C A N A D A’ S I N S U R A N C E A N D R I S K M A G A Z I N E . C A N A D I A N U N D E R W R I T E R . C A
NO V E M B E R 2 0 1 5 PM#40063170
Tipping Point? 2016 REINSURANCE MARKET OUTLOOK
Avoiding Black Holes BY JOSEPH BRANDONISIO & GLENN McGILLIVRAY
Credit Trading Up BY RUSS PARKER
Personal Insurance commercIal Insurance Global sPecIalty lInes
an insurer worked with you to offer flexible, tailored coverage for your small business risks? at rsa Insurance, we’re transforming the way we do business. that’s why we’re taking a more flexible, hands-on approach to working with you to write policies for the entrepreneurs in your community. add to that our exclusive aIr mIles® reward miles offers for small- to medium-sized businesses and comprehensive risk-control resources, and it all adds up to a winning blend.
to learn more, visit rsabroker.ca/commercial
© 2015 royal & sun alliance Insurance company of canada. all rights reserved. rsa, rsa & Design and related words and logos are trademarks and the property of rsa Insurance Group plc, licensed for use by royal & sun alliance Insurance company of canada. rsa is a trade name of royal & sun alliance Insurance company of canada. ®™ trademarks of aIr mIles International trading b.V. used under license by loyaltyone, co. and roins Financial services limited. aIr mIles® offer not available in manitoba or saskatchewan. collectors can earn 1 aIr mIles reward mile for every $20 in premium (including taxes) to a maximum of 15 reward miles a month. all aIr mIles offers are subject to the terms and conditions of rsa, and may be changed or withdrawn without notice. For full details, please see terms and conditions available at rsabroker.ca/rsa-advantage/air-miles.
11922_RSA-CI-CU-102315_FA.indd 1
2015-10-23 12:09 PM
CANADIAN UNDERWRITER
VOL. 82, NO. 11, NOVEMBER 2015 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY NEWCOM BUSINESS MEDIA INC.
www.canadianunderwriter.ca
COVER STORY
2016 Reinsurance Market Outlook
30
The relative calm for the reinsurance industry cannot last forever. Catastrophes will happen and disruptive conditions will persist, subjecting the market to accumulating pressure. Despite still-positive returns, how long can reinsurers hold out? Is the industry at or near its tipping point?
FEATURES
14
18 RIMS Canada Conference
44 Disaster Financing
Best-in-Class Cat Plans
Governments and (re)insurers must better leverage industry’s risk management expertise and access to capital to lighten the nat-cat burden on taxpayers.
What are the key elements of a best-in-class catastrophe plan? Businesses need to look inward and outward to learn how best to cover off their risks and exposures.
BY JOSEPH BRANDONISIO & GLENN MCGILLIVRAY
BY JOE COLBY
22
52
48 Ontario Auto
Risk management can be risky if those involved are unaware of evolving and emerging risks. RIMS Canada gave risk professionals a view of some top-of-mind issues.
Fraud and legal costs are two ready answers to the question, What is driving the higher auto insurance rates in Ontario? The province must move beyond tinkering to address cost containment.
BY ANGELA STELMAKOWICH
BY WILLIAM STAR
26 Underinsured, Uninsured and Unidentified Coverage
56 Cat Modelling
A recent dismissal by Ontario’s appeal court reaffirms that plaintiffs must commence their actions for underinsured, uninsured or unidentified coverage in the jurisdiction in which the contract was made.
Fuelled by lessons learned and the availability of data, risk modelling is expected to serve as an increasingly important tool for how insurers and reinsurers calculate expected loss. BY PATTI RISTICH
BY ANTHONY GATENSBY
28 Dale Rempel Award
Supply Chain Risks
Trade Credit Insurance
The rise in Canadian firms engaged in foreign supply chain procurement has attracted the attention of those pursuing prosecutions.
With the positive growth in trade credit insurance in Canada, companies need to be aware of the current conditions and opportunities.
Bryan Yetman has received the 2015 Dale Rempel Award of Excellence in recognition of his contributions to broker professional development.
BY SEAN VAN ZYL
BY RUSS PARKER
BY ANGELA STELMAKOWICH
November 2015 Canadian Underwriter
3
we have it covered.
to providing the most timely and relevant news, information
PROFILE
VOL. 81, NO. 2, FEBRUARY 2014 VOL. 81, NO. 2, FEBRUARY 2014 PROFILE
steve@canadianunderwriter.ca
BY ANGELA STELMAKOWICH
are key priorities for Sean Duggan, incoming Editorial president of the Toronto Editorial Insurance Conference. Marketplace
SPECIAL FOCUS
6 6 8 SPECIAL FOCUS BY GREG MECKBACH 8 Marketplace 56 Moves SPECIAL FOCUS & Views 6SPECIAL Editorial FOCUS 56 Moves & Views 58 Gallery FOCUS 6 SPECIAL Editorial 86 Marketplace Editorial 58 Gallery 8 6 Marketplace Editorial 56 & Views 8 Moves Marketplace 568 Marketplace Moves & Views 58 56 Gallery Moves & Views 5858 Gallery Moves & Views 58 Gallery 60 Gallery
4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014
4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014 Canadian Underwriter November 2015
Art Director astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Editor @CU_Greg Twitter: Senior Wilson Publisher Angela Stelmakowich Steve Editor gmeckbach@canadianunderwriter.ca Gerald Heydens Art Consultation Senior Publisher (416) 510-6793 @InsuranceMedia the industry, providing marketers with aTwitter: range of specialized Angela Stelmakowich (416) 510-6796 Steve Wilson Angela Stelmakowich astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Twitter: @CU_Greg Steve Wilson Sascha Hass (416) 510-6800 astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca astelmakowich@canadianunderwriter.ca Art Consultation (416) 510-6793 Twitter: @InsuranceMedia Associate Editor steve@canadianunderwriter.ca (416) 510-6796 Online Editor and highly effective marketing communications opportunities. (416) (416)510-6793 510-6793 Twitter: @InsuranceMedia Sascha Hass Canadian Underwriter’s Insurance Media Group is committed Production Manager (416) 510-6800 Greg Meckbach (416) 510-6800 Art Director Harmeet Singh Associate Editor (416) 510-6800 Online Editor Associate Editor Gary White gmeckbach@canadianunderwriter.ca to providing the most timely and relevant Gerald Heydens DirectorManager news, information Associate Editor hsingh@canadianunderwriter.ca Production Greg Meckbach ArtArt Director Greg Meckbach Harmeet Singh (416) 510-6760 Twitter: @CU_Greg Gerald Heydens from all segments of and resources to insurance professionals Greg Meckbach Twitter: @CU_Harmeet Art Consultation Director Gary White gmeckbach@canadianunderwriter.ca Gerald Heydens Art gmeckbach@canadianunderwriter.ca hsingh@canadianunderwriter.ca (416) 510-6796 gmeckbach@canadianunderwriter.ca Art Consultation (416) 442-5600 ext. 3652the industry, providingSubscriptions/Customer Gerald Heydens marketers with a rangeService of specialized (416) 510-6760 Twitter: @CU_Greg (416) 510-6796 Sascha Hass Twitter: @CU_Harmeet National ArtSascha Consultation Hass Twitter: @CU_Greg and highly effective marketing Gail Page (416) 510-6796 communications opportunities. Online Editor Online Editor Claims (416) 442-5600 ext. 3652Canadian Associate Publisher ArtInsurance Consultation Subscriptions/Customer Service Sascha Hass Underwriter’s Media Production Manager (416)Contant 510-6796 Production ManagerGroup is committed gpage@bizinfogroup.ca Harmeet Singh Jason Paul Aquino Sascha Hass Gail Page Online Editor White toManual providing the mostGary timely and relevant news, information Karen Samuels Associate Publisher jcontant@canadianunderwriter.ca (416) 510-5187 hsingh@canadianunderwriter.ca Production Manager Online Editor paul@canadianunderwriter.ca gpage@bizinfogroup.ca Harmeet Singh InsuranceMarketer.com (416) 510-5190 (416) 510-6760 (416) 442-5600, Ext. 3652 and resources to insurance Paul Aquino professionals Production Managerfrom all segments of Twitter: @CU_Harmeet Gary White Harmeet Singh Twitter: @InsuranceCanuk (416) 510-5187 Circulation Manager hsingh@canadianunderwriter.ca Subscriptions/Customer paul@canadianunderwriter.ca Gary Whitewith a rangeService Associate Publisherext. 3652the (416) 442-5600 industry, providing marketers of specialized (416) 510-6760 Subscriptions/Customer Service National hsingh@canadianunderwriter.ca (416) 510-6788 Mary Garufi Twitter: @CU_Harmeet Bona510-6760 Lao Manager Twitter: @InsuranceCanuk Paul Aquino (416) Circulation Gail Page and highly effective marketing communications opportunities. Twitter: @CU_Harmeet mgarufi@bizinfogroup.ca (416) 442-5600 ext. 3652 Claims blao@annexnewcom.ca Associate Publisher Subscriptions/Customer Service National paul@canadianunderwriter.ca (416) 510-6788 Account Manager Mary Garufi industry’s social the insurance network gpage@bizinfogroup.ca (416) 442-5600 ext. 3652 (416) 442-5600,ext. Ext.3545 3552Service Subscriptions/Customer Claims (416) 442-5600 Paul Aquino (416) 510-6788 Gail Page Manual Michael Wells mgarufi@bizinfogroup.ca Associate Publisher (416) 510-5187 Manual Account Manager Gail Page paul@canadianunderwriter.ca Circulation Manager gpage@bizinfogroup.ca InsuranceMarketer.com Account Manager InsuranceMarketer.com Associate Publisher michael@canadianunderwriter.ca (416) 442-5600 ext. 3545 Print Production Manager Paul Aquino Michael Wells gpage@bizinfogroup.ca Mary Garufi Twitter: @InsuranceCanuk (416) 510-5187 Michael Wells Circulation Manager Paul Aquino (416) 510-5122 Phyllis Wright paul@canadianunderwriter.ca michael@canadianunderwriter.ca mgarufi@annexnewcom.ca (416) 510-5187 Print Production michael@canadianunderwriter.ca (416) 510-6788 Mary Garufi Manager paul@canadianunderwriter.ca INSURANCE the insurance industry’s social network Twitter: @InsuranceCanuk Circulation Manager (416) 442-5600, Ext. 3545 (416) 510-5122 (416) 510-5122 Account Manager Phyllis Wright President mgarufi@bizinfogroup.ca Twitter: @InsuranceCanuk National Circulation Manager (416) 510-6788 DIRECTORY Account Manager Mary Garufi the insurance industry’s social network Elliot Ford Print Production Manager Creighton Account Manager insBlogs Bruce Claims (416) 442-5600 ext. 3545 (416) 510-6788 Account Manager Mary Garufi President Michael Wells Phyllis Wright INSURANCEmgarufi@bizinfogroup.ca eford@canadianunderwriter.ca Manual ChristineManager Giovis Account Elliot Ford mgarufi@bizinfogroup.ca Bruce Creighton InsuranceMarketer.com Vice President DIRECTORY michael@canadianunderwriter.ca (416) 442-5600 ext. 3545 Print Production Manager christine@canadianunderwriter.ca Account Manager (416) 510-5117 President Michael Wells eford@canadianunderwriter.ca (416) 442-5600 ext. 3545 Alex Papanou (416) 510-5122 (416) 510-5114 Phyllis Wright Jim Glionna Michael Wells Insurance Blogs hosted by Canadian Underwriter Vice President michael@canadianunderwriter.ca insBlogs Print Production Manager (416) 510-5117 the insurance industry’s social network Property &INSURANCE Casualty Insurance michael@canadianunderwriter.ca Account Manager Print Production Alex VicePapanou President General Manager (416) 510-5122 Account Manager Newswire Property & Casualty InsurancePresident Newswire Phyllis Wright& Manager DIRECTORY Elliot Ford (416) 510-5122 Joe Glionna Phyllis Wright Elliot Ford Bruce Creighton insBlogs Connect with Canadian Underwriter Account Manager eford@canadianunderwriter.ca President INSURANCE eford@canadianunderwriter.ca insBlogs.com Account Manager (416) 510-5117 President Elliot Ford Bruce Creighton Vice President DIRECTORY Insurance Blogs hosted by Canadian Underwriter Connect with Canadian Underwriter (416) twitter.com/CdnUnderwriter facebook.com/CanadianUnderwriter Elliot510-5117 Ford Bruce Creighton eford@canadianunderwriter.ca Alex Papanou Insurance BlogsBlogs hosted hosted by Canadian Insurance byUnderwriter Canadian Underwriter Vice President insBlogs eford@canadianunderwriter.ca (416) 510-5117 twitter.com/CdnUnderwriter facebook.com/CanadianUnderwriter Property & Casualty Insurance Newswire Vice President Alex Papanou .ca Property & Casualty Insurance Newswire (416) 510-5117 linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter InsuranceMediaGroup.com Alex Papanou
INSURANCE – we have it covered.
Photo: Patrick Thompson
Photo: Patrick Thompson Photo:Thompson Patrick Thompson Photo: Patrick Thompson Photo: Patrick Photo: Patrick Thompson
SPECIAL FOCUS
4
astelmakowich@canadianunderwriter.ca
INSURANCE – we have it covered.
PROFILE
Cameron & Associates James Cameron, president of Insurance Cameron &Consultants Associates Limited, was recognized by the CIP Insurance Consultants Limited, 14 Leading by Example Society when he was recognized byreceived the CIPits James Cameron, president of Established Award.its 14 Leading by Society whenLeader heExample received Cameron & Associates 14ANGELA Leading by Example 12 Evolving Risks BY STELMAKOWICH James Cameron, president Established Leader Award. of Insurance Consultants Limited, James Cameron, president of Keeping commercial Cameron & Associates BY ANGELA STELMAKOWICH was recognized by the CIP Cameron Associates brokers&Consultants informed of Limited, Insurance Society when hebyreceived its Insurance Consultants Limited, emerging risks and was recognized the CIP Established Leader Award. was recognized the CIP educating MPs on its Society when new heby received BY ANGELA when STELMAKOWICH Society he protection received the consumer Established Leader Award.its Established Award. BY ANGELA STELMAKOWICH portions ofLeader the Bank Act
Senior Publisher
(416) 510-6800 (416) 510-6793 Twitter: @InsuranceMedia Associate Editor timely and relevant to providing the most news, information and highly effective marketing communications opportunities. Editor Senior Publisher (416) 510-6800 Greg Meckbach Art Director AssociateStelmakowich Editor Angela Wilson and resources to insurance professionalsSteve from all segments of gmeckbach@canadianunderwriter.ca Gerald Heydens Editor Senior Publisher Greg Meckbach
VOL. 82, NO. 11, NOVEMBER 2015 PROFILE PROFILE
14 Leading by Example James Cameron, president of 14 Leading by Example
Editor
Angela Stelmakowich Steve Wilson and resources from all segments of Editorto insurance professionalsSenior Publisher astelmakowich@canadianunderwriter.ca steve@canadianunderwriter.ca Angela Stelmakowich Steve Wilson Canadian Underwriter’s Insurance Media Group committed (416) 510-6793 marketers @InsuranceMedia the industry, providing with aTwitter: range ofis specialized
VOL. 81, NO. 2, FEBRUARY 2014
instouch.com
insBlogs Ontario
instouch.com instouch.com
Ontario
insBlogs Ontario
Insurance Blogs hosted by Canadian Underwriter
instouch.com
Ontario
insBlogs.com insBlogs
Insurance Blogs hosted by Canadian Underwriter
Connect with Canadian UnderwriterInsuranceMediaGroup.com instouch.com/group/CanadianUnderwriter Published linkd.in/CanadianUnderwriter by
insBlogs.com
insBlogs.com
www.CanadianUnderwriter.ca/MediaGroup
.ca
Insurance Blogs hosted by Canadian Underwriter Connecttwitter.com/CdnUnderwriter with Canadian Underwriter facebook.com/CanadianUnderwriter Canadian Underwriter iswww.CanadianUnderwriter.ca/MediaGroup published thirteen times yearly (monthly + the Annual Statistical Issue) by Connect with Canadian BUSINESS MEDIA INC. Underwriter Insurance BlogsNEWCOM hosted by Canadian Underwriter
facebook.com/CanadianUnderwriter InsuranceMediaGroup.com facebook.com/CanadianUnderwriter NEWCOM BUSINESS MEDIA INC.
twitter.com/CdnUnderwriter
.ca
Canadian is at thirteen 80 Valleybrook Drive,(monthly Toronto, Ontario, M3B Statistical 2S9 Canadian Underwriter Underwriter is located published times yearly + the Annual Issue) by linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter InsuranceMediaGroup.com twitter.com/CdnUnderwriter Phone: (416) 442-5600. NEWCOM BUSINESS MEDIA INC.
InsuranceMediaGroup.com
All rights reserved. Printed in Canada. contentsDrive, of this publication mayM3B not be reproduced or transmitted Canadian Underwriter is located at 80 The Valleybrook Toronto, Ontario, 2S9 linkd.in/CanadianUnderwriter Published byeither in part or in full, including photocopying instouch.com/group/CanadianUnderwriter in any form, and recording, without the written consent of the Phone: (416) 442-5600. www.CanadianUnderwriter.ca/MediaGroup linkd.in/CanadianUnderwriter instouch.com/group/CanadianUnderwriter copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted prior written consent. in any form, either in part or in full, including photocopying and recording, without the written consent of the Canadian Underwriter iswww.CanadianUnderwriter.ca/MediaGroup thirteen times yearly +a the Annual Statistical Issue) bywithout NEWCOM BUSINESS MEDIA INC. © Published monthly as apublished source news, technical information comment, and as link between copyright owner. Nor may any partofof this publication be (monthly stored inand retrieval system of aany nature NEWCOM BUSINESS MEDIA INC. all segments of the insurance industry including brokers, agents, insurance and reinsurance companies, www.CanadianUnderwriter.ca/MediaGroup prior written consent. adjusters, risk managers and consultants. Canadian Underwriter is 80 Valleybrook Drive, Toronto,and Ontario, M3B Statistical 2S9as a link Canadian Underwriter is alocated published times yearly (monthly + the Annual Issue) by © Published monthly as sourceatofthirteen news, technical information comment, and between Phone: (416) NEWCOM BUSINESS MEDIA INC. all segments of442-5600. the insurance industry including agents, insurance and reinsurance companies, Canadian Underwriter is published thirteen timesbrokers, yearly (monthly + the Annual Statistical Issue) by Privacy Notice adjusters, risk managers and consultants. All rights reserved. Printed in Canada. contentsDrive, of this publication mayM3B not be reproduced or transmitted NEWCOM BUSINESS INC. Canadian Underwriter isMEDIA located at 80 The Valleybrook Toronto, Ontario, 2S9 From toeither time we makeorour subscription available to and select companies and organizations whose of the in anytime form, in part in full, includinglist photocopying recording, without the written consent Phone: (416) 442-5600. Canadian Underwriter is located at 80 Valleybrook Drive, Toronto, Ontario, M3Bto2S9 product orowner. serviceNor may interest you. you do not wish your contact available, copyright may any part ofIfthis publication be stored in a information retrieval systembeofmade any nature without Privacy Notice Phone: (416) 442-5600. All rights reserved. Printed Canada. Themethods: contents of this publication may not be reproduced or transmitted please contact us via one ofinthe following prior written consent. From time we makeorour subscription available to and select companies and organizations whose of the in anytime form,toeither in part in full, includinglist photocopying recording, without the written consent All rights reserved. Printed in Canada. The contents of this publication may not be reproduced or transmitted Phone: 1-800-668-2374 Fax: 416-442-2191 product orowner. service may you. Ifthis youpublication do not wish your contact to beas available, © Published monthly asinterest a any source ofofnews, technical information comment, and aany link between copyright Nor may part be stored inand a information retrieval system ofmade nature without in any contact form, either inone partoforthe in following full, including photocopying and recording, without the written consent of the E-mail: jhunter@businessinformationgroup.ca please methods: all segments ofus thevia insurance industry including brokers, agents, insurance and reinsurance companies, prior written consent. copyright owner. Nor may any part of this publication be stored in a retrieval system of any nature without Mail to: Privacy Officer, 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 adjusters, risk managers and consultants. Phone: 1-800-668-2374 416-442-2191 written consent.as aFax: ©prior Published monthly source of news, technical information and comment, and as a link between E-mail: jhunter@annexnewcom.ca all segments of the insurance industry including brokers, agents, insurance and reinsurance companies, GST Registration number 890939689RT0001 Subscription Rates: 2013 Canada © Published monthly a Valleybrook source of news, technical and2S9 comment, and as a link between Mail to: Notice Privacy Officer,as80 Drive, Toronto,information Ontario, M3B Privacy adjusters, risk managers and consultants. Second Classagents, Mail Registration Number: 08840companies, 1all Year $49.95ofplus applicable industry taxes including segments the insurance brokers, insurance and reinsurance From time to time we make our subscription list available toMail select companies and organizations whose Publications Agreement #40069240 adjusters, risk managers and consultants. 2 Years $73.95 plus applicable taxes GSTwish Registration number 890939689RT0001 Subscription Rates: may 2015interest Canada you. If you do not product or service your contact information to be made available, Privacy Notice Return Canadian addresses Secondundeliverable Class Mail Registration Number:to:08840 please contact$10 us via one of thetaxes following 1 Year Copies $51.95 plus applicable Single plus applicable taxes methods: From time to time we make our subscription list available Dept. toMail select companies and organizations whose Circulation Publications Agreement #40063170 Privacy Notice 2 Years1-800-668-2374 $75.95 taxesIf you do not Phone: Fax: 416-442-2191 product or serviceplus mayapplicable interest you. wish your contact information to be made available, Elsewhere Canadian Underwriter From time to time we make our subscription list available to select companies and organizations whose Return undeliverable Canadian addresses to: E-mail: jhunter@businessinformationgroup.ca please contact us via one of the following methods: Single $10 plus taxes Drive, Toronto, Ontario 1 Year Copies $73.95 product or service may applicable interest you. If you do 80 notValleybrook wish your contact information to be made available, Circulation Dept. Mail to: Privacy Officer, 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 M3B 2S9 please 1-800-668-2374 contact us via oneFax: of the following methods: Phone: 416-442-2191 Elsewhere Canadian Underwriter Annual Statistical Issue E-mail: jhunter@annexnewcom.ca WeValleybrook acknowledge the financial support 80 Drive, Toronto, Ontario 1Phone: Year $71.95 1-800-668-2374 Fax: 416-442-2191GST (included with above subscription) Registration number 890939689RT0001 Subscription Rates: 2013 Canada Mail to: Privacy Officer, 80 Valleybrook Drive, Toronto, Ontario, M3B 2S9 of the2S9 Government of Canada through M3B jhunter@businessinformationgroup.ca or separately $38 plus applicable taxes Second Class Mail Registration Number: 08840 1E-mail: Year $49.95 plus applicable taxes Annual Statistical Issue 80 Valleybrook Drive, Toronto, the Canada Periodical Fund of the Mail to: Privacy Officer, Ontario, M3B 2S9 Publications Mail Agreement #40069240 2 Years $73.95 plus applicable taxes We acknowledge the financial support (included with above subscription) GST Registration number 890939689RT0001 Rates: 2015 CanadaService Subscription Inquiries/Customer Department of Canadian Heritage ISSN Print: 0008-5251 of the Government of Canada through Return Canadian addresses or separately $39 plus applicable taxes Secondundeliverable Class Mail Registration Number:to:08840 Bona Lao (416) 442-5600 ext 3552 1Subscription Year $51.95 plus applicable Single Copies $10 plus applicable taxes GSTCanada Registration number 890939689RT0001 Rates: 2013 Canadataxes the Periodical Fund of the ISSN Digital: 1923-3426 Circulation Dept. Publications Mail Agreement #40063170 blao@bizinfogroup.ca 21Years $75.95 plus applicable applicable taxes Second ClassofMail Registration Number: 08840 Year $49.95 plus taxes Subscription Inquiries/Customer Service Department Canadian Heritage Elsewhere Canadian Underwriter Publications Mail Agreement #40069240 Return undeliverable Canadian addresses to: ISSN Print: 0008-5251 Bona Lao (416) 442-5600 Ext. 3552 2Year Years $73.95 plus taxes Single Copies $10 plusapplicable applicable taxes 80 Valleybrook Drive, Toronto, Ontario 1 $73.95 ISSN Digital: 1923-3426 Circulation Dept. blao@annexnewcom.ca M3B 2S9 Return undeliverable Canadian addresses to: Single Copies $10 plus applicable taxes Elsewhere Canadian Underwriter Annual Statistical Issue Circulation Dept. We acknowledge the financial support 80 Valleybrook Drive, Toronto, Ontario 1 Year $71.95 (included Elsewherewith above subscription) Canadian Underwriter of the2S9 Government of Canada through M3B or1 separately $38 plus applicable taxes 80 Valleybrook Drive, Toronto, Ontario Year Statistical $73.95 Annual Issue the Canada Periodical Fund of the M3B 2S9 We acknowledge the financial support (included with above subscription) Subscription Inquiries/Customer Service Department of Canadian Heritage Annual Statistical Issue ISSN Print: 0008-5251 of the Government of Canada through or separately $39442-5600 plus applicable taxes Bona Lao (416) ext 3552 We acknowledge the financial support (included with above subscription) the Canada Periodical Fund of the ISSN Digital: 1923-3426 blao@bizinfogroup.ca of the Government of Canada through or separatelyInquiries/Customer $38 plus applicable taxes Subscription Service Department of Canadian Heritage the Canada Periodical Fund of the ISSN Print: 0008-5251 Bona Lao (416) 442-5600 Ext. 3552 Subscription Inquiries/Customer Service Department of Canadian Heritage ISSN 1923-3426 ISSNDigital: Print: 0008-5251 blao@annexnewcom.ca Bona Lao (416) 442-5600 ext 3552 ISSN Digital: 1923-3426 blao@bizinfogroup.ca
.ca
InsuranceMediaGroup.com
YOUR NATIONAL COLLISION REPAIR PARTNER CONSISTENT QUALITY AND CUSTOMER SATISFACTION NATIONAL SCHEDULING AND KPI MONITORING SYSTEMS OVER 220 COLLISION REPAIR FACILITIES COAST TO COAST
1
ST
PLACE
CANADA’S #1 NATIONAL CONSUMER BRAND IN COLLISION REPAIR*
2
ND
3
RD
4
TH
5
TH
*Top-of-mind unaided awareness levels measured via national OMNIBUS survey, w/o May 5-9, 2015. Results based on 1,532 respondents in Provinces with access to private insurance, i.e. BC, AB, ON, QC, NB, NS, PEI and NF. Results are statistically accurate within 2.5%, 19 times out of 20.
