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Upfront | Canadian Insurance


Canada’s Lack of TRIA

After a period of mild suspense, the U.S. Congress stirred itself last month to finally renew the Terrorism Risk Insurance Act. If RIMS had its way, TRIA’s life span would be “indefinite.” Carolyn Snow, one of the organization’s past presidents who once testified before the Senate on the issue, told Top Broker, “The problem with having short periods of time just means you’re constantly working on it. And there are other issues as an organization that we want Congress to act on.”

Yes, that would be convenient, especially when the latest extension will phase in an increase from $100 to $200 million as the threshold for Washington loans to kick in on acts of terrorism. Granted, the federal share of losses is being trimmed from 85 percent to 80 by 2020, but Britain’s Guardian newspaper has still been withering over TRIA: “The program has cost the government one million a year— almost nothing—but has made an estimated $40 billion in revenue for insurance companies, who have never paid a claim, or given a dime to the government for their reinsurance protection.” Snow admits, “…Even the Boston bombings that occurred [almost two years ago] has not been certified as a terrorism act.”

Which is not to say that a case can’t be made for a reinsurance framework, and those Down Under might be on to something. Insurance companies in Australia can reinsure their eligible terrorism losses through a tiered system of premiums paid to the Australian Reinsurance Pool Corporation. The premiums are partly set by postal code and population density, with the total value of the scheme coming to $13.4 billion Australian.

Meanwhile, here at home—where we’ve just experienced the two worst terrorist attacks in the country in decades—we have nothing. While the media examines Stephen Harper’s new anti-terrorist laws, little attention is paid to the fact that we have no government reinsurance framework in place. At all. “Canada does not have a similar Act,” explained Finance Department spokesperson Stephanie Rubec in an email to Top Broker. Okay. Are there any plans to develop a Canadian Terrorism Insurance Act?

“The Department does not comment or speculate on possible policy actions, or discuss what might be under consideration.”

It may be that the urgency simply isn’t felt. After 9/11, says RIMS chair of external affairs Janice Ochenkowski in Chicago, Canadian insurers “have not constricted the coverage limits, and they haven’t increased the pricing outside market standards. If market coverage is available, you don’t need a legislative mandate regarding the coverage.”

“The insurance industry continues to monitor developments and adapts to changes in risk as necessary,” the Insurance Bureau of Canada told us in a statement. Of course, after Martin Rouleau’s deadly hit-and-run attack in SaintJean-sur-Richelieu, Que. and Michael ZehafBibeau shocked the nation by shooting his way into the Parliament Buildings, security protocols on the Hill and military installations have gone through a serious overhaul. They were deemed more than necessary, but downright urgent.



For our 110th issue, we wanted to give you something really special, and some of us here have a nostalgic fondness for the great pulp science fiction mags of olde, particularly the covers painted by an artist named Mel Hunter (who created his own lonely, whimsical robot for the Magazine of Fantasy and Science Fiction). We wanted something that had a “vintage” feel—the great covers of Liberty, Thrilling Wonder Stories, Collier’s—while offering a hint to the future. And hey, since we offer an article on space insurance, why not a homage to one of the greats? So we went out and recruited our own great: Carl Wein of Belleville, Ont., who’s done stunning illustrations for Entertainment Weekly, The Walrus, SubTerrain and others. Then we let his creation, “Buddy,” run loose on our pages.



So as brokers and execs fled the cold for cocktails in the Shrangi-La Hotel in downtown Toronto in late January, the big question (for some of us) was why CNA—which has a sizeable footprint across North America, with manufacturing, construction and marine cargo, not to mention making itself felt in the UK and Europe—has had such a low profile in Canada in terms of specialty. “We’ve been a capacity provider at Encon for many years,” explained CNA Canada president John Hennessy. But in that relationship, there was a non-compete clause that meant Encon was the distributor for specialty products up here, and CNA wasn’t able to write specialty business in Canada except through its partner. Not anymore. The two came to a parting of the ways last April, with only some legacy business being handled until the end of the policies’ terms. So we can expect CNA to cast a much bigger shadow in specialty in the coming months, with line launches planned as well for Vancouver, Calgary, Montreal and Winnipeg. “We maintain a narrow distribution platform,” Hennessey told his audience. “We aren’t trying to have our shingle on every corner. We want to work with experts in what we do.”

As the wine glasses and hors d’oeuvres were passed around, Michael O’Connor, the company’s vice-president and Chief Underwriting Officer for specialty told reporters, “We’ve already got a really strong broker presence across Canada.” He says CNA plans to keep brokers it already has “deep relationships with” closer, and as it enters the specialty business on a direct primary basis, the company plans to work with them “in a more focused way.” So the firm will be prioritizing care and feeding of, at least for the initial short term, “our existing brokers that have brought us to the dance.”

New lines include everyone’s favourite, cyber liability, as well as crime (e.g., employees swiping company funds or those of a third party) and employment practices (the usual roll call of sins: wrongful termination, discrimination, harassment and other acts against employees).

To sell CNA specialty products, Hennessey says brokers will need “technical expertise and market reach.” The company wants to deal “with brokers who are on the same level of technical expertise as we have in underwriting and claims.”


Stupid Claim Tricks

Hell hath no fury like a driver inebriated. Last year, after downing 20 beers at a work party, a Winnipeg man doused his new pickup truck with gasoline, set it on fire and watched it explode. At first, coworkers corroborated a story that the truck was stolen, but they eventually ‘fessed up. The owner, who admitted he was “just mad at the world,” was convicted of arson causing damage to his own property and fined $2,000. Although the driver won’t have his $40,000 truck to remind him of his rager, permanent scars on his chest and arms should spur his memory.

This cautionary tale, like something out of Tosh.0, comes from those fun folks at Manitoba Public Insurance, who wanted to share the top auto frauds in the province for 2014. Also on their hit parade is the case of the magic hail. A guy opened a hail claim a few days after a storm swept through his community, but the adjuster quickly noticed that half the dents on the man’s damaged car had interestingly hammerhead impressions. MPI loudly cleared its throat, ahem, and the man withdrew his $10,000 claim. Throughout the year, MPI’s special investigations unit flags the oddest fraud cases, and in December, they get together with their media relations team to whittle the 35 or so files down to five.The list, says media relations coordinator Brian Smiley, is meant “to send the message that … our front-line staff are diligent in recognizing what may be a suspicious claim.” In preparing Smiley’s people, he says one purpose is “to catch the attention of the media in order to send the message.”

Yes. Guys who give their cars a Viking funeral and a hammer shower do get our attention.