Possibility of a “big shake” requires big moves by P&C industry: senator

Scott Tannas shared his ideas on how the industry can engage the federal government on the topic of financial help in the wake of a possible earthquake
Tessie Sanci, Associate Editor on May 26, 2017

The potential of a “big shake” in British Columbia or even Quebec requires drastic action from the insurance industry, even if that might ultimately mean not providing earthquake coverage, according to Senator Scott Tannas who spoke at the Canadian Insurance Financial Forum in Toronto on Thursday.That would be an action of last resort if the insurance industry is unable to convince the federal government that it must be more active in ensuring that a major earthquake does not force the industry into insolvency, according to Tannas, who is a former broker as well as the founder and current vice chairman of High River, Alb.-based Western Financial Group.
Tannas suggested that the issue is the industry cannot afford the potential losses following a major earthquake. “In aggregate, the industry could likely handle a $20 billion-event,” said Tannas. “Recent catastrophe models have generated losses as high as $95 billion.”
Tannas’ belief that the government has a role to play echoes the thesis put forward by a C.D. Howe Institute paper published in August 2016. The study suggested the Canadian government should be willing to provide an emergency backstop arrangement, like a bail-out plan, for P&C insurers that would minimize the systemic financial impact resulting from a catastrophic natural disaster.
However, both the industry and the government are prone to procrastinating to making decisions about an event that is predicted to occur at some point within the next 50 years, said Tannas.
Steps for a plan
But there will never be a solution if the industry waits for the government to act and so it is up to P&C leaders to put forward a plan to produce a backstop arrangement, said Tannas who presented his recommendations for the development of such a plan.
The P&C industry must begin by declaring publicly that there is a problem and that they are willing to work with stakeholders to find a solution, said Tannas.
The industry should then convene a “360-degree” task force that would include P&C insurance leaders and individuals who could act as government representatives but who are not currently policy makers. Retired senior public servants from departments such as the federal finance ministry, Office of the Superintendent of Financial Institutions and the British Columbia and Quebec governments can use their professional experience to provide a policy perspective, according to Tannas.
The group should have six months to produce a detailed blueprint for a backstop financial mechanism.
The next step is for this committee to present that blueprint to the federal minister of finance and relevant parliamentary committees in addition to engaging the media and the opposition party in Parliament to discuss the issue. The committee has to be ready to discuss how its plan will work and the dangers surrounding the non-implementation of that plan, said Tannas.
The committee will also invite the government to meet with it within 90 days of the blueprint publication.
“The final step is that insurance leaders have to start moving from ‘we have a problem with no solution’ to ‘we’ve got a problem with a solution and if we don’t have a solution soon, we’re going to have to do something else,’” said Tannas.
Withdraw earthquake coverage?
One possible industry response if the government refuses to implement a backstop measure could be to withdraw hurricane coverage, said Tannas, who noted that when he entered the insurance industry more than 20 years ago, earthquake insurance was not available among many insurers.
“The answer could be that if we don’t get this [government assistance], we can’t offer earthquake insurance anymore. We can’t bet all of our shareholders’ money, all of our employees’ employment, all of our national policyholders’ coverage on 15% of the population,” Tannas said. “That sends a signal to the government.”

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Most insurers met deadline for CCIR market conduct report

