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
D E CE M B E R 2 0 1 5 PM#40063170
The Driver’s Seat 2016 PRIMARY INSURANCE MARKET OUTLOOK
Digital Dis...ruption BY SHARON LUDLOW
Drying Out BY GREG MECKBACH
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CANADIAN UNDERWRITER
VOL. 82, NO. 12, DECEMBER 2015 CANADA’S INSURANCE AND RISK MAGAZINE. PUBLISHED BY NEWCOM BUSINESS MEDIA INC.
www.canadianunderwriter.ca
COVER STORY
2016 Primary Insurance Market Outlook
26
Conditions are changing at breakneck speed for Canada’s property and casualty insurance industry. And with 2016 providing little promise that things will slow down — allowing slow-adopters to catch up — primary insurers need to keep pace or be left in the dust.
FEATURES
12 D E CE M B E R 2 0 1 5
Digital Innovation
PM#40063170
Being open to digital change and understanding what customers want is key to Canada’s p&c insurance industry having a smooth transition to a digital model. BY SHARON LUDLOW
20
42
16 Mega-Disasters
46 Business Continuity
What would happen if Canada experienced an atmospheric perils mega-disaster in a single year? Is Canada prepared to deal with the uncertainty that that would create?
Protecting property can equate to protecting the business. A comprehensive and well-conceived business continuity plan will help get a business back up and running after a disaster.
The Driver’s Seat Ethics Series: Note-Taking BY ERIC ROBINSON 2016 PRIMARY INSURANCE MARKET OUTLOOK
When dealing with a difficult claimant, failing toDigital be Dis...ruption 24 BYOD Policies BY SHARON LUDLOW professional and accurate Bring Your Own Device is a with note-taking can put Drying Out business technology solution the impartiality of both the BY GREG MECKBACH that is now firmly part of adjuster and company at risk. the business landscape. But BY CIP SOCIETY with the convenience and flexibility comes risks that must be addressed in policy.
50
Audit Techniques
Water Coverage
Data and analytics, and lean in audit, are two auditing techniques that can enhance audit value and provide risk management insights.
Three personal lines insurers now offer residential flood coverage in Canada. It is progress, but gaps in coverage do remain.
BY DOUG KING & LEE ALFREY
BY GREG MECKBACH
BY MITCH KOCZERGINSKI
BY MATT JOHNSON
54 Data & Analytics Canada is ahead of some other countries in embracing data analytics. That said, expanding the focus to also include the human element will help drive even more value from these efforts. BY STEVEN MAYNARD
December 2015 Canadian Underwriter
3
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VOL. 81, NO. 2, FEBRUARY 2014 VOL. 81, NO. 2, FEBRUARY 2014 PROFILE
steve@canadianunderwriter.ca
BY ANGELA STELMAKOWICH
of insurance services at Manitoba Hydro, getting Editorial there simply took a bit of Editorial focus and a lot of work. Marketplace
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6 6 8 SPECIAL FOCUS BY ANGELA STELMAKOWICH 8 Marketplace 56 Moves SPECIAL FOCUS & Views 6SPECIAL Editorial FOCUS 56 Moves & Views 58 6 Gallery Editorial 86 SPECIAL Marketplace Editorial FOCUS 58 Gallery 8 Marketplace 56 & Views 8 6 Moves Marketplace Editorial 56 Moves & Views 58 Gallery 568 Marketplace Moves & Views 58 Gallery 5858 Gallery Moves & Views 60 Gallery
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4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014 4 Canadian Underwriter February 2014 Canadian Underwriter December 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
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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 Gains Example 10 Loss and BY STELMAKOWICH James Cameron, president Established Leader Award. of Insurance Consultants James president of Tino Cameron, Brambilla, this Limited, year’s Cameron & Associates BY ANGELA STELMAKOWICH was recognized by the CIP Cameron &Consultants Associates recipient of the Donald Insurance Limited, Society when hebyreceived its Insurance Consultants Limited, M.recognized Stuart Award, knows was the CIP Established Leader Award. was recognized the CIP full well that loss can be Society when heby received its BY ANGELA when STELMAKOWICH Society heinto received its transformed life-long Established Leader Award. Established Leader Award. BY ANGELA STELMAKOWICH gains. For the manager
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. 12, DECEMBER 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
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EDITORIAL
All the Rage
“Canada as a whole seems not to be translating concern into swift enough action, achieving an oh-so-average ‘C+’ for its cyber security readiness.” Angela Stelmakowich Editor Canadian Underwriter astelmakowich@ canadianunderwriter.ca
6
Canadian Underwriter December 2015
Cyber is all the rage these days. It is also potentially all the harm, all the mischief and all the incalculable loss. This is disconcerting, to be sure, given that cyber is a threat everyone is concerned about and most agree — a coming together that has been slower than advisable — must be addressed. The state of affairs is unnerving, as well, because Canada seems not to be translating concern into swift enough action, achieving an oh-so-blah “C+” for its cyber security readiness. Or so suggests Maryland-based Tenable Network Security. True, the network monitoring company is a tough marker: an overall ranking of 77% equates to a C+. But that grading — Canada’s was just slightly higher than the overall global score of 76% or “C” — is put into perspective when one considers almost 40% of respondents to the company’s recent global survey report feeling “about the same” or “more pessimistic” about the ability of their organizations to defend against cyber attacks compared to last year. Respondents largely believe they have the tools in place to measure overall security effectiveness (B-), although they question whether or not their executives and board members are investing enough to mitigate security risks (C). But solid belief does not necessarily equate to the ability to defend or respond. Just one in five Canadian firms taking part in a recent
Deloitte Canada survey report that their organizations are prepared to effectively respond to a cyber attack. In fact, just 36% of the information technology leaders say their businesses have in place effective procedures and technologies to protect critical assets, and just 22% would be able to rapidly recover if attacked. Any organization in any sector in any country needs to understand the risk exists. But misperceptions die hard. A new survey from Zurich Insurance Group shows concern over cyber crime among 3,000 C-suite executives and managers at small and medium-sized enterprises (SMEs) has doubled this year. Sounds impressive, but that brings the total to only 8%, up from 4% in 2013. One in six SMEs still consider themselves to be “too insignificant to attract the attention of cyber criminals.” Of course, it is not all doom and gloom. Moody’s Investors Services reported in November that more than 50 insurers globally are now offering standalone cyber coverage, with others providing cyber-related endorsements. Despite the belief that cyber insurance has significant further growth potential, though, Moody’s views the significant expansion by insurers into the cyber risk insurance market as credit negative, similar to expansion into other high-risk/return product segments, as underwriters test the risk/return spectrum of the product.
As all that unfolds, a little help from friends is welcome. The RCMP has released a cyber crime strategy detailing its operational framework and action plan to help the police service reduce the threat and impact of cyber crime in Canada. It will focus on identifying and prioritizing cyber crime threats through intelligence collection and analysis; pursuing cyber crime through targeted enforcement and investigative action; and supporting cyber crime investigations with specialized skills, tools and training. But services, governments, organizations and individuals — sometimes perpetrators of inadvertent and unintentional missteps that can, nonetheless, produce breaches and information losses that can put an organization at risk — all need to do their parts. Ken Hughes, the City of Ottawa’s auditor general, recommended in his most recent annual report that the city’s chief information officer and city-wide managers “continue to improve the identification and assessment of IT and related mitigation strategies.” This should be supported via improved governance, leadership and reporting structure. Cyber’s potential is slowly shaping from concern into understanding. But getting the bigger picture demands looking wider, detecting more, collaborating and sharing information to protect the thing that is bigger than any one entity: security.
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Regulation ELIGIBLE POLICYHOLDERS TO VOTE ON DEMUTUALIZATION Economical Insurance’s Board of Directors has announced a shareholder vote on demutualization will proceed in mid-December. The announcement comes several months after Ottawa enacted regulations allowing property and casualty insurers to demutualize. Beyond Board of Directors approval, a mutual p&c insurer requires the approval of eligible policyholders and the federal government. If given the green light, the money raised from demutualization would “likely be tied around acquisition activity,” Karen Gavan, Economical Insurance’s president and chief executive officer, told Canadian Underwriter. The regulations “basically preclude anything” other than an initial public offering of stock, if the demutualization is successful, Gavan said. “There is a requirement that from the point of demutualization and for at least two years (after), our shares must be widely held.” Gavan noted the insurer is “well-capitalized” today, but “our industry is consolidating and we need access to capital to participate in that consolidation, so additional capital would likely be tied around acquisition activity.”
CREATION OF NEW ONTARIO AGENCY RECOMMENDED A panel appointed by Ontario’s Ministry of Finance 8
Canadian Underwriter December 2015
has recommended creating a new regulatory agency to operate as an “integrated regulator of financial services with distinct market conduct, pensions and prudential regulatory functions.” The functions of the Financial Services Regulatory Agency would operate independently of one another, but in a co-ordinated and consistent manner, the panel suggested. The recommendation was one of 37 flowing from the Review of the Mandates of the Financial Services Commission of Ontario, Financial Services Tribunal and the Deposit Insurance Corporation of Ontario. “Many feel that there are material shortcomings in the mandates, regulatory approach, operational resources, tools and capacity,” the report authors point out. “These agencies should have the mandate and authority to work closely with the financial services sector and with ‘sister’ agencies in other provinces to encourage the development of a vibrant and safe financial sector and to better ensure consumers have a consistently high level of service and protection, without burdening market participants with undue regulatory costs or complexity,” the panel recommends.
COMPETITION BUREAU CALLS FOR MODERNIZED TAXI INDUSTRY REGULATIONS Canada’s Competition Bureau is recommending a regulatory overhaul of the taxi industry to allow these vehicles and
ride-sharing services to compete on an even playing field. The bureau released a whitepaper in late November that explores factors such as price, availability and wait times, convenience and quality of service. “Consumers stand to benefit from lower prices, reduced waiting times and higher quality services if regulators allow the forces of innovation and competition to shape the industry.” While the taxi industry is regulated at the municipal and provincial levels in Canada, ride-sharing services are not, creating an uneven playing field in the industry, the bureau notes. “To even the playing field, where possible, regulators should relax restrictions on traditional taxis, rather than imposing additional regulations on new entrants in the industry.” The bureau supports efforts to regulate ride-sharing applications instead of prohibiting them.
Risk IBC, LEXISNEXIS, OTHERS TO COLLABORATE ON NATIONAL FLOOD PROGRAM Insurance Bureau of Canada (IBC) and other partners are collaborating on a national flood program to be led by the private sector. The new flood maps and supporting data, developed in partnership with LexisNexis Risk Solutions, JBA Risk Management, DMTI Spatial and Brookfield RPS, will use the latest technology, local
climate data and geospatial data, and will cover the entire country, IBC reports. They will identify the cities and regions at risk of flooding, the associated economic costs, and resilient areas and regions in Canada, IBC adds. Working closely with IBC, LexisNexis Risk Solutions will lead the development of a new set of flood hazard maps and property-level exposure data, thereby allowing IBC to identify the number of properties at risk of flooding and the associated economic losses for virtually any geography in Canada.
CYBER, TECHNOLOGY RISKS BIGGEST CONCERNS FOR FINANCIAL SERVICES A poll of global financial services experts and Canadian risk executives conducted at the Global Risk Institute’s (GRI) recent annual conference shows cyber and technology risks are the greatest concerns for the global financial services sector. With input from more than 180 senior Canadian financial executives, Torontobased GRI reports almost half of the respondents cited technology risks as the biggest emerging risk to global financial institutions. Among technology risks, 23% specified cyber security as the biggest risk and 23% identified disruption from emerging technologies as the biggest risk. Other global risks noted by participants were deflation (14%), asset bubbles (8%) and the slowdown in China (8%).
MARKETPLACE
MAGNITUDES, INCIDENCES OF QUAKES CAUSED BY FRACKING MINIMAL While hydraulic fracturing can cause increased seismic activity, the tremors generated by the process are often very small and undetectable at the earth’s surface, notes a new Fraser Institute report. The report concludes research on the safety of hydraulic fracturing confirms that “while there are, indeed, risks with it, they are, for the most part, readily manageable with available technologies and best practices.” Compared with industries such as mining and conventional oil and gas extraction, “the magnitudes and incidences of earthquakes caused by hydraulic fracturing are quite minimal.”
ROGERS MEDIA AGREES TO PAY $200,000 FOR ALLEGED ANTI-SPAM BREACH The Canadian Radio-television and Telecommunications Commission (CRTC) reports that Rogers Media Inc. has paid $200,000 in relation to alleged violations of Canada’s anti-spam legislation (CASL). Following an investigation by CRTC’s chief compliance and enforcement officer, it is alleged Rogers Media failed to comply with various requirements of the law between July 2014 and July 2015, notes the Department of National Defence. During this period, it is alleged, among other things, the company sent commercial emails containing an
unsubscribe mechanism that did not function properly or which could not be readily performed by the recipient. Rogers Media has agreed to improve its existing compliance program to meet CASL requirements.
Canadian Market PETLEY-HARE LAUNCHES DIGITAL DIVISION TO SERVE ONTARIO CLIENTS Petley-Hare Limited, an insurance brokerage with almost 100 years of experience in Ontario’s Durham Region, has launched a new digital division to serve clients across the province. “Insurance Jack was built on the premise that the insurance industry has evolved and consumers are interested in a more streamlined buying process,” the division reports. “While our traditional customers may still want a high-touch relationship with their brokers, Millennials, who will comprise 46% of the workforce within 10 years, want to communicate digitally at their convenience,” says Dave Hare, president of Petley-Hare Limited.
ROGERS INSURANCE ACQUIRES CCV INSURANCE Rogers Insurance Ltd. has acquired a controlling interest of Ontario-based CCV Insurance & Financial Services Inc. under the previously formed Inowest Insurance Brokers Inc. group of companies.
The acquisition represents the strategic expansion of Rogers Insurance into the Ontario marketplace, leveraging CCV Insurance’s business locations in Brampton, Georgetown and Huntsville. “This first foray into the Ontario marketplace is part of the plan to scale up the Rogers’ operations in both size and geography,” says Bruce Rabik, chief operating officer of Rogers Insurance. Brian Evans will become president and a significant shareholder of CCV Insurance; Robert Lewis will remain a shareholder and become director, insurance distribution.
Reinsurance THIRD HIGHEST NUMBER OF WILDLAND FIRES IN ALBERTA IN 25 YEARS Wildland fire crews in Alberta were called out to combat almost 1,800 fires during the 2015 season, the thirdhighest number in the past 25 years, reports Alberta Agriculture and Forestry. During the 2015 season, fire crews battled 1,786 wildfires covering more than 492,000 hectares (twice the 25-year average), notes a ministry statement. Sixty-four fires were more than 200 hectares compared to the 25-year average of 19. Beyond the $139 million budgeted at the start of the season for wildfire prevention, preparedness and management, the province provided an additional $375 million in emergency funding to cover
the costs of fighting wildfires this season. “An early spring, along with dry conditions, strong winds and thunderstorms created ideal conditions for extreme wildfire behaviour in Alberta,” says provincial agriculture and forestry minister Oneil Carlier. “Still, over half of the wildfires we saw this year were human-caused.”