FIXAUTO.COM
FOLLOW US ON
EDITORIAL
Blast Radius
“Claims from the blasts are likely to undermine the financial performance of some regional players and those property and casualty insurers with high-risk accumulation in the affected areas.” Angela Stelmakowich Editor Canadian Underwriter astelmakowich@ canadianunderwriter.ca
6
Canadian Underwriter November 2015
It may be that it becomes the blast felt around the world. The reverberations from the August 12 explosions in China’s Port of Tianjin — believed to be the result of a warehouse fire that sparked an explosion that then triggered a massive blast — are already being felt with very quick, very real and very disquieting numbers. Among those affected are PartnerRe, which reported it is estimating related losses could be US$50 million to US$70 million pre-tax and net of retrocession and reinstatement premiums; XL Group plc, which has put its preliminary loss estimate, pretax and net of reinsurance and reinstatement premium, at US$100 million, and Zurich Insurance Group, whose preliminary estimate of aggregate loss, net of reinsurance and before tax, is about US$275 million. Allied World Assurance Company Holdings, AG, for its part, notes its US$51.6 million net loss for 2015 Q3 was driven by catastrophe and investment losses, with Tianjin a contributor to the former. To put the expected loss into context, it compares to Cat losses for the third quarter of 2014 related to Hurricane Odile, Windstorm Ela and a severe storm in Midwestern United States. Shortly following the blasts, Fitch Ratings estimated insurance losses associated with the explosions are likely to be material for Chinese insurance companies, estimated at US$1 billion
to US$1.5 billion. The resulting claims “are likely to undermine the financial performance of some regional players and those property and casualty insurers with high-risk accumulation in the affected areas.” Guy Carpenter & Company, LLC noted the explosions are set to become one of Asia’s largest insured man-made loss events, with potential losses of US$1.6 billion to US$3.3 billion. Beyond the loss of life, Guy Carpenter has noted the fireball and shock wave, among other things, blasted shipping containers, incinerated vehicles, including destroying 1,500-plus newly manufactured cars, and ruined warehouses, production facilities and dormitories. A.M. Best expected property damage claims arising from mostly commercial property policies, business interruption and vehicle loss. “Both direct and reinsurance premium rates will be hardened, and reinsurers will likely tighten their terms and conditions for large commercial risks,” it added. But it is not only the near-immediate hits reflected in financial results and loss projections that are of concern. Tianjin also offers a dramatic reminder of how a local event can affect the global supply chain — perhaps not so devastatingly illustrated since a quake and tsunami combined to bring about business interruption and supply snags felt far away. Dieter Berg, former marine
expert at Munich Re and now president of the International Union of Marine Insurance (IUMI), recently said the Tianjin catastrophe shows “the persistent growth of accumulation risks, particularly in highly industrialized regions.” Again and again, “losses are caused by human beings, particularly around industrial facilities,” Berg pointed out. “Container losses are likely to be spread among many marine cargo insurers, but motor vehicle insurance is a specialist sector and so that market is likely to be hit hard,” Nick Derrick, chairman of IUMI’s cargo committee, recently said. A study this year in planet@ risk provides a comparative analysis of the Tohoku and Katrina disasters.“Decadal trends and the best available science all clearly indicate geophysical, meteorological, biological, technological and human-induced disasters are increasing in intensity (also many in frequency), complexity (interconnected, synergistic and cascading), and uncertainty (future new events).” Citing the “cascading” nature of disasters today, “for the near future, the world will need to consider an even more complex and interconnected next generation of disasters, i.e. ‘global network’ disasters resulting from the coupling of different kinds of systems.” Eyes and ears must remain open to develop measures to avoid feeling that cascading effect. That would clearly be to the benefit of all.
It’s easy to be one of Canada’s Best Employers when you have the best employees.
At Intact, we believe Insurance is not about things. Insurance is about people. Thank you to all of our employees. They are one of our greatest strengths. What they do makes a difference – to our customers, to communities and to our business.
Intact is Canada’s largest provider of home, auto and business insurance, proudly serving over 5 million customers coast to coast. Intact design is a registered trademark of Intact Financial Corporation. © 2015 Intact Financial Corporation. All rights reserved.
MARKETPLACE
Reinsurance PROTECTION GAP AN ESTIMATED US$1.3 TRILLION Disaster risks are increasing, but insurance has not kept pace as the estimated US$1.3 trillion gap between insured and total losses remains stubbornly large, Swiss Re notes in a new report. The protection gap — the difference between economic and insured losses — remains large despite the availability of innovative insurance solutions. The increased risk is mainly the result of economic development and population growth, a higher concentration of assets in exposed areas and, increasingly, climate change. On average, only about 30% of catastrophe losses have been covered by insurance over the last 10 years, Swiss Re notes, meaning that about 70% of Cat losses have been borne by individuals, firms and governments. As a first priority, Swiss Re recommends that governments enable a functioning insurance market. Pre-event financing solutions can alleviate the remaining financial burden on governments and post-disaster financing should only come into play to cover residual losses once all other risk transfer solutions have been exhausted.
GROWING RISK OF CYBER ATTACK ON NUCLEAR INFRASTRUCTURE: STUDY The risk of a serious cyber attack on global civil nuclear infrastructure is growing, as 8
Canadian Underwriter November 2015
facilities become ever-more reliant on digital systems and make increasing use of commercial “off-the-shelf” software, suggests a new report from Chatham House. “The infrequency of cyber security incident disclosure at nuclear facilities makes it difficult to assess the true extent of the problem and may lead nuclear industry personnel to believe that there are few incidents,” the report states. “Reactive rather than proactive approaches to cyber security contribute to the possibility that a nuclear facility might not know of a cyber attack until it is already substantially under way.”
REINSURANCE INDUSTRY SHOULD BRACE FOR MORE CHALLENGES: A.M. BEST A continued benign loss environment and strong performance by select publicly traded reinsurers in the first half of 2015 resulted in a healthy increase in average share price, but positives seem to be giving way to challenges afoot in the industry, reports A.M. Best. Just three of the 18 publicly traded worldwide reinsurers had negative performance over the first half of the year. But those positives have not extended in 2015 Q3. “The market has taken a turn for the worse so far during third-quarter 2015, and returns for most companies are officially negative for the year,” states A.M. Best. “The new reality for the
reinsurance market looks to be more of an industry where returns are less impressive and underwriting will have to become a larger contributor to profits and returns, leading to more conservative risk selection, more diversification of product offerings, a wider geographic reach and conservative loss picks.”
Canadian Market ACE SHAREHOLDERS VOTE TO OKAY CHUBB ACQUISITION ACE Limited shareholders have voted to approve all proposals related to the company’s agreement to acquire The Chubb Corporation. ACE reported that votes in favour of each agenda item exceeded 98% of the total represented and cast. The matters approved included the proposal to change the company’s name to Chubb Limited following completion of the transaction. The transaction, expected to close in 2016 Q1, remains subject to regulatory reviews and approvals and other customary closing conditions.
FOUR SHAREHOLDERS TAKE OVER QUEBEC INSURANCE BROKERS NETWORK Intergroupe Assurances, which specializes in personal, commercial and life insurance and financial services, has announced it is being taken over by a quartet of well-established shareholders in the industry.
Founded in 1996 by five brokerage firms, Intergroupe Assurances now has 20-plus employees, 70 member firms and a total premium volume of more than $600 million. Its annual turnover nears $700 million collectively with its members, representing almost a 20% share of Quebec’s insurance market. Sylvain Racine, Louis Cyr, Christian Foisy and Bernard Laporte, who will serve as the new president, recently took the reins of Intergroupe Assurances. They will work towards modernizing the business process, opening up new markets and offering a wider selection of products.
ACE GROUP LAUNCHES GLOBAL CYBER FACILITY ACE Group has announced it is launching its Global Cyber Facility, providing as much as US$100 million of primary capacity. ACE announced the facility, which is available in Canada, “goes beyond standard risk transfer by incorporating a comprehensive risk management solution into a single policy purchase.” The company cites analysts who forecast a 150% rise in cyber security insurance demand over the next five years.
Regulation HAIL-RESISTANT ROOFING SHOULD BE ADDED TO BUILDING CODES: ICLR More needs to be done to address insured losses from hail, Glenn McGillivray,
MARKETPLACE
managing director of the Institute for Catastrophic Loss Reduction, suggested at a recent AIR Worldwide event in downtown Toronto. Showing attendees a list of large hail events in Canada, McGillivray noted that three of those storms in Alberta (2010, 2012 and 2014) caused a combined total of $1.72 billion in damages. “We really need to concentrate on roofing, because that’s where a lot of the damage (from hail) is coming from, and that’s where we have the most knowledge,” he said. “We have to push for impact resistance in building codes, particularly getting Class 4 asphalt shingles put in the building codes, especially for high-risk hail areas.”
NEW OPTIONS TO ELIMINATE DEDUCTIBLES FOR VICTIMS OF VEHICLE VANDALISM
INSURED DAMAGES FROM B.C. STORM PEGGED AT MORE THAN $25 MILLION
Manitoba Public Insurance (MPI) has announced people who insure their vehicles with an Autopac Extension deductible package of $100 or $200 will qualify to have the deductible reduced to $0 for vandalism claims. The change took effect in early October. In 2014, about 10,000 such vandalism claims were opened with MPI, with an average cost per claim of about $1,300. This policy change will result in a rate adjustment of $3 to $5 annually, expected to apply to policy renewals and reassessments, effective March 1, 2016 or later.
Insured damage arising from a windstorm August 29 that swept through southern British Columbia could exceed $25 million. “The storm affected Metro Vancouver and surrounding areas, bringing rain and strong winds that toppled fences, trees and power lines, and left hundreds of thousands without power,” reports Insurance Bureau of Canada, citing figures from Catastrophe Indices and Quantification Inc. The storm also closed businesses and attractions.
SASKATCHEWAN APPROVES CHANGES TO AUTO INJURY COVERAGE PROGRAMS
Claims
Saskatchewan has approved several recommendations put forward by Saskatchewan Government Insurance (SGI) for changes to its auto injury coverage programs. Changes include improving the insurer’s tort and no-fault programs to better meet the needs of customers by providing improved benefits for the most seriously injured, closing gaps in coverage for those involved in auto collisions, making changes to help keep coverage affordable and addressing inconsistencies in coverage. The changes follow consultation with, and input from, stakeholders and groups in 2014 and early 2015.
LOSSES FROM DROUGHT CONDITIONS COULD EXCEED US$1 BILLION Drought conditions across western Canada in September were expected to cost Alberta’s Agriculture Financial Services Corporation between $700 million and $900 million, Impact Forecasting reported in early October. This corresponds to an economic loss exceeding US$1 billion on a national basis, states the firm’s Cat recap report for September. Drought conditions continued to intensify across western Canada in September, with Alberta being particularly affected, the report notes.
insurance levels that are explicitly linked to risk.
Technology SOME ALBERTANS WANT TO MANAGE THEIR AUTO INSURANCE ONLINE Almost half of surveyed Albertans do not fully understand all aspects of their auto insurance policy and about one-third want to manage their insurance online, note findings of a poll sponsored by Esurance. More than half of Albertans surveyed are already leveraging the Internet to shop for auto insurance, but there is a gap between shopping for a quote and being able to fully manage insurance online, since the service has not been widely available.
Risk POLLUTION PROBLEMS TO PERSIST IN WAKE OF LAC-MÉGANTIC INCIDENT
ONTARIO PLANS TO TEST AUTOMATED VEHICLES
Pollution problems from the 2013 fatal railway derailment in Lac-Mégantic, Quebec will persist for years, Don Mustard, a senior investigator with the Transportation Safety Board of Canada, recently said during an event in Toronto. “In this case, we had six million litres of product released, million of litres ended up in the river, ended up in the lake,” Mustard said. “We’re still going to be seeing for years problems related to this particular release.” On June 18, the Safe and Accountable Rail Act was passed into law. Among other things, it establishes minimum mandatory
Ontario has announced it is launching a new pilot program to allow for the testing of automated vehicles on roads in the province. The pilot will enable about 100 companies and institutions involved in the connected vehicle and automated vehicle industry in the province to conduct research and development in Ontario rather than in competing jurisdictions, reports the transportation ministry. The Institute of Electrical and Electronics Engineers forecasts that by 2040, autonomous vehicles will account for 75% of all vehicles on the road.
November 2015 Canadian Underwriter
9
Articles:1996 – 1997
Advertisements:1989 – 1990
PROFILE
Evolving Risks Greg Meckbach Associate Editor
Keeping commercial brokers informed of emerging risks and educating new MPs on the Bank Act are key priorities for Sean Duggan, incoming president of the Toronto Insurance Conference. The threat of “systemic loss” from cyber events, the disruptive effects of emerging technologies and consumer protections in Canada’s Bank Act are all top of mind for Sean Duggan, current vice president and incoming president of the Toronto Insurance Conference (TIC). “We are seeing a shift happening where companies are becoming increasingly concerned about their intangible risk, which is the cyber and data security piece,” reports Duggan, who has been a commercial broker for 17 years. Tangible risks include fire, flood, earthquake and windstorm, he says. Duggan is scheduled to become president of TIC, an association of Ontario commercial brokers, next March, taking the reins from 12 Canadian Underwriter November 2015
Philomena Comerford. Currently vice president, partner and practice leader for clean tech, technology and life sciences for Hub International HKMB, Duggan is well-aware that a cyber breach can lead to a systemic loss. “One of the key concerns for a lot of our clients is, what is the impact of a cyber event on a business’s reputation and our brand?” Beyond concerns related to reputational harm, business interruption and loss of customers, cyber events can also give rise to “statutory notification costs,” Duggan says. “So you have the impact of direct costs to the business because of that loss, and then you may be sued.” But cyber is not the only issue receiving a lot of notice from commercial brokers nowadays. Another important issue, says Duggan, relates to the “accelerated rate of change.” Whether emerging technologies or business models such as autonomous vehicles, big data, the sharing economy, cyber risk, drones or the Internet of Things, “these are all having disruptive effects on many businesses and industries for which brokers need to adapt and proactively risk manage in order protect their clients.”
INFORMING BROKERS Keeping commercial brokers informed on new and emerging issues will be
among Duggan’s goals as TIC president. Of course, there are also perennial concerns that will also receive plenty of attention. One such issue revolves around the difficulty of renewing coverage in the event of an emergency — such as a pandemic, earthquake or severe weather — that interferes with business operations. TIC has been working on getting all insurers to adopt the declaration of emergency endorsement that Insurance Bureau of Canada approved in 2009. The endorsement is
With the Bank Act, TIC plans to redouble its efforts to ensure “new MPs understand what the implications are.” intended to extend the term of an expiring policy — or suspend the notice period for a pending cancellation — and to continue charging premiums on a pro-rated basis should an emergency be declared. At its heart, the endorsement is intended to apply if a declared emergency prevents insurers, brokers or clients from conducting business, such as binding coverage, processing documents, confirming new terms or remitting premiums. It is
also meant to protect brokers from errors and omissions exposure. It was “difficult to get 100% buy-in to adopt that endorsement,” Comerford told attendees during the Insurance Brokers Association of Ontario’s annual convention in October. “We were hopeful that it would be adopted on a blanket basis and I think we are making some headway in engaging with the insurance companies,” Duggan reports. “More of them seem to be open to the idea of adding that endorsement on behalf of their clients, but.... like most things in the industry, it’s incremental change. It’s essentially a new coverage and a new risk that commercial insurers are now entertaining covering.” In the wake of the October 19 federal election, another TIC priority in the coming year will be to approach new Members of Parliament and inform them about consumer protections contained in the Bank Act, set to undergo its five-year review in 2017. While Canadian banks are authorized to sell eight lines of insurance, such as creditors’ disability, mortgage and travel, they are essentially prohibited from selling either property or auto from their branches and cannot provide links from their websites to other web pages through which these coverages are sold. Insurance Brokers Association
PROFILE
One client, he reports, “started as a computer software and network equipment company, and it eventually morphed into a smart grid company because they saw the emerging opportunity.”
Photo: Patrick Thompson
LEARNING THE ROPES
of Canada (IBAC) and other brokers associations contend financial institutions should not be selling insurance at the point of credit. “Given the changeover in the government, I think that the discussions around the Bank Act are particularly important,” says Duggan. “It’s a consumer protection issue, and now we are going to have to redouble our efforts to make sure that our new MPs understand what the implications are.”
WELCOME FALL Originally from the Toronto area, Duggan studied political science at York University, graduating with a Bachelor of Arts in 1992. “I couldn’t decide between continuing my studies, pre-law or beginning a new career,” he says. “Like many of my peers, I fell into insur-
ance out of university.” That welcome fall was thanks to his sister, Patricia, who worked in marine claims for William H. McGee & Co. Inc. “She suggested to me, ‘Why don’t you come to our firm and intern as a summer student, get some exposure to the industry and see what it’s all about, and you may decide that you want to make a career out of it?’” So Duggan did, working at the managing general agent for a summer. “I really enjoyed the work and the people there, learning more about the industry.” In 1993, he joined Guardian Insurance, working as a commercial underwriter for about four years. He attained his Certified Insurance Professional (CIP) designation in 1994, and his Certified Risk Management (CRM) designation three
years later in 1997. The following year, Duggan joined Hunter Rowell, which later merged to become Hunter Keilty Muntz & Beatty (HKMB), which, in turn, was acquired by Hub in 2008. In the meantime, Duggan completed York University’s Schulich Executive Management program in 2002 and became a Hub International HKMB shareholder in 2003. Duggan says his clients face a variety of risks, including supply chain, intellectual property and warranty coverage. Noting there are many subsets of clean tech and clean energy, he says “it’s everything from solar power, wind farms to smart grid and process efficiency solutions — using less energy, using less water, creating less waste, as well as energy storage.”
