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Flood Coverage, Broker-Direct Balance, Stampede Breakfast, IBAC (CAIB) Volunteers, Orlando Massacre

Posted By Thom Young, June 21, 2016

Flood Coverage

In my discussion of federal political advocacy last issue, I mentioned that the politicians all seem to be very aware of and interested in our industry’s response to the need for flood coverage. I’m always quick to mention the terms “overland water” and “sewer backup” in the discussion because people need to know that the changing dynamics of these coverages seem to be merging them into one. In order to drive flood coverage towards premium adequacy, you can’t have one without the other in some markets. It’s a saleable perspective: if you are in an area where you should be concerned about a sewer backup, you should be also concerned about overland water. Most people will agree that the proximate cause of most sewer backup is actually overland water. Combining the two coverages eliminates “the chicken and the egg” claims discussion that generates public confusion and protest when one side of the street is covered. This random coverage is an ongoing issue because many companies are still not providing any coverage for “overland water” perils and are offering only the old “sewer backup” endorsement. This competing coverage is now both a public issue and a broker E&O nightmare.

The failure of the insurers to develop a standard of coverage that is set out in common wording and is used by all companies referencing this protection will likely be a major issue for our business. No company or insurance adviser is immune from the confusion that will arise with the next catastrophic loss in a major urban centre. If we as brokers are advising clients to take coverage with one company or another but are confused by the variances in the wording and the special limits for “overland water” or “flood” coverage, we will not be able to describe the differences sufficiently for the client to understand the coverage and make an informed choice. Consequently, we will be held responsible for any shortfall in the coverage that causes the client an uninsured loss. Of course, the insurers will suffer the same challenges and may even be found liable to the public for failure to set a standard of coverage, but any liability charges would be years after the headlines sullying our reputations have long passed.

The political perspective on disaster relief programs may further jeopardize public good will. Some provincial and federal politicians have suggested that the programs in place for uninsured losses from flood can now be reviewed and the budgets for them limited so that these funds can be freed up for other needed programs. Well, the reduction may not be that simple. As most brokers will tell you, “overland water” coverage is excluded for those living within 300 meters of running water and the new forms won’t likely even cover “sewer backup” for these folks. When these exclusions become apparent after the next weird weather event, don’t be surprised if you’re asked to explain what happened. I can’t help but note that, as I write, the community of Dawson Creek is suffering from just this kind of thing. I know everyone’s tired of hearing me quip that we are just three days of rain away from a repeat of the 2013 flooding that devastated Calgary and High River. I recently toured some of the work underway to mitigate the Highwood River’s potential to create havoc again. While mitigation is happening, we’re far from prepared to deal with the kind of flood we saw just three years ago.

Nature Abhors a Vacuum—Eventually Everything Finds a Balance

The issue of “broker” companies entering into the direct-writing business is always foremost in discussions between brokers. Of particular concern is the manner in which the competition takes place and the use of the data accumulated from the customers for further sales and marketing by both the brokers and the company. The other main concern remains the name by which the competition takes place. It should be clear to anyone that competing with your brokers by using the same name as that used to write the business the broker sends the company is seen as a breach of trust, a violation of the exclusivity anticipated in the contract between the broker and the company and just downright wrong! To further belabour the point, the public is also very confused when they see the same name on the insurance contract that is on the broker’s wall and advertising. They expect to receive service and advice from the broker. Well, this confusion will of course sort itself out, eventually. If a “broker” company wants to be a “direct writer” under the same name as it is a “broker” company, then it will damage the relationship. Their support from brokers may wane to their detriment. All things being equal, I believe they will either have to commit fully to participating in the marketplace one way or the other.

With more competition in the direct-writing market, the direct writers may well be gearing up to hold their market share by offering their products at the same price through the brokerage market. According to Canadian Underwriter, “CAA Insurance Company announced on Thursday (June 16, 2016) that it has appointed 17 ‘well-known and experienced brokerage firms across Ontario’ to provide its customers with more choice.”

This is quite a move for an affinity-group insurance company. Would a membership in the Automobile Association come as part and parcel with an insurance application? I wonder as well if the agent will get a fee for this part of the transaction. Auto clubs have affected the insurance industry before. The roadside assistance endorsement SEF 35 was created to provide a direct competitive response by the insurance industry to the entry of automobile clubs into the automobile insurance markets. An actual Auto Club package that provided some of the auto club services such as mapping and hotel planning used to be sold by brokers for one market. Now most that has gone by the wayside—no need to spend an hour talking about a road trip with someone when you can simply Google a route (complete with turning directions) and immediately get a whole bunch of information on all the amenities you might need on your trip. As in most of the travel industry, technology has taken over the heavy lifting, leaving little money for the service providers, but the affinity group of auto-club members continues to survive. In Alberta, their operations seem quite healthy, and they compete actively in the insurance and travel marketplace. I wonder if they will be appointing Alberta brokers to represent them. If not, I’m pretty sure they’ll be watching the success of the Ontario efforts closely. I know I will be.

Stampede Breakfast in Calgary, Wednesday, July 13, 7:00–11:00 a.m.

9705 Horton Rd. SW, CGY, Southland parking lotCome and join around 1500 of our closest friends for a regular old-fashioned western whoop up. There’ll be lots to eat, world famous chuck-wagon drivers, line dancers, and a live band. It’s our 23rd time, and I think we’re starting to get it right. This has turned into an “all industry” event that you don’t want to miss. It starts early enough that even the 15 people in Calgary who do any work that week can get in on the fun before they get to the office.  

IBAC Volunteer Work—CAIB Review

I’m working my way through the chapters of CAIB 2 covering business interruption and crime coverage and reviewing their content for relevancy and accuracy in our ever-changing marketplace. Reacquainting myself with the material is interesting: I find I learn more by teaching than I ever did by studying. As I’m plodding along with this project, the thought crossed my mind that those of you far more in tune with the current market than I am might have helpful contributions to these topics. If you, do I’d be happy to include them in my overview of the suggested changes to the instruction program. For example, we’ve come a long way from the old 3D wording as the basics for crime coverage, but all the new package stuff just builds on the old foundation. I wonder if tossing out the basics might hinder comprehension of the reasons the new package works the way it does. Many of you are far wiser on this topic than I, so I’d welcome your ideas. The email address below is my personal one. Feel free to drop me a note.

In Closing

Real life is stranger than fiction—watching the news these days sure hammers that saying home. The events unfolding to the south of us make me pause and reflect. The aberration that occurred in Orlando leaves me simply overwhelmed with grief for the people killed and injured and their families. I can make no comment that makes any sense of this. It is just so sad. Something has to be done. While I can hope for change, the lack of it after the massacre at Sandy Hook leaves me with a fatalistic view, believing that it will continue to get worse before it gets better. Pray I’m wrong!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

 

Tags:  broker channel  CAA  CAIB  competition  direct writer channel  disaster relief  Hill Day  insurance industry reputation  mitigation  Orlando massacre  overland flood insurance  sewer backup insurance  Stampede breakfast 

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Troublesome Flood Coverage, Uber Legislation without Industry Backup, Mark Prefontaine Seconded, Blog Activity

Posted By Thom Young (Full first name: Thomas Clifford John), February 22, 2016

Troublesome Flood Coverage?

