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HANDBOOK FOR INSURANCE PROFESSIONALS

YOUR GUIDE TO INSURANCE SUCCESS. SINCE 1934

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2019 STATS GUIDE WHAT’S INSIDE: Comprehensive Data: Detailed results of more than 200 companies Growth Charts: Hottest insurers by line and location Provincial Outlooks: Key trends, top performers Exclusive Analysis: The stories behind the numbers

The

POWER

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ToaRe

STABILITY The Toa Reinsurance Company of America 55 University Avenue Suite 1700, P.O. Box 53 Toronto, Ontario, Canada M5J 2H7 Phone: 416-366-5888 Fax: 416-366-7444 Web Site: www.toare.com

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CONTENTS Volume 86, No. 6 | July 2019

CANADIANUNDERWRITER.CA

YOUR GUIDE TO INSURANCE SUCCESS. SINCE 1934

ANNUAL

HANDBOOK FOR INSURANCE PROFESSIONALS

2019 STATS GUIDE

F EATURE PA CKAGE

Your complete and handy guide to the ﬁnancial results of more than 200 Canadian property and casualty insurance companies. A quick glance tells you how insurers rank in market share, premiums and growth. Provincial reports highlight hot carriers, business lines and trends. And a comprehensive company directory paints a detailed, line-by-line picture of carriers’ current and historical results.

canadianunderwriter.ca | July 2019

Your business moves fast. So you need an insurance partner who’s as fast as you. From data breaches to natural catastrophes, covered claims are our opportunity to keep our promise and demonstrate how our award-winning expertise gets moving quickly so you can too.

Know You Can

Get back to business fast axaxl.com Ranked Highest in Customer Satisfaction among Large Commercial Insurers by J.D. Power, three years in a row. XL Catlin, now a part of AXA XL, received the highest score among insurers in the J.D. Power 2016-2018. Large Commercial Insurance Studies of customers’ satisfaction with their commercial insurance. Visit jdpower.com/awards. AXA, the AXA and XL logos are trademarks of AXA SA or its affiliates. AXA XL is a division of AXA Group providing products and services through four business groups: AXA XL Insurance, AXA XL Reinsurance, AXA XL Art & Lifestyle and AXA XL Risk Consulting © 2019 AXA SA or its affiliates. In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. Not all insurers do business in all jurisdictions nor is coverage available in all jurisdictions.

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161

16 11

FROM THE EDITOR

20 David Vass

170 Fire clean-up

A big advocate in the broker community for implementing lead management systems, Vass tackles the question everyone wants to know: Which is better for managing leads -a CRM or a BMS?

Jeff Reitsma of 30 Forensic Engineering explores what it means to restore an insured’s property back to its “original state” after it was burned down during a catastrophic wildfire

HANDBOOK

IN EVERY ISSUE

DECLARATIONS

161 Hard market ethics

11 Covering sinkholes

Brokers in a hard market cycle are particularly pressed for time when dealing with client matters. When do their limited timeframes become not just a process issue, but an ethical one as well?

12 16 19 163

Bringing more discipline to disciplinary decisions

PERSPECTIVES 8 Our readers respond to recent stories about licensing exams, broker-insurer unity, recreational marijuana and more…

Your client’s home falls into a sinkhole -- are they covered? Why the terrain shifts if the sinkhole is the result of an earthquake

15 Keyless entry Data from handwritten policy applications need to be transferred into your system: Can you do this without re-keying the same information? How Optical Character Recognition can help

INTERVIEW

PEER-TO-PEER

TRUSTED ADVISOR NEW OFFERS BIG MOVES BY THE NUMBERS

165 The case for appraisals How brokers can create additional value for their clients by offering the services of expert appraisers

canadianunderwriter.ca | July 2019

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FROM THE EDITOR MANAGING DIRECTOR, INSURANCE MEDIA GROUP

Sandra Parente sandra@canadianunderwriter.ca 416-510-5114 EDITOR-IN-CHIEF

David Gambrill david@canadianunderwriter.ca (416) 510-6793 MANAGING EDITOR

Adam Malik adam@newcom.ca ASSOCIATE EDITOR

Greg Meckbach gmeckbach@canadianunderwriter.ca

Discipline digest

ONLINE EDITOR

Jason Contant jcontant@canadianunderwriter.ca

It’s time for a national standard on publishing provincial broker discipline decisions

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5353 Dundas Street West, Suite 400, Toronto, Ontario M9B 6H8 Tel: (416) 614-2200 Fax: (416) 614-8861 Canadian Underwriter is published twelve times yearly by NEWCOM MEDIA INC. All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted in any form, either in part or in full, including photocopying and recording, without the written consent of the copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without prior written consent. © Since 1934, Canadian Underwriter has been the voice of Canada’s insurance industry - a monthly magazine providing the highest quality and most relevant news and insight to insurance professionals from all segments of Canada’s property and casualty insurance market. The magazine is delivered on a direct-request circulation basis to nearly 15,000 senior decision makers nationally, including insurance brokers, risk managers, insurance and reinsurance company personnel, claims managers and adjusters. Since its beginnings, Canadian Underwriter has been a link between all segments of the insurance industry, providing insurance professionals with award-winning coverage of industry issues, trends, news, personalities and events - written by Canada’s leading insurance journalists. Subscription Rates: 2018 Canada 1 Year $51.95 plus applicable taxes 2 Years $75.95 plus applicable taxes Single copies $10 plus applicable taxes, except $49 plus applicable taxes for July issue featuring annual Statistical Guide. Elsewhere 1 Year $71.95 Subscription Inquiries/Customer Service Mary Garufi (416) 614-5831 mary@newcom.ca GST Registration number 890939689RT0001 Second Class Mail Registration Number: 08840 Publications Mail Agreement #40063170

ome time ago, a broker contacted us to have his or her name scrubbed from an online story we published about their discipline case. The request was like asking us to shut the gates after all the horses had escaped: the disciplinary decision was posted for all the world to see on the website of the Canadian Insurance Regulators. This is as it should be. Trade media publish stories about discipline decisions partly as a tool for brokers to learn about best (and worst) practices. Also, media act as a check on the authority exercised by the regulators. In R v. Sussex Justices, ex parte McCarthy, Lord Chief Justice Gordon Hewart penned the now-famous phrase: “it is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done.” In the digital age, all disciplinary decisions should be posted online, where they are easily accessible to the public (the constituency being protected). They should include not just a vague order or an outcome, but some kind of comprehensive agreed statement of facts and reasons for the decision. Currently, most provincial broker regulators post their disciplinary decisions online, accessible through the Canadian Insurance Regulators Disciplinary Actions database. However, exactly how provincial broker regulators craft and post their discipline decisions is scattershot. In B.C., Manitoba, and Quebec, for example, the decisions tend to be the most up-to-date, accessible and generous with information. Alberta’s decisions are comprehensive when posted, but the province’s regulator hasn’t posted a discipline decision since February 2019. Saskatchewan decisions are up to date, but frequently don’t contain enough information to understand what happened. In Ontario, Registered Insurance Brokers of Ontario (RIBO) posts outcomes of their broker discipline hearings, as well as a few details about each case, in their quarterly bulletins, posted online. However, the full reasons for decision, including an agreed statement of facts, are often not available unless requested. In Atlantic Canada, broker regulators have not posted any disciplinary decisions in the CISRO/CCIR online database. To address these inconsistencies, provincial broker regulators should develop and adhere to a national standard for producing and publishing disciplinary decisions.

