Canadian Underwriter

Does Canada have the adjusting resources to handle back-to-back catastrophes?

June 6, 2018   by Jason Contant

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Does Canada’s property and casualty industry have enough resources in place to adjust major catastrophes that occur in tandem or right on the heels of each other?

Industry resources in Ontario were tested after a severe ice storm in April, which caused almost $200 million in insured damage. Two weeks later, in May, a powerful windstorm blew through Ontario and Quebec with with hurricane-force wind gusts, costing insurers another $410 million.

At least two independent adjusting firms operating in Canada reported that they had called in resources from inside the country, as well as outside the country (including the United States), due to an extremely large volume of calls. Word on the street has it that auto adjusters had to be brought in to handle home claims.

All of which raises the question: how are resources for dealing with cats? Are there enough adjusters in Canada?

“Probably not,” said Marie Gallagher in an interview with Canadian Underwriter. Gallagher is the branch manager of Kernaghan Adjusters in St. Catharines, Ont.

One of the reasons, she said, is that while some insurers may expect independent adjusters to be “on standby” in the event of a cat, “for many years now, they are no longer assigning the claims that we need for our adjuster-trainees to cut their teeth on.” Instead, there may be an attempt to reduce expenses by using contractors as a substitute for independent adjusters or by using telephone adjusting in-house.

Ron Biggs, national property claims director at RSA Canada, says the company does work with a network of preferred independent contractors in the event of a catastrophe. “Our approach to onboarding adjusters, contractors included, is by peril and geography,” Biggs said. “While wind and hail are easier catastrophes from a claims perspective, fire and water cats can involve bringing on additional adjusters with that specific expertise to complement the RSA team’s efforts.

“As for managing claims by phone, this is something all insurers are doing. It doesn’t just save costs but also expedites claims resolution.”

Gallagher said independent adjusting is often referred to as a “feast or famine” industry. “Adjusters will work long, often gruelling hours to get the job done,” she said. “In times of a catastrophe, we cancel vacation plans and often our families don’t see us for weeks, sometimes longer.”

Is there a strategy for dealing with claims arising from back-to-back cats? “I imagine that, like Kernaghan Adjusters, most independent adjusting firms independently compile a list of property adjusters across the country each year who are willing to be part of their cat team,” Gallagher said. Kernaghan prefers that insurers reach out to local and national resources rather than resort to bringing in adjusters from the United States. But sometimes, “as a knee-jerk reaction,” it’s not unusual for an insurer to seek assistance outside the country before considering Canadian resources.

Biggs said capacity, peril and geography will all play a part in whether RSA works with experts from other regions, including international resources. “For instance, we supplemented the team managing claims resulting from the Fort McMurray wildfire with resources from across Canada and the United States,” he said.

Gallagher said it’s not uncommon to receive a call from an insurer at the beginning of a cat asking, “How many claims can you (the firm or branch) take?” Or they might ask if the adjuster could take, for example, 20, 200 or 1,000 claims.

Just like an insurer may have service agreements in place with independent adjusters so they know who to call and when, independent adjusters also have plans in place, Gallagher said. In the event of a cat, insurers faced with an adjuster shortage have access to the Canadian Independent Adjusters’ Association’s (CIAA) Catastrophe Response Resource Plan, allowing them access to a number of CIAA member firms – and adjusters within those firms – across the country.

So what about the story that auto adjusters may have been pitching in to handle a home property damage claim during the Ontario windstorm event?

“I’ve never experienced or heard of a non-licensed property adjuster suddenly being asked to assist with an influx of property claims due to a catastrophe,” Gallagher said. However, she added that in an effort to help immediately service the needs of the stakeholders involved, certain criteria need to be met. For example, there must be immediate contact with an insured to reassure them that their claim has been assigned, that they will be taken care of and to determine any emergency requirements. “At this point, it is ‘all hands on deck’ and if it takes an auto adjuster to make that initial contact before handing the claim off to a licensed property adjuster, then so be it,” she said.

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1 Comment » for Does Canada have the adjusting resources to handle back-to-back catastrophes?
  1. Skip McHardy says:

    As a catastrophe response manager of a Canadian Independent Adjusting (IA) firm, I take exception to a few things in the above article. There are many reasons that insurance companies utilize companies like ours, which use Canadian and US ‘cat’ adjusters in addition to local contractors to help with large claim events.

    First, “Independent Adjusters” in Canada are not really independent. They are working regular non-cat claims in their home markets sometimes for a few different Insurance companies. They are employees of Independent Adjusting firms whose main business is servicing the daily claims of a carrier to support bricks and mortar offices.

    Second, there will never be enough Canadian Independent Adjusters to service large cat events. Even when a Canadian IA firm shifts adjusters from other parts of the country, they come with their personal “pending” claims work from back home. True ‘cat’ adjusters do not work daily claims. They come to an event with one focus only – settle the carrier’s claims as fast as possible in the manner that particular carrier directs them, and in the format that carrier uses. They stay until the work is completed.

    Third, US adjusters are trained much differently. Whereas Canadian adjusters are far more knowledgeable because they learn a very broad knowledge of insurance (liability, property, auto, medical, etc.), US cat adjusters specialize in property flooding, fire, wind or hail. Most US adjusters are former contractors who are constantly trained in building methods, material identification, and peril specific information.

    Most importantly, US adjusters are taught how to quantify damages and, write the estimate of damages. The majority of Canadian adjusters are not qualified or trained to prepare damage estimates and require a contractor to come in and prepare this key part of a property claim.

    With catastrophic events increasing in severity and frequency, utilising a company that has pure ‘cat’ adjusters from across North America, makes sense with today’s customer expectations.

    Managing nothing but Canadian catastrophe response for nine years, it is clear that we are in a stage of major disruption with technology and new processes. If you want to know more from a Canadian cat response company, please feel free to contact me.

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