Non-compliant insurers may be subject to regulatory action
Staff on May 26, 2017

The Canadian Council of Insurance Regulators (CCIR) announced on Friday that 94% of all insurers that were required to file an annual statement of market conduct by May 1 had done so by the end of that week and that non-compliant insurers may be subject to regulatory action.“Overall, the industry has responded positively to the new information return and collaborative approach CCIR members have adopted for information gathering,” says Patrick Déry, chair of the CCIR in a press release.
The new research report is aimed at consolidating data about how insurance companies deal with the public. It will allow insurance regulators to better understand insurer operations, best practices and conduct and the information can be used to identify trends and potential risks to consumers, the CCIR notes in its announcement.
“The information we are collecting will help Canada’s insurance regulators to be more proactive,” Déry says. “We will be in a better position to see and respond to potential risks and concerns before consumers are impacted.”
The statement was a joint effort made by provincial and federal insurance regulators in order to gather cohesive, comprehensive and consistent information about Canadian insurers. The harmonized approach means that insurers operating in more than one province or territory file only one return, rather than responding to similar information requests from multiple regulators.
For the first edition of this market conduct report, a limited number of insurers were required to comply. However, the goal is for all insurers to be involved in the process. To respond to the information request, the selected insurers, who are also CCIR members, entered into service agreements with the Autorité des marchés financiers to collect and manage the data on their behalf.
“This is another step in the increasing cooperation and information sharing among CCIR members,” Déry says.
Related: Good Measures

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Weak or non existent El Nino to contribute to above normal hurricane season

Anywhere from four to six storms could affect Canada in 2017
Aly Thomson, The Canadian Press on May 26, 2017

Warm water temperatures and a weak or non-existent El Nino will contribute to an above-normal hurricane season this year, the Canadian Hurricane Centre said Thursday.Bob Robichaud, a meteorologist at the Halifax-based centre, said figures released by the U.S. National Oceanic and Atmospheric Administration predicted 11 to 17 named storms, with five to nine expected to become hurricanes and two to four expected to become major in force.
Robichaud said an average of 35 to 40% of storms that form in the Atlantic Basin actually make it into the centre’s Canadian response zone, meaning anywhere from four to six storms could affect Canada this year.
But Robichaud stressed: “It only takes that one storm to make it a bad year, regardless of the number of storms.”
That means Atlantic Canadians should always prepare for the worst by having an emergency kit ready and creating a family plan, he said.
One factor contributing to the active hurricane season is above-normal water temperatures in the Atlantic in the last six weeks, said Robichaud.
Likelihood of El Nino is uncertain
He said there is a chance of El Nino conditions this year, but it’s uncertain whether those conditions will be reached by peak hurricane season during August, September and October.
A strong El Nino – the warming of waters in the Pacific Ocean – can suppress hurricanes in the Atlantic.
Hurricane seasons tend to be quieter in years with a strong El Nino and more active in years with La Nina conditions – like in 2016.
“The key thing here is the uncertainty in the El Nino,” said Robichaud.
Hurricane season runs from June 1 until the end of November, and there has already been one named storm this year.
A rare April tropical storm named Arlene formed over open ocean, but was no threat to land. The next tropical storm will be named Bret.
Robichaud said the Atlantic region has been in an “active period” for hurricanes since 1995. He said active periods can last up to 30 years, but it’s not clear whether we’re currently leaving an active period or still in it.
“We went three years with either average or below average numbers, and then last year – boom – they’re above average again,” said Robichaud.
Storms in 2016
Last year there were 15 named storms, seven of which reached hurricane status, with four of those reaching major hurricane status. A typical year has 12 storms, six hurricanes and three major hurricanes.
However, the centre has said in the past that those numbers can be misleading. They have argued that the number of storms forming over the Atlantic has no connection with the impact on Central and Eastern Canada.
The centre issued bulletins on six storms in 2016, but only three actually made it into the Canadian response zone.
Robichaud said a separate system pulled moisture from Matthew up to the region, causing extensive heavy rainfall and subsequent flooding in eastern Nova Scotia and Newfoundland.

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Allianz GCS names new global head of aviation

Mike Hansen, previously the North American lead for the insurer’s aviation department, will be responsible for global aviation underwriting strategy
Staff on May 25, 2017

Allianz Global Corporate & Specialty (AGCS) announced on Thursday that its North American lead of aviation will be taking on the role on a global scale.Mike Hansen succeeds Henning Haagen, who was appointed to the role of executive for the northeastern U.S. territory within AGCS North America earlier this year. Hansen will report directly to Paul O’Neill, the insurer’s chief underwriting officer of specialty.
In his new role, Hansen will lead AGCS’ overall aviation underwriting strategy. Hansen’s replacement in the role of North American aviation lead for AGCS will be named soon and Hansen maintains responsibility for both the global and North American markets until that occurs, according to the insurer’s announcement.
“I look forward to working with Mike [in] managing our aviation business in a challenging market environment and making the most of opportunities in the months ahead. I am confident this will be a smooth transition,” says Paul O’Neill, the insurer’s chief underwriting officer of specialty.
As part of its aviation practice, AGCS writes a wide range of risks, covering airlines, airports and manufacturers as well as private pilots, suppliers, service providers and drones.