One of his co-workers at Hub International HKMB, vice president and partner Michael Boire, served as TIC president in 2010. Boire “made me aware of some of the important and evolving issues our industry peers and partners address” through TIC, and the important advocacy role it plays. So in 2012, Duggan joined the TIC board and currently represents the association on IBAC’s Broker Identity Program (BIP) committee. While at TIC, Duggan says he has had the chance to work with industry leaders for whom he has a great deal of respect, including Comerford, Brooke Hunter, Jack Lee and Robert Harrison. But learning is always best when passed along, he says, citing TIC’s scholarship fund, now in its third year, for relatives of TIC brokers, partners and staff. “It’s nice to work with and offer a merited helping hand to the next generation of peers coming up, and promote the message that the commercial broker profession is a career of choice and influence to benefit businesses and consumers,” Duggan adds.
November 2015 Canadian Underwriter
13
Insuring Black Holes Governments and (re)insurers need to better collaborate to leverage the industry’s risk management expertise and access to capital to lighten the financial burden placed on taxpayers as a result of natural catastrophes.
Senior Vice President, Guy Carpenter
Glenn McGillivray
Managing Director, Institute for Catastrophic Loss Reduction
14 Canadian Underwriter November 2015
difficult to plan and budget, primarily because the past is not always a good indicator of what can be expected in the immediate future or in the next budget period. These challenging areas have been referred to by some as financial black holes because of their tendency to not only exceed the original budget, but to do so by multiples rather than incrementally. The various agriculture ministries in Canada, for example, have relevant real-world experience with such black holes.
MANAGING BLACK HOLES: A CASE STUDY Prior to implementation of the current crop insurance system in Canada, these ministries recognized that they would have to make large ad hoc payments to distressed farm producers from time to time. It is inevitable that given enough time, the next drought or extreme weather event will occur, causing financial hardship. The challenge in these scenarios is that it is not possible to know when, or how much, ad hoc funding will be required. Budgeting for the worst case is clearly inefficient (and is seldom financially or politically possible), while budgeting anything less than the worst case guarantees that ad hoc supplements will be required at some
Illustration by Guy Parsons/threeinabox.com
Joseph Brandonisio
When there is a catastrophic loss, such as a natural disaster, taxpayers are generally left to cover a substantial portion of the associated costs. Not only must they pay the deductible for their own insured property damage and pay out-of-pocket for any uninsured damage, but their tax dollars must also go towards paying for first response, evacuation costs, damage to public infrastructure, overtime expenses for government and/or public utility employees, and overall government disaster assistance. It is generally a falsehood that disaster loss costs are paid out of several different pockets (both public and private) as, ultimately, all pockets essentially have the same funder — the taxpayer. The costs associated with repair or replacement of public infrastructure can be quite high, and insurance, if it is in place, does not cover 100% of the loss. Indeed, when experts speak of the ”coverage gap” — which is the generally identifiable and quantifiable divide that exists between insured and uninsured damage caused by an event — they often note that uninsured or underinsured damage to public infrastructure is one of the main contributors. In addition to the coverage gap, there are certain areas of government finance that are particularly
Water is beautiful. Until it isn’t.
Heavy rains
Spring run-off
Overflow from lakes and rivers
avivapartner.ca Insurance | Home | Auto | Leisure & Lifestyle | Business | Surety
Aviva, proud Canadian partner to over 1700 independent brokers from coast to coast Aviva and the Aviva logo are trademarks used under license by the licensor.
MC-15-1130Cdn UW - OWE ad revised.indd 1
2015-10-29 2:14 PM
point. In either case, the difference, ultimately, trickles down to the general population where taxpayers eventually fund the balance. This is the real issue. With these challenges in mind, an intelligent crop insurance scheme was developed to properly fund the inherent volatility in the exposure being assumed by the federal and provincial governments. The crop insurance scheme is essentially a user-pay system, with costs shared with government. The program absorbs peak loss activity while insulating governments from extreme losses. The crop insurers, in turn, use reinsurance to manage the risk in their own portfolios. Taxpayers are protected from the risk of crop failure when substantial losses are funded by the government. Budget deficits and tax increases may be the outcome. The crop insurance scheme is a reasonable solution that insulates the tax base from unfriendly budget volatility. The California Earthquake Authority and various wind pools in the United States are comparable examples of insurance plans that accomplish the same objective while providing a social benefit.
WANTED: A PARADIGM SHIFT Not every government exposure or program requires an insurance scheme serving tens of thousands of policyholders and, in fact, most do not. The crop insurance model has merit, but is limited in its application. Fortunately, many of the existing black holes are more suited to customized one-off (re)insurance solutions. Examples include the following: • snow removal costs; • debris removal costs (such as tree removal after ice storms and bulk trash removal after basement flooding events); • overtime payment costs (such as city forestry and hydro crews after an ice storm); and • wildfire suppression costs. These cases present many challenges to those in charge of setting government budgets, as all frequently prove to be 16 Canadian Underwriter November 2015
quite volatile, ensuring that there is often great variation in year-over-year costs. The 2015 North American wildfire season is the most recent example of how budgets can be exceeded by multiples. British Columbia, Alberta and Saskatchewan exceeded their respective wildfire suppression budgets this year. Other examples are the severe winter weather conditions in 2015 that presented substantial financial challenges to a number of North American cities.
is only possible to estimate how many other comparable coverages have actually been put in place. The general impression is that there are just a few live transactions, leaving observers to ask why the opportunity to insure these exposures are not acted on more often. Followers of risk finance would largely agree that (re)insurance or some form of risk mitigation can be used to manage unwanted volatility within government finances. Tools used to manage such risks may include the following: • insurance; • traditional reinsurance; • non-traditional reinsurance - catastrophe bonds - other index-linked securities - parametric covers; and • other capital markets solutions. Yet governments typically do not leverage the options that are available to them, perhaps because of a reluctance to deal with the up-front costs of implementing the solution.
MEETING HALFWAY In each of these cases, it is possible to risk manage budget variability with the use of insurance and reinsurance coverage. The reinsurance industry, in particular, is well-positioned to apply intellectual and financial resources to developing customized products, in contrast to the insurance industry, which tends to be more focused on mass retailing.
USING (RE)INSURERS’ IMAGINATIONS Considering the many ways that reinsurance or financial engineering tools might be used by governments to reduce black hole volatility, the list of actual uses in Canada is quite short. Wildfire suppression cost coverage purchased by the Province of Alberta on a pilot basis several years ago may be the best known case of using private reinsurance to help a government manage volatility. But since there are no publicly available records of such purchases, it
Research indicates that while private citizens tend to be risk averse (and, therefore, purchase insurance to ensure a soft landing if a loss occurs), governments tend to be risk neutral, not insuring their assets or insuring only certain asset classes and, usually, paying for losses directly out of public coffers. This is particularly true as public entities increase in size. Municipalities, especially small ones, often, at least partially, insure while more senior levels of government tend not to do so. Some governments are showing a desire to get away from this model, as paying for increasingly costly events makes it challenging to finance projects and/or balance the books. Consider the June 2013 southern Alberta flood. The event required the federal government to direct a reported $2.8 billion to Alberta for disaster assistance, a substantial unbudgeted funding amount. At the time of the disaster, the federal government entered a period of austerity with planned budget cuts.
Likely as a direct result of this unplanned outlay, the federal government subsequently altered the Disaster Financial Assistance Arrangements (DFAAs) with the provinces and territories. A key amendment to the DFAAs included changing the initial threshold of $1 per capita of an affected province’s population to $3 per capita, effective February 1, 2015. Additionally, the next two levels of eligible expenditures were changed from $2 per capita to $6 per capita. The change means that provinces or territories impacted by a significant loss event will now have to absorb significantly more of the costs going forward. Aside from questions regarding risk aversion versus risk neutrality, it appears that most governments are not used to thinking in terms of mitigating risk beyond traditional property/casualty coverages. Some large corporations operate the same way. However, corporations are risking their own equity while governments are dealing with public funds.
Conversely, (re)insurers may need to shift their focus towards dedicated problem-solving and away from the historical business model that tends to emphasize product distribution. The opportunity to help governments manage and temper expenses associated with large single losses or typical ongoing budget volatility does not fit the existing business template. That said, there are examples around the world where private (re)insurers work well with governments in the creation of very innovative risk transfer programs. There is not a long tradition of such collaboration in Canada, but this could easily change.
CONCLUSION With governments at all levels showing a desire to get out of the business of financing volatile losses — both those associated with large single loss events like natural disasters and those related to normal, run-of-the-mill budget vola-
tility — government officials need to be open to taking advantage of the capital strength and expertise of the (re)insurance industry in order to lighten the financial burden placed on taxpayers. The (re)insurance industry has a responsibility to work with all levels of government to develop solutions for sharing and transferring public risk. This needs to happen within the budgetary systems in which all governments exist. Smoothing volatility is a shared objective. However, the mechanics may need to be more innovative to address the unique financial needs of governments. This is an imperative as the pressure is on for governments to manage expenditures while also maintaining or improving services to constituents, investing in public infrastructure and performing other tasks typically associated with government responsibility. For (re)insurers, it is a natural opening to grow organically in a challenging environment.
November 2015 Canadian Underwriter 17
41st Annual Risk and Insurance Management Society (RIMS) Canada Conference Quebec City
Risk Remedies
Risk management can be a risky venture if those involved are not well-aware of evolving and emerging risks. Learning, adapting and responding based on knowledge provides the prescription needed to deal with a risk landscape that is changing quickly and showing no signs of slowing down in the future. Angela Stelmakowich Editor
Those interested in how best to manage risk flocked to Quebec City this year for the RIMS Canada Conference, held September 27 to 30. Attendees were provided a view of top-of-mind issues ranging from cyber attacks to drones, floods, earthquakes, ice storms and more.
DEMAND FOR CYBER INSURANCE INCREASING Companies in Canada are warming to cyber insurance — with more and more organizations expected to obtain coverage over the next few years — but these same companies also need to ensure their exposure ducks are all in a row. “You have to consider cyber liability exposure, even if you choose not to risk transfer and purchase insurance for that,” Lynn Oldfield, president and chief executive officer of AIG Canada, said during a panel discussion at Panorama: RIMS Canada Conference 2015, held September 27 to 30 in Quebec City. “You absolutely have to go through the due diligence process for your firm,” Oldfield em-
18 Canadian Underwriter November 2015
phasized, suggesting that just doing so brings with it value and information that will likely prove of use should an organization decide to move forward with purchasing coverage. Robert Dunn, chairman and managing principal of Integro Canada Ltd., said his company is seeing a bit of cyber insurance coverage being purchased, but it is also “making an awful lot of presentations.” Dunn’s prediction? “I would say that over the next two or three years, we probably will get 75% of the people buying coverage. It’s just becoming a lot more common.” People need to understand the potential impact of cyber events and take steps to address related risks, he argued. “Whether a small or a big organization, it can be disastrous to your organization, not just from a financial point of view, but also from a reputational point of view.” At AIG, “we’re having a claim reported on 50% of the policies that were purchased in Canada,” Oldfield reported. “I would encourage you to go through the (application) process,” which she called well worth the effort.
Maps from the 1970s and 1980s are “too old, not only because the climate’s changing, but actually in these days, more importantly, it’s the development,” Gritzo said. Development changes the profile of the flood terrain and with paving, water does not return to the soil. Rick Roberts, RIMS president and director of risk management and employee benefits for Ensign-Bickford Industries, told attendees that going through the process of reviewing possible cyber threats helps identify any gaps, which, in turn, helps guide response.
UPDATED FLOOD MAPS VITAL It is critically important to have good flood maps in the wake of the changing climate, Louis Gritzo, vice president and manager of research at FM Global, suggested during the recent RIMS Canada Conference. “Flood mapping across the world and even across Canada sometimes is spotty,” Gritzo said. “The coverage is not as good as it should be; those maps are not up to date,” he reported, emphasizing that “maps being up to date is vital.” Maps from the 1970s and 1980s are “too old, not only because the climate’s changing, but actually in these days, more importantly, it’s the development,” Gritzo said. Development changes the profile of the flood terrain and with paving, water does not return to the soil, but, rather runs along the pavement to somewhere else. “The good side of this is there’s a geospatial data revolution. There’s much better geospatial data for precipitation, for topography, all the things that you need to build a flood map from satellite data are becoming more available,” he told conference attendees. This provides risk professionals with “an opportunity to know this hazard better than you ever have before.” If there is a flood and lot of surface water develops, “you have to have a plan of how to deal with it and exercise that 20 Canadian Underwriter November 2015
plan,” Gritzo said. One thing that insurance and risk professionals “can expect is more volatility, that the extremes are going to become more pronounced.” Climate change is happening slowly, Gritzo said. As such, it is important that insurance and risk management professionals be as informed and prepared as possible to avoid having climate change “sneak up on us,” he advised. “Whether it’s Manitoba, Ontario, Quebec, the economic impact of Thailand, or even the pesky surface water, flash flooding’s that often not covered in insurance policies in Canada,” he noted, “there’s going to be more flooding.”
VOLCANOES PART OF THE NAT-CAT MIX? A mix of natural disasters that are both familiar and less familiar to Canadians, including volcanoes, must be considered as a whole when trying to determine what events can result in potentially high insurable losses. John Stix, a professor in the Department of Earth and Planetary Sciences at McGill University, suggested to attendees of the RIMS Canada Conference that they consider the volcano eruption five years ago in Iceland. “This was a very puny eruption and yet it generated huge losses worldwide because the whole North Atlantic and European air sectors were shut down for days,” Stix said. “It just so happened that this volcano and the combination of atmospheric winds at the time made for a very efficient dispersion of ash across the North Atlantic into European airspace,” he explained. Because the aviation sector “did not know how to deal with relatively small
levels of volcanic ash in the atmosphere,” Stix pointed out, it took the industry some time to determine how best to handle conditions. Questions about how long aircraft can fly in an eruption column and how long it takes for an aircraft engine to be damaged need to be answered, he said. In North America, candidates most vulnerable and most susceptible to volcanic eruptions occurring are along the Cascadia subduction zone — home to a magnitude 9 earthquake in 1700 — which runs about midway through Vancouver Island along the Pacific coast to northern California, he said. That is “where the subduction zone is, where there’s active volcanoes, volcanoes which might erupt explosively, producing significant amounts of ash,” Stix noted. “Depending on the direction of the ash, the duration of the eruption and so forth, there may be a significant effect for Canada and the U.S.”
MORE CONSOLIDATION ANTICIPATED A number of persistent conditions are expected to drive more consolidation in the primary and reinsurance sectors, Maurice Greenberg, president and chief executive officer of C.V. Starr & Co. Inc. said during a luncheon address via video link from New York City to attendees of the RIMS Canada Conference. Emphasizing it takes discipline to run an insurance company successfully in today’s environment, Greenberg noted that current pressures include the continuing low interest rates, a strong U.S. dollar and excess capacity. Of course, all mergers carry risks, he said, so adopting an overall view is key.
LOWER OIL PRICES CAN UP P&C DEMAND The negatives that come with depressed oil prices also bring with them a few positives for Canada’s property and casualty insurance industry, Ulrich Kadow, chief agent, Canada for Allianz Global Corporate & Specialty (AGCS) Americas, told Canadian Underwriter in advance of the RIMS Canada Conference. “While the energy sector is going through difficult times, there are also some positive effects from lower oil prices and the correlated strong U.S. dollar in other sectors,” Kadow said. He cited as one example that “manufacturing companies with strong U.S. exports could benefit from falling production costs and rising exports — and so, this could have a positive effect on demand for property and casualty coverage.” With regard to cyber, his company has heard from many clients about firstparty damage — in particular, business interruption risks, resulting from a cyber loss — as a primary concern beyond privacy issues and data loss. “There’s a desire to see more products and capacity suited to this risk,” Kadow said.
LACK OF UNDERSTANDING AROUND DRONES The expanding interest in drones means that many companies and industries are considering their use, but some of these companies will also be engaged in an aviation activity for the first time ever, reports a new white paper from Zurich Insurance Company Ltd. The newness for many potential entrants means it is essential these companies have a firm grasp of associated risks before jumping in since many will likely be operating outside of their core competencies, notes the paper, released during the RIMS Canada Conference. Urs Uhlmann, chief executive officer, global corporate for Zurich Canada, noted that the initial lack of competency may, in fact, be the overarching risk with respect to drones and those looking to capitalize on their use. Uhlmann cited “a lack of understanding that operating a drone is a serious
aviation activity, which requires training, staffing and operational procedures that may lie outside an organization’s core competencies.” At the current rate of development, the Teal Group projects global spending on drones will represent US$91 billion by 2024, largely driven by civil and commercial use, the paper states. “Operators are frequently ignorant of regulations or ignore them, and, unlike manned aircraft pilots, they lack training. A technology failure, system hack or operator error could easily cause a drone to collide with other aircraft, fall and injure people or damage property,” the paper cautions.
INFORMATION MOST VULNERABLE IN TRANSIT Being in transit can be risky when it comes to information, suggested Brian Huntley, senior information security advisor for IDT911 Consulting. “Information is especially at risk of breach when it is in transit on public networks, and when it is shared with third parties, such as vendors, service providers and resellers,” Huntley told Canadian Underwriter in advance of speaking at the RIMS Canada Conference. To ensure the ongoing effectiveness of strict security protocols, Huntley recommended that every organization should continuously monitor and test its effectiveness to keep pace with the ever-changing risk profile that is being shaped by “the continually shifting threat spectrum and significant technology change.” All this effort, however, will only lead to true protection if both a company and the third-party providers it uses are on the same page. Huntley emphasized that it is essential a company have in place rigorous due diligence processes to pre-qualify and continuously verify the security protocols employed by third-party vendors, service providers and resellers. But security is about more than systems and agreements. There is also the human side of the equation. “Systems breach tactics increasingly
target the human factor as the weakest link in the security protocol chain, as a means to enable placement of information theft-enabling technology, and as a means to establish apparent trust accreditation for nefarious activities.” Huntley said his expectation is “pureplay technical attacks will continue descendency in direct response to the development and market availability of effective technical preventive controls embedded in security technologies and network equipment.”
LOSSES FROM URBAN ICE STORMS COULD BE IN THE BILLIONS Ice storms may not have been on the radars of some reinsurance companies in 1998 — when Canada experienced what has become its second largest natural disaster insured loss — but planning for such events is key, John Gyakum, chair of McGill University’s Department of Atmospheric and Oceanic Sciences, said at the RIMS Canada Conference. Gyakum pointed to recent ice storms that have included a 20-day event in China and a five-day event in Slovenia. Ice storms are among natural disasters that could lead to tens of millions of dollars in losses, he told attendees of the conference. Gyakum noted that ice storms really are “one of the most devastating of winter weather hazards,” which can bring communities to a standstill because of the truly “devastating impact on power infrastructure.” The potential impact of an ice storm relates not solely to the intensity of precipitation, he pointed out, but also to duration and persistence. In 1998, Gyakum said, losses from ice storms were about one order of magnitude lower than those associated with hurricanes. As such, ice storms may not have been on reinsurance companies’ radars back then, he noted. However, the possibility of having longer ice storms, such as the recent events in China and Slovenia, “juxtaposed upon metropolitan areas, we could run into potential losses of tens of billions of dollars,” he cautioned. November 2015 Canadian Underwriter 21
Supply Teach
Sean van Zyl
Freelance Writer
More and more Canadian enterprises are becoming involved in procurement and outsourcing activities as a means of reducing operational costs and boosting shareholder returns. Consider these figures from the national office of the Supply Chain Management Association (SCMA), Canada and data collected by Statistics Canada: the annual value of goods imported up to August 2015 — including manufacturing and retail, which combined are considered foreign supply chain goods — amounted to roughly $550 billion. Notably, this volume, as reflected in dollar terms, rose by 25% year-on-year for the same period in 2014. It suggests Canadian enterprises are becoming more reliant on procurement of foreign goods, whether “finished” or “unfinished” in terms of raw materials, components and part-assembly. In most instances, the foreign countries involved are third-world economies or so-called emerging and fast-growing markets, where bribes to “oil the wheels” of commerce are not uncommon. In fact, the “best practices” applied within these countries can conflict with the anti-bribery and corruption standards set in Canada, the United States and other first-world nations. A report from PricewaterhouseCoopers (PwC), Bribery and Corruption: The Impact of the Canadian Corruption of Foreign Public Officials Act on You, shows a marked increase in related prosecutions both in
22 Canadian Underwriter November 2015
Canada and the U.S. PwC reports the watchdogs for the U.S.’s Foreign Corrupt Practises Act (FCPA) — namely, the Securities Exchange Commission (SEC) and the Department of Justice (DOJ) — presented 48 prosecutions in 2010 versus two actions in 2004; the RCMP has conducted 34 non-compliance investigations under Canada’s Corruption of Foreign Public Officials Act (CFPOA) since 2012 compared with little prior activity. RCMP reports to Canadian Underwriter that, so far, there have been four successful prosecutions with another two charges before the courts. The FCPA and the CFPOA have the same authority within their jurisdictions, says Ray Haywood, who, based in Toronto, leads PwC’s Intelligence Screening Services. Most importantly, Haywood observes, the laws in question not only provide for prosecution of companies as entities, but also their Boards of Directors (BoDs) and, possibly, shareholders. The PwC report notes that under the CFPOA, penalties for anti-bribery (giving a bribe to a foreign public official) are an unlimited fine for corporations and up to five years imprisonment for individuals. Under the FCPA, penalties are up to US$2 million for corporations and a fine of US$100,000 and as much as five years imprisonment for individuals. The regulators are placing pressure on corpo-
Illustration by Guy Parsons/threeinabox.com
The increase in Canadian enterprises engaged in foreign supply chain procurement has attracted the attention of authorities in pursuing prosecutions under foreign anti-bribery and corruption laws. Are Canadian enterprises and their Boards of Directors aware of the heightened risk associated with these foreign dealings?
