P&C opportunities exist despite challenges
    The Canadian p&c industry is facing a challenging climate but there are opportunities for success if insurers make the right moves in 2012, Ernst & Young says.
    The p&c side of the industry is in a similar situation to the life business.
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Rise of home-grown terrorism leads to new risks in West
    The growth of radical homegrown terrorism linked to or inspired by Al-Qaeda and its associated groups will be a cause for concern in the coming year for countries in the West, according to the January 2012 edition of the RMS Terrorism Risk Briefing.
    The political uprising that has swept through the Middle East and North Africa region, the demise of Al-Qaeda’s leader, Osama bin Laden, and the use of U.S. drone strikes to remove key Al-Qaeda agents have reduced the ideological and operational environment in which Al-Qaeda and its
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Social data will be mined, researcher says
    Social media such as Facebook, LinkedIn and Twitter have become commonplace tools for claims investigators.
    But underwriters?
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Commercial p&c rates expected to remain stable
    The Canadian insurance market remains in a state of transition entering 2012, says Marsh Canada president and ceo Alan Garner.
    “Insurers are expected to be extremely disciplined in their underwriting and seek rate increases where they can,” he said in ‘Navigating the Risk and Insurance Landscape: Canada Insurance Market Report 2012.’
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Insurers question rehab group figures on assessments
    Recent media coverage of an Ontario auto insurance survey conducted by the Alliance of Community Medical and Rehabilitation Providers may be a little misleading, the Insurance Bureau of Canada’s Ontario vp says.
    “We’re concerned that the same numbers keep getting put out without any indication of the scientific validity of the survey itself,” Ralph Palumbo said.
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New research suggests major earthquakes
    A new white paper from EQECAT says that ‘giant’ earthquakes — once assumed to strike randomly with time — actually occur in clusters.
    The report, ‘Spatial and Temporal Earthquake Clustering: Part 1: Global Earthquake Clustering,’ makes the case that we are currently experiencing a global cluster of earthquakes exceeding magnitude 8.5. ...More

Costa claims could reach US$1bn
    Injury and other claims from the sinking of the Costa Concordia could push the total cost to insurers as high as US$1bn — the biggest marine loss ever absorbed by the industry, the U.K.’s Guardian newspaper quoted an unidentified analyst as saying.
    Another report quoted Nick Johnson, a London-based insurance analyst at Numis, saying the total insurance loss is likely to be between US$600m and US$800m.
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Autoplan price approaching $1m mark
    The price of an ICBC Autoplan appointment is expected to break the $1m mark in 2012 — if it hasn’t already.
    But Vancouver insurance consultant Robert O’Connor said the transfer value of the basic Autoplan licence could plummet if the public insurer ends its moratorium on issuing new appointments.
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Insurers in N.S. prepare for April auto changes
    Insurers have expressed some optimism for changes to the Nova Scotia auto insurance system due to start taking effect Apr. 1.
    Mandatory benefits under Section B of the Standard Automobile Policy will be increased and insurers will be prohibited from increasing premiums if no claims are made.
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Forecast 1: Brokers facing changes
    Independent brokers will be tapping further into technology this year to keep up with changing consumer demands — and cope with challenges posed by direct writers, said new Insurance Brokers Association of Ontario president Rick Orr.
    Brokers and the broker insurers both need to better understand the demands of today’s consumer.
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IBAC ceo expecting increased regulatory scrutiny
    Regulators in Ottawa, the provinces and overseas will intensify their scrutiny of financial institutions in 2012, the ceo of the Insurance Brokers Association of Canada Dan Danyluk predicts.
    “The financially important services are going to be looked at in terms of their impact, the interrelationship of various lines of business.
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Internal option proposed for p&c solvency assessment
    Work began on a new structural outline two years ago and a group of industry representatives and regulators published a preliminary report last July.
    The P&C Minimum Capital Test advisory committee explains in the new paper that insurers are moving toward internal capital models for internal risk management, capital management, regulatory reporting requirements and rating agency assessments.
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Analyst warns insurers to focus on underwriting profitability
    Standard & Poor’s says the credit fundamentals of the overall Canadian p&c industry are stable and only minimal rating changes are expected — but there are issues insurers will need to watch out for.
