Overall Canadian market conditions remain favourable across most commercial lines through the end of the 2011 Q2, but signs of a firming market are beginning to appear in segments of the marketplace, according to Marsh.
In its Canadian Insurance Market Midyear Update, Marsh examined data from transactions brokered by Marsh through early July 2011.
The report's findings suggest the majority of commercial property, casualty, and financial and professional insurance buyers are not experiencing significant rate increases.
Property insurance rates are increasing in individual sectors such as energy and mining, and 2011 catastrophe losses could further affect rates for some buyers.
In the mining sector, specifically Canadian companies with operations outside of Canada, Marsh anticipates overall rate increases of between 5% and 10% in the second half of 2011, with a potential increase of as much as 20% for insureds with catastrophe exposures and poor loss records.
In the first half of 2011, most upstream energy exploration and production property risks were subject to rate increases of between 5% and 10%. But control-of-well general liability rates remain fairly flat.
Underwriters are also starting to look more closely at contingent business interruption and contingent exposures following the Alberta wildfires. They are requiring more information from insureds before offering such coverage, the report says.
On the other hand, in financial and professional lines, including directors and officers liability, insurers are offering broader coverage options as they seek to expand their market share.
"It is too early to tell if the second half of the year will bring any overall increases to commercial insurance rates in Canada," said Alan Garner, president and CEO of Marsh Canada Limited.
"Marsh expects that pure Canadian commercial accounts will see rates remain flat well into the third quarter of 2011, and possibly beyond."
Friday, July 22, 2011
Tuesday, July 19, 2011
IBC calls for regulation of medical assessment clinics
The insurance industry is calling for the accreditation and regulation of assessment clinic ownership to help put the brakes on fraudulent accident benefits claims.
Fake accident treatment charges are costing insurers roughly $1.3 billion, a recent Toronto Star article says, citing unnamed sources in the insurance industry.
To combat the fraudulent abuse of the system, IBC is calling for tighter regulation around the ownership and operation of medical assessment clinics.
For example, ownership should be restricted to regulated health professionals, who could face discipline by a professional college if found guilty of filing fraudulent treatment charges, the Star article says.
Such a measure would prevent bogus clinics from being "shut down one day and open[ing] up again the next," Ralph Palumbo, IBC's vice president of Ontario, told the Toronto Star.
Fake accident treatment charges are costing insurers roughly $1.3 billion, a recent Toronto Star article says, citing unnamed sources in the insurance industry.
To combat the fraudulent abuse of the system, IBC is calling for tighter regulation around the ownership and operation of medical assessment clinics.
For example, ownership should be restricted to regulated health professionals, who could face discipline by a professional college if found guilty of filing fraudulent treatment charges, the Star article says.
Such a measure would prevent bogus clinics from being "shut down one day and open[ing] up again the next," Ralph Palumbo, IBC's vice president of Ontario, told the Toronto Star.
Despite reports of widespread misuse of social networks at work, nearly 50% of businesses still don't have a social network policy: survey
Nearly half of businesses do not have social media and networking policies in place, despite the fact that 76% use social networking for business purposes and many report abuse or misuse of social networks.
These findings come from an informal survey of more than 120 multinational employers conducted by the international labor and employment group of law firm Proskauer Rose LLP.
Forty-three per cent of survey respondents reported employee misuse of social networks at some point. And 31.3% reported having to take disciplinary action against an employee for misuse of social networks.
"In order to harness the benefits and minimize the risks of social networks, employers need to set distinct and specific policies and practices for their use," said Betsy Plevan, co-head of Proskauer's international labor and employment group. "Relying on employees to exercise good judgment is simply not enough."
The June 2011 survey asked 10 questions aimed at capturing current attitudes and practices concerning social media in the workplace. Survey participants included in-house counsel, executives and HR professionals across a broad range of businesses, many of which have a global presence and are clients of Proskauer.
The survey found social network use for business is a relatively new phenomenon. Of the businesses that use social networking for business, 70% only started doing so in the past three years.
Twenty-nine percent of businesses actively block employees' access to social networking sites. Only 27% monitor employee use of social networking sites.
"The business world is experiencing an ongoing and rapid proliferation in the use of social networking," said Daniel Ornstein, a London-based partner in the international labor and employment group. "Although this has many benefits, hardly a week goes by without yet another new story of a viral tweet or posting that has the potential to damage the reputation of a business, underscoring the need for companies to be proactive in this area."
