus in the analysis of contribution to MVAs, but mostly in the context of driver behaviour. There are many reasons for this, but predominant among them is the ‘reverse onus’ on the vehicle operator in a case of a collision with a pedestrian to disprove their contribution to a collision regardless of the particular circumstances surrounding the event. In other words, drivers are effectively deemed to be at fault for a collision with a pedestrian unless they can prove otherwise. This means that drivers, and not pedestrians, have been more extensively studied and scrutinized in claims of distraction being causative to the collision. Whether Zombie Laws shift the tests of contributions to a collision remains to be seen. But the mere fact that such laws are being debated in legislative assemblies suggests that it’s at least a possibility.

If it walks like a duck The influence of mobile-device use extends beyond distraction. A defining feature of zombies is their slow and shuffling gait pattern, and mobile devices can cause that behaviour. Research has shown that pedestrians walk more slowly when engaged in distracting tasks (like talking) than if they walk without engaging in distraction. The effect is quite robust, as it is observed across the population in individuals of various ages and states of health. In observational research, it has been shown that it takes distracted pedestrians 18 percent longer to cross a roadway compared to their undistracted counterparts.

Believe it or not, walking requires cognitive resources (i.e., brain power) to control the intricate and coordinated timing of leg movements. Compared to a phone-less pedestrian, those using mobile devices while crossing the roadway show substantial detriments in their ability to walk a straight line, meaning they walk more slowly and they walk a longer path to the other side of the intersection. The more disengaged you are in the task of walking, and the less brainpower allotted to controlling it, the longer it takes to get to the other side. Roadway crossings are inherently dangerous because they are a place of mutual conflict between pedestrians and vehicles. Simply put, the more time pedestrians spend on the road, the more likely they are to come into conflict with vehicles. Unfortunately, crossing signal timings do not yet include a ‘zombie mode’ to increase protected pedestrian crossing time for those simultaneously swiping right, leaving the slowest

of slow on the roadway for longer than they would be otherwise, and at the mercy of the vehicle operator and prevailing environmental conditions.

A path rarely walked Given that HTA charges are often brought forward well before the filing of tort claims, pedestrians bringing civil actions against drivers may have new and higher hurdles to overcome. Principally, the proverbial paper-trail of distraction may exist where it had not before. Such information may be used as a gateway to alleging pedestrian distraction as a contributing factor more frequently than in years passed. Old challenges in the collection and preservation of the alleged in-use mobile device will no doubt be unearthed with greater importance in contesting claims of distraction. Legislation aside, the forensic analysis of human behaviour during pedestrian/vehicle collisions often reveals that the pedestrian has the last opportunity

to avoid impact, simply because they can change their direction and speed much more quickly than the approaching vehicle. Legislation such as Zombie Laws may shed new light and emphasis on pedestrian behaviour during litigation, bringing to bear science not typically heard by the courts about the consequences of distraction and the pedestrian’s ability to avoid collisions. As it is with technical analysis of any collision event, all involved parties would be wise to explore the potential ramifications of such allegations early in the claims process to avoid surprises at the eleventh hour. The dangers of both distracted drivers and pedestrians are real. But for all you zombies out there, the path to new life is clear; focus on walking instead of on other distractions when crossing the road. Your health, and (possibly sooner rather than later) your wallet, will thank you. • Adam Campbell, Ph.D. is senior associate, human factors with 30 Forensic Engineering.


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interruption of a business’s operation resulting from insured physical damage to property of the type insured. Coverage can extend to include access to a premises and interruption of the supply of goods or services (contingent business interruption). Like all coverages, business interruption policies are subject to typical time element exclusions, such as business losses due to strikes, breach or lapse of leases, penalties, etc. Understanding the full scope of the business interruption insurance in place is key to executing an effective loss cost containment strategy. An aspect of this is understanding policy definitions, two of which are indemnity period and measure of recovery.

Indemnity period BY JAY STRANO

Indemnity period refers to the period of insurance protection, commencing on the date of the event or damage and ending at the time defined in the policy. This is a component of the coverage that a forensic accountant can help the insured understand. Generally, an indemnity period will end with either the length of time to rebuild, repair, or replace, or when the business returns to normal operations, again depending on the policy wordings. Gross earnings wordings generally use the period to rebuild, repair, or replace while gross profits wordings are generally used when the business income returns to normal. Although superficially similar, the difference in wordings can greatly affect the indemnity period. In the case of physical damage, the length of time to repair, replace, or rebuild is just that. The indemnity begins when the damage strikes, and ends when the last nail is hammered in. However, once the repairs are finished and the business is operational, it may take some time for the normal course of business to resume. The indemnity period continues after the physical damage is repaired, replaced, or rebuilt, until when the actual income of the business matches a forensic accountant’s projection. Working with the insured, a forensic accountant can analyze current sales and historical trends to develop an accurate projection on which to base the loss. Of course, there is also a time period limit in place, usually 12 months, but occasionally 18 or 24 months.