Return undeliverable Canadian addresses to: Circulation Dept. Canadian Underwriter 5353 Dundas Street West, Suite 400, Toronto, Ontario M9B 6H8 Tel: (416) 614-2200 ISSN Print: 0008-525 ISSN Digital: 1923-34

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How a broker regulator plans to ﬁx “abysmal” licensing exam results May 8 The story: Alberta’s broker regulator is urging the provincial government to change the rules to allow for “equivalency,” which essentially allows designations offered by industry education providers to be considered the equivalent of passing the province’s broker licence exam.

Dawn says: Going from being able to walk in and pass the exam with no previous knowledge or studying, to being more difficult than a Secondary School exam is too extreme. There is a set base of knowledge that an individual must have to be Level 1 insurance agent or broker. The exam should be based around that knowledge, not based on any area of insurance that an experienced broker/agent would handle. Setting individuals up for failure is no way to support those wanting to start a career in the industry.

canadianunderwriter

Brokers urged to unite with insurers to end Alberta cap May 7 The story: The Insurance Bureau of Canada is calling for a united front with the broker channel to come up with a new auto reform package to end Alberta’s 5% cap on auto insurance rate hikes.

Chad Leibel says:

Josh says:

The cap (and even the grid) has only resulted in fewer options for consumers and good drivers subsidizing the high-risk drivers.

It should be hard, but I also think it is worth revisiting what skills are necessary for an entry level broker to need….I’d like to see more emphasis on communication and client education skills, risk assessment, working with clients through challenging renewal cycles, negotiations, how to build market relationships etc. Maybe it’s time to rethink the whole thing and renovate the process, not just give it a fresh coat of paint? Let’s build for the future.

Why your clients may not be covered when there’s an active wildﬁre

Thom C.J. Young says:

May 21

The Alberta Insurance Council (AIC) recommended the licensing equivalency solution for Level 1, 2 and 3 licenses on achievements of specific levels of training in the Insurance Brokers Association of Canada and the Insurance Institute (Alberta) courses four years ago. They’ve been endorsed by the Superintendent of Insurance and forwarded to the Alberta Minister of Finance’s office for enactment; despite almost monthly requests from the AIC, they’ve been ignored. They will still be there when the new government’s minister of finance takes the desk. Let’s hope that perhaps a better sense of urgency produces this at least in short order.

The story: Brokers and clients alike may not know that the ability to bind coverage could be restricted if there is an active wildfire nearby.

Rachel says: Some of the industry exams require a huge amount of “memorization,” which is not very practical in this day and age. With all the resources available online, it seems unreasonable to expect students to memorize wordings that have become so fluid and constantly changing. Perhaps teaching students to properly use the tools they have available would be more beneficial.

Alain Gauthier says: We have and continue to offer an online self-study course for Levels 1 and 2 in Alberta (since 2009). We are quite confident in the material we cover in the courses and teaching methods we offer. However, since we do not know where our students fail on the exam, we are quite blind as to how to help them if they fail. We continue to work with the AIC to perfect this system of checks and balances and look forward to the changes promised for this coming fall.

Kyle Giesbrecht says: Very hard time for us brokers during this season. Especially when a young couple has a mortgage come through on their brand new home and we have to tell them we don’t have any binding authority with an active fire nearby.

How should employers yers treat recreational marijuana use? May 9 The story: Employers should d treat marijuana use in the workplace ace in the same way that they would alcohol use.

Should insurers offer incentive for remote water shut-off?

The story: Should insurers consider incentives for clients that have a system in place to shut off water quickly if it flows out of a pipe and causes damage? For example, lower premiums for clients who install water control products on their commercial properties.

Ashley Chinner says:

Brian Sharples says:

May 6

It may get to the point of, “Install and we quote, don’t and we won’t.” They may not have a choice soon.

Like business lunch cocktails and business dinner wine.

July 2019 | Canadian Underwriter

Richard Wahl says: How do they treat the social consumption of alcohol?

Putting the pieces together.

Events and Seminars Calendar 0VS Events and Seminars give you the opportunity to learn, to network, to catch up on industry USFOET and to advance your professional and career development. Seminars

&vents

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declarations HIGHLIGHTS

Career ambitions p.12 l Handwritten data p.15 l Big moves p.19

HOME INSURANCE

Shifting sands Your client’s home falls into a sinkhole — coverage denied, right? How coverage may still apply, depending on a shift in circumstances B Y J A S O N C O N T A N T, Online Editor

f a house collapses into a sinkhole, is there coverage under a standard homeowner’s policy? The answer seems to shift like the sand. A family in Falmouth, N.S. recently grappled with that question when they were denied coverage for the peril; they have since told the media that they are considering legal action against their carrier, Wawanesa Mutual Insurance

MAYDAY IN JUNE | JUNE 5

Two tornadoes swept through the Ottawa region, prompting questions about the effectiveness of Canada’s emergency alert system. Some residents were reportedly notified 15 minutes after the tornadoes hit; others received no warning at all. Since April 2018, it has been mandatory for wireless providers to issue emergency alerts on mobile phones.

Company. The homeowner tried to submit a claim after the sinkhole opened up under their home on Sept. 3, 2017, but says the insurer denied the claim due to an ‘earth movement’ policy exclusion. Wawanesa says it does not comment publicly on any speciﬁc claim, nor does it discuss matters currently under dispute. That said, the insurer points out that personal property insurance

policies in Canada, in keeping with advisory wording from the Insurance Bureau of Canada (IBC), generally exclude damage if it is “caused directly or indirectly, in whole or in part by snowslide, earthquake, landslide or any other earth movement, regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage.”

HUB BUYS WESTERN BROKERAGE | JUNE 4

Hub International Ltd. acquired home and auto insurer Cottenie and Gardner Inc., which also places farm insurance coverage for machinery, buildings, liability and livestock. For Hub, it was the second acquisition of a Saskatchewan-based brokerage in less than a month.

canadianunderwriter.ca | July 2019

TRUSTED ADVISOR

DECLARATIONS Stefan Tirschler is product and underwriting manager with Square One Insurance Services in Vancouver. He believes standard home insurance policies usually contain some form of an earth movement exclusion that “in many cases would also encompass sinkholes if they were to arise spontaneously on their own.” Does that mean that sinkhole damage is uninsurable? Not necessarily. There may be coverage under an earthquake endorsement. IBC also has advisory wording related to earthquake coverage, but “companies are free to use their own policy wordings,” said Pete Karageorgos, IBC’s director of consumer and industry relations for Ontario. For example, coverage may apply if a sinkhole opens up as a result of an earthquake, a landslide, or a snowslide. This kind of scenario is typically considered subsidence or liquefaction. In contrast, things like settling of earth after a new home is built are not covered, Karageorgos clariﬁes. In this example, “it’s not an insurable situation, it’s a maintenance issue.” Another consideration is when the event occurs. For IBC, a single earthquake event is deﬁned as seismic shocks that occur within 168 consecutive hours. But individual companies may choose to use different time periods in their policies. Proximate cause of loss is another important factor in determining coverage, Karageorgos and Tirschler agree. “If an earthquake triggered that sinkhole, and you have the earthquake endorsement, I would say you’re covered,” Karageorgos said. Added Tirschler: “If the sinkhole-related damage is concurrent with or caused by an earthquake, then coverage may be provided by some insurers’ earthquake endorsements. However, if an ordinary sinkhole causes damage to a home in the absence of an earthquake, then an earthquake endorsement gener-

ally will not be triggered, and an ‘earth movement’ exclusion may continue to apply under some policies.” There is a lot of variation in policy language, Tirschler observes. “Some go so far as to state speciﬁcally that earthquake will include other forms of earth movement resulting from earthquake,” he said. “And then some are not quite that speciﬁc: They’ll simply include coverage for the peril of earthquake itself.” It is unknown whether the Nova Scotia family had an earthquake endorsement. Earthquakes Canada did not report any earthquake activity in that region in September 2017. For interest’s sake, Wawanesa’s earthquake endorsement reads as follows: “Earthquake shall include snowslide and landslide occurring concurrently with and resulting from an earthquake shock and other natural or man-made earth movements resulting from mining or fracking operations.” If a home insurance policy categorically excludes coverage for sinkholes, but if an endorsement appears to cover them, which trumps which? “The intent and purpose of an endorsement on an insurance policy is to override any language within the policy itself that is inconsistent with that endorsement,” Tirschler said. “Insurance providers develop endorsements that can speak to individual customer needs without requiring every customer to purchase them and [carriers to build] them into the base premium. “So, if you have an ‘earth movement’ policy exclusion, and you have an earthquake endorsement that reads back coverage for ‘earth movement’ resulting from earthquake, then anything that would qualify as earth movement – potentially including landslides and sinkholes – would then be read back in the case of an earthquake triggering such a loss.”