These findings come from an informal survey of more than 120 multinational employers conducted by the international labor and employment group of law firm Proskauer Rose LLP.
Forty-three per cent of survey respondents reported employee misuse of social networks at some point. And 31.3% reported having to take disciplinary action against an employee for misuse of social networks.
"In order to harness the benefits and minimize the risks of social networks, employers need to set distinct and specific policies and practices for their use," said Betsy Plevan, co-head of Proskauer's international labor and employment group. "Relying on employees to exercise good judgment is simply not enough."
The June 2011 survey asked 10 questions aimed at capturing current attitudes and practices concerning social media in the workplace. Survey participants included in-house counsel, executives and HR professionals across a broad range of businesses, many of which have a global presence and are clients of Proskauer.
The survey found social network use for business is a relatively new phenomenon. Of the businesses that use social networking for business, 70% only started doing so in the past three years.
Twenty-nine percent of businesses actively block employees' access to social networking sites. Only 27% monitor employee use of social networking sites.
"The business world is experiencing an ongoing and rapid proliferation in the use of social networking," said Daniel Ornstein, a London-based partner in the international labor and employment group. "Although this has many benefits, hardly a week goes by without yet another new story of a viral tweet or posting that has the potential to damage the reputation of a business, underscoring the need for companies to be proactive in this area."
Ontario auto insurance rate filings increase an average of 1% in 2011 Q2
Ontario auto insurance rate filings approved during 2011 Q2 - from Apr. 1, 2011 to June 30, 2011 - averaged an increase of 1%, based on the entire market, according to the Financial Services Commission of Ontario (FSCO).
For the 29.59% of the market that had rate changes approved in 2011 Q2, the average rate change was a 3.36% increase when weighted by market share.
Rate changes approved in the second quarter of 2011 become effective in the second quarter or later.
Among the 24 filings approved in 2011 Q2, only one company, The Dominion, received an approved rate decrease (-0.02%).
Tokio Marine and Nichido Fire Insurance Company, with a market share of 0.01%, and Lombard General Insurance Company of Canada, with a .94% market share, were approved for the largest rate increases for 2011 Q2 - a 14.76% increase for Tokio and a 13.63% increase for Lombard.
The Top 5 companies ranked by market share that applied for rate increases in 2011 Q2 received the following rate approvals:
1) The Dominion
Market Share (5.33%)
Rate Approval: -0.02%
2) Aviva Insurance Company of Canada
Market Share (4.65%)
Rate Approval: +0.03%
3) Allstate Insurance Company of Canada
Market Share (3.24%)
Rate Approval: +5.86%
4) Nordic Insurance Company of Canada
Market Share (3.03%)
Rate Approval: +9.70%
5) Traders General Insurance Company
Market Share (2.5%)
Rate Approval: -0.05%
For the 29.59% of the market that had rate changes approved in 2011 Q2, the average rate change was a 3.36% increase when weighted by market share.
Rate changes approved in the second quarter of 2011 become effective in the second quarter or later.
Among the 24 filings approved in 2011 Q2, only one company, The Dominion, received an approved rate decrease (-0.02%).
Tokio Marine and Nichido Fire Insurance Company, with a market share of 0.01%, and Lombard General Insurance Company of Canada, with a .94% market share, were approved for the largest rate increases for 2011 Q2 - a 14.76% increase for Tokio and a 13.63% increase for Lombard.
The Top 5 companies ranked by market share that applied for rate increases in 2011 Q2 received the following rate approvals:
1) The Dominion
Market Share (5.33%)
Rate Approval: -0.02%
2) Aviva Insurance Company of Canada
Market Share (4.65%)
Rate Approval: +0.03%
3) Allstate Insurance Company of Canada
Market Share (3.24%)
Rate Approval: +5.86%
4) Nordic Insurance Company of Canada
Market Share (3.03%)
Rate Approval: +9.70%
5) Traders General Insurance Company
Market Share (2.5%)
Rate Approval: -0.05%
Friday, July 15, 2011
Legal counsel for AB claimant not required to docket hours to receive credit at upper end of scale for hours worked: FSCO arbitrator
Legal counsel representing claimants in Ontario arbitrations are not required to docket their hours in order for claimants to receive their legal expenses at the high range of the scale determining hours worked, an Ontario arbitrator has ruled.