Claims ALBERTA TAKES STEPS TO CHANGE DISASTER RECOVERY PROGRAM Alberta’s Ministry of Environment and Parks is making changes to the Disaster Recovery Program (DRP) that will allow 80% of outstanding cases related to the 2013 flooding in southern Alberta to be resolved. With a financial impact of approximately $6 billion and insured losses of about $2 billion, the flood was the most costly natural disaster in Canadian history. The ministry reports that the changes will also “ensure the DRP process operates more efficiently in the future, should Albertans be faced with another disaster.” The government will cease collection on overpayments for files of $5,000 or less, which affects almost 550 outstanding case files. In about 75 cases where overpayments are more than $5,000, files will be handled on a case-bycase basis. The province will also be closing almost 450 files classified as inactive. December 2015 Canadian Underwriter 9
PROFILE
Loss and Gains Angela Stelmakowich Editor
Tino Brambilla, this year’s recipient of the Donald M. Stuart Award, knows full well that loss can be transformed into life-long gains. One can go from loss to gain — it just takes a bit of focus and a lot of work. Just ask Tino Brambilla, manager of insurance services at Manitoba Hydro. Brambilla did not begin his career in risk management. Armed with a diploma in Mechanical Engineering Technology from Winnipeg’s Red River College, he responded to an ad for a job designing sprinkler systems and testing pumps on sprinkler systems. “It was actually a natural progression to go from an engineering world into a loss control world,” he says, when in 1978, he was hired as a loss control representative for Insurers’ Advisory Organization and Fire Underwriters Survey. Working there for a number of years, Brambilla was fortunate to interact with specialists ranging from engineers to underwriters and risk managers. 10 Canadian Underwriter December 2015
But it was his interest in better understanding the needs of his customers — insurance underwriters — that moved him towards an associateship at the Insurance Institute of Canada, completed in 1984. That was followed by obtaining a Canadian Risk Management Diploma in 1992 and finishing the institute’s Fellowship program, choosing the risk management track, in 1994. “That’s when I thought I would certainly like to get into the risk management side of the business,” he says. Why the interest in switching from loss control to risk? Because the former meant “you were always doing something for a different industry. You never did have the control to follow through on a recommendation,” Brambilla says. “There wasn’t the followthrough, the sense of accomplishment that you would get when you are responsible for identifying a gap and then closing the gap,” he says. That held considerable sway for Brambilla. He secured a risk management position at Centra Gas in 1997 and continued on as risk manager for Manitoba Hydro when the Crown corporation purchased Centra Gas in 1999. The almost four-decades veteran of loss control, insurance and risk management remains there today.
The move has worked out well for Brambilla, recipient of this year’s Donald M. Stuart Award, widely recognized as Canada’s highest honour within the risk management field. Bestowed annually by the Ontario chapter of the Risk and Insurance Management Society (RIMS), the award was presented to Brambilla in September at the 2015 RIMS Canada Conference. His accomplishments and contributions are many. Brambilla not only helped to consolidate the insurance and risk management programs when Manitoba Hydro merged with Centra Gas, he did so again when Winnipeg Hydro was bought. Brambilla is also an active member of Manitoba Hydro’s Corporate Enterprise Risk Management (ERM) Steering Committee and its Natural Gas Emergency Response Steering Committee.
AN EVOLVING FIELD When Brambilla first became involved in the risk management world in 1997, he says that was just about the time everyone was starting to talk about ERM. Shortly after Manitoba Hydro purchased Centra Gas, in fact, the Crown corporation, too, was among “the initial vanguards into enterprise risk management,” he reports. Determining the balance between traditional risk management and ERM is
something that industry has been working on ever since, Brambilla suggests. That said, the efforts seem to be paying off. Risk management is now being embraced by all levels of business — from the field worker to the C-suite and to the Board of Directors, he notes. “Risk management has become a vocabulary of everyone in industry at all levels and in all sectors,” he
“Risk management has become a vocabulary of everyone in industry at all levels and in all sectors.” points out, adding his view is that the term “is so ingrained now in everyone’s vocabulary that I sometimes wonder about who should be the risk management champion, and should there really be one risk management champion?” Perhaps, there should be many. Brambilla suggests healthy co-operation among different departments, as well as ensuring everyone is speaking the same language, can help to advance an organization’s risk management efforts. “At the end of the day, a risk is a risk is a risk, and each respective department treats its risk the same as we would in another area, but
PROFILE
is climate change. “That’s probably the one common denominator that’s driving decisions in government, in industry and throughout the economy now,” he suggests. Risk professionals need to stay on top of developments as best they can, always considering how their organizations can be affected.
Photo: Andrew Sikorsky
DEEPER POOL
specific to their risks.” Numerous perspectives may prove helpful in light of a world where risk, the risk profession and the demands on risk professionals are all changing quickly. Consider, for example, cyber risk. “Clearly, it’s here,” Brambilla says. “It does impact all of us and I think it’s our responsibility at least to go through the due diligence process,” he says, whether or not a decision is made to buy coverage. Pointing out that Manitoba Hydro has a very extensive IT department with its own
expertise, he says a risk professional should still make contact and initiate discussion to ensure that, if not already under way, risk is identified and analyzed to determine what mitigation, if any, is needed. Whatever the department — be it engineering, maintenance or something else — Brambilla’s experience to date has been that “they do appreciate a set of different eyes to look at their side of the business.” Looking globally, another challenge faced by all manner of organizations
It is encouraging that, more and more, risk and risk professionals are becoming part of the fabric of daily business operations. But the changing demands require that the pool of risk professionals be regularly replenished. Like any industry today, attracting the best and the brightest is a challenge. “The demographics of the workforce are such that we all are competing for the same people,” Brambilla says. For both insurance and risk management, “I think they [young people and new recruits] just have to realize what we’re asking them to be involved in is an industry that encompasses every [area] and that can accommodate them,” he says. “The challenge is just getting them to understand what’s involved with the industry and all the opportunities that exist within it.”
VOLUNTEERING BENEFITS With demands on risk professionals expanding, it can be a time-consuming
venture to volunteer for groups supporting and promoting risk management. Despite the hours and effort, Brambilla emphasizes that what he received in return from all his volunteer work in insurance and risk management has been well worth it. “Getting involved in committees exposes you to such a network of individuals. That alone, in itself, is worth the participation,” he says. “I just found the interaction, the networking abilities and the people that you meet from coast-to-coast, nationally and internationally, was well worth it,” he says. Brambilla has served as board member and president of the Insurance Institute of Manitoba (IIM), a board member of his local RIMS chapter since 2001 (including a four-year stint as chapter president), and in 2005, became involved the RIMS Canada Council, serving as representative, treasurer, vice chair and chair over his time with the council. It was just about the time Brambilla was completing the fellowship program, also serving then with IIM, that he was approached by the Manitoba RIMS chapter. “Once they approached me, I basically shifted my gears from the insurance industry side of things to risk management,” he reports. It was a gain, indeed. December 2015 Canadian Underwriter
11
Sharon Ludlow President, Aviva Insurance Company of Canada
The property and casualty insurance industry is late to the digital game. Some may even believe that this wave of consumer-driven technological innovation will bypass the business altogether. Some argue insurance is too complex or intangible to “digitize”; others clearly contend those observers are dead wrong. Technology is making it easier to do business and impacting a number of traditional platforms. Just take a quick look at the fate of other sectors or services that were slow to recognize the pace of digital disruption quickening on their heels. How about music, books and videos? What about taxis, travel agents and hoteliers? Did those industries see the sharing economy rushing up in their rear view mirrors? The key factor is that customers are all still buying most, if not all, of these products or services: it is the way they are being purchased that has changed dramatically. Customer choice is driving the need for dialogue among industry, government and regulators to work together and embrace digital technology.
12 Canadian Underwriter December 2015
IDENTIFYING DRIVERS OF DISRUPTION Insurance is, in many ways, ripe for disruption. Will there be an algorithm that transforms the face of Canada’s p&c insurance? Can the industry become “uber-ized”? There is a gap between what the insurance industry has offered, in terms of overly complicated products, traditional distribution channels and cumbersome buying experiences, and what modern consumers want when it comes to convenience, simplicity and price. As everyone know, nature abhors a vacuum. The big question is, who will fill this gap? And where will the new competitors come from? Canada is already seeing signs of disruption in the financial services industry today. Take the example of shadow banking, where virtual lenders and borrowers are matched, and money is lent simply and seamlessly. Online lending has grown to US$12 billion in new loan originations, in a short amount of time, and is disrupting the traditional banking model.
Illustration by Scot Ritchie
Discovering Digital Innovation
Can Canada’s property and casualty insurance industry shift into a higher digital gear before disruption sets in? Being open to digital change — whatever the source of those ideas — and understanding what customers want is critically important for a smooth transition to a new digital model.
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Or how about robo-advisers? Earlier this year, Power Financial Corporation partnered with Wealthsimple Financial Inc. to plug into the world of robots. The partnership of the robo-adviser firm and a major financial institution is the first of its kind in Canada. The aim is to reach more Millennials and other Canadians who are less likely to invest through traditional channels, and opt for low-cost robo-advisers that provide automated online portfolio management. Closer to home, in the p&c insurance space, there is an increasing pattern of experimental start-ups and innovations from both new and established entities. In Europe, especially, there are several examples of new peer-to-peer (or P2P) insurance groups, such as Guevara Insurance and Bought By Many in the United Kingdom, and Friendsurance in Germany. The marketing thrust of these P2P ventures can be best summarized in Guevara Insurance’s online profile, which notes: “Guevara is a digital company offering a new approach to insurance… Our customers recognize the opportunity to leave behind an industry that’s not working for them anymore and embrace something better.” Tech leaders like Google have also dipped their toes in the insurance waters. With its Google Compare Auto Insurance Services, the search giant is now licensed to do business in 26 states south of the border.
holding the door wide open to fastermoving competitors. The regulatory framework surrounding insurance is another brake on digital innovation. Rigid regulation is not innovation-friendly. Insurers may understand what consumers want and be eager to create a product, service or feature to meet that
COMING TO CANADA
So if, indeed, the seeds of digital disruption are springing up all around, how can Canada’s p&c industry react? A starting point is to identify what is holding the industry back.
need — yet are unable to introduce it for regulatory reasons. A uniform, one-sizefits-all approach to product oversight does not lend itself to digital change. The Canadian p&c industry and the taxi industry are similar in that both are stifled by regulation. Are insurers going to permit the same level of disruption with an unregulated player like Uber? When it comes to the sharing economy, it is essential that insurers engage with government, regulators and consumers so that they can embrace digital technology for the purposes of meeting customer choice.
Technology and regulation Leadership, technology and regulatory barriers are major considerations that insurers have to think through. The limitations of existing (and past) technology are a major obstacle. The traditional approaches to business development, change management systems and process upgrades are too slow to work in the digital age. This is
Need for leadership While technology and regulation are significant hurdles, it is leadership that has greatly hampered insurers’ approach to digital innovation. What is holding the industry back, plain and simple, is cultural change. It is necessary to understand the same consumers buying insurance products are having unique experiences in other
BEING INNOVATION-FRIENDLY
14 Canadian Underwriter December 2015
service and retail environments (online and offline). They automatically compare these to the insurance-buying process. This synchronicity means that it will be consumers who lead the charge for change. The insurance industry will be dragged into the future. But how the industry responds will be crucial. Instead of being dragged kicking and screaming, it is better to anticipate change, be continually curious about what is going on elsewhere, spot the opportunities and seize how these could relate to insurance, technology and customer experience. This imperative is one reason Aviva Insurance has developed “digital garages” in London, U.K., Singapore and Toronto, which allow technical specialists, creative designers and business teams to explore, develop and test new insurance ideas and services.
Some of the aforementioned P2P insurance examples in Europe may seem far away, but they are destined to emerge in Canada, as well. Insurers here are not geographically immune to digital disruption, so they must be ready to tackle this problem. This does not mean simply starting a digital project here or there, and tacking it onto an overall business plan. Instead, the effort must involve a comprehensive undertaking that includes strategy, customer-centricity, business process, organizational change, technology and data analytics. In other words, insurers need to transform the business itself into a digital strategy, As an industry, there are opportunities to make smarter investments in technology. The industry can capitalize on those innovations that bring the kinds of changes consumers demand — simpler products, mobile and digital options, customizable features and a better experience. These must go beyond the incremental improvements to technology infrastructure, such as policy administration systems. Bolder strategies are required that embrace digital technology (includ-
ing cloud and mobile) either as standalone services or as effective bridges to current systems. A simpler business environment will contribute to the success of the insurance industry in advancing digital innovation in Canada. That means more flexible, customizable product options, and greater agility for companies to design insurance solutions that meet the needs of digital clients. Key to efforts moving forward is leadership — the ability to ask tough questions, spot emerging trends and figure out how these will impact the industry. Companies must constantly be asking, What are competitors (old or new) doing to disrupt the p&c insurance business and its business model? How could change in other industries affect the insurance model? What can insurers do to stay ahead, knowing that digital disruption has impacted, destroyed and transformed industries? The gradual development of innovative
What can insurers do to stay ahead, knowing that digital disruption has impacted, destroyed and transformed industries? technologies, such as autonomous and semi-autonomous cars, the connected home, drones and Google glasses, is already being seen, and is starting to have an impact on the p&c insurance industry. In October, the Ontario government announced it will be the first province in Canada to allow road tests of automated vehicles, starting in January 2016. While some may see these as futuristic “toys,” it is interesting to note that PayPal, Netflix, Skype and Uber were once dismissed as toys. In recent years, the number of technologies in the “toy” phase has risen sharply and is hard to ignore: 3D printers, smartwatches, Inter-
net television, robots, wearable technology, autonomous cars, drones, expert systems, quantified self and artificial intelligence. The p&c insurance industry has to engage with regulators, governments and other stakeholders on how to embrace these “toys” that customers are — or will be — demanding. Change is inevitable. The problem is trying to spot where change will come from. The worry is not so much about traditional competitors or even insurance start-ups. Rather, what keeps some insurers awake at night is the person in his or her garage, thinking of different ways of offering a product or service that will completely alter the insurance experience. For the insurance world, that could be just around the corner. The choice as an industry is to peer around that corner and anticipate this change — or sit idly and wait for it to radically transform the industry’s business models.
Mega
Prepared?
What would happen if Canada experienced an atmospheric perils mega-disaster in a single year? Is Canada prepared to deal with the uncertainty of numerous events in different regions?
