MarketPlace

Claims

Manitoba flood damage projected to cost government $815 million

The projected costs of widespread flooding in Manitoba this past spring will be $815 million, according to the government of Manitoba’s quarterly financial report.

By the end of the second quarter, $437 million had been spent on the spring flood.

The forecast of unbudgeted expenditures for the 2011 spring flood includes funding for the Building and Recovery Action Plan and other financial assistance of $483 million to support homeowners, businesses, First Nation communities and municipalities, as well as $332 million to support livestock and crop producers for AgriRecovery and excess moisture programs.

Infrastructure expenditures are projected to require an additional $159 million. These expenditures include the restoration of bridges, roads and dikes and the construction of the outlet channel to alleviate the pressure on Lake Manitoba and Lake St. Martin.

FSCO seeks help from private dispute resolution companies to help clear up backlog

The Financial Services Commission of Ontario (FSCO) is seeking help from up to four private dispute resolution companies to help eliminate a backlog of files, estimated to be more than nine months as of May 2011.

FSCO posted a Request for Proposals (RFP) on MERX, Ontario’s electronic tendering system, on Jan. 16, 2012. The service providers would handle the backlog of files, while FSCO’s existing dispute resolution staff would receive files as usual.

FSCO added that as mediation files move through the system, it anticipates an increased demand will develop in arbitration.

“As a result, in addition to mediation services, the RFP is seeking service providers to provide arbitration services in order to respond to the expected increase in demand,” FSCO said. “These companies will be used to supplement FSCO’s existing resources and address the files in the backlog.

“FSCO expects to have contracts in place with qualified service providers by May 2012.”

Regulation

Harmonized approach to credit scoring in Canada will not happen: CCIR

The Canadian Council of Insurance Regulators (CCIR) is currently reviewing the results of a consultation it conducted last year on credit scoring, but it doesn’t appear likely that a harmonized approach to credit scoring will be the outcome.

“Frankly, there will be no harmonized policy on use of credit information in underwriting,” CCIR chairwoman Danielle Boulet said in a Dec. 13 speech at a Canadian Association of Financial Institutions in Insurance (CAFII) board of directors meeting.

“Some jurisdictions feel it is a valid tool to underwrite and price insurance, but other jurisdictions have banned its use already and still others are moving to do so.

“Ultimately, this is a government decision dependent upon a combination of political and socio-economic conditions within a jurisdiction, and a jurisdiction’s level of tolerance in relation to any potential risk identified.”

Canadian Market

Hard market in Canada unlikely in 2012

A hard market cycle will not likely happen in Canada’s property and casualty insurance industry in 2012, according to Philip Cook, president and CEO of Omega Insurance Holdings.

Cook talked about market cycles, escalating catastrophe losses and a number of other hot topics in the insurance industry at the 2012 CIP Society Industry Trends Breakfast.

“The $64,000 question is: Have we reached the turning point and will we see the hard market starting in 2012?” Cook asked. “I stick out my neck and say, ‘Absolutely not.’”

Cook said the soft market in Canada may have ended in 2011, but that doesn’t necessarily mean that a hard market will follow directly on its heels in 2012.

“We tend to graph [market cycles] as ‘Vs,’” Cook said. “That is, we reach the bottom and it goes up again….

“But I’m going to suggest to you that for the insurance industry, the graph is going to look like the bottom of a bucket. It’s going to come down, it’s going to be flat, and then it’s going to go up again. And that flatness, I think, is going to hold for at least the next two to three years [2012-14].”

Canadian commercial rates in 2012 expected to be “stable”: Marsh

Canadian commercial insurance rates are expected to remain stable across most lines of business in 2012, continuing a trend that began in the second half of 2011, according to a report by Marsh.

In its report, Navigating the Risk and Insurance Landscape: Canada Insurance Market Report 2012, Marsh noted that substantial catastrophe losses and reduced investment returns prompted many insurers to seek rate increases in 2011.

Property insurance rate reductions will likely cease in 2012, especially for Canadian insureds with significant loss histories or U.S. catastrophe exposures. Companies with U.S. catastrophe exposure will likely see rate increases of up to 15%. Rates for financial and professional lines, including for directors and officers liability, are expected to remain stable in 2012, although some rate decreases are still achievable.

“Entering 2012, the Canadian insurance market remains in a state of transition,” said Marsh Canada Limited president and CEO Alan Garner. “Insurers are expected to be extremely disciplined in their underwriting and seek rate increases where they can.

“Insureds that are able to provide insurers with complete, accurate and quality data will be best positioned to secure more competitive rates at renewal.”

Social networks could become insurance distribution channels by 2014: Gartner

What if social networks such as Facebook, Myspace or Google+ became insurance channels unto themselves in the next two years?

Juergen Weiss, a research director at Gartner, a technology research firm, said this kind of development could
be a very real possibility — perhaps as early as by the end of 2014.

Weiss hosted the Gartner Webinar, 2012 Industry Predicts: Disruptive Technologies for Insurers, on Jan. 11. Weiss did not name any specific social network providers prepared to offer insurance services. He also noted that regulators would have an impact on the possibility of this occurring.

But he noted that since insurance services are already in the virtual space, social networks could use their networks to extend their reach by offering insurance services to different generations of users. Most likely this could be done through some kind of ‘white label’ arrangement, in which the insurance product is sold under the brand of one company (a distributor) while a separate company (an insurer) actually provides the product.