BROKERLINK ACQUISITION | MAY 31 With its third M&A deal in a month, BrokerLink acquired Alberta independent insurance brokerage Thomson Schindle Green Insurance & Financial Services Ltd. (TSG). With branches in Medicine Hat, Calgary, Brooks, Bassano and Edmonton, TSG offers personal and commercial lines products, as well as specialized coverage for owners of custom, exotic or antique vehicles. 12

July 2019 | Canadian Underwriter

PRESSURE TO END MONOPOLY | MAY 28

I want to grow my career as a broker, but I don’t feel like my brokerage wants to invest in me. I love working here, so how can I develop my career? — Wanting More

Dear Wanting, A good workplace is worth a lot, but it’s probably not worth stalling your career for it. Speak with your boss about your desire to grow professionally. One business management coach defines a true professional as someone who seeks a continual renewal of knowledge and expertise by regularly reading, attending development courses and conferences, and interacting with industry people. A popular meme on LinkedIn shows a conversation in which one leader asks: “What if we invest in our employees and they leave?” The other responds, “What if we don’t and they stay?” Some employers spend too much time worrying about dollars and cents when it comes to professional development. They focus on expenses associated with sending employees to a course, potential lost business for the day, and other short-term factors that don’t make much of an impact on the bottom line. They fail to see the longer-term benefits of having well-connected brokers who attend network events; brokers who are knowledgeable about the issues in the industry; brokers with sophisticated skills; and brokers who are more enthusiastic about their work because they know their employer has their back and wants them to grow and develop. When push comes to shove, invest in your own education: Find courses to take and books to read on your own. Do it yourself and then look for a new job. Another brokerage will be proud to have you.

The British Columbia Chamber of Commerce added its voice to a chorus of groups pushing to end the Insurance Corporation of British Columbia (ICBC)’s monopoly on the auto insurance market. ICBC and brokers counter that private systems of auto insurance fare no better.

Whatâ€™s inside a Chartered Insurance Professional designation?

PRINCIPLES DISCIPLINE ANTICIPATION Throughout the Canadian insurance industry, there are over 18,000 people who currently hold the Chartered Insurance Professional (CIP) designation. CIPs undergo rigorous training and education, operate at a highly professional level and adhere to a strict code of conduct. Get your CIP through the Insurance Institute to enhance your skills and serve your clients better today and in the future. insuranceinstitute.ca/cip

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DECLARATIONS

KEYLESS DATA ENTRY

Handwritten data Machine learning and optical character recognition can help brokers enter data from forms, but it still often takes human effort to read handwriting B Y G R E G M E C K B A C H , Associate Editor

o your brokerage staff spend countless hours reading forms completed by clients and re-typing all that data into the computer? Some of that work could be automated through artiﬁcial intelligence (AI) and machine learning. But machines won’t take over that process completely if your client’s chicken-scratch looks like a doctor’s notes on a prescription. “With handwriting, everyone has a different ‘E.’ Everyone has a different ‘R,’” says Eyal Barsky, president and CEO of OCR Solutions Inc. Optical character recognition (OCR)

allows computers to read paper documents and enter the text into software. While it may be easy for the computer to recognize typed letters on paper, the same cannot be said for handwriting. “That is where you have to apply machine learning and more intelligence to a system to [recognize the letter],” said Barsky, whose runs a St. Petersburg, Fla.-based scanner reseller and systems integrator. When software reads handwriting, it’s called intelligent character recognition (ICR). But machine learning cannot recognize handwritten letters even

BATTLE OVER STORAGE FEES | MAY 16

Intact Insurance lost a court battle against J.P. Towing’s $70 daily storage fee. That’s significantly higher than the average $35 daily fee that other insurers reportedly pay to other storage yards. J.P. Towing is contracted by the Toronto Police Service to tow vehicles that are abandoned or involved in a collision.

half the time, unless they are printed in block letters with each letter being printed in a box, suggests Barsky. Once AI can quickly, easily and accurately figure out what a letter is, insurance professionals can then start to focus on higher-value tasks such as figuring out whether the form has enough information to approve something, says Christopher Wynder, director of product marketing for capture and original equipment manufacturer products at Open Text Corp. “No one wants to spend their day figuring out if that was an ‘H’ or just someBEWARE OF REWARDS | MAY 21 If your client offers loyalty and rewards programs, they may want to keep a closer eye on securing these “non-traditional risk points” from cyber criminals. “Everything from frequent flyer miles to bonus points to hotel rooms are targets for cyber criminals who can sell these loyalty points on the web,” a NuData Security rep told Canadian Underwriter. canadianunderwriter.ca | July 2019

DECLARATIONS body’s lazy ‘N,’” Wynder says. “The one thing we know about handwriting is, there is a lot of variability.” Before he joined the Waterloo, Ont. software giant Open Text, Wynder was a tech consultant. One of his clients was a small brokerage office that received and processed a lot of paper documents. Initially, the brokerage did not use OCR. “They ended up hand-typing everything,” as Wynder explains. But re-typing data from forms is exactly what many brokers and carriers would rather not do. “The goal is to focus on the high-value things that define whether or not that document provides the necessary information, and whether or not there is enough information to do the approvals,” says Wynder. “These kinds of things are still very much a human task.” This is where intelligent character recognition and optical mark recognition (OMR) can come into play. With OMR, the computer will detect whether a certain percentage of pixels within a check box on a form are filled in, says Barsky. This way, the computer can detect whether the client answered yes or no to a question. An ICR system has a better chance of correctly reading hand-written forms if people are asked to print in block letters, with each block letter going into a box. It’s even better if the computer knows what data (for example a first or last name) is supposed to go into that box. With AI, a computer can look at a string of characters and figure out whether it is a word, and whether that word makes sense in context, said Wynder. “That’s where you get operational efficiencies. It doesn’t come from the optical character recognition itself. It comes from the ability to combine opon with some tical character recognition key word character recognition.” gnition.” FLOODPLAIN BUYOUTS | MAY 16 Flood-ravaged provinces asked the federal government to provide almost $138 million to move or buy out homeowners affected by 10 of last year’s floods. Insurers estimate about 100,000 homes out of Canada’s estimated 14-million dwellings are at the highest risk of repeat flood damage. 16

July 2019 | Canadian Underwriter

NEW OFFERS V2 Vendor: Encon Group Inc. Target Audience: Brokers What It Does: Allows insurance brokers to quote, bind, and issue commercial insurance policies within minutes, 24 hours a day

Accessible through Encon.ca, V² will offer a variety of commercial coverage lines, starting with ENCON’s Technology Insurance for Small Firms, which protects against allegations of wrongful acts, as well as a broad range of cyber risks for IT professionals. Additional lines of business designed specifically for small- to mid-size accounts will be added to the V2 platform in the coming year. Insurance brokers using the platform can choose multiple quote options to present to clients; add additional insureds; get certificates of insurance; and manage their transactions in real-time. The launch of V² follows the launch of V+ , ENCON’s online portal for individual Canadians to purchase post-retirement personal life, health, and travel insurance.