Understanding business interruption losses Prompted by the emergence of new triggers, business interruption remains a top risk according to the 2017 Allianz Risk Barometer, which defines it as “a loss of income that could impair a company’s revenue stream and thus [trigger] a shortfall in covering the ongoing costs of doing business.” Given the nature of business interruption losses and the impact they can have on an organization, they can be quite difficult to measure. Due to globalization and shifts in market trends and demands, triggers of business interruption losses are expanding from traditional damage-driven events, such as natural catastrophe or fires, to newer, formerly uninsurable events. Such events include cyber incidents and access restrictions to areas impacted by terrorism or political violence, both of which can result in a large loss of income for companies. Managing a business interruption claim can be a challenging exercise, and understanding the complexities in mitigating business interruption losses is key to implementing effective pre- and post-event risk management strategies. Within the context of a business interruption, a forensic accountant can be leveraged to quantify a loss through reviewing and analyzing the insured’s financial statements, past performance and business trends and prepare a business interruption analysis that coincides with the language of the policy coverage to indemnify the policy holder for covered losses in an expeditious manner.

Reviewing coverage – Sifting through terms of a general policy Although policy wordings differ between insurers, business interruption coverage typically covers short-term financial losses (typically 12 to 24 months) arising from the 18 Claims Canada

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Measure of recovery The insured is eligible to recover its loss of gross profit, or whatever measure is defined by the wording, produced by applying the rate of gross profit to any reduction in turnover caused by the physical damage. Once the forensic accountant has received and reviewed the financial statement, they can calculate the rate of gross profit. Previous claim experience allows the forensic accountant to quickly determine which parts of the financial statements will be included in calculating the rate of gross profit. Also, their experience allows them to work with the insured to develop and project the reductions in turnover against which the rate of gross profit will be applied.

Understanding the financial statement Business interruption insurance is intended to cover the unavoidable fixed costs and loss of profit in the event of an unexpected loss of sales or revenue due to physical loss or damage of insured property. In order to determine actual loss sustained, it is necessary to review the insured’s income statement for the last completed fiscal year or 12 months prior to the date of loss. Determining fixed and variable expenses is necessary and essential to determine the gross profit rate. Fixed costs include rent, where an abatement does not exist, while variable costs include things such as purchases and credit card fees, or any expenses which can be avoided if the business is suddenly suspended. When the business is closed for an extended period of time, some costs may straddle the line between fixed and variable costs. These are described as semi-variable costs. As an example,

utilities will generally stay stable during a short loss, however, for longer interruption periods, power usage may fall. Forensic accountants are able to work with the insured to gather the necessary documentation to determine which, if any, expenses continue during the loss period. As a result, both the insured and insurer are involved in the process and have an understanding of how the rate of gross profit is calculated and what of the continuing expenses are covered.

Extra expenses Extra expense insurance is often added as additional coverage to a standard business interruption policy. Extra expense insurance covers additional costs in excess of normal operating expenses that the insured incurs to continue operations while its insured property is being repaired or replaced after having been damaged by a covered loss. These costs can include temporary property rental to set up operations and rental of equipment, such as portable generators to continue partial operations.

Lorne McIntyre named Director, Large & Complex Loss for First General Canada. Lorne joins an expert team advancing strategic growth in the Canadian & U.S. market. First General, one of North America’s largest restoration networks, is pleased to announce the appointment of Lorne McIntyre as Director, Large & Complex Loss for First General. Lorne’s appointment is part of our focus on expanding and strengthening our geographic coverage and infrastructure across North America. “Lorne adds significant strength adding experience and expertise to our organization,” said Frank Mirabelli, CEO. His primary focus will be to lead the large & complex loss division. Lorne will also help our continuing network expansion in the US. Lorne brings more than 30 years of experience in cleaning and restoration to First General. His operations and project management experience, advanced technical training and catastrophe and field work will help drive our overall large loss strategy.


Extra expense insurance allows the insured to spend in excess of any amount it will save on the loss of gross profits. As an example, failing to meet contracts and deadlines may result in a loss outside the original insured loss, and a reasonable extra expense may help the insured save clients and future revenues.

Conclusion Getting a handle on a business interruption claim starts well before the event takes place. By taking control of the data, establishing a team and developing plausible business interruption risks before losses occur, risk managers can do much to lessen the confusion and frustration common to the claims process. If it is done well, the business interruption process can be quite straightforward. Jay Strano, CPA, CMA, is Managing Director, Crawford Forensic Accounting Services / Global Technical Services with Crawford & Company (Canada) Inc. •

More recently he has worked on various types and sizes of losses after sever weather events across the country. “I am attracted to First General’s vision and forward-thinking leadership,” says Mr. McIntyre. “I intend to apply my experience and skills to help our team deliver extraordinary services when our clients need us most.” Lorne has demonstrated devotion to the industry, his clients, and his advanced knowledge in managing complex losses. Lorne’s commitment to higher education has earned him the highest industry credentials including the RIA Certified Restorer, Water Loss Specialist and the American Council for Accredited Certification-Certified Structural Drying Supervisor designations. He is also an IICRC, RIA and ICRA Technical Instructor. Recently, Lorne was a consensus body member that created the ANSI/ IICRC S540 Trauma & Crime Scene Clean up Standard, the first of its kind. Lorne serves voluntarily on several committees for both the IICRC and RIA. He is currently RIA Canadian Education sub-committee Chairperson and an RIA Board of Director.



