December 16, 2021 by Canadian Underwriter Staff
Bernard McNulty, chief agent and head of claims, Canada, Allianz Global Corporate & Specialty
A big lesson for us, and for many insurers from 2020 and into 2021, was understanding our contractual language or policy language and knowing what our obligations are. There is significant COVID-19 coverage litigation in Canadian courts right now, including disputes over whether policy wordings covered business interruption under the circumstances of COVID-19.
We rely heavily on our engineering expertise, but our engineering staff was largely grounded. Some inspections were not carried out because of pandemic restrictions. Completing a desk inspection of a complex facility is really not the same as visiting that facility in person, whether that’s a power generation facility or a mine.
Another challenge for the industry is social inflation. Canada saw plaintiff-friendly judgments and awards continue to creep up. Those costs directly impact even the most basic slip-and-fall claim for all insurers in Canada.
Climate change has been a big theme. An unprecedented heat wave in Western Canada in 2021 ultimately led to over 6,000 forest fires. We also had a hurricane and many storms, particularly in the Prairie provinces. That theme is going to continue through 2022. There was also an unprecedented number of cyber incidents and threats in 2021. I think those threats are on the rise.
We’re looking at succession planning to manage our talent pipeline. If we think a retirement is coming, we get ahead of that and make sure we have a qualified individual ready to step into that role. For engineers, we usually go outside of the industry to find somebody with the right background.
We see reinsurance costs rising in Canada. Some think of Canada as somewhat of an isolated market, but there’s no question the European floods and the cat losses in the U.S. are going to affect reinsurance pricing globally. We’re going to see some of that cost ultimately get passed on to clients.