Issuu

NOW WHAT? The broker’s role in the claims process

President’s Message

RANT

October - November 2012

YOU have an app for that

What’s Your (Learning) Style? Take Our Quiz

Page 16 Cdn Publication Mail Registration 40018149

Annette Hubick

Message from the Editor Whenever I tell someone that I publish an insurance industry magazine, I get an earful — I’m sure many of you reading this can relate. Everyone one has a first- or second-hand insurance experience to share and most of them are not warm and fuzzy (human nature to spout off about the negative and keep the positive to oneself, I suppose). By and large, dissatisfaction seems to centre around the claims process, and although most of these scenarios do not fall under the insurance broker’s area of responsibility per se, it strikes me that claims present a huge opportunity to promote and secure the perception of brokers as “trusted advisor.” It is with this in mind that our cover story features Karen Rutherford’s take on “The

Broker’s Role in the Claims Process.” Presenting a more conservative viewpoint is Swiss Re’s Alison VanDyke in “Watch Your Step (page 24) — after all, E&O insurance providers are primarily concerned with avoiding the risky aspects of client relationships. To say that IBAA president Scott Treasure is fired up is an understatement, indeed. His column on page 4 delivers an impassioned message to brokers who choose not to be members. For those brokers who are members, IBAA has introduced two new programs — one designed to attract the online consumer and the other to put your brokerage in the palm of your client’s hand, i.e., smartphone. IBAA CEO George Hodgson’s “The Advocate” provides the details (page 16).

Two ladies make their debuts in this issue: IBC’s new director of government relations for Alberta, Heather Mack (page 12) and IBAA’s new director of professional development, Karen Bushie (page 36). The industry has had a very busy past few months hosting a variety of fundraising events for WICC. Read Amy Foggin’s report on page 30 for a recap and remind yourself of one of the many reasons to feel proud to be a part of the insurance business. In October, we will gather with friends and family to give thanks for life’s blessings. May your list be a long one!

IN THIS ISSUE

October - November 2012 The Alberta Broker is the official publication of the

3010 Calgary Trail, Edmonton, AB T6J 6V4 T: 780.424.3320 •1.800.318.0197 F: 780.424.7418 • www.ibaa.ca

President Scott Treasure Chief Executive Officer George Hodgson Published six times annually by:

9249-48 Street Edmonton, Alberta T6B 2R9 T: 780.448.0936 • F: 780.465.6201 E: albertabroker@linkpr.ca Publisher and Editor Annette Hubick Printing McCallum Printing Group Design and Layout Ron Leckelt Advertising Michele Schuldhaus 780.448.2890 michele@linkpr.ca The Alberta Broker welcomes articles about the insurance industry and its people. Letters to the Editor are welcome.The opinions and viewpoints expressed in The Alberta Broker may not necessarily be those of the association and its members.

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Message from the Editor Message from the President Now What? IBC Insight

The Advocate

Know E & O

Legal-Ease

WICC Alberta

32 34

Chinook Country Report Commercial Break

Professional Development

Did You Know?

The Broker’s Role in the Claims Process

The New Advocate

IBAA Has a Program for That!

Skills and Experience Irrelevant When Hiring

Watch Your Step Shaky Argument Rallying for the Cause

Analyzing Client Business Contracts What’s Your Style?

Material in The Alberta Broker may be reproduced with the credit to the author and the following: “Reprinted from the Insurance Brokers Association of Alberta’s magazine - The Alberta Broker (date).” Please send a copy to the publisher.

The Alberta Broker October - November 2012

Scott Treasure

Message from the President

I need to get something off my chest. So I think maybe it’s time for me to vent, if only just a little. And while, as I mentioned in my last article, it has been suggested that a little “controversy” in these pieces can boost their readership, I keep thinking that this really might not be the best idea for my personality. As Dennis Miller used to say on his HBO show, “I don’t want to get off on a rant here ...” Oh well, caution, meet wind. I am a touch frustrated at the moment. Don’t get me wrong, this role truly is a wonderful experience and through it I have already learned a ton and met some really amazing people. But along with all that awesomeness, comes the odd frustration. You see, we are currently in a situation at IBAA where we’ve lost a couple members over the last few years. Keeping in mind that, even with these losses, we still maintain one of the top (if not THE top) provincial membership penetration statistic in the country. We are currently at around 90% when most associations are well below that number, so there is nothing to panic about, really. That said, we’ve still lost a number of what I would describe as “important brokers” over the last two or three years (with a lot of them being predominantly larger commercial brokers), and what is frustrating me the most right now, are the reasons they give for their departures. Before I get going though, I want to recognize the fact that I’m doing a little preaching to the choir here, in that the vast majority of the readership of this article is made up of current IBAA members. Hopefully, what I have to say below will make you guys feel even better about your decision to stick with us. One justification we often hear for leaving the brokers association goes something like this, “We do our own political lobbying so we don’t really need you guys,” kind of a “lone wolf ” stance on political lobbying. To me, this shows a serious naïveté when it comes to government relations in today’s world of the internet, social media and instant communication. Gone are the days when one could just phone up a buddy who happened to be the finance minister (or the deputy minister for that matter) and that individual politician would then be able to make things happen, or not happen, based on that one relationship and potentially that one phone call. Yes, back room stuff like that can occur; it’s just rare, and difficult to pull off. In order to really get

The Alberta Broker October - November 2012

things done these days, one needs a chorus not just a hand full of soloists. And this is precisely why the association’s work in this area is so important. Our message is powerful due to IBAA with its local member brokers in almost every community in Alberta actively advocating on behalf of the consumer. That presence is why the politicians we visit really listen to what we have to say. Local brokers talking to their politicians or as a duly-elected representative of X brokers with offices in every single community in the province really matters to politicians (more than what the heavily financed banking lobby has to say, for certain). This stance also overlooks the great work being done by the IBAA office, executive, and board with both the government (Premier’s office, Department of Finance) and our regulators (Superintendent’s office, AIC). I suppose I can understand that brokers might not be completely aware of the extent of the work that we are currently doing with these industry stakeholders, considering we are essentially in “peace times.” Instead of assuming that there is not a lot of work going on and cancelling your IBAA membership because “you don’t think it’s necessary anymore,” why not pick up the phone and call the office to talk to George Hodgson or Rikki McBride, or call any member of the executive to see what we’ve been up to on this front, even just over the last few months? We will be more than happy to fill you in. Another “argument” we hear from these recently departed brokers is that they “are not afraid of the banks” and that they will “compete with anybody.” This is super frustrating to me, because it implies that the reason we lobby the government in the first place is to impede competition and that we are driven to do this because we are somehow “afraid.” Let me be clear here: personally, I despise protectionism in every form. The battle we are fighting at the federal level is largely an ideological one, in that, as it was put in a recent Globe and Mail article on the topic. The rules (in force in the Bank Act) were created partly out of concern that banks would have too much power over potential customers if they were able to tie the granting of credit or loans to buying insurance. When it comes to the Bank Act, our work, and the work of