    “We believe p&c insurers will need to focus on underwriting profitability, since economic and industry-specific concerns, such as low investment yields and pricing adequacy, are likely to continue in the new year,” Standard & Poor’s credit analyst Hardeep Manku wrote in a new report titled ‘Credit Fundamentals For Canadian Property And Casualty Insurance Industry Are Stable, But Challenges Remain.’
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OSFI updates reinsurance change guidelines
    The Office of the Superintendent of Financial Institutions last week released an updated question-and-answer document further explaining new rules on reinsurance security arrangements.
    Under the new scheme, which takes effect Jan. 1, ceding companies — insurers purchasing reinsurance — must ensure that the reinsurer has pledged assets located in Canada sufficient to back up the reinsurance contract (Thompson’s, Dec. 5 issue).
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Deals, demutualization changing landscape
    There was the biggest-ever deal. The biggest shareholder challenge in recent memory. And some of the biggest natural catastrophe losses to go along with them.
    2011 will be remembered for many big events, but perhaps the most important for p&c insurers was their gaining the ear of government on the biggest issue affecting the biggest segment of the industry.
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AG cites escalating claims costs
    The annual report released this month by Ontario’s Auditor General concludes that drivers in that province pay significantly more for auto insurance than other Canadians. And insurers are cheering the fact that the report has highlighted the main reason for this — escalating accident claims costs.
    The Insurance Bureau of Canada’s Ontario vp, Ralph Palumbo, noted the Auditor General Jim McCarter cited a 150% increase in claims costs from 2005 to 2010 while the number of injury claims rose only 30%.
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Domino effect concerns are unfounded, Economical vp says
    Concerns over a domino effect from the demutualization of Economical need to be put to rest, the company’s senior operations vp says.
     “The domino theory was flawed when it was applied in the Cold War and it’s flawed now,” The Economical Insurance Group’s David Crozier said at the Insurance Institute’s recent ‘At the Forefront’ breakfast in Toronto.
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Larger rate reduction ordered in Manitoba
    Manitoba Public Insurance must reduce its 2012-2013 basic Autopac rates by 8%, the province’s Public Utilities Board ruled.
    MPI applied in June for a rate cut of 6.8%. The additional 1.2% will cost the insurer about $10m, according to president and ceo Marilyn McLaren.
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Research findings shed light on risk-taking decisions
    Research into how the human brain makes risk-taking decisions and how quickly it can learn the correlations between risk and reward has won the 2011 Lloyd’s Science of Risk Prize.
    A team led by Klaus Wunderlich of University College London used the latest brain-scanning technology to triumph over more than 60 other entrants to take the top prize.
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ICBC seeking to raise basic rates, reduce optional
    Citing higher bodily injury claims and declining investment income, the Insurance Corp. of B.C. is seeking its first basic rate increase in four years.
    The insurer would not put a percentage on the hike until it filed a formal rate application with the B.C. Utilities Commission, expected soon.
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New weather risk partnership struck
    Insurance Bureau of Canada director of research Robert Tremblay is one of three volunteer co-chairs of Toronto’s WeatherWise Partnership, a new group of more than 50 public, private and not-for-profit organizations from across the region that have begun working together.
    The object is to better protect residents, organizations, infrastructure and the environment from extreme weather.
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Flood cover presents opportunity
    Canada is the only G8 country that doesn’t have homeowner insurance coverage for overland flooding. And the Institute for Catastrophic Loss Reduction wants to change that.
    Managing director Glenn McGillivray says it would be good public policy and good for business.
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Fairfax further diversifies its investments
    Fairfax Financial Holdings is looking to further diversify its investments by bidding $71m for a restaurant operation and picking up more shares of a toy company following its purchase this summer of tableware retailer William Ashley China.
    Fairfax is offering $7.75 a share for Prime Restaurants Inc., which operates several chains including East Side Mario’s, Casey’s and D’Arcy McGee’s.
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Heavy cat year leading to home premium hikes
    Home insurance premiums will likely continue rising in Alberta, as elsewhere, but that’s not necessarily due to the $700m in claims arising from the fire that swept through Slave Lake last May.
    Some news media quoted Peace Hills Insurance ceo Diane Brickner as telling a business luncheon in Edmonton last week that claims from the fire would force the company to raise rates.
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ICLR plan called ‘ambitious but achievable’
    The Institute for Catastrophic Loss Reduction has identified urban earthquakes, water damage, extreme wind and wildfire as its primary concerns for the near future.
