Marketplace

CANADIAN MARKET

Intact acquires Canadian Direct Insurance for $197 million

Intact Financial Corporation (IFC) is expanding its direct operations in Western Canada with the recently announced acquisition of Canadian Direct Insurance Inc. (CDI).

IFC reports that it has entered into a definitive agreement with Canadian Western Bank to acquire CDI, which wrote approximately $140 million in home and auto premiums in 2014.

The transaction has been approved by the boards of both companies and is expected to close in mid-2015, subject to the required regulatory approvals and customary closing conditions, notes a statement from IFC.

The acquisition is expected to be financed exclusively with excess capital.

“Growth and innovation are continuing priorities for IFC,” says Louis Gagnon, the company’s president of service and distribution. “The CDI acquisition presented an opportunity to grow our direct-to-consumer distribution channel,” Gagnon adds.

Aviva announces may availability of overland flood endorsement

Aviva Canada has announced it will offer an overland water endorsement, coverage that has generally not been available to Canadian homeowners, to residential policyholders in Ontario and Alberta this May.

With the launch of the overland flood endorsement, home policyholders could be covered for “losses that result from the accumulation or run-off of surface waters, including torrential rainfall when water enters the property,” Aviva Canada reports.

“The endorsement forms a key part of the Aviva Water Protection package, which combines base policy water protection (broken water pipes and more), sewer back-up protection (the backing up or escape of water or sewage) and overland water protection (from water entering the property),” the insurer adds.

The coverage will be “available as an endorsement to personal property insurance policies that have sewer back-up protection in place,” Aviva Canada notes. The plan is to roll out the endorsement to other provinces in 2015.

Esurance launches in Alberta, offers auto insurance online

The Allstate Corporation recently announced its Esurance unit is expanding into Canada, offering auto insurance online directly to consumers in Alberta.

“Our research indicates there is an underserved segment of the Canadian market that prefers a self-directed experience,” says Jonathan Adkisson, president and chief operating officer of Esurance Canada.

Esurance launched its website and began writing personal auto insurance in the United States in late 1999.

RISK

Wildfire community preparedness day scheduled for May 2

Canada’s first Wildfire Community Preparedness Day is set for May 2, with the goal being to encourage communities to take part and to help communities reduce their exposures.

FireSmart Canada – administered by Partners in Protection – announced the launch in collaboration with the Institute for Catastrophic Loss Reduction, the National Fire Protection Association and The Co-operators Group Ltd.

“Proper risk management requires a partnership in which insurance companies, emergency responders, property owners and others each play a crucial role,” says Kathy Bardswick, president and chief executive officer of The Co-operators.

Researchers are predicting “an alarming increase over the next 20 or 30 years in the risk of property damage in the wildland-urban interface, including risk of homes destroyed by fire,” says ICLR founder and executive director Paul Kovacs, but adds most losses are preventable “if property owners and communities take the time to prepare.”

Manitoba auto collision death rate drops

Seventy people were killed on public roadways in Manitoba last year, marking the lowest annual toll in 30 years, but distracted driving still claims the lives of 25 people every year, reports Manitoba Public Insurance (MPI).

The death toll of 70 last year was 58% lower than the 30-year high of 168 in 1986. Beyond the 25 people killed annually as a result of distracted driving, about a third of road fatalities are alcohol-related and 10 people died from nine off-road vehicle crashes (two fewer than in 2013), reports MPI.

CLAIMS

Property policies getting more segmented by cover: Alberta ADM

Recent changes to insurance policies – in large part, responding to weather-related losses – could lead to more checker-boarding in coverage as additional segmentation within insurers occurs, suggested Mark Prefontaine, Alberta’s assistant deputy minister of financial sector regulation and policy.

Insurers in Alberta are responding to a number of successive years of catastrophic loss with product change and various degrees of underwriting practices, Prefontaine said via Skype during the joint conference of the Canadian Insurance Claims Managers Association and the Canadian Independent Adjusters’ Association’s Ontario chapter.