The introduction of another company’s coverage for overland water (used to be called flood) leaves me underwhelmed with the industry’s attempts to meet the needs of our customers adequately. The underwriting of these products seems limited only to those who are outside of the red zones demarcating high risk for overland water damage. Since the number of insurers even willing to provide this coverage remains minimal, adverse selection will likely favour those who don’t get on the bandwagon. Only those who live where the flood risk is the highest will want to purchase the coverage. Those who don’t live in those zones won’t want to share the cost for claims and return on equity through their premiums and will seek another provider. Well, we’ve been here before, and history repeats itself.

A recent article in Canadian Underwriter magazine sums up a lot of the data being developed to map the risk of flood coverage in Canada. While the accuracy of the models in use can be easily challenged, data management, even with suspect data, is the baseline necessary to determine an actuarial model of rate. As I’m often reminded when I think of those very difficult classes in statistical analysis that I endured way back in the day, even poor data enables easier adjustments in the equation than hypothetical estimations. Although all actuarial prediction is really hypothetical, I know several actuaries who will spend tremendous energy vigorously arguing the scientific merits of their predictions, even when the historical accuracy is different. Such is the mystic nature of number manipulation. Regardless, the data from the research shows that "20% of Canadian [households] could be qualified as high risk, based on our metrics and about 10% of those would be considered very high risk and that's about 1.8 million households." That percentage implies 18 million households and numbers that should lend themselves well to actuarial predictions on the average loses per household from flood. If the actuarial mapping results in the application of a proper rate for these risks, then the competitive contest for these risks will have a proper outcome. If not, then little interest will be generated for continuing to provide coverage for this peril, and we’ll be back where we began.

Of course, identifying the risk exposure is the first part of the process. Knowing that 1.8 million homes are at an ultrahigh exposure to the peril won’t be very helpful until the frequency of loss is determined. In reality, we have no records for most of North America that are relevant for losses of any type over 150 years old. Forest fires, flood, and earthquakes that occurred over 100 years ago had little consequence to any large group of people simply due to the demographics of that historical era. If 10% of the dwellings in Canada incurred such a loss in any calendar year, people would clearly be concerned about the availability of coverage in Canada, but that’s not the way catastrophic losses work. Flood losses usually occur in a small localized area on an infrequent basis. We toss around terms like 100-year, 500-year, and 1000-year floods as if they have meaning when, in fact, these descriptions are only an excuse for the lack of mitigation efforts.

I still believe that flood coverage needs some form of statutory basic wording so that the competition between the insurers is based on risk selection and premium, rather than on limiting the coverage through different definitions of the peril. As brokers, we should not be forced to present our solutions to the clients based on the shortcomings of one company over another in the definition of the insured peril. That process is confusing to the public, fraught with errors and omissions exposures for each of us, and goes against the principles by which we currently manage the competition between our insurers. When the choices go beyond the cost and drill down into the wordings, how do you assure clients that what you are giving them the best option in the market? How do you know which company has the most comprehensive coverage when you have no access to its wordings? When we present options to our customers, will we have to provide a disclaimer that “better coverage may be out there, but this proposal is the best I can do?”

Some may say that forcing statutory wording upon the insurers is unfair and that a residual risk-sharing facility could allow those companies that prefer an alternative wording to cede their risks into a pool. Australia and England follow this practice to provide an even playing field in the market for these coverages. In these jurisdictions, the capital necessary to backstop these losses comes from government guarantees that insure neutral charges to the insurers. Strangely enough, the losses in these pools have been manageable and have produced positive cash flow. Stability appears to have some advantages over time.

The efficacy of flood coverage in Alberta will not be tested until the next significant flood event. I, like most observers in our industry, will be watching closely to see if this recent private-corporate response will mitigate the amount of money our governments end up throwing at these losses. Whether the premiums for the coverage produce underwriting surpluses or deficits will also be interesting to see. Time will tell.

As I reflect on the review of yet another “new” overland water endorsement and attempt to determine what makes it better or worse than the other three I’ve looked at, I’ll close this discussion today by once again pointing out that I’m not alone in my continued insistence that consistency is preferable to total confusion. We need more industry leaders calling for an agreeable wording that sets a baseline for overland flood coverage and standardizes the coverage. While supporting the need for consistency, Philip Cook, CEO of Omega Insurance Holdings Inc., suggests another approach to consider—developing catastrophe coverage that would respond to a variety of catastrophic losses.

Municipal Uber Legislation without Industry Backup

Many articles have appeared in the press about the municipal legislation that Edmonton City Council passed to address this new (old) form of ride sharing, and most of them are touting it as the new model for municipalities across the country to address the issue in their locations. The legislation didn’t make everyone happy and was particularly unpopular with the taxi owners and drivers who see this new entrant into the livery business as direct competition to them in their highly regulated and access-regulated marketplace. Still, it was an attempt to find a compromise that addresses the reality that Uber is here to stay, and ignoring it or waiting for it to go away is not likely going to change that. The legislation requires Uber drivers to match the level of insurance protection that is in place for the traditional taxi industry. While the model seems to resolve a number of issues, it unfortunately fails to address the fact that the insurance industry has yet to introduce the new coverage products. So far, I’ve seen one company announce that a new product is coming, but I’ve seen no information yet as to what it will look like or cost, or when it will be actually available. Some companies have tightened their underwriting procedures and included questions that specifically ask if customers are using their vehicles for ride sharing, while others are polling clients on renewal for confirmation of their current use. Meanwhile at the regulatory level, no changes have been made to the SPF 1 in Alberta (or elsewhere) regarding ride sharing of any sort, the SEF 6 has not been modified to allow for Uber-like exposures and rating, and no additional endorsements regarding ride sharing have been created. Under the automobile regulatory regime, any such changes would have to be approved by the Superintendent of Insurance in Alberta for use, and, as far as I am aware, nothing is pending on these.

While the Edmonton municipal authorities have addressed the problem, everything else remains in limbo pending the application of the insurers for new tools and the approval of the regulator for their use. So, despite all the optimistic articles on this topic, nothing has changed so far.

If anyone has anything new to share on this issue, I’d be happy to hear about it.

Mark Prefontaine Seconded

Speaking of the regulator, did you know that our current Superintendent of Insurance, Mark Prefontaine, has taken a new temporary role within the finance ministry? While our government has made no official announcement as yet, the following memo about Mark was posted on the Pension Information page in the Alberta Treasury Board and Finance website:

Effective January 11, 2016, Mark Prefontaine will be taking a one year secondment within Alberta Treasury Board and Finance as Senior Assistant Deputy Minister. Mark will be working closely with the Deputy Minister and will be responsible for  key organizational strategies and will oversee and manage special projects and priorities spanning across government, the department and multiple divisions of Treasury Board and Finance.