APOLLO EXCHANGE Vendor: Apollo Insurance Solutions Target Audience: Brokers and Brokerages What It Does: A digital tool that assists individual broker and brokerages in placing insurance policies

Apollo Insurance Solutions, an online insurance marketplace, has launched the Apollo Exchange, a digital platform designed to help the broker channel compete against disruptive new entrants and insurance companies creating direct-to-consumer brands. More than 300 brokers have signed up for Apollo Exchange, which enables brokers to bind insurance products from multiple insurance carriers using one fully digital platform. The exchange grants access to capacity from several of Canada’s markets. Products are continually being added to the platform, with more than 500 classes of small business eligible for coverage packages. Those include consultants, personal trainers, yoga instructors, nonprofits, retail stores, and hundreds more. Product lines include errors and omissions [E&O], professional liability, non-profit directors and officers [D&O], standalone cyber, contents and equipment, and general liability.

CSSI BMS INTEGRATION WITH CLEARPAY Vendor: Custom Software Solutions (CSSI) and ClearPay Target Audience: Brokers What It Does: A digital tool assisting individual broker and brokerages in placing insurance policies

Custom Software Solutions (CSSI) is directly integrating ClearPay with its broker management systems, The Broker’s Workstation (TBW) and The Underwriter’s Workstation (TUW). ClearPay automates payments and account reconciliation for the insurance industry. The integration will enable TBW and TUW users to automate payment authorization, notification, reporting delivery and the movement of funds. Automating these processes is intended to eliminate inefficiencies such as lost cheques, erroneously cancelled policies and chasing down signatures. With the process fully digitized, brokers will also benefit from enhanced security, accuracy of payments, and reporting. The integration also “anticipates future ClearPay capabilities for collections and auto reconciliation,” says John Knotek, CEO of ClearPay.

NEW TELEMATICS APP | MAY 16

Allstate Canada debuted a “personalized app for the modern driver” during National Road Safety Week. Drivers can use the app to learn more about their driving habits; safe behaviours could potentially result in up to a 30% reduction on their annual auto insurance premium.

Your

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Our

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She’s back on her feet

Wherever and whenever earthquakes strike, they cause devastation and loss. To peoples’ lives, to businesses and to infrastructure. What can be done to help increase resilience to these natural disasters? When we combine your local knowledge and natural resolve with our expertise in natural catastrophes, we can make a real diﬀerence. Both in advance, by using innovative predictive modeling to assess earthquake risk, and after the event, by helping people, businesses and governments to get back on their feet. Let’s join together and help make this a better world for everyone. We’re smarter together. swissre.com

DECLARATIONS BIG MOVES

New CEO of Aviva Canada Company taps its chief distribution officer to take over the helm

WHO: Jason Storah CURRENT ROLE: CEO, Aviva Canada P&C EXPERIENCE: 20+ years PROFILE: Formerly Aviva Canada’s executive vice president of broker distribution, Storah takes over as CEO from Colm Holmes, who is returning to the U.K.

Jason Storah is the new CEO of Aviva Canada. “I am honoured to be taking on the role of CEO and I’m committed to building on the great work that was done under Colm’s leadership,” Storah said of the appointment. “Over the last 18 months, we have worked hard to improve our business performance, and while this has meant making some tough calls, it’s put us in a much stronger position to now grow.” Storah succeeds Colm Holmes, who became the CEO of Aviva Canada in March 2018. Holmes will return to London, U.K., where he will assume a new role as CEO of General Insurance. Storah joined Aviva Canada in 2004. He previously served in the role of chief distribution officer. In that role, he was responsible for all of Aviva’s distribution channels across Canada, including the broker channel, as well as oversight of RBC Insurance. Prior to that, he was executive vice president of broker distribution. Storah has worked across a number of lines of business, holding the roles of chief risk officer, senior vice president of Traders and national brokers, and senior vice president of strategic development. Before joining Aviva, he worked at RSA in North America, South America and Europe. Holmes will continue to sit on the Aviva Canada board, providing oversight into Canadian operations.

Paul Meinschenk has been appointed as the new chief operating officer and executive vice president of Totten Insurance Group. Previously, he was vice president of sales and producer management for commercial insurer CNA Canada.

CRU Group promoted Jim Rich to lead the independent adjuster’s new flood response and wildfire response divisions. Rich, who has more than 30 years of experience in claims, has worked at CRU since 2017.

Dick Freeborough has been elected to a new three-year term on the board of directors of Economical Insurance. Freeborough was also KPMG Canada’s practice lead for insurance. Additionally, he is on the board of RGA Life Reinsurance Company of Canada.

Appointment Diane Cooper, B. Comm, FCIP Director, Reinsurance Assumed The Boiler Inspection and Insurance Company of Canada (BI&I) is pleased to announce the appointment of Diane Cooper to Director, Reinsurance Assumed. With an extensive industry background, Diane will assume strategic responsibility for BI&I’s Equipment Breakdown partnerships with many of Canada’s leading primary P&C insurers. Diane joined BI&I as Regional Branch Manager, Toronto in 2016, after working for a large regional broker and several international P&C carriers in business development and underwriting. Diane holds a Bachelor of Commerce (Honours) degree from Concordia University and a FCIP designation from the Insurance Institute of Canada. The Boiler Inspection and Insurance Company of Canada (BI&I), a member of HSB Group and part of Munich Re’s Risk Solutions family, provides the industry-leading range of specialty and equipment breakdown insurance coverages for business and home. Visit biico.com

BFL’S LATEST ACQUISITION | MAY 15

BFL Canada acquired Summit Insurance Brokers Inc., based in Prince George, B.C. Summit is a full-service brokerage specializing in services for forestry, logging contractors, agriculture, transportation, and suppliers to oil and gas and mining industries.

canadianunderwriter.ca | July 2019

INTERVIEW

DAVE VASS, Vice President, Innovation, Truﬂa Technology

MANAGING LEADS

CRM CONVERT Why are brokers afraid of lead generation software? Dave Vass of Truﬂa Technology makes the case for a client relations management solution By Adam Malik, Managing Editor

July 2019 | Canadian Underwriter

cu | Why are leads so important for brokers? Brokers live and die off their leads. A lead is someone who is interested in doing business with you; that includes your existing customers, who must decide if they want to renew their business with you. Every business in the world needs leads, but for brokerages, that’s pretty much their entire focus.

cu | How do traditional brokerages manage their leads? They’re used to handling things through their email, memory, a notepad. One traditional brokerage that wanted to go digital said they use spreadsheets and email. I thought that was a joke. I couldn’t fathom it; these guys were spending tens of thousands of dollars a month on leads and telling me they’re handling all of this through emails and spreadsheets.

cu | How do digital brokerages generate their leads? In the digital world, everyone is focused on using their website to generate leads. Brokerages are really focusing on how to set up online campaigns, pay per ads, search engine optimization (SEO) — they’re trying to ﬁnd ways to get more leads coming in so they can grow their business.

cu | Is there a difference in how traditional brokerages generate leads, compared to digital brokerages? Traditional brokerages may say they’re not digital, so they don’t do lead generation. That’s not true. Every brokerage does it. If they don’t, they’re dying. Traditional brokerages may be doing it more from an outbound perspective, meaning that they are cold-calling, or producers are out in the ﬁeld drumming up more business. But there has to be a more centralized way of doing it. It’s still like pulling teeth with some of these producers: once they’re stuck in their old ways, they don’t want to change.