BURNS &
CONQUER THE HARDTO-PLACE
WILCOX
EXPERTISE IS OUR MIDDLE NAME. With our global expertise, you have the right solutions for all your hard-to-place risks. Ensure your success every time with Burns & Wilcox Canada.
888.591.9125 | burnsandwilcox.ca Commercial | Professional | Personal | Wholesale | Binding | Risk Management Services
38529 Burns Canada MiddleName 2 Ads Canadian Underwriter APPROVED.indd 2
10/8/15 10:14 AM
BURNS &
CONQUER THE HARDTO-PLACE
WILCOX
EXPERTISE IS OUR MIDDLE NAME. With our global expertise, you have the right solutions for all your hard-to-place risks. Ensure your success every time with Burns & Wilcox Canada.
888.591.9125 | burnsandwilcox.ca Commercial | Professional | Personal | Wholesale | Binding | Risk Management Services
rate boards to enforce the notion that management and responsibility of foreign supply chains should lead from the top to the bottom of the organization, Haywood says. In this regard, the overseers are pushing enterprises to adopt the same level of corporate governance in terms of oversight, compliance and transparency within their organizations to a broader level of accountability, he adds. “Effectively, what they [the regulators] are saying is that companies need to expand their enterprise-wide risk management protocols to include the ‘wider enterprise’ such as foreign supply chain sources,” Haywood notes.
LEGAL TRENDS “It’s no coincidence that the dramatic uptick in SEC/DOJ prosecutions under the FCPA occurred in 2010,” says Haywood. “This corresponds with the introduction of the Dodd-Frank Act,” meant to better regulate oversight of the financial service sectors. “The regulators are now applying pressure on all enterprises to implement this level of corporate governance internally and externally,” he says. Embedded within the Dodd-Frank Act is the “Conflict Minerals Rule,” which has been applied by the U.S. regulators of suppliers of so-called “3TG minerals,” which include tin, tantalum, tungsten and gold. The legal bureaucracy and delays in securing access to these minerals by industries ranging from electronics to healthcare led to several lawsuits being launched against the SEC. Notably, the Canadian government introduced the Extractive Sector Transparency Measures Act this past June, effectively aligning with the foreign mineral disclosure requirements under the Dodd-Frank Act. This legislation impacts companies engaged in the oil and gas, and minerals sectors in terms of disclosure of payments made to foreign sources. The RCMP does not perform oversight of the anti-bribery and corruption laws, but did establish two anti-corruption units in 2008 that work on a “caseby-case” basis with provincial and international security agencies. “Corruption 24 Canadian Underwriter November 2015
can have significant repercussions on business transactions and international relations and, thus, are treated with the utmost confidence,” the RCMP adds.
CORPORATE AWARENESS Are directors of Canadian enterprises engaged in foreign supply chain procurement aware of the liability dangers they may face? “I don’t think there is sufficient knowledge among Canadian companies of the potential ramifications. However, some companies are now drawing a hard line in the sand. I think the situation with regard to compliance is improving,” suggests Arthur Hamilton, a partner at Cassels Brock. The devil in the mix, Hamilton says, is how a Canadian enterprise applies appropriate corporate governance measures as set by Canadian regulations across an
international supply chain that could extend several levels down from the first party in the chain. There is also the potential of conflict with the regulations applied in emerging economies in that they simply do not apply the same level of compliance, he comments. While there is growing awareness of the liability exposures Canadian firms face as a result of foreign supply chain, Haywood expects that the issue will attract more attention in the future. At the moment, regulators have been involved with high-visibility cases that attract media attention and, thus, increase awareness at the BoD level, he says. Peter DaSilva, chief executive officer of Cornerstone Insurance Brokers, says he believes there is broad awareness of anti-corruption laws among Canadian enterprises, but questions if they have adequately applied the necessary oversight in terms of monitoring and audit process across their supply chains.
DaSilva notes the cost associated with foreign supply chain management is not restricted to liability, but includes property and reputational risk. “By far, the greatest financial impact is reputational risk linked to a company’s name or brand, which could run the company into bankruptcy,” he contends. The rapid response by Loblaws/Joe Fresh to the 2013 building collapse in Bangladesh and the lawsuit filed in Toronto this past July on behalf of blast victims — and the transparent manner in which the catastrophe was handled — is an excellent example of crisis/risk management response to a potentially devastating blow to the group’s clothing brand, DaSilva suggests. Anne Chalmers, vice president of risk and security for Teck Resources, views Canadian enterprises as being “well-
established” in foreign supply chain procurement and the anti-corruption legal ramifications involved. “As Canadians, we need to lead and not reduce standards with regard to supply chain management, and this means open communication and regular audits of suppliers in accordance with quality and safety associated with developing standards and legislation,” Chalmers says. The SCMA notes in a statement it has a code of ethics, the first of its kind in the world for supply chain professionals, which all members are required to sign as a condition of membership. “This includes being aware and complying with their obligations laid out in the CFPOA and more recent laws,” SCMA reports.
INSURANCE COVERAGE Coverage of cases involving anti-corruption violations “on the face of it is not a comprehensive general liability (CGL) issue,” one insurer told Canadian Underwriter.
PROOFED ESTIMATED SENT
AD PROOF & ESTIMATE Docket
Media
All prices exclu Prices do not in
Section
Insertion Date
Ad Size
Price
1509-123A Underwriter 1/2 Page supply Island $0.00 “It’s very hard to see any likely coverageCanadian DaSilva. Many companiesANNOUNCEMENT assume they acrossNovan16/15 enterprise’s foreign 4.5” (w) x 7.25” triggers because CGL and excess [cover- have adequate coverage under their CGL chain, which could include 20 different People ANNOUNCEMENT 1/15 the procurement 1/2 Page Island ages] generally require1509-123B bodily injury orInsurance and D&O policies, and find out too late levelsNov within network. $0.00 4.5625” (w) x 7.25” property damage.” that they are fully exposed as a result of The safest approach to limiting expo$0.00 The source notes that “if any cover- their coverage conditions, he says. sure and prosecution is to have proper $0.00 age is available, it would likely be under DaSilva says even defence costs cov- risk management procedures in place. $0.00 a directors’ and officers’ (D&O) policy,” ered under a D&O policy can be limited, Top management can no longer afford most often for defence costs, although leaving individual directors and BoDs to delegate supply chain TOTAL management PRICE $0.00 any final criminal judgment would not stranded in a legal battle. Furthermore, to lower levels within the organization, be covered. “Fines or penalties against a insurance coverage may not extend DaSilva emphasizes. director or officer for violating anti-corruption laws are rarely covered, though in some policies, there may be limited coverage in a settlement if insurable by law. Of course, any coverage analysis is subject to the terms, conditions, limitations, exclusions and endorsements of a policy, so there can never be a general, hypothetical response.” The Wawanesa Mutual Insurance Company announces the following recent appointments: Jim Proferes, vice president of speciality insurance D&O underwriting for Chubb Group of Insurance Companies, says there is a lot of “grey area” when it comes to liability coverage available in D&O policies and what legally might be deemed a criminal offence. However, Proferes concurs the clauses and conditions set in D&O policies play a pivotal role in whether or not legal and other related costs associated with corrupt business practices may come into effect. “We [at Chubb] work hard to remind Graham Haigh, BA, CAIB, FCIP Brenda Gibson, B.Comm, CA, CIP clients their liability exposure doesn’t Graham Haigh, BA, CAIB, FCIP, as Vice Brenda Gibson, B.Comm, CA, CIP as only exist in their country of incorporaPresident, Manitoba and Saskatchewan Vice President, British Columbia Region, Region, effective May 1, 2015. In his effective May 1, 2015. In her new role, tion. Rather, the risk can come from any new role, Mr. Haigh has taken on the Ms. Gibson has been given the responsibility country in which they do business.” responsibility of overseeing insurance of overseeing insurance operations for the operations for the newly combined British Columbia and Yukon Regions. Proferes says D&O-related costs have territories of Manitoba, Saskatchewan, and Ms. Gibson joined Wawanesa Insurance in been on the rise in recent years with North Western Ontario. 2005, as a Senior Financial Analyst, in our regard to prosecutions under the antiMr. Haigh joined Wawanesa in 2009 as Executive Of�ice location in Winnipeg. Over Vice President, British Columbia Region, and the years, she has held roles of increasing corruption laws, more so in the U.S. than held this position until the end of April, 2015. responsibility including; Manager Treasury, in Canada. As a result, insurers are focusMr. Haigh holds a Bachelor of Arts degree and Manager Strategic System Renewal, a from Simon Fraser University, has achieved role she has held until April 2015. ing more underwriting on a client’s risk his Fellow Chartered Insurance Professional Ms. Gibson holds a Bachelor of Commerce to alleged corrupt business practices. (FCIP) designation, is past President of the (Honours) degree from the University of Insurance Institute of British Columbia, and At the end of the day, the greatest Manitoba and has achieved the Chartered has been a past Governor of the Insurance Accountants (CA) designation, as well risk/cost facing enterprises found in Institute of Canada. Throughout his career, as the Chartered Insurance Professional Mr. Haigh has become a well-known and non-compliance of the anti-corruption (CIP) designation. With her appointment highly respected individual within the Ms. Gibson and her family have relocated laws pertaining to foreign supply chain British Columbia Insurance Industry. With to Vancouver, where she is reporting to his appointment, Mr. Haigh and his family exposures are legal expenses and repuKeith Hartry, Vice President, Regional have relocated to Winnipeg. In his new role, Insurance Operations. tational damage, Proferes reports. Mr. Haigh will be reporting to Keith Hartry, Vice President, Regional Insurance Operations. Enterprises exposed to the convoluted legal morass associated with foreign The Wawanesa Mutual Insurance Company is a Canadian-owned leader in the insurance industry. supply chain procurement need to pay Established in 1896, Wawanesa conducts business throughout Canada, California and Oregon and has close attention to clauses and exclusions combined assets of over $8 billion with annual premiums exceeding $2 billion. of their insurance coverages, observes November 2015 Canadian Underwriter 25
For Want of
Jurisdiction
A recent dismissal by the Court of Appeal for Ontario reaffirms that plaintiffs are required to commence their actions for underinsured, uninsured or unidentified coverage in the jurisdiction in which the contract was made, and for tort actions to be made in a jurisdiction with a presumptive connecting factor.
Anthony Gatensby
Associate Lawyer, McCague Borlack LLP
The Court of Appeal for Ontario recently handed down its latest views regarding when an Ontario court can assume jurisdiction over a non-resident defendant. On September 9, 2015, a five-panel court dismissed the plaintiff’s appeal from a stay of proceedings in Forsythe v. Westfall, issued in February by Ontario’s Superior Court of Justice. Done from the bench without hearing the respondent’s submissions, the dismissal strongly affirms the current conflicts of law analysis, which may require a plaintiff to litigate his or her tort claim in one jurisdiction and his or her contractual insurance claims in another.
THE ACCIDENT In August 2012, Alberta resident Michael Westfall was driving his motorcycle outside the City of Vernon in British Columbia. Riding shotgun was Rennie Forsythe, who was visiting from Ontario. Westfall lost control of his motorcycle, resulting in an accident in which both he and Forsythe were injured. Westfall maintains that an oncoming vehicle swerved into his lane, causing the accident, although this was denied by the four other witnesses to the accident.
26 Canadian Underwriter November 2015
Forsythe eventually returned to Ontario, where she commenced an action against Westfall for damages. Given the potential that the unidentified vehicle was completely at fault, Forsythe also named her own insurer, Intact Insurance, as a defendant. This was pursuant to the unidentified and underinsured — as per Ontario’s Insurance Act and the (Ontario Policy Change Form) OPCF-44R Family Protection Endorsement, respectively — provisions of her Ontario automobile policy. Westfall brought a motion to stay Forsythe’s tort claim against him on the basis that an Ontario court had no jurisdiction over him — he was neither a resident of Ontario nor did the accident occur in the province. Forsythe then opposed the motion on the basis that she would be forced to litigate her tort claim in British Columbia and her contractual claim in Ontario.
THE MOTION TO STAY The motions judge, Justice Paul Perell of Ontario’s Superior Court of Justice, reviewed the existing conflicts of law analysis as set out by the Supreme Court of Canada in its 2012 decision, Club Resorts Ltd. v. Van Breda. The analysis requires
the court to first determine whether or not it has jurisdiction simpliciter, and in the event that it does, to then decide whether or not it should decline to exercise that jurisdiction in favour of a more favourable jurisdiction (known as forum non conveniens). Jurisdiction simpliciter exists when a real and substantial connection exists between the parties, the matter and the jurisdiction. A real and substantial connection presumptively exists when one (or more) of the following factors exists: (i) the defendant is domiciled/resident in the jurisdiction; (ii) the defendant carries on business in the jurisdiction; (iii) the tort was committed in the jurisdiction; and/or (iv) a contract connected with the dispute was made in the jurisdiction. This presumptive factor can then be rebutted by demonstrating the connection between the forum and the factor is weak. As the court is assuming jurisdiction over a non-resident defendant, it is important to note that the inquiry is naturally defendant-oriented. The corollary of this is that the presence of the plaintiff in the jurisdiction is not considered a connecting factor, and neither is the fact that damages were sustained in the jurisdiction. Forsythe pointed to the fact that her automobile insurance policy was made in Ontario. As she was required to litigate the unidentified and underinsured claim in Ontario vis-à-vis the policy, this should presumptively bind the defendant to Ontario as it was a “contract connected with the dispute.”
CONFIRMATION OF TAMMINGA Justice Perell disagreed with Forsythe’s position, based heavily on the Court of Appeal for Ontario’s reasoning in its 2014 decision, Tamminga v.Tamminga. The situation in Tamminga was almost identical to Forsythe’s case, and many of the same arguments were raised, including the connection between the plaintiff’s insurance contract and the defendant tortfeasor.
Tamminga was explicit that a plaintiff’s contract of automobile insurance is immaterial and disconnected [emphasis added] from the underlying tort claim. While an insurance contract can be said to contemplate potential accidents, any claim for underinsured, uninsured or unidentified coverage “only arises in the aftermath of the tort and its application is conditional on the outcome of the appellant’s claim against the tortfeasors,” the decision notes. Until that point, there is nothing that “connects the appellant’s insurance contract to the respondents,” Tamminga adds.
Forsythe pointed to the fact that her automobile insurance policy was made in Ontario. As she was required to litigate the unidentified and underinsured claim in Ontario vis-à-vis the policy, this should presumptively bind the defendant to Ontario as it was a “contract connected with the dispute.” As stated by Justice Robert Sharpe in the Court of Appeal for Ontario’s 2002 decision, Gajraj v. DeBernardo, “[j]urisdiction over claims against extra-provincial defendants should not be bootstrapped by such a secondary and contingent claim against a provincial defendant.” In the ruling this year, Justice Perell also referred to Craig v. Allstate Insurance Co. of Canada, handed down by Ontario’s appeal court in 2002. The decision held that a plaintiff need not have a finding of liability in the tort action before proceeding with a claim for uninsured/ unidentified/underinsured coverage. Indeed, Section 5.6.3 of the (Ontario Automobile Policy) O.A.P. 1 and Section 9 of the OPCF-44R endorsement explicitly
state that findings of liability by courts outside of Ontario are not binding on the insurer with respect to claims for said coverage. As Justice Perell did not find jurisdiction simpliciter, he had no need to refer to the forum non conveniens doctrine — which considers elements such as potential inconsistent results and multiplicity of proceedings. He also denied the application of the forum of necessity doctrine, a narrow and exceptional remedy that allows the court to take jurisdiction despite there not being jurisdiction simpliciter. While the ruling may have been an opportunity for the Court of Appeal for Ontario to explore this doctrine, this ground was not seriously argued on appeal given its exceptional nature. (This doctrine is not yet fully developed in Ontario case law, but its beginning was explored at some length in the 2014 decision, West Van Inv. v. Daisley. The doctrine typically applies when there is a denial of justice, not inconvenience.) Justice Perell granted the defendant’s motion for a stay of proceedings for want of jurisdiction.
THE AFTERMATH Given the fact that Tamminga was released just last year, there was little prospect that the Court of Appeal for Ontario would overturn itself after such a short time. The case law remains firm that plaintiffs are required to commence their actions for underinsured, uninsured or unidentified coverage in the jurisdiction in which the contract was made (in this case, Ontario), and for the tort action to be made in a jurisdiction with a presumptive connecting factor (in this case, possibly B.C.). The reality is that should a B.C. court find that the unidentified motorist was 100% liable, and an Ontario court find that a named defendant was at least 1% liable, Forsythe will be denied recovery. It will be interesting for this issue to eventually be heard by the Supreme Court of Canada, as the high court may need to clarify that such a multiplicity of proceedings should exist. November 2015 Canadian Underwriter 27
DALE REMPEL AWARD OF EXCELLENCE
Business-Minded “It’s not just about talking about the insurance industry, but it’s about creating the environment for post-secondary education where people can actually graduate with some skills,” Yetman emphasizes.
Angela Stelmakowich Editor
That Bryan Yetman had received the 2015 Dale Rempel Award of Excellence — established last year by the Insurance Brokers Association of Canada (IBAC) — came as a bit of a shock to the vice president of operations for First Durham Insurance and Financial in Pickering, Ontario. “I’m not really an awards guy,” says Yetman, who was, nonetheless, greatly honoured to receive an award named for Dale Rempel, IBAC’s much-loved former president who died three years ago. “You almost don’t know how to react.” The reaction to Yetman — and what he has achieved over less than two decades in the business — has been far clearer. Presented at IBAC’s President’s Banquet in Quebec City this September, the award is meant to recognize someone who has made a significant difference in the professional development of insurance brokers. That recognition was made all the more special since Yetman knew Rempel, whose passion for broker education, development and advancement was clear to all who met him. Being passionate about broker education is something that comes naturally to Yetman, one of the youngest-ever presidents of the Insurance Brokers Association of Ontario (IBAO). Among his contributions are co-facilitating a series of seminars, including Understanding the 21st Century Insurance Consumer (developed by Navicom’s Bill Morris and delivered by Morris and Yetman) and All Customers Are Not Created Equal; helping educate brokers and consumers on legislation detailing Ontario auto reforms, always a hot issue in the province; and serving as a key leader in the Young Brokers Council (YBC).
28 Canadian Underwriter November 2015
AT THE BEGINNING Yetman was very clear, very early on, regarding the path he wanted to pursue. “Early on in high school, I knew that business was the way that I wanted to align myself,” he says. His parents provided a “living example” of how fulfilling being insurance brokers could be, having a family brokerage at the time, but the lure for Yetman was not necessarily insurance as much as business in general. With that interest firmly set, he enrolled in the commerce program at Carleton University in Ottawa. While there, he learned about an insurance program at nearby Algonquin College of Applied Arts and Technology. Making what he calls one of the hardest decisions of his life, Yetman left his university education — “which, in my family, was a very big deal” — for the college program. Despite how difficult the initial decision was to make, Yetman now says what it provided him has been invaluable. “What that gave me coming out of school, coming into the business, was huge, absolutely huge. The technical knowledge that I had coming into the business was priceless.” Yetman’s first job was not at the family brokerage, but rather at the Financial Services Commission of Ontario (FSCO). Working in the ombudsman’s office resolving consumer complaints, he got yet another education. “You learn a hell of a lot real quick in that role,” he says. “That opened my eyes that we had to do a better job as an industry to communicate with customers about how our products worked.” He remained at FSCO for about a year before returning to the family business.
DALE REMPEL AWARD OF EXCELLENCE
While Yetman’s entry into business may have been by design, his involvement in YBC — a likely launching point for what followed — was more happenstance. Recalling being at a luncheon, attendees were asked to consider volunteering. Looking around and seeing no hands go up, Yetman thought the prospect sounded interesting, and being the new guy, decided to give it a go. “I wonder if my path would have been a whole lot different had I not done that that day.” It turned out to be solid decision. “It became very obvious early on that youth in the business was something that the industry is challenged with. I think we still are, but I think that movement has come a long way,” Yetman says. Getting younger people involved “has had huge dividends to our industry because it’s brought fresh ideas and fresh minds.” But despite being varied, interesting and rewarding, getting young people to consider insurance as a career is no easy task. “I think in a lot of ways our industry is one of the best-kept secrets, and that’s not a good thing,” Yetman says. It is one reason he plans to teach some courses as part of Durham College’s insurance program. “It’s not just about talking about the insurance industry, but it’s about creating the environment for post-secondary education where people can actually graduate with some skills.” Yetman regards it as a duty to young people to help nurture these programs so they can grow and succeed. “It’s only us as an industry that benefits at the end of the day,” he points out. Work on the YBC was followed by his time on the IBAO board, which Yetman joined in his late-20s, and executive board, before becoming president for the 2010 term. After joining the board, he remembers there being some members in their 30s and 40s, but most were in their 50s
Photo by Patrick Thompson
JUMPING IN
and 60s. “They were giving back,” he realized. “Well, I had nothing to give back to the business, so (he took) every opportunity I had to participate.” Through his work experience, volunteer efforts and educational pursuits, the message about the need to serve customer only became more entrenched. “We’ve done a very bad job of engaging customers and communicating with customers,” Yetman argues. “I’m very fearful of many brokers and carriers who create an environment where we have to continue to do business like it’s 1985. It’s not 1985 anymore,” he says. It is necessary to engage with customers “about things that matter to them, whether or not there’s a sale at the end of that conversation,” he contends. To Yetman’s mind, the big challenge brokers face is how to use technology. “It all comes back to technology, right? Competition, how we’re going to engage customers on the web,” he says. “That’s what’s making our competitor
better. It’s the data that they can turn on its ear that we can’t or aren’t doing.” Technology is just part of what will help brokerages be more strategic. “When I look at traditional broker education, it’s about teaching people about policy and wordings. And while that is certainly important to a point, I’d like to see education turn on its ear” by having programming that works with brokers and brokerage owners about how to become more strategic business people. “Teach me how to export and import data from my (broker management system) and use that information to make intelligent and strategic decisions, help me work with my staff to change their mindset and the culture of the business and of the industry as a whole,” he says. Yetman has seen great value in taking part, emphasizing that he has learned so much from being a volunteer. “I’m not so sure I could ever pay for the kind of education that I got through that experience,” he says. November 2015 Canadian Underwriter 29
Tipping Point? The relative calm for the reinsurance industry cannot last forever. Catastrophes will happen and disruptive conditions will persist, subjecting the market to continuing and accumulating pressure. Despite still-positive returns, how long can the reinsurance industry hold out before this pressure necessitates material change? Is the industry at, or nearing, its tipping point?