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column on page 16 for info on two new member benefits), and on top of that we don’t hide anything about how your memIBAC and our sister associations across the country, is not bership dues are spent. about protectionism, it is about protecting the consumer and So to those who say that you are “out” because the issues keeping a level playing field among competitors — bottom don’t affect you, or you are not getting the value, I challenge line. Consumers are clearly in a vulnerable position when you to look into how we spent the money that we received they are asking a financial institution for credit and this from members, look into our relationprovides the banks with an unfair adship with the government, heck, call vantage when trying to sell insurance. the good people at the SuperintenThis is not the banks fault, The idea that any insurance dent’s office and ask them how we’re obviously, but it is an unavoidable office and its clients are doing. function of their business model. immune to the threat from All this said, I want to point out that And, fortunately for us at this point, the unfair practices of the banks no comment or complaint provided to both the federal and provincial IBAA goes unheard. We are always is both naive governments seem to understand this, open to suggestions from members as evidenced by their actions (or nonand short sighted. when it comes to how we operate. My actions) around the banks in recent comments above are in no way meant years. We, the brokers, are the largest customer-facing group to imply that there is no need for improvement at IBAA — far in this fight and, as a result, are seen as a great resource for from it. We need an active and engaged membership in order politicians. get better as an association, and to survive and flourish into While it is true that the front lines in this particular battle the future. It’s just that, to me, the reasons we’re hearing from is, and will continue to be, personal lines, should the Bank recently departed members don’t hold true. At best, they repAct fall, what is to stop a bank from setting up an in-branch resent a lack of understanding when it comes to what we do at “boutique” commercial brokerage model to provide comIBAA and, at worst, are simply rationalizations for no longer mercial lines, and throw more money at that than we can wanting to foot the bill while letting others shoulder the load. even dream of as individual brokers (yes, even the big ones)? I challenge any member or non-member broker to give me a I’d say nothing. They’ve done it before. Remember TD call personally should you disagree. End rant. Meloche’s initial splash? They essentially purchased market share with lowball rates and then started working at reducing services and coverages (sewer back up limits, anyone?) hoping to keep the market share over the long run. Businesses already have great relationships with their bankers, perhaps even closer than their relationship with their broker, so, to me at least, the idea that any insurance office and its clients are immune to the threat from the unfair practices of the banks is both naïve and short sighted. IBAA is a completely open book. We believe in transparency to the core and our CEO George Hodgson’s work over the last year or so on the accounting structure and reports produced at IBAA is a testament to this fact. We have an annual general meeting at which all of our initiatives and expenditures are discussed openly and honestly with the membership. Everyone at IBAA (both staff and volunteers) works incredibly hard to present our message to government and bring value and services to the membership that we serve (see George’s

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The Alberta Broker October - November 2012

NOW WHAT? The brokerâ€™s role in the claims process By Karen Rutherford

work in both the insurance industry and the commercial world with a wide variety of clients. I love the insurance industry and know the value it brings to individuals and commercial clients. The solvency of many Canadian businesses is dependent upon insurance. On average, individuals in Canada have less than a three-month cash cushion; without insurance protection many would face financial ruin. Everyone reading this knows what a valuable product insurance is. Why, then, do so many people bash insurance? If you don’t think that is true, check with your friends and relatives; they’ll tell you what people say when you aren’t within earshot! Like many of you, I was proud to be a broker, proud of the work my staff did, proud of the role of intermediary in a complicated industry. The most important thing brokers can do is be technically sound when giving pre-purchase advice and then exceptionally technically skilled when your client has a claim. Often, I find brokers who cheerfully take a claims report via phone, reassure the client an adjuster will call her within 24 or 48 hours, invite her to call if there are problems and then hang up the phone and carry on with the day. Good claims service requires much more than that! Brokers need to know their adjusters and their skill sets. Many adjusters have minimal training, often little supervision, provide little, if any, follow up and are virtually impossible to get a hold of. Do you really think your clients are well served with that scenario? In a recent seminar, I met a young woman, under 30, who explained she had just quit her job as senior claims manager with a major insurer. She had two years total claims experience! She knew, and you know, she was seriously lacking in experience to manage claims. So what is a broker to do? First, know your product well enough to know whether there is coverage or

not. Brokers shouldn’t rely on adjusters for coverage determination unless it is a highly technical claim and you have an expert in the field looking at the file. Assuming there is coverage, know the claims service levels with your various carriers. Are claims being settled in 30 days? 60 days? 90 days? Can you live with the delay knowing the consternation delayed payment causes clients? Recently, I was involved in three different claims as a consultant, friend and mother.

The cheerful “an adjuster will call you within 24 hours” gives a false impression that the claim will move along quickly. More often than not that is not the case!

All claimants were disappointed in the outcome of insured losses. My friend is a very senior executive of a very large insurance brokerage. The insurance company’s senior claims VP actually called him to say they would take great care of him. His claim wasn’t settled for almost a year after that call. In fact, no one at the insurance company had done a thing! My daughter had a straightforward claim and nine months after the date of loss, the insurance company still hasn’t finalized the claim. And then I was hired to help a neighbour. Their water claim was seven months old when they discovered the insurance company’s recommended contractor had missed the problem and they now also had to contend with mold. Every one reading this could add to the list a hundredfold. Claims often have complicating factors and very often have claims people who are either too remote to care, undertrained, under supervised or overworked. Brokers need to make sure when they are taking that claims call to prepare their client for the very challenging process the client is about to begin. Brokers should train all staff to understand what clients need to do to

speed up the process. Tell clients that they will need to prove their claims. Tell them to gather up receipts, get competitive prices, do research on the value of their property and be ready for the first meeting with the adjuster. Remind them the adjuster’s job is to protect the insurance company, so clients will want to do the prep work themselves. Brokers should know the average time to settle a variety of claims from each of their insurance companies. If a water claim takes six months to settle, then tell the client. Managing expectations will really help reduce the number of complaints you will get and it will help clients better prepare for the claims experience. The cheerful “an adjuster will call you within 24 hours” gives a false impression that the claim will move along quickly. More often than not that is not the case! Clients will have to work with independent contractors to get their claims resolved. And while it is not fair that a bad experience with a contractor is often blamed on the insurance industry, it happens. Tell your clients how to hire a good contractor. Tell them what insurance documents to check and how to check them. Make sure your homeowners understand what can happen to them if their contractor doesn’t have workers compensation coverage. For your commercial clients, make sure you remind them that they are the best people to mitigate a loss, not their insurance adjuster. As long as there is fully documented evidence of damaged property, they should begin mitigating their loss immediately. Once the claim has been confirmed, they should move forward as quickly as possible — no need to wait for an adjuster as long as the damaged property is available for inspection. Fly-by-night contractors often spring up after major storms. On my street this past week, we saw at least five different shingling companies fixing up roofs after a recent hail storm. I watched a crew nail shingles directly to the plywood. No tar paper. So I didn’t

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The Alberta Broker October - November 2012

continued from page 9 need to ask anyone if they were a solid contractor — their work shouted that they were a couple of opportunistic guys with a truck and nothing more. Help your clients understand what their repairs will require so that they can qualify the folks they are talking to. Think of it. Most people have one, maybe two or three, claims in their lifetimes; whereas adjusters will deal with hundreds. If, as the saying goes, “information is power,” your clients are sure to be in a weak position and they need your expertise.

[they] need to have a good experience so that they don’t spend the rest of their lives telling anyone who will listen, “Insurance is a rip-off.” Here’s a hint: rather than reinventing the wheel or spending time reciting the same advice on the phone, have your team come up with a tip sheet on the most common claims situations (basement flooding, hail storm damage, auto collisions — addressing vehicle damage and bodily injury, etc.). Provide these to all your customers upon a claim, along with the invitation to contact you with any more questions. You are the advice channel, indeed. Claims are the only reason clients buy insurance. The majority of your customers will never have a problem. The few that do need to have a good experience so that they don’t spend the rest of their lives telling anyone who will listen, “Insurance is a rip-off !” Taking the time to ensure your staff understand the claims process, can give quality advice and prepare the client for the process will ensure your clients have the fewest negative experiences possible. Your reward will be more than the knowledge that you did your best for your clients — think of the two best R-words for your business: renewals and referrals.