cu | How can brokerages better manage their leads? If brokerages are putting a lot of investment into generating their own leads, buying their own leads, and trying to grow their brokerage, it would be common sense to have a very good platform for organizing and managing all those leads that they’re generating.

canadianunderwriter.ca | July 2019

INTERVIEW

cu | Are they not doing this? They’re spending thousands of dollars a month and their leads are not even going into a lead management tool such as a customer relationship manager (CRM). To me, that’s mind-boggling. I don’t even know how that’s possible. Without a platform to manage it all, you’re really just throwing money down the toilet. Two brokers I know both buy leads from the same aggregator; one broker uses lead management tools, the other doesn’t. The broker with a lead management tool reports a 12% conversion rate. A conversion rate of 2% is fairly common for brokers who do not use lead management tools. The leads are from the same aggregator, so what’s the difference? It’s just how they manage them. With a good lead management system, you will deﬁnitely get two to ﬁve times the conversion rate.

cu | How many brokers are not using CRM? My guess would be 90%. Whenever I’m at a conference, I ask people: “Show of hands, how many are using any kind of tool like this?” Almost always, 90% of the audience isn’t using something.

PROFILE

DAVE VASS Title: Vice President, Innovation, Trufla Technology Education: Attended the University of Calgary but did not graduate. “I’m one of those entrepreneurial drop outs who started my own thing,” he says. Background: Has run multiple businesses over the past 15 years. In 2013, he started EMethod, a digital marketing company with a technology focus. EMethod merged with Sharp Mobile to form Trufla Technology, which helps digitize brokers through education. He’s also written e-books that explore how to generate quality leads and mistakes to avoid when going digital, all geared to the insurance industry.

cu | Why are so many choosing to not have a lead management system in their brokerage? A lot of brokers associate lead generation with giving them cheap and junky leads; some have had bad experiences. Many brokers are spending money on SEO and digital ads; the

problem is, they don’t realize that a lead from the internet is likely someone who prefers efficiency and convenience. They expect you to respond right away. If you don’t respond to the query of an online lead in 12 hours, that’s like someone coming into your office looking for a quote and then you leave your office and don’t come back for 12 hours. Of course they’re going to get mad. Then you call them a cheap and junky lead. But it’s because of the way you’re handling them. For a broker, you need to be in the right mindset of what it means to use a lead management platform.

cu | How do you get them in the right mindset to use a CRM? It’s important for a broker to understand that it’s not just about managing leads. For instance, why would you not use technology to automate and personalize your communications? I’ll use the example of a broker in Saskatchewan who does farm insurance. Why would the broker not build a new educational campaign around farm insurance? After the broker puts the work into it once, the campaign is there to use forever. Now, as you’re interacting with farmers – and they all have email addresses – you can leverage technology to build your brand, communicate, educate, and eventually close more business. To me, that’s what everyone in the world is doing except insurance.

cu | Why is insurance not moving in the same direction? It feels like insurance is archaic. It feels like brokers are being told that going digital means they must have an online quoter on their websites. They’re not being educated on what it actually means to go digital. 22

July 2019 | Canadian Underwriter

cu | What does it mean for a brokerage to ‘go digital’? It means leveraging technology to make your processes more efficient. I don’t think brokers are getting enough education to understand that. It’s an eye-opener for a lot of them to understand what a lead management tool can do. Many brokers believe their broker management system (BMS) is supposed to do it. But when they see the capabilities of a modern CRM, they all of a sudden realize that their BMS doesn’t do any of this.

the lifetime value of a customer, it’s huge for them. But a lot of them don’t see it that way.

cu | Does CRM help with existing customers? Existing customers are leads. A lot of brokers miss that. Customers renew annually; each year they become a new

lead. If you’re going well, 90% retention would be great, sure. As insurance changes, it’s not going to be as much of a guarantee. It’s getting more competitive out there and that number is going to get lower. You have to remarket to them every single year. And if you don’t have a very easy way to do that, then you’re going to miss out.

cu | Do brokers rely too heavily on a BMS? Could they switch out with a CRM or lead management system? A lot of times brokers think CRM should replace their BMS, to which I always say no. Brokers shouldn’t make decisions about handling leads based on the capabilities of their BMS. If they do, they’re never going to grow their brokerage, because a BMS is for the most part closed. It isn’t easy to integrate a CMS with a BMS.

cu | Have you seen pushback from brokers who say a CRM doesn’t work? There are those brokers who have tried the digital way of generating leads, and then they don’t have a system or process set up to manage them properly. When they don’t get the conversion rates they expect, compared to the more traditional way of generating leads (through outbound sales and networking), then they say this new way doesn’t work. Well, no, it’s just because you haven’t been managing the leads properly.

cu | By not managing their leads effectively, what are brokers missing out on? The Number 1 thing brokers are doing is leaving money on the table. They’re not able to convert a possible customer into an actual customer. It’s guaranteed that if they implement a good tool that helps them with that, they’re going to increase their conversions. Even if it’s by a point or two, if you take that over

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ON THE SCENE IBAA Convention 2019 May 5-8 Banff, Alta. P&C industry professionals from across the country converged on the scenic Fairmount Banff Springs Hotel to attend the Insurance Broker Association of Alberta (IBAA)’s annual convention. The “eXperience” started with a Peace Hills Kick-off Party, continued with the President’s Gala and trade show, and ended with fun at Hospitality Night. A packed schedule of big-name speakers discussed the burning issues of the day for Alberta brokers, including what to do if a carrier cancels your contract, how to digitize lead management, best hiring practices, licensing pass rates, the state of Canada’s economy, and more.

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ON THE SCENE IBAO Young Brokers Conference June 5-7 Niagara Falls, Ont. Young brokers from across Ontario gathered in Niagara Falls to attend the Insurance Brokers Association of Ontario (IBAO)â€™s Young Broker Conference. After the opening night party, attendees heard from a pair of keynotes speakers. Presentation coach Warren Weeks discussed how to define your polished, professional brand. Also, negotiation expert Fotini Iconomopolous offered insights about key principles of persuasion. Brokers then formed teams to develop their selling skills during the Pitch to Win competition. The conference ended with a pair of executive panels, which delved into the topics of hard market survival and industry innovation.

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CanadianUnderwriter.ca/gallery canadianunderwriter.ca | April 2019

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2019 STATS GUIDE

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COVER FEATURE | INDUSTRY RESULTS

INDUSTRY RESULTS

The Power of Now The industry is quite rightly focused on the future to assess emerging issues, but it must remain mindful of the present moment to address two major drivers of its poor results. By Glenn McGillivray, Managing Director, Institute for Catastrophic Loss Reduction (ICLR)

hese days, it is both highly fashionable, and extremely necessary, for insurance professionals to look into the future and discover new things that have clear potential to cause massive sea changes to the property and casualty insurance industry. Emerging issues include autonomous vehicles, ﬁntech (including blockchain), cyber risk, the Internet of Things, artiﬁcial intelligence/ma28 STATISTICAL GUIDE 2019

chine learning, usage-based insurance, telematics (both vehicle and home), etc. There is certainly no shortage of industry seminars on these emerging issues; such topics stir the imagination and prompt strategy-makers to begin thinking about how they will prepare for a brave new world — if they choose to do so at all. Awareness of the future is certainly key, but equally important — if not more

important — is the current state of the P&C insurance industry. Things happening now are most pressing, particularly chronic issues that have been nagging the industry for some time and solutions to which are not always immediately forthcoming. Both auto insurance and severe weather clearly ﬁt into this category. Before examining the impact on the results of auto and severe weather, let’s have a look at the existing state of the industry.