30 Canadian Underwriter November 2015
P
layers in Canada’s reinsurance space are expected to see some familiar faces yet again in 2016. Many of the same market influences in recent years — low interest rates, mergers and acquisitions activity, the influx of alternative capital, more than ample supply, wide buyer choice and rates that most say have bottomed out — could persist in the coming year. These conditions have, no doubt, applied pressure on reinsurers over the last few years, but as 2015 turns into 2016, that pressure seems to be just a bit stronger, just a bit more present. Loss events have occurred, but the natural catastrophe experience to date in 2015 has looked very much as it did in 2014. It has been fairly quiet, bringing with it, at worst, the potential for complacency; at best, an opportunity for different players to rethink what they can do on their own and when it is better to partner to guard against the losses that inevitably will come. Is it possible that the reinsurance market as a whole — still strong and with many players continuing to perform well — has reached its tipping point? Will current conditions allow buyers to begin investigating alternative structures and additional limits? Will new and innovative offerings, coupled with well-tended relationships, allow reinsurers to better deliver on their value proposition? Or will those in Canada’s reinsurance industry simply maintain their share and prepare for another year of more of the same? Canadian Underwriter asked senior executives of reinsurance companies operating in Canada what they see ahead for 2016. What effect will these persistent conditions have on reinsurance market here at home?
November 2015 Canadian Underwriter 31
COVER STORY
Tipping Point?
1
Donald P. Callahan President & Chief Executive Officer
Guy Carpenter Canada
At this time last year, it appeared that reinsurance pricing had reached its historical low. Some buyers took advantage of the sale prices, but, paradoxically, most bought less reinsurance in order to promote net premium growth. Local reinsurers were perplexed. They were clearly selling a product at or below cost and yet there were very few takers. Today, the landscape is unchanged in the virtual absence of major catastrophe losses. Because Cat activity is low, Canadian-licensed reinsurers will likely post a sub-80 combined ratio for 2015. Premium is flat or down. The local reinsurance underwriters are fighting for scale, with supply (capital) far outstripping demand. At this time last year, there was a sense that buyers would logically go on a spending spree with new quota shares or drop down contracts in view of the fact that the cost of reinsurance was approaching negative territory, with quoted premiums sitting at levels at or below projected recoveries. New deals, however, did not materialize. Today, everyone on the sell side is still ravenously hungry. The reinsurers are more focused on their insurance businesses and are actively competing with clients. Furthermore, an inevitable diminution of distributors is looming as the smaller reinsurance brokers operate at a loss. Brokerage revenue is not covering expenses for these firms and their future in this constricted market is very much at risk. With the exception of new and sophisticated methods for modelling and reinsuring the flood peril, the 2016 reinsurance outlook is simply more of the same. Pricing will drop another 5% to 10% on a risk-adjusted basis. Insurers, preoccupied with top line, will forgo the financial benefit that inexpensive reinsurance provides. Reinsurers will reluctantly authorize despite their technical indications. 32 Canadian Underwriter November 2015
1
2
3
“Only by providing coverage that is meaningful to its customer base, with the support of their reinsurers, will the industry manage to grow premium by more than the gross domestic product, and at the same time start increasing the size of the reinsurance pie,” suggests CCR’s Pierre Dionne. 2016 will be the year of the bargain, but most of the available products will remain on the shelves.
2
Pierre Dionne Senior Vice President & Chief Agent
Caisse Centrale de Réassurance – Canada
2015 is turning out to be another quiet year on the natural catastrophe front, both worldwide and right here at home. But this does not mean the year is boring. Quite to the contrary!
The industry has been abuzz with news of mega-mergers, such as ACE and Chubb, XL and Catlin, Endurance and Montpelier, just to mention the ones with some impact on the Canadian marketplace. Asian insurance companies are also purchasing western companies, expanding outside of their borders. And then there were the mergers that never came to pass, which shall remain nameless. The reinsurance industry can expect the mergers and acquisitions (M&A) trend will continue into next year, and the next global deal may have bigger repercussions in Canada. Additional M&A activity specific to the Canadian insurance marketplace is also expected, resulting in a shrinking reinsurance pie, and downward pressure on reinsurance prices over the coming years (barring major loss activity). Not everything is looking down, though. Some insurers have started offering flood insurance for homeowners in Canada, increasing the relevancy of the insurance industry to its customer base. At the same time, this will generate new premium for the industry. Insurers should be mindful that a solution must be found for the high-risk houses, which require flood insurance the most. There is also a large earthquake coverage gap, especially in Québec, which will eventually need to be addressed. The insurance industry must also remain relevant on the commercial front, finding innovative solutions for the top risks faced by corporations, such as reputational risk and cyber risk. Only by providing coverage that is meaningful to its customer base, with the support of their reinsurers, will the industry manage to grow premium by more than the gross domestic product, and at the same time start increasing the size of the reinsurance pie. Bon appetit!
3
Tim Fisher Canadian Branch Manager XL Catlin – Reinsurance
How will the market for Canadian reinsurance business evolve in 2016?
Alongside the traditional risks of Mother Nature, the insurance and reinsurance industry is facing new risks from globalization, increased interconnections and scientific and technological developments. Global risks call for global responses. At SCOR, we offer a highly rated balance sheet and global franchise.
• Photo credit: Getty Images
By sharing the art and science of risk with our clients, we can carry the burden.
scor.com
The Art & Science of Risk
COVER STORY
Tipping Point? To answer that question, it may be best to consider if the major trends from 2015 will persist. • Mergers and acquisitions activity: Major forces in today’s economy such as globalization, better data and analytics and increasing regulation all signal increased scale being critical to future success. Combined entities should be better-positioned to entertain any risk a client has, fostering enhanced client and broker relationships. M&A activity is expected to continue through 2016. • Available capacity: The combination of low loss activity and alternative capital entering the reinsurance market has resulted in elevated supply from sellers. From the buy side, consolidations, increased retentions and pressure on margin have resulted in relatively consistent buying requirements. This, too, could persist into 2016. • Pricing expectations: There are signs the property Cat market is starting to reach a floor, driven by rates no longer being proportionate with the risk. Rate declines have slowed, pricing in the insurancelinked securities market is stable and, in some markets, some placements have been re-priced. Pricing in the casualty segment remains under pressure, primarily as a result of increased supply from reinsurers and a reduction in demand following significant increases in program attachment levels in recent years. Given current reinsurance retention levels, buyers have very significant exposure to changes in loss frequency and severity. Pricing metrics point to the need for pricing stability and slowing of price declines is expected. • Reduced reinsurance panels: Outside of Canada, there has been a move from buyers to reduce their panel of reinsurers. In general, buyers want to work with reinsurers that can engage with them globally. This trend appears likely to impact Canadian placements more over the next few years. • Traditional reinsurance market: To not only survive, but thrive, reinsurers must strive for analytical excellence and innovate for risks with respect to risks that are underserved. 34 Canadian Underwriter November 2015
4
5
M&A “activity has been consistent and its ultimate effect appears to be a reduction in the amount of business ceded to the reinsurance market. It will be interesting to see what the reinsurance landscape will look like when the current wave ends,” notes Jean-Raymond Kingsley of Odyssey Reinsurance Company. • Relationships central: As always, relationships will remain critical in allowing reinsurers to trade through the cycles inherent in this business.
4
Jean-Raymond Kingsley Chief Agent & Chief Underwriting Officer – Canada Odyssey Reinsurance Company
The Canadian reinsurance market is facing numerous challenges as 2015 comes to a close. While it may be a bit early to comment on January 1 renewals, there are several factors that will continue to impact the market in 2016.
Clearly, consolidation will continue to reign for the foreseeable future. Mergers and acquisition activity has been consistent and its ultimate effect appears to be a reduction in the amount of business ceded to the reinsurance market. It will be interesting to see what the reinsurance landscape will look like when the current wave ends. There will probably be fewer players, but new participants will emerge over time in response to market opportunity. The market is also seeing the impact of globalization, whereby some programs that were historically placed in Canada are now part of a global or North American placement. As well, the impact of the Office of the Superintendent of Financial Institutions Canada’s B-9 Guideline: Earthquake Exposure Sound Practices has not fully materialized. While the guideline was anticipated to encourage an increase in the level of coverage purchased by primary companies, reinsurers have instead seen that some companies are buying less Cat coverage. Overall, the net effect of these factors is a reduction in business placed in Canada. While size and business diversification are helpful in a declining market, Canadian reinsurers with long-standing market relationships, financial security and a desire to be innovative will see a good share of opportunities in 2016. Despite an overabundance of capacity putting negative pressure on rates, reinsurers are seeing some signs around the world that the significant rate reduction experienced during the last two years is slowing down. Needless to say, this firming of the market would be a welcome change not just for catastrophe placement, but across all lines of business.
5
Geoffrey Lubert Executive Vice President & Managing Director Willis Re Canada
Canadian insurers purchasing reinsurance in 2016 will continue to benefit from the conditions of a buyer’s market.
Evolving
with the Business
Janice Anstie
Geoff Lubert
Mike Norris
Scott Jellous
Roufat Raguimov
Adam Canning
Gus Katsuras
Jim McCarney
Effective September 28, 2015 Our new address is: First Canadian Place, 100 King St West, Suite 4700, P.O. Box 470, Toronto, ON, M5X 1E4 416.368.9641
www.willisre.com
COVER STORY
Tipping Point? Reinsurance capacity remains plentiful and there is a significant portion of the market providing upper level catastrophe capacity at rates on line below 2.0%. With a few exceptions, large global insurers continue to consolidate their various regional reinsurance programs into one purchase, thereby exacerbating the impact in Canada. These conditions put further pressure on reinsurers in this market. Mergers and acquisitions will continue as companies strive to achieve better scale in a challenging marketplace and satisfy their capital providers and shareholders with improved returns on investment. XL and Catlin, Endurance and Montpelier Re, Willis and Towers Watson, and MS Frontier and Amlin Syndicate are recent examples of completed and pending deals. Despite a long engagement, the proposed marriage of AXIS Capital and Partner Re did not make it to the altar. In addition, only a handful of Lloyd’s syndicates remain truly independent. Differentiation is the key to being prosperous going forward in this challenging market. Reinsurers will look to position themselves with clients and intermediaries by offering a value proposition that distinguishes them from their competitors. Intermediaries with strong local investment will deploy their resources to develop and unearth products and opportunities, which provide new reinsurance premium to the market. Analytics will continue to dominate the scene. Reinsurance buyers expect and deserve leading-edge analytical tools. The reinsurance intermediary will use these models to enable their clients to compete more cost-efficiently in their specific market. Quite obviously, the natural hazard and weather models will assist insurers in better understanding their exposures and how to manage them. Recently, there have been examples where clients can better deploy adjusting staff following events, resulting in cost savings and enhanced reputations with their insureds. 36 Canadian Underwriter November 2015
6
7
“Analytics will continue to dominate the scene,” says Willis Re Canada’s Geoffrey Lubert. “Reinsurance buyers expect and deserve leading-edge analytical tools. The reinsurance intermediary will use these models to enable their clients to compete more cost-efficiently in their specific market.” Soft markets are challenging for all the participants, but with strong broking teams, compelling analytics and technical partners, everyone can flourish.
6
Cam MacDonald Senior Vice President & Chief Agent – Canada Transatlantic Reinsurance Company
The Canadian reinsurance market continues to struggle under the weight of a plethora of readily available capacity from a variety of traditional and nontraditional sources. Achieving technically adequate pricing of risk is proving difficult, and far too often in today’s competitive environ-
ment, it is a matter of to what degree the reinsurance market is prepared to discount rates in order to write new business or to maintain existing accounts. The fact is that some accounts contain little or no profit margin. Couple this with an end to favourable reserve and IBNR (incurred but not reported) adjustments, as well as a woefully low interest rate environment, and it is easy to speculate that more pressure will be applied to underwriting result sooner rather than later. However, if the soft market persists, there is little doubt that more reinsurers will fall by the wayside because of poor results or through acquisition. In addition to ongoing market challenges, reinsurers must also deal with managing new and emerging exposures such as telematics, drones, cyber and flood coverage on homeowners’ policies. These exposures are not something far off in the future; they are here now and new analytics and risk management techniques will be required to properly assess and diagnose these new risks. Telematics will radically change the (re)insurance industry’s perspective on automobile insurance, cyber coverage presents a host of security issues, drones will create privacy concerns and potential hazards for the airline industry, while flood insurance on personal property will be an enormous undertaking. On a positive note, these emerging risks offer tremendous opportunity for the reinsurance marketplace, although with any peril, it is incumbent on the underwriting community to accurately assess these risks and properly price products — hopefully, something seen more often in future.
7
Frank Rückert
Senior Vice President Canadian Treaty Department Hannover Re
Not much change in pricing is anticipated for the upcoming renewals, and in the absence of really major losses to the market, this trend will continue.
If only all environmental risks were obvious.
Let the leading environmental coverage provider protect you against hidden risks. Virtually every industry is subject to environmental risk and liability. As the industry leader for more than 35 years, AIG insurers can provide you with the knowledge, solutions, and tools you need to manage those exposures. Like PIER (Pollution Incident and Environmental Response),ÂŽ a nationwide, round-the-clock network of emergency response and environmental specialists that is ready to assist you at every step of a pollution event. To learn more, visit www.AIG.ca/environmental
AIG Insurance Company of Canada is the licensed underwriter of AIG property casualty insurance products in Canada. Coverage may not be available in all provinces and territories and is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Š American International Group, Inc. All rights reserved.
COVER STORY
Tipping Point? Reinsurers in Canada are still in the phase of recouping from the losses incurred in 2013. It is critically important that reinsurers differentiate themselves and show their value as fully fledged reinsurance companies, particularly in light of the fact that more and more capital is coming into the market and the sources of that capital are not necessarily looking at the long term. Clients have to make forward-looking, but still economical, decisions. In response, reinsurers must determine at what portions they can deliver value over and above a competitive rate. They must be solution-oriented, quick, understand the customer’s problem and start thinking more in three- to five-year horizons than be focused on a specific return on equity for a single year. The challenge: this approach requires a client (primary insurance company) that thinks (can afford to think) the same way. The game that investors play is black and white: either there is a Cat and they decide to double down or walk away, or there is no Cat and they book the money and do it all again next year. Reinsurers must ensure that that perception does not apply to the reinsurance market as well. With the continuing mergers and acquisitions activity and some primary companies choosing to retain one or the other bottom layer themselves, the reinsurance market as a whole will not increase from a premium perspective. Reinsurers have to be innovative and, together with the broker and client, determine what helps the client and how programs can be constructed to make more sense for that client. Possibilities include providing multi-year deals and deals across all lines. Talk is continuing around flood and cyber, but the reinsurance industry is in a wait-and-see position.
8
Veronica Scotti President & Chief Executive Officer Swiss Re Canada
From boardrooms to the boulevards, sweeping transformation is challenging the (re)insurance industry to maintain 38 Canadian Underwriter November 2015
8
9
“Ride-sharing is transforming the streets, changing how the (re)insurance industry thinks about mobility and the risk it brings. The emergence of Uber forces insurers to rethink their assumptions about auto liability — leapfrogging everyone into the imminent reality of granular data-based underwriting,” says Swiss Re Canada’s Veronica Scotti. its essential function in the economy. It would be nice to think the industry has finally acknowledged the challenge and is readying for it. Ride-sharing is transforming the streets, changing how the (re)insurance industry thinks about mobility and the risk it brings. The emergence of Uber forces insurers to rethink their assumptions about auto liability — leapfrogging everyone into the imminent reality of granular data-based underwriting.
The competition is good for consumers and it creates jobs — but it puts on the road a type of risk that is different and unfamiliar. Autonomous cars will also change the risk equation, forcing insurers to contemplate a host of new probabilities when technology takes the wheel. The next time floodwaters overtake a community, it is hoped that more citizens will have the funds to recover and rebuild. Private carriers are increasingly offering overland flood insurance thanks to improved models and a collective resolve not to repeat the hardships of 2013. However, it will take a collaborative effort between public and private sectors to close Canada’s $2.1 billion property protection gap, much of it due to flood exposure. As brisk mergers and acquisitions activity continues, the task of closing that protection gap will fall to fewer, larger companies, who will also have to respond constructively to concerns about affordability, availability of coverage and societal expectations of being served in innovative and efficient ways. Companies will have to consider the advantages and disadvantages of reinsurance solutions, alongside more traditional financing options. They will look to strike strategic alliances with those partners able to support their transformative journey beyond capacity offering. The quiet evolution with the greatest potential impact is happening outside the public eye — but squarely in the regulatory spotlight — as insurers continue to embed enterprise risk management and Own Risk and Solvency Assessment throughout their organizations. Reinsurers will undoubtedly play a key role, assisting clients with early identification of possible downside scenarios and modelling of solutions.
9
David Sloan Chief Executive Officer Aon Benfield Canada ULC
For this coming renewal, the expectation is there will be rate reductions of 5% to 10% (risk-adjusted).
WHEN THE UNEXPECTED HAPPENS,
WE’RE WE’RE READY
WHEN THE UNEXPECTED HAPPENS,
READY
WE ARE EQUIPPED TO RESPOND TO YOUR NEEDS 24/7.
We are the single-source solution with the expertise and resources to mitigate damages and minimize losses with superior results. You can depend on us to handle every aspect of the property repair efficiently, effectively and with care. Call the brand you can trust to deliver all your We are the single-source solution with the expertise and resources to mitigate damages needs. andrestoration minimize losses with superior results. You can depend on us to handle every aspect
WE ARE EQUIPPED TO RESPOND TO YOUR NEEDS 24/7.
We are the single-source solution with the expertise and resources to
of the property repair efficiently, effectively and with care. Call the brand you can trust to mitigate damages andneeds. minimize losses with superior results. You can deliver all your restoration
depend on us to handle every aspect of the property repair efficiently, effectively and with care. Call the brand you can trust to deliver all your restoration needs.
1-800-RESPOND servicemasterrestore.ca
ad right size copy.indd 1
15-01-19 9:21 AM
COVER STORY
Tipping Point? With respect to reinsurance contract terms and conditions, there was broader coverage by way of an expanded loss occurrence definition on catastrophe treaties in 2015, changes tailored to meet the specific needs of each client. For this renewal, it is anticipated there will be a harmonization in the loss occurrence definition used across the client base. On the surface, 2016 could be seen as the typical soft market renewal: plentiful capacity, reducing pricing and expanded coverage. However, two things make this soft market renewal different: • Alternative capital: It has had a profound impact on the global reinsurance market. It is estimated that almost 50% of the capacity for Florida wind originates from alternative markets. Although not directly in use in Canada, the excess capacity created globally intensifies competition at the local level. As reinsurers continue to adjust to this new reality, it is expected that the push towards diversification to new lines of business and territories, either organically or through mergers and acquisitions, to continue. Reinsurers need scale. • Flood coverage: 2016 should see the wider availability of the flood product to homeowners. However, since the release of these products is just getting under way, reinsurers are not yet in a position to reflect this exposure in their reinsurance pricing. This being said, many would argue the overall exposure will be reduced relative to 2013 as the clarity of the actual coverage provided is improved at the policy level with the introduction of a definition of flood in the wording. The challenges in assessing these new products going forward include the following: 1) differences in product offerings between insurers; 2) differences in underwriting stance between insurers (no-write zones? sublimits? deductibles?); and 3) take-up rates in general, as well as in high-risk versus low-risk zones. 40 Canadian Underwriter November 2015
10
11
“The soft reinsurance pricing appears to be subtly firming,” says Steve Smith of Farm Mutual Reinsurance Plan Inc. “The profitable results of the last few years have been supported by reserve releases which, obviously, cannot continue, meaning underwriting and pricing discipline will be clearly evident through the renewal season.”
10
STEVE SMITH President & Chief Executive Officer Farm Mutual Reinsurance Plan Inc.
The Canadian reinsurance outlook for 2016 continues to be very optimistic as reinsurers enjoyed yet another quiet Cat year in 2015 and, fortunately, the United States hurricane season came and went with only a whimper.
The main focus for reinsurers heading into the new year is a collection of emerging issues and what these exposures represent to the reinsurance market. Products are being developed to respond to overland flood, drones and cyber with very little credible data or underwriting experience to support confident pricing at both the primary and reinsurance levels. There will be a great deal of interest in underwriting approaches, pricing and consumer response to these emerging risks as the reinsurance industry watches closely while the market evolves. The soft reinsurance pricing appears to be subtly firming as reinsurers focus on underwriting profitability, recognizing that investment returns deteriorated through the third quarter of 2015. The profitable results of the last few years have been supported by reserve releases which, obviously, cannot continue, meaning underwriting and pricing discipline will be clearly evident through the renewal season. The one interesting event that has the potential to be a market-changing event, and yet to be fully understood, is the Volkswagen issue that has the potential to generate insurance/reinsurance losses well into the billions of dollars. The reinsurance community will be watching very closely. The one challenge all reinsurers will be facing is achieving growth goals and mandates. The market is over-capitalized, with every reinsurer around the globe trying to grow and deploy capital, while at the same time, not sacrifice price and underwriting standards.
11
ERIC STEEN Executive Vice President – Reinsurance JLT Re
The stakes and risks associated with making the right decisions are arguably higher than in past periods as reinsurers and reinsurance brokers alike enter the busy “year-end” season for reinsurance buying.
AlliedWorld_Shortcut_Canadian Underwriter_Bleed.indd 2
11/5/15 10:36 AM
COVER STORY
Tipping Point?