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In 2017, forest fires blazed across British Columbia and northern California. The Atlantic was hit with hurricanes that damaged businesses and homeworkers alike. And, the high volume of floods had communities across Canada on consistent alert for high-water risks, with 2017 seeing a historic rise in water levels. First responders, homeowners and companies are approaching their disaster recovery planning with greater education and preparedness than they did years ago. While the ripple effect of climate change will spill into every industry, the insurance sector is particularly affected. The modern era of catastrophic natural disasters, happening more often and with more significant damages, has augmented the volume and scale of insurance claims. This, in turn, enhances the stakes for all stakeholders. Claims managers can approach this new kind of storm – the onslaught of claims – with education and new tools to enhance the effec-tiveness of recovery.

A new breed of storm In 2016, Canadians endured an increasing number of both natural and man-made disasters. According to Catastrophe Indices and Quantification (CatIQ), these events ultimately cost insurers more than $4.9 billion in 2016 alone. The Insurance Bureau of Canada (IBC) indicates the annual economic cost of disasters around the world has increased by 500 per cent since the 1980s. The Fort McMurray wildfire was especially costly, with IBC stating the insured damage it caused was the most expensive disaster in the country’s history for insurance providers, coming in at $3.58 billion. Don Forgeron, IBC president and CEO, noted “the record damage reported in 2016 is part of an upward trend that shows no signs of stopping.” The big question for claims managers and adjusters is: how do they deal with the onslaught of claims? And, if the pattern of natural disasters steadily continues at the same rate, how will 20 Claims Canada

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Claims, Interrupted

insure r s find n e w ways t o

Why a new breed of storms paves a new course for claims managers By Shane Swinson

streamline the large magnitude of claims?

The disaster claim ecosystem As claims managers understand, tracking costs for a large loss or complex commercial mitigation is no easy feat, with multiple moving parts at play. When there are multiple properties, tenants and owners, which all have separate billing schemes, how do you keep track? For claims managers, how do you know if the invoice you receive is true to what the damage costs? This process can be headache-inducing for all parties involved. It can take months to recall how long a crew or piece of equipment was used or deployed on-site. Tracking this information leads to longer delays in the billing process. Then, when a final bill is produced, lack of documentation can result in a drawn-out audit process and negotiation. Claims managers are responsible for tracking how the data and pricing is configured, and the more complex the job, the more complex it is to manage. The cycle of more claims, and more administration, can mean claims managers are weighed down by administration and red tape. All the while, the closing the file is delayed and delayed. In commercial cases, when a disaster occurs, it is pivotal that reparations begin immediately. Expediency is the make-or-break factor for business: according to the US-based Strategic Institute, if companies can’t resume operation within 10 days of a

disaster, they are not likely to survive. They will therefore be eager to sort out claims immediately, putting pressure on claims managers to deliver quickly. In a time when client retention for claims managers is a top priority, taking months to produce a final billing price won’t cut it.

New storms, new partnerships Major insurers are now partnering with vendors like disaster restoration companies that can contribute to site inspection and exploratory checks, and provide the necessary photos, reports and analysis. They can then communicate quickly with property owners and adjusters and submit updates wirelessly from any job site. This is facilitated by technology that has changed how insurers are able to respond to claims. For example, software can streamline data capture and increase the speed of estimates through built-in reporting, scoping tools and estimate turnaround. This reduces the time-consuming paperbased components of the business. Claims managers are now using technology to integrate directly with in-house claims management systems that are designed for the restoration industry, some of which can also synch with industry standard software. So, on-site mobile job management software drives, tracks and manages restoration jobs in real time. Good for project managers, yes, but what does this mean for claims managers?

When insurers have access to realtime, on-site reporting and comprehensive site reports, they can speed up decision-making. And, if they have someone on the ground immediately who can quickly provide that information, it reduces the cycle time from the time of an event to the time of file closure. For example, FirstOnSite received a 3 a.m. call for a fire in a food processing plant in British Columbia, which quickly set off the sprinkler system. A dispatch and emergency mitigation began immediately. Luckily, using mobile reporting, management and documentation tools, FirstOnSite’s teams could provide data to the facility manager and the adjuster in order to assess the situation and plan the repair steps. This included reports, photos, and videos, which were all seamlessly shared. They built estimates and provided approvals while the mitigation was still under way, allowing the mitigation job to roll directly into the rebuild phase. During the repair phase,

teams could upload work orders and purchase orders, and adjusters and facility managers were able to provide authorizations in real time throughout the job. This degree of communication avoided planning delays, and the facility never had to shut down. In another example in BC, a healthcare facility suffered a massive flood, and the pressure was on to mitigate and repair as quickly as possible. This particular repair included 17 offices, flooring, electrical, among other work. As a result of the real-time reporting provided by the restoration team, the adjuster in this case was able to assess all damage throughout the facility and provide approvals immediately. These events demonstrate the extent to which partnerships between disaster restoration companies and claims adjusters can lead to more efficient, streamlined reparations. When a catastrophic event occurs, one main challenge is involving multiple businesses or tenants, and multiple

insurers, each with different degrees of damage and different business continuity requirements. The utilization of management tools and software designed to help identify, track and streamline independent “files within files” is critical not only to timely recovery, but to being able to provide transparent customer service in situations like these.