One Adjuster’s Perspective What does an adjuster think about the role of the insurance broker in the claims process? The Alberta Broker asked Leslie McDougall, CIP, an independent adjuster located in Edmonton. As an adjuster, what do you wish brokers would tell their clients who have a claim? What do you wish they wouldn’t tell them? I wish brokers would tell their clients who have a claim that regardless of fault, they may have to pay their deductible and wait for the insurance company to determine liability, and if they’re found not at fault, await reimbursement of their deductible. I wish they wouldn’t tell

The Alberta Broker October - November 2012

them not to get any estimates assuming that the insurance company will send an appraiser out. Not all damages warrant an appraiser attending. The best advice they can give is to get an estimate or two that day to determine the approximate damage. Then, when the adjuster receives the claim, he or she can determine whether an appraiser is needed based on the estimate already obtained. It speeds up the process. Complete this sentence, “If I were a broker and my client had a claim, I would protect their interests by …” … informing them of the coverage they have (after all, they sold the coverage to them), telling them their deductible amount and suggesting they gather all their documents surrounding the claim before the adjuster calls.

IBC Insight

The New Advocate

Heather Mack to Represent IBC to Alberta Government

You’re originally from Alberta … when/why did you move away? To what are you most looking forward upon your return? I was born in Edmonton and my dad worked in the airline industry so the family had a couple big moves to Ontario and then to Manitoba. After school I moved between Ontario and Manitoba when interesting opportunities presented themselves. For example I worked on Parliament Hill in Ottawa, in the Mayor’s Office in the City of Winnipeg and as a Minister’s Chief of Staff in the Ontario government before coming to Insurance Bureau of Canada. When IBC had an opening in Alberta, I jumped at it because it brings me closer to my family and allows me to continue doing a job I really love. As director of government relations – Alberta, what will be your primary responsibilities? Heather Mack is IBC’s new Director of Government Relations in Alberta. Formerly holding that position in Ontario, she has returned to her Western roots to help take on the challenges of the industry here. The number one priority

for IBC remains auto insurance, with adapting to severe weather a major and ongoing concern. To help our readers get to know her better, Mack participated in a Q&A with The Alberta Broker.

The Alberta Broker October - November 2012

First and foremost I will liaise with the government on behalf of our member companies. That means staying on top of current issues and trends in the P&C industry. I will also monitor consumer concerns and may need to respond with education campaigns,

media interviews or working with the government to address regulatory issues. What are IBC’s key issues in Alberta? How do they compare to those in Ontario? Our number one concern in Alberta is auto insurance — it’s the biggest book of business for our members and so has to be IBC’s priority. Another issue is severe weather losses. These are both major issues in Ontario as well but obviously there are different political and regulatory environments in Alberta. What are the most pressing issues you will be working on? What outcomes are you working toward? I’m obviously still getting up to speed on Alberta issues but from my perspective the most pressing issue has to be auto insurance rate regulation. We think Albertans would be better served by a rate regulation system that promotes competition instead of the current industry-wide adjustment process. It will take government and industry working together to find the best solution. You worked for 15 years in government before joining the IBC. What insights did you gain looking at things from an industry’s perspective?

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The Alberta Broker October - November 2012

continued from page 13 I have told a number of my former government colleagues that every public servant would benefit from some experience in the private-sector to really understand the impact of regulation. Regulation is absolutely necessary, but regulators need to be forward-thinking and responsive to emerging issues. I’ve had an introductory meeting with Mark Prefontaine, the Superintendent of Insurance, and I am already blown away by the differences between Alberta and Ontario in their approaches to regulation. In Ontario, the regulator waits for an affordability crisis before they act. In Alberta, I sense more interest in innovation and modernization and that’s one of the reasons I’m really looking forward to my new job.

responding to, or advocating for, regulatory change. We obviously need to get into technical details but we cannot forget the big picture; auto insurance is a mandatory product and the government has a duty to ensure affordability and availability. If we keep those goals in mind, we will have a more productive relationship. The government needs to be responsive to issues and be willing to listen

What were you most surprised to learn about the insurance business? Before coming to IBC I would not have described insurance as “interesting,” but now I really can’t get enough. I absolutely love the history of insurance and how it has played a role in shaping society. I enjoy using that information to educate Canadians about the important role insurance plays in our economy. When you consider the huge economic footprint of P&C insurers, it is amazing how little Canadians truly understand about the industry. Having experience on both “sides,” what do you think would be most beneficial for government to know/understand about insurance and vice versa? The role of government relations is really to translate between the regulator and the industry. That’s how I see my role — I understand both sides now and can help the two come together. The insurance industry needs to keep the government’s goals in mind when

The Alberta Broker October - November 2012

and learn from insurance experts. They need to know that insurance is an everevolving industry and new tools are continually introduced to allow more accurate underwriting. That means the regulator needs to be flexible and give companies room to innovate while also ensuring consumer protection and market fairness.

With the increase in catastrophic events, some insurance companies are changing rating models to address geographic risks; do you foresee this becoming a political issue? What will IBC’s response be? Yes, I have no doubt that weather losses will become a political issue. The reality is that severe weather losses have become regular occurrences in Alberta and this will have an impact on rates. I have been dealing with this issue in Ontario because certain communities are having problems obtaining sewer back-up coverage due to repeated flooding. But the fact is that insuring a neighbourhood with inadequate sewer and water infrastructure is no different than trying to insure a house that’s already on fire. IBC has been working on this issue for several years now and we’re developing suggestions for municipal and provincial governments. We want to see infrastructure built for the climate we will experience in the next 50 years, not what we’ve experienced in the last 50 years. Weather patterns have changed and we need to adapt now. Insurers can provide a lot of expertise in this area. We recently released a report “Telling the Weather Story” that looks at what Canadians will experience in the coming years. We have also created a website (www.getintheknow.ca) that provides consumers with tips to protect their home from weather losses.

ing well and we don’t see a need for wholesale change. The AIRB is asking the province to allow it to regulate the non-mandatory portion of auto insurance and move to a system where each company submits individual rate applications. What is the IBC’s position on this?

We completely support moving away from industry-wide adjustments. Alberta could have a more competitive and innovative insurance marketplace if we moved to a file and approve system. Ultimately, competition between companies is good for the consumer and we hope the government will decide to move in that direction in the near future.

What is IBC’s position on Premier Redford’s stated intention to review the minor injury regulation, specifically “the cap”? The cap is there to ensure that insurance premiums remain affordable for Albertans. There needs to be regular adjustments to ensure that the cap is keeping up with inflation, but it’s workThe Alberta Broker October - November 2012

The Advocate

George Hodgson

Access to the Online Shopper? Your Own Brokerage App?