INDUSTRY RESULTS l COVER FEATURE

2018 results Industry results in 2018 worsened yearover-year “despite nearly 8% growth in DPW [direct premium written] and 9% in net earned premiums,” according to the MSA Quarterly Outlook Report 2018 Q4. Claims grew by more than 15%, resulting in a signiﬁcant reduction in underwriting income. Investment income, too, was down heavily over 2017, resulting in an almost 20% reduction in net income and

a signiﬁcantly heavier loss in comprehensive income. For Canada’s P&C industry, the net loss ratio deteriorated more than 3.5 points last year to 67.7%, while the industry’s combined ratio was up more than two points, according to MSA Research president and CEO Joel Baker. The investment yield dropped to just over 2% and return on equity was down to 6.4% from close to 8% the year prior. Baker attributes the dismal industry performance last year to high Cat losses, low reserve releases (down to their lowest level in seven years), ongoing troubles with auto in Ontario, Alberta and Atlantic Canada, and poor performance in certain commercial lines and personal lines markets, with products for high net worth individuals being a speculative sore point. That said, insurers now have more than $47.5 billion in capital, the highest level ever reported by the industry, as noted in Property and Casualty Insurance Compensation Corporation (PACICC)’s 2018 annual report. “A well-capitalized industry provides stability for insurance consumers, promotes competition and attracts new entrants to the market.” On the reinsurance side, companies experienced significant growth in claims. Baker attributes at least part of the pain to large reserve releases the previous year, “which suppressed reinsurers’ incurred losses that year.” All told, the 20 reinsurers included in the Reinsurance Research Council’s 2018 published results recorded net written premiums of $4.95 billion, investment income of $211.7 million, and an underwriting result of $740.2 million, with net income after tax of $705.3 million. Ratios came in at 53.1% (loss), 31.7% (expense) and 84.87% (combined). Auto Auto insurance “…is a product that has been subject to enormous swings in profitability and subject to constant reforms over the past 20 years,” as PACICC notes. Not much appears to have changed, particularly since Ontario auto “ap-

pears [again] to be unproﬁtable in 2018,” PACICC adds. The problems with Ontario auto are multi-fold and complex, Insurance Bureau of Canada (IBC) explains, but can be summarized in three high-level statements: • Auto insurance rates are too high in Ontario. Making changes to the system — for example, protecting consumers by taking extra costs out of the system — will help. • A big chunk of money that insurers pay out to injured accident victims doesn’t get to them. Too much is going to legal fees and medical assessments instead of treatments that would help people heal. That needs to change. • The high cost of repairing vehicles is contributing to the cost of insurance premiums in Ontario. We can no longer ﬁx a car using a simple wrench. Every inch of a modern car — with computers controlling cameras, airbags, and sensors — is becoming more costly to repair or replace. IBC is optimistic that Ontario's ‘Putting Drivers First’ reforms, which emphasize ‘care not cash,’ puts proper emphasis on those injured in vehicular accidents. In addition, the reforms will allow for electronic proof of insurance, placing Ontario in a league with several other jurisdictions in North America and elsewhere. Looking at Alberta, claims costs are increasing by more than 10% a year, with loss ratios hovering in the 130% area. This is translating into premium increases, availability issues, less choice and no innovation as the product has not been reviewed in some time. Insurers are concerned that the 5% cap on rate increases implemented by the previous government has remained in place and that the true drivers of higher costs have yet to be addressed. The industry is calling for the government of Alberta to work closely with the industry to address the underlying cost drivers and remove the cap. Looking to Atlantic Canada, “Auto insurance in Newfoundland and Labrador is another source of concern,” says PACICC. “The province did not introduce the same reforms as the other provinces in Atlantic Canada. Claims costs are rising faster than premiums. 2019 STATISTICAL GUIDE 29

COVER FEATURE | INDUSTRY RESULTS There are no signs that product reform is being considered in the near term…. History suggests that government intervention will be required before the product returns to proﬁtability.” Not a huge auto market, but an industry concern nonetheless. Severe weather We have clearly reached the point in Canada when stating that a given year was active from a severe weather standpoint is a complete waste of breath. Now, a quiet Cat year is far outside the norm and large losses are business as usual. Only one of the past 10 years can be considered “quiet.” Last year, unfortunately, did not fall far outside the norm. More than $2 billion in insured losses were racked up from disasters that met or exceeded the $25-million threshold for catastrophic claims, as set out by Catastrophe Indices and Quantiﬁcation Inc. (CatIQ). (See Page 31 for a 2018 Cat summary.)

Twelve Cats and nine “notable events” — events that generally fall into the $10- to $25-million range — were declared in 2018. Last year turned out to be the fourth-costliest year on record for insured disaster losses in the country (first place: 2016; second place: 2013; and third place: 1998). There were no really big single losses in 2018 along the lines of the 2016 Fort McMurray wildfire or the 2013 southern Alberta floods. However, just two events — the May 4 Southern Ontario/Quebec windstorm, and the September 21 tornado sequence in the National Capital Region — caused more than $935 million in insured losses. When claims adjustment expenses are added, that particular pair of events left the industry with close to $1 billion worth of cheques to write for more than 80,000 claims filed. Although water continues to be a challenge for the industry, last year showed that extreme wind can be a driver of significant insured loss in

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Total Cost of Insured Cat Claims 2009-2019 2009

$800 million

2010

$1.0 billion

2011

$1.5 billion

2012

$1.3 billion

2013

$3.0 billion

2014

$950 million

2015

$600 million

2016

$4.9 billion

2017

$1.0 billion

2018

$2.0 billion

TOTAL

$17.0+ billion

Source: CatIQ (numbers are rounded up or down). Not adjusted for inflation.

Canada. A wind event doesn’t need to be tornadic to produce big claims numbers; indeed, extreme wind partially or fully caused 62% of all natural catastrophe events recorded by IBC between 1983 and 2016, according to an Institute for Catastrophic Loss Reduction (ICLR) analysis of IBC data. Canadian insurers have dealt with a nearly-unbroken string of major severe weather-related losses since 2009, with many years nearing $1 billion in claims; several exceeded this number handily. (See Chart on this page.) In only one instance, in 2015, losses were considerably below $1 billion. None of these numbers include claims adjustment expenses. There is no indication that this trend in Cat losses will abate anytime soon. There is a sense that, given that $1-billion annual losses are no longer rarities in Canada, we may in fact be moving quickly toward $2 billion as the next “new normal.” Although Cat losses have been ﬁnancially manageable to date (thanks in great part to widely accessible and affordable cat reinsurance cover), ICLR is cautioning the industry that continuing urbanization and a warming climate will make managing natural perils considerably more challenging in the decades ahead. Property insurers may ﬁnd that price

INDUSTRY RESULTS l COVER FEATURE

12 Canadian Cat events in 2018

adjustments and changes to deductibles, caps/limits and exclusions may not be enough to prevent severe weather from heavily impacting their bottom lines; one answer is to fully embrace loss control that is based on the latest scientiﬁc understanding.