Eric Robinson
Senior Scientist, AIR Worldwide
In any given year, Canada can be impacted by numerous natural disasters caused by severe thunderstorms, winter storms and tropical cyclones. With the vast size of the country and its varied topography and geology, the risk of atmospheric perils differs by region and by season. Couple that with steady population growth, ongoing development and increasing concentrations of exposure value in at-risk regions, and the potential for insured loss from these perils is increasing. Although sizable catastrophic events from atmospheric perils do occur — such as the Great North American Ice Storm of 1998, which caused insured losses in Canada of about $3 billion (adjusted to 2013 dollars) — many smaller events, of various sizes, intensities and duration can have a substantial impact on insured losses. Aggregating the risks from various perils can help risk managers prepare for the uncertainty of numerous events, at wide-ranging loss levels, occurring in different regions and in all 12 months of the year.
THE SCENARIO Consider a mega-disaster year in Canada, which results in insured losses of $6.4 billion from severe thunderstorms, winter storms and tropical cyclones, a sum that falls at an exceedance probability (EP) near 1% (100-year return period). This modelled year encompasses 84 events in all: • 74 severe thunderstorm events — hail, straightline wind and/or tornadoes — impacting all
16 Canadian Underwriter December 2015
provinces, except Prince Edward Island, with total insured losses in Canada of $5.9 billion; • seven winter storms — wind, frozen precipitation (snow, ice pellets, freezing rain) and/or freezing temperature — affecting all 10 provinces, with insured losses of $217 million; and • three tropical cyclones — high wind, with insured losses totalling $213 million, all in Quebec and Atlantic Canada. The map (upper left, page 18) shows the loss severity throughout Canada of the three perils combined. The loss gradient is based on “forward sortation areas,” geographical regions determined by Canadian postal codes. Note that significant losses occurred in the west-central and central regions of the country, areas historically at high risk of severe thunderstorms, as well as in areas with high population density in Ontario and Atlantic Canada. Insured losses from severe thunderstorms dominate the modelled year — reflecting historical natural disaster experience in Canada — although both winter storms and tropical cyclones contribute losses that could have noteworthy impact to regional portfolios.
AFFECTED EXPOSURE The various sub-perils of severe thunderstorm, winter storm and tropical cyclone inflict damage by different mechanisms, adding a layer of complexity to the impact on exposures. Also,
Aggregated Insured Losses from Severe Events in Modelled Mega-disaster Year
Insured Losses by Peril for Each Month in Modelled Year 700 (4.5 Billion)
Insured Loss Millions
600
Tropical Cyclone Winter Storm
500
Severe Thunderstorm
400 300 200 100 0
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept Oct
Nov
Dec
Source: AIR, Insured losses by peril for each month in the modelled year Source: AIR, Aggregated insured losses from severe thunderstorms, winter storms and tropical cyclones during modelled mega-disaster year
vulnerability to atmospheric perils in Canada differs region to region because of varying building codes and standards, varying building construction and varying climates and weather conditions (see map below). Wind is a risk common to all three atmospheric perils, although for the tropical cyclone peril, wind duration — much longer for a slower-moving tropical storm than for a severe thunderstorm or winter storm — can become critical. Construction type affects a building’s vulnerability to wind. As well as physical damage from atmospheric perils, time element losses can be a factor. The 1998 ice storm, for example, crippled the electrical infrastructure in the region affected, resulting in power outages lasting from days to months, considerably impacting the ability of many businesses to operate. In this simulated mega-disaster year, with $6.4 billion in estimated insured losses, losses occurred in every month of the year except March and December. May experienced the greatest losses by far — $4.5 billion, representing 71% of the
total for the year — due to an off-the-chart windstorm that month, with $4.3 billion in losses (see graph above). The modelling also reveals the season-specific characteristics of the various perils, with winter storms in the fall and winter months, severe thunderstorms (and related sub-perils) in warmer, perhaps humid, spring and summer months, and tropical cyclones in the late summer and fall months. (A winter storm with less than $1 million in insured losses, not visible on the chart, also occurred in October). The 10 most costly events of the modelled year, shown in the table below, account for $5.9 billion, or more than 90%, of total losses in this simulated 1% EP year. The most devastating severe thunderstorm of the modelled year, the $4.3 billion event in May, occurred just 12 days after an $82 million storm struck Alberta and 18 days before $371 million in damage resulted from a storm in Alberta, Manitoba and Ontario. This underscores the real risk of atmospheric peril event clustering in Canada. Top 10 Insured Loss Events in the 1% EP Modelled Year
Regional Building Vulnerability to Wind Based on Building Codes
Source: AIR, Aggregated insured losses from severe thunderstorms, winter storms and tropical cyclones during modelled mega-disaster year
18 Canadian Underwriter December 2015
Event
Month
Provinces with Insured Losses
Insured Loss ($ million)
1
Severe thunderstorm
May
British Columbia, Alberta, Ontario, Quebec
2
Severe thunderstorm
July
Alberta, Saskatchewan
433
3
Severe thunderstorm
June
Alberta, Manitoba, Ontario
371
4
Tropical storm
September
Nova Scotia, New Brunswick, PEI, Quebec
179
5
Winter storm
November
Ontario, Quebec, New Brunswick, Nova Scotia, PIE, Newfoundland and Labrador
164
6
Severe thunderstorm
August
Alberta
113
7
Severe thunderstorm
April
Ontario
90
8
Severe thunderstorm
April
British Columbia, Ontario
84
9
Severe thunderstorm
May
Alberta
82
10
Severe thunderstorm
July
British Columbia, Ontario
74
4,341
Source: AIR, Top 10 insured loss events in the 1% EP (100-year return period) modelled year
The costliest winter storm, with insured losses of $164 million, brought wind gusts in excess of 100 kilometres/hour in coastal regions and snowfall of almost a metre in major metro areas, spreading losses across six provinces from Ontario to Prince Edward Island. The costliest tropical cyclone in the simulated year left $179 million in losses in Nova Scotia, New Brunswick, PEI, Newfoundland and Labrador and Quebec.
IS THE INDUSTRY PREPARED? The various severe thunderstorms, winter storm and tropical storm events in this mega-disaster loss scenario exemplify the extensive and widespread damage that can result from atmospheric perils in Canada, particularly the potential risk of loss from multiple smaller events. Importantly, with an annual EP of about 1%, the scenario year is not an extreme tail event; far greater losses are possible. Responsible risk management includes acquiring a comprehensive and realistic view of risk, as well as prepar-
ing for a wide range of loss scenarios. Using model scenarios — such as a multi-peril 1% EP year — to probe a portfolio’s strengths and weaknesses will help a company respond effectively when disaster does strike. Being attentive to best practices can help ensure the most realistic loss estimates are achieved. • Strive to obtain highly accurate exposure data. Atmospheric perils cause widely variable events that can have different impacts in different regions. Collecting detailed information for the properties in a portfolio — including location, primary building characteristics (such as construction type, occupancy, building age and height), and a true replacement value — will help refine the loss results and help get closer to the true vulnerability of individual buildings. • Use visual intelligence to understand a company’s data. Geospatial analytics can provide rich and intuitive information on risk accumulations and how they
relate to potential hazards, allowing for more-informed risk management. • Anticipate business interruption losses. Use catastrophe models to calculate business interruption after natural disasters — a potential source of significant loss — as a function of downtime, damage, building size and architectural complexity. • Be aware of non-modelled sources of potential loss. Damage attributable to inland flooding and coastal storm surge, extra clean-up costs and loss-adjustment expenses — which, for example, are not modelled in this scenario — can result in sizable insurance losses. Although no model can predict what catastrophes will occur and when, it can be revealing and informative to simultaneously analyze multiple models across different perils, and across different regions. The careful analysis of model results can help risk managers prepare for myriad contingencies, ensuring scenarios like this simulated mega-disaster year will not be unexpected.
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Audit professionals are increasingly using two innovative audit techniques — data and analytics, and lean in audit. Offering an opportunity to raise the bar for audit quality and risk detection, the new approaches not only enhance audit value, but often produce insights businesses can use to manage risk and improve business results.
Lee Alfrey
As the risk landscape becomes more and more challenging — from the complexity of risks faced to heightened regulatory pressure on organizations to prioritize risk issues — finding ways to augment existing corporate risk management and mitigation arsenals is becoming critical. Two increasingly popular techniques being leveraged by audit professionals, “data & analytics” (D&A) and “lean in audit,” should be attracting
National Data & Analytics Leader, Audit, KPMG in Canada
National Lean in Audit Leader, KPMG in Canada
20 Canadian Underwriter December 2015
the attention of audit committees and risk professionals alike. These innovative audit approaches are outlined in detail in KPMG’s recent report, The audit is changing: How techniques in D&A and Lean in Audit are enhancing quality and value in the digital evolution. Developed both as a response to board and audit committee expectations for enhanced audit value, and as the result of improved technological capabilities, the D&A-enabled approach to the audit is proving to be the next logical phase in audit innovation. It also has a direct impact on identifying and reducing risk. Data, of course, has always been fundamental to both auditors’ ability and mandate to provide assurance around financial statements. However, where they previously had to work with crosssections and samples of data, D&A technology increasingly allows access to, and analysis of, virtually 100% of organizational financial statement data. A range of advanced analytical techniques can now be applied to that mass of data that may raise risk flags that would not have popped up before, in areas that may previously have been only sparsely explored. For example, deep, granular analysis may identify unusually large or difficultto-explain transactions. It can even go to the
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level of examining task segregation in specific areas, unearthing instances of individuals performing conflicting organizational duties. It should be noted the auditor’s goal and role remain unchanged: to opine on financial statements. However, the end result, due to the far more sophisticated analytical techniques in play, is that the organization aims to get a deeper picture of its data than previously possible. The auditor is not providing risk advice, but rather risk analysis and insight that the companies themselves may be able to act on. For its part, lean in audit is a technique developed from an industrial productivity improvement methodology focused on eliminating wasteful activity. If D&A offers a different way to understand data, lean in audit takes a different approach to the whole audit process and its various sub-processes. Rather than relying on a compartmentalized, rigidly sequential approach to audit execution, lean in audit is collaboratively based, helping to ensure that auditors, key executives, management and audit systems managers interact throughout the audit. Utilizing experiential tools such as walkthroughs and flowcharts of actual financial processes, the knowledge exchanged between audit stakeholders is vastly expanded, as is the possibility for business improvement insights to be developed. As with D&A, any insights that may emerge into how things might be done differently or better are simply the result of conducting the audit in a different way, not of any additional consultative service on the part of the auditor. All insights are available to auditor and client alike, allowing process improvement to occur on all sides. This may result in companies seeing ways to work more efficiently and engage their people more actively, and in auditors gaining a deeper understanding of key corporate processes.
CO-CONTRIBUTORS TO VALUE It may seem on the surface that D&A and lean in audit are operating in sepa22 Canadian Underwriter December 2015
rate value spheres, but in reality, the two approaches work quite well together. While lean in audit’s contribution to risk may not be as obvious as that of D&A, it emerges more clearly when seen in conjunction with D&A. For example, a deep D&A data analysis may unearth a problematic anomaly. It may then be possible for a lean in audit-based process analysis and review to find out whether or not the problem is the function of an underlying process, perhaps a controls breakdown. The organization can then take steps to close that gap. Working together, D&A and lean in audit leverage previously unavailable tools and techniques, helping to bring enhanced audit value to companies that effectively act on the information they receive.
for corporate failures. In such a climate, directors — the audit committee, in particular — should find very appealing the potential for both D&A and lean in audit insights to help them detect outliers and potential risk issues. Initially, audit committees might find the prospect of learning another new process daunting given the way their duties have expanded in recent years. The fact that they will have access to more information means they may find themselves looking into risk areas they have not had to deal with as yet. Today, however, as new risk responsibilities continue to find their way onto the agenda, it is hard to see how access to more and better data — and a methodology to apply that data in the most efficient manner possible — would not be welcome. Another potential benefit to the audit committee is that once the organization fully embeds D&A in the audit process, the data will aim to accumulate over time
WELCOME RISK SUPPORT Boards and audit committees have come under significantly increased pressure since the financial crisis. The global economy is more complicated and board risk responsibilities are expanding. Penalties for regulatory infractions resulting from risk-prevention missteps are getting stiffer, and directors are finding themselves, often individually, liable
and will be permanently accessible. This will help make internal benchmarking capabilities far more powerful. Moreover, D&A technology will assist with the collection and application of a vast range of external industry data
that will be universally available on the Internet — StatsCan data on unemployment, for example. This will help make it easier for organizations to benchmark themselves against their peers and find out how others are handling risk and demonstrating appropriate governance. It should also support the development of a deep, ever-growing informational database for better understanding industry and data trends. Boards and audit committees that are hesitant to accept emerging technological approaches to the audit may want to ask themselves a few key questions around risk: • Is the organization decentralized or centralized, and how does that affect the ability to track risk? • Does the organization engage in a very large number of individually small transactions? • Does the organization employ a lot of people? • Are there enough variables in the data
to technology. Similarly, there has been concern that too proactive an approach to data analysis could raise questions of independence on the part of the auditor, a risk which would, if valid, present a potential regulatory quagmire for client and auditor alike. Neither of these concerns holds water, as neither approach is in any way an extra consultation or advisory service. Technology simply gives auditors better ways to do things they have always done. As a result, companies and their directors are finding themselves in possession of a much deeper picture of their own data and processes, information they can independently apply to help manage risk, improve business and, indeed, put to whatever use they see fit. These two audit approaches not only enhance audit value, but also often produce insights that businesses can use to manage risk and improve their business results.
Working together, D&A and lean in audit leverage previously unavailable tools and techniques, helping to bring enhanced audit value to companies that effectively act on the information they receive. that it would benefit from granular D&A analysis? • Would the company benefit from streamlining and closing gaps in the existing controls environment?
SELLING OUT TO TECHNOLOGY OR BUYING IN? There is a sense for some that advanced approaches such as D&A or lean in audit are, in some way, selling out the audit
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Bringing Sense to
BYOD Mitch Koczerginski Associate, McMillan LLP
Bring Your Own Device is now part of the business landscape. But with the convenience and flexibility of BYOD comes risks that an organization must address in a dedicated policy. Bring Your Own Device, or BYOD, is a business technology solution that clearly offers some benefits, but can also create risks if not implemented effectively. By allowing employees to perform professional tasks on personally owned devices, these arrangements are attractive to Canadian businesses because they can result in significant savings on technology costs, as well as enhance employee satisfaction and efficiency. Despite these benefits, organizations should carefully explore and consider all potential implications before implementing a BYOD program. A program that allows employees to use their own devices for both personal and professional purposes has the potential to create conflicts between an organization’s need to enforce important organizational policies and an employee’s privacy interests. To avoid this potential conflict, organizations should develop a BYOD policy that strikes an appropriate balance between organizational con-
24 Canadian Underwriter December 2015
cerns and related privacy obligations. Recently released joint guidelines from federal, Alberta and British Columbia privacy commissioners detail some of the important issues that need to be considered.