Please be advised that Nilam Jetha (see bio) will be the Acting Assistant Deputy Minister of Financial Sector Regulation and Policy (FSRP), and also the Superintendent of Pensions, Insurance, and Financial Institutions. Nilam has been with FSRP for the past two years in a project management capacity, and brings over 25 years of Government of Alberta leadership experience to the role.

I suspect that in due course additional information will be distributed. However, I would have expected/appreciated a more widely spread official government message assuring us all of continued stability in the regulation of our volatile industry. In a memo on February 18, 2016, George Hodgson assured us that IBAA will continue to have a good working relationship with the Superintendent’s office, that he has met with Ms. Jetha, and that Mark will assist her throughout the transition. That message may help quell uncertainty among IBAA members, but the transition affects more than those in the association. Official reassurance from the government that the course of the department will remain steady should be a priority.

In Closing

As I sit here in Playa del Carmen looking out over the pool and the beach, I’m reminded in the top right corner of my computer that the weather in High River is less than 10 degrees off of what we’re enjoying here. The pool is likely cooler though!

We could use some more subscriptions to this blog. The distribution list (while rising) has deteriorated substantially since we made it necessary to get to the website to view it. Please let your staff know that it is still being produced and easily available. Website interaction on any of the issues I’m going on about is also lacking. I’d very much like this blog to initiate a dialogue with several people on some of these points. Come on, folks. Give it a try!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

 

Tags:  catastrophic risk  E&O  livery business  Mark Prefontaine  Nilam Jetha  overland flood insurance  ride sharing  SPF 1  statutory coverage  Superintendent of Insurance  Uber  Young's Stuff subscription 

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Cat-Risk Preparedness, Overland Flood Clarity, IT Basics for Insurers

Posted By Thom Young, November 17, 2015

Cloudy with a 50% Chance of a 5.5 or Greater Earthquake in the Next 10 Years

In our technologically advanced world, we are often underwhelmed by our ability to predict natural events with any degree of certainty yet overwhelmed when experts predict calamities and trends. Meteorological predictions beyond three days in the future retain little more than a 50% accuracy rating, which, as any statistician will tell you, has the same certainty as flipping a coin in the air. As I’ve often noted, the science of weather modeling really only began in the 1970s when the first weather satellites were launched and began collecting rudimentary data that advanced the understanding of weather in general and, particularly, of hurricanes. As modern technology has exponentially increased the amount and type of data upon which the science is based, the science continues to evolve. New data sometimes contradict the old hypotheses and provoke new insight. The National Oceanic and Atmospheric Administration (NOAA) and its one of its partners, the U.S. National Weather Service, meet to determine warnings and updates about the upcoming hurricane season.

The accuracy of this information may depend on perspective. A statistical review from a Houston newspaper claims NOAA’s predictive analysis is accurate “6 out of 10 times, or twice as often as chance would predict” based on the average number of hurricanes per year, and the NOAA website confirms this ratio of around 50%. Further, the Houston article indicates that the accuracy assessment was affected by the small sampling. All that considered, the information seems about as helpful as standing at the edge of the ocean and reading the Farmer’s Almanac.

Seismologists are predicting a catastrophic earthquake and tsunami in the Pacific Northwest—much like the 2011 event that occurred in Japan—is inevitable, could happen at any time, and would involve the heavily populated areas of Seattle and Vancouver. They opine that the magnitude of such an earthquake is indeterminable but that the area is long overdue for a “big one” and calculable pressures along known fault lines are the highest they’ve ever seen. References abound to the specter of a disaster along the lines of that portrayed in the movie San Andreas, but saying that a major earthquake is inevitable is no more useful than forecasting another eventual ice age. The motivation to prepare is substantially reduced if the inevitability has no sense of urgency or expiry date. Inevitability also evokes fate: if nothing can be done to avoid the disaster, getting ready for it won’t be the number one item on a list of things to do “someday.”

The governments charged with protecting us from disasters are allocating money to build shelters and create emergency resources. Emergency protocols are being practiced. I predict these efforts will not be enough. The “big one” will overwhelm the infrastructure in place and the ensuing chaos will include devastating personal suffering and economic turmoil, much like that we’ve seen in Japan and Indonesia. These countries are still trying to recover from the effects of earthquakes and tsunamis. I advise everyone to be prepared! Put together a survival kit. Make sure to have at least 12 liters of water and three days’ dry food per person in your household. Have a heat source available that isn’t dependent on the probably crumbled infrastructure. Hope that after 72 hours either you have been evacuated or the infrastructure will be available for use. Your cell phone and lights will not likely work very well if at all when the floors collapse, so plan for the worst. Those who consider the contingencies and possible responses will have a better chance of survival.

Enough of the doom and gloom! Chances are the big one won’t happen in the next 100 years. Toss that coin often enough and you’ll eventually be right!
 

Confusing Overland Water (Used To Be Called “Flood”) Coverage

These past weeks have seen several announcements and a number of reports from various insurers on their participation in this coverage for personal-lines risks. If those of us in the industry are confused, we won’t likely be able to assist our customers in understanding their options for coverage. If your clients are insured with company A, they have coverage for sewer backup so long as a flood doesn’t occur either 72 hours before or 72 hours after (I think). With company B, as long as they are outside of the red zone by any waterway, we might be able to cover them for sewer backup—unless the overland water reaches a point higher than the imaginary line, but maybe not for overland water (I think). Company C is putting together another new wording that doesn’t match the wordings of Company A or B but has the same intent. Company D is considering their options. What a mess this has become! Without standard wording, how do we develop an informed recommendation to the buying public? The confusion is getting worse with every new wording announced in the competition for personal-lines business. Can anyone say E&O nightmare? Am I the only one who is looking to the horizon in anticipation of the next serious water event in Alberta? What kind of claims mess will we be sorting out as a result? Need I remind everyone that three days of rain such as we had in 2013 can produce a similar event? Sure, mitigation efforts are underway, but the assurances are coming from the same engineers that approved the construction of numerous housing developments impacted by the July 2013 event.

The deviations from a norm cannot be sanctioned in package wordings. For the process to work, all industry players must offer a similar promise to respond to a similar event. They cannot limit or exclude things that are covered by the wordings already in place. The differences lead to confusion in the marketplace and undermine the confidence of consumers in the advice they receive from agents and brokers.

Package policies were developed to provide consumers a common and expected minimum coverage and to provide insurance companies with a basis for competition. The rule in the development of standard IBC package policy wordings was that everyone would build from the same basic wording so every consumer could be assured that the basic coverage was identical from company to company. Beyond that, each company was free to enhance its coverage and provide all the extras it wished to consumers, excluding modification to the Statutory Conditions, which were still required. This rule of consumer protection seems to have changed with overland flood coverage. Since definitions and limitations are all over the place, brokers are in a precarious situation (E&O risk, as well as professional reputation) when trying to advise their clients, and the public may be unsure of what is covered and the value of their premium dollar.

