IDT911 expands in Canada to offer privacy breach services to insurers and businesses

IDT911, an identity management and data risk management services provider, has expanded into Canada to help businesses minimize the chance of breaches and manage them when they occur. The Arizona-based company, which has offices in Toronto, partnered with Economical Insurance and Trisura Guarantee Insurance Company earlier this year to provide privacy breach resources to Canadian businesses. Now, its products, which include data security education and training, proactive exposure mitigation tools, breach response services, and identity management services for consumers, will now be available to clients throughout Canada. It will also offer its expertise to insurance carriers to create privacy products that fit their policyholders’ specific needs. IDT911 also has a training methodology to help brokers promote cyber-security products and services to their clients. Privacy risks within and outside of Canadian businesses are increasing, especially with more technology in the workplaces, IDT911 notes. Employee errors, lost or stolen laptops and other mobile devices and deliberate, target attacks all present major concerns for privacy breaches. Though its offerings are built for businesses of all sizes, small and mid-sized businesses are often most unprepared and unprotected, the company notes.

Low interest rates a drag on investment returns for insurance industry

The low interest rate environment and declining investment returns are putting stress on the insurance industry and having a significant impact on re/insurers, Kurt Karl, chief economist for Swiss Re, noted in a blog post on Sept. 5. “The vulnerability of different lines of business depends on the importance of investment income as a source of revenue and the ability to hedge interest rate risks,” Karl writes. “Life savings products are more sensitive to interest rates than long-tail non-life products,” he adds. “Non-life insurers can periodically attempt to re-price their products as policies are renewed, allowing them to restore profitability.”

Canadian P&C outlook stable to year-end: A.M. Best

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Best TEXT SIZE 2012-09-06 -------------------------------------------------------------------------------- The outlook for the Canadian property and casualty market for the remainder of 2012 is stable, with a low level of change to companies’ ratings, notes a senior financial analyst with A.M. Best Company. This is despite economic uncertainty in many parts of the world, Jackie Catrino Lentz commented during the rating agency’s 2012 Insurance Market Briefing in Toronto on Sept. 6. “We see no significant drivers emerging currently that would indicate a near-term change to the stable outlook.” The vast majority, 97%, of companies are “secure” in terms of financial strength rating (FSR), Catrino Lentz said. Industry consolidation from mergers and acquisitions has led to movement in ratings, mainly companies improving their ratings. “Companies are looking for market share in a very competitive environment,” she said. Among the top 10 rated companies, which include companies that have seen M&A activity in recent months, market share has grown from 58% to 68% between 2007 and 2011, she added. Since 2011, there also have been no ratings downgrades. While the first six months of 2012 have developed favourably, severe weather events in various provinces across Canada may have a negative impact in 2012 Q3. Results for the P&C market overall have been very favourable compared to the last three years, with the auto segment helping to drive the industry to a modest underwriting profit. That strength has been offset by severe damage from major storms across Canada and the United States, including the Slave Lake fire and hail storms in Alberta, Catrino Lentz said. In the coming year, industry consolidation will continue to be a key issue and may test companies’ abilities to merge cultures and even leadership styles, she added. Some companies may have to simplify their business models and refocus on profitable lines, she added.

Insurance fraud in U.S. a $30-billion problem: Deloitte

Property and casualty insurers need to adopt a multi-pronged approach to combat a growing fraud problem in the United States, notes a recent report from Deloitte. The report, A Call to Action: Identifying Strategies to Win the War Against Insurance Claims Fraud, says auto insurance and workers’ compensation are the two biggest sources of an estimated $30 million in insurance fraud. Deloitte also states the National Insurance Crime Bureau (NICB) reported that in 2011 questionable claims for the first time had exceeded 100,000 referrals and had increased by 19% compared to 2009, and specific categories saw even larger increases, such as casualty and miscellaneous claim types. To deal with claims fraud, Deloitte recommends insurers to create an integrated fraud management strategy that rests upon four pillars. Its four pillars of an integrated fraud management program include: •developing a fraud management strategy; •aligning the operating model; •improving information quality; and •leveraging advanced technology tools and analytics. “While many insurers have invested resources in an effort to improve fraud management, few have taken a broad or integrated approach,” Deloitte observes in the report. “Some companies have invested in improving data quality and adopting technology tools, but still lack the business processes, workforce competencies and organizational structure needed to act on the insights gained from data analysis.”

York Regional Police lay 142 charges in alleged auto fraud scheme called "Project Sideswipe"

Forty-six suspects have been charged in connection with an alleged auto fraud scheme called Project Sideswipe involving staged collisions and suspected false medical billings in Ontario. One hundred and forty-two charges have been laid to date, including conspiracy to commit an indictable offence, fraud under $5,000, fraud over $5,000 and obstruction of a police officer, notes a statement from the York Regional Police (YRP). Project Sideswipe involved nine alleged staged collisions that occurred in York Region, as well as suspected associated false medical billings from several medical rehab and assessment centres in Brampton, Toronto and Mississauga, notes a statement from the Insurance Bureau of Canada (IBC). The allegations have not been proven in court. Police believe a ring of recruited drivers and passengers staged collisions to support accident benefit insurance claims. Medical rehab and assessment centres would then use the names, signatures and college registration numbers of medical practitioners, without their proper authorization, and invoice insurance companies for services that were not rendered, the IBC reports. Rick Dubin, vice president of investigation services for the IBC, characterized the efforts as yet, "another step at driving a wedge into one of the alleged sophisticated fraud networks, operating throughout the Greater Toronto Area.” “The potential loss to nine insurers is still being calculated, but it is estimated to be somewhere in the neighbourhood of $5 million,” Dubin notes in the statement. “Insurance premiums are driven by claims costs and right now costs have been driven through the roof in Ontario as a result of fraud and abuse in the system.” Results from a KPMG study estimate the annual cost of auto insurance fraud in Ontario to be in the range of between $770 million and $1.6 billion per year.