Eastern Canada winter flooding | January 11-14, 2018 Insured losses came to just under $52 million. Southern Ontario and Quebec flooding | February 19-22, 2018 Insured losses were just under $60 million. Southern Ontario and Quebec windstorm | April 4-5, 2018 Losses were just shy of $100 million. Southern Ontario and Quebec ice storm and flooding | April 14-17, 2018 Insured losses totaled more than $240 million. Early May Southern Ontario and Quebec windstorm | May 4-5, 2018 The event totaled more than $622 million in insured losses. Southern Saskatchewan and Manitoba severe storms | June 14, 2018 The event produced just under $114 million in insured losses. Central Alberta and Saskatchewan severe storms | July 6-7, 2018 Insured losses came in at around $52 million. Central Alberta and Saskatchewan severe storms | July 13-14, 2018 Insured losses were about $41 million. Early August Prairie storms | August 1-4, 2018 Insured damage came in at around $130 million. Toronto flooding | August 7-8, 2018 Insured damage came in at more than $113 million. Ottawa and Gatineau tornadoes | September 21, 2018 Insured losses totaled more than $314 million. Southern B.C. windstorm | December 20, 2018 The event totaled $52 million in insured losses. Source: Laura Twidle, Director of Catastrophic Loss Analysis at CatIQ. (As presented at this year’s CatIQ Connect Conference in Toronto)

Conclusion Over the past decade and a half, it has become all too clear that auto insurance has nearly (and probably) always been a huge challenge for Canadian insurers; that remains true to this day. And while it remains to be seen whether it will continue to be a perennial thorn in the industry’s side, it’s probably a safe bet that it will continue to vex the industry until products are torn down to their very foundations and rebuilt from scratch. In auto lines, past performance seems to be a pretty good indicator of future success. This, of course, can’t be said for severe weather. Cat losses will increasingly be inﬂuenced by a climate that is getting warmer and, in many places, wetter. Here, the past is no longer an indicator of what we can expect going forward. It’s an interesting juxtaposition of the need to consider both present and future and, in both cases, a costly one.

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2019 STATISTICAL GUIDE 31

ON THE SCENE TIC Annual Golf Classic June 11 Toronto, Ontario The rainstorms the industry has been talking about took a much-appreciated break for the Toronto Insurance Council (TIC)’s prestigious golf tourney in June. Golfers tried their luck at a fast-moving, 27-hole course, competing for prizes while enjoying good food and great company sponsored by Canada’s bestknown carriers. CAFCO Inc. took home the honours as the tournament’s best team. Pictured immediately below, the winning team included Bill Chapman, Jason Ravenhill, Dave Nixon and Craig Emuss.

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CanadianUnderwriter.ca/gallery 158 July 2019

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ETHICAL BEHAVIOUR

Juggling priorities How a hard market can turn conﬂicting priorities into an ethical issue B Y T H E C I P S O C I E T Y, T H E I N S U R A N C E I N S T I T U T E O F C A N A D A

ue to price sensitivity and a firming market, an experienced broker may feel increased time pressure when attempting to accommodate the conflicting demands of internal staff, carriers and consumers alike. On the one hand, brokers need to take more time to educate themselves and their consumers about carriers’ product changes, provide justifications to clients about rate increases, and find and place new coverage; etc. At the same time, carriers in a firming market require brokers to seek premium growth. To generate more sales, brokers need to talk to more sales prospects and clients. As the old saying goes, something has to give. During a hard market cycle, a business process and operational issue could easily evolve into an ethical issue. Stretched in different directions, brokers may find themselves spending less quality time

with individual clients, and their advice and guidance might suffer as a result. Who is the top priority in this challenging time? If something falls through the cracks, the broker is putting both clients and reputation at risk.

sources. First, there simply aren’t enough hours in the day. Second, clients often become disenchanted when the expectations developed through many years of a softer market are not met. How brokers respond to these pressures can lead to ethical dilemmas. ANALYSIS As the saying goes, “No one is an island.” If we try to do everything on our Maurice Audet own, we put ourselves and our clients Senior Vice President, Regional Resource at risk. Working with the assistance of Leader, Risk Research & Solutions management, brokers can work within Aon Reed Stenhouse Inc. the strengths and limits of their organizaBrokers can become overwhelmed in tions – or they can work until they drop. many circumstances, including the presIn previous, very-hard markets, I witsures of working in a hardening market. nessed co-workers unable to cope with In this type of market, the scope of covthe stresses; some suffered a breakerage that clients have come to expect, as down. Brokers who become stressed well as the amount of time it takes to turn around a request for coverage and pricing need to ask for help, and managers need expectations, create a great deal of stress. to be trained to recognize problems and The stress arises from at least two provide assistance.

canadianunderwriter.ca | July 2019

161

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HANDBOOK a commission. However, brokers should not use time constraints as an excuse for providing inadequate quality of service. How do brokers balance their obligation to their clients with other obligations? By looking at the bigger picture. Spending an appropriate amount of time with clients, explaining coverages, and asking the right questions are all integral parts of the broker’s duties. Brokers will not only fulﬁll their obligation as professionals, but will reap the ﬁnancial rewards of retaining current clients and attracting new ones based on the care provided. A broker’s obligation to the client is Arthur Kosikowski, CIP highlighted in a hard market more so Senior Investigator than during any other market cycle. All Complaints and Investigations actions taken (or not taken) by the broker Registered Insurance Brokers of Ontario can be linked to the ethical dilemma the “Who do I work for?” Although brokers broker is experiencing: spending more may have mixed feelings in response to time with one client means spending less this question, the answer should always time with the next client and possibly be the same — the clients. losing a sale and the commission. BroMaking clients’ needs a priority does kers should be focused on taking care of not detract from the broker’s obligation to provide all known underwriting in- all their clients properly and providing formation to the underwriter. Working the best recommendations for each. It is absolutely true that time is monfor the client means ensuring the risk is known to the insurer – and that the risk ey, but the time invested in client care is properly underwritten – so that no should not be thought of as time lost, but rather as time invested. problems arise at claim time. Taking the time to explain the different options available, asking the right ques- The CIP Society represents more than 18,000 tions, reviewing policy wordings, visiting graduates of the Insurance Institute of Canada’s the risk locations, etc., all take time away Chartered Insurance Professional (CIP) and Fellow from selling the next policy and making Chartered Insurance Professional (FCIP) programs. The ethical issue is not to be measured strictly by whether individual brokers are spending less time on any particular challenge. Also important is how brokers are responding more broadly to the new reality of a changing market. One important factor is how management responds. If the corporate culture looks upon a request for help as a sign of weakness and a blot on the broker’s record, then the issue becomes more about a company’s failure to act in the best interest of both the client and the broker.

BY THE NUMBERS

Holding your cyber clients for ransom Ransomware attacks and demands are turning into a cottage industry for cyber criminals. Not only are the number of attacks up, but the average ransom is up, too.

RANSOMWARE ATTACKS

RANSOM DEMANDS

93% increase

IN THE NUMBER OF RANSOMWARE ATTACKS

INCREASE IN THE AVERAGE RANSOM DEMANDS

2018

US$116,324 Source: Beazley Breach Insights, May 2019 report

Enna Kaplun, BA, CHRM Director, Digital Solutions The Boiler Inspection and Insurance Company of Canada (BI&I) is pleased to announce the appointment of Enna Kaplun to Director, Digital Solutions. In this newly created role Enna will develop and implement the vision to optimize BI&I’s digital environment and infrastructure across all business lines. With a career spanning over 25 years in strategic business development, Enna was previously Director, Reinsurance Assumed for BI&I since 2016. She is a graduate of York University with a Bachelors of Arts and a post graduate certiﬁcate in Human Resource Management (CHRM). The Boiler Inspection and Insurance Company of Canada (BI&I), a member of HSB Group and part of Munich Re’s Risk Solutions family, provides the industry-leading range of specialty and equipment breakdown insurance coverages for business and home. Visit biico.com

