Marketplace

REGULATION

Eligible policyholders to vote on demutualization

Economical Insurance’s Board of Directors has announced a shareholder vote on demutualization will proceed in mid-December.

The announcement comes several months after Ottawa enacted regulations allowing property and casualty insurers to demutualize. Beyond Board of Directors approval, a mutual p&c insurer requires the approval of eligible policyholders and the federal government.

If given the green light, the money raised from demutualization would “likely be tied around acquisition activity,” Karen Gavan, Economical Insurance’s president and chief executive officer, told Canadian Underwriter.

The regulations “basically preclude anything” other than an initial public offering of stock, if the demutualization is successful, Gavan said. “There is a requirement that from the point of demutualization and for at least two years (after), our shares must be widely held.”

Gavan noted the insurer is “well-capitalized” today, but “our industry is consolidating and we need access to capital to participate in that consolidation, so additional capital would likely be tied around acquisition activity.”

Creation of new Ontario agency recommended

A panel appointed by Ontario’s Ministry of Finance has recommended creating a new regulatory agency to operate as an “integrated regulator of financial services with distinct market conduct, pensions and prudential regulatory functions.”

The functions of the Financial Services Regulatory Agency would operate independently of one another, but in a co-ordinated and consistent manner, the panel suggested.

The recommendation was one of 37 flowing from the Review of the Mandates of the Financial Services Commission of Ontario, Financial Services Tribunal and the Deposit Insurance Corporation of Ontario.

“Many feel that there are material shortcomings in the mandates, regulatory approach, operational resources, tools and capacity,” the report authors point out.

“These agencies should have the mandate and authority to work closely with the financial services sector and with ‘sister’ agencies in other provinces to encourage the development of a vibrant and safe financial sector and to better ensure consumers have a consistently high level of service and protection, without burdening market participants with undue regulatory costs or complexity,” the panel recommends.

Competition Bureau calls for modernized taxi industry regulations

Canada’s Competition Bureau is recommending a regulatory overhaul of the taxi industry to allow these vehicles and ride-sharing services to compete on an even playing field.

The bureau released a whitepaper in late November that explores factors such as price, availability and wait times, convenience and quality of service. “Consumers stand to benefit from lower prices, reduced waiting times and higher quality services if regulators allow the forces of innovation and competition to shape the industry.”

While the taxi industry is regulated at the municipal and provincial levels in Canada, ride-sharing services are not, creating an uneven playing field in the industry, the bureau notes. “To even the playing field, where possible, regulators should relax restrictions on traditional taxis, rather than imposing additional regulations on new entrants in the industry.”

The bureau supports efforts to regulate ride-sharing applications instead of prohibiting them.

RISK

IBC, LexisNexis, others to collaborate on national flood program

Insurance Bureau of Canada (IBC) and other partners are collaborating on a national flood program to be led by the private sector.

The new flood maps and supporting data, developed in partnership with LexisNexis Risk Solutions, JBA Risk Management, DMTI Spatial and Brookfield RPS, will use the latest technology, local climate data and geospatial data, and will cover the entire country, IBC reports.

They will identify the cities and regions at risk of flooding, the associated economic costs, and resilient areas and regions in Canada, IBC adds.

Working closely with IBC, LexisNexis Risk Solutions will lead the development of a new set of flood hazard maps and property-level exposure data, thereby allowing IBC to identify the number of properties at risk of flooding and the associated economic losses for virtually any geography in Canada.

Cyber, technology risks biggest concerns for financial services

A poll of global financial services experts and Canadian risk executives conducted at the Global Risk Institute’s (GRI) recent annual conference shows cyber and technology risks are the greatest concerns for the global financial services sector.

With input from more than 180 senior Canadian financial executives, Toronto-based GRI reports almost half of the respondents cited technology risks as the biggest emerging risk to global financial institutions.

Among technology risks, 23% specified cyber security as the biggest risk and 23% identified disruption from emerging technologies as the biggest risk. Other global risks noted by participants were deflation (14%), asset bubbles (8%) and the slowdown in China (8%).

