MarketPlace

Canadian Market

IBC tours Atlantic Canada with climate change adaptation message

Insurance Bureau of Canada (IBC) took its message of climate change adaptation to Atlantic Canada in February.

Speaking to the Saint John Board of Trade on Feb. 22,IBC president and CEO Don Forgeron observed that water damage losses in New Brunswick have almost quadrupled over four years — escalating from $7 million in 2005 to $23 million in 2009.

“That’s huge,” he said. “And when we compare this relative growth to losses from fire, water wins the race, hands down.”

Insured water losses in Nova Scotia almost doubled over four years, increasing from more than $20 million in 2005 to more than $38 million in 2009.

Acknowledging that the federal government committed close to $150 million towards a climate change adaptation strategy, Forgeron said the sum “is not enough to address the adaptation problems our country faces.”

Forgeron said he met with Finance Minister Jim Flaherty during pre-2012 budget consultations and encouraged the federal government to “undertake a focused effort to work with all other levels of government to improve water and wastewater infrastructure.”

Canadian commercial rates expected to remain stable across most lines

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 substantial catastrophe losses and reduced investment returns have 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.

Claims

Canadians can anticipate more intense wildfires over the next century

Canadians can anticipate more intense wildfires that are too difficult to stop using traditional fire fighting techniques, according to Mike Flannigan, a senior research scientist with Natural Resources Canada.

Flannigan presented his team’s latest research in Vancouver at the annual meeting of the American Association for the Advancement of Science.

“It’s going to be incredibly difficult in the future to manage forest fires because the intensity of forest fires is going to be increasing,” Flannigan is quoted as saying by PostMedia News.

Flannigan predicted two to three times more fire activity in the northern hemisphere by the end of the century. “Virtually all of Russia, Canada, the U.S.” will be affected, PostMedia quotes him as saying, adding that his analysis represented a conservative estimate.

Ontario court says 60-day mediation period is solid,despite serious case backlog

Despite a serious mediation case backlog in Ontario, claimants may nonetheless proceed with legal actions against insurers if mediations are not completed within 60 days of an application for mediation being filed with the Financial Services Commission of Ontario (FSCO), the Ontario Superior Court has ruled.

Section 19.1 of the province’s Dispute Resolution Practice Code says “…mediation must be concluded within 60 days of the filing of an application for mediation.” This timeline holds firm whether there is a case backlog or not, the court confirmed.

“While some accident victims may choose the court route, others will not, and FSCO can continue to try to get sufficient resources/mediators to comply with the 60-day period,” Ontario Superior Court Justice James Sloan wrote in a decision issued on Feb. 8. “Alternatively, FSCO could seek a change in the 60-day time period and/or ask for legislative direction to extend the 60-day period in appropriate circumstances.” FSCO recently announced it is engaging the services of private mediation companies to help clear up the case backlog.

Regulation

CCIR looking at rules for insurance sales online

The Canadian Council of Insurance Regulators (CCIR) has circulated an issues paper about issues raised by insurance sales on the Internet.

In particular, the paper identifies the absence of a regulatory framework specific to the distribution of online financial or insurance products. It lists seven desired consumer protection goals related to the online sale of insurance.

The paper does not address the role of social media in the online distribution of insurance, although stakeholders are invited to comment on this.

The deadline to submit comments to the CCIR about the issues paper is Apr. 27.

“While there is legislation in all Canadian jurisdictions governing electronic commerce in Canada, none applies specifically to financial products, unlike the European Union and the United Kingdom where there are regulations designed specifically for the distance marketing of financial services and general insurance, respectively,” the paper observes.

The full issues paper can be found at:

http://www.ccir-ccrra.org/en/ init/Elec_Commerce/ECC%20issues%20paper%20EN.pdf

Risk Management

Businesses concerned about reputational risk, but only 10% of these events are insurable: Willis

About 95% of major corporations have suffered at least one major reputation crisis in the last 20 years, but less than 10% of these events are insurable, according to Willis Group Holdings.

Phil Ellis, CEO of Willis Global Solutions Consulting Group, spoke at the Risk Frontiers conference in London, United Kingdom recently. He researched the performance of 600 publicly held companies, finding that major firms suffer a significant reversal of fortune once every seven years.

Furthermore, 19 out of 20 companies suffered at least one such reversal over the 20- year time span of the research.

“About 50% of the events we researched had to do with problems with the company’s business strategy or model,” he said. “Fifteen per cent were from lawsuits, 10% were due to M&A problems. Notably, until 2011, natural catastrophes were not a factor in these reputation crises.”

Given that the insurance industry primarily offers protection against named perils, less than 10% of major reputation-damaging events are due to an insurable, peril-related event, Ellis said.