A new course forward Technological innovation and new partnerships are making the modern storm of insurance claims more manageable. With the help of new stakeholders like disaster restoration companies, claims managers can expand the boundaries of their role to include future-looking customer focused consulting as well, helping their customers get back in business quickly, and be better prepared going forward. • Shane Swinson is SVP, insurance portfolio, FirstOnSite Restoration.

Ontario Chapter’s

Annual Spring Education Seminar

Tuesday, May 8, 2018 – 9am-4pm Sandman Signature Toronto Airport Hotel Developed by CIAA appeals to Claims Professionals, Adjusters, Claims Managers and Lawyers, the program includes: • WSIB – Covering key rules and regulations • Bill 18 – Priority and liability of leased and rented automobiles • Legalizing Marijuana – Its effects on auto and property insurance • Condo Losses – Understanding coverage • Product Liability – Top defenses • Cyberbullying – Trends in parental liability CPD: Substantive Credits 5.5 hours / RIBO CREDITS:TBA

CIAA Members $50.00 Non-Members $120.00 REGISTER NOW / FOR MORE INFORMATION Space is limited - Tickets will not be sold at the door. Enquires: or 905-206-5415

March-April 2018

Claims Canada 21

alty 360 back in April 2009. Ken’s article was a rebuttal to another article that stated inferior contractors would take more than three days to dry. The reality is that there was no technical or scientific data to support the claim, or to the contrary. I asked Ken to revisit this article with me, nine years on, to write this series from a competent restorer’s perspective using both science and profitability considerations for the contractor and restorer. By the end you will see how science favours restorative drying, why carriers have been exposed to massive liability and how you can reduce that liability going forward.

The 2009 myth discussed In the 1990s and early 2000s restorative drying science was in its infancy, but was evolving as some thought leaders in the industry began taking a more scientific approach. Restorers were rapidly moving from being carpet cleaners to restoration specialists, and in the process they were learning what worked and what did not work. These restorers also developed the technology that is still used today. In the 2000s this early science was harnessed and restorers began teach the techniques for the proper use of the equipment that would lead to less tearout and allow them to dry structural materials in place. The term Applied Structural Drying (ASD) became known in the industry as a drying course. The Institute of Inspection, Cleaning and Restoration Certification (IICRC) stated in its IICRC S500 V3-2006 standard, “Currently, among the IICRC's 38,000 registered technicians, approximately 24,000 are IICRC-certified as Water Restoration Technicians (WRT), with approximately 4,500 of those being certified in Applied Structural Drying (ASD). This number is growing daily. ASD is primarily a handson course in which demonstration houses representative of standard residential construction are flooded, extracted, monitored, and dried throughout the three-day course – although three-day drying cannot be guaranteed." Everyone was going to these classes, from contractors to adjusters to property managers. The fact a restorer could reduce the cost of rebuilding a structure substantially impacted the bottom line of the final customer, reduced cycle time and decreased rebuild costs. The issue with these classes was that they consisted of a three-day class. The perception was that structures could be dried in three days. The reality is that many of these structures remained wet for three to four days after the class ended.

Restoration myth-busting:


Part 1

Insurance carriers could dramatically improve cycle time, profitability and improve customer service if they abandon misinformation about restorative drying. It has been nine years since one of the world's leading restoration minds wrote the article “The three-day drying myth.” By the end of this series you will have the knowledge to make informed decisions, understand that risks you are exposed to and have a true solution that can be applied to the industry to improve your true KPIs– customer service, profitability and reduce liability. In November, I was talking with the VP of Claims for a leading restoration company and the discussion came to the fact some of their top restorers were drying structures in seven and 10 days but were not getting paid due to their "incompetence". As we discussed the situation the VP said: “Why take seven to 10 days when three to four days is what a competent restorer can do? I am wrong?” And that led us to a 15-minute conversation – or soap box – on why I thought the restorer taking seven to 10 days was the restorer I would use. I realized that a good friend of mine, Ken Larsen, had written “The Three-Day Drying Myth” for Property Casu22 Claims Canada

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Some contractors and adjusters believe contractors are in possession of technology, equipment and training can dry structures in three days. In 2009 Ken wrote: “They (insurers) may even accuse contractors of being unscrupulous and advise adjusters to alter the contractor’s invoices based on wishful, non-existent quotations. The fact remains that these sceptics are hard pressed to substantiate their comments. Moreover, publishing erroneous materials can lead to serious conflicts between contractors and adjusters rather than assist in fair and scientifically sound practices.”