IBAA Has a Program for That! As I write this column, there are way too many signs that summer is coming to a close. The odd yellow leaf on trees, golden grain fields along Alberta’s highways, slightly earlier sunsets and of course the slight but unmistakeable chill in the morning air are all definite signs that the Alberta summer is giving way to autumn. And what a summer it has been! Record-breaking heat and severe storms producing spectacular lightening displays, thunder claps causing children and adults alike to suddenly awaken with hearts pounding, as well as the more serious floods and hail damage. This is a summer that will be remembered, perhaps not fondly, by insurance people and meteorologists alike. Another sure sign that summer is waning is the onset of all the back-toschool sales advertising the newest and greatest in school fashion and supplies. Yes, new is the operative word every September — a new school year, a new university year and before we know it, a new hockey season. “New” is also prevalent at IBAA. Over the spring and summer, the executive and staff at the association have been working feverishly preparing two new tools to be rolled out in the fall that will increase brokers’ online presence: My Insurance Shopper and the Broker-Branded App. My Insurance Shopper As the broker industry moves into an ever increasing web-based marketplace, the need for a stronger online presence grows. The Canadian population has seen the some of the largest percentage growth of any population in the G8 countries. The demographic that contributes most to that growth are those people who have immigrated to Canada from other countries. It is also

this group that will purchase or research their purchases of most goods and services online. The competing channels, primarily banks and direct writers, have spent considerable time and money developing and operating online sales tools with the explicit purpose of accessing this growing market. And evidence shows that they have had considerable success. While the existing broker channel clientele appears to be very loyal to the brokers, the overall organic growth in the market appears to be heavily trending to the channels that currently have an online presence. As a result, the broker channel is barely treading water — in fact by not capturing its share of this market, it appears to be losing market share.

first page, ideally in the first three unpaid items in the search results. Today, as I write this column, I Googled “auto insurance quotes Alberta” and no reference to an insurance broker appeared on the first page of the free search results. I had to go to page 2 to find the first reference to any Alberta broker; few people go to the second page of search results on Google. It should also be noted that the first item in the paid results was a bank-owned insurance company. It is no wonder that the broker channel is struggling against its competition in the online market. On the other hand, when I Googled “auto insurance quotes Ontario” the MIS item appeared in the middle of the first page of the free search results. While it would be much better if MIS

That is why, for many years now, IBAA and other provincial broker associations have been searching for and working on solutions to increase online broker channel presence. My Insurance Shopper (MIS), developed by the Insurance Brokers Association of Ontario, is currently being utilized in both Ontario and New Brunswick. The Alberta initiative was supported unanimously at the annual general meeting last May in Calgary and provides IBAA member brokers with access to MIS. The overall concept behind MIS is to ensure that when an insurance customer searches online for say, “auto insurance,” My Insurance Shopper comes up on the

appeared in the first three items, it is crucial that it is on the first page. In order to drive it up the list, Google needs to see that MIS is considered an expert in the field of insurance. This is achieved by increasing the number of pages within MIS, which in this case is accomplished by increasing the number of brokerages and brokerage locations that are taking part in the initiative. So when all, or nearly all, Alberta broker locations sign up with MIS, its status on Google will be enhanced and thus it will appear nearer to the top of the search results. Go to www.myinsuranceshopper.ca to see how the website works. The

The Alberta Broker October - November 2012

easiest way to do this is to search for a broker in a smaller centre in Ontario (I tried Kenora) and you will see a list of brokers. Note that each time the same city or community name is typed in, a different participating broker will appear at the top of the list. The MIS website is designed to highlight the advantages of dealing with a broker such as choice of markets, independent advice, advocacy on behalf of the client in the event of a claim, etc. Collectively, the website allows brokers to get on an equal footing with direct writers and banks and create a client relationship for IBAA member brokers. MIS offers: • A directory listing for each broker location • A dedicated landing page for each broker location that tells the brokerage’s story • Online quoting ability for personal lines auto and property The cost to member brokers is really quite minimal — comparable to one or two months of a Yellow Pages ad or the

equivalent of the commission earned from a couple of auto policies. And let’s face it, most of us no longer know where our Yellow Pages book is — if it ever made it past the recycle bin — and the online version contains little other than contact information. Google is now where our generation lets its fingers do the walking.

The overall organic growth in the market appears to be heavily trending to the channels that currently have an online presence. It is one thing to have the best online presence; it is quite another to drive consumers to that page. IBAA has committed a significant portion of current members’ equity to the marketing of MIS in order to direct consumers to the site. As well, for those brokerages that have spent considerable funds to develop their own web presence, MIS

is not designed to compete with your website, but rather to enhance it. MIS is another means by which the consumer will be directed to your website. For the small broker in either metropolitan Alberta or small town Alberta, MIS will put you on an even online footing with the banks and direct writers. Broker-Branded App A generation ago, the desktop computer was the online revolution of its time. Later, it was the laptop, allowing people to be online whenever and wherever they wanted. Later still, it was the tablet. Today, the new laptop is the smart phone. And the engine that is driving this revolution is the mobile phone application or the app. Today, businesses of all sizes and from all sectors are trying to find means of creating apps to make it easy to have their product literally in consumers’ pockets or purses.

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The Alberta Broker October - November 2012

continued from page 17 Many people within the insurance industry, and the broker channel in particular, have expressed an interest in creating a broker-branded app with the typical development cost ranging from $10,000 to $15,000. The Insurance Brokers Association of Ontario in partnership with a developer have created an app that IBAA member brokers can purchase for a small fraction of what it costs to develop one on their own. The Broker-Branded App has a built in GPS, general claim information forms and photo capabilities that can email information from the client’s phone directly to the broker. In other words, the client can communicate directly with a broker in a meaningful way at the client’s time of need.

Available to Members Only The Broker-Branded App and My Insurance Shopper are perhaps the most important new initiatives the association has undertaken in many years. These benefits are available exclusively to IBAA member brokers. The value of getting an enhanced presence online presence and an app cannot be overstated. Google has replaced the Yellow Pages while the smart phone, along with apps, may eventually

replace much of the wallet that we all carry today. Therefore, the small combined cost of My Insurance Shopper and the Broker-Branded App make these steps into the online world no-brainers.

GEORGE HODGSON CEO, IB AA ghodgson@ibaa.ca

Darrell Blenus, President of IFS Financial Services, is pleased to announce the appointment of Rob Downard as sales manager, Western Canada. Rob joins IFS with 15 years experience within the insurance industry. He has worked in both insurance brokerage operations and with several large Canadian underwriters as a business development specialist and senior insurance underwriter. The app offers the following standard features: • Direct broker contact • On-site accident reporting complete with photos • Property claims • Home inventory • The ability to customize the app to the broker’s brand • The extra branding power of the BIPPER

Rob Downard T: 403.370.6389 Toll-free: 1.877.389.3009 E: rob@ifs-finance.com

The Alberta Broker October - November 2012

Rob will be responsible for business development with IFS’s commercial and personal brokers and MGAs in Western Canada. His territory includes the four western provinces and he will be stationed in Calgary. Rob graduated from the University of Calgary and has his CIP destination from the Insurance Institute.

IFS is Canada’s largest private premium financing company serving brokers for 34 years. IFS provides a number of premium financing options for brokers and their clients, offering easy payment terms, flexible rate structures and a very simplified online processing system.

BUSINESS

e c n e i r e p x E Skills and

T N A V E IRREL hen Hiring! W

A candidateâ€™s ability to apply their skills is what counts. By Brad Remillard

The Alberta Broker October - November 2012

ust to clarify, the word is “irrelevant.” It doesn’t read “not important.” There is a difference between something being relevant and being important. Of course, having the right skills and experiences are important to performing the job, just not relevant when hiring. Skills and experiences are simply the tools one brings to the job. It is one’s ability to use these tools effectively that counts. Just because you have a hammer and saw in your garage, doesn’t make you a fine finishing carpenter. Since most people have been taught interviewing is about the candidate’s skills and experiences, the interviewer tends to ask a lot of questions about the past. For example, “What have you done in this area?” or “Have you ever done _____?” Those trained in behavioral interviewing will take those same questions and convert them into asking for an example such as, “Give me an example where you have done X” or “Tell me about a time when you had X as an issue.” All of this may be good to know, but the fact is you really don’t care about any of this. When candidates show up on Monday morning, you no longer care about all the things they have done. You only care about one thing, whether or not they can do the job you are hiring them to do. That is all you really care about. Nothing else matters anymore. They may have the best skills and all the right experiences, but if they can’t effectively apply them to do your job, then you really don’t care about their skills and experiences.

these are the indicators on which most hiring managers rely. Instead, focus the interview on the primary reason for interviewing: Can they do your job? The key to successful hiring is having a methodology that puts candidates in the job BEFORE you hire them. It is not about determining if candidates have the right tools. It is about determining if they can use those tools effectively to get your job done. This is why behavioral interviewing often falls short. Behavioral interviewing was once a quantum leap forward in how interviewing was performed; however, it too has run its course. Great interviewing is more than getting examples of the past. It is about doing your job. The tag line for behavioral interviewing, “past performance is an indicator of future performance,” isn’t always the case. A good hiring methodology shifts the focus from the candidates’ skills and experiences to how they will use these to do your job. If they can’t use

these effectively in your company and your position, then they may be a great person but they aren’t the right candidate. This is why a person with all of the right skills and experiences often falls flat on his face. So how do you put the candidate in the job BEFORE you hire the person? Stop asking questions that start with have, what, have you, tell me about a time when, etc. These are all fine to know but they should be used for probing after the example and not for the example. That is a huge difference. The famous who, what, when, where and why questions are for probing deeply and not for opening questions.