UNDERSTANDING THE PROBLEM Organizations have a legitimate interest in regulating and monitoring an employee’s professional use of a BYOD device. Although a BYOD program permits employees to perform professional tasks on personal devices, employers still have an interest in prohibiting employee conduct that may negatively impact the organization, as well as monitoring compliance with workplace policies. The intermingling of professional and personal use inherent in a BYOD program blurs the line between what is professional and what is personal. As a result, an employee may continue to represent his or her organization even when using a device in a personal capacity. An employee who uses a device for inappropriate or unlawful purposes may further expose his or her organization to liability or reputational harm. While a BYOD program provides an employee the flexibility to perform work tasks from virtually anywhere, an organization must, nonetheless, take steps to ensure the security of both privileged and confidential organizational data, as well as individuals’ personal information. Unauthorized release of confidential business data may result in significant legal or business harm to an organization and breaches of personal privacy can result in lawsuits and damage to reputation. For instance, organizations in possession of information subject to confidentiality obligations may be found liable if such information is inadvertently released. Even if an organization is not legally subject to confidentiality requirements, release of internal documents may cause significant business harm. For instance, the inadvertent disclosure may reveal otherwise not publicly known business plans or initiatives. Using a personal device to perform profes-
sional tasks may compromise security in a variety of ways, including allowing access to documents or emails over an unsecured WiFi network, performing organization tasks in public, or losing information upon termination of the employment relationship if company data remains on an employee-owned device. The risk of a data breach increases substantially if employees are able to access confidential information from devices that are outside an organization’s security system. While organizations invest significantly in the security of their networks, documents that are removed from the network are subject to the security controls on an employee’s device. As such, an organization may require access to a BYOD device to install security software necessary to protect its network. Organizations may also have an interest in monitoring BYOD devices to ensure employee compliance with workplace programs or policies. While permissible, an organization’s decision to regulate a BYOD device raises issues regarding employee privacy. An organization may have a legitimate reason to access professional information on an employee’s personal device, but it must be mindful of applicable privacy obligations. These obligations, where applicable, include a requirement to obtain consent before collecting personal information. A single device used for personal and professional purposes is more likely to have work product information and personal information intermingled. As such, an employer runs the risk of collecting personal information while accessing the device to collect work product information. It is important that participants in BYOD programs understand employer access to the professional data on a device may result in the inadvertent collection of their personal information.
RECONCILING ORGANIZATIONAL CONCERNS, PRIVACY OBLIGATIONS This August, the information and privacy commissioners of Canada, Alberta and B.C. issued joint guidelines to help organizations reconcile security concerns
with obligations pursuant to applicable privacy law. The guidelines serve as a useful tool for organizations considering implementing a BYOD program. An important recommendation is for an organization to conduct a privacy impact assessment (PIA) and a threat risk assessment (TRA) prior to implementing a BYOD program to see if such a program makes sense for the organization. A PIA identifies potential privacy risks inherent in a new program or policy; a TRA identifies potential threats that a new program or policy may have on an organization’s IT system. Conducting a PIA and a TRA prior to implementing a program allows an organization to determine if an appropriate balance between security concerns and privacy obligations is possible. As well, by identifying potential risks to both an organization’s security system and employee privacy, organizations will be better-positioned to construct a specialized BYOD policy. The commissioners recommend a BYOD policy clearly establish obligations and expectations of BYOD users and the organization, including those below: • user responsibilities; • how personal information in an organization’s control may be subject to reasonable and acceptable corporate monitoring on a BYOD device, and how BYOD users are informed of these monitoring practices; • whether or not geo-tracking information generated by the mobile device will be tracked by an organization; • the privacy practices an organization has adopted in respect of the employee’s personal use of a BYOD device; • training for BYOD users; • acceptable and unacceptable uses of BYOD devices; • sharing of devices with family members or friends; • application (app) management; • data/voice plan responsibility; • device and information security requirements; and • access requests. Beyond generating a robust policy, it is important that an organization develop
training materials and programs to educate employees on the organization’s expectations outlined in the policy. Organizations should ensure employees agree and consent to the terms of the BYOD policy.
MITIGATING ORGANIZATIONAL RISK The commissioners further recommend that organizations undertake certain technological procedures to mitigate the security and privacy risks identified in a particular BYOD program, including those relating to “containerization” and “encryption”. Containerization is a risk management strategy where a device is divided into separate virtual containers: one for personal data; one for organizational data. Organizations are encouraged to use mobile device management software to facilitate internal management of the container holding professional data and organization-approved applications. Organizations should also train employees about any specialized software installed for these purposes. Staff co-operation is key to the success of containerization as a mitigation strategy, since the process may be undermined if employees perform professional functions in the personal container or vice versa. Encryption refers to the process of encoding messages or information in such a way that it can be read only by authorized parties. Implementing a system of encryption for communicating confidential information between a BYOD device and the organization’s network mitigates the risk that the content could be meaningfully intercepted. The commissioners recommend encryption of the organizational container of a BYOD device be centrally managed by an organization’s IT department. BYOD programs offer some benefits to both participating organizations and employees, but must be implemented thoughtfully. While organizations may regulate the use of BYOD devices, they must consider employee privacy obligations when doing so. It is also important to consider the joint recommendations of the three privacy commissioners. December 2015 Canadian Underwriter 25
The Driver’s Seat Conditions are changing at breakneck speed for Canada’s property and casualty insurance industry. With 2016 providing little promise things will slow down — allowing slow-adopters to catch up — primary insurers need to keep pace or be left in the dust. All that demands plotting the best route forward, knowing when to rev up or slow down, to reach the final destination.
26 Canadian Underwriter December 2015
C
hange is unfolding quickly for primary property and casualty insurers in Canada, much the same as for their counterparts around the world. While all manner of influences — the economy, low interest rates, mergers and acquisitions, focus on underwriting performance, climate change, community resilience, changing technology, new and innovative entrants, the sharing economy and pricing of existing and emerging risks — will be part of the ever-transforming mix in the coming year, one consideration has more clearly come to the fore: the customer. The customer is demanding more, more quickly — and p&c insurers are not currently the measuring sticks for rapidly changing client expectations. Customer “service” is being measured against everything from search engine companies to online shopping providers and coffee retailers. All that demands p&c insurers develop appropriate infrastructure, and adjust their approaches and attitudes accordingly, to foster greater flexibility, enhanced speed and improved understanding of the seemingly endless supply of data. Combined, the resulting systems and knowledge will advance customer service and promote ongoing and sustainable relationships. Waiting for much longer, expecting to hitch a ride, will unlikely get insurers where they want to go. If insurers opt not to move forward and perform, new entrants or existing forward-thinking competitors will, no doubt, fill that space. Canadian Underwriter asked senior executives for some of the country’s primary insurance companies the following question: What are the key trends affecting the Canadian p&c market and what sort of responses are needed to meet those challenges and opportunities in 2016? Here is what executives had to say, presented in alphabetical order by last name.
December 2015 Canadian Underwriter 27
COVER STORY
The Driver’s Seat
1
Kathy Bardswick President & Chief Executive Officer The Co-operators Group Limited
These are certainly interesting times for the Canadian property and casualty industry. By its very nature, the industry is in a constant state of evolution as it adapts to all nature of change — environmental, social, technological, economic and political. Still, this is an exceptionally exciting time of profound change. Not long ago, the standard industry position on overland flooding in this country was that it was an uninsurable risk, one to which private insurance just could not respond. Recently, that has changed dramatically. There are now products in the market, and more are expected to be introduced soon. There are products currently available that show overland flood can be priced, even in the most at-risk areas. As the industry steps up to fill this gap and make communities more resilient, it is critically important that insurers clearly and effectively price all risk, avoiding subsidization to ensure appropriate public policy associated with urban planning and investment. There is a great deal of work to be done with a wide variety of stakeholders in order to make communities more resilient to flood, but recent developments are certainly encouraging. A second area of change worth noting is the nature and pace of technological advancement. Omni, Uber, driverless vehicles and big data were not a part of p&c insurers’ vocabulary that long ago. Today, these developments are causing all insurers to rethink business models, innovation core competencies and overall approach to the market. Insurers’ ability to adapt and willingness to value the future more than the past will dictate the winners.
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Jean-François Blais President Intact Insurance
The insurance industry, like other industries, is quickly evolving, which will 28 Canadian Underwriter December 2015
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It is critically important that insurers clearly and effectively price all risk, avoiding subsidization to ensure appropriate public policy associated with urban planning and investment. present a number of opportunities over the next 12 months. The industry needs to be agile and keep customers at the center of all it does if it wants to leverage these opportunities. Atop the traditional risks associated with the physical environment and severe weather events, such as flooding, insurers have to be prepared to manage emerging risks and opportunities, and assess how technology, telematics and big data could revolutionize underwriting, pricing and claims. Insurers also need to be more customer-driven. Technology will continue to drive the industry and how insurers connect with customers. Technology is at the heart of the customer experience, and
is transforming insurance and broker channels. Improving customer connectivity and the customer experience will be integral to success. As well, it is important that the industry develop simple, personalized and innovative products to meet customers’ changing needs. A good example of this is the sharing economy. It is clear these services are growing in popularity, which will likely see insurance companies participating at an increasing rate. Partnering with companies like Uber is just a first step. Insurers should also challenge themselves to design and develop new products that customers can easily understand and access. This demands transforming systems to improve the customer experience, including streamlining the claims process to provide a more customer-focused claims experience. Insurer and broker success will continue to depend on their strong fundamentals, which include acting as trusted advisors and advocates. It will also require the ability to innovate and deliver a simple and seamless experience based on the evolving needs and expectations of consumers.
3
Alister Campbell Chief Executive Officer
The Guarantee Company of North America
Drones, driverless cars, 3D printers in homes, 4D printing in hospitals, hacktivism, social engineering, cyber risk and customers tweeting their claims. It would appear that the evolution in technology is about to force Canada’s property and casualty industry to change at almost revolutionary speed. Underwriters are in the middle of an “IT transformation.” As an industry generally content to manage COBOL-based legacy systems, these transformations are challenging insurers to upgrade IT management skills. To execute well in these new areas of endeavour, however, is not easy. Big IT projects have a habit of taking longer and costing more than projected. And
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COVER STORY
The Driver’s Seat to fund the embedded costs of these IT investments within already-constrained expense ratios will be a real test for every insurer. For brokers managing accelerating customer expectations for speed and accuracy of service interactions, the pace of their underwriting partners’ IT progress may prove frustrating. The good news is it is actually happening and will make things better. Most significant is that the changing of systems will require a review of who does what. Insurance Brokers Association of Canada is doing important work on developing principles that should help guide Canada’s p&c industry thinking on this. The best news in all this is increased customer expectations will force all insurers to become better. And the improvement in available tools will make it possible for some insurers to become a lot better! With all these evolving risks — driven by new technology — will come new complexity in risk management and increased needs for advice on effective risk transfer. Lots of room for trusted advisors and specialized insurers to prosper. Should be another fun year!
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Technology is at the heart of the customer experience, and is transforming insurance and broker channels. Improving customer connectivity and the customer experience will be integral to success.
Karen Gavan President & Chief Executive Officer Economical Insurance
There are numerous key trends/developments expected to affect Canada’s property and casualty insurance industry in 2016. Consumer education: As the industry is becoming more and more sophisticated in pricing and underwriting, insurers need to communicate better with consumers about the risks to which they are exposed, such as fire and theft, hail, flood and earthquake, and the actions they can take to reduce those risks. This will give them a much better understanding of the risks they may want to insure against. To do that, insurers need to be more transparent, like looking at a plain-language menu in a restaurant, so consumers 30 Canadian Underwriter December 2015
can make educated decisions on the limits and deductibles they can factor into their insurance purchase decisions. This creates a customized insurance plan for each consumer that optimizes the spend. Climate change: The p&c insurance industry must continue to forge ahead and make Canadian communities more resilient to the impact of climate change. Collectively, the industry needs to support Insurance Bureau of Canada in its efforts to increase government understanding of the simple, low-cost solutions that would help prevent property losses in the first place, including making backflow valves part of national and provincial building codes for new builds and basement renovations, and preventing new construction on floodplains.
The industry also needs to keep pressing for infrastructure improvements to reduce the impact flooding has in communities. Flood: Insurers need to have a unified approach to flood coverage. The recently announced initiatives on flood coverage are not good for the industry. Charging for flood in areas without significant exposure beyond that covered by sewer back-up is gouging consumers. Ultra-high premiums for flood endorsement in flood-prone areas will deter purchase. Offering coverage no one can afford is not a solution. A big marketing splash and subsequent industry failure in the next flood could push the industry towards regulation. Working collaboratively in open dialogue in a committee of industry, regulatory and government stakeholders is the key to making the product sustainable, available and affordable.
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John Hennessy President & Chief Operating Officer
CNA Canada
In 2016, the pace of change across commercial insurance will continue to accelerate, given the pressure on profitable growth in a suppressed interest rate environment. Competitive edges are sharpening as carriers and brokers jockey for position, focused on optimal financial performance and market expansion. Carriers are seeking the right mix of business in their portfolios to ensure long-term value and sustainability throughout the market cycle. Data, analytics and metrics have become increasingly important to effectively compete in today’s environment. These powerful tools help shape and direct underwriting strategy and execution. In today’s dynamic business climate, preferred customers are better-informed and, rightly, demanding authentic industry expertise from their broker and carrier partners. As customer-driven requirements and insurance-based solutions evolve, the fundamental truth of deep understanding endures. Deep understanding of a
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COVER STORY
The Driver’s Seat customer’s needs and ambitions, across both underwriting and claim, and the capability to consistently deliver on them, has become the key differentiator required to win and retain customers. The days of competing successfully as a generalist are long over. Clearly, customer-level specialization is a skill-based game and the best talent usually wins. As a result, the race to attain and retain the right talent across all disciplines has become the hallmark of the competitive landscape for brokers and carriers alike. While the changes within the property and casualty insurance industry are oftentimes astonishing, when it is all boiled down, a strong broker and carrier relationship resides at the core of every successful deal. This bond must be refreshed and renewed on a regular basis to ensure mutual strategic success. As proven throughout many different cycles and territories, nothing can replace the value of a fully optimized broker/carrier offering.