FSCO rejects insurer's motion to obtain academic course records of injured woman's daughter/caregiver

A Financial Services Commission of Ontario (FSCO) arbitrator has rejected the motion of an insurer to obtain a copy of the academic course record of the daughter of a woman injured in an auto accident. The insurer in the matter, Security National, argued the course schedule of the daughter, who attended the University of Toronto between 2008 and 2010, was necessary to confirm whether or not the daughter was a full-time or part-time student. This information would then shed light on whether or not the daughter provided housekeeping and caregiving services to her mother as claimed. Mary Anothonipillai was injured in an auto accident on Apr. 21, 2008 and applied for statutory accident benefits. Security National disputed the amount she claimed for housekeeping and caregiving expenses, contending the costs were too high. Security National attempted through correspondence with Anthonipillai’s daughter, Sharel George, to establish George’s status as a student, so it could assess the amount of time she may have taken away from school to provide care for her mother A Financial Services Commission of Ontario (FSCO) arbitrator has rejected the motion of an insurer to obtain a copy of the academic course record of the daughter of a woman injured in an auto accident. The insurer in the matter, Security National, argued the course schedule of the daughter, who attended the University of Toronto between 2008 and 2010, was necessary to confirm whether or not the daughter was a full-time or part-time student. This information would then shed light on whether or not the daughter provided housekeeping and caregiving services to her mother as claimed. Mary Anothonipillai was injured in an auto accident on Apr. 21, 2008 and applied for statutory accident benefits. Security National disputed the amount she claimed for housekeeping and caregiving expenses, contending the costs were too high. Security National attempted through correspondence with Anthonipillai’s daughter, Sharel George, to establish George’s status as a student, so it could assess the amount of time she may have taken away from school to provide care for her mother. George did not supply the information to Security National, which then brought a motion asking FSCO to compel George to provide her academic course schedule during the period at issue (between 2008 and 2010). FSCO did not allow the motion, questioning the relevance and the probative value of the documents. “I am not persuaded that the records are so relevant that their non-disclosure now would prejudice a just and fair hearing so that I should therefore set aside privacy concerns around documents that contain information personal to a third party [George] but none about a party to this proceeding [Anthonipillai],” FSCO arbitrator Jessica Kowalski wrote in her decision. “Nor am I persuaded that the academic schedule is as probative as Security National asserts. That schedule will not disclose how often, or even whether, Ms. George attended her classes.”

Pocket bike is not an automobile for insurance purposes: FSCO arbitrator

An insurance company has won an appeal that a motorized pocket bike should not be considered an automobile for insurance purposes under the Ontario Statutory Accident Benefits Schedule (SABS). Motors Insurance Corporation appealed the original ruling by Financial Services Commission of Ontario (FSCO) arbitrator Denise Ashby in January 2011 that a pocket bike met at least one of the three tests for classification as an automobile. In that original ruling, Motors Insurance and Bouchard, there was an agreed statement of facts that Cassondra Bouchard was injured while riding Kristin Stratton's uninsured pocket bike at Stratton's property on Jan. 13, 2008. In Adam v. Pineland Amusements Ltd., decided in 2007, the Ontario Court of Appeal developed the following three-part test to determine what is an “automobile”: • Is the vehicle an “automobile’ in ordinary parlance? If not, then, • Is the vehicle defined as an “automobile” in the wording of the insurance policy? If not, then, • Does the vehicle fall within any enlarged definition of “automobile” in any relevant statute? Ashby determined that the first two conditions did not apply in Motors Insurance, so she looked to the Off-Road Vehicles Act (ORVA). Ashby interpreted the ORVA to mean that if the pocket bike had required insurance, that would have made it an “automobile.” If so, then Bouchard should have access to accident benefits under her father's automobile policy. Ashby held that the pocket bike met the definition of an off-road vehicle under s. 1 of the ORVA, since it was “a vehicle propelled or driven otherwise than by muscular power or wind and designed to travel [on] not more than three wheels.” Section 15(1) of the ORVA goes on to require off-road vehicles to be insured under a motor vehicle liability policy in accordance with the Insurance Act, with the exception under s. 15(9) “where the vehicle is driven on land occupied by the owner of the vehicle.” Ashby concluded that the pocket bike was required to be insured under the ORVA despite the time and circumstances of the incident because s. 15(9) is a “very narrow exclusion.” However, FSCO arbitrator David Evans disagreed with this assessment in a June 20 appeal decision. He found that the pocket bike was being operated on Stratton's property when the incident occurred. In those circumstances and at that time, the ORVA did not require Stratton's pocket bike to be insured under an automobile insurance policy. Therefore, Bouchard was not operating a motor vehicle and was not involved in an accident within the meaning of s. 2(1) of the SABS. The appeal was allowed in favour of Motors Insurance.