Magnitudes, incidences of quakes caused by fracking minimal

While hydraulic fracturing can cause increased seismic activity, the tremors generated by the process are often very small and undetectable at the earth’s surface, notes a new Fraser Institute report.

The report concludes research on the safety of hydraulic fracturing confirms that “while there are, indeed, risks with it, they are, for the most part, readily manageable with available technologies and best practices.”

Compared with industries such as mining and conventional oil and gas extraction, “the magnitudes and incidences of earthquakes caused by hydraulic fracturing are quite minimal.”

Rogers Media agrees to pay $200,000 for alleged anti-spam breach

The Canadian Radio-television and Telecommunications Commission (CRTC) reports that Rogers Media Inc. has paid $200,000 in relation to alleged violations of Canada’s anti-spam legislation (CASL).

Following an investigation by CRTC’s chief compliance and enforcement officer, it is alleged Rogers Media failed to comply with various requirements of the law between July 2014 and July 2015, notes the Department of National Defence.

During this period, it is alleged, among other things, the company sent commercial emails containing an unsubscribe mechanism that did not function properly or which could not be readily performed by the recipient.

Rogers Media has agreed to improve its existing compliance program to meet CASL requirements.

CANADIAN MARKET

Petley-Hare launches Digital Division to serve Ontario clients

Petley-Hare Limited, an insurance brokerage with almost 100 years of experience in Ontario’s Durham Region, has launched a new digital division to serve clients across the province.

“Insurance Jack was built on the premise that the insurance industry has evolved and consumers are interested in a more streamlined buying process,” the division reports.

“While our traditional customers may still want a high-touch relationship with their brokers, Millennials, who will comprise 46% of the workforce within 10 years, want to communicate digitally at their convenience,” says Dave Hare, president of Petley-Hare Limited.

Rogers Insurance acquires CCV Insurance

Rogers Insurance Ltd. has acquired a controlling interest of Ontario-based CCV Insurance & Financial Services Inc. under the previously formed Inowest Insurance Brokers Inc. group of companies.

The acquisition represents the strategic expansion of Rogers Insurance into the Ontario marketplace, leveraging CCV Insurance’s business locations in Brampton, Georgetown and Huntsville.

“This first foray into the Ontario marketplace is part of the plan to scale up the Rogers’ operations in both size and geography,” says Bruce Rabik, chief operating officer of Rogers Insurance.

Brian Evans will become president and a significant shareholder of CCV Insurance; Robert Lewis will remain a shareholder and become director, insurance distribution.

REINSURANCE

Third highest number of wildland fires in Alberta in 25 years

Wildland fire crews in Alberta were called out to combat almost 1,800 fires during the 2015 season, the third-highest number in the past 25 years, reports Alberta Agriculture and Forestry.

During the 2015 season, fire crews battled 1,786 wildfires covering more than 492,000 hectares (twice the 25-year average), notes a ministry statement. Sixty-four fires were more than 200 hectares compared to the 25-year average of 19.

Beyond the $139 million budgeted at the start of the season for wildfire prevention, preparedness and management, the province provided an additional $375 million in emergency funding to cover the costs of fighting wildfires this season.

“An early spring, along with dry conditions, strong winds and thunderstorms created ideal conditions for extreme wildfire behaviour in Alberta,” says provincial agriculture and forestry minister Oneil Carlier. “Still, over half of the wildfires we saw this year were human-caused.”

CLAIMS

Alberta takes steps to change disaster recovery program

Alberta’s Ministry of Environment and Parks is making changes to the Disaster Recovery Program (DRP) that will allow 80% of outstanding cases related to the 2013 flooding in southern Alberta to be resolved.

With a financial impact of approximately $6 billion and insured losses of about $2 billion, the flood was the most costly natural disaster in Canadian history.

The ministry reports that the changes will also “ensure the DRP process operates more efficiently in the future, should Albertans be faced with another disaster.”

The government will cease collection on overpayments for files of $5,000 or less, which affects almost 550 outstanding case files. In about 75 cases where overpayments are more than $5,000, files will be handled on a case-by-case basis. The province will also be closing almost 450 files classified as inactive.