Marketplace

CLAIMS

New arbitration hearing in Ontario MIG dispute

A delegate in the Office of the Director of Arbitrations for Ontario’s auto insurance regulator has rescinded an earlier decision related to the Minor Injury Guideline (MIG) in the Statutory Accident Benefits Schedule (SABS) and ordered a new arbitration hearing.

In Scarlett v. Belair Insurance Company, an arbitrator with the Financial Services Commission of Ontario found in a preliminary hearing that Lenworth Scarlett’s medical and rehabilitation claim, after a 2010 vehicle accident, was not subject to the $3,500 limit for minor injuries.

In an appeal ruling in lateNovember, Director’s Delegate David Evans cited several flaws in the arbitrator’s decision. Evans ordered a new full arbitration hearing with a new arbitrator to address all issues between Scarlett and Belair, not just those addressed in the preliminary hearing.

Evans notes the arbitrator “did not direct his mind to the relevant test of whether Mr. Scarlett’s impairment was predominantly a minor injury” when he arrived at his decision.

Most firms in Calgary had emergency plans

A poll by Ipsos Reid found most surveyed Calgary-based businesses had emergency response plans (ERPs) in place before the June flooding, but there were gaps in plans, instructions and protocols.

Ipsos Reid did 50 phone interviews with businesses with 100 or more employees in Alberta that were directly affected by the flooding. Of those surveyed, 80% said they had an ERP prior to the flooding, and 81% rated their plans as effective.

Of those who reported having effective ERPs, only 19% said they were able to reach employees or communicate well. Among those who said their plans were ineffective, 67% said they had gaps in contact information.

Claimant not precluded from pursuing mediation

A Financial Services Commission of Ontario (FSCO) arbitrator has ordered Unifund Assurance Company to pay Kadian Augustin treatment expenses of about $2,935, plus interest, after the company denied the auto claimant medical benefits because she had refused to attend insurer’s examinations.

FSCO arbitrator Susan Sapin noted that Augustin is not precluded from pursuing mediation for her claim.Injured in a vehicle accident, Augustin made a claim to Unifund Assurance for medical and attendant care benefits, and a weekly non-earner benefit (NEB), meant for claimants who suffer “a complete inability to carry on a normal life as a result of and within 104 weeks after the accident.” She was unemployed and a caregiver to her two children, but had not purchased optional coverage for caregiver benefits.

Unifund Assurance refused to pay for medical benefits on the basis that Augustin failed to attend insurer’s examinations to determine whether her accident injuries fell within the Minor Injury Guideline (MIG), and further refused to pay an NEB, reporting that Augustin did not apply for it, Sapin noted.

The insurer’s notice to Augustin “does not state that Unifund ‘believes’ the MIG applies, or why,” as well as fails to state “medical reasons” for refusing to pay the benefit claimed, Sapin wrote. “I find it is reasonable to require an insurer who chooses to refuse to pay an initial claim to counter with something more than simply a desire ‘to determine if your impairment is predominantly a minor injury as described in the [MIG],’ as Unifund has done in this case.”

REGULATION

Position on electronic commerce releasedThe Canadian Council of Insurance Regulators (CCIR) released its final position paper on the use of electronic commerce in insurance products, citing the need for consumers to have access to advice at all times.

The report, released on November 15, follows the first position paper last May, in which the CCIR requested feedback from stakeholders.

“Generally, brokers and intermediaries are of the view that a licensed agent should be involved in each insurance transaction,” notes the report.

While insurers support consumer choice and the option of using an intermediary, they also “generally believe that the Internet allows for the same level of advice as other methods of interaction.”

Insurer must defend client being sued

The Court of Appeal for Ontario has ruled Wawanesa Mutual Insurance Company has a duty to defend a homeowners’ insurance client being sued in a third-party claim.

The court came to the decision on the claim – related to a traffic accident in which the homeowners’ daughter was injured – despite a clause in the policy excluding claims for bodily injury to others in the household.

In August 2003, Kelly Bawden, then eight, was hit and injured by a vehicle while riding her bicycle on a sidewalk in Toronto. The vehicle was driven by Joyce Wilson and owned by Randall Wilson. Kelly Bawden’s parents, David and Elizabeth Bawden, sued the Wilsons.