6
Ulrich Kadow Chief Agent of Canada Allianz Global Corporate & Specialty Americas
There continues to be steady overcapacity in the market in most areas, putting pressure on rates. This is partly offset by consolidation in the insurance industry, as seen currently by mergers and acquisitions activity. With pressure on rates, there is an increased need for more efficiency and brokers are seeking effective online and/or program solutions in response. Insurers are focusing on differentiating customer experiences. A fully customer-centric solution, providing an individualized experience, is a competitive advantage and hard to replicate by new entrants. Cyber protection is top of mind for most Canadian companies. The need for cyber insurance coverage is increasing along with the frequency of cyber attacks, changing regulation and general awareness of risk. 32 Canadian Underwriter December 2015
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line. Political instability, terrorism, economic and trade sanctions can affect their flow of capital and operations. In addition, Canadian companies are increasing cross-border sales to increase market share and require expertise in cross-border solutions to help cover their emerging insurance needs.
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Patrick Lundy President & Chief Executive Officer
Insurers need to be more transparent, like looking at a plain-language menu in a restaurant, so consumers can make educated decisions on the limits and deductibles they can factor into insurance purchase decisions. With so many unknowns, this risk is underestimated in many cases, partly driven by a lack of understanding and knowledge around exposure. Companies should be looking for policies that address many likely exposures, such as first- and third-party claims, crime losses and the cost of a PR consultant to manage reputational risk. Globalization is another top industry trend. Managing the impacts of global change must include consideration of economic, social, geopolitical, legal, technology, environmental, market and customer needs issues. Although companies are able to smooth out regional adverse impacts on their businesses, they are also affected by global trends and occurrences that have a negative effect on their bottom
Zurich Canada
Some of the issues highlighted in last year’s Primary Insurance Market Outlook have taken a more central place in discussions with customers this year. A brave new world is coming into existence with some of these new and changing risks starting to compete with traditional perils, such as fire and flood, for the devastating impact they can have on a business. The carriers that will win the battle for the customer in these changing times will be the ones that can capitalize on their longevity, show patience and take a long-term approach to the market, like any good investment strategy. With so many high-profile hacks in the news, businesses of all sizes are beginning to fully grasp how serious a security or privacy breach can be for the viability of a company. The 2015 Advisen Cyber Survey of risk managers shows that customers have moved past mere interest in cyber security products. Insurers are now seeing double-digit year-over-year growth in demand for cyber liability coverage and higher limits. But dealing with cyber risk is a societal problem that goes far beyond the coverage choices and insurability of individual customers. Insurers will need to collaborate, with government policymakers and with each other, sharing data to better understand how cyber losses develop and the totality of the exposures. Industry collaboration and analytics based on this shared data will be necessary to build the right predictive models and benchmark pricing and limits appropriately.
COVER STORY
The Driver’s Seat Just like these fast-evolving techno risks that begin changing just as insurers come to grips with the previous iteration, the Canadian insurance market continues to evolve, through perpetual mergers and acquisitions activity and changes to distributor models. Far less likely to change is the value of a steady approach to the market and the ability to add value beyond the insurance product.
8
Sean Murphy
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President Lloyd’s Canada
The risk landscape is changing fast, with new and emerging risks impacting governments, businesses and individuals across the world with increasing severity and frequency. Business activity is becoming more interconnected and global. More economic output is exposed to potential systemic shocks than ever before. Now is the time to highlight this fact and stimulate a discussion on steps for governments, businesses and the insurance industry. The recently released City Risk Index, research for which was completed by Cambridge University Centre for Risk Studies, measures the financial impact in dollars of 18 major threats on 301 of the world’s leading cities, including six Canadian cities. Emerging economies, for example, will shoulder an increasing proportion of risk-related financial loss as a result of their accelerating economic growth. These cities, the study found, are often highly exposed to single natural catastrophes. Here in Canada, and elsewhere in the world, man-made threats — market crash, cyber attack and power outage — are becoming increasingly significant. Likewise, emerging threats — human pandemic, plant epidemic and solar storm — are set to have greater impact in terms of their potential economic disruption. Insurance is just one piece of the jigsaw, however. Governments and businesses must also play their parts in building resilience and robust infrastructure. 34 Canadian Underwriter December 2015
The need for cyber insurance coverage is increasing along with the frequency of cyber attacks, changing regulation and general awareness of risk. In an age when financial institutions are viewed with skepticism, it is time for the insurance sector to show leadership, explain its value and, by innovating, help build a global economy that, in spite of systemic catastrophic shocks, thrives rather than falters.
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JOHN O’DONNELL P resident & Chief Executive Officer Allstate Canada Group
For the past few years, insurers have met market challenges while driving towards innovation. Insurers have capitalized on opportunities, but also need significant progress to ensure that they keep pace with customer expectations. Customers’ experience with other industries has been notably enhanced by
customization and technology enhancements, and they expect no less from their insurance providers. In 2016, Canada’s p&c insurance industry must be able to make exponential leaps rather than small increments of change in strategy and execution. Insurers cannot do this alone. User-based insurance is an example of effective partnership that has enabled innovative, competitive solutions for consumers, who are embracing this where it meets their needs. Customer expectations guarantee that the pace of change will accelerate. Insurers continue to need their partners — distributors, technology suppliers and regulators — to embrace innovation and move quickly alongside insurers. Going forward, insurers have the chance to get it right, working together on initiatives such as customized solutions, technology advances and activity focused on ensuring effective, but not prohibitive, oversight on solvency and market conduct. Customers benefit from people of vision, collaborating to drive innovation and change. Dialogue among regulators, governments and industry is more critical than it has ever been. It means that all stakeholders will be prepared in true emergencies to respond with the timeliness and level of protection and service customers deserve. For insurers who are involved in shaping reforms, products and services in Canada’s p&c marketplace, a great chance exists to truly invest in change that ensures companies can manage both capital and operations in the long-term interest of the rapidly evolving consumer marketplace.
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LYNN OLDFIELD President & Chief Executive Officer AIG Canada
Hoping not to sound like a “broken record,” 2016, nonetheless, will likely feel much like 2015: a low interest rate environment; robust regulatory oversight; consolidations and new market entrants
Evolving
with the Business
Janice Anstie
Geoff Lubert
Mike Norris
Scott Jellous
Roufat Raguimov
Adam Canning
Gus Katsuras
Jim McCarney
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COVER STORY
The Driver’s Seat leading to downward pressure on commercial rates; and consumers driving Canada’s p&c industry to more online and hand-held technology solutions. What is not so easy to predict is the severity and frequency of catastrophic events, the Canadian dollar, the cost of a barrel of oil and the performance of the Canadian economy. Creating a talent pipeline to replace a generation poised to retire over the next five years will continue to be a high industry priority. Fundamental to this pursuit is appealing to graduates by effectively promoting the intellectual diversity the industry provides — and offering an engaging workplace and career path progression planning. In mature, competitive markets like Canada’s, insurers are seeking ways to add value for clients. In an inter-connected world, where people are ordering their lattes on their mobile devices, clients are seeking the same kind of enhanced service, be it expedited claims and policy issuance or risk engineering on demand, to cite a few. In the age of big data, it is anticipated there will be considerable disruption as new industries emerge and old models become obsolete. To mention a few examples, robotics performing end-to-end processes, drones conducting aerial loss control inspections and catastrophic claims data feeds, autonomous vehicles and the re-imagining of the transportation network when traffic signals are no longer needed. Insurers who are best-positioned to analyze and extract meaning from the 205,000 new gigabytes of data created every second and provide actionable insights to help make clients’ operations safer and more productive will succeed. This demands harnessing data to also meet needs clients have not yet identified. From cyber breaches to shifting questions of property and products liability, clients will be called upon to consider risks not yet contemplated, where machines replace humans as the decisionmakers and sensors are capturing data creating questions about liability, resulting physical damage and privacy. 36 Canadian Underwriter December 2015
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Insurers best-positioned to analyze and extract meaning from the 205,000 new gigabytes of data created every second and provide actionable insights to help make clients’ operations safer and more productive will succeed.
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SYLVIE PAQUETTE President & Chief Operating Officer Desjardins General Insurance Group
There was no shortage of challenges facing Canada’s insurance industry over the past year. One of the biggest concerns was, and is, the low-yield environment. Seven years and counting of rock-bottom interest rates are taking their toll on industry profitability. With investment income eroding, the only way to make up the lost income is to improve underwriting results by reducing expenses and adjusting premiums. Efficiencies, improved segmentation and selection, and better claims management can all help strengthen bottom lines in the short term.
But with record-low interest rates, the “new normal” for the foreseeable future, it is also clear that expense reductions will not be sufficient on their own. Industry premiums will have to be adjusted to reflect the new reality, though this will not happen immediately. In the meantime, much of the heavy lifting will fall on expense management. This is happening at the same time that many insurers are increasingly adopting multi-line distribution and facing big investments to update legacy systems to build their digital capabilities. Telematics, mobile applications, selfservice claims, advanced analytics, the shift to an omni-channel customer experience — these are all bringing radical change to the way property and casualty insurers do business. At the same time, the “things” insurers insure — mostly vehicles and homes — are also changing with technology. Obviously, safer, semi-autonomous vehicles and homes that are connected through the “Internet of things” will have very different insurance needs. These technologies are not going to radically change the industry in the next 12 months. But despite the current pressure to reduce expenses, the smart companies have already started to prepare for the changes that will, no doubt, come surprisingly fast.
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ROWAN SAUNDERS P resident & Chief Executive Officer RSA Canada
The property and casualty landscape is changing at a rapid pace. Catastrophic events are becoming the norm, digital capabilities are improving, and the regulatory environment is becoming more robust and complex. Mergers and acquisitions activity is likely to continue over the next five to 10 years as brokers and insurance companies look to drive greater operational efficiencies to improve their returns. More consolidators are operating both nationally and regionally than ever before.
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COVER STORY
The Driver’s Seat Broker consolidation is changing the relationship with insurers. It is important that brokers and insurers work together to maintain a cost-effective channel. An important strategy in 2016 will be for insurers and brokers to choose the right partners who want to strategically invest in their businesses in order to evolve and stay relevant through an increasingly dynamic market. The implications of new and disruptive technologies to the insurance industry are also significant. The p&c industry must be prepared for this reality within the next decade. A risk facing the insurance industry is the potential for distribution by noninsurance companies such as Google and Amazon, which are fuelled by digital and technology. It is clear that a decision to distribute insurance this way is price-driven, not relationship-driven. However, while the direct channel will continue to grow as some consumer preferences change, it is believed that the broker channel will continue to remain the largest and most dominate distribution channel in the next 10 years. Brokers must continue to focus on their trusted advisor role to customers by acting as independent insurance experts. In order to stay relevant in the face of changing environmental, regulatory, technological and digital pressures, insurers’ and brokers’ entire proposition has to evolve. It will be exceedingly important for both insurers and brokers to clearly define their market, and products and service delivery will need to become more innovative to anticipate customer needs and exceed their expectations.
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GREG SOMERVILLE
Chief Executive Officer Aviva Canada Inc.
Continued development of solutions to respond to customer needs remains the top priority for 2016. Customers will continue to seek a solution aligned to their preferences around product distribution. While a simple digital experience is the top choice, some 38 Canadian Underwriter December 2015
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With investment income eroding, the only way to make up the lost income is to improve underwriting results by reducing expenses and adjusting premiums. also rely on the Internet for research before making a non-digital purchase. As the industry continues to evolve to meet these needs, brokers and insurers that increase their digital capabilities will lead the pack. Not only will the industry see more business purchased through digital means, but adopting new technologies will also position everyone in the industry to further adapt to evolving customer needs in the years ahead. Working with all levels of government on flood mitigation and community resiliency is critical to protecting homes and businesses. Discussions need to continue to focus on improving residential developments and incentivizing residents to mitigate the risk of damage to their properties. Products must also evolve to become easier to understand so customers know what is covered. The Ontario auto system, inclusive of both the regulatory environment and the product, must be overhauled as it simply does not work for customers. A
new product, one that is more stable, affordable and offers consumers more choice, is required. As well, Ontario drivers will be bestserved by a regulator that is proactive and strongly committed to promoting innovation and competition in the marketplace. The expert panel reviewing the Financial Services Commission of Ontario’s mandate is carrying out thoughtful work and the industry will continue to work with the panel to advance customer interest and protection. The shared economy will continue to grow in 2016. Everyone has seen the rise of Uber and AirBNB — and now the topic of insurance related to these ventures has come to light. Product development needs to keep pace with a rapidly evolving economy that continues to create opportunities to develop exciting customer solutions. Whether it is disruption from within the industry or created from the outside, engaging with customers on their needs and preferences is the best way for brokers and insurers to stay ahead as they move into 2016 and beyond.
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JOHN TAYLOR President & Chief Executive Officer Ontario Mutual Insurance Association
2015 was another year of “lightning round” developments and 2016 promises more of the same. After years of grappling with what to do about overland water or flood insurance, the industry is seeing a rush of residential insurers making some form of additional water coverage available on most homeowners policies, with each insurer taking a somewhat unique approach. The prediction is that by the end of 2016, virtually every insurer will be providing some form of enhanced water coverage. As a caveat to that prediction, there will remain a portion of the residential market, including those most in need, whose exposure to flood or overland
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The Driver’s Seat
Insurers often like to do an apples-to-apples comparison and benchmark themselves against other insurance providers. But what insurers should be doing is comparing apples to oranges, because that is what customers are doing. water damage is such that coverage will simply be unavailable. Insurers can expect further governmental activity on this gap and can hope for some type of viable public private solution. In the longer term, with increasingly volatile and severe weather, the next few years could generate some interesting results and analytical approaches that will re-set the ultimate market price of water coverage for the consumer. Technology continues to march on and the hunger for data on consumer habits and preferences grow. With what appears to be an infinite supply of data, the greatest constraint will be insurer’s ability to collect and analyze it in a meaningful way. In 2016, the Ontario auto market will continue to provide affordability and profitability challenges. Some of the most important of the 2010 product reforms should be coming on line, and there appears to be a political commitment to align the Ontario product more closely with those in other provinces to get to the same affordability benchmarks. Adding “excitement” is the prospect of autonomous car technology that is predicted in the next 10 to 15 years to drastically reduce exposures. Finally, the state of the Canadian economy will continue to cast a shadow 40 Canadian Underwriter December 2015
over the strategic plans and risk management of insurers. Operating decisions and investments in operations have a lot less room for error.
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SILVY WRIGHT President & Chief Executive Officer Northbridge Financial Corporation
The insurance industry is undergoing an intensive period of rebirth. A series of disruptive trends will have an unprecedented impact on what the industry will look like in the next five to 10 years. Insurers’ traditional way of doing business is changing, and it is changing fast. Looking back, the industry has enjoyed a long history of stability when it comes to customer service models. With so few customer touchpoints, insurers have been somewhat sheltered from providing a great customer experience. That is no longer the case. Insurers often like to do an applesto-apples comparison and benchmark themselves against other insurance providers. But what insurers should be doing is comparing apples to oranges, because that is what customers are doing. Their expectations of insurers are based on high-engagement industries
like retail and even other financial service providers. Industries that have a much better under- 15 standing of what customers want, when they want it and how they want it, are setting the new standard. Closing the gap between customer expectations of insurers and their current experience elsewhere is one of the industry’s biggest challenges. New entrants are coming in with big capital, big ideas and big data, and they know more about customers than insurers currently do. So what needs to happen in order to survive and thrive as insurers enter this period of unprecedented change? For starters, they need to do a better job of prioritizing the customer experience. Providing “good” customer service is no longer good enough. “Exceptional” is what insurers need to be aiming for. This will require brokers and insurers to innovate and collaborate more effectively to create the best customer experience possible. Disruption does not happen for the sake of disruption. It happens because customers are asking for it.