12
“The proclaimed change is no longer ahead, but all around — leaving reinsurers without the comfortable signposts that have been used in the past to determine where they are in the (re)insurance cycle,” says Philipp Wassenberg of Munich Re Canada. Risks continue to be extreme for natural catastrophe-related exposures or individual risk selection elements, yet providers are competing for these risks in an environment with a very low rate of return. Adding to the perils of obtaining adequate terms for the paper provided, these same insurers and reinsurers are looking to gain scale and top line premium by merging. In addition, real interest rates in Canada and in similar economies have been near zero for some time, so access to funds to buy or consolidate will remain robust well into 2016. Organic growth is also lackluster; yet adding growth, profitability and efficiencies remains a high priority. Similarly, technology and distribution by the more tech-savvy competition will marginalize behemoths who are too slow to react and risk being left behind. In 2016, the (re)insurance industry will continue to see the development of usage-based insurance and unmanned automobile technology, while unmanned aerial vehicle/drone commercial coverage will become a very hot and divisive coverage item. Cyber attacks, terrorism threats and climate change will continue to be potential world-wide game-changers, while major natural catastrophes carry supply change impacts of their own. Finally, global reserving — traditionally, the largest “catastrophe” facing the sector — may be coming to the end of a long period of redundancies, further pressuring underwriting capital. The world of underwriting remains in an uncharacteristically long-term state 42 Canadian Underwriter November 2015
of relative calm, which has benefitted returns on equity both for insurers and reinsurers. However, the soft market is encouraging risk managers of all varieties — insurance companies, corporations and the government — to take a closer look at solutions, including alternative parametric based-products on a peroccurrence and aggregate basis, hedges for business interruption, community interruption, contingent business interruption and weather derivatives that may have appeared too expensive a few years ago. With continuing increases in reinsurers’ reported balance sheet surplus, only a series of events, possibly involving catastrophe losses, reserving, interest rates, inflation — or all of the above — could make an impact on these results.
12
PHILIPP WASSENBERG President & Chief Executive Officer Munich Reinsurance Company of Canada
Every fall, reinsurers reflect about what to expect in the year to come. This year, it seems as if the future has already caught up with the industry. The proclaimed change is no longer ahead, but all around — leaving reinsurers without the comfortable signposts that have been used in the past to determine where they are in the (re)insurance cycle. Canada is no exception in this respect. Not only do reinsurers continue to be pressured by low interest rates and
an abundance of capital, there is also truly disruptive pressures from unanticipated sources. Cyber exposures are growing so exponentially that reinsurers can hardly get their heads around defining, let alone ring-fencing, the risk and the accumulation. Shared economies alter or even eliminate the risks to be insured as reinsurers have known them. Automobile is at a crossroads as the automation of driving disrupts daily driving behaviour, and this is happening much faster than anticipated only a few years ago. New and applied technologies are redefining how to access clients — today in personal lines; tomorrow in commercial lines. As more and more devices collect data (Internet of Things), reinsurers are asking how this vast amount of additional information will be used to supplement risk analysis. Big data analytics allow for an understanding of individual risk drivers to an extent unimaginable only yesterday. As a market, are reinsurers ready to rise to these challenges? While some aspects of the insurance industry will remain traditional for some time, only rapidly developed custom or innovative solutions will ensure it is not “Uber-ized.” Listening to client needs and offering full co-operation are required more than ever. As changes emerge, and innovation becomes commonplace, collaboration between primary risk carriers and reinsurers will have to extend towards innovation and digitalization. From a Canadian reinsurance perspective, risk taking has just become more multi-dimensional.
Meet the HSB BI&I Specialty Lines Claims Team Jose Landrove Claims Manager, Specialty & Reinsurance Lines “The primary goal of our team is to make a difference - every customer, every claim, every time. We set high standards to ensure clients receive an exceptional level of service and expertise.”
Moya Campbell
Brenda Fletcher
Minnie Cho
Claims Adjuster
Claims Adjuster
Administrative Adjuster
As a leader in providing risk solutions to the Canadian insurance industry, The Boiler Inspection and Insurance Company of Canada (HSB BI&I) understands how vital their services are to its clients. Continuously striving to improve and deliver results that facilitate easy management of high claim volumes, HSB BI&I’s Barbara Amodeo, AVP Claims, is pleased to introduce her dedicated team of professionals, responsible for personal lines product claims. HSB BI&I personal lines products provide equipment breakdown coverages for homeowners through our partner companies. Home Systems Protection offers homeowners a broad spectrum of insurance for household equipment. Service Line covers failure of homeowner-owned, exterior underground water and sewer piping, electrical and data lines. The Boiler Inspection and Insurance Company of Canada, a member of HSB Group and part of Munich Re’s Risk Solutions family, provides the industry–leading range of specialty equipment breakdown insurance coverage for business and home. Visit munichre.com/HSBBII
Risk Solutions
Anatomy of a Cat Plan What are the key elements of a best-in-class catastrophe plan? Not only do businesses need to look inward to determine company-specific risks and exposures, but also look outward to see how lessons learned elsewhere can be employed to their advantage. Figures both north and south of the border tell a familiar tale. Organizations need to know how to respond to catastrophe events regardless of where and when they occur to ensure that the reputational risk associated with large-scale catastrophes is mitigated.
Joe Colby
Senior Vice President and Head of Claims, Canada & English Caribbean, Swiss Re
The importance of a well-developed catastrophe response plan was never more evident to Canadian property and casualty insurers than in 2013. In the year of the flood, water devastated widespread areas in southern Alberta and wreaked havoc in and around the Greater Toronto Area (GTA), propelling insured losses from severe weather to record levels. It has been reported that from 1983 to 2008, yearly natural catastrophe losses in Canada averaged about $400 million. Over the next four years, these losses hovered around the $1 billion mark annually, but then came 2013. In early 2014, Insurance Bureau of Canada — citing figures from Property Claim Services (Canada), reported that insured losses from severe weather reached $3.2 billion in 2013. More than $2.6 billion of that estimated total related specifically to flooding in Alberta and the GTA. In the United States, the Insurance Research Council notes that between 2004 and 2011, 39% of homeowners’ premium was spent on Cat claims.
44 Canadian Underwriter November 2015
One of the most critical and worthwhile exercises for an insurer to undertake is to complete a post-mortem following a major event and to use lessons learned from catastrophes to close gaps in existing catastrophe plans. These plans need to be reviewed and updated regularly, always remaining flexible enough to adapt to specific catastrophe circumstances. J.D. Power’s 2015 U.S. Property Claims Satisfaction Survey, released this past March, illustrates the impact that an effective post-catastrophe claims review can have. By applying the lessons learned while handling Cat claims to non-Cat claims, and by putting renewed focus on their property insurance businesses, insurers have been able to increase property claims satisfaction to 851 (on a 1,000-point scale) in 2015, up from 840 in 2014, notes a company statement. “The study shows the significant gains insurers have made in customer satisfaction by applying the lessons learned while handling prior catastrophic losses to all claim processes,” Jeremy Bowler, senior director of the insurance practice at J.D. Power, says in the statement. When looking at the 2013 events in Canada,
Illustration by Guy Parsons/threeinabox.com
POST-MORTEM REVIEW INVALUABLE
there were a number of challenges and lessons learned. Carriers were challenged by significant capacity utilization issues as a result of the sheer volume of claims generated by two significant events occurring so close together and, as such, had to rely heavily on external adjusters in both Canada and the U.S. to manage claims. Adequate resources for a catastrophe event must be lined up beforehand (adjusters and contractors, among others). Insurers with strong vendor partner agreements and relationships, as well as scale, have an advantage in terms of pinning down resources. It is also important to have appropriate and timely liaison with the government post-event when uncovered losses are being funded by governments. In addition, companies need to be aware of policy coverage differences with their competitors and insurers need to ensure that their personnel have adequate media training.
LESSONS FROM AFAR Canada’s p&c insurance industry, as a whole, can learn from catastrophes that occur in other parts of the world. One of this country’s largest catastrophe risks is on the west coast, where there is potential for a major earthquake event. Consider what happened in Christchurch, New Zealand. In 2011, the city experienced a significant earthquake that caused widespread damage, with the impact aggravated by buildings and infrastructure already having been weakened by another quake in 2010. Significant liquefaction affected certain parts of Christchurch, producing around 400,000 tons of silt. Liquefaction occurs when seismic waves cause wet soils to behave like a liquid, resulting in structural damage to buildings and creating significant barriers to reconstruction efforts because of the instability of the soil on which structures are built. A number of lessons learned in New
Zealand can benefit Canadian insurers. Surprises do happen. The loss experience from Christchurch reveals that liquefaction can become the dominant loss driver, and should there be a quake in Vancouver, the impact of liquefaction is potentially worse given the population density and property values on the west coast. In Christchurch, the staffing for many insurers was too lean and training happened “on the job.” In an earthquake event, engineering consultants are a critical resource and the New Zealand event demonstrated that these resources were in short supply. That experience also showed the length of time to repair quake-affected buildings structurally resulted in longer than expected business interruption and additional living expense claims.
ALL-PURPOSE PLANS Whether the catastrophe event relates to flood, earthquake or some other cause,
We’re going places. Let’s move forward together. For over 50 years, we’ve helped insurance professionals like you grow their businesses. Partner with us for travel insurance that’s easy and convenient. It’s worth it to sell TuGo™ Travel Insurance!
1-855-929-TUGO
LET’S GO
partner.tugo.com
TuGo is a registered trademark of and is administered by North American Air Travel Insurance Agents Ltd. d.b.a. TuGo
November 2015 Canadian Underwriter 45
there are a number of best practices, if executed well, that should increase the opportunity for insurers to successfully manage a catastrophe event. An insurer needs to make sure its business continuity plan (BCP) dovetails with its claims catastrophe plan. An internal catastrophe co-ordinator (or a small focused team) possessing necessary skills and experience should be appointed. Team members will deal with varied technical, logistical and customerrelated challenges, as well as daily and weekly debriefings to ensure relevant issues are addressed in real time to make certain the unique nuances presented by a catastrophe are being addressed effectively and in a timely manner. Training of employees, both inside and outside of the company’s claims department, including temporary staff, is vital. Catastrophe-specific guidelines and scripts and loss scenarios depicted in the training material can be very effective in ensuring that claims staff handle claims consistently. Insurers that execute well with a comprehensive claims-handling on-boarding program will stand out if Swiss Re claim reviews and benchmarking exercises completed over the last couple of years are any indication. Companies should consider using non-claims personnel — such as underwriters, marketing people, agents, brokers and others with some knowledge or experience working with policy coverages — for emergency claims response. They can be a tremendous resource to a claim department and can help underpin the capacity shortfall that exists with many catastrophe events. Other considerations include the following: • vendor selection and management is key, both inside and outside of the area affected by the event; • companies need to ensure they have an acute understanding of claimshandling capacity; • reserving guidelines that are eventspecific should be considered, ensuring that company management and actuaries are aware of reserving practices 46 Canadian Underwriter November 2015
unique to the individual Cat event; and • companies should prepare hard copy catastrophe binders or have memory sticks with a copy of their BCP, claim guidelines, policy wordings, vendor lists with contact information and any other expert-relevant information should infrastructures be impacted during an event. Adjuster licensing is another consideration if the plan contemplates bringing in resources from outside of the province(s) where the event takes place. Companies should be prepared to discuss with the regulatory authority responsible for licensing should the need arise to ensure dispensation is given to
use unlicensed adjusting personnel, while catastrophe co-ordinators must consider their claim guidelines and how they should be altered to fit the event. In addition, companies should consider building loss scope and estimating training for key catastrophe claims field staff to control building damage claims and to prevent building loss estimates from escalating; negotiating flat fees and implementing short-form reporting with external vendor partners to help mitigate adjusting expenses, reduce the shelf life of a claim and improve customer service with faster turnaround times; ensure that file reviews and re-inspections during and after an event are a staple of the process to make certain there is compliance with best practices; and carry out post-event customer surveys to measure
how customers viewed their claims experience.
SECURING SUPPORT In Canada, earthquake events present unique claims-response challenges not previously experienced by Canadians. Adjusters should be trained to recognize existing laws relative to the demolition of repairable structures, as well as have a comprehensive understanding of building codes and regulations. Insurers, for their part, should consider securing retainers or agreements with engineers, architects, contractors and other related experts from jurisdictions that have experienced large-scale earthquakes that could help with responding to a Canadian quake event. Catastrophe response in a hyper-linked world creates challenges and opportunities for insurers. With tech-savvy policyholders ready and able to take to social media when their claims expectations have not been managed or met, organizations are fast realizing the importance of social media in their catastrophe response plans. It is critically important to actively monitor social media and push out information to help with demystifying concerns or issues being expressed on social media. Media enquiries create significant reputational risk and potential brand damage if not handled well. As such, companies should ensure a single point of contact with media and embed media training with personnel who are involved in responding to the intense media coverage that often occurs in the days and weeks following an event. Any catastrophe plan must be regarded as a living set of best practices that can be revisited and tweaked based on lessons learned from each event. Effective catastrophe claims management with best-in-class people, processes and technology can mitigate claims leakage and strengthen an insurer’s reputation and brand. In addition, this approach allows a company to deliver on its promise to customers in a timely and well-executed way.
Canadian Insurance Claims Managers’ Association / Canadian Independent Adjusters’ Association United & Committed Leadership through - Education • Professionalism • Communication
CICMA/CIAA Ontario Chapters’ 49th Annual Joint Conference
Technology Bytes Insurance
Tuesday, February 2, 2016 Metro Toronto Convention Centre, Toronto, Ontario Registration 8:00 a.m. • Seminar 8:30 a.m. Reception and Lunch 12:00 p.m. Featuring an open forum led by our expert panelists covering disruptive technologies and potential new exposures affecting the P&C Industry.
James E. Dunn, Blouin Dunn LLP Chris Giffin, Giffin Koerth Forensic Engineering Paul Hancock, Crawford & Company (Canada) Inc. Brian Rosenbaum, Aon Reed Stenhouse Keynote Speaker – Jesse Hirsh, Futurist,
Broadcaster & Technologist
Luncheon Entertainment – Graham Chittenden,
Corporate Comedian
CICMA
Delegate Registration Fee: Price: $215.00 — CIAA/CICMA Members Price: $245.00 — Non Members register early - space is limited tickets will not be sold at the door.
RETURN WITH CHEQUE PAYABLE TO: CICMA/CIAA JOINT CONFERENCE to: Canadian independent adjusters’ association, 5401 eglinton ave. W., suite 100, etobicoke, oN m9C 5K6
Name: _________________________________________________ CompaNy: _____________________________________________ address: ______________________________________________ City: __________________________ postal Code: ___________ e-mail: ________________________________________________ phoNe: ________________________________________________ Fax: ___________________________________________________ please indicate affiliation:
CiCma ❏ Ciaa ❏ other ❏
Opinion/Analysis
Fuelling Discontent
William Star
President and Chief Executive Officer, Trillium Insurance Group Inc.
What is driving the increase in automobile insurance premiums in Ontario? Fraud and legal costs are two ready and relevant answers. The provincial government must move beyond tinkering with the current no-fault system to a definitive change in direction to ensure these costs are controlled. For many years, the automotive industry has improved the design and construction of passenger cars to protect occupants and reduce collisionrelated deaths and injuries. Despite the advances, however, statistics show that there is a greater percentage of injuries per mile driven now than in the past. There has never been a serious study to determine if the increase in the number of injury claims is the result of the frequency of accidents or vehicle design. It does appear that minor in-
48 Canadian Underwriter November 2015
jury claims have risen at a greater proportion to serious claims. It also appears that serious claims are investigated in greater detail than minor claims, with the latter being dealt with on a casual basis under accident benefit coverage.
MORE MINOR INJURIES, YET SAFER VEHICLES? If the effort to improve vehicle design has not reduced injuries, what other factors are contributing to the increase in minor injuries? In general, minor injuries are settled quickly under accident benefits and under current rules. In the past, under the tort system, injuries had to be proven and were not paid quickly. Also, lawyers tended not to give much attention to minor injuries since evidence was required to prove liability and the loss sustained had to be proven in great detail. Because losses were not settled quickly, this demanded an investment of both expense and time. Only injuries that were obvious could be justified. A review of the last 60 years will explain how the insurance industry has arrived at the present. In the early 1950s, auto accidents were few and far between — or so it seemed. Perhaps more likely is that automobile accidents were just as
“Get all the riGht connections!”
2016
ontario insurance Directory this outstanding directory is your personal address and telephone book dedicated solely to the ontario insurance industry… find the company contacts you need immediately! Used on a daily basis by all segments of the industry — the o.i.D. is the Undisputed source for insurance professionals to make contact with companies quickly and easily.
The coil bound O.I.D. contains: • 400+ pages of information • 2,200+ company listings
• 130+ advertisers • 10 key industry sections:
• Insurance Companies / Wholesalers • Restoration Services • Brokers • Engineers / Accountants • Independent Adjusters • Bodyshops / Collision Repair • Appraisers • Insurance Industry Associations • Rehabilitation Services 2016 ontario insurance Directory: $59.00 each (plus $5.00 shipping & handling plus applicable taxes)
Order online:
www.bit.ly/oidorder Or call 416-510-6840
Completely Updated for 2016- over 10,000 changes!
By using unlicensed clinics, it is easier to build claims under no-fault than it was under the tort system. More than 40% is now allocated under no-fault for legal fees, a concern that certainly existed under the tort system, but that has since worsened.
frequent as today, but people did not claim unless injuries were serious. Compensation was not generous, injuries had to be proven and insurers did not settle claims without sufficient proof. Since lawyers in Canada and the United States did not advertise, there was no market for so-called “ambulance chasers.” No-fault coverage did not exist and serious injuries were dealt with in the courts. So what caused the changes being experienced today? Not only are cars built safer to prevent injuries, people on average are healthier, hospitals are better equipped to deal with injuries that do occur and more drugs are available for treatment. All that said, the change in attitude is the result of several reasons, not any one.
NON-VEHICLE-RELATED DRIVERS FOR HIKE IN CLAIMS Years ago, the law society in the U.S. decided to allow lawyers to advertise. With most hospitals south of the border being private, it appears that automobile claimants were seen as an excellent source of income. In light of the potential return, lawyers could order every available test, supporting the view that their clients were receiving necessarily comprehensive and excellent care. When general expenses become larger, special awards are also apt to increase. Although hospitals in Canada are not private, some clinics certainly are. In Ontario, many clinics are not licensed or approved as health providers, allowing for conditions in which fraud can flourish. 50 Canadian Underwriter November 2015
Before no-fault insurance was introduced in Ontario, a study carried out in 1986 considered, among other issues, the availability and cost of automobile insurance. The one item that stood out was the high fees paid to lawyers, which represented a high percentage of injury payments. The conclusion arrived at was that simple injury claims could be dealt with by insurance adjusters without regard to fault. In this way, the high legal fees could be avoided in such claims. Accident benefits were introduced with minimal benefits which, over the years, have increased. This was the beginning of no-fault, prompting clinics to spring up and take advantage of this newfound income. With lawyers also given the authority to advertise in Ontario, yet another new form of income was created. Among other things, paralegals — initially, not licensed — began negotiating with insurers on behalf of people who were in auto accidents. (The law society later became involved and paralegals are now required to operate under the direction of lawyers.) Being able to represent injured people at mediation hearings and arbitrations fuelled growth of additional law firms. Following the U.S. lead, some laws firms in Ontario became busy enough that they began sharing clients with smaller firms that did not advertise. By using unlicensed clinics, it is easier to build claims under no-fault than it was under the tort system. More than 40% is now allocated under no-fault for legal fees, a concern that certainly ex-
isted under the tort system, but that has since worsened.
NEED FOR CHANGE IN DIRECTION Over the past 30 years, the Ontario government has repeatedly made changes to no-fault in an effort to improve benefits and control costs. However, the government has failed to accept that the system is not working and changes will not eliminate fraud and growing legal fees. Ontario should follow the lead of many U.S. states that returned to the tort system to control costs and reduce fraud. No effort has been made to license all service providers under no-fault. And with advertising being used more and more by law firms, encouraging claimants to extend their pursuit for higher damages, costs could continue to rise. With new ways to obtain money from corporations continuing to grow and develop, lawsuits related to all products, not just automobile insurance, could increase in step. In the mid-1980s, product and general liability insurance became costly for corporations and the market was limited. Ontario has much greater problems than the cost of automobile insurance, and mandating insurers to reduce rates without the government controlling other costs, is not the answer to fixing a broken system. The two main contributors to rising insurance costs are fraud and legal costs; these must be controlled. These two contributors will continue to cost Ontario consumers more each year until the provincial government takes definitive steps to deal with them.
Recent Insurance Press Releases featured on insPRESS.ca AssessMed Announces the Addition of Dr. Max Kleinman to Their BC Roster Oct 29 – by AssessMed Inc. Meet Burchells LLP, ARC Group member [VIDEO] Oct 29 – by The ARC Group Canada | Le Groupe ARC Canada CRU Adjusters Answers Industry Call to Action Recently on the Ground In South Eastern US Oct 28– by CRU - Catastrophe Response Unit ServiceMaster Restore of Oakville Raises the Roof and $5,000 in Support of Habitat for Humanity Oct 27– by ServiceMaster of Canada Limited Whistle while you work! - FREE Albums, Playlists, Songs and Music Stations Tuned to you, Courtesy of CHES Special Risk Oct 26 – by CHES Special Risk CRU Adjusters Ready for El Niño Oct 23 – by CRU - Catastrophe Response Unit High End Homeowners Insurance Provided by CHES Special Risk Inc. Responds to the Increase in Construction Costs Oct 22 – by CHES Special Risk APRIL Canada is proud to launch a new manufacturing product Oct 20 – by April Canada James Greenan, NEW Vancouver Branch Manager for On Side Restoration Oct 14 – by On Side Restoration Services Ltd. The Terrorism Coverage Gap: Is your business protected? Oct 14 – by Ironshore Canada Ltd. Own it at the IBAO Convention with FIRST Insurance Funding of Canada Oct 14 – by FIRST Insurance Funding of Canada Landlord Insurance Provided by CHES Special Risk Inc. Supports the Airbnb and Rental Market Oct 14 – by CHES Special Risk
The 2015 RIMS Canada Conference: An interactive learning experience [VIDEO] Oct 14 – by The ARC Group Canada | Le Groupe ARC Canada APRIL Canada is proud to announce the addition of a new Commercial Marine product line to its portfolio Oct 14 – by April Canada AssessMed Insurance Industry Seminar Knocks It Out of the Park! Oct 13 – by AssessMed Inc. See Payment Solutions Differently at the IBAS Convention with FIRST Canada Oct 13 – by FIRST Insurance Funding of Canada CHES Special Risk Inc. Supports the Construction Industry with a Wide Array of New Capacity and Product Mix Oct 7 – by CHES Special Risk ServiceMaster Restore of Fraser Valley Says Thanks and Raises $5997 for Matthew’s House Oct 6 – by ServiceMaster of Canada Limited CEP Ottawa welcomes new Civil / Structural Engineering Forensic Investigator Oct 6 – by CEP Forensic Engineering Inc. Growth in direct premiums of receivables insurance advances 8% in first half of 2015 – Oct. 8 free trade symposium aims to build more awareness Oct 5 – by Receivables Insurance Association of Canada Pario Engineering & Environmental Sciences Enhances Expert Services and its Management Team Oct 1 – by SCM Insurance Services SPECS Limited – Director of Sales and Marketing Oct 1 – by SPECS (Specialized Property Evaluation Control Services) SGI CANADA Obtains CSIO Certification for Commercial Lines eDocs Oct 1 – by CSIO (Centre for Study of Insurance Operations)
To Read the Full Story for Each Press Release visit insPRESS.ca
TCI on the Rise Recent figures clearly show new opportunities exist for the expansion of trade credit insurance in Canada. With the positive growth trend, which outpaces what is happening worldwide, companies need to be aware of the current conditions, developments and opportunities.