We need to act now. Broker and consumer associations must call for clarification of this matter. IBC should be looking for consistency among its members on the wordings in use to define overland flooding and the limitations of its availability. The public properly expects that what they are buying from an insurer is defined the same way no matter how it is packaged or which  insurer they choose.
 

Should Insurers Buy an IT Company?

I was amused by a recent article in which the author suggested that an insurer should purchase an IT company. The headline caught my eye as I determined that finally someone was on the right track to resolving the IT nightmare that we endure. The archaic legacy systems that the insurers continue to use are inefficient, slow, and limited. The continued attempts to improve accessibility and efficiency by introducing unworkable “portals” that offload inefficiencies onto the broker cost the industry millions of dollars in administrative costs and stress. Since I was hot under the collar before I even started to read the article, imagine my surprise when I found that the article was only suggesting that such a purchase would help insurers understand and mitigate cyber risk. The author’s view that risk mitigation would be the main benefit certainly suggests he doesn’t understand the issues, at least those at stake from my perspective.
 

In Closing

I have followed the geese and am writing this column from the side of my pool. Please send me a note about things you’d like to hear about. It’s hard to stay focused on insurance issues without your feedback.

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  catastrophic risk  consumer protection  E&O  earthquake  hurricane  IT  overland flood insurance 

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Flood Coverage Confusion, Demise of the Broker, Driverless Cars, AIC Online License Application

Posted By Thom Young, October 7, 2015
Well, the frost is certainly on the pumpkin in Southern Alberta. As a rather large flock of Canada geese heading directly south flew right over my place, the last one looked back at me as if to ask “What are you waiting for?”  Our fall departure for the southern climes has been delayed since our usual date coincides with the birthday of our middle grandchild. We’re not allowed to be away until after that. Besides, I’ve still got much to get done here this fall, so my Canadian perspective on things remains pure at the moment.

Flood Coverage Confusion

In addition to the usual number of interesting things to talk about at the couple of industry gatherings I’ve attended in the past few weeks, “flood” coverage and its limitations seems to have generated quite a bit of confusion. Many people are concerned about the new limitations on sewer backup endorsements that insurance companies are slipping into customer renewals. The implications for E&O exposure on the broker side are staggering. Clients may think they have coverage but don’t if the proximate cause is “overland water.” If a nearby creek over flowed its banks 72 hours before or after the sewer backup, then the proximate cause is “overland water.” In the past, many of us wondered why sewer backup would respond when the proximate cause was flood, an uninsured peril. Questions of this nature used to be answered with a blank stare, but now an actual wording limits the cover. Do clients still have good coverage? Try explaining the coverage and all the limits and exclusions when, as a broker, you’re not sure about the benefits yourself. The real kick on this will come with the next major flood event, which could be next year or not for five. The interpretation and, more importantly, limitations and exclusions of these coverages will not be firmly established until we meet up with a catastrophic loss. I worry about my customers and the way these changes impact my responsibilities to them.

Advice on the “overland water” coverage provided by various companies is even more difficult. The only wording I’ve been able to secure is the one from Aviva. I’m told that The Co-operators has one on the market and that Wawanesa and Intact are soon to enter into the competitive fray, but I’ve no idea how one product compares with another. Explaining the differences must be very confusing for a personal-lines CSR. A jaded person might suggest that the new coverage isn’t sufficient enough to move forward with a competitive response in any great urgency. We are back to the original conundrum with flood coverage. The coverage needs to provide adequate distribution of risk and sufficient premium to deal with claims. These are interesting times for insurance brokers and even more confusing for the buying public. Oh well, who needs brokers? I’m sure an internet link will eventually provide all the correct answers.

The Demise of the Broker

Once again the industry press is predicting that insurance sales intermediaries (the fancy legal term for sales people) are on the road to redundancy. According to those who claim that you can find online information to purchase just about anything without any assistance, sales people are irrelevant, an unnecessary distraction, and perhaps an annoyance. Online information sites are becoming better, they claim, and giving intelligent choices with proper information prompts to allow the consumer to purchase increasingly complicated things without the need for a company representative. These statements are all true but, and it’s a big BUT, one of the most important parts of arranging a contract that promises to do something in the future is the meeting of minds when the deal is struck. When only one mind is in play, the value of the contract is uncertain because of potential misinterpretations. The legality of the contract may be suspect as well.

Look, I’m not one of those anti-tech people. I’m all for using any available distribution method to get our products and services out to the public, but at the end of the process a real person must negotiate the interests of all parties to the transaction to ensure that their real needs are met and the legal process of the contract is respected. I support the notion that the value added of a properly trained insurance adviser will continue to be an important part of the distribution process for all insurance products. Any suppliers (insurance companies) that fail to understand the support they get from such an individual risks their business success. All of the technical simplifiers, online applications and quotes, information algorithms, coverage prompts, and flashy digital pictures used by the insurance companies serve only to drive to the finished transaction between two people, the insured and the broker/agent. The manner of this meeting could be changed by technology, but the importance of it and the value to all parties won’t be.

Speaking of Human Redundancy, What about Driverless Cars?

As the technology continues to advance in this field, we are very close to the tipping point where these vehicles become a reality in the norm. No longer just a strange thing, they will be reliable and cheap enough to become a common sight in many jurisdictions. Getting to this stage won’t be easy. Many hurdles will need to be jumped before the legislation becomes uniform enough to operate these vehicles in different jurisdictions. Further, the reliability of these vehicles in operation will need much demonstration, documentation, and proof. Who is going to insure these vehicles? Who is the insured? Current legislation in Alberta would likely see the vehicle insured in the facility market. The insured would be the owner of the vehicle as per the statute wording of the SPF 1, which defines who is insured. The owner would include the driver whether that be a computer with AI capability or your brother-in-law who borrowed the vehicle while visiting town. The driver will need to be more properly defined, but such definition is not an insurmountable obstacle as the usual operator (normally the owner) would be produced for the application record. In my view, the functional manner in which that person operates the vehicle or delegates its operation would be irrelevant (I repeat, in my view—legal disclaimers abound—this is my opinion). Definition of the driver may have some grey areas that may challenge the regulators, but let’s hope they’re looking at it now and have some kind of contingency in place to deal with it when it happens. Our Alberta regulatory response to changes in our business has tended to follow the leaders instead of making good changes for our market by being the leaders (again, IMHO)!