    In its strategic plan for 2011 to 2015 the ICLR outlines strategies to ensure it continues to achieve its mitigation objectives — including quality research, effective partnerships, industry education and consumer awareness regarding those four main perils.
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Insurers set to help guide N.S. auto reforms
    The Insurance Bureau of Canada supports the direction of Nova Scotia auto insurance reforms announced earlier this month but has expressed concern about the complexity of implementation issues involved with such comprehensive changes.
    “IBC applauds the Nova Scotia government for its direction with these reforms and the thoughtful and consultative process that led to them,” IBC Atlantic vp Bill Adams said.
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RSA commits to Canada with reorganization
    RSA Group has announced major structural changes that will see its growing Canadian arm operate as a stand-alone unit.
    The group’s operations here had been part of an international group which included Ireland, Italy and Scandinavia.
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Ontario report highlights staff challenges
    A new report from Ontario has found p&c growth potential in the province but the authors warn that access to specialized staff continues to pose a major challenge.
    The Insurance Bureau of Canada, together with the Toronto Financial Services Alliance, released a new economic impact study conducted by the Conference Board of Canada and a consultancy firm. ...More

Brokers, insurers pleased with moves aimed at balance
    Brokers and insurers in New Brunswick are pleased that proposed auto insurance system changes appear to strike an appropriate balance for the industry and consumers.
    “The recommendations brought forth in the report, if adopted, are broad enough to stop consumers from falling between the cracks but not so broad as to greatly increase premiums or reduce competition,” Insurance Brokers Association of New Brunswick president Terry Gaudet said following the release of a report from a working group looking into the province’s system (Thompson’s, Nov. 4)
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Reinsurers post solid results despite catastrophic challenges
    The world’s largest reinsurers are celebrating strong earnings after the first nine months of 2011 despite major loss events at the beginning of the year.
    For Swiss Re the overall effects were moderate — leaving it with a net income of $1.3bn.
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Canadian Tire enters p&c insurance fray
    Insurance product provider Johnson Inc. is partnering with Canadian Tire Corp. to sell and service personal home and auto coverage.
    Sold under the name Canadian Tire Insurance Services (CTIS), the coverage will be promoted by the merchandising giant and primarily underwritten by Unifund Assurance Co. — which shares common ownership with Johnson, a member of the RSA Group since 1997.
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N.B. working group calls for award cap hike
    New Brunswick’s auto insurance working group has concluded that the province’s minor injury definition needs to change and its cap on awards for minor injuries should be raised.
    Under the current legislation, the legal definition of ‘minor personal injury’ is an injury that does not result in permanent serious disfigurement or permanent serious impairment of an important bodily function caused by a continuing injury which is physical in nature.
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Consultants hired to tally total cost of fraud
    The Insurance Bureau of Canada has retained consultants to peg exactly how much fraud is costing Canadians.
    IBC Ontario vp Ralph Palumbo said at the bureau’s 11th annual regulatory affairs symposium in Toronto that a figure of $1.2bn has been bandied about for some time as the total cost of insurance fraud in Canada per year.
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IBAO 1: Solutions elusive as brokers lose market share
    Brokers in Ontario are losing market share to their direct counterparts and opinions are divided on how technology may help to stem the erosion.
    Insurance Brokers Association of Ontario chair Bryan Yetman said at the organization’s 91st annual convention that from 2007 to 2009 broker market share for all lines sat at 63% (in Ontario).
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IBAO 2: High-tech tools present problem
    The barrage of new high-tech tools available for consumers is making business increasingly difficult for brokers, the incoming president of the Association has warned.
    “If every company develops a mobile app and every company develops their own quoting website, what does this do for us as brokers or consumers?” Rick Orr, of Orr Insurance Brokers in Stratford, asked at the convention.
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EGI Financial acquires stake in Danish firm
    Toronto-based EGI Financial Holdings has acquired a controlling interest in a Danish holding company with an insurance subsidiary which sells products similar to its Echelon General unit.
    QIC Holdings’ newly launched Qudos Insurance is a p&c company based in Copenhagen.
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Brokers cheer bank website sales regulations
    To an enthusiastic welcome from Canada’s p&c brokers last week, federal Minister of State, Finance, Ted Menzies announced the government will be bringing in regulations that prohibit the promotion and sale of unauthorized insurance products by banks on their Internet websites. ...More

Analyst says Intact may find motivated sellers
    CIBC World Markets is the second investment firm to suggest Economical Mutual may end up as Intact Financial’s next acquisition target once demutualization rules are finalized.