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Spring storm in Alberta and Saskatchewan uproots trees and knocks out power

High winds and rain lead to property damage
The Canadian Press on May 25, 2017

A nasty spring storm has toppled semis, uprooted trees and produced localized flooding throughout much of Saskatchewan and Alberta.In Saskatoon, wind speeds were recorded at 105 kilometres an hour Wednesday afternoon, leaving garbage bins strewn throughout the streets, shingles blown off roofs and at least one unoccupied vehicle was crushed by a fallen tree.
Johnathan Tremblay with Saskatchewan’s power utility said as of 3 p.m. Wednesday afternoon, outages had been reported all across the province, and more than 2,500 calls for service had come in.
Two semis were reported to have tipped over on area highways as a result of the winds.
In Alberta, it was much the same story, with the addition of snow and sleet in Calgary and other areas of southern Alberta.
The wind forced several construction sites in downtown Calgary to shut down to keep the debris from flying around and crews safe.
Environment Canada said as much as 30 millimetres of precipitation fell.
Several parts of the province were affected by power outages, including Calgary and Edmonton.
Epcor Utilities said as of 5 p.m. on Wednesday, 18,000 customers in Edmonton had experienced outages and so many calls came in about downed trees and power lines that the phone system shut down.
Officials said there was some flooding in parts of the River Valley Trails; Mill Creek was in poor condition; and the Edmonton Valley Zoo was closed for the day.
The high winds wreaked havoc at the Edmonton International Airport with officials tweeting that most arrivals were delayed by two hours, and some planes scheduled to land were being diverted.
– With files from CJME, CKOM, CKRM, CTV Edmonton, CTV Calgary

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Ontario ombudsman to investigate driver’s licence suspension system

Some drivers say police or their insurance company, not the province, are informing them about suspended licenses
The Canadian Press on May 25, 2017

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Ontario’s ombudsman is investigating how the government handles driver’s licence suspensions, after hearing that some drivers didn’t know for years their licence had been yanked.Paul Dube says his office will look into how the province communicates licence suspensions and reinstatements to drivers who were suspended for unpaid fines.
Dube says his office has informally suggested improvements to the suspension and reinstatement fee notification letters, but the problems continue, suggesting a systemic problem.
The ombudsman says he has heard from some people who had unwittingly been driving with a suspended licence for years, and when they found out – through their insurance company or police – the government made them go through the graduated licence system again to get them reinstated.
Dube says if those drivers are in a collision, it could be catastrophic if they were not covered by insurance.
The Ministry of Transportation sends about 130,000 suspension notices a year to drivers who haven’t paid traffic fines.

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Winds, storm surge cause some flooding as Okanagan Lake creeps upward

Residents in low-lying areas are being urged fortify flood protection before an expected heat wave this weekend
The Canadian Press on May 24, 2017