In Kamal Gogna and State Farm Mutual Insurance Company, an arbitrator at the Financial Services Commission of Ontario (FSCO) granted the insurance claimant Gogna his legal expenses of $12,000. The sum was based on 100 hours of work by two lawyers, multiplied by the counsel fee of $120 per hour.
In making his decision, the arbitrator rejected the insurer's argument that the 100 hours of legal work for which the claimant sought to be reimbursed was too high and should have been docketed by the law firm.
Gogna was injured in a motor vehicle accident in April 2004 and received accident benefits from State Farm. A dispute arose concerning his entitlement to an income replacement benefit.
An arbitration date was set, but the arbitration did not go to a hearing. Instead, the insurer settled with Gogna, who received his income replacement benefits.
The insurer noted the arbitration was not complex and did not raise any new issues of law. Therefore, since legal counsel for Gogna did not document their hours, they should not be entitled to claim their expenses at the high range of a standard scale used to calculate legal hours.
"Counsel for the applicant indicated that the lawyers at the firm do not docket their hours, noting however that 100 hours includes time for two lawyers to prepare for the hearing set in May 2010 (which was adjourned) and for one lawyer to prepare for the hearing set for October 2010," FSCO arbitrator Alec Fadel wrote. "It was also submitted that the significant amount of time a law clerk and junior lawyer had put into the file was not being claimed."
Fadel calculated the 100 hours based on a standard 3:1 ratio of days spent preparing for an arbitration against the number of actual arbitration hearing days. In this instance, the hearing (later adjourned because of the settlement) was scheduled to last four days.
Ratios used in arbitration decisions to estimate preparation time range from 1:1 to 4:1, with 4:1 usually being the uppermost level of the scale.
"I reject the insurer's suggestion that since the applicant has not provided dockets of their hours they should not be entitled to a ratio of 3:1," Fadel ruled.
"Rule 79.2(c) of the Dispute Resolution Practice Code (DRPC) lists examples of supporting documentation that must be provided. The Rule does not make mandatory that applicant's counsel keep dockets in order to be reimbursed at a higher rate, it merely indicates that if dockets are kept they must be provided.
"Also, I note that insurer's counsel has not provided me with their docketed hours, which would have assisted in my determination of a reasonable number of hours to permit."
In Kamal Gogna and State Farm Mutual Insurance Company, an arbitrator at the Financial Services Commission of Ontario (FSCO) granted the insurance claimant Gogna his legal expenses of $12,000. The sum was based on 100 hours of work by two lawyers, multiplied by the counsel fee of $120 per hour.
In making his decision, the arbitrator rejected the insurer's argument that the 100 hours of legal work for which the claimant sought to be reimbursed was too high and should have been docketed by the law firm.
Gogna was injured in a motor vehicle accident in April 2004 and received accident benefits from State Farm. A dispute arose concerning his entitlement to an income replacement benefit.
An arbitration date was set, but the arbitration did not go to a hearing. Instead, the insurer settled with Gogna, who received his income replacement benefits.
The insurer noted the arbitration was not complex and did not raise any new issues of law. Therefore, since legal counsel for Gogna did not document their hours, they should not be entitled to claim their expenses at the high range of a standard scale used to calculate legal hours.
"Counsel for the applicant indicated that the lawyers at the firm do not docket their hours, noting however that 100 hours includes time for two lawyers to prepare for the hearing set in May 2010 (which was adjourned) and for one lawyer to prepare for the hearing set for October 2010," FSCO arbitrator Alec Fadel wrote. "It was also submitted that the significant amount of time a law clerk and junior lawyer had put into the file was not being claimed."
Fadel calculated the 100 hours based on a standard 3:1 ratio of days spent preparing for an arbitration against the number of actual arbitration hearing days. In this instance, the hearing (later adjourned because of the settlement) was scheduled to last four days.
Ratios used in arbitration decisions to estimate preparation time range from 1:1 to 4:1, with 4:1 usually being the uppermost level of the scale.
"I reject the insurer's suggestion that since the applicant has not provided dockets of their hours they should not be entitled to a ratio of 3:1," Fadel ruled.