If anyone thinks we’re talking about something way off future, think again. On last report, 48 vehicles are being operated in a California Google study. These vehicles operate in a highly dense urban environment and function extremely well all on their own, with no human intervention in the completion of their assignments. Yes, some minor accidents have involved these vehicles, but none of them can be defined as at fault—so long as you don’t use the other drivers’ distraction at a driverless vehicle as an excuse. The tests incurred some minor injuries in accidents but, again, they were due to the manual operation of the vehicle by technicians. No reports have been made of any traffic violations in the operation of these vehicles. While only four states have made provisions for autonomous vehicle operation, their use will doubtless soon be expanded to new jurisdictions in short order.

The concept of a self-driving automobile lets the mind wander into some interesting possibilities. For example, in a Top Broker editorial, Jeff Pearce discusses flying cars.

Certainly, driverless cars have a huge number of benefits. All of the advantages of having a chauffeur come to mind.

That $26 a day you pay in parking won’t be much of an issue. Just send your vehicle away to wait for you to tell it to come pick you up. Where you send it might be an issue, but I’m sure you could program around that hitch.

Auto theft would become an issue of the past. Imagine trying to steal a car that’s driving you to the police station, emitting an alarm, and has already sent the police a picture it has taken of the crook trying to steal it. Following that logic, your vehicle can become part of your home security system, keeping an eye on things around the house and reporting suspicious activity to you.

What about the kids needing to get to the rink or to dance? No more juggling schedules or negotiating with other parents to get them there and back—just send the car (or the other parent’s car).

Studies claim that the average person who lives and works in a high density urban environment spends as much as four months of their adult life looking for a parking place. Imagine how many more clients you could see if your car just dropped you off and came back to get you when you were done. Your productivity would increase substantially.

The technology has huge implications for the insurance industry, most of them very positive. Loss ratios on automobile insurance are composed substantially by administration and adjudication costs. Imagine the elimination of arguments regarding fault by the ability to review 360° digital recordings of the accident scene prior to the accident, during the accident, and after the accident? Much less discussion will be needed to determine who did what and who should have done what. The mind boggles. In some insurance markets, recording technology is already making a difference with the mandatory use of GoPro technology in commercial automobiles. We’re moving that way here too as the price of this technology declines. The price won’t be an issue when it comes built into your next automobile.

The mind can wander into the future. We can embrace new technology and work with it, or not. Based on my own musings here, the positives far outweigh the drawbacks. We certainly won’t be talking about distracted driving anymore, and underage drivers will be in a different class than they are now. The future is ours!

New Technical Frontiers

Speaking on the issue of technology advancement ….

As one of your representatives on the General Insurance Council, I’ve been working to resolve an amendment to the cumbersome regulations surrounding the DR’s role in recommending an individual for a license. As it now stands, only the DR is able to sign the application to sponsor an individual for a license. The DR is not able to delegate this authority to any other individual in the office. While this duty likely isn’t much of a burden for those operating a smaller shop with only one office and a few employees, the larger the brokerage, the more cumbersome this requirement becomes. New hires in branch offices are often stuck in an unproductive limbo waiting for the paperwork to get completed to give them the proper authority to act as an agent. If the DR is away on holidays or sick leave, further unnecessary delays can occur. In the logical flow of things, particularly in a multiple-office brokerage, the branch or office managers are responsible for the all functions of their location. They recruit, hire, and train new staff and are entrusted with all the duties of a self-directed senior manager except the submission to the regulator to transfer or change the license of one their employees. The DR in head office needs to sign the paperwork physically. I’ve maintained for years that this requirement is inefficient, impractical, and unnecessary. I know many other DRs share my perspective.

Recently, the AIC sent out an email advising of new online provisions for Levels 1, 2, and Probationary New License Applications. If you have not done so already, I strongly suggest that you familiarize yourself with the contents. Transfers and Level 3 General applications are still being handled in the old manner, but I’m told these procedures will also be updated. DRs can now delegate supervision of these online application preparations. DRs still need to endorse the submission to the AIC, but, now that it’s online, DRs can review and digitally endorse the transaction from wherever they are. This provision should provide greater efficiency and speed up the process.

I wonder what the take up is and will be on this processing ability and if it will in fact reduce the amount of paperwork. I will be asking questions about the new process at the upcoming GIC meeting and encourage your feedback on this topic. While I’m supportive of these changes, I still feel the process can be adjusted to provide for the complete delegation of the DR’s authority within larger organizations. I can’t seem to get the point across that the delegation of authority doesn’t negate the responsibility. Please let me know what you think.

In Closing

It’s hard to remain focused and unbiased given the political climate at the moment. It’s hard to be complacent with so many issues before us and so many different points of view! Still, as I voice my opinions in this column, I want simply to remind everyone to exercise the right to express your opinion at the ballot box. I cannot stress enough that this ability is your ultimate right to self-determination. Your vote can help change the things that are bad in the world and make a difference for everything that needs to be supported. This right has been fought for through many generations. The equality demonstrated by the line ups at the voting booths is one not shared by many other people in our world. Tyrants and brutal cultural influences that mute the voices of the people don’t belong in a modern society. Many young people in our new technological society don’t see the need to use this franchise or don’t believe their actions make any difference. They see the “trending” perspective instantly on issues and can’t understand how slow the process of a functioning democracy is to change. That slow process becomes even slower when people don’t vote. Politicians won’t think about to your concerns if they know that listening to your problems won’t get them a vote. Make a difference and get involved. Get out and vote. If you don’t care enough to get out and vote, you can’t later complain about what the government is doing!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  Alberta Insurance Council  Aviva  Aviva overland flood policy  broker channel  competition  customer service  DR authority  driverless cars  Google  GoPro  Intact  online insurance  overland flood insurance  sewer backup insurance  The Co-operators  Wawanesa 

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Stampede Breakfast, Normal Prairie Weather, Will Rogers' Common Sense

Posted By Thom Young, July 28, 2015
Updated: July 23, 2015
I love summer!

Well, for those of you working out of Calgary and area, the end of this month will likely be much more productive than the beginning. The greatest outdoor show on earth annually bites into business productivity for the first two weeks of each July. Once the Stampede is over, work catch up begins. While efficiency experts debate the value of invested time and effort in this kind of frivolity, in my opinion the positive gains in business promotion and employee morale far outweigh any losses perceived by the brainy bunch! And the work always seems to get done.

This tradition of ten or more days celebrating part of our Western culture is well received by the insurance industry in the Calgary area. In 1993, we felt a customer-appreciation day was in order and sent out invitations to all our clients and brochures to all our neighbours announcing that we’d be having a stampede breakfast on the Wednesday morning of stampede week. I think about 300 people showed up that first year, and we determined the promotion to be a smashing success. The next year, when Southland Registrations opened, we partnered with this sister firm to expand the event. We hired a band and invited underwriters. On average, some 1000 people began to show up for breakfast. As our efforts continued to evolve, we hired a better band and chuck wagons with drivers who signed autographs and posed for pictures. Even our competitors began to drop by and wish us well. About five years ago, we declared this an all-industry event and began promoting it with everyone associated with the insurance business.