“No longer are we seeing policies that have a particular policy limit with all perils covered under that policy limit and one deductible,” he reported. Instead, a variety of perils are being lifted out of policies and there are differing deductibles and sub-limits, dependant upon geographic location and “a whole bunch of other underwriting factors.”

As additional segmentation occurs within insurers, the level of inconsistency will be magnified, he added.

More than 10% of claims have element of fraud, exaggeration

The Insurance Corporation of British Columbia (ICBC) reports its two investigation units advanced 131 fraud-related charges against 100 defendants to Crown counsel in 2014, estimating 10% to 15% of “insurance claims contain an element of fraud or exaggeration, consistent with industry estimates.”

The figures were contained in an ICBC press release citing the insurer’s top auto claims fraud files for 2014.

In one case, a customer “who was prohibited from driving claimed his vehicle had been stolen at the time it was involved in a three-vehicle crash,” notes the ICBC.

After being found guilty of providing a false statement relating to an ICBC investigation, the customer was fined $1,000 and ordered to pay ICBC “more than $18,000 in claims costs and total loss payments paid out for the other two vehicles involved in the crash.”

REGULATION

New federal insurance requirements tabled for railways hauling oil

Canadian railways moving dangerous goods will have new minimum insurance requirements if a bill, the draft Safe and Accountable Rail Act, tabled in February, is passed into law.

“The Canadian Transportation Agency (CTA) will assign legislated minimum levels of insurance to railways based on the type and volume of dangerous goods they transport,” Transport Canada reports. “Railways will have to demonstrate coverage before the CTA would issue the Certificate of Fitness they need to operate.”

The act proposes specifying minimum levels of insurance for railways, depending on the type and quantity of dangerous goods transport.

“Railways requiring either $25 million or $1 billion are not expected to need more time to adjust, so those levels would take effect immediately after the legislation comes into force,” notes a federalgovernment backgrounder.

For some short-line railways, the $100 million and $250 million levels will be phased in over time.

Sanctions launched against Quebec car dealers, insurance firm

With a view to ensuring customers are treated fairly, the Autorité des marchés financiers (AMF) has launched proceedings for sanctions against the commercial practices of nine automobile dealers and one damage insurance firm in Quebec related to the unauthorized sale of automobile insurance.

The AMF notes that when purchasing an automobile from the nine dealers in question, some customers were o ffered automobile insurance products covering civil liability and damage to the vehicle.

“Only a damage insurance agent or broker registered with the AMF is authorized to provide advice about insurance and compare available automobile insurance products,” the AMF reports.

AMF has issued orders – the dealers have responded by filing applications in court for a review – imposing administrative sanctions, ranging from $10,000 to $17,500.

The Bureau de décision et de révision also examined the agreement entered into between the AMF and insurance firm Rochefort, Perron, Billette et associés inc., approving the joint recommendations of the parties to impose a $45,000 fine. As well, the firm and its responsible officer, Alain Houle, have been ordered to comply with An Act respecting the distribution of financial products and services.

REINSURANCE

Bond providing capacity for named storms in U.S., U.s./Canada quake

SCOR has sponsored a new catastrophe bond that will provide the group with multi-year risk transfer capacity of US$150 million for named storms in the United States, as well as earthquake events in both the U.S. and Canada.

The risk period runs from February 11, 2015 to December 31, 2018.

In connection with placement of the bond, SCOR Global P&C will enter into a risk transfer contract with the issuer, Atlas IX Capital Limited.

The first issuance from the Atlas IX vehicle, Series 2013-1, protects SCOR’s extreme mortality exposures in the U.S., the company notes.

January catastrophes include U.S. northeast snowstorm

Record snowfall in January spurred at least US$500 million in economic losses on the east coast of the United States, Aon plc’s Impact Forecasting unit reports.

One catastrophe affecting the U.S. was a storm January 26 to 28 that brought more than 90 centimetres of snow to some locations in Massachusetts and prompted officials to call states of emergency in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York and Rhode Island, notes a statement from Impact Forecasting.

Total economic damage and losses, including business interruption, “were minimally estimated” at US$500 million, Aon Benfield notes in the new report.