Evolving Risks

The threat of “systemic loss” from cyber events, the disruptive effects of emerging technologies and consumer protections in Canada’s Bank Act are all top of mind for Sean Duggan, current vice president and incoming president of the Toronto Insurance Conference (TIC).

“We are seeing a shift happening where companies are becoming increasingly concerned about their intangible risk, which is the cyber and data security piece,” reports Duggan, who has been a commercial broker for 17 years. Tangible risks include fire, flood, earthquake and windstorm, he says.

Duggan is scheduled to become president of TIC, an association of Ontario commercial brokers, next March, taking the reins from Philomena Comerford.

Currently vice president, partner and practice leader for clean tech, technology and life sciences for Hub International HKMB, Duggan is well-aware that a cyber breach can lead to a systemic loss. “One of the key concerns for a lot of our clients is, what is the impact of a cyber event on a business’s reputation and our brand?”

Beyond concerns related to reputational harm, business interruption and loss of customers, cyber events can also give rise to “statutory notification costs,” Duggan says. “So you have the impact of direct costs to the business because of that loss, and then you may be sued.”

But cyber is not the only issue receiving a lot of notice from commercial brokers nowadays. Another important issue, says Duggan, relates to the “accelerated rate of change.”

Whether emerging technologies or business models such as autonomous vehicles, big data, the sharing economy, cyber risk, drones or the Internet of Things, “these are all having disruptive effects on many businesses and industries for which brokers need to adapt and proactively risk manage in order protect their clients.”

INFORMING BROKERS

Keeping commercial brokers informed on new and emerging issues will be among Duggan’s goals as TIC president. Of course, there are also perennial concerns that will also receive plenty of attention.

One such issue revolves around the difficulty of renewing coverage in the event of an emergency – such as a pandemic, earthquake or severe weather – that interferes with business operations.

TIC has been working on getting all insurers to adopt the declaration of emergency endorsement that Insurance Bureau of Canada approved in 2009. The endorsement is intended to extend the term of an expiring policy – or suspend the notice period for a pending cancellation – and to continue charging premiums on a pro-rated basis should an emergency be declared.

At its heart, the endorsement is intended to apply if a declared emergency prevents insurers, brokers or clients from conducting business, such as binding coverage, processing documents, confirming new terms or remitting premiums. It is also meant to protect brokers from errors and omissions exposure.

It was “difficult to get 100% buy-in to adopt that endorsement,” Comerford told attendees during the Insurance Brokers Association of Ontario’s annual convention in October.

“We were hopeful that it would be adopted on a blanket basis and I think we are making some headway in engaging with the insurance companies,” Duggan reports. “More of them seem to be open to the idea of adding that endorsement on behalf of their clients, but…. like most things in the industry, it’s incremental change. It’s essentially a new coverage and a new risk that commercial insurers are now entertaining covering.”

In the wake of the October 19 federal election, another TIC priority in the coming year will be to approach new Members of Parliament and inform them about consumer protections contained in the Bank Act, set to undergo its five-year review in 2017.

While Canadian banks are authorized to sell eight lines of insurance, such as creditors’ disability, mortgage and travel, they are essentially prohibited from selling either property or auto from their branches and cannot provide links from their websites to other web pages through which these coverages are sold.

Insurance Brokers Association of Canada (IBAC) and other brokers associations contend financial institutions should not be selling insurance at the point of credit.

“Given the changeover in the government, I think that the discussions around the Bank Act are particularly important,” says Duggan. “It’s a consumer protection issue, and now we are going to have to redouble our efforts to make sure that our new MPs understand what the implications are.”

WELCOME FALL

Originally from the Toronto area, Duggan studied political science at York University, graduating with a Bachelor of Arts in 1992.

“I couldn’t decide between continuing my studies, pre-law or beginning a new career,” he says. “Like many of my peers, I fell into insurance out of university.”

That welcome fall was thanks to his sister, Patricia, who worked in marine claims for William H. McGee & Co. Inc. “She suggested to me, ‘Why don’t you come to our firm and intern as a summer student, get some exposure to the industry and see what it’s all about, and you may decide that you want to make a career out of it?'”

So Duggan did, working at the managing general agent for a summer. “I really enjoyed the work and the people there, learning more about the industry.”

In 1993, he joined Guardian Insurance, working as a commercial underwriter for about four years.

He attained his Certified Insurance Professional (CIP) designation in 1994, and his Certified Risk Management (CRM) designation three years later in 1997. The following year, Duggan joined Hunter Rowell, which later merged to become Hunter Keilty Muntz & Beatty (HKMB), which, in turn, was acquired by Hub in 2008.

In the meantime, Duggan completed York University’s Schulich Executive Management program in 2002 and became a Hub International HKMB shareholder in 2003.

Duggan says his clients face a variety of risks, including supply chain, intellectual property and warranty coverage.

Noting there are many subsets of clean tech and clean energy, he says “it’s everything from solar power, wind farms to smart grid and process efficiency solutions – using less energy, using less water, creating less waste, as well as energy storage.”

One client, he reports, “started as a computer software and network equipment company, and it eventually morphed into a smart grid company because they saw the emerging opportunity.”

LEARNING THE ROPES

One of his co-workers at Hub International HKMB, vice president and partner Michael Boire, served as TIC president in 2010. Boire “made me aware of some of the important and evolving issues our industry peers and partners address” through TIC, and the important advocacy role it plays.

So in 2012, Duggan joined the TIC board and currently represents the association on IBAC’s Broker Identity Program (BIP) committee.

While at TIC, Duggan says he has had the chance to work with industry leaders for whom he has a great deal of respect, including Comerford, Brooke Hunter, Jack Lee and Robert Harrison.

But learning is always best when passed along, he says, citing TIC’s scholarship fund, now in its third year, for relatives of TIC brokers, partners and staff. “It’s nice to work with and offer a merited helping hand to the next generation of peers coming up, and promote the message that the commercial broker profession is a career of choice and influence to benefit businesses and consumers,” Duggan adds.