The Bawdens’ homeowner carrier, Wawanesa Mutual, refused to provide a defence to the Wilsons’ third-party claim against the Bawdens. In a March 2013 ruling, Justice Mary Sanderson found the insurer has a duty to defend.

Wawanesa Mutual appealed, citing an exclusion in the policy. But Ontario’s high court ruled in November to uphold the earlier decision. The clause excluding coverage for bodily injury to other people living in the policyholder’s home “only catches claims by a family member directly against the insured.”

CO detectors to become a must in Ontario homes

The Insurance Bureau of Canada (IBC) has commended the move to make carbon monoxide detectors mandatory in homes across Ontario.

Progressive Conservative MPP Ernie Hardeman’s private member’s bill was passed in the legislature in November and just requires Royal Assent to become law.

The bill expands the scope of the Fire Protection and Prevention Act, 1997 to cover measures relating to the presence of unsafe levels of CO, and to fire safety.

IBC points out that 88% of all homes have something that creates a CO threat.

CANADIAN MARKET 

Higher CAT-exposed property rates: Marsh

Overall insurance rates fell during 2013 Q3, although rates in Canada increased for catastrophe-exposed property risks and for directors and officers liability, notes a new report from brokerage and risk management firm Marsh Ltd.

In one table noting rate changes, there was a 0 to 10% increase in property for catastrophe-exposed risks in Canada.

In major market liability, Canada was stable (meaning a rate change of -5% to +5%) for general liability, financial institution liability and professional liability. There was a 0% to 10% increase for directors and officers liability.

RISK

Canada currently faces a tide of risks: IBC CEO 

“Insurers are now operating in an environment characterized by a rising tide of regulatory and legislative issues and initiatives,” Don Forgeron, president and CEO of the Insurance Bureau of Canada, said during IBC’s 2013 Regulatory Affairs Symposium.

The events of 2013 have demonstrated the insurance industry in Canada is facing a significant tide of risks, including regulatory risks, Forgeron told attendees.

But if the pendulum of regulation swings too far, he said, “it endangers healthy and robust insurance markets, and, therefore, availability and affordability of products.”

TECHNOLOGY

Independent brokers investing in tech

Independent agencies and brokerages in the United States are increasing their specializations and planning to make more investments in technology for the coming year, notes the Independent Insurance Agents & Brokers of America (IIABA).

In its report, created in collaboration with Reagan Consulting, the IIABA found specialization has increased across agencies of all sizes.

“Developing an expertise or proficiency in a c ertain industry or product has shown to facilitate targeted leads and referrals, improve retention and provide a competitive edge for an agency,” notes an IIABA statement.

Many agencies are planning to invest in technologies over the coming year. For smaller agencies (revenue less than $5 million), Internet marketing and social media were the top investment plans; for firms with over $5 million in revenue, agency management systems were the priority.

REINSURANCE

More creativity needed in long term: A.M. Best

Reinsurance firms are advised to get into lines of business other than the property catastrophe business as competition from third-party capital sources continues, notes a new report from A.M. Best Company Inc.

“Despite the less than robust market opportunities, capital from third-party investors such as hedge funds and pension funds continues to flood the industry, putting additional pressure on pricing in the overall reinsurance segment,” A.M. Best states.”These challenges are exacerbated by primary companies retaining more risk with each passing year, which decreases the pool of risk available to reinsurance companies,” the report adds.

“Managing third-party capital, as many reinsurance companies already do, is one way to gain fee income and maintain control of the business,” notes the report. “More creativity may be needed in the long term to stay relevant, and reinsurance companies also will have to spread into other lines of business.” 

CAT bond market could reach US$50 billion by 2018: BNY Mellon

Insurers and capital markets need to harness big data to close the disaster gap – the difference between insured and economic costs of natural catastrophes – BNY Mellon suggests in a report that states the cat bond market could balloon to US$50 billion by 2018.

The number of cat bonds outstanding could more than double from the current level of US$19 billion to about US$50 billion by the end of 2018, notes BNY Mellon.

Globally, natural catastrophes cost the insurance industry about US$13 billion in the first half of 2013, with overall economic losses estimated at US$45 billion.

“Insurers and the capital markets can help reduce the disaster gap by working together with big data to deploy new capital to cover new perils in new regions. This will reduce the cost of rebuilding for governments and provide a positive contribution to society,” says Paul Traynor, international head of insurance for BNY Mellon.