Vice President, Trade Credit, PBL Insurance Limited
52 Canadian Underwriter November 2015
LOSSES ARE TRENDING UPWARD Figures from Canada’s nine licensed trade credit insurers, including the Crown Corporation, Export Development Canada (EDC), show a marked increase in incurred losses on Canadian policies. Numbers posted by the Office of the Superintendent of Financial Institutions and EDC indicate that the net premium/loss ratio for Canadian insureds (after reinsurance and adjustment fees) hit 105% in the first half of 2015, after more than $111 million of claims were incurred. This is just $17 million less than for all of 2014. The three largest insurers by size had loss ratios of 122%, 124% and 85%, respectively. Contributions to these numbers include the insolvencies of U.S. Steel Canada and Target Canada, the commodity and currency crosswinds in global trade, and the political risks blowing out of Russia. Insurers report an increase in non-payment notifications in China and claims being filed across a number of important trade sectors throughout the Americas, especially within Brazil, Mexico and Canada. It should be noted that losses can materialize as long as six months or more from the date of the event when they are incurred.
Illustration by Guy Parsons/threeinabox.com
Russ Parker
With more than 10,000 Canadian companies purchasing trade credit insurance (TCI) as a specialist insurance line, the market is seeing strong growth. Consider that direct premium volumes are up 8% for both 2014 and for the first half of 2015. The upward trend in premium volume is well ahead of Canada’s growth rate and above the average growth rate for TCI worldwide. It is currently a buyer’s market, with fierce rate competition among carriers. Rates have trended down for the past five years, while coverage levels are above those of the 2007 peak. Credit insurance protects against the nonpayment for sales to business customers (buyers) as a result of insolvency or protracted default. Additional cross-border political risks are also covered. Political risks can be defined as when political events or government decisions within or between the country of the seller, or the buyer of the goods or services, prevent contract performance or payment. This is essentially a financial risk on accounts receivables, which typically represent 40% of the balance sheet. This asset is increasingly valued as the engine of cash flow and working capital, a principle source of funding and profitability.
Canadian domestic claims are understated, since international insurers also underwrite risks within Canada for customers located outside of the country.
PRICING OUTLOOK Pricing and terms offered in the marketplace are not indicating any marked tightening in underwriting at this point, but vigilance is increasing. Andreas Tesch, president of the International Credit Insurance & Surety Association (ICISA), a private sector trade body whose members had more than US$8 billion in premium in the last full reporting year, noted in a press release this past June that “the drop in average premium rate demonstrates the fierce competitive environment ICISA trade credit insurance members operate in.” Tesch further reported that “members’ results continue to improve and exceed pre-crisis levels, with a 34.6% higher premium income and 29.1% higher insured exposure.” EDC, Canada’s largest credit insurer, had a 31% higher average premium rate in 2010 and premium volume 18% higher than it was at year-end 2014. The Canadian private carriers tend to track slightly below this average rate.
MARKET CHANGE, NEW ENTRANTS More new carriers and one or more managing general agents (MGAs) are expected to be operating in Canada within the next year or two. High levels of activity are taking place in the Lloyd’s market for traditional trade credit, specific transaction (single) risk and the rapidly growing supply chain finance channel. Lloyd’s has added a huge boost to global capacity and has more than 47 participants offering TCI through licensed brokers. For example, Red Rock Insurance Services is a Canadian MGA for Kiln, a Lloyd’s syndicate. In addition, Zurich Canada commenced underwriting in Canada in late 2014 and more recently, Great American has commenced underwriting trade credit in several provinces within Canada. There is more product differentiation
insBlogs
than ever: some single carriers can offer traditional all-sales cover, named account cover, single risks, excess of loss, political risks and supply chain finance products. Coverages are emerging for new business-to-business exchange paymenttype risks, as well as for the underinsured agricultural sector and, significantly, for the energy sector to cover additional elements of mark to market risks.
SME SEGMENT Insurers in Canada have hit hurdles in cost recovery and distribution when targeting the small business segment. Technology is improving dramatically. Catching smaller growing companies is important for most specialist carriers. The SME segment is generally looking for working capital solutions as well as risk transfer.
insBlogs
Insurance Blogs hosted by Canadian Underwriter
Recent Blog Posts Featured on
insBlogs.com
Insurance Blogs hosted by Canadian Underwriter ONCA: No Laches in Loss Transfer by Daniel Strigberger – Nov 12
Redefining Boundaries: The Global C-Suite Study by Christian Bieck – Nov 9 Birthday Party Fall from Fire Truck not an “accident” by Daniel Strigberger – Nov 6 Resilience by luck or by design by Glenn McGillivray – Oct 30 Digital Wallets and the Mobile Consumer by Catherine Smola – Oct 29 Focus on reducing losses associated with sump pumps by Glenn McGillivray – Oct 19 Rough road may await Ontario auto insurers by Peter Morris – Oct 19 Ontario Rate Approvals Fall in the Third Quarter by Willie Handler – Oct 16 New Work: Stairway to Heaven or Race to the Bottom? by Patrick Vice – Oct 15
November 2015 Canadian Underwriter 53
NEW PROVIDERS COULD DISRUPT Annual Credit Insurance Premium, Average Premium Rate for EDC Annual Credit Insurance Premium, Average Premium Rate for EDC 150
150 130 Gross Premium $Millions Gross Premium $Millions
110 90 70 50 30
136
124
114 114
110 110
90 70
0.24 0.24
50
0.22 0.22
0.21 0.21
0.20 0.20
105 105
0.450.40 0.400.35 0.350.30 0.300.25
0.19 0.19
30
0.250.20 0.200.15 0.150.10
10
10 -10 -10
124
0.500.45
0.100.05 2010 2010
2011 2011
Source: EDC Annual Report 2014
2012 Year 2012
2013 2013
2014 2014
Average Premium Rate % Average Premium Rate %
130 110
0.50
136
0.050 0
Year
Source: EDC Annual Report 2014
Finance companies such as Bibby Financial and other asset-based lenders are providing funding solutions enhanced with separate credit insurance in a segment where larger banks have been less aggressive in deploying their capital.
significant information cost savings can be made. Pricing for detailed written credit decisions on large exposures or simple “Yes/No” coverage written for smaller limits is often less than from traditional information agencies.
TECHNOLOGY-DRIVEN CHANGE Companies such as Euler Hermes, Atradius and COFACE are offering complete online toolboxes for customers. For example, beyond general policy maintenance and filing capabilities, the portals offer module choices with multiple filters for information and custom reports. Drill-down menus enable multiple views of risk decisions and risk ratings for buyers (on a portfolio, group or individual level) and countries, risk acceptance and policy performance. These platforms are enabling more customers to extract a lot more value and transparency from their insurers. Some reporting tools can be enhanced to work within an insured’s receivable management system to calculate cover and exposure in real time and to generate alerts. Detailed cover reports can be generated on receivables that are being financed, as well as for financial reporting and risk management. Currently available technology means 54 Canadian Underwriter November 2015
Following developments in modernizing the general property and casualty insurance arena, several non-insurer“software as a service” companies are growing in influence in the TCI market. They are enabling new entrants to rapidly build scale and efficiency in risk management and complete policy management platforms. While insurers and MGAs are increasingly attracted to specialist risk classes, such as trade credit, for higher returns and diversification, several brokers are developing their own software platforms with enhancements. For example, RKH in London has pioneered a capacity reservation website for structured credit and political risk solutions. Corporates and financiers increasingly want their own modules that are capable of separating credit risk data systems, insurance and receivables finance functions, and then integrate them with their enterprise risk management systems. Others want to control the degree of dependency on any one insurer’s system and be able to add to all of them. Specifically, corporations are aiming to arrive at very precise total cost of risk propositions priced into the point of sale they can build into the supply chain.
EVOLUTION
Insurer databases consist of multiple source inputs, including their “closeto-purchaser” risk analysts operating locally in many countries. In addition, important delinquency information is continuously supplied by the vast pool of insured customers that report late payments and file claims to help sellers avoid potential loss.
Real-time dynamic information may also lead to more efficiency throughout the TCI reinsurance market since there is limited actuarial data of true capacity usage by insureds versus total potential exposure on the insurers’ books. Pricing closer to actual usage could free up capacity and reduce premium rates further. This market is well on its way to evolving more dynamic pricing models and service platforms. These could serve to attract new capital to the market and reduce costs further. Creating new opportunities from the important trade receivables asset pushes deep into the finance and supply value chain. This trend is very positive for expanding the market and should deliver new premium volumes.
MARK
YOUR CALENDARS MONDAY
TUESDAY
2016
2016
FEB. 29
MAR. 1
14TH ANNUAL
Insurance-Canada.ca
Technology C O N F E R E N C E
MONDAY, FEBRUARY 29, 2016
TUESDAY, MARCH 1, 2016
METRO TORONTO CONVENTION CENTRE
METRO TORONTO CONVENTION CENTRE
“Technology: A Two-Edged Sword”
“Brokers on the Digital Expressway”
Technology offers operational and strategic advantages. However, the same tools can also introduce serious, unexpected consequences; or provide new, previously unthinkable opportunities. This is the two-edged sword of 21st century technology. Implementation has always required internal staff and process adjustments. More significantly, digital innovation can require a re-definition of an organization’s strategies and business model. The alternative is to watch existing and new competitors use the same technology to support disruptive strategies. At the 2016 Insurance-Canada.ca Technology Conference, practitioners, analysts and suppliers will share their experiences to help you mitigate adverse consequences and exploit new opportunities.
Brokers are competing strenuously. They understand all too well the need to out-market and outsell the competition; to offer competitive products; and to excel at customer service. While brokers are continuously enhancing their positions, the competition is more aggressive than ever, with insurers embracing multichannel strategies and doubling down on Big Data and sophisticated analytics tools for marketing and service delivery. The 2016 Insurance-Canada.ca Broker Forum will provide information on leading best practices in each of the major functional areas, to help brokers better assess if they are on the right course for success as they travel the digital highway. The Forum faculty will represent broker leaders; innovators from insurer partners; subject matter experts in these disciplines; and representatives from key providers of technology to this community.
Learn more at www.insurance-canada.ca/ictc
Learn more at www.insurance-canada.ca/icbf
If you are interested in sponsorship opportunities for these events, please contact: Kathryn Bertsch
Doug Grant
Patrick Vice
Business Development Manager 416-244-4361 kathryn.bertsch@insurance-canada.ca
Partner 416-921-7756 doug.grant@insurance-canada.ca
Partner 416-540-3008 patrick.vice@insurance-canada.ca
Patti Ristich
Partner, R2 communications Inc.
The unprecedented growth of mega-cities and the changing environment mean the Cat risk business is growing. With that, risk modelling — fuelled by lessons learned and the availability of data — could serve as an increasingly important tool for how insurers and reinsurers calculate expected loss.
ever-evolving risk environment and the everincreasing capacity to collect, analyze and use data. “The Cat risk business is a growth industry,” Hement Shah, co-founder and chief executive officer of Risk Management Solutions (RMS), said during his keynote address at the recent Canadian Insurance Accountants Association (CIAA) annual conference in San Francisco. “We are seeing the unprecedented growth of mega-cities. If natural or man-made disasters occur, they have a profound effect,” said Shah, telling the meeting’s 150 delegates that the San Francisco Bay region, for example, is home to 8 million people and more than $2 trillion in property value.
Why has catastrophe modelling become so pervasive? Simply put, historical loss records are insufficient. Models provide a representation of the frequency and severity of complex physical phenomena. And with this type of detail, models allow for the calculation of future expected loss and the quantification of uncertainty. Quantification has always been top of mind for property and casualty insurers and reinsurers, but is perhaps even more so today given the
ASSETS TO SYSTEMS
56 Canadian Underwriter November 2015
Of course, consideration of potential damage and costs are beyond any one area. “The interconnected world poses a huge risk. Some of the biggest losses in the Tohoku earthquake were not in Japan, they were in global supply chains,” Shah pointed out. As a vital supplier of parts and equipment for things like computers, electronics and automobiles, Japan’s inability to deliver to global customers was crippling. Shah called it a “paradigm shift” from assets@
risk to systems@risk. “This can mean everything from global supply chains and logistics to networks and digitalization, to cyber risks and IP (Internet protocol) and reputation,” he said. Devastating events such as Hurricane Katrina in 2005 — among the most costly catastrophes logged by insurers, and resulting in damages of more than US$150 billion — uncovered the benefits of Cat modelling, but also revealed its flaws. But the lessons learned only helped to make Cat models better. “Models now calibrate storm surges (water damage). Historically, the major peril was wind. There is a host of factors that were previously overlooked, such as economic demand surge, when excess demand leads to price increases in materials and labour,” Shah said. Lessons were also learned from the almost US$3 billion in claims data for Hurricane Irene in 2011 and Superstorm Sandy a year later in 2012. Providing the backdrop to better manage coastal flood risk, claims data from the two events revealed basement-level property and contents damage contributed to higher losses, especially in business areas. Today, companies are now able to more accurately quantify the effect on flood loss at the underwriting phase.
IN THE MAINSTREAM Cat modelling has come a long way in a short period of time, Shah suggested. “Modelling has moved rates, initiated deals and is now firmly in the mainstream. There’s a saying that, ‘All models are wrong,’ but some are useful,” he said. “It is all data-driven,” Shah pointed out. “Models reflect the latest scientific and engineering assessments of Cat risk. The technology has allowed us to capture the unique risk characteristics of a region,” he told attendees. David Crozier, president and chief executive officer of Everest Insurance Company of Canada, said during an interview “data does not lie. Models are critical to understand and mitigate risk. This exponential increase in data shortens the cycle time on products and gives insurers a handle on any accumulations.”
ON PACE The sophistication of models can bolster insurers to extend coverage, not just avoid risk. “The fact is, most of world’s economy is uninsured. Models give useful information that can keep the industry more relevant. When a business is insured and suffers a loss, it is way more resilient and recovery is quickest,” Shah said. “Insurance monetizes risk within the economy and via market forces, and reduces risk over time by creating incentives to mitigate risk (loss prevention),” he explained. Despite the benefits, insurance as a share of global gross domestic product (GDP) is not keeping pace. The global industry experienced the highest insured catastrophic losses on record in 2011, but the claims paid were less than 30% of the underlying losses.
The sophistication of models can bolster insurers to extend coverage, not just avoid risk. “The fact is, most of world’s economy is uninsured. Models give useful information that can keep the industry more relevant.” That is alarming to Shah, who said he feels the global p&c industry has room to “triple its value — but that can only be reached by innovation and pushing through obstacles, many of them systemic.” Rather than just expanding coverage, Crozier said, the focus should be on tailoring coverages that are more meaningful to clients. “Individuals or groups that share the same risks can benefit from coverages that speak directly to them. Credible data can make that happen,” he suggested.
TAKE THE LEAD Shah noted that insurance could play a role in “depoliticizing climate change,” pointing out that modelling can calm a
volatile issue by providing impartial data. As an example, he suggested considering hurricanes, where the main peril historically has been wind damage. Losses attributed to wind were typically 80% versus 20% to water damage. As sea levels rise as a result of climate change, water damage during a storm surge in certain coastal areas now model at 50%. That is something underwriters and reinsurers need to know. Beyond catastrophes, where does the hot button of cyber risk fall into risk modelling? Regarding cyber risk as part of the new economy that must be serviced, Shah noted, nonetheless, that the risks are not well-understood, making it tough to price cyber. “The data is limited as companies do not want to publicize the security breaches. And if they do, the loss is not disclosed. When the market is better able to comprehend cyber risks, model them and manage accumulations, cyber could really take off,” he suggested. Crozier concurred. “How do you manage the contagion when a breach can spread from insurance to reinsurance, to your investment portfolio, your share price, to your reputation? It can morph in so many ways that putting a dollar figure to it is a challenge,” he said. “Models are critical,” Crozier argued. “When a risk modeller comes up with the ‘absolute worst-case scenario’ and ‘the best-case scenario’ for cyber, the market can say, ‘that falls within my risk appetite’ and start to write business. Cyber risk is so vast that the axiom is, ‘You can’t write it, if you can’t understand it,’” he said. “Human beings will be the architects of an inevitable digital catastrophe, staggering in scope since it knows no borders,” Crozier said. “We can model the path and fallout from a windstorm, but human behaviour is unpredictable.” Advised Shah, “The industry can combine capital and know-how, along with data analytics, to develop new solutions and expanded coverage. It is an increasingly risky and interconnected world and insurers need to turn risk into opportunity.” November 2015 Canadian Underwriter 57
MOVES & VIEWS
UPCOMING EVENTS: FOR A COMPLETE LIST VISIT
www.canadianunderwriter.ca
AND CLICK ‘MY EVENTS CALENDAR’ ON THE HOME PAGE
1
David Marshall [1], currently president and chief executive officer of Ontario’s Workplace Safety and Insurance Board (WSIB), has been appointed as advisor — on auto insurance and pensions — to Ontario’s finance minister. The appointment, which takes effect February 1, 2016, is for a one-year term, with an opportunity to renew for another year. Marshall’s term with WSIB ends January 30. As part of Marshall’s advisory role, he will be charged with providing recommendations to the provincial government on additional ways to reduce auto insurance costs, as well as guidance on implementing the Ontario Retirement Pension Plan.
2
Zurich Insurance Group has appointed Paul Horgan [2], the company’s head of group reinsurance since 2012, as its new chief executive officer for global corporate in North America (GCiNA). Based in New York City, Horgan succeeds Daniel Riordan, who left Zurich to “pursue professional opportunities outside of the company.” Horgan will report to Thomas Huerlimann, Zurich’s CEO, global corporate. He previously served as GCiNA’s chief underwriting officer and also worked at Liberty Mutual Insurance Company. 58 Canadian Underwriter November 2015
3
Co-operators General Insurance Company has announced the company has purchased Chatham, Ontario-based brokerage Browning Insurance Ltd., which provides personal and commercial insurance as well as retirement and investment planning services. Existing insurance coverage will remain in effect, but as policies expire, clients will be offered comparable policies from The Co-operators.
4
Chris Floyd [4], chairman of the Insurance Brokers Association of Ontario (IBAO), is the inaugural winner of the Danny Craig Spirit Award, named after past president Danny Craig, who passed away in 2014. Presented at IBAO’s recent awards of excellence, the award “is given to a broker who has displayed commitment to the betterment of the broker channel and their community, and has built and strengthened the broker brand by representing the profession with integrity.” Among the other awards of excellence recipients are Morison Insurance Brokers Inc. & R.A. Bennett Insurance as IBAO’s Brokerage of the Year; Dario Battista of iSure as Innovator of the Year; the Insurance Brokers Association of Durham Region as Affiliate of the
1
2
8b
9
Year; and Crystal Underhill of Reith & Associates Insurance and Financial Services Ltd. as Young Broker of the Year.
5
XL Group plc has named Robert Peretti as XL Catlin’s senior vice president, head of broker and client management in the Americas, which includes Canada, the United States, Bermuda and Latin America. In his new role, Peretti will lead a team of regional executives and customer distribution leaders. He has previously worked for AXIS Specialty (U.S.) Services, Zurich, Marsh and The Hartford.
6
Commercial insurance carrier CNA Financial Corporation has
named Mark Lucas [6] as its vice president, property and inland marine, effective October 19. Working out of Toronto, Lucas “will be responsible for driving profitable growth of CNA Canada’s property and inland marine business through stronger broker relationships,” reports CNA. He previously worked for XL Catlin and ACE INA.
7
Telus Corporation has announced a vehicle monitoring service that allows commercial customers to qualify for a discount on auto coverage with Intact Insurance. The company has teamed up with Intact Insurance and Fleet Complete, a vendor of fleet, asset and mobile workforce management products.
MOVES & VIEWS MOVES & VIEWS
of Calgary; Gordon Adams; Robert Cartwright, Jr.; Al Gorski; Leslie Lamb; John Phelps; Michael Phillipus; Frederick Savage; and Lori Seidenberg.
3 4
9 11 have included genpositions eral adjuster, branch manager, Companies using Telus vice president of operations Fleet Tracker with Fleet and Lloyd’s DivisionMy leader. Solution “will qualify for an enrolment discount on their commercial fleet insurance Macdonald Chisholm with Intact Insurance, and Trask Insurance (MCT) can qualify for potential announced in early additional on January thatsavings it will based join proptheirand fleet’s performance.” erty casualty brokerage
6
8
BrokerLink. The terms of the Manitoba-based transaction were not dis-Red River has named closed, notesMutual a statement Rob Hamelynck [8a] from BrokerLink. BrokerLink as vice president, underwritcompanies, subsidiaries of ing and broker relations, Intact Financial Corp., and Lyndon 84 Friesen [8b] as vice include offices serving president, claims.Canada, Hamelynck clients in Atlantic joined the inDating 2011 Alberta andmutual Ontario. as a commercial account back more than 60 years, manager and was MCT has more thanpromoted 110 into commercial lines manager surance professionals in 18 in 2013. Friesen, for his offices. Michael Brien, who part,led has held several senior has MCT over the last 12 management roles at Red years, joins BrokerLink as RiverofMutual. head its Atlantic operations.