    As reported in Thompson’s Oct. 10, GMP Securities listed Intact and Westaim Corp. as likely acquirers.
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Attracting talent remains major p&c industry challenge
    The shortage of technical skills in p&c insurance is at a five year high in the U.K. — with more than 80% of firms responding to a survey there reporting a detrimental effect on business performance due to the challenges of attracting talent.
    And the difficulties are not unique to the U.K. p&c marketplace.
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Demutualization could spur M&A activity
    An open door for demutualization will likely increase merger and acquisition activity in the p&c sector as it did for lifecos more than a decade ago, a report from GMP Securities suggests.
    It identifies companies with what it calls a “strong possibility” of being acquired.
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Insurers, brokers offer varied credit views
    Insurers have expressed vigorous support for the use of credit scoring for determining risk but brokers and consumers are more critical in their submissions to regulators on the issue.
    The Insurance Bureau of Canada told the Canadian Council of Insurance Regulators that it neither supports nor opposes the use of credit scoring — but it does believe that providing insurers with the ability to include it in their toolkits “ultimately leads to more consumer choice.”
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Report finds home policyholders are happiest in Quebec
    Home insurance customers in Quebec are considerably more satisfied than are customers in the West, Ontario and Atlantic regions, a study by J.D. Power and Associates shows.
    Its 2011 Canadian Home Insurance Study found widely diverse perceptions and satisfaction rates that are based on five factors: interaction, price, policy offering, billing and payment and claims.
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NICC: Campbell calls for adequate pricing of quake risks
    Insurers have a duty not only to provide earthquake cover but also to charge appropriately for it, the ceo of Zurich Canada ceo said last week.
    “We do Canada no favours by underpricing quake coverage,” Alister Campbell told the Vancouver conference.
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NICC: U.S. fraud-buster warns insurers
    Organized insurance fraud rings in the U.S. are growing in size and sophistication and they’re heading north, a leading American fraud-buster is warning.
    Joseph Wehrle said at a conference session that fraud rings do not respect borders — citing a Somali-American auto fraud ring operating in Minnesota that moved into Canada after feeling the heat from U.S. investigators.
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CAMIC weighs in on demutualization
    Canada’s Finance Department is not publishing the submissions it has received on demutualization regulations, nor is it even identifying which stakeholders responded to the call for consultations.
    But the Canadian Association of Mutual Insurance Companies has posted its position paper on the proposed regulations, drafted long before the July consultation process.
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Canadian concern over privacy issues growing
    Canadians view privacy as a fundamental right and companies have been advised to approach such issues carefully.
    Privacy Commissioner of Canada legal counsel Daniel Caron said at RIMS Canada’s 36th annual conference in Ottawa that a recent survey found that Canadians’ concern about privacy — especially in the virtual world — is growing.
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Kingsway insider trading case settled
    A former Kingsway Financial accountant and her son have agreed to pay more than $1m in a settlement with the Ontario Securities Commission over insider trading and illegal tipping charges.
    Under the settlement agreements, Helen Kuszper is permanently banned from trading securities and acting as an officer or director of a public company.
    Paul Kuszper is banned from trading securities and acting as an officer or director of a public company for a minimum of 15 years.
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Insurers’ customer satisfaction rising
    Despite widespread premium increases, J.D. Power and Associates has found that customers in Canada’s West and Ontario/ Atlantic regions of Canada are notably more satisfied with their auto insurance company compared with 2010.
    The Canadian Auto Insurance Study, now in its fourth year, measures insurance customers’ experiences with their primary insurer.
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Soft reinsurance market expected to be the norm
    In the absence of a massive global event — such as another financial crisis combined with significant natural catastrophe losses — the overall soft reinsurance market that has persisted since 2004 could become the norm for the foreseeable future with hardening occurring along geographical and business lines rather than across the broader market. ...More

Tory platform promises action on fraud
    Ontario’s Progressive Conservatives are explicitly mentioning insurance and insurance fraud in platform for the upcoming provincial election, scheduled to take place Oct. 6.
    In its ‘Changebook’ platform document, the party said it will create a special unit of Crown attorneys and the Office of Financial Crimes-Prosecution dedicated to fighting fraud.
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