105% increase 2018

Appointment

2018

US$224,871

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HANDBOOK

PROPERTY APPRAISAL

The broker’s valuation proposition How offering appraisal services can increase your client’s satisfaction B Y K E L L Y J U H A S Z , President, Canadian Chapter, International Society of Appraisers

rokers offering the extended service of appraisal can see their client satisfaction levels increase and gain an advantage over their competitors. Working with a qualified appraiser can help you better understand your client’s property and level of risk. And in the case of a loss, a qualified appraiser can ascertain a justified value and help you make your clients whole. I am a qualified appraiser for art, antiques and other objects of personal property. I am educated and trained in specialized valuation methodologies and knowledgeable in these specialty objects. My involvement is as an independent expert having no interest other than determining a proper value. Over the past eight months, I’ve per-

formed four appraisals for 15 pieces of art that had been stolen or destroyed. In each instance, none of the insureds had any documentation on the artworks. Only half of the insureds could remember important details about their artwork, such as the artist’s name. Fewer than half had photographs I could use to conduct the appraisal and, in return, help justify the values they claimed. It is important to note that my professional involvement in each of these claims was based on an invitation by the claims adjustor, not the client. Had these clients, their brokers or insurance companies been in possession of an appraisal report to accompany their policies, their claims could have been processed more expeditiously, thus

saving valuable time, resources and, in many cases, money. A report prepared by a qualiﬁed appraiser offering an unbiased, third-party opinion of value increases the validity of the methodology and credibility of the value conclusions. As a skilled and qualiﬁed personal property appraiser, I have been able to work without documentation or descriptive details to create a probable description, an acceptable market range and a determination of parallel objects for each claim. This provided estimated replacement costs that claims adjustors could support. To do this, I needed to work directly with the insureds to better understand their buying and collecting habits and the quality of their personal proper-

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HANDBOOK ty objects. Regarding artwork, asking questions about the subject, scene and elements of paintings provides insight into their age and genre. Performing a market analysis of a sampling of parallel artworks – essentially, similarly-themed works created around the same time and selling for similar values – will reveal trends that suggest an increase or decrease in value at the time of loss. Such analysis helps to narrow down a broad range of possibilities. By engaging directly with a qualiﬁed

specialist, clients are more likely to feel that their insurance companies and brokers are providing them with the level of individual attention and expertise that their art requires. Plus, the high level of transparency and service will leave clients with positive feelings about their insurance professionals. Kelly Juhasz is an art advisor and a qualified appraiser specializing in fine art and antiques. She is an accredited member of the International Society of Appraisers and president of the Canadian Chapter.

Appointment Tammy Parris, BA, FCIP, CRM

5 things to say to your clients about appraisal reports By having an appraisal report on file, you will:

1 2 3

buy the right amount of coverage and not overpay for coverage

properly cover your most valuable personal property objects when you need them to be expedite the settling of your insurance claim. Your most valuable objects will be documented and identified professionally before they were lost, stolen or damaged

decrease the chance that your insurance company will treat you or your claim with suspicion. Your appraisal report will contain justified values for each object by a qualified third-party expert show you are managing your “passion investments” proactively and responsibly, perhaps resulting in lower premiums

5 ways brokers beneﬁt from offering appraisal services to consumers

Setting up your insureds with a qualified appraiser and/or an appraisal report can extend your service offering. It gives you a competitive advantage over brokers who do not add this valuable service

3 4

Qualified appraisers who are actively part of an association of professional appraisers (such as the International Society of Appraisers) will ensure that every type of personal property asset or object can be described and valued accurately. The appraiser’s network will include experts in all classifications of personal property

Justified value opinions in case of claims Appraisals make it easier for you to find or place coverage, in addition to providing your clients with scheduled property reviews

Director, Regional Offices and Insurance Operations The Boiler Inspection and Insurance Company of Canada (BI&I) is pleased to announce the appointment of Tammy Parris to Director, Regional Offices and Insurance Operations. Tammy will oversee the operations of the Regional Offices, building existing relationships and driving new opportunities in BI&I’s Commercial EB business. Tammy joined BI&I in 2007 as Regional Manager, Calgary Office after thirteen years at a national P&C insurer, bringing strong, diverse cross-functional leadership. She became Hamilton Branch Manager in 2011 and was assigned National MGA Coordinator responsibilities in 2014. The Boiler Inspection and Insurance Company of Canada (BI&I), a member of HSB Group and part of Munich Re’s Risk Solutions family, provides the industry-leading range of specialty and equipment breakdown insurance coverages for business and home. Visit biico.com

A list of personal property is not an appraisal or a statement of qualified values. Often an inventory list doesn’t contain the level of detail required to perform a justified valuation, especially for high-value objects. A qualified appraiser can provide a detailed description, in addition to replacement costs, based on accepted appraisal methodology

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ON THE SCENE 2019 23rd Annual WICC Gala May 8 Toronto, Ontario “Rebels for a Cause,” all decked out in their best lace, leather, tattoos and black-tie formal wear, flocked to the Fairmont Royal York Hotel in Toronto to raise funds for the Women in Insurance Cancer Crusade (WICC). A jam-packed dance floor greeted the raucous tunes of Tommy Youngsteen, billed as North America’s premier Bruce Springsteen tribute band. Warming up to the big show, the gala featured a silent auction and cocktails, followed by dinner.

FIND MORE PHOTOS AT

CanadianUnderwriter.ca/gallery

ON THE SCENE RIMS 2019 Annual Conference & Exhibition April 28 to May 1 Boston, Massachusetts, U.S.A. A premier risk management conference, RIMS U.S. opened with keynote speaker Erin Meyer, a business school professior and author, speaking about how business leadersâ€™ management styles affect their companiesâ€™ cultures. In between the receptions, the golf tournament, the awards luncheon and the 5th annual Spencer/Sedgwick 5K FunRun, attendees were treated to a host of professional development seminars on emerging and hot topics for risk managers.

FIND MORE PHOTOS AT

CanadianUnderwriter.ca/gallery

canadianunderwriter.ca | April 2019169

peer to peer PROPERTY RESTORATION

ORIGINAL STATE With wildfire season once again upon us, Canadian Underwriter recently caught up with Jeff Reitsma, vice president and practice lead of remediation at 30 Forensic Engineering. He shared some of his experiences in Fort McMurray, Alta., where he assisted in the rebuilding effort after a wildfire razed much of the town in 2016. Similar issues have played out more recently in High Level, Alta., he reports. Here are his thoughts on restoring property to its pre-loss condition. – As told to David Gambrill

The whole principle of the insurance industry is to get the damaged property of a policyholder back to its pre-loss condition. The key here is its “original state.” One issue we saw in Fort McMurray was a difference of opinion around what that meant. In Fort McMurray, we were always looking to ﬁnd areas that would be representative of the preloss condition. For example, for background, we would often take a sample inside of a refrigerator that had been closed, or a safe in a hotel – something that had a seal that had been opened and closed over time, but closed during the loss event. In one instance, we did some work at a heavy machinery facility that

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was across the highway from where the fire was burning; they had a whole bunch of smoke in the facility. The question was, “What level of cleaning is appropriate?” Because of the wildfire season, the air quality in Fort McMurray wasn’t very good at the time; there was a health and safety concern. Even after cleaning, the air in the facility was smoky and surfaces became re-contaminated. So, you could clean, but then you would come back the next day and test it, and it was dirty again. You could get into this endless loop with the contractor: “What’s appropriate here? And what’s the level of cleaning that we consider to be fair and reasonable?” In this specific

instance, we as a group — the business owner, the insurer, the adjuster, the contractor, and we as engineers—all agreed there was a residual impact of smoke that was not related to the loss. We recognized and agreed that the insurer had done its due diligence; it had done the right tasks to get the business back to its original state. Everyone agreed, and we had it documented. As long as that’s all on the table, most insurers in my experience are okay with that. It takes a seasoned policy management group to recognize that as long as you take that high road, you can avoid potentially negative downstream issues such as litigation or disputes.

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JULY 2018