How questions should be used for the opening question. One of the biggest challenges facing hiring managers is getting them to shift to asking How questions. After that you can then begin probing with the five Ws. For example, “How would you decrease costs by 10%?” “How would you

continued on page 22

Have you ever hired a person that had all the right skills and experiences? They interviewed well, had all the right answers, their resume read like the job description, and after you hired them they fell flat on their face? This has happened to just about everyone who has ever hired. Why does this happen? It’s usually because the person’s skills and experiences are not primary indicators of their ability to do your job. These are at best secondary indicators and more often than not, misleading indicators. Yet, The Alberta Broker October - November 2012

continued from page 21 increase gross margins by X%?” “How would you go about implementing a complete systems upgrade of our ERP system?” “How would you increase market share in your territory?” Then probe deeply with the five Ws.

Now the interviewer is shifting the interview from skills and experiences to having the candidate explain how she would apply these to do the job. If the candidate can’t apply her skills and experiences in the new job, then one has to question whether or not she is the right person regardless of skills and experiences. Most hiring processes fail because it is easy for candidates to talk about their skills and experiences. Some might even embellish in this area. It is significantly different to explain how they would apply those skills and experiences in your company, with your culture, your resources, your budget constraints and all the aspects that make your company unique from the company they are leaving or just left. ABOUT THE AUTHOR Brad Remillard is a speaker, author and trainer with more than thirty years of experience in hiring and recruiting. Brad is also the co-founder of Impact Hiring Solutions and co-author of, You’re NOT the Person I Hired: A CEO’s Guide to Hiring Top Talent. For more information on Brad’s hiring training programs or speaking, please visit www.bradremillard.com.

The Alberta Broker October - November 2012

Know E & O Alison VanDyke

Watch Your Step The Hazards of Making Coverage Determinations for Insurers “To claim or not to claim?”

That is the question William Shakespeare might have asked had he chosen to become an insurance broker rather than a playwright. Understandably, when clients tender claims to their brokers, the professional who placed coverage in the first place is tempted to offer his opinion regarding coverage. Will the carrier agree that the loss is covered? Will the loss be within the deductible? Would it make sense for the insured simply to pay the loss in the hope that he will keep his premiums low? Those questions may be intriguing, but the reality is: brokers who delay, agonize and, in some cases, substitute their own coverage analyses for those of the carrier face a higher risk of encountering professional liability claims. Brokers who dutifully provide prompt notice to carriers of claims made against their clients are already one step ahead of their competitors. Consider the following example: A homeowner suffers what appears to be a sewer backup loss on one of several properties he owns, all of which are covered by the same carrier. He reports the matter to his broker, whose job it is to notify the carrier of the risk. Because the broker finds, upon investigation, that his client’s policy does not cover sewer backup loss on this one property, he merely advises the client that reporting such a claim is useless because the policy does not afford such coverage. In actuality, the broker should immediately tender the matter to the insurer on the risk, in part because it is his professional obligation

to do so. Equally significant, though, is the possibility that the carrier may rectify the policy to include the same coverage that is present on the other properties. There may be a number of reasons why sewer backup coverage was not on the policy in question, several of which may lead to rectification — and it only takes one to achieve the desired result. Moreover, there are other causes of water damage that the carrier’s adjuster may deem a partial or complete cause of the loss in the case at hand (e.g., flooding). If the client later learns his claim may have been covered or even partially paid by the carrier, but the broker never even tendered the loss to the carrier on the risk based on his own coverage analysis, the client’s reaction may well include filing suit against the broker and his brokerage. Next, consider an employee who sues her employer for discrimination and defamation. While brokers typically know to tender such a claim to the client’s EPL carrier, brokers should be aware that many GL policies also contain coverage for defamation that arises within the employer-employee context. Therefore, the broker would be wise to tender the same claim to the client’s GL carrier as well. Following this best

The Alberta Broker October - November 2012

practice would likely prevent the client from suing the brokerage for failure to report. Brokers should also always tender claims to excess and umbrella carriers. Even if the initial demand does not appear to exceed the primary insurers’ policy limit, such reporting procedures aid a brokerage in two ways. First, as noted above, it satisfies the broker’s duty to report such matters to the carrier on the risk. Second, it protects the broker from a malpractice action. The broker is not in a position to evaluate, on a going-forward basis, whether and when it should be apparent that the claim may exceed primary limits and provide notice accordingly. By reporting the matter up front to the excess and/ or umbrella carrier, that carrier will be unable to deny the claim for late notice at a later date. Because brokers are not claims professionals who are authorized to render coverage determinations on insurers’ behalf, they should refrain from trying to ascertain if and when a loss is covered. Rather, brokers should focus on providing carriers with prompt notice of any and all claims made against their clients. If and when the carrier takes a coverage position, the broker can then put on his “coverage cap”and offer advice to his client. Which brings us back to our initial question: “To claim or not to claim?” If he wants to avoid a full-blown tragedy

continued on page 26

continued from page 24 — the “slings and arrows” of outrageous E&O claims — the nobler course for Mr. Shakespeare’s insurance brokerage would be to submit his client’s claim to the carrier and to do so without delay. ALISON VANDYKE Assistant Vice President Swiss Re Corporate Solutions

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article.The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. © Swiss Re. All rights reserved. Reproduction of this article in whole or in part is only permitted with the permission of Swiss Re.

The Alberta Broker October - November 2012

Legal-Ease

Shelley L. Miller and Terry J. Williams

ShakyArgument Reinsurer Seeks to Rescind Policies and Avoid Roofing Tile Claims MacMillan Bloedel Limited (“MBL” — now part of Weyerhaeuser Company Limited) had a casualty insurance program which was managed out of Vancouver by its Casualty Risk Manager, a former underwriter and casualty broker. MBL incorporated Camarin Limited (“Camarin”) as a captive reinsurance company to facilitate MBL’s insurance requirements. AON Reed Stenhouse Inc. and its predecessors and worldwide affiliates (collectively “AON”) acted as MBL’s insurance brokers. MBL, with assistance, structured an insurance program whereby MBL obtained liability coverage from AIG Assurance Company (“AIG”). AIG issued both primary policies and excess umbrella liability policies (“AIG Excess Policies”) to MBL. The umbrella policy provided broader coverage than each of the individual underlying primary policies and was designed to “drop down” to fill any gaps in the underlying policies. As part of its insurance program, MBL reinsured 50% of the AIG Excess Policies through Camarin and Camarin reinsured 100% of its limits with Swiss Reinsurance Company (“Swiss Re”) in Zurich. The reinsurance policies were casualty policies covering resulting damage caused by products manufactured by MBL entities. Any damage to the product itself was provided by warranty coverage by the MBL entity that manufactured the product. In 1993, MBL purchased American Cemwood, an Oregon manufacturer of wood fibre-cement roofing tiles that simulate the look of cedar shakes (“Cemwood Tiles”), and American Cemwood was added as an insured to MBL’s casualty policies. Claims arising from defects in the Cemwood Tiles, when they arose, were handled internally at American Cemwood as warranty claims in a manner completely separate from liability claims. Depending upon the nature of the problem, the Cemwood Tiles would be recoated, repaired or replaced.