"Rule 79.2(c) of the Dispute Resolution Practice Code (DRPC) lists examples of supporting documentation that must be provided. The Rule does not make mandatory that applicant's counsel keep dockets in order to be reimbursed at a higher rate, it merely indicates that if dockets are kept they must be provided.
"Also, I note that insurer's counsel has not provided me with their docketed hours, which would have assisted in my determination of a reasonable number of hours to permit."
Monday, July 4, 2011
Licensed medical doctors, neuropsychologists should lead catastrophic impairment assessment: panel recommendation
Ontario's Catastrophic Impairment Panel is calling for medical doctors or doctorate-level neuropsychologists (in the case of brain injuries) to be the lead evaluators in the assessment of people with catastrophic impairments arising from auto injuries.
FSCO established the panel of medical experts last year to produce recommendations on the definition of a ‘catastrophic impairment' under the Statutory Accident Benefits Schedule (SABS).
FSCO also asked the panel of medical experts to provide recommendations on the training, qualifications and experience of assessors who conduct catastrophic impairment assessments for auto accident benefits. The panel's full report on the training, qualifications and experience of cat assessors can be found at:
http://www.fsco.gov.on.ca/english/insurance/auto/reform/documents/CAT_Report_PhaseII.pdf
The expert panel recommends that a lead evaluator be responsible for overseeing the catastrophic impairment assessment process.
Doctors or neuropsychologists acting as lead evaluators should have at least five years of licensing or registration in Canada, the panel recommends. Doctors must be licensed to practice by one or more Canadian Colleges of Physicians and Surgeons.
The panel also recommends that "all clinicians involved in the assessment of catastrophic impairment be trained, depending on their scope of practice, in the use of the American Spinal Injury Association (ASIA) classification for spinal cord injury, Extended Glasgow Outcome Scale (GOS-E) for traumatic brain injury in adults, the Spinal Cord Independence Measure for ambulation disorders, the Global Assessment of Functioning (GAF) for psychiatric disorders and/or the American Medical Association's (AMA) Guides to the Evaluation of Permanent Impairment, 4th edition for the assessment or physical impairments."
The panel has called on Ontario's auto insurance regulator, the Financial Services Commission of Ontario (FSCO), to develop transition guidelines while training is being implemented.
FSCO established the panel of medical experts last year to produce recommendations on the definition of a ‘catastrophic impairment' under the Statutory Accident Benefits Schedule (SABS).
FSCO also asked the panel of medical experts to provide recommendations on the training, qualifications and experience of assessors who conduct catastrophic impairment assessments for auto accident benefits. The panel's full report on the training, qualifications and experience of cat assessors can be found at:
http://www.fsco.gov.on.ca/english/insurance/auto/reform/documents/CAT_Report_PhaseII.pdf
The expert panel recommends that a lead evaluator be responsible for overseeing the catastrophic impairment assessment process.
Doctors or neuropsychologists acting as lead evaluators should have at least five years of licensing or registration in Canada, the panel recommends. Doctors must be licensed to practice by one or more Canadian Colleges of Physicians and Surgeons.
The panel also recommends that "all clinicians involved in the assessment of catastrophic impairment be trained, depending on their scope of practice, in the use of the American Spinal Injury Association (ASIA) classification for spinal cord injury, Extended Glasgow Outcome Scale (GOS-E) for traumatic brain injury in adults, the Spinal Cord Independence Measure for ambulation disorders, the Global Assessment of Functioning (GAF) for psychiatric disorders and/or the American Medical Association's (AMA) Guides to the Evaluation of Permanent Impairment, 4th edition for the assessment or physical impairments."
The panel has called on Ontario's auto insurance regulator, the Financial Services Commission of Ontario (FSCO), to develop transition guidelines while training is being implemented.
FSCO identifies consideration of administrative monetary penalties as priority
The Financial Services Commission of Ontario (FSCO) has made implementing administrative monetary penalties a priority.
In its Statement of Priorities & Strategic Directions, FSCO said it will work with the Ministry of Finance to enhance regulatory effectiveness by considering the enforcement tool of administrative monetary penalties in insurance.
Such a system would allow the regulator to levy fines, for example, without having to proceed by way of a quasi-criminal tribunal, as is now required by legislation.