Where is the science today? In 2018, the science has evolved, the equipment has evolved, and restorative techniques have dramatically improved. But with all this improvement and knowledge one thing is true – three-day drying is not the norm. There has been plenty of research by the restoration and building science community to substantiate the fact that not all materials can be dried in a specified, arbitrary time of three days. As a matter of fact, many structural materials will dry in varying degrees, depending on saturation time, atmospheric conditions and the material's location in the building composition. What is interesting is that Ken had the foresight to see that the issue with arbitrarily applying a window for drying to 72 hours or three days was that the pricing pressure would have contractors remove their equipment prematurely. His observation was that less time would be spent focused on restorative drying goals and more time focused on monitoring how much equipment was left onsite and for how long. For the most part, today’s reviewers do not look at the goal of the drying project; they look at the costs of the job. The measurable cost of the job is more important than the successful drying of a project. But are you actually saving money? Nobody I have talked to could pinpoint where the three-day drying standard entered the industry. But the fact is three-day drying was incorrect in 2009, and three-day drying is

correct in 2018. Based on the science we know today it is not just incorrect, but it is potentially dangerous, and the liability of applying this standard has dramatically increased to both the contractor and the carrier. Today, the indoor environmental profession knows more about the effects of contaminated indoor environments and the effects of mould on occupants and highly sensitized individuals. If carriers do not address properly drying a structure, it dramatically increases the potential for litigation and there is no limit on that liability. You should be aware of your use of terms like 'stabilization services' and 'restorative drying'. Today we see many carrier protocols that are drafted with the use of terms like “contractors cannot proceed with drying and are to only stabilize the site until an adjuster has provided a confirmation of coverage or until the adjuster has viewed the loss location.”

Stabilization In the restoration world stabilization services and restorative drying are two very different stages of the drying process. But they are often misunderstood and misused terms. Stabilization services are used during the investigation stage of the claim before coverage has been determined or before the hazard assessment is completed. Most commonly, stabilization services are used while determining coverage issues, determining the cause of loss, determining the responsible party, or waiting for testing results of hazardous materials such as lead, asbestos and now silica. The process gets even more complicated when more than one of these is involved. The only goal of stabilization is to prevent secondary damages from high humidity, to prevent cross-contamination to unaffected areas and to allow the restorer to secure the jobsite. In water damage, stabilization services are the deployment of dehumidifiers and other tools to allow the insurer time to perform an investigation. However, stabilization is not restorative drying, and if left in stabilization for too long, there is a high probability that the site will de-

grade, not only in the category of water but can also result in mould growth. It is also considered stabilization during a Category 3 water loss where multiple days are spent removing contents, conducting hazardous material testing and removing structural materials that are affected by the Category 3 water. Only after the Category 3 water has been removed, are materials removed or cleaned. The three-step bio-wash is a process of applying heavy amounts of hot water to the site to remove the contaminants, the water is extracted and this process is applied multiple times in order to get the site materials free of contaminants. Then anti-microbial applications are put down. Now you are ready for restorative drying.

Restorative drying Restorative drying is properly managing the jobsite's humidity, air flow, temperature and time on site to effectively dry. In order to achieve the proper atmospheric conditions the restorer must deploy proper dehumidification levels, proper air flow and understand the effects of the temperatures of both the atmosphere and structure to effectively dry the materials in question. Time is always the unknown, as different materials and different structural construction can impact the drying plan. There is no doubt that during the drying process the restorer should be providing an update to the client on how the drying is proceeding and what challenges are faced on the jobsite. When the challenges are going to increase the costs or delay the job this information should be conveyed in order to ensure everyone is on the same page. Restoration is not as simple as putting equipment into the jobsite and walking away. This mentality is dangerous and does both the customer and the profitability of your business a disservice. In the next article we are going to explain the IICRC's S500 standard and how the different calculations insurers rely on are commonly misunderstood by most in the industry. Kris Rzesnoski is vice-president business development with Encircle. • March-April 2018

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• on the scene OTS He opened his own law firm, Larry H. Gilbertson & Associates, now known as Gilbertson Davis LLP, which practices insurance Larry Gilbertson 1933 - 2018 litigation, insurance defence and commercial It is with heavy hearts that the Canadian litigation. Independent Adjusters’ Association (CIAA) Larry retired from active practice in 1994, announces the passing of Larry H. Gilbertson although he continued working in alternate on January 4, 2018. A true giant in the insurdispute resolution, dealing mostly with propance industry, with an eminent career spanerty issues, plus business interruption, stock ning over 60 years, Larry spent 16 years as losses, and industrial and residential claims. a claims adjuster, 18 years as an insurance Larry was a long-time advocate and active lawyer and the past 23 years as an arbitrator, supporter of CIAA and his numerous contriappraiser, mediator and umpire. butions and friendship were valued and very Larry started out as an independent admuch appreciated. juster with Underwriters Adjustment Bureau In recognition of his tremendous service to in 1955, managing their Midland Branch from Larry Gilbertson CIAA he is the only person to have been grant1957 to 1959. He left UAB in 1959 to work for Angell & Townson Insurance ed the Honourary Chartered Loss Adjuster designation. A consummate advocate for our industry, Larry was an inspiAdjusters Ltd., rising to the role of vice-president and director beration to all who had the privilege of knowing him, earning their fore his resignation in 1971. Having dealt with a lot of lawyers, he knew he was a good respect and admiration through his selfless willingness to share match for those he had encountered as an adjuster so he decided his knowledge and expertise. Please join us in a moment of reflection to honour Larry’s to study law. From 1971 through 1974, Larry attended law school at the University of Western Ontario in London. He was called to memory and influence on our industry and the many people the bar in 1976, after articling at Montgomery Cassels Mitchell he touched personally and professionally along his illustrious journey. ● Somers Dutton & Winkler, where he worked until 1982.