5 6
10 12
7 9
Carolyn Snow [7] will lead RIMS as president Thomas Coleman for the 2014 term, [9], former dean of 1. which took effect January Snow, mathematics who has beenatonthe the University of of Waterloo andfora RIMS Board Directors former professor of computer seven years, is currently discience Cornell University, rector ofatrisk management for has been Inc. named the new Humana Sheaspreviously chief officer for servedresearch as RIMS’s treasurer, the Global Risk Institute secretary and director of in Financial Services. The external affairs. The RIMS institute’s 21 members board for 2014 also includes include Insurance Bureau vice president Richard of Canada, Fairfax Financial Roberts, Jr.; treasurer Julie Holdings Ltd.corporate (parent secrePemberton; company of Seaman, Northbridge tary Nowell director Insurance andmanagement OdysseyRe), for of global risk Munich Re Canada, of Intact Potash Corporation Insurance and Desjardins Saskatchewan Inc.; Gloria Group, several banks Brosius;plus Steve Pottle, director and the Canadian Institute of risk management servicesof Actuaries. Its mandate is to at York University; Jennifer deliver research and educaSantiago; Janet Stein, direction programs “that build tor of risk management and risk capacity stimulate insurance at and the University
says Chuck McTague, president of Anderson McSeptember, as an adjuster. Tague & Associates, a familyBourassa previously owned MGA based inworked New as an adjuster in the comBrunswick. In January, Anpany’s He derson Kelowna McTaguebranch. & Associates has 25 yearsit in theexpanding, construcannounced was tion industry, withinexperience adding an office Toronto to in restoration, commercial service the brokers of Ontario project management, and Manitoba. Rayner’s bidding, renovations appointment confirmsand the building maintenance. company’s “commitment to
8
As of January 8, Toronto insurance bro8a ker Jones DesLauriers Insurance Management Inc. (JDIMI) had acquired Whitley evidence-based debate for Insurance and Financial Serits members the wider vices. Whitleyand Insurance has global community.” officesfinancial in Belleville, Ontario and the nearby communities of Trenton, Shareholders Deseronto andof ACE Limited is Stirling. “The acquisition have expected to buildelected a solidfour additional directors to Eastern its presence for JDIMI in board, to approval Ontariosubject and position the firm of US$28.3-billion to its better service their clients, acquisition of The commerChubb with strengthened Corporation. Sheila Burke, cial and personal insurance faculty research fellow at a offerings in the region and Harvard University’s Malcolm new financial services diviWiener Center for Social from sion,” notes a statement Policy; James Cash Jr.,CEO owner JDIMI. President and of The Cash Catalyst LLC; the Shawn DeSantis will lead Lawrence Kellner, a former teams from both companies. chairman and[8]chief Loris Clarke has executive been officer of Continental Airlines named successor to Paul Inc.; and James Zimmerman, Whitley, president of Whitley aInsurance, former chairman chief who willand remain executive officer of Federated during a transition period. Department Stores Inc., are independent directors on Chubb’s board. ACE and Ken Rayner [9] has Chubb joined shareholders have voted Anderson to approve the acquisition. McTague & Associates
12
the Ontario/Manitoba marketGreenan of place, and James to the building [12]team is OntoSide a local support assist brokers withRestoration their surplus Services newtobranch lines andLtd.’s difficult place manager for Vancouver as business,” McTague adds. of October 19. Joining the company in 2011 as a project manager, Greenan The Guarantee was appointed branch of Company manager for Abbotsford in North America 2013. He beganthat constructing has announced Tara single-family homes and Wishart [10] became vicelater became a lead carpenter president of claims for thein the restoration industry. insurer’s Toronto branch on
10
9
11
10
13
Ltd. as its director of busiKernaghan ness development, Central Adjusters Region. “Ken brings areports wealth Mike of experience to Bourassa our com-[11] will behaving joiningheld the firm’s pany, variousnew office Kamloops, British seniorin management positions Columbia, which opened in with insurers and other MGAs,”
December 2, 2013. Having Watson 21 years ofTowers experience in The Company Guarantee’s&claims developed department,has Wishart will be an application, within its responsible for the operations Igloo financial modelling of the Toronto Branch Claims. suite, targeting and She first joined property The Guarancasualty insurers in Canada. tee in 1995 as an adjuster The is designed and application has held roles of increasto help Canadian insurers ing seniority with the com“efficiently use comprehenpany, including, most sive, full-function models for to recently, claims manager help better manage risk is and specialty lines. Wishart a capital based on International member of both the Surety Financial Reporting Standards Association of Canada and in Canada, or on an eco- of the Canadian Association nomic Womenbasis.” in Construction. Follow @CdnUnderwriter on http://twitter.com/CdnUnderwriter
November 2015 Canadian Underwriter
59
February 2014 Canadian Underwriter
57
GALLERY
The Canadian Broker Network held its annual Presidents’ Dinner on September 23 at Stratus Restaurant in the TD South Tower. The broker members of Canadian Broker Network, along with CW Group, were joined in downtown Toronto by several presidents and senior executives of major insurers for an evening of dining and networking.
60 Canadian Underwriter November 2015
GALLERY
Toronto insurance and commercial litigation boutique Gilbertson Davis LLP hosted its Annual Fall Reception at the Albany Club on September 10. Industry friends and colleagues enjoyed an evening of fine conversation and cuisine, with background musical accompaniment provided by the Variante Harp & Flute Duo. Guests at the reception included, among others, claims representatives, adjusters, engineers, accountants and other service providers.
November 2015 Canadian Underwriter
61
GALLERY
The insurance industry showed up in full force in support of JDRF Ride for Diabetes Research on October 2, at the Metro Toronto Convention Centre. As part of the JDRF Insurance Challenge, several teams of five participated in a stationary bike-athon, where each team member rode for seven minutes in a bid to raise funds for diabetes research. With participation from a number of different industry stakeholders, the event was a huge a success. The JDRF Ride is a high-energy and fun event: attendees can truly feel the wall-towall enthusiasm as teams work hard to complete their rides.
62 Canadian Underwriter November 2015
Risk Solutions
Appointment Matthew Jowett Client Company Manager, Western Region HSB BI&I has appointed Matthew Jowett to the position of Client Company Manager – Western Region. He will also be managing relationships with our brokers in Manitoba. Matt joined HSB BI&I in 2012 as Marketing Representative for the Hamilton Branch, then relocated to Calgary as Senior Marketing Representative, supporting Brokers and Client Companies in the Alberta and Saskatchewan markets. Matt has 16 years of industry experience and holds a Diploma in Business Insurance from Mohawk College. The Boiler Inspection and Insurance Company of Canada, a member of HSB Group and part of Munich Re’s Risk Solutions family, provides the industry–leading range of specialty equipment breakdown insurance coverage for business and home. Visit munichre.com/HSBBII
GALLERY
On September 8, XL Catlin held a Product Fair and Reception – Toronto at the St. Andrew’s Club in the city’s downtown core. Attendees were able to enjoy cocktails and hors d’oeuvres while browsing the product tables and meeting with XL Catlin’s Americas leadership team as well as local team members.
64 Canadian Underwriter November 2015
Appointment Announcement
GALLERY
ANATOL MONID The Financial Services Commission of Ontario (FSCO) is pleased to announce Anatol Monid as the new Executive Director for the provincial regulator’s Licensing and Market Conduct Division, effective August 3, 2015. In October 2014, Mr. Monid was named the Interim Executive Director of the Licensing and Market Conduct Division. He has responsibility for divisional strategic planning and regulatory oversight of five of FSCO’s regulated sectors. Some of his other duties included leading regulatory engagement with government officials and industry associations, and acting as the delegate of the Superintendent of Financial Services, issuing regulatory decisions on licensing sanctions and administrative monetary penalties against market participants. Mr. Monid joined FSCO in 2005, where he served as Director of the Market Regulation Branch. In this role, Mr. Monid appeared as a crown witness to present and explain regulatory decisions, he was appointed the Insurance Ombudsman to resolve consumer complaints. Mr. Monid transformed FSCO’s Market Regulation Branch into a leading market conduct regulator by implementing modern supervisory initiatives, reinforced by solid risk-based principles. Prior to joining FSCO, Mr. Monid was a Senior Supervisor with the Office of the Superintendent of Financial Institutions. He also served in a variety of progressive leadership roles in the insurance industry overseeing claims, underwriting, and marketing departments. Mr. Monid served in the Canadian Armed Forces, for both the Reserve and the Regular Army. He is also a member of Royal Canadian Military Institute, the Chartered Insurance Professionals’ Society, and the Institute of Public Administration of Canada.
Financial Services Commission of Ontario
November 2015 Canadian Underwriter
65
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
The Cycle for Wishes team, comprised of members of the insurance industry, cycled from Montreal to Quebec City, ending up at the 2015 RIMS Canada Conference, which was held from September 27 to 30. The efforts of all participants paid off, raising more than $100,000 for Make-A-Wish Canada. Taverne Grande Allee in Quebec City served as the finish line. John Haas, the initiative’s team leader and managing principal for Integro Insurance’s Canadian office, said that in 2011, industry friends and colleagues embarked on an inaugural four-day, 500-kilometre cycle from Toronto to Ottawa, raising $53,000 for Make-AWish®, to kickstart the 2011 RIMS Canada Conference. The 2011 event not only helped grant five kids their wishes, it served as the inspiration to launch the 2015 ride to Quebec City. Speaking to the $100,000-plus raised with the 2015 Ride, Haas commented that, “$100,000 far exceeded our expectations and was only accomplished because of our generous corporate supporters, friends, family members and industry colleagues. I would also like to recognize the outstanding efforts of Meghan McGill from Make-A-Wish®. Meghan was a pleasure to work with and most helpful throughout our campaign. We are looking forward to continuing this tradition and would encourage anyone interested to join us.”
66 Canadian Underwriter November 2015
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
As a warm-up for the 2015 RIMS Canada Conference, which took place this year in Quebec City, Crawford and Company (Canada) Inc. held its annual RIMS Canada Conference dinner on September 26 at Il Bello Ristorante.
November 2015 Canadian Underwriter
67
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
To help kick off the 2015 RIMS Canada Conference, in Quebec City, SCM Insurance Services hosted its annual RIMS Canada Cocktail Party at the MusĂŠe de la Civilisation on September 26.
68 Canadian Underwriter November 2015
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
November 2015 Canadian Underwriter
69
Putting the pieces together.
Events and Seminars Calendar You work hard to protect your clients’ property. Now, it’s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.
CIP Society Events & PROedge Seminars Dartmouth – Understanding Directors & Officers Liability ............................... November 17 Hamilton – Inaugural Euchre Tournament .................................................................. November 19 Toronto – At the Forefront with Anatol Monid ......................................................... November 19 London – CIP Society Olympics ......................................................................................... November 24 London – CIP Society London Knights vs. Ottawa 67’s ....................................... December 5 Toronto – Industry Trends Breakfast with Phil Cook .............................................. January 12 London – CIP Society London Knights vs Saginaw Spirit................................... January 15
Convocations 2015
IIBC – Victoria.........................................November 20 IIM – Winnipeg .....................................November 24 IISA – Calgary.........................................November 25 IINA – Edmonton ................................November 26 IADQ – Quebec ....................................January 10 IIBC – Kelowna ......................................January 14 IIO – GTA...................................................January 21
Keeping you at the forefront of the P&C industry. The CIP Society. MEMBERS BENEFIT. www.insuranceinstitute.ca/cipsociety
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
To help launch the 2015 RIMS Canada Conference in Quebec City, AIG Canada held a cruise down the picturesque St. Lawrence River on September 27. The afternoon cruise offered guests a unique perspective of the beautiful city and the opportunity to meet the entire AIG Team.
November 2015 Canadian Underwriter
71
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
More than 60 companies and organizations providing products and services filled the Exhibit Hall at the 2015 RIMS Canada Conference in Quebec City, held September 27 to 30.
72 Canadian Underwriter November 2015
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
Continued on Page 106… November 2015 Canadian Underwriter
73
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY …Continued from Page 106… Exhibit hall at the 2015 RIMS Canada Conference Quebec City, September 27 to 30.
74 Canadian Underwriter November 2015
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
November 2015 Canadian Underwriter
75
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
The 2015 RIMS Canada Conference was held in Quebec City, From September 27-30. The Conference Program included a robust line-up over the span of the event including keynote address, by David Suzuki, titled ‘The Challenge of the 21st Century: Setting the Real Bottom Line’. Amongst others, some of the Plenary Sessions included, ‘Climate Change: its impact on the Insurance Industry and How Corporate Responsibility Can Make A Difference’; and ‘A Broker, An Underwriter and A Risk Manager
76 Canadian Underwriter November 2015
Walk into a Room’; as well as Awards Luncheon Keynote Speaker Maurice Greenberg, Chairman and CEO, C.V. Starr & Co. Inc.. Dozen’s of concurrent sessions for delegates to choose from were held over two days covering major topic areas including: ERM, Cyber, Insurance, Claims, Executive, Environment, Global Risk Management, Risk Financing (Captives), Infrastructure Risks, Power & Utility, Emerging Risks and more. Conference co-chairs were Julie Chapdelaine and Michel Pontbriand.
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
November 2015 Canadian Underwriter
77
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC
Tino Brambilla celebrated another cherished anniversary this year during RIMS Canada Conference 2015 in Quebec City, his 30th wedding anniversary. Brambilla, manager of insurance services at Manitoba Hydro and this year’s recipient of Canada’s highest risk management honour, the Donald M. Stuart Award, told those assembled for the 41st edition of the event that this is not the only time anniversary and conference have converged. The two “have shared both our personal and working life with the risk management community,” Brambilla told conference attendees. “We’ve also shared some of our milestone wedding anniversaries with RIMS,” he said, citing the couple’s 25th anniversary, enjoyed during the gala when the conference was held in Edmonton, “and today we celebrate our 30th.” Saying he was humbled and honoured by the distinguished award – presented as always by ORIMS, the RIMS Ontario Chapter – it is widely regarded as the country’s highest honour within 78 Canadian Underwriter November 2015
the risk management field. Bestowed annually by ORIMS since 1979, the award is presented to any corporate, professional, associate and emeritus member of any Canadian chapter of RIMS who has made outstanding contributions to the risk management field and community in Canada, ORIMS president Paul Provis said in presenting the honour to Brambilla. In 1978, Brambilla began his risk and insurance management career as a loss control representative for Insurers’ Advisory Organization and Fire Underwriters Survey. He worked on the broker side for Alexander & Alexander Services Inc. before joining Centra Gas Manitoba in 1997. Brambilla not only helped to consolidate the insurance and risk management programs when Manitoba Hydro merged with Centra Gas, but he did this again when Winnipeg Hydro was purchased. He was named manager of insurance services in 1999. In addition, Brambilla is an active member of the utility’s
Corporate ERM Steering Committee and its Natural Gas Emergency Response Steering Committee. Brambilla has been equally active away from work, volunteering his time to serve in a long list of risk management positions at the local, provincial and national levels. He served as board member and president of the Insurance Institute of Manitoba, 14 years (and counting) as a board member of his local RIMS chapter (including a four-year stint as chapter president), and chapter representative, treasurer and chair of the RIMS Canada Council (RCC). When Provis called him in July, seeing the name on his telephone display, Brambilla said he initially thought it was about a routine RCC issue. Upon learning he had been nominated for – and would receive – the Donald M. Stuart Award, “I thought, ‘Surely there was someone more deserving than me.’” It was only after he began reviewing some of the submissions that he realized – perhaps like many other risk professionals in Canada – that he has contributed to
the community and profession. “So often we get caught up in our daily work,” he said, “that we fail to recognize, or believe, that we’re making a contribution.” Despite personal accomplishments, “this award really belongs to numerous people, without whom it would not have been realized,” Brambilla emphasized, pointing especially to the RIMS Manitoba Chapter, which he characterized as small, but whose members are endlessly supportive of one another. “Providing that support ensures that we succeed both personally and at the chapter level,” Brambilla said, also extending thanks to those he has worked with on the RCC, sub-committee volunteers, RIMS staff and his employer for their encouragement and support over the years. Brambilla encouraged young people just starting in risk management “to volunteer at the chapter level, in the classroom and in the workplace. You will get so much more back than what you put into it. And one day, you, too, may be nominated for the Don M. Stuart Award.”
APPOINTMENT
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
Integro Insurance Brokers held its annual Integro Pub at Tavern Grande Allee, Quebec City during the 2015 RIMS Canada Conference, held September 27 to 30. The Integro Pub was a popular meeting place for many conference delegates and exhibitors throughout their busy schedules.
Mercédes C. Marin Mercédes obtained her Bachelors in Civil Law (LL.L.) from the University of Ottawa in 2013. She made it on to the Dean’s list for the 2012/2013 academic year. She graduated from the National Program, Juris Doctor (J.D.) in 2014. Mercédes completed her articles at Blouin, Dunn LLP and was hired back as an associate in 2015 after being called to the Ontario Bar. Her practice focuses on insurance defence litigation, including motor vehicle accidents, occupier’s liability, construction claims and WSIB matters. Mercédes has appeared as counsel in interlocutory proceedings and at trials, as second chair, at both the Ontario Superior Court of Justice and Small Claims Court levels. Prior to practicing law, Mercédes worked in the claims department for a managing insurance agent in the areas of professional liability, construction and environmental law. Mercédes is fluently bilingual (French and English) and is able to practice in both languages. Mercédes is a member in good standing with the Law Society of Upper Canada. Mercédes’ contact information is: mmarin@blouindunn.com 416) 365-7888 ext. 169 Blouin Dunn is one of Ontario’s leading insurance defence firms whose members have been providing quality legal support to the insurance community for over 30 years. We offer services in Ontario to property and casualty insurers throughout North America, at all levels of experience, at appropriate and competitive rates.
www.blouindunn.com November 2015 Canadian Underwriter
79
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
The William H. McGannon Foundation held a special celebration during the 2015 RIMS Canada Conference, in Quebec City in honor of the foundation’s founding father, William H. McGannon, as well as to recognize and thank the foundation’s donors and supporters. The event was held at Quebec City’s icon of gastronomy, Restaurant Le Saint-Amour. Among the attendees were students from the 2015 Student Involvement Program provided by the McGannon Foundation. Bill McGannon passed away peacefully on August 26 at the age of 79 from idiopathic pulmonary fibrosis. “Bill left behind a legacy for all of us to follow,” William H. McGannon Foundation president Joe Restoule said. “We were blessed to have him as a friend, mentor and/ or business partner, and we are left profoundly saddened by this loss.”
80 Canadian Underwriter November 2015
APPOINTMENT
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
Mehran A. Wancho Mehran holds an Honours Bachelor of Arts degree in Criminology from York University, where he graduated Summa Cum Laude. Mehran received his Juris Doctor from the University of Ottawa’s Faculty of Law, where he graduated Cum Laude. Mehran was the recipient of numerous academic awards during undergrad and law school. Prior to obtaining his J.D., Mehran worked in the area of personal injury law as a licensed Paralegal with the Law Society of Upper Canada. While in law school, he interned at two esteemed boutique personal injury firms in Toronto. Mehran’s exposure to the personal injury bar provides him with a unique perspective which he incorporates when serving his clients’ needs. Mehran articled with Blouin, Dunn LLP and was hired back as an associate after being called to the Ontario Bar in 2015. During his articles, Mehran successfully argued a number of opposed motions at the Superior Court of Justice. Mehran’s practice focuses exclusively on insurance defence litigation and he has had extensive exposure to different aspects of defence work, including personal injury, motor vehicle liability, statutory accident benefits and property damage disputes. Mehran is a member in good standing with the Law Society of Upper Canada and is also a member of the Canadian Defence Lawyers and Toronto Lawyers Association. Mehran’s contact information is: mwancho@blouindunn.com (416) 365-7888 ext. 176 Blouin Dunn is one of Ontario’s leading insurance defence firms whose members have been providing quality legal support to the insurance community for over 30 years. We offer services in Ontario to property and casualty insurers throughout North America, at all levels of experience, at appropriate and competitive rates.
www.blouindunn.com November 2015 Canadian Underwriter
81
GALLERY - 2015 RIMS CANADA CONFERENCE QUEBEC CITY
ARC Group Canada hosted a cocktail party at the 2015 RIMS Canada Conference in Quebec City at Savini Restobar on September 28. Guests enjoyed hors d’oeuvres and networking with fellow conference delegates and attendees.
82 Canadian Underwriter November 2015
ProgiClaim_CanadianUnderwriter2.pdf
1
2015-10-29
14:04:19
I answered a couple of multiple choice questions and snapped photos of the cars and documents.
Tuesday morning: My colleague Jake rears into my car. He spends half the day on the phone with his insurance company and looking for a shop. Me? I’m done within minutes by submitting an Online Claim to:
Prepare an accident report
The process was streamlined. A summary of steps completed helped me keep up!
C
M
Y
CM
Start the claim process Locate a preferred shop and book an estimate appointment
MY
CY
CMY
K
Online Claim, by Progi
Empowering insured clients to initiate their claim online ... a tool for a new generation There right at the first notice of loss
ProgiSync, Progi’s supplier locator and appointment booking service, is seemlessly integrated into Online Claim.
To learn more about our insurance solutions, visit Since
1990
let data work for you
Excellent, they have a spot open on Thursday!
www.progi.com/insurer or call us at 1-855-310-6343.
WHAT DOES IT MEAN TO BE ACE INSURED?
Participant Accident Insurance | acegroup.com/ca It means my team, coaches and other members of my organization are protected by a sports accident plan that provides the benefits we need. ACE understands how to supplement our general liability programs with a separate accident and medical plan in order reduce liability and costs associated with retained claims. ACE knowing their game, means we can focus on ours.
息 2015 ACE Group. In Canada, coverages are underwritten by ACE INA Insurance and ACE INA Life Insurance. Coverages may not be available in all locations and are subject to actual policy wording. ACE速, ACE logo速, and ACE insured.速 are registered trademarks of ACE Limited.