Other priorities identified by the regulator include:
• conducting market conduct audit reviews of compliance with the 2010 auto insurance reforms, including Statutory Accident Benefits;
• working with stakeholders to identify measures addressing fraud and abuse in auto insurance industry;
• undertaking long-term initiatives extending from the 2010 auto insurance reforms - including a new Minor Injury Treatment Protocol, a new catastrophic impairment definition and a closed claims study; and
• performing market conduct review of suitability of product recommendations for insurance.
FSCO said it would be working with the auto insurance industry to conduct a study of closed auto insurance claims.
"Many existing data sources do not provide a detailed breakdown of claims costs," the report says. "The results of the study will assist industry and government actuaries in properly assessing the impact of past and future auto insurance reforms."
The market conduct review will determine how the insurance industry is ensuring that consumers are empowered to make informed decisions and are presented with suitable product recommendations.
"The focus of the review will be to understand and assess the process agents use in making recommendations to consumers and the processes in place at insurance companies when developing and distributing products," the report says.
In its Statement of Priorities & Strategic Directions, FSCO said it will work with the Ministry of Finance to enhance regulatory effectiveness by considering the enforcement tool of administrative monetary penalties in insurance.
Such a system would allow the regulator to levy fines, for example, without having to proceed by way of a quasi-criminal tribunal, as is now required by legislation.
Other priorities identified by the regulator include:
• conducting market conduct audit reviews of compliance with the 2010 auto insurance reforms, including Statutory Accident Benefits;
• working with stakeholders to identify measures addressing fraud and abuse in auto insurance industry;
• undertaking long-term initiatives extending from the 2010 auto insurance reforms - including a new Minor Injury Treatment Protocol, a new catastrophic impairment definition and a closed claims study; and
• performing market conduct review of suitability of product recommendations for insurance.
FSCO said it would be working with the auto insurance industry to conduct a study of closed auto insurance claims.
"Many existing data sources do not provide a detailed breakdown of claims costs," the report says. "The results of the study will assist industry and government actuaries in properly assessing the impact of past and future auto insurance reforms."
The market conduct review will determine how the insurance industry is ensuring that consumers are empowered to make informed decisions and are presented with suitable product recommendations.
"The focus of the review will be to understand and assess the process agents use in making recommendations to consumers and the processes in place at insurance companies when developing and distributing products," the report says.
Canada launches public consultations on the regulation of P&C demutualizations
The Department of Finance Canada has wasted no time launching its anticipated public consultation on the demutualization of Canadian property and casualty insurance companies, setting the deadline for submissions on July 31, 2011.
The Finance Department committed to establishing regulations for the demutualization of a Canadian P&C insurance company in its budget, released on June 6. The government officially launched public consultations on June 30.
The proposed regulatory framework is a required step before The Economical Mutual Insurance Company may proceed with its plan to demutualize.
Assuming mutual policyholders approve the company's plan, The Economical would be the first Canadian property and casualty insurance company to demutualize under the Canadian Insurance Companies Act.
But the company and its mutual policyholders must first wait until the federal government establishes a regulatory framework for the demutualization of a P&C insurer. Currently, no such regulations exist.
Finance Minister Jim Flaherty has said publicly that no Canadian P&C insurer will be allowed to demutualize until regulations are in place. The public consultation is the first step in that process.
The timing of the public consultations was a wild card in whether the regulations might be in place by the end of 2011 or in early 2012. The company has said it would be ready to present a concrete proposal for demutualization to its mutual policyholders within six months after the introduction of the new regulations.
The Finance Department committed to establishing regulations for the demutualization of a Canadian P&C insurance company in its budget, released on June 6. The government officially launched public consultations on June 30.
The proposed regulatory framework is a required step before The Economical Mutual Insurance Company may proceed with its plan to demutualize.
Assuming mutual policyholders approve the company's plan, The Economical would be the first Canadian property and casualty insurance company to demutualize under the Canadian Insurance Companies Act.
But the company and its mutual policyholders must first wait until the federal government establishes a regulatory framework for the demutualization of a P&C insurer. Currently, no such regulations exist.
Finance Minister Jim Flaherty has said publicly that no Canadian P&C insurer will be allowed to demutualize until regulations are in place. The public consultation is the first step in that process.
The timing of the public consultations was a wild card in whether the regulations might be in place by the end of 2011 or in early 2012. The company has said it would be ready to present a concrete proposal for demutualization to its mutual policyholders within six months after the introduction of the new regulations.
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