In Memoriam:

At the CIAA Mid-Year meeting on February 5, 2018, CIAA director Jim Eso (left) presented E. Grant King, BA, B.ED., CIP, of Crawford & Company (Canada) Inc., in Dartmouth, Nova Scotia with the CIAA Honourary Life Membership award, bestowed upon only those members that have gone above and beyond in serving and furthering the objectives of the association. On behalf of the CIAA membership, Jim thanked Grant for his invaluable guidance, support, expertise and loyal service to the organization spanning almost three decades. ● 24 Claims Canada

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At the CIAA Mid-Year meeting on February 5, 2018, CIAA executive director Pat Battle (left) presented the esteemed FCIAA accreditation to Patti M. Kernaghan, FCIP, CRM, FIFAA, in recognition of her exceptional professional achievements and distinction. Patti’s tremendous efforts and advocacy on behalf of CIAA and the membership are substantial. The insurance industry at large is also the beneficiary of her distinguished contributions, expertise and professionalism. ●

• on the scene OTS Arcon Forensic Engineers has promoted Jillian Leblanc to senior collision reconstructionist in their collision reconstruction & personal injury practice group. This change is in recognition of Jillian’s continued high quality work, positive client feedback, exJillian Leblanc panding industry involvement and ongoing commitment to enhancing her specialized knowledge. Her credentials include an Honours Bachelor of Science degree in Physical Science and her Professional Physicist designation, along with the experience of managing hundreds of reconstructions. She regularly shares her knowledge through articles in industry periodicals and presentations to insurers, lawyers and industry groups. ●

CEP Sintra has moved its Vancouver, British Columbia office and appointed Adel Shoaib, Ph.D., M.Sc., P.Eng., to its team. Adel completed his Ph.D. in Structural Engineering at the University of Alberta in 2012, and joins the structural and civil engiAdel Shoaib neering team. “With the addition of Dr. Shoaib to our office in Vancouver, we now have the ability to provide comprehensive structural engineering services in BC. We are excited about our continued growth in the Vancouver region, and look forward to expanding our services further in the near future,” said Mark Hughes, P.Eng., vice-president of CEP Sintra. ●

Origin and Cause has acquired Independent Fire Services in Saskatchewan, a subsidiary of Independent Investigation Services (IIS). President of Origin and Cause, Mazen Habash, spoke enthusiastically about the company’s expansion in the Prairies. “We have been actively following the Saskatchewan market for the past few years as part of our growth strategy, and Independent Fire Services has always been in the conversation as the go-to fire investigation firm in the province,” he said. “I’m extremely proud of what we’ve been able to accomplish with Independent Fire Services in the past couple of years, and very thankful to our clients. I will be putting my efforts into strengthening my SIU and polygraph services, as that is where my passion lies at this point in my career,” said IIS founder, Mark Ochitwa. ●

Sedgwick and its subsidiary Vericlaim appointed Delphine Clerc as vice-president of business development for both Vericlaim Canada and Sedgwick Canada. Delphine brings nearly two decades of experience in account management and sales to the job. Building on her Delphine Clerc claims expertise in Canada and her experience as an entrepreneur, she will manage strategic sales and customer relationship activities for all lines of business. In the past, Delphine has specialized in captive claims, truckers liability, product liability, medical malpractice, marine survey, residential property, environmental, heavy equipment, tractors/trailers, auto physical damage and flood. She earned a bachelor’s degree from the University of Franche-Comté (Besançon) and has completed Chartered Insurance Professional (CIP) courses through the Insurance Institute of Canada. In addition, she holds a translation certificate from the University of Toronto and an interpretation certificate from Humber College in Toronto. ●

DAS Canada will join and shift its risk carrying capacity to Temple Insurance, the insurance carrier of Munich Re in Canada. Ownership of DAS Canada will jointly be held between Munich Re, Canada and ERGO International. DAS Canada will assume the role of a Managing General Agent (MGA) and continue to handle all legal expense insurance sales, marketing, underwriting, administration, customer service and claims handling as before. The transaction is to be finalized in the third quarter of 2018. For DAS policyholders, nothing will change and they will benefit from an even stronger risk management and financial security level, as their new legal expense insurance carrier, Temple Insurance, is part of one of the world’s largest insurance companies. ●

On Side Restoration is opening a new branch March 2018 in Barrie, Ontario with industry veteran Crystal Graveson taking the helm as branch manager. “We’re thrilled to be in expansion mode within the Ontario marketplace. The next step for On Side is to secure more work in Barrie, the OrilCrystal Graveson lia region and into cottage country,” said Jay Kielt, regional manager Ontario and Atlantic. Crystal holds her IICRC WRT, AMRT and ASD. She’s formally trained in project management and has over 21 years of industry experience. Crystal is a member of the Barrie community along with her family of five, two dogs, two pot belly pigs and a dozen chickens. ● continued on page 26...