In 1996, American Cemwood retained Anistics Ltd. (an AON subsidiary) to produce a report on warranty liabilities. The Anistics Report did not reveal any resulting damage claims but did disclose over 900 warranty claims and concluded that the coating would not last as warranted. In an unsuccessful attempt to obtain coverage for the warranty claims, AON forwarded a copy of the Anistics Report to various insurers, including Swiss Re. In addition, although the Bermuda Application forms completed by MBL and AON as part of MBL’s annual underwriting submissions did not specifically mention problems with the Cemwood Tiles, the Anistics Report was included with one of the Bermuda Applications. Between 1994 and 1997, a series of lawsuits were commenced in the United States claiming damages from the Cemwood Tiles. The trial judge found that MBL’s Casualty Risk Manager had no personal knowledge of these U.S. lawsuits and that although AON had knowledge of the U.S. lawsuits, it did not provide information about them to Swiss Re because in AON’s view the claims were warranty claims and were not covered by insurance. However, when MBL was served with a class action lawsuit in late 1997, it retained a San Francisco law firm which reversed the previous position of MBL and AON that the claims were strictly warranty claims. In 1998, a further class action lawsuit was commenced and AON put Swiss Re on formal notice. However, Swiss Re denied coverage and sued MBL and Camarin in British Columbia to have its reinsurance policies rescinded for misrepresentation (the “Swiss Re case”). The Swiss Re reinsurance policies contained a “claims cooperation clause.” In 1999, American Cemwood and MBL had sued AIG in California to force AIG to provide coverage under its policies. A day later, AIG sued Camarin

The Alberta Broker October - November 2012

and MBL in British Columbia, denying coverage and claiming that the AIG umbrella policies were void. In 2003, as part of a global settlement, AIG agreed to pay $70 million (U.S.). The trial judge in the Swiss Re case found that AIG made an informed decision to settle its lawsuits with MBL rather than press coverage defences. The trial judge observed that AIG fully explored and ultimately found to be without merit the allegations of material misrepresentation raised by Swiss Re in its action for rescission of the Swiss Re policies. The trial judge found that Swiss Re understood that the claims cooperation clause gave it the right to form a panel with other reinsurers, to participate in defences and to advise AIG to raise defences such as rescission. However, Swiss Re elected not to exercise its rights under the claims cooperation clause. Swiss Re argued that MBL, Camarin and AON failed to disclose extensive claims relating to the Cemwood Tiles and production quality problems with the Cemwood Tiles that could result in leakage and water damage. The trial judge agreed that MBL and Camarin owed a duty of utmost good faith which required them to disclose all information that may be material to the risk, whether or not Swiss Re asked for that information. A fact is material if a reasonable and prudent insurer would take it into consideration in deciding whether to accept the risk or in setting the premium. However, the trial judge noted that Swiss Re had received the Anistics Report which disclosed problems with the Cemwood Tiles and claims for roof replacement and that Swiss Re had then renewed for the 1997 year. The trial judge found that a reasonable and prudent insurer would not take into consideration the warranty claims or production quality problems in deciding whether to accept the casualty risk or in setting the

premiums. The trial judge observed that AON had not specifically disclosed the warranty claims because AON was of the view that they were not relevant to the coverage being provided by Swiss Re, and agreed with AON’s assessment. In the result, the trial judge dismissed Swiss Re’s action for rescission of its reinsurance policies and held that Swiss Re was obligated to indemnify Camarin for 100% of its assumed limits (being 50% of AIG’s limits under the AIG umbrella policies). Finally, Camarin and MBL also had a third party claim against AON. Instructions had been provided to AON London to renew the 1993 Swiss Re policy “as is”. Previously, a “follow the settlements” clause was included which stated, “Being a Reinsurance of and warranted same terms and conditions as and to follow the settlements of the reinsured.” The trial judge interpreted this clause as binding Swiss Re to any settlement reached by Camarin arising out of litigation relating to the underlying policies. The trial judge held that AON breached its duty of care

to Camarin when, through a clerical error, the follow the settlements clause was omitted from the Swiss Re policies after 1993. The trial judge concluded that, if he was ultimately found to be

wrong in dismissing Swiss Re’s claim for rescission of its policies, then AON was liable for the amount claimed by Camarin against Swiss Re.

SHELLEY L. MILLER, Q.C. and TERRY J. WILLIAMS are lawyers with Fraser Milner Casgrain LLP and practice in the professional liability insurance area. terry.williams@fmc-law.com shelley.miller@fmc-law.com

• Property • CGL (Incl. Truckers) • Cargo • COC • Umbrella/Excess • Fine Arts • Product Recall • Cross Border

• Auto Physical Damage (Incl. Logging) • Special Events • CEF • Aviation • High Value Homes • E&O • D&O

WHOLESALE BROKER FOR BROKERS Tel: 780.442.2240 • Toll Free: 1.866.328.1314 E: nmccreedy@auroraunderwriting.com

auroraunderwriting.com

The Alberta Broker October - November 2012

WICC Alberta

Amy Foggin

Fanning the Flame

We encourage all industry members to consider WICC as their charity of choice for any client or team building event with a fundraising component. Contact any WICC committee member for more information.

Rallying for a Cause

The Women in Insurance Cancer Crusade has had a busy spring and summer! New supporters have come on board in droves, donating the proceeds

Our precedent-setting donations and the tenacity of our committee lead to us being chosen as the recipient of the 2012 Canadian Cancer Society

of their fundraisers to WICC. We also have our tried and true ongoing events and companies keeping our foundation strong. A cross-section of all of

Award of Excellence in Revenue Development. WICC AB was nominated by Ann-Marie Senft, revenue development coordinator, independent

The Alberta Broker October - November 2012

the demographics of our supporters are pictured above, representing our 2012 Gold Flame Award Recipients.

fundraising, for the CCS AB/NWT division. The banquet and award presentation were held in Edmonton where WICC was recognized with other committees and philanthropic individuals. Proud current WICC AB committee members are pictured here with the award from left to right (top row) Jen Davis of Marsh, David Smith of Alberta Fire and Flood, Susie Nagy of RSA, (front row) Quan Luu-Dixon of Aviva, Donna Brown of Nordic Insurance, Amy Foggin of CKR Investigations, Stephanie Young of MD&D, Jen Adams of Marsh and Rosetta Bilodeau of RSA. Missing are Katherine Campbell of Marsh and Sacha Carey of Renfrew Insurance.

Another annual event in southern Alberta is the WICC Carol Flood Memorial Ride for Cancer. Those with a love of motorcycling are encouraged to join in and celebrate the life of an insurance industry friend.

We had a significant donation of $11,000 from the All Industry Stampede Party this year. The committee for this event is spearheaded by David Smith of Alberta Fire and Flood

the Sinclair Committee to MC its event this year. They added a fashion show and skills clinic aspect to their 2012 event, keeping the entire day fresh and unique. Striving to bring in new ideas, excellent auction items and some fantastic golfing are the big draws for industry members to be a part of this longstanding, first rate tournament. Namesake, Jim Sinclair, is pictured in the first photo on page 30 (far right) as a 2012 Gold Flame Award winner.

