TABLE OF CONTENTS Dec 2012 - 0 comments

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2012-12-02

REGULATION

Court upholds 60-day wait limit for mediation

The Court of Appeal for Ontario has upheld a decision by a lower court to dismiss the appeals by insurers in a case involving wait time for mediation before the Financial Services Commission of Ontario (FSCO).

Hurst v. Aviva Insurance Company details circumstances in which four individuals made separate, but similar, claims to their insurers under the Statutory Accident Benefits Schedule (SABS) after being in vehicle accidents.

The claimants pursued litigation against their insurers, citing failed mediation through FSCO, since their claims were not mediated within 60 days — a limit set out in the commission’s Dispute Resolution Practice Code.

FSCO had not provided reports to the claimants noting that mediation had failed, since it said the 60-day parameter only applied after the mediation application had been assessed by staff and found to be “complete.” The insurers then argued in court that mediation had not failed because the 60-day limitation did not apply.

A lower court judge dismissed the motions by the insurers, who appealed to the Court of Appeal for Ontario.

The appeal court upheld the earlier decision, which hinged on wording in sections of SABS. The appellant insurers had argued the wording did not set out a 60-day limitation on the mediation wait time. “The purpose of the legislation is to make mandatory a mediation process that is timely and effective,” the ruling notes.

PEI eyes prohibition on credit scoring

Prince Edward Island has drafted regulations to ban insurance companies from using personal financial information after receiving complaints some individuals have been denied residential property or private passenger automobile insurance.

The draft regulations were released after complaints the “practice has resulted in some individuals either not being offered insurance, or only being offered insurance at unaffordable rates,” notes a discussion paper on the issue.

The type of information being used by some insurance companies include credit history, rating and score or credit-based insurance score; income level; net worth; indebtedness; credit card ownership; and whether or not a late payment has been made to an insurer, which did not result in cancellation.

If use of personal financial information becomes widespread, “that, in turn, may lead to significant availability and affordability issues within the province, with respect to these insurance products,” the paper notes.

The Canadian Council of Insurance Regulators’ Credit Scoring Working Group, tasked with reviewing the use of credit scoring by insurers, was unable to develop recommendations on the matter. The group notes in its November 2012 report that it had a “preponderance of opinion, but a dearth of fact as to the actual and current, rather than potential, harms that may be accruing to consumers from the use of credit scores by insurers.”

To make recommendations, market conduct reviews by various provincial regulators would be needed, it adds.

CLAIMS

Severe weather tally to top $1 billion in 2012

The Insurance Bureau of Canada (IBC) reports that insured damage from severe weather across the country is less than last year, but is still expected to exceed $1 billion in 2012.

Citing estimates from Property Claim Services Canada (PCS-Canada), IBC notes total insured damage for 2012 is approximately $1.19 billion, down from last year’s $1.7 billion.

The data suggests thousands of claims have been filed for damage to homes, cars and businesses as a result of severe weather events this year. Ontario and Alberta were most hard hit.

A weather system that tore through Ontario and Quebec in May brought with it high winds and flooding that resulted in $260 million in damages. But it was the wind, flooding and hail storms that battered in and around Calgary in August that proved most expensive, with insured damages pegged at more than $500 million.

Superstorm Sandy caused $100 million-plus in damages in Ontario and Quebec.

CANADIAN MARKET

CBN acquires South Western Insurance 

An agreement has been reached, although terms have not been disclosed, for Canadian Broker Network (CBN) to acquire Intact affiliate, South Western Insurance Group Ltd.

The transaction involving the wholesale insurance intermediary is expected to close by the end of 2012. Upon closing, South Western will operate as an independent subsidiary of CBN with its own leadership team, name and brand.

The deal marks CBN’s expansion into the wholesale insurance market and offers South Western the ability to expand its relationships with insurance companies, CBN reports. “With more than 50 years supporting brokers, South Western’s growth potential is significant thanks to its strong industry relationships, experienced professionals and unique underwriting expertise in niche and specialty insurance products,” says CBN chair Daryn McLean.

Commercial Insurance Focus of New Forum

Brokers, MGAs and insurers involved in the commercial space in Canada will be the focus of a new conference next year launched by MSA Research Inc.

The first Canadian Commercial Insurance Summit (CCIS), scheduled for next June, offers attendees expert speakers, breakout sessions and networking opportunities. The CCIS agenda and conference ground rules will be driven by an inaugural advisory committee, members of which include senior executives with some of the country’s largest insurance companies and organizations.

“Support for this has been overwhelming as there is an obvious need for a national annual gathering for leaders in the Canadian commercial market,” Joel Baker, president and CEO of MSA Research, says of the conference.

RISK MANAGEMENT 

Municipalities call for billions more in infrastructure dollars

The Federation of Canadian Municipalities (FCM) is calling on the federal government to create a 20-year plan and to beef up annual funding by $2.5 billion to address aging infrastructure.

The FCM is proposing the federal government increase its municipal infrastructure investments from $3.25 billion annually to $5.75 billion, bringing spending (as a percentage of GDP) more in line with levels in the mid-1950s to the mid-1970s. This “allowed proper infrastructure maintenance and growth.”

Ottawa is working on an infrastructure funding plan to use when the current plan ends in 2014. “A long-term federal funding commitment that reflects the life-cycles of the infrastructure it is meant to fix is needed to allow municipalities to invest wisely and strategically in priority areas over decades, not just years,” says FCM president Karen Leibovici.



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