Open minds. Understand Risk. “In understanding and evaluating risk, we focus on the client’s needs, be it developing programs for associations or individual risk placements. In professional liability, a thorough understanding of the risk and scope of services is imperative. We collaborate with our broker partners to evaluate their clients specific coverage needs. We think strategically and strive to be innovative, flexible and solutions focused, making the product fit the client, not the client fitting the product. We endeavour to always be flexible and agile in our thinking and constantly evolve our products to meet the ever changing needs of the marketplace, to be the bespoke provider of innovative coverage solutions.“ Jon Cooper Underwriting Specialist, Professional Liability / Directors & Officers Liability Direct 416-673-5094 jon.cooper@sovgen.com sovereigngeneral.com
Note-Worthy
The CIP Society
For insurance professionals, taking note-taking seriously is no laughing matter. Dealing with a difficult, demanding or even threatening claimant can be trying for claims adjusters, but professionalism and accuracy in note-taking is paramount. Failing to do so can put the impartiality and reputation of both the adjuster and the company at risk.
Insurance Institute of Canada
The CIP Society represents more than 17,000 graduates of the Insurance Institute of Canada’s Fellow Chartered Insurance Professional (FCIP) and Chartered Insurance Professional (CIP) Programs.The CIP Society, through articles such as this, is working to bring ethical issues to the forefront and provide learning opportunities that enhance the professional ethics of all insurance professionals.
Over the course of their careers, insurance professionals tend to encounter a variety of people (customers, co-workers and the general public, among them). While most people are pleasant, sometimes professionals have to work with difficult personalities.
42 Canadian Underwriter December 2015
Such was the case for one particular adjuster who was forced to deal with a very unpleasant claimant. The claimant was demanding and impatient, and had unrealistic expectations about the outcome of his claim. This included both the time frame and amount of the claim. It was becoming a concern for the adjuster because at each step of the process, the claimant threatened that if he did not get what he wanted, he would go over the adjuster’s head. He even said he would go to the regulators and the press. The adjuster felt that he and his company were acting fairly and responsibly, but simply did not want the aggravation of dealing with an unnecessarily and unwarranted escalated issue. The adjuster sought advice from his mentor, who suggested that he take very good notes of each encounter and each step in the process. In this way, the adjuster would not have to rely on his memory later if everything went in the wrong direction. Agreeing that this would be wise, the adjuster made copious notes of all meetings and interactions. In some instances, he would pepper the notes with brief comments, sometimes questioning the honesty of the claimant’s remarks. The
Illustration by Scot Ritchie
The CIP Society Ethics Series
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adjuster would insert such comments as, “He’s lying here” or “real jerk.” While the adjuster was away for an indefinite period because of jury duty, his company’s legal department requisitioned the claimant’s file because it was likely headed for court. The claimant’s legal representative had an opportunity to view the file and found the supplementary and unflattering commentary. Accusing the adjuster and the company of acting unprofessionally, the claimant’s lawyer argued the comments should call into question treatment of the claimant in its entirety. Is this accusation warranted? How could the entire situation have been prevented? Darrell Mack, FCIP Injury Claims Manager Saskatchewan Government Insurance A claims adjuster will deal with conflict and adversity many times over in his career, and handling a demanding claimant brings both challenge and opportunity. At all times, the adjuster must be a professional, including in the area of note-taking. The insurer owes a duty to their customers and enters relationships with them based on the principle of utmost good faith, which is incumbent on both parties. Utmost good faith requires the insurer and all representatives to act fairly when investigating a claim. Failure to abide by this principle opens insurers to claims for bad faith, including punitive damages. Plaintiffs’ counsel will look for evidence of unreasonable behaviour on the part of the adjuster, including careless and prejudicial comments made about the insured. This includes comments in letters, emails, notes and even deleted files. If found in breach of his duty — and especially if punitive or aggravated damages are awarded — court decisions can affect the reputation and finances of an insurer. Insurers must maintain an excellent standard of business ethics as it relates to consumer confidence. An employee’s personal conduct has the potential to raise doubts about his integrity or abil44 Canadian Underwriter December 2015
ter proceeds to court. The company lawyer will need to analyze the risk of taking this matter forward and provide his opinion to the claims manager. This situation could be prevented by having a training program to help adjusters establish better note-taking skills and expectations around “dos and don’ts” for claims correspondence.
ity to perform his job duties, and even discredit the insurer’s reputation in the community. In this scenario, the mentor gave sound advice to the adjuster to note the file. It is assumed the mentor did not guide the adjuster in proper documentation or inform that notes are legally accessible by the insured. Is the allegation warranted? Yes. The adjuster’s notes have compromised the insurer’s position in the event the mat-
Miles Barber, B. Comm. (Hons.), FCIP, RF Executive Adjuster Network Adjusters Ltd. Independent adjusters are trained to take notes during claim investigations. This is both a rudimentary activity and a critical responsibility. Comprehensive and accurate notetaking does not begin when the individuals involved in a claim adjustment first begin to disagree on an aspect of the adjustment process. Rather, it begins upon receipt of the claim assignment. An adjuster will interact with a claimant in various ways, including in person, by telephone and by email. Some channels of communication naturally result in a record of that interaction, such as email. Where other forms of communication are involved, the adjuster should record each interaction thoroughly as that interaction occurs. As an example, for telephone calls, the adjuster should record the date, time and length of the interaction, and, most importantly, the topics discussed. Current technology makes the creation of file notes very easy. Most — if not all — independent adjusting firms employ some form of technology-based time management system that allows their adjusters to record daily activities on their claim adjustment files. Like all professionals, independent adjusters are human, and as such, are subject to the myriad of emotions that everyone feels from time to time, especially when interacting with a difficult or even threatening individual. As professionals, however, adjusters must maintain a level of composure during even the most difficult situations. That professional approach should continue when preparing file notes to
Is the allegation warranted? Yes. The adjuster’s notes have compromised the insurer’s position in the event the matter proceeds to court. The company lawyer will need to analyze the risk of taking this matter forward and provide his opinion to the claim manager.
record the interactions with claimants. Objective records that are detailed and concise reflect an impartial attitude towards the claimant and the claim adjustment process. Subjective comments about the claimant in the adjuster’s file notes are unprofessional, unproductive and a negative way of dealing with difficult situations. The adjuster should communicate with his principal immediately when a claimant becomes unusually difficult, and especially when a claimant becomes threatening. Together, they can develop a strategic approach to handling the claim file in response to the difficult circumstances involved. All the hours of objective professional interaction with the claimant can be lost by one simple derogatory comment in an adjuster’s file notes. Keep it professional and keep it objective. Marie Gallagher, FCIP, CRM Branch Manager Kernaghan Adjusters Ltd. All good adjusters know that documenting a file with accurate notes is imperative regardless of the size or nature of the claim. Noting the date and time of every telephone call placed or received produces a service record from which key performance indicators can be measured. This also helps circumvent a possible allegation down the road that the adjuster has not made initial contact or failed to return a call. Three decades ago in the claims industry, there were no computers and
adjusters hand wrote all notes. Notetaking was just as important back then as it is today. And equally as important is to record just the facts and nothing but the facts. This includes everything from comprehensive notes to quick written comments in the file. An adjuster never wants to be put in a position of seeming prejudiced or biased if a file goes to litigation. Every file should be maintained with the idea that it could suddenly be plucked from an adjuster’s drawer without notice to be used for litigation purposes. Although the file may never end up in litigation, it is a valuable lesson to learn. Having mentored and trained numerous adjusters, one of the first things new adjusters are taught is the need for accurate note-taking. When taking notes, they must record just the facts, and ensure there is nothing derogatory in the file notes about the person with whom they have spoken. There may be times where adjusters will contact their principals to let them know verbally that it appears the insured or claimant will not make a good witness on their own behalf. The information is meant as a headsup to give them a better sense of the person they are dealing with to help with their decision-making. THE LAST WORD In ethical decision-making, three different approaches can help guide how insurance professionals respond to difficult situations in their workplaces,
such as the one in the aforementioned scenario. A rules-based approach to solving ethical dilemmas involves an examination of the formal rules and principles that govern a scenario. For example, adjusters must abide by specific standards to ensure claimants are treated fairly throughout the claims process. This includes guidelines for handling claims notes. In the scenario, the mentor should have emphasized that good notes are objective and free of personal commentary. Instead, the adjuster undermined the impartiality of the process by inserting his opinions about the claimant into the file notes. A people-based approach to the dilemma aims to maximize outcomes for the individual stakeholders involved. This approach aligns well with the adjuster’s difficult task of ensuring that the claimant and the insurer are in agreement about the claim. To balance the relationship between the two parties, the adjuster must treat both with objectivity, even — or, perhaps, especially — when faced with difficult personalities. Applying the situation-based approach, the focus shifts to final outcomes of the dilemma. By making comments in the notes that do not pertain to the facts of the case, the adjuster has not only upset the claimant, but has also undermined the position of the insurer in future litigation. The situation could have been prevented if the adjuster recorded just the facts — and kept his thoughts about the claimant to himself. December 2015 Canadian Underwriter 45
Back to Business Matt Johnson
President, Commercial Loss Experts, and Board Director, Disaster Recovery Information Exchange (Toronto)
Protecting property can equate to protecting one’s business. But to make that objective a reality, a comprehensive and well-conceived business continuity plan should be in place. Planning for the worst-case scenario can help a business minimize business interruption. The importance of having a business continuity plan (BCP) is clear, but having a plan and keeping it current can have a significant impact on the time it takes to get a business back up and running. Getting to that point involves focusing on a number of things, including the actual building in question and what should be included in the BCP to best reduce business interruption (BI). A disaster affecting a building can come in many forms — consider, for example, a pipe burst, severe storm activity that causes wind damage, fire, flooding, sewer back-up and any secondary damage that can be caused when water is in-
46 Canadian Underwriter December 2015
volved. How long it takes to dry building materials is critically important if secondary damage (such as mould) and contaminated water posing additional risks to occupants is to be avoided. Whether an apartment building, office tower, hotel, hospital or shopping plaza, all commercial buildings inherently include complexities not present in residential structures. Complexities include different building materials, carpet tiles, commercial heating-ventilation-air conditioning (HVAC), pipes containing glycol, asbestos, elevators, escalators, high voltage, sprinkler systems, boilers, computer or filing rooms, specialized equipment and inventories and fire routes. Despite these complexities, it is necessary to do whatever can be done to keep the business operating while restoration following a disaster is concurrently under way. Although aging buildings and city infrastructure contribute to the increase in incidents affecting buildings, climate change is — and will be — a significant contributing factor. Telling the Weather Story, a report released in 2012 by Insurance Bureau of Canada, cites an increase in Canada’s average temperature. “This is also the cause for the rising frequency and severity of extreme weather events in Canada, such as floods, storms and droughts, because warmer temperatures tend to produce more violent weather patterns,” the report states. Disasters cannot be avoided. The best recourse for managing costs is a rapid response and recovery process, mitigating damage and returning the building to an operational state in the shortest amount of time possible.
NEED FOR A PLAN With water damage, for example, the sooner water intrusion can be stopped, any standing water removed and the building dried, the better the chances of reducing both primary and secondary damage. Consider that “clean water” (CAT 1) can become “grey water” (CAT 2) or “black water” (CAT 3) in as little as 72 hours, depending on the materials and contaminants through which the water is flowing, notes the third edition of the American National Standards Institute/Institute of Inspection, Cleaning and Restoration Certifications’ S500 Standard and Reference Guide for Professional Water Damage Restoration.