Another solid continued WICC fundraiser in its 3rd year is the Silvercrest and Ding & Bradley Golf Tournament. Mike Bradley commented, “We’ve both (Silvercrest and D&B) lost people close to our organizations to cancer and so we are committed to choosing a cause that means something to our staff.” Similarly committed to fundraising for causes they are passionate about are the Sinclair Golf Tournament Committee Members. WICC AB founding member Donna Brown was invited by

and Lynda Sayles of Alberta Jewelry Claims. They are welcoming new sponsors to jump on board for this incredibly successful event in 2013.

AMY FOGGIN Regional Manager, CKR Global Investigations amy.foggin@ckrglobal.com

The Alberta Broker October - November 2012

Who? What? Where? Darrell Verbonac

The summer months brought about several reasons to celebrate as well as a number of personnel changes. Celebrations & Congratulations In Calgary, CJ Campbell Insurance celebrated its 100th anniversary with a barbecue hosted by company president Ken Stott and the staff. The event was attended by both insurance colleagues and clients. Since 2001, Ken has been the president of the family-owned company, which also has a sub-office in the town of Linden, located north-east of Calgary. In Red Deer, July brings the Westerner Days Exhibition, and two brokers held events in celebration. Mooney Insurance hosted its eighth annual kickoff pancake breakfast and raised $7122 for the Golden Circle Seniors Centre. Since the event’s inception, Mooney has raised over $40,000 for Golden Circle. Alpine Insurance held a lunch barbecue later in the week that raised funds for Special Olympics. Also in Red Deer, All Service Insurance has moved into brand new premises located at 5002 - 55th Street, which is right on Gaetz Avenue. In other moves, Calgary’s Costen and Associates relocated to new premises as well. They stayed in the same building, but moved into a different space in a bright corner location. Costen’ s new address is 1920 Kensington Road NW. Congratulations also go out to a number of people on milestone events. Four brokers celebrated their nuptials in July: John Salt of Jones and Salt Insurance and Bev Pilon of CRS/ Merrill Insurance tied the knot July 1;

Heather Ivan of Airdrie Insurance and Dustin Backes were married July 7; and in Lethbridge, Amanda Nobbee of Alpine Insurance was also married on July 7. Three Calgary brokers celebrated additions to their families. Brad Deibert of Renfrew Insurance and his wife welcomed a daughter, Molly, in July. Braden Maser of BKI Risk Management and his wife welcomed a daughter, Charleze, in August; and Chad Mullen of Lanes Insurance and his wife welcomed a daughter, Leah, on August 5. As well, best wishes go to Gwen Rice of Intact Insurance who retired in mid-August after a career of over 20 years with the company. Lastly, congratulations to Link PR Incorporated, publishers of The Alberta Broker magazine, which celebrated its 20th anniversary on July 1. People Moves & Acquisitions In broker changes around Calgary… • Jeff Peters joined Renfrew Insurance, having come over from the energy sector’s Talisman Energy. • New at H.E. Hunt is Whitney Lewis, previously with Western Financial Group in Red Deer. • Andrew Zagorski is new at Bell Davidson. • New at Rogers Insurance are Rhawnie Tremblay, who was at Wilson Beck Insurance, and Amber Tonhauser, who was with Jardine Lloyd Thompson Canada. • Leaving from Rogers were Dave Matthews, who went to Aon, and Chuck Heuther, who moved to Edmonton to join Marsh Canada.

The Alberta Broker October - November 2012

• Joining Wilson Beck is Jenna Eisenhut formerly with Wawanesa. At Western General, two new staff members are Paige Cox, who came from AM Luken Insurance, and Brad Janke, who was with MHK Insurance. • Mary Heibein, formerly with TSG Insurance, went over to BKI Risk Management. • Western Financial Group appointed Mark Dutton as its new vice president of Southern Alberta, based in Okotoks. On the company side … • Lana Wood was appointed as the new executive vice president of Western Canada for Northbridge Insurance. • Greg Joyce was promoted to chief underwriting officer for Catlin Canada. • Neil Cory moved from Peace Hills Insurance to SGI Canada as its southern Alberta marketing representative. • Ken Santarossa moved from Zurich Insurance to CNA. • At Intact Insurance, Ken De Decker was appointed director of commercial lines, Sheri Shafer transferred to Edmonton and new staff are Darlene Nicholls and Kevin Chau in commercial underwriting and Lori Bartlett, previously with IBAA, in finance. • Brian Fortier moved to RSA from Godfrey Morrow Insurance. • New in commercial underwriting at Aviva is Savi Nanduri. • The new sales manager for Western Canada for IFS Insurance Premium Financing is Rob Downard. • Simon Gibson is the new broker consultant for Alberta at DAS Canada.

DARRELL VERBONAC, FCIP, CRM Regional Business Development Manager Intact Insurance Company darrell.verbonac@intact.net

The Alberta Broker October - November 2012

Commercial Break Karen MacWilliam

Analyzing Client Business Contracts

client. Typical examples may be faulty workmanship, environmental contamination, fines, breaches of statutes, etc. Distinguish between what’s uninsured from what’s uninsurable. Coverage may be available for some of the risks not currently covered, and you should make reasonable efforts to provide quotations.

met with a prospective client recently — a small business owner transitioning to medium and large size jobs. He was completely bogged down trying to understand and analyze contracts and longed for the past when everything was easier and a handshake was enough. “Those days are over,” I said. “The biggest risks I see emanate from poorly drafted contracts.” When I speak to brokers on this topic, many folks seem terrified at the prospect that they could be expected to examine a business contract and offer related advice to clients. “We are NOT lawyers,” a senior broker admonished indignantly. “Lawyers are LEGAL experts, but we are INSURANCE and RISK experts,” I countered, “and it’s our JOB.” When did we decide that a 25-yearold lawyer knows more about insurance than a trained and experienced insurance broker, anyway? Okay, so now you feel somewhat more empowered. But, what next?

Before you do anything, make sure you and your client agree on the scope of services that your office will be providing. I’ve seen dozens of “disconnects” where the client thought that

the broker had reviewed the contract, but the broker just used it to fill in the blanks on a certificate of insurance. A service agreement (or engagement letter) may specifically list “analyzing contracts for risk and insurance implications” as an included or excluded service. That way, if anything is amiss, it clearly indicates in advance the scope of services your office has agreed to provide.

Educate your clients to provide you with copies of contracts PRIOR to signing them. It’s kind of tough to change the language in a document that’s already been executed.

Look at the subject matter of the contract. It should fit the description of business operations provided previously to the insurer. If a road paving contractor is doing something other than paving roads, check back with the underwriter to make sure there hasn’t been a material change.

Look at the indemnification provisions of the contract. These spell out under what circumstances the client will have to pay the other party. If there are obvious risks that are clearly uninsured, advise the

The Alberta Broker October - November 2012

Look at the insurance provisions in the contract. Make sure that your client is in conformity with the types and amounts of insurance required, with the necessary endorsements, insurer ratings, and deductibles. Outline, in writing, those areas that are not compliant — don’t just hope the other party won’t notice. I have written entire articles on “Waivers of Subrogation,” “Additional Insureds” and “Notice of Material Change,” so I remind you to be vigilant here.

Don’t assume that clients or their legal representatives actually know what they’re asking for or why. When I have asserted myself, questioning why a particular type of insurance is required, folks on the other side of the negotiation have admitted, more than once, that they “borrowed” the language in the agreement from another document used for another purpose. If it doesn’t make sense, ask. Changes may be possible.

Look at the jurisdiction of the contract. Many of your commercial clients may be working in the oil and gas business and may be signing contracts that are subject to U.S. law, in jurisdictions that may increase the cost and risk for the insurer. The safest bet is Canadian law, specifically, Alberta law, if that’s where your client is based and where the work is being performed.