March-April 2018

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...continued from page 25

Lisa Ulrich has been promoted from senior business relations advisor to her new title of director, Alberta business with AssessMed. Lisa has spent many years within the IME business in Alberta. Her ever-evolving and diverse group of skillsets has made her an invaluable member of the AssessMed family. Lisa consisLisa Ulrich tently exceeds expectations. “Lisa’s strong work ethic and commitment to the greater good is bound together with a strong moral compass that makes her an important and trusted employee,” said Don Kunkel, president of AssessMed. ●

Envista Forensics is acquiring SAMAC Engineering Ltd, a national provider of failure analysis services to insurance, legal and commercial clients. Founded over 25 years ago and based in Calgary, Alberta, SAMAC’s team of engineers and experts assists clients with failure investigations. SAMAC’s leadership will serve in pivotal roles throughout the acquisition and integration, as well in the resulting combined organization. “The recent growth of our Canadian operations, both organically and strategically through the acquisitions of key leadership and expertise, is one of Envista’s many success stories over the last couple of years,” said Robert Wedoff, Envista’s president. ●

CIAA New Members — February 2018 CORPORATE MEMBERSHIP

HBA Adjusters Ltd. Calgary, AB Walker Adjusting Services Inc. Burlington, ON INDIVIDUAL MEMBERSHIP

Crawford & Company (Canada) Inc. Leah Ferguson Dartmouth, NS Shane Langille Dartmouth, NS

Level 1 Level 1

HBA Adjusters Ltd Michael Ander, B.A., CIP Glen Jakubowski, FCIP Robert V. Pearson, CLA, FCIAA Scott Thielen, CIP Mark Van der Wee, B.Comm, CIP

Level 3 Level 3 Level 1 Level 3 Level 3

Calgary, AB Calgary, AB Calgary, AB Calgary, AB Calgary, AB

Kernaghan Adjusters Limited Leslie Fuhr, CIP Edmonton, AB

Level 3

Maltman Group International Kim Cameron, CIP Toronto, ON

Level 3

Sedgwick CMS Canada Inc. Apurav Gupta Mississauga, ON Level 3 Walker Adjusting Services Inc. Peter Walker, CIP Burlington, ON ASSOCIATE MEMBERSHIP

Level 3

Affirmative Risk Management Corporation Little Rock, Arkansas 26 Claims Canada

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Robert Cartwright, Jr. CRM, BSB/OP will lead RIMS, the risk management society, as president for the 2018 term. Robert is the division manager of environmental, health, safety and sustainability for Bridgestone retail operations in the Northeast Region. He has been a member of RIMS for more than 25 years and on its board of directors for 10 years. He has held every board position with the RIMS Delaware Valley Chapter, including serving as its president from 2005-2007. He was also the recipient of the 2009 RIMS Richard W. Bland Award for exceptional contributions to the Society’s legislative initiatives. Other RIMS board officers are vice-president, Steve Pottle, CIP, CRM, director risk management services, York University; treasurer, Gloria Brosius, corporate risk manager, Pinnacle Agriculture Holdings; and, secretary, Robert Zhang; China risk and compliance manager, IKEA (China) Investment Co., Ltd. New to the board are: Susan Hiteshew, RIMS-CRMP, ARM, senior manager, global insurance and risk financing, Under Armour, Inc.; Kristen Peed, CPCU, RPLU, CRM, ARM-E, CIC, AAI, director of corporate risk management, CBIZ, Inc.; Jennifer Santiago, RIMS-CRMP, ARM, director, risk management, Novartis Pharmaceutical Corporation; and, Patrick Sterling, SPHR, SHRM-SCP, senior director, legendary people and risk, Texas Roadhouse. Incumbent board members are: Emily Cummins, CPA, CPCU, CISSP, ARM, ARE, managing director of tax and risk management, National Rifle Association; Barry Dillard, director, claims management, Walt Disney Parks and Resorts US; Ellen R. Dunkin, Esq., senior vice-president, general counsel and chief risk officer, Amalgamated Life Insurance Company; Laura Langone, JD, MBA, senior director, global risk management and insurance, PayPal, Inc. Holdings; Soubhagya Parija, senior vicepresident and chief risk officer, New York Power Authority; and, ex officio, Nowell R. Seaman, RIMS-CRMP, FCIP, CRM, director, global risk management, Potash Corporation of Saskatchewan Inc. ● ClaimsPro/IndemniPro has enhanced its leadership team in Quebec for the Specialty Risk Division’s (SRD) Complex Commercial Industrial (CCI) Unit. Michael Martow, vice-president, SRD-CCI for Quebec & Eastern Canada and Jean Yves Bernier, regional vicepresident, SRD-CCI, will provide senior leadership and direction for all technical aspects of Quebec’s CCI business unit. The unit boasts regional support from vice-presidents Eddy Zajac, Bernard Caron, Joey Dubois, and Michel Girard, who provide guidance and technical expertise to CCI adjusters in the region. ● WINMAR International Inc. has opened a location in Iqaluit, Nunavut. WINMAR Nunavut will be operated by owners Martin Barbe and Patricia Peyton, who have owned and operated Nunavut Restoration Services since 2014. Starting out as a small family business doing renovations, the company gradually expanded to perform emergency services and reconstruction of damges caused by floods, fire and mould for residential and commercial properties in Nunavut. Martin’s success as leader in the restoration industry and in his community is due to his commitment to ensuring outstanding customer service and providing quality workmanship. ●