Mould growth requiring the removal of affected materials can transform a relatively inexpensive two- to three-day drying process into a one- to two-week mould remediation. Not only will this increase costs associated with remediation, but it also ups the impact on the business and potential BI costs. As the water degrades from CAT 1 to CAT 2 to CAT 3, the need to remove contaminated building materials rises. The degree of contamination of the source of the water — for example, sewer, toilets, dishwater or something else — will accelerate the contamination and the growth of harmful bacteria that can then become airborne and potentially harmful to occupants. Contaminated water left untreated for as little as 24 to 48 hours can cause significant mould growth, creating a more hazardous environment for occupants and a significantly more costly remediation process, the S500 standard explains. Mould growth requiring the removal
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of affected materials can transform a the response and recovery process. relatively inexpensive two- to three-day Using cloud-based systems accessed drying process into a one- to two-week through smartphones or tablets allows mould remediation. companies to catalogue critical buildNot only will this increase costs asso- ing information in one central system. ciated with remediation, but it also ups These systems can also serve as a portal the impact on the business and potential for job documentation, such as damage BI costs. photos and reports, which facilitates Effective communication and access decision-making by the building owner to key building information and con- or insurance company throughout the tacts can reduceInsurance unnecessary delaysbyinCanadian recovery process. Blogs hosted Underwriter
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December 2015 Canadian Underwriter 47
In addition, emergency response/restoration contractors will have access to the information at the time of any loss. The idea is to keep the response tied to the building and have critical information accessible. ELEMENTS OF A ROBUST BCP What approach should be taken to meet the twin goals of getting the building back to an operational state in the least amount of time possible, with minimal disruption, while also avoiding secondary damage? Restoration expertise It is advisable, if not crucial, that the BCP includes an experienced restoration contractor familiar with the commercial environment and who meets minimum requirements, including but not limited to, a written health and safety manual, certifications in remediating water, fire, mould, odours and asbestos, the equipment and manpower to provide emergency services 24 hours a day, and adequate insurance, namely $5 million in commercial general liability (CGL) and $1 million in coverage for mould and asbestos remediation. Consider that a commercial environment, regardless of the specific type of building, has increased risk of liability to personal injury because of the number of occupants and public access. Exposure of one tenant in a multi-tenant building can lead to exposure for another, including as it relates to BI. With pre-planning for rapid response and recovery, there will be less impact on BI costs. While a quicker return will save the insurer money, it can also help a business avoid a hit from which it cannot recover. A disaster can have an impact on a business’ survival, with the Federal Emergency Management Agency reporting “40% of businesses never reopen after experiencing a disaster, and another 25% of surviving businesses will shut down within two years.” Asbestos coverage is important for contractors since many buildings have asbestos-containing materials — in48 Canadian Underwriter December 2015
cluding in pipe insulation, ceiling and floor tiles, boiler room insulation and drywall compound. For those providing mould remediation, they also need related coverage since water remediation has the potential to cause secondary damage in the form of mould. These exposures must be covered through appropriate insurance. Note that “pollution coverage” may include asbestos, mould and hazardous materials such as lead, polychlorinated biphenyls and glycol. In a residential setting, risk is typically less than commercial, likely requiring coverage limits of $2 million or less, with $1 million or less specifically for mould/asbestos. Emergency service agreement Another key element of a BCP is an emergency service agreement (ESA) with the contractor performing remediation and restoration work. Having in place an ESA allows a business to define the rules of engagement up front — among other things, as they relate to emergency, reconstruction, contents and documents, service process and communication protocol, pricing and payment terms — and can help to ensure unnecessary delays in the contractor getting started. Not knowing some very simple things can lead to potentially costly delays: where to park restoration vehicles; location of loading areas; location of the breaker panel to shut down electricity; the contact number for the building’s electrician; and the location of the water shut-off valves. Easy access to this key information should come from the property manager, who must carry out proper recordkeeping to ensure all details are current. Keeping the emergency response building profile with the corporation’s building records ensures that all service providers and property management staff have ready access to accurate information. Building profile Emergency response can be expedited if responders and providers have access to the building profile. Having a prepared cataloguing of building features — for
example, shut-off valves, location of electrical and mechanical rooms, security procedures, building contacts, tenants, specialty trades, HVAC, elevators, sprinkler systems, computer room procedures, building generator operation and hazardous materials on site — can help save time and allow for the most efficient and effective re sponse possible. Current Internet and mobile technology allows this information to be readily shared with property managers and service contractors. A cloud-based building profile system is a useful tool not only for cataloguing building information, but also for accessing the information when needed. A business should also consider reviewing its building profile and performing a site survey with its commercial restoration contractor to build a knowledge base and a familiarity with the building that may prove of use during any recovery process. Plan updates As part of any BCP, it is important to have the most up-to-date building information, contacts and procedures, so these must be reviewed and amended on a regular basis. When a disruptive event occurs — and during the recovery process that follows — accurate information must be available to suit what, inevitably, will be many moving parts. While a disaster event itself is unwelcome, what can be learned from the event should be embraced to help bolster the protective measures that are in place. This improved protection can be served by completing a debriefing following a disruptive incident and then making changes to any procedures that would benefit from such an update. Planning for the worst-case scenario will help a business protect against a particularly big event and return to full operation with minimum BI. But a solid BCP will also help minimize damage during smaller events that can, nonetheless, be costly and disruptive. Learnings from all events, big or small, should be incorporated into BCPs.
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Residential flood coverage is now available from three personal lines insurers in Canada. While a step forward for a peril that until just recently was deemed to be uninsurable, gaps do remain, with Insurance Bureau of Canada noting the offerings likely will not deal with all high-risk properties. Overland flood insurance was generally unavailable to Canadian homeowners until this past May, when Aviva Canada Inc. began offering the Overland Water Protection option in Alberta and Ontario. It is anticipated the company’s coverage will be available in all provinces, except Quebec, by the end of the year. Aviva Canada was quickly followed by The Cooperators Group Limited, which, late last spring, launched its Comprehensive Water Endorsement in Alberta and expects to expand that nationwide over the next 18 months. Then in November, RSA Insurance became the third insurer to offer residential flood coverage in the country, providing its Waterproof coverage for new business. Starting January 17, it will be available to RSA Canada customers on renewal, except in Saskatchewan, Quebec and the territories. While movement has been made, there are a
50 Canadian Underwriter December 2015
number of areas where coverage gaps remain. Coastal flooding is still generally not available, while for high-risk areas — those where insurance is either not available or very expensive — industry professionals contend that flood coverage is a public policy issue that should not be borne by the insurers alone.
WHAT IS COVERED? The Co-operators’ product covers a “number of perils,” including a river body overflowing its banks, says Rob Wesseling, the company’s executive vice president and chief operating officer for property and casualty operations. It further covers “water that overwhelms the natural or builtin infrastructure’s ability to carry it away” and traditional sewer back-up, Wesseling reports. When the comprehensive water coverage is purchased, “you get all three, and there is not an option to buy one and not the other,” he says. “Our rationale for structuring the coverage that way is that our clients tell us consistently that when they have four feet of water in their basement, it doesn’t really matter to them how
Illustration by Scot Ritchie
Greg Meckbach
or why the water got there.” Both RSA Canada and Aviva Canada offer flood coverage as an endorsement to their sewer back-up polices. “To qualify for the overland water endorsement, there has to be an active sewer back-up endorsement on the policy,” says Maz Moini, Aviva Canada’s vice president of commercial lines and reinsurance. “The two wordings have been fitted to each other, so to speak, to provide a more complete coverage. They work hand in hand, and that’s part of the reason behind that product structure.” RSA Canada, for its part, gives homeowners the option of buying sewer back-up without the new coverage, but the insurer’s new sewer back-up wording is more restrictive than it was in the past. “That is going to be very clearly defined as to what is covered and not covered,” Donna Ince, senior vice president for personal lines at RSA Canada, says of the company’s new sewer backup endorsement. In the past, the endorsement “was much broader and, in some respects, would cover flood — not intentionally — but it did cover flood.” A case in point was the 2013 flooding in southern Alberta and in and around Toronto. “Some of the challenge we had with the floods in Alberta and in Toronto was this concurrent causation issue, where you had sewer back-up happening at the same time as you had clean floodwater coming in,” Ince points out. “You can’t really say, ‘Part of it is brown water, part of it is clear water.’” Aviva Canada could relate. “Aviva has run into those situations where we basically sided on the side of the client in terms of paying out the claim, assuming the right coverage was available,” says Moini. “So if you had concurrent causation and there was a sewer backup endorsement present on the policy, then the claim was paid out under the terms of the sewer back-up endorsement and the limits of the sewer backup endorsement,” he explains.
HOW IS TAKE-UP? Greg Robertson, vice president and commercial producer at R. Robertson Insur-
ance Brokers Limited, says that take-up of the Aviva Canada option has been “very, very good” among homeowners in low-risk areas. In these areas, the coverage would cost an additional $75 to $100 a year, says Robertson, who places home insurance with both Aviva Canada and Western Assurance, a subsidiary of RSA Canada. (He had not yet placed any RSA Canada coverage, which launched just two days before he was interviewed.)
With regard to the new Aviva Canada product, Robertson notes that customers in low-risk areas “are fairly comfortable purchasing the coverage because it is not a horrific outlay.” For homeowners, “I find the take-up is based on geography,” Robertson says. For tenants, uptake on the coverage “is not great, especially when (the unit is) above the second floor,” he says. The situation “is similar” for condo owners.
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The Co-operators’ Wesseling reports more than 90% of the insurer’s homeowners clients in Alberta are buying the new coverage on renewal, reporting a “little over” 24,000 have purchased the product. “We are about halfway through our renewal book now,” he says. Of the 60,000 homeowner clients in the province, Wesseling notes, “we expect by the time we get through our renewal book in May, we will have between 27,000 and 30,000 homes for Albertan families insured.” Though Aviva Canada is not releasing figures “for competitive reasons,” says Moini, it did report last Marsh that the average cost per residential water claim increased 37%, from $11,709 in 2004 to $16,070 in 2014. “For a number of years now, in terms of claims dollars paid out, water has surpassed fire as the number 1 cause of loss for Aviva.” The experience has been similar for The Co-operators, Wesseling reports. “We fully expect that we will pay substantially more in losses associated with all types of flooding as a result of the launch of this coverage,” he says, adding “that’s why we are doing it. There’s an unmet need out there.” In its new water endorsement, The Co-operators notes it insures loss or damage caused by the following: surface water; flood; discharging, back-up or overflow of water or sewage; rising of the water table; or water below the surface of the ground, including that which exerts pressure on or flows, seeps or leaks through any opening in a sidewalk, driveway, foundation, wall or floor. RSA Canada’s endorsement, for its part, covers “fresh-water flooding and damage that is also caused by eaves and downspouts and drains,” Ince says, with the insurer adding, it covers “losses that result from the accumulation or run-off of surface waters, including torrential rainfall when water enters the property.”
WHAT GAPS REMAIN? All that said, some water coverage is still not available to Canadian home insurance policyholders. • The Co-operators does not cover waves, tidal water, tidal waves or tsu52 Canadian Underwriter December 2015
namis, or spray from any of the foregoing, whether driven by wind or not; • RSA Canada does not cover floods related to saltwater, tsunami, dam breach or levy, or a coastal flood; and • Aviva Canada does not cover coastal flooding.
For homeowners, “I find the take-up is based on geography,” Robertson says. For tenants, uptake on overland flood coverage “is not great,” with the situation being “similar” for condo owners. “Up until now in the Canadian marketplace, there aren’t catastrophic loss models that can help us quantify losses from those types of events,” Moini says of coastal flooding. “So if we cannot quantify, it’s difficult for us to price it from an actuarially sound risk basis,” he says. “We think it’s possible that as more models come online that that coverage may be provided in the future.” Moini’s view is that The Co-operators does not cover continuous or repeated leakage of water or sewage, while Aviva Canada does not cover losses that result
from maintenance issues, such as leakage of water from a pipe or seepage of water from the foundation. Ince points out that fewer than 3% of existing RSA Canada customers will not qualify for the company’s new water coverage. “The reasons may be a combination of customers living in a zone where the product isn’t available, existing claims history, or the product type is not eligible,” she says. “This percentage is aligned with the number of Canadians living in very high-risk areas who will be challenged to find coverage.” Wesseling reports that in Alberta, The Co-operators is offering its new water endorsement to all homeowners, even those located in high-risk areas. Homeowners who “are at a very high level of risk can buy down a limit or buy up a deductible to manage their individual affordability,” he explains. Moini notes that with some properties, the “actuarially sound premium” could exceed $10,000 a year. “That leads us, as well as the rest of the market, I think it’s fair to say, to sit back and say there are areas where the coverage is not workable,” he says. “What we need to do is think about solutions — and these are broader industry solutions — on how to think about potentially making some level of coverage available in those areas as well for insurers that are in those areas and that is what the industry is working through right now” with Insurance Bureau of Canada (IBC). At the recent National Insurance Conference of Canada, Don Forgeron, IBC’s president and chief executive officer, said the new residential overland products “will likely not deal with all of the highrisk properties, and for that, we believe we need government involvement.” Government involvement “should be focused on pre-planning instead of after-the-fact financial support,” Forgeron said. “Damage from water, be it flood or otherwise, is not something that is going to be successfully managed on the balance sheet of insurance companies alone,” Moini maintains. “We need some public policy. We need a Canadian solution and we need everyone to recognize what their role is in mitigating risk.”
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GameChanger Steven Maynard
Partner & National Analytics Leader, EY Canada
Canada is ahead of some other countries in embracing data analytics, although many organizations have yet to figure out how best to derive value from related initiatives. While the focus on analytics is encouraging, expanding the focus to also include the human element will drive even more value. Data analytics has already shaken virtually every industry to the core, and it is just the beginning. While the concept of data analytics is not new in business, the explosion of vast amounts of data — from consumers, all corners of the enterprise, audio and video content, telematics and sensors — have created an opportunity for deeper insight and, by extension, competitive advantage. Add to the equation much more affordable computing power, and data analytics has evolved into what it is today: a force to be reckoned with. Many Canadian businesses have invested in
54 Canadian Underwriter December 2015
analytics capabilities and tools to reap the enormous business benefits. In fact, a new report developed by Forbes Insights in co-operation with EY, 2015 EY/Forbes Insights Data & Analytics Impact Index: Don’t Forget the Human Element, shows almost 60% of polled Canadian businesses are making data analytics a strategic priority. Canada is leading the way, but there is much progress to be made. Many organizations are still struggling to derive value from the data analytics initiatives they have in place. Survey results show there is a segment of executives whose enterprises have achieved higher levels of maturity in becoming analytics-driven organizations. These leading organizations are seeing a competitive advantage as a result of their efforts, and their experiences, practices and results provide a road map for other organizations to consider on their own analytics journeys. The impact of data analytics reaches beyond sectors and markets. While regulations, strategies and approaches may vary from industry to industry, the overarching best practices outlined in the survey will be applicable to an insurance company as much as a manufacturing or retail organization and even the public sector, in many respects.
Those who fail to get on board will be left behind in Canada’s slower-growth economy, which is expected to continue at least for the next couple of years.
DRIVING VALUE THROUGH ANALYTICS In order to fully embrace analytics, it needs to be incorporated into every aspect of a business. The survey found that 54% of leading analytics organizations (or the top 10% of companies polled) have embedded their analytics strategy into their overall business strategy. And it is these executives who report seeing tangible results in meeting competitive challenges. Canada stands out in this aspect. Already, 31% of Canadian executives report feeling that analytics has better-prepared their organizations to meet today’s competitive challenges, compared to 20% of their counterparts in the United States and 26% globally. However, that means that 69% of
Close to two-thirds of executives in the top 10% of enterprises indicate they have a dedicated C-suite executive to oversee their data analytics programs, with a title such as chief analytics or chief data officer. Canadian executives have not been able to reap benefits from analytics yet. Many may have hired data scientists and analysts or identified targets for analysis, but truly leveraging analytics is about more than introducing programs. It is a continuous process that requires an analytics plan that is tied in with the rest of the business, as well as buy-in from employees across the organization and a strong leader.
Close to two-thirds of executives in the top 10% of enterprises indicate they have a dedicated C-suite executive to oversee their data analytics programs, with a title such as chief analytics or chief data officer. This ensures that the organization’s data analytics strategy has the attention and the champion it requires to be successful. While effective data and analytics initiatives are inherently an enterprisewide endeavour, the centralization of such efforts requires an executive-level position or team that can lead the effort. That top-level executive must work to secure organizational resources and commitment, as well as elevate analytics to the board level.
THE FOCUS ON PEOPLE The winning formula for achieving analytics success is a combination of strategy, leadership, production and consumption. While the production aspects of analytics (technology, tools, data and
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Putting the pieces together.
Events and Seminars Calendar You work hard to protect your clients’ property. Now, it’s time to ensure that you apply the same kind of energy and commitment to your own success. CIP Society Events and Seminars give you the opportunity to learn, to network, to catch up on industry developments and to think about your career.