The usual turn out is between 1500 and 2000 people browsing through our head-office parking area. Some people wait as long as half an hour for a pancake and a couple of sausages. 50/50 tickets are sold to raise money for the food bank and, on the whole, a great social gathering occurs.

Lundgren and Young Stampede Breakfast This year our stampede breakfast was again a great success. The numbers attending were toward the higher end of the scale and a terrific time was had by all. Those who had their picture taken on the chuck wagon with Kurt Bensmiller will be glad to know that he took it all at the Stampede this year. We’re proud to be associated with the Bensmiller wagon racing team, and it was really nice to see my friend Buddy Bensmiller hop up on his son’s wagon as he took his bows after winning the Rangeland Derby on the last day of Stampede. Buddy retired from racing two years ago and his son has carried on the family tradition of winning chuck wagon races and championships. You can’t beat that kind of succession planning success!

Sewer Backup, Overland Flooding, and “Normal” Prairie Weather

Just west of Calgary, two summer storms blew through the bedroom community of Chestermere Lake. The first storm resulted in a quick downpour of hail followed by a torrent of rain, which resulted in storm sewer systems backing up and the water finding its way to the lake by whatever route was available. Overland flooding occurred in a number of homes. Storm sewers and regular sewers backed up for a number of residences in the community. Two days later, another storm complicated the cleanup efforts of the residents with an almost identical set of circumstances. Some people just can’t catch a break.

These events drew a lot of media attention, many referencing the previous flooding issues a couple of years ago in Alberta, even though that event had no similarity whatsoever to this relatively normal weather event. In this case, the community in question is relatively new, the area affected by the infrastructure’s failure to deal with a normal weather event was minor, and the number of residents impacted was limited to some 300 homes. These details do not limit the impact on the individuals in question, but the media seemed overly focused on the tribulations of those affected. This slant was tempered somewhat when one of the people mentioned in an interview that this event wasn’t as bad as the last one they had.

I had some personal discussions with an affected insured who questioned why his policy didn’t cover sewer backup, a question that was somewhat surreal as the coverage was through a limited form provided by a nonstandard market for problem risks. The insured in question had three prior claims for sewer backup in the past four years—all for amounts in excess of $100,000. The incumbent insurer had refused to renew, and finding this insured coverage even on a limited form was not an easy thing. Still, the insured seemed to feel that the fact that he was not covered for this repeated and unmitigated event was the fault of our industry and not the failure of the municipal engineers or the home builder who plunked his home foundation in the middle of the reservoir draw without providing a non-obtrusive path for the water to take—never mind the wisdom of the insured in refinishing and refurbishing a part the home that has now been under water four times in the past five years without taking into account the reasons for the problem. No doubt, the provincial disaster relief fund will find a way to push some more good money after bad on this risk as well.

This weather event has brought a number of reflections and interpretations on the new wordings in use by some insurers, particularly the limiting of time in the process of adjudicating a claim. What defines the results of an overland flooding event in which our insured was not affected but his neighbours experienced a sewer backup within the 72 hours following the overland flooding event, even if the sewer backup was not consequential to the overland flooding event? I’m getting a headache thinking about this one. The claims adjusters are following the old axiom: when in doubt, deny!

These issues still call for much work.

As I finish this column, severe weather is tracking through the centre of our province. Communities to the south of Edmonton are being pummeled by intense hail and rain storms, and tornado watches are in effect. The normal midsummer Prairie weather continues.

Common Sense Ain’t So Common

Way back in the ’70s when I was working on a diploma in business management, I remember a rather lengthy discussion about common sense. Many may concede truth to such simple aphorisms as “never judge a book by its cover” or “too many cooks spoil the broth.” Others like these come in the life-instruction manual passed down to us by the sages of wisdom in our families and communities. Rarely are any of them questioned, but every once in a while someone will point out that many of them can be seen as contradictory and confusing. The axiom that “many hands make light work” overtakes the point about the cooks, doesn’t it—well, at least when it comes to something other than making soup?

One of the most well-known purveyors of good old folksy wisdom is the often-quoted Will Rogers. While he spent a short time on the planet, his meanderings continue to inspire and amuse. Here’s a piece about him and some of his sayings for your midsummer amusement:

Will Rogers"Never squat while wearing your spurs."

Will Rogers, who died in a 1935 plane crash, was one of the greatest political sages this country has ever known.

Enjoy the following:
  1. Never slap a man who's chewing tobacco.
     
  2. Never kick a cow chip on a hot day.
     
  3. There are two theories to arguing with a woman.
     
  4. Never miss a good chance to shut up.
     
  5. Always drink upstream from the herd.
     
  6. If you find yourself in a hole, stop digging.
     
  7. The quickest way to double your money is to fold it
    And put it back into your pocket.
     
  8. There are three kinds of men:
    The ones that learn by reading.
    The few who learn by observation.
    The rest of them have to pee on the electric fence
    And find out for themselves.
     
  9. Good judgment comes from experience, and a lot of that comes from bad judgment.
     
  10. If you're riding' ahead of the herd, take a look back every now and then
    To make sure it's still there.
     
  11. Lettin' the cat outta the bag is a whole lot easier'n puttin' it back.
     
  12. After eating an entire bull, a mountain lion felt so good he started roaring.
    He kept it up until a hunter came along and shot him.
    The moral : When you're full of bull, keep your mouth shut.
     
About Growing Older ...

First ~ Eventually you will reach a point when you stop lying
About your age and start bragging about it.

Second ~ The older we get, the fewer things seem worth waiting in line for.

Third ~ Some people try to turn back their odometers.
Not me; I want people to know 'why' I look this way.
I've traveled a long way, and some of the roads weren't paved.

Fourth ~ When you are dissatisfied and would like to go back to youth,
Think of Algebra.

Fifth ~ You know you are getting old when everything either dries up or leaks.

Sixth ~ I don't know how I got over the hill without getting to the top.

Seventh ~ One of the many things no one tells you about aging
Is that it's such a nice change from being young.

Eighth ~ One must wait until evening to see how splendid the day has been.

Ninth ~ Being young is beautiful, but being old is comfortable.

Tenth ~ Long ago, when men cursed and beat the ground with sticks,
It was called witchcraft.
Today it's called golf.

And, finally ~ If you don't learn to laugh at trouble,
You won't have anything to laugh at when you're old

In Closing

Well, that’s enough for this run. Those keeping track will note that I took a little break on the last deadline. It was sort of planned and some might say deserved. I’ve had a very busy summer so far and, believe it or not, much of it revolves around work for our industry. That’s not much of an excuse though, and, yes, I do know where to look for sympathy so you can keep your dictionary references to yourself. I hope all of you are enjoying our all-too-brief Alberta summer. Before the next issue, I will have traversed through four of our Canadian provinces and no doubt will be feeding a healthy crop of mosquitoes in each of them.