Remember that the insurance provisions of the contract may not define or limit your client’s obligation to indemnify the other party and they may not specify types of insurance that may be very prudent for the risks facing the

client. Higher limits and additional coverages should be recommended, whenever appropriate.

Insurance, indemnity and risk issues may appear throughout the document, and not just in the sections entitled “risk” and “insurance.” Wherever possible, obtain an ENTIRE copy of the contract, and not just page X with the insurance stuff on it. So, now you’re asking, “Do we have to read the WHOLE thing?” To provide value for your client, you should be prepared to read the entire document. Personally, I don’t read technical specifications, unless there’s something I need to understand in more detail. If you’re not prepared to read the whole contract, you may do more harm than good.

Recognize your limitations. Recommend and utilize other professionals to provide advice if you aren’t an expert. No one becomes an expert immediately — you will need practice to become competent. Engage your colleagues, within and outside of the office, to assist you.

KAREN MacWILLIAM is an insurance and risk management consultant karen_macwilliam@telus.net

The Alberta Broker October - November 2012

Professional Development

Karen Bushie

What’s Your Style? I would like to see a strong customer service focus in our course offerings and am exploring courses related to human resources and leadership. Stay tuned for a learning needs assessment survey. Let me know what you would like to see in our course offerings. Learning Styles Quiz Do you know your preferred style for learning? A good facilitator will recognize these traits and integrate many of them in all courses. Good mentors will adapt training to the participant based on the individual’s preferred learning

style. A number of people have devised tests based on Neil Fleming’s VAK/ VARK (visual, auditory, kinesthetic) model and quiz. The self-assessment below is from Carlene Cassidy, Bob Kreitner and Robert Kreitner, Supervision: Setting People Up for Success. Take this short learning-styles quiz to become aware of your preferred learning style. Your preference can help you determine which courses will work best for you. One learning style is not better than another. Place a check mark after the answer that best fits your common practices.

1. When seeking travel directions, I...

look at a map

ask for spoken directions

follow my nose or maybe use a compass

2. When cooking a new dish, I...

follow a recipe

call a friend for an explanation

follow my instinct, tasting as I cook

3. I tend to say...

“show me”

“tell me”

“let me try”

4. When shopping generally, I tend to...

look and decide

discuss with shop staff

try on, handle or test

5. When learning a new skill, I...

watch what the teacher is doing

6. Choosing from a restaurant menu, I...

imagine what the food will look like

talk through with the teacher exactly what I am supposed to do talk through the options in my head

like to give it a try and work it out as I go along by doing it imagine what the food will taste like

7. When concentrating, I...

focus on the words or pictures in front of me

8. I remember things best by...

writing notes or keeping printed details

9. When explaining something to someone, I tend to... 10. My main interests are...

show them what I mean

11. Most of my free time is spent...

watching television

discuss the problem and possible solutions in my head saying them aloud or repeating words and key points in my head explain to them in different ways until they understand listening to music or listening to the radio or talking to friends talking to friends

move around a lot, fiddle with pens and pencils, and touch unrelated things doing and practicing the activity, or imagining it being done encourage them to try and talk them through the idea as they try physical/sports activities, fine wine, fine foods or dancing doing physical activity or making things

12. I find it easier to remember...

faces

names

things I have done

TOTALS =

VISUAL

AUDITORY

KINESTHETIC/ PHYSICAL

photography or watching films or people-watching

The Alberta Broker October - November 2012

Supervision: Setting People Up for Success, (Mason, OH: South-Western Cengage Learning, 2010), p. 409

TAKE THIS QUIZ

Excited to Join the IBAA Team!! Good day broker world! I am excited to be the newest member of the IBAA team. I come from the education department with the Alberta Motor Association where I facilitated a number of courses, from technical training to soft-skills training. I am looking forward to meeting with you to discuss education initiatives for the upcoming year. One of my goals is to have highly interactive training programs in which participants are engaged and will surely remember their learning experience.

Most people will have a mixture of learning styles, although one or two types often predominate. Once you understand your preferred learning style, you will have a better idea of what to choose from in our seminars, webinars, and online courses. Remember that good facilitators include aspects of all these learning styles in their courses, whether they are in the classroom, in the field or on the web. Some seminars and webinars do, however, lean more toward one style than the other. For those of you who scored highest in VISUAL, you may want to check out some of our webinars, online CE credits through VuBiz and Captus, and Video Online Training (VOLT). Visual learners prefer to see things such as pictures, flow charts, and written instructions. The VOLT videos include much footage pertaining to the materials and risks insured. The VuBiz and Captus PowerPoints include written descriptions, lists, flow charts, diagrams, and practice quizzes. The webinars include pictures and verbal description on PowerPoint as well as written-word feedback through polling. For those of you who scored highest in AUDITORY, you may be more interested in one of our highly interactive classroom seminars or the less interactive online courses. For auditory learners, memory is triggered by the spoken (or sung) word. (No, our facilitators don’t usually sing. I’m still waiting for that mnemonic trick.) Along with the oral presentation (supplemented with handouts and PowerPoint displays for the Visual learners), classroom seminars provide ample room to discuss issues with the facilitator and your peers. The VuBiz and Captus CE credits have voice-over in the slides, the VOLT videos are narrated, and the webinars are live interaction.

If you scored highest in KINESTHETIC, you should try our field-trip seminars and VuBiz courses. Kinesthetic learners like to be physically active and to learn by trying to perform the task. The commercial lines fieldtrip seminars include an on-site visit, for example, to an oil and gas company that lets you explore the issues. A large component of these seminars includes classroom instruction that helps you contextualize what you see on the site and provides practical tools for use. Many of the VuBiz seminars also ask you to perform the task you are learning, for example, to draft a business plan. If you were close in a couple of areas, you certainly have the versatility to choose from many of the different seminars, webinars, and online courses we offer. Course Selection for Fall 2012 Don’t miss the webinar series Getting Started in Commercial Lines (November 20-29).

Keep up with the growing trend: Insuring Home-Based Business (October 23). Visit our website at www.ibaa.ca for information on the upcoming seminars and webinars, as well as our IBAC Designation programs (CAIB, CPIB, and CCIB), Licensing, and IBAC and other Certification programs (Professional Selling for Insurance Brokers, Customer Service for the Insurance Professional, Best Practices and Introduction to Risk Management). VOLT, Captus and VuBiz are available year round as online education options.

KAREN BUSHIE Director of Professional Development, IB AA kbushie@ibaa.ca

The Alberta Broker October - November 2012

Did You Know... Approximately 8.5 million Canadians aged 16 years or more acquired goods or services by placing an order online in 2009? These numbers have seen a continual increase every year. More and more of your customer base is looking and purchasing on the Internet.

Claim payouts from severe weather have doubled every five to ten years since the 1980s? It makes sense that insurance companies need to be continually revising insurance premiums and coverage in response to severe weather patterns.

Laughing lowers levels of stress hormones and strengthens the immune system. Six-year-olds laugh an average of 300 times a day. Adults only laugh 15 to 100 times a day. So consider it a new health initiative for you to have a little more fun at work. Laughing could potentially reduce your sick time!

The Alberta Broker October - November 2012

You can have a customized mobile phone app for distribution to your customers? The Broker-Branded App that IBAA is offering for purchase can be a tool for you to stay in touch with your clients and stay current with technology. There are 1,444 insurance agencies and brokerages in Alberta? You have to differentiate yourself from 1,443 other businesses that are all selling the same thing as you. How are you going to do that in todayâ€™s marketplace? How are you going to let the public know what makes your brokerage unique?

Sources: Alberta Finance, AIRB, IBAA,Travel Alberta and Statistics Canada.