CIP Society Events & PROedge Seminars
Convocations 2015
Toronto – Industry Trends Breakfast with Phil Cook ..................................................... January 12 London – CIP Society London Knights vs Saginaw Spirit.......................................... January 15 Webinar – Inside an Errors & Omissions Claim................................................................. January 28 Ottawa – PROedge: Managing Customer Loyalty ......................................................... January 28 Edmonton – PROedge: Social Media Risk ........................................................................... February 3 Toronto – Symposium 2016......................................................................................................... April 21
IADQ – Quebec IIBC – Kelowna IIO – GTA IIO – Kawartha/Durham IIO – Hamilton IIO – Conestoga
Keeping you at the forefront of the P&C industry. The CIP Society. MEMBERS BENEFIT. www.insuranceinstitute.ca/cipsociety
January 10 January 14 January 21 February 5 February 18 February 25
WHERE CANADIAN EXECUTIVES LEAD THE PACK Canadian organizations have a slight lead in the race to becoming analytics-driven enterprises, but they must remain vigilant since there is much progress to be made. Share of executives who say analytics has better prepared their organization to meet today’s competitive challenges.
Share of executives who say data analytics initiatives are “advanced” or “leading.”
CANADA 31% GLOBAL 26% U.S. 20%
advanced analytic skills) have drawn a great deal of attention, the analytics consumption side is what, ultimately, delivers business value. Analytics consumption takes place at two levels — within the organization, where insights help decision-makers understand their markets, product or service positioning and operations; and individually, where analytics help employees at all levels improve their business processes. In the insurance business, the focus on analytics has traditionally been squarely actuarial in orientation. Increasingly, analytics is being used to improve customer experience, prevent fraud, drive operational effectiveness and manage portfolio risk. That means everyone in an organization, from the chief executive officer to the business analyst, needs to have an analytics mindset. Therefore, the focus
Share of firms offering bonuses or rewards for new initiatives derived from analytics-driven insights.
CANADA 36% GLOBAL 33% U.S. 33%
of any analytics program needs to be on the human element — the analyticsbased decisions and business processes of end-users. The people management aspect of data and analytics, however, is an Achilles heel, with less than half (39%) of the top 10% of survey respondents defining their employees’ analytics skills as recognized, effective, efficient, monitored and clearly used to support decisions. That creates a gap between the insights analytics provide and the business value that can be derived when those insights are applied by trained staff. Encouraging employees to become better consumers of analytics will require investment in training programs, incentives and opportunities for advancement. A majority of the top 10% of enterprises surveyed award bonuses or rewards for new recommendations derived from insights, and more than 40%
GLOBAL TRENDS Canadian firms stack up well among the four components of the Data Analytics Impact Index. The Index is based on respondents’ scores in four categories that define a data analytics–driven organization: strategy and leadership; analytics production; and analytics consumption, both organizational and individual. Each category has a maximum score of 25; the maximum index score is 100. Strategy & Leadership
CANADA 13.77
Analytics Production
12.43
54.2 Analytics Consumption: Organization
13.55
14.45
EUROPE, MIDDLE EAST AND AFRICA 13.06
Analytics Consumption: Individual
51.1 12.94
13.51
11.54
13.58
12.16
51.9 12.88
13.38
UNITED STATES
Based on a worldwide survey of 564 executives of large organizations, conducted by Forbes Insights in June of 2015.
ASIA & PACIFIC RIM 13.94
12.83
57.1 14.43
15.90
CANADA 40% GLOBAL 35% U.S. 27%
also offer greater opportunities for promotion and advancement to individuals. Canadian companies are leading the way in this area, too. Forty percent of Canadian executives surveyed offer bonuses or rewards for new recommendations derived from insights, compared to 27% of their U.S. counterparts and 35% globally. In addition, 40% of Canadian respondents are willing to help employees expand their opportunities for promotion and advancement through the use of data analytics on the job, versus 27% of their counterparts in the U.S. and 33% globally. This is an encouraging start, but these best practices are still exemplified by less than half of Canadian organizations taking part in the survey. The research strongly suggests that all Canadian corporations, including insurers, need to integrate analytics into the core of decision-making in order to compete effectively in Canada’s slow-growth economy. Those that do so will have a competitive advantage; those that do not risk getting left behind in an environment where their competitors are betterequipped to execute their strategy, respond to competition and manage risk. Now is the time for Canadian businesses to speed up their commitment to building an analytics culture. As others embrace analytics, remaining competitive will only become more difficult. A greater focus on people will help Canadian businesses transform the way their organizations make decisions and, in doing so, will drive incremental value for shareholders and the economy as a whole. December 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
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Serge Lavoie [1], former president and chief executive officer of Jevco Insurance Company, took on duties as president of the Canadian subsidiary, Echelon Financial Holdings Inc., as of December 1. Most recently Quebec president of GDI Integrated Facility Services, Lavoie headed Jevco until 2012, when The Westaim Corporation sold the company to Intact Financial Corporation. Formerly known as EGI Financial Holdings Inc., Echelon Financial writes non-standard auto and other specialty insurance in Canada through Echelon General Insurance Company.
2
J.R. (Bob) Tisdale [2a], vice president of Allstate Canada Group, was elected this past October as chair of the Insurance Institute of Canada’s Board of Governors, succeeding T. Neil Morrison. Tisdale, who served as vice chair in 2014-2015, is also president and chief operating officer of Allstate subsidiaries, Pembridge Insurance Company, Pafco Insurance Company and Ivantage Insurance Brokers Inc. JeanFrançois Blais [2b], president of Intact Insurance, has been elected as the board’s 20152016 deputy chair, while Lynn Oldfield [2c], president and chief executive officer of AIG Insurance Company 58 Canadian Underwriter December 2015
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2a
2b
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7b
from 2000 through 2007. He has experience with directors’ and officers’ liability, errors and omissions, fidelity, employment practices liability, fiduciary liability and commercial general liability.
served as president and chief executive officer of Arch Reinsurance Ltd. and has held senior positions at Berkshire Hathaway and F&G Re.
of Canada, will serve as vice chair and governor at large. The regional vice chairs for 2015-2016 are Robert Katzell, Tim Shauf, Chantal Gagnon and Kathy Stewart, while the divisional vice chairs are Michael Wills, and Julie Pingree.
3
The Guarantee Company of North America has named Dave MacDonald [3] as its national vice president, corporate insurance, effective November 10. MacDonald was most recently assistant vice president at RSA Canada, notes his LinkedIn profile. He has also worked for Northbridge/Lombard Canada, XN Risk and ACE Limited, where he served as Toronto-based vice president
4
Bermuda-based Arch Capital Group Ltd., which owns Arch Insurance Canada Ltd., has promoted Marc Grandisson [4] to the position of president and chief operating officer, effective January 1, 2016. Grandisson is currently chairman and chief executive officer of Arch Worldwide Reinsurance and Mortgage Groups. In his new role, he “will have responsibility for all of the company’s operating units, insurance, reinsurance and mortgage.” He previously
5
Monique Leroux [5], chair of the board, president and chief executive officer of Desjardins Group, has been elected as president of the International Co-operative Alliance (ICA) for the 2015-2017 term. Leroux, who will step down as head of Desjardins Group in April, was elected to serve the remaining two-year mandate of Dame Pauline Green, ICA’s outgoing president, who is retiring after six years serving the co-operative movement. Leroux served on the founding board of Co-operatives and Mutuals Canada in 2014.
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 2c
9 8 positions have included general adjuster, branch manager, vice president of operations The organization and Lloyd’s Division leader. formed by the merger of Allianz Global Assistance CanadaChisholm and TIC Macdonald Travel Trask Insurance Coordinators Insurance (MCT) officially became known announced in earlyas Allianz Global January that it Assistance will join propas ofand November “This erty casualty16. brokerage rebranding is an important BrokerLink. The terms of the and symbolic milestone transaction were not dis- in the integration of our recently closed, notes a statement merged entity,” says Daniel from BrokerLink. BrokerLink Wichels [6], chief executive companies, subsidiaries of officerFinancial of AllianzCorp., Global Intact Assistance in Canada. include 84 offices serving
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clients in Atlantic Canada, Steele [7a] has AlbertaBrad and Ontario. Dating been appointed Allianz back more than 60 years, Global MCT has moreCorporate than 110&inSpecialty’s (AGCS) head of surance professionals in 18 property for Canada. Steele, offices. Michael Brien, who wholed joined Canada has MCTAGCS over the last 12 in 2007, most recently years, joinswas BrokerLink as director of Atlantic global broker head of its operations.
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Carolyn Snow [7] will management for the lead RIMS as company. president Before for joining Allianz, Steele the 2014 term, was an account manager which took effect January 1. at FM Global and hason also Snow, who has been the worked at Aviva Canada. RIMS Board of Directors Also for at AGCS, Robert Fellows di[7b] seven years, is currently was named of market for rector of riskhead management management Humana Inc. for SheCanada, previously effective 2016. served asJanuary RIMS’s 4, treasurer, Fellows most recently secretary and director served of as senior affairs. vice president, external The RIMS distribution and also regional board for 2014 includes management for Zurich vice president Richard Canada, is a former Roberts,and Jr.; treasurer Julie president andcorporate chief agent Pemberton; secrefor Canada. director taryTravelers Nowell Seaman,
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of global risk management for Torr [8] PotashAndrew Corporation of is Willis Canada’s new Saskatchewan Inc.; Gloria managing partner Brosius; Steve Pottle, director for the Toronto branch. Torr of risk management services previously was a senior vice at York University; Jennifer president Marsh Canada. Santiago; at Janet Stein, direcHe deepand tor “has of riskdeveloped management experience with variety of insurance at theaUniversity
says Chuck McTague, president of Anderson McTague & Associates, a familyowned MGA based in New Brunswick. In January, Anderson McTague & Associates announced it was expanding, adding an office in Toronto to service the brokers of Ontario and Manitoba. Rayner’s appointment confirms the 5 company’s “commitment to the Ontario/Manitoba marketplace, and to the building of a local support team to assist brokers with their surplus lines and difficult to place business,” McTague adds.
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As of January 8, Toronto insurance bro4 ker Jones DesLauriers Insurance Management Inc. (JDIMI) had acquired Whitley Insurance and Financial Services. Whitley Insurance has offices in Belleville, Ontario and the nearby communities of Trenton, Deseronto and Stirling. “The acquisition is expected to build a solid presence for JDIMI in Eastern 10 Ontario and position the firm to better service their clients, industries, but withcommera specific with strengthened concentration in natural recial and personal insurance sources,” Willis Canada notes. offerings in the region and a
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new financial services divi[9] is the sion,” Dan notesBurns a statement from new branch manager, JDIMI. President and CEO for Cunningham ShawninTrust DeSantis will lead the Lindsey Canada teams from bothClaims companies. Services Ltd.’s Toronto branch. Loris Clarke [8] has been Through inTrust, Cunningham named successor to Paul Lindsey provides Whitley, Canada president of Whitley third-party administration Insurance, who will remainof insurance claims programs. during a transition period. Before joining the company in 2014, Burns had worked for Granite Ken Claims Rayner Solutions, [9] has Jevco Insurance Company joined Anderson and Confederation Life McTague & Associates Insurance Company. Ltd. as its director of busi-
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The Guarantee Company of North America Abbotsford, British has announced thatColumbia. Tara Duhault’s new duties Wishart [10] became will vice be in addition to hisfor role president of claims theas branch manager for the insurer’s Toronto branch comon pany’s Surrey, B.C. location. December 2, 2013. Having He Side in 2013. 21 joined years ofOnexperience in The Guarantee’s claims Isotta-will be department,Ben Wishart responsibleRiches for the[11], operations chief informaof the Toronto Branch Claims. tion of Aviva She officer first joined The Canada GuaranInc., has been named to tee in 1995 as an adjuster the Centre for Study of and has held roles of increasInsurance Operations’ Board ing seniority with the comof Directors. Isotta-Riches pany, including, most will serveclaims the remaining recently, manageryear for of the two-year of Aviva specialty lines. term Wishart is a Canada’s Robert Merizzi. member of both the Surety Working out of the United Association of Canada and Kingdom, his most recent of the Canadian Association role wasin Digital CIO. Women Construction.
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ness development, Central Peter Duhault Region. “Ken brings a wealth [10] has of experience to our assumed comtheheld branch pany, having various management positionpositions for On senior management Side Restoration’s office in with insurers and other MGAs,”
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December 2015 Canadian Underwriter
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February 2014 Canadian Underwriter
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GALLERY
CCR Canada celebrated its 15th Anniversary in Canada in style on October 6 with a special cocktail reception at LUMA Bell Lightbox in downtown Toronto. CCR in Canada operates as a branch office of the parent company which is based in Paris, France and looks after all non-life treaty business written in Canada. CCR became federally licensed in Canada in 1998 and opened its Branch Office in October 2000. On hand for the event was Bertrand Labilloy, CCR’s Chief Executive Officer and Patrick Delalleau, Chief Underwriting Officer.
60 Canadian Underwriter December 2015
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GALLERY
More than 1,000 delegates and attendees made their way through the exhibit hall to visit the 75-plus exhibitors at the Insurance Brokers Association of Ontario’s (IBAO) 95th Annual Convention and Exhibition, held October 21-23 in downtown Toronto.
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Continues on Page 64‌ December 2015 Canadian Underwriter
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GALLERY
‌Continued from Page 63... More than 1,000 delegates and attendees made their way through the exhibit hall to visit the 75-plus exhibitors at the Insurance Brokers Association of Ontario’s (IBAO) 95th Annual Convention and Exhibition held October 21-23 in downtown Toronto.
64 Canadian Underwriter December 2015
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December 2015 Canadian Underwriter
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66 Canadian Underwriter December 2015
Chubb Insurance Company of Canada participated in the 16th Annual North American Chubb Charity Challenge Golf Tournament at Pinehurst Resort in North Carolina on October 25-28. Chubb Canada was represented by three teams from across the country: KRG Insurance Brokers in Toronto; Lloyd Sadd Insurance Brokers in Calgary; and Hub International Quebec in Montreal. Annually, the Chubb Charity Challenge raises almost $1 million for local charities in Canada and the United States. Fortyfive teams advanced to the final round at Pinehurst, competing this year for over $560,000 for their charities. Over the course of the tournament’s 16 years, Chubb’s broker partners and clients have donated almost $13 million to various charities, with the goal being to reinvest in the communities in which they work. The Calgary branch, partnering with Lloyd
Sadd Insurance Brokers, was again the topperforming Canadian team, finishing in fourth place overall and securing $35,000 for its local charity — Catholic Social Services Sign of Hope. The Toronto branch, represented by KRG Insurance Brokers, took fifth place, winning $30,000 for its charity — KRG Children’s Charitable Foundation. The money raised for charity was only enhanced by the Toronto branch accomplishing its first-ever, finish in the top five. The Montreal branch, represented by Hub International Quebec, finished in 16th place, collecting $9,000 for its charity — Club Des Petits Dejeuners. Thanks to the continued support of its key partnering brokers and the strong play of its teams at the North American finals, Chubb Canada is happy to announce this year that, together, the teams have raised almost $1.3 million in donations over the 16 years for charities in Canada.
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