The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  Chestermere flood 2015  overland flood insurance  sewer backup  Stampede 

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Political Changes, Online Crime Increases, Overland Flooding Competition, AIC Update

Posted By Thom Young, June 2, 2015

To Quote Shrek, “Change is good, donkey”


When it comes to change, I’ve always sat with the optimists. Change of any sort can be disruptive and difficult for some, but it always brings with it new perspectives and new opportunities. Analyzing the effect of change in your marketplace gives you a competitive advantage, particularly if your competitors are slow to react or quick to react in the wrong manner. Being the first one with a positive message will always win you more credibility than harping about the difficulties the change will bring. Change is inevitable in all things; dealing with it is your only option. How you deal with it will determine how it affects you.

The political front is certainly a different landscape before us in Alberta. Doubtless, people had more than enough of the ruling regime and demanded change. You can debate whether or not the change they have effected is the kind of change they wanted, but that won’t change the outcome. The popular vote certainly did not go to the new ruling party but, with the right of centre divided and the left of centre united, the first past-the-post outcome in this three-horse race was assured almost from the get go. In a democracy, the will of the people cannot be denied, and we will have to deal with whatever changes are produced on that account.

The insurance industry will experience a number of years of trepidation. The NDP perspective on auto insurance is a threat to our businesses, and a hard market (should it arise even for a short period of time) would bring the political forces to bear upon this issue. Unfortunately, auto insurance wasn’t part of the discussion in this past election, and one would believe this topic presents no immediate threat. Our industry in Alberta has never faced this kind of threat before, so it would be wise to begin to prepare and strategize for possibility of the discussion. Interesting times?

One might observe though that the previous government wasn’t as kind to us as we all thought it should be. Premium roll backs on auto insurance were somewhat disruptive, not to mention financially difficult for us. Brokers in particular had to suffer commission charge backs, often arriving in a different fiscal period. The return of money spent because of a misguided belief that the public had been mistreated by rates was more than a minor inconvenience to many brokerages. That, followed by the introduction of auto insurance reforms that continue to interfere in the natural competitive market for auto insurance in Alberta, doesn’t support the notion that a right-of-centre government is better for our circumstances than the new incoming one.

Those of us who have registry offices have direct experience with the ineptitude of the previous government. A succession of nearly a dozen different ministers has proven a lack in the simple understanding of the challenges of running a business where your revenues are limited by regulations while your expenses increase unchecked. Registry agents have been doing their best to convince the government that fees charged the public should be adjusted through a fee model taking into account the factors that affect revenues and expenses. While the model is logical from a business perspective, for over 10 years the service fee received by registry agents has remained the same even while the government has increased its fees substantially over the same period. Considering just the increases in rents and salaries in Alberta over this 10-year period, it impossible to understand why requests for fee increases to account for these fell on deaf ears, particularly from a government that is supposed to be cognizant and supportive of business issues. I don’t believe you’d find too many registry agents who felt that the previous government was their “friend.” Who knows what’s in store for these businesses under the new government? The success of the registry agent service-delivery system in Alberta is the idol of governments everywhere. Will the government follow the principle that, if it isn’t broke, don’t fix it? We will have to wait and see.

I for one am looking for the new opportunities that will present themselves to us in short order.

Online Crime Continues to Increase


phishingRecently, an item circulated purporting to be from the Canadian Revenue Agency asking for credit card information in order to deposit your tax refund directly to your credit card account. This followed recent notices from CRA that the office would like to do away with cheque refunds and have you initiate a direct deposit for your refunds. CRA has a great site for this—safe, secure, and easy to use. Unfortunately, the email purporting to be from CRA wasn’t from CRA. The link took you to a site that sure looked like CRA’s but, of course, was a new twist on an old internet scam called phishing. An email purporting to be from a bank or insurance company asks you to click on a link and confirm your data. Once you do so, the data you input is stolen in a form of identity theft. Every day people are caught in this scam and the thought is always the same: “It looked real.” Well, that’s the point.

Protecting Canadians from online crime, new laws are now in effect and bring new rules about data management and cooperation with investigations. Still, other than on TV, law enforcement officials who are the least bit interested in investigating this kind of crime or have any of the skills necessary to actually do so are hard to find. Focusing on the most heinous of crimes involving distribution of images and abuse of children, these new laws are the first step to bringing actual legal discipline to our new communication technology, but we are a long way from consequences.

My advice on this remains the same. Unless you initiate the contact and are on a secure website indicated by the lock symbol, put none of your information on the internet. If in doubt, call the company and verify they are who they are. The electric company won’t even talk to you about your account without verifying who you are by asking you questions. You should not have more trust in the process than they have. Verify and confirm—sensitive information should be shared only when you are certain you are sharing it with the right people.

People caught up in the so-called CRA phishing scam gave out their SIN number, name, address, birth date, and credit card data—all the information necessary to begin the process of identity theft. The consequences of this might not be discovered for years. Don’t get caught by this.

The First Competitive Response to Overland Flooding Coverage


As has been predicted, the markets’ response to the Aviva overland flood coverage has seen a new entry in Alberta with the Co-operators’ announcements last week.

The broker side has some new competition through this product from the direct writers. We are still awaiting updates from other markets on this, but this announcement is certain to put additional competitive pressure on them. If anyone has heard any current rumours, I would be interested in hearing about them.

AIC Stakeholder Sessions Have Been Completed


AIC stakeholder sessions were held in the past two weeks in both Edmonton and Calgary. I attended only the Calgary meeting but had updates on the issues raised in Edmonton. It was nice to see that the very vocal life-insurance minority who had been clamoring for relaxed entrance standards determined to let these meetings pass without making a spectacle of themselves once again. It was also nice to see the interest from the General Insurance community expressed on the examination and education issues. Updates were provided on the efforts underway to improve the pass/fail rates on the examinations without reducing the standards of education needed to both enter our business and advance within it. The process of establishing equivalencies for professional designation holders and matching education providers' courses to other jurisdictions was discussed as well. Two General Insurance sub-committees are working hard on these issues and hope to provide actionable decisions on both issues by the end of July. If you have opinions on these matters and would like to ensure that they are brought to the attention of the people working on these issues, please don’t hesitate to forward them to me. As a sitting member of the General Insurance Council, I will be happy to ensure that your thoughts on these issues are heard.

The AIC also reported on the licensing cycle, which is well under way. If you haven’t received an email from the AIC on this matter, you’re not recorded properly in the system. All license holders are personally responsible to ensure that their licenses are in good standing before they represent themselves to the public. This means your Continuing Education Credits need to be up to date, your declarations made, and your licensing fee paid by the end of June or you are not eligible to receive compensation for selling insurance. Make this process a priority, people.

I’d like also to mention that you are now required to know your CIPR number. This number identifies you across most Canadian jurisdictions and enables things like your CE credits to be followed wherever you are licensed. Your CE certificate now requires your CIPR identification, so all education providers are asking for it. Make you know what it is and have it with you when you are signing the attendance sheets.