The Central Okanagan Regional District reports localized flooding in the wake of a powerful windstorm that swept across southern British Columbia on Tuesday.The district says in a news release that residences in low-lying areas near lakes throughout the region were affected as winds caused a storm surge and whipped up waves, pushing already high water levels past flood stage.
The district says Okanagan Lake rose 4.5 centimetres during the storm, reaching 342.95 metres, five centimetres below its highest recorded level of 343 metres, set in 1948.
The Okanagan Indian Band issued evacuation orders for several lakeside properties southwest of Vernon, while the district warned residents that water saturated ground creates a greater hazard of falling trees in the aftermath of the storm.
Environment Canada says temperatures will drop significantly from the unseasonable highs recorded earlier in the week and the regional district urged residents in low-lying areas to use the break in the weather to fortify flood protection before another heat wave this weekend.
Recent warm weather accelerated the melting of heavy snowpacks throughout the southern Interior, and the River Forecast Centre says the Kettle, Nicola and Salmon rivers are on flood watch.
A spokesman for the Ministry of Forests, Lands and Natural Resources says officials are not concerned that high levels of Okanagan Lake will affect the operation of the William Bennett Bridge, a floating crossing between Kelowna and West Kelowna.
“Operators of the bridge actually have made some adjustments to the tension, to the cables,” says Brian Symonds.
“[The bridge] was designed with the intention to be able to respond to changing lake levels, particularly when they go outside the normal range,” he says.
Symonds says the bridge is even beneficial because it acts as a breakwater and minimizes waves during strong winds, such as those seen Tuesday night.
The district has warned that high lake levels and flood conditions could persist into June.
– With files from CKFR

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CAA ranked Canada’s second-most trusted brand by B.C.-based business school

A total of 12 insurers from the P&C and life insurance industries made the list of 294 companies
Staff on May 24, 2017

The Canadian Automobile Association (CAA) was named Canada’s second most trusted brand in the third annual Gustavson Brand Trust Index, which is published by the University of Victoria’s business school.CAA is the only P&C insurer to make the top 10 of the Peter B. Gustavson School of Business’ annual index and came second to recreation retailer Mountain Equipment Co-op.
The study measures the performance of brands and companies in 26 industry sectors on a range of brand value measures. More than 6,000 Canadian consumers were asked to score brands based on respondents’ perceptions regarding how the brand interacts with its customers; whether the brand acts with integrity; the brand’s social responsibility; and whether consumers would recommend the brand to others. CAA beat out Apple, IKEA and Netflix in its second-place finish.
“Trust is very important to CAA. Our members trust us to provide them with honest and helpful services and advice, and to advocate on their behalf, be it for travellers’ rights, safer roads or consumer protection,” says Jeff Walker, CAA’s chief strategy officer.
A total of 12 insurers made the list of 294 trusted Canadian companies:
CAA: 2
Blue Cross: 65
Manulife: 102
Great-West Life: 116
Sun Life: 121
The Co-operators: 160
Intact Insurance: 183
Canada Life: 187
Green Shield Canada: 189
Desjardins Insurance: 208
Aviva Insurance: 233
Wawanesa Insurance: 243

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Canadians want more government regulation of emerging technology: study

Drones and driverless vehicles are Canadians’ top picks for a regulatory review
Staff on May 24, 2017

Drones and autonomous vehicles are among the emerging technologies that Canadians believe need the most regulatory oversight from government, according to a study from Accenture.Of the more than 1,000 Canadians surveyed for the report, more than 40% say drones carrying video cameras should be a priority for government review and close to 40% say driverless cars and online user agreements also require greater oversight.
“With new, disruptive players quickly entering the market, governments must work with business to provide assurance that there is a regulatory process that creates the best situation for Canadians,” says Dave Telka, a managing director and leader of Accenture’s Canadian public service practice, in a press release.
As well, 30% of Canadians want a regulatory review of connected home products such as technology that controls lights and home security systems. Social media and privacy rights were cited by 26% of those surveyed as needing more regulation. The sharing economy also saw a high response rate with 26% of respondents wanting more ridesharing regulation for companies like Uber and Lyft and 23% wanting more oversight for shared accommodation services like Airbnb.
The emerging technologies that Canadians felt most strongly about greater regulatory oversight are:
Drones and autonomous vehicles
Ridesharing services
Digital currencies like Bitcoin
Online user agreements
The study finds that different generations prioritized the review of different technologies. Millennials between the ages of 18 and 34 were more likely to want increased oversight of music and streaming services while baby boomers place more importance on online user agreements. Boomers are also more likely to want greater regulation regarding drones, autonomous vehicles and ridesharing services.

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