MarketPlace

Claims

Hurricane Irene blows through Quebec and Maritime provinces

The verdict is still out on insured losses caused by Hurricane Irene’s three landfalls, but loss estimates for the Caribbean range as high as $1.1 billion.

The remnants of Hurricane Irene, which had weakened to a post-tropical storm, lashed parts of Quebec and the Maritime provinces on Aug. 29, leaving hundreds of thousands of people without power, downing trees and dropping up to 80 mm of rain, the CBC reported.

As of press time, the storm left more than 3 million people without power and 23 people dead in the United States, and more than 200,000 without power and one man dead in Canada, the CBC reported.

As a Category 1 hurricane, the storm caused an estimated $200-million to $400-million of insured losses on Aug. 26, when it made landfall in the Carolinas. Earlier that week, it caused an estimated $300- to $600-million in insured losses as a Category 3 storm in the Caribbean, reported EQECAT.

AIR Worldwide placed its preliminary loss estimate in the Caribbean between $500 million and $1.1 billion.

Hurricane Maria sideswipes Canada in near miss

Hurricane Maria didn’t live up to its expectations when it made landfall as a Category 1 hurricane in the Avalon Peninsula area of Newfoundland on Sept. 16.

The Canadian Hurricane Centre (CHC) predicted on Sept. 15 that Maria’s highest winds would pass through the Avalon Peninsula with wind gusts of 100 km-h in the warning area, and 120 km-h or higher in the watch area.

But on Sept. 16, the CHC issued a bulletin saying the region had been spared the worst of the storm, as strongest winds were to the right of the track/centre. The highest winds were far enough from the centre at landfall that they did not pass over land, the CHC noted.

Winds did gust to 100 km-h in a few exposed locations around Avalon, with a peak wind of 103 km-h reported near Cape Pine, the CHC reports.

Rainfall totalled about 60 mm on the Burin Peninsula and the South Coast, with St. Lawrence receiving 63 mm and Burgeo registering 61 mm. Only 13 mm fell over St. John’s.

Magnitude 6.4 earthquake hits west of Vancouver Island

A Magnitude-6.4 earthquake that hit just west of Vancouver Island, B.C. on Sept. 9 caused more than 100 aftershocks – the largest being a Magnitude of 4.9 – but no significant damage has been reported, according to Earthquakes Canada.

The initial 6.4 quake was felt from across Vancouver Island, Greater Vancouver and even in Kelowna. The initial quake resulted in more than 100 aftershocks, according to Earthquakes Canada.

“The largest aftershock occurred three minutes after the earthquake and had a magnitude of 4.9,” it reported. “The remaining aftershocks were in the magnitude 1-3 range and approximately 50 km offshore, thus too small and too far offshore
to be felt or cause any damage.”

In concert with several media reports, Earthquakes Canada said “there have been no reports of damage” in connection with the quake.

Risk Management

Only “minute” causal connection can result in U.S. regulatory action against Canadian companies

A “minute” causal link between a U.S. claim and a Canadian company is all that is required for the U.S. Securities Exchange Commission (SEC) to flex its muscle against Canadian companies.

Jay Cassidy, senior vice president at Marsh Canada, made the observation as a panel member at the Risk and Insurance Management Society (RIMS) Canada’s Annual Conference in Ottawa.

Cassidy noted the United States adopted the Foreign and Corrupt Practices Act in 1977, and the act remained virtually dormant over the decades.

But as a result of the Bernie Madoff financial scandal, as well as the global economic downturn, authorities are putting more emphasis and energy into going after companies with illegal practices and their individual directors, he said.

For Canadian companies, the causal link that needs to be established in order for the U.S.’s Securities Exchange Commission (SEC) to enforce the act is “minute,” Cassidy continued.

“From a Canadian perspective, we need to keep our eyes on this,” he said. “There doesn’t need to be a close proximity geographically: a Canadian owned and operated company that doesn’t even have its feet in the U.S. is at risk.

“If funds flow through a U.S. bank, or if your servers are hosted in the U.S., the SEC can exert its enforcement.”

Canadian Market

Canadians happy with their insurers despite premium increases: J.D. Power

Despite widespread premium increases, customers in the Western and Ontario/Atlantic regions of Canada are notably more satisfied with their auto insurance company this year than they were in 2010, according to the J.D. Power and Associates 2011 Canadian Auto Insurance Study.

The study measures insurance customers’ experiences with their primary insurer. Conducted in July 2011 and published on Sept. 15, the study is based on responses from 11,286 auto insurance policyholders.

National overall satisfaction averages 740 on a 1,000-point scale in 2011 – 13 points higher than in 2010.

Primarily driving this increase are considerable improvements in customer satisfaction in the Western and Ontario/Atlantic regions, while satisfaction in Quebec decreases slightly from 2010, the study says.

“Despite the relatively large proportion of customers who have experienced a premium increase, some auto insurance companies were able to mitigate the negative impact on satisfaction by providing proactive communications and helping customers explore various options for reducing costs,” said Lubo Li, senior director and practice leader of Canadian financial services and insurance at J.D. Power and Associates.

Federally regulated P&C insurers see their consolidated profits drop in 2011 Q2

Federally regulated foreign property and casualty insurers saw their consolidated net income tumble to $1.5 billion in 2011 Q2 from $2.1 billion in 2010 Q2, according to the Office of the Superintendent of Financial Institutions.

Foreign P&C insurers saw their collective net income dip from $117 million in 2010 Q2 to $47 million in the same period of 2011.

Canadian federally regulated P&C insurers also saw their net income drop, from $1.96 billion in 2010 Q2 to $1.47 billion in 2011 Q2.

Net premiums earned improved for federally regulated insurers on a consolidated basis. The figure increased from $16.6 billion in 2010 Q2 to $17.3 billion in 2011 Q2.

Canadian federally regulated insurers saw their net premiums earned increase from $12.9 billion in 2010 Q2 to $13.4 billion. Foreign insurers saw this figure grow from $3.7 billion to $3.9 billion.

Net investment income for Canadian and foreign insurers on a consolidated basis declined from $1.8 billion
in 2010 Q2 to $1.6 billion in 2011 Q2.