In Closing


Summer is almost here. Time to go for a bike ride!

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  Alberta Insurance Council  Aviva  broker channel  CIPR numbers  CRA  direct writer channel  insurance license renewal process  licensing courses and exams  NDP and insurance  online crime  overland flood insurance  phishing  The Co-operators 

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Motorcycle Awareness, Organ Donor Initiatives, Overland Flood Coverage

Posted By Thom Young, April 21, 2015
Updated: April 20, 2015

Motorcycle Awareness

With our spring weather, motorcycles are back on the road again, and people need to be looking for bikes. The most common injury to motorcyclists comes from vehicles turning in front of them, either making an unsafe left turn or failing to yield the right of way to a motorcycle by entering the highway in front of them. Virtually all of the drivers who cause these accidents claim they didn’t see the motorcyclist. In truth though, they weren’t looking. Often, they fail to judge the speed of a motorcycle approaching them because of either inexperience or indifference. Many state after the fact that they believed the motorcyclist was travelling at excessive speed. I’ll concede that they may be right on the speed issue once in a while, but, in reality, analysis of the impact usually exonerates the motorcyclist. Unfortunately though, whether right or wrong, the motorcyclist and passenger are always the losers in any motor vehicle accident. Please watch out for motorcycles on the roadways. Double check when making that left turn, and give extra space to allow them to pass before pulling out on the highway. In particular, if you see a large black Harley going by with a couple of happy people on it, wave. I’ll be sure to wave back!

Speaking of motorcycle safety, let’s not forget the extra precautions that we as motorcyclists need to take to ensure our own safety and the advice we should be giving our clients on this issue as well. IBC publishes a number of very good handouts on insurance matters, and all insurance brokers should remember their role as educators and advisers to their clients on preventing loss and ensuring their safety.

IBC's Top 10 Tips for a Safe Motorcycle Ride

    IBC Motorcycle Tips
  1. Drive what you can control. Often, people buy motorcycles that are too powerful for them to handle. Ask your dealer if you can test drive the bike before you buy it.

  2. Take a safety course. Be aware of your limits on a motorcycle. What would happen if you had to quickly avoid an incident?

  3. Ride according to weather and road conditions. Check the forecast and keep your eyes on the road ahead.

  4. Wear a DOT (Department of Transportation) approved helmet.  Choose the helmet best suited for how you ride, and replace your helmet every five years.

  5. Wear clothing that will protect you in a fall. Heavy denim or leather jackets and pants aren't just stylish; they help prevent nasty cuts and burns if you fall.

  6. Stay focused on the road. The cold reality is that motorcyclists are 30 times more likely to die in a collision than people in a car, according to the Insurance Institute for Highway Safety.

  7. Always be seen. Assume car drivers can't see you, so leave them plenty of room. Also, wear clothing or reflective materials that allow you to be seen.

  8. Ride in the proper position in the lane. Know where you should be positioned in the lane and never drive along the middle of the lane where there is oil build up from cars.

  9. Practise riding with others. When riding as a group form a staggered pattern and establish hand signals that all of the riders understand.

  10. Stop frequently. Being rested will help you focus on the roads.

Download IBC’s Motorcycle Tips poster.


Riders, be careful out there. The number one thing you need to do is drive defensively. On any motorcycle, you have maneuverability and visibility advantages, but they won’t save you unless you are keeping a lookout for what the other guy is doing. I couldn’t give any better advice on this issue! In my experience, it usually doesn’t matter who is at fault in an accident involving a motorcycle: the motorcyclist always loses.

Organ Donor Initiatives Revisited

I received a whole bunch of emails thanking me for making this topic an issue for discussion. My superficial review of what’s going on was criticized as well because I didn’t cover the topic in its entirety. In the last issue, I barely touched on the whole registry initiative that is underway, so here is the circular and the form that Alberta health sent to registries. You can complete the form yourself and make the brochure available in your insurance offices as well. Let’s make this important issue a game changer.

Alberta Organ and Tissue Donation Registry Brochure and Form

Overland Flood Coverage

I received a briefing on this new initiative of Aviva. The program looks very good, and I’m very excited about its introduction in our province. Brokers need to get behind it for two reasons: one is it’s good for our clients, and the other is the way it’s being rolled out. You have huge E&O exposure if you fail to provide information on it to your clients. Even existing Aviva clients will need to be presented an option midterm to ensure that they have been given notice that this coverage is available. Any opportunity to contact your client about anything is a huge opportunity to give that value-added service that others aren’t providing. You need to get a plan together. Write your homeowner clients a letter explaining what’s available and how they can get it. They may choose to wait until the renewal or to stay with what they have, but, regardless, we have to let them know. The letter needs to be followed up with a phone call and notes on the resulting discussions about the coverage. If you explain the coverage properly, the client declines it, and you fully document the interaction, there will be no coming back at you if there’s an overland flood coverage shortfall. Further, this contact will give you a wonderful opportunity to cross sell your other insurance products to your clients.

Now that the word is out, we’ll need to listen carefully to the competitive response by other insurers. One hopes that a uniform approach to this coverage by the major players will keep our marketplace level and not disrupt our clients so badly that our industry comes into disrepute on account of it. I noticed a news article on TV this week which focused on the dilemma of a homeowner who had three weather-related losses in the past five years and was advised that the insurer would not be willing to offer a renewal if any further weather-related losses occurred. The gist of the discussion was that coverage refusal was unfair. Well, it may be unfortunate but not unfair. We as an industry need to continue to educate our clients on the issues before them. Insurance remains a vehicle to share the risk of sudden and unforeseeable events. If a loss becomes a routine occurrence, companies will not want to share that risk unless the premiums are high enough to cover the losses in time. The perception that making money is bad and that our industry focuses on unreasonable expectations of returns ahead of the needs of the public is unfortunate. The premiums produce the money to pay the claims. If the claims exceed the premiums, then the premiums go up. It’s not really rocket science.

Negative selection due to these new coverages may occur, and we may well find the public pushing back, especially where a group is redlined from the coverage on account of an area’s high risk. At some point, sharing these excessively high risks may have to come about through government intervention in the market that mandates basic coverages supported by a government-funded risk sharing pool. Perhaps a facility for facultative underwriting of residential risk may be needed. Time will tell my friends, and it is an exciting time to be in our business!
 

In Closing

It’s nice to be back in Alberta for a while—a little windy for my liking, but the weather is temperate for this time of year. I have no illusions that I’m home scot-free of some inclement weather—at least one big spring snow storm. As dry as it is in the south, precipitation will be welcome no matter how it comes. Most of the grain crops are sown. If Mother Nature cooperates, the harvest should be early this year.

The opinions expressed in this blog are not necessarily those of IBAA.
Comment on this post below or email Thom Young privately. Thom also encourages suggestions for topics.

Tags:  motorcycle  organ donor  overland flood insurance 

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