• on the scene OTS FirstOnSite has opened a new branch in Ste-Agathe, Québec. The branch will serve the restoration, remediation and reconstruction needs of both existing and new customers in the Laurentians region (including Mont Tremblant, Ste-Agathe and Saint-Sauveur) and will compleOlivier Bertrand ment service provided by the current branches in Montréal and Québec City. This new branch is led by senior project manager and acting branch manager Olivier Bertrand. Olivier, who resides in the Laurentians, originally joined FirstOnSite in 2010, and has more than 10 years experience in disaster recovery and restoration, having worked on multimillion-dollar commercial restoration and reconstruction projects as well as condominiums and residential rebuilds. Olivier has also owned and operated his own construction firm, where he specialized in new-build construction. Supporting Olivier is project manager Eric Archambault, a 30-year veteran of the restoration industry, and an expert in loss evaluation and restoration of major residential and commercial properties. Eric is also a resident of the Laurentians. ●

Dave Johnson joins First General as director – education and field support. Sheila Corbett joins as manager – vendor program resources. Dave’s responsibilities will focus on work with project management teams across Canada to identify efficiencies through the use of technology and best practices. Dave’s wealth of experience in the construction industry includes general contracting, new home builds, renovations, agricultural, commercial buildings and project management. Sheila’s extensive experience within the industry includes field property claims specialist for a leading insurance company, co-owner of a full-service property damage restoration franchise, team lead and for a non-profit organization. Sheila’s responsibility will be to execute and monitor quality initiatives. ●

After seven great years with Kernaghan Adjusters, Raymond Smith, vice-president marketing/executive adjuster has formally retired. Ray’s career in the insurance industry spans over 45 years. Throughout his career he has been appointed to many high-level positions including: Raymond Smith claims manager, national casualty claims superintendent, executive adjuster and most recently vice president marketing for Kernaghan Adjusters. He has a consistent reputation as a reliable trouble-shooter, skilful investigator and strong negotiator. Ray has a special skill for bringing adversaries together and finding common ground for positive outcomes. Raymond has been a valued member of Kernaghan Adjuster’s senior management team. In his departing words, Raymond said “it has been a great seven years being associated with Kernaghan Adjusters…there are many highlights I will never forget and was happy to be a part of the growth of the company during my tenure.” “Raymond, your insights, enthusiasm and support will be greatly missed,” said president and CEO, Patti Kernaghan, FCIP, CRM, FIFAA. ●

Knowledge And Experience That Has You Covered

Philip Turner TORONTO

Alain Viger MONTREAL

Kevin Copeland CALGARY

Edward Robinson VANCOUVER



March-April 2018

Claims Canada 27

• on the scene OTS The Ontario Insurance Adjusters Association (OIAA) continued its tradition of delivering timely and informative insights and guidance at its 26th annual Professional Development and Claims Conference, held January 30 in Toronto. Through an adjuster’s lens, subject-matter specialists covered such topics as the sharing economy, electronic data recorders and covert surveillance technology. When the hundreds of conference delegates weren’t engaged in learning all the latest, they walked the aisles of a bustling tradeshow in which more than 100 exhibitors represented a diverse array of claims-related fields.

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• on the scene OTS It’s not easy to maintain a solid grasp on duty of care when so many new risks are evolving so quickly. So, kudos to the planning committee of the 51st annual Joint Ontario Conference of the Canadian Insurance Claims Managers Association (CICMA) and Canadian Independent Adjusters’ Association (CIAA) for dedicating their 2018 event to that dynamic topic. An audience of about 140 gathered in Toronto to learn from legal experts in three emerging areas: Sandra Corbett of Edmonton’s Field Law (autonomous vehicles); Waterloo, Ont.-based Patricia Forte of Miller Thomson (cyberbullying); and Christina Polano of Toronto’s Thomas Gold Pettingill (drones). The day wrapped with a luncheon and laugh-out-loud take on life from comedian Susan Stewart.

30 Claims Canada

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Announcing the

QUARTER CENTURY CLUB 59th Annual Reception

Wednesday, May 16, 2018 The Albany Club

91 King Street East Toronto, ON, M5C 1G3

Bar opens – 11:30 a.m. Lunch – 12:30 p.m. Cost - $75.00 59th Annual Reception Committee: John Cherrie - 416-737-7525 John Sharoun - 416-957-5001

Send Contact Info and Cheque Payable to (or VISA, provide exp. date):

Featuring... The Roasting of Michael Holden

John Sharoun Quarter Century Club c/o Crawford & Company (Canada) Ltd. 55 University Ave, Suite 400 Toronto, ON M5J 2H7 Email: Phone: 416-957-5001

Thank you for the support of these generous event sponsors:

Once again this year, The Quarter Century Club plans to continue to make a donations to Children’s Charities & the Insurance Institute Scholarship Fund. Design and Space Compliments of:


With over 40 offices on 5 continents, over 30


language fluencies, 18 distinct professional


designations and a work history that spans more


than 130 countries and 800 industries, we are truly


world-class experts with a global reach.


To work with a member of our respected team


contact any one of our Canadian offices or visit us




Claims Canada March + April 2018  
Claims Canada March + April 2018