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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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Risk Management—Common Sense, Regulation, and Insurance—Organ and Tissue Donation

Posted By Thom Young, April 7, 2015

Risk Management in the Modern Era

There’s an email that circulates among the older folk that observes it’s amazing we all have lived so long. We had none of the currently omnipresent restrictions on our play activity. Common sense was the process that guided us into to doing the right thing. Those without common sense often suffered the fate of Darwinism—their failure to survive the challenges of our youth and their inability to contribute to the gene pool made our species stronger. That was the theory then, anyway. I think of this principle when I travel to third-world countries where things seem to work their way through without all the intrusions. Ultimately, some fail to use common sense and suffer the expected consequences.

In an old story about an American lady who fell into a hole in a sidewalk on a downtown Mexico City street, the statement of claim contained all the usual boiler plates—the city and its contractors were negligent in allowing this terribly dangerous obstacle to exist and should have taken many steps to protect the public from injury. The defense of the case was simple—the city produced seven days of video monitoring the hole in the sidewalk exactly as it was when the plaintiff fell in it. By the city’s account, over 3700 people passed by the hole (which had a pylon on both sides of it) and no one fell in it. Case dismissed? Well, not entirely. The city had to pay a small amount and cover the legal costs of the plaintiff, but the award was abnormal by Canadian standards. The plaintiff was found 90% responsible for her own damages because she failed to watch where she was going. The contractor was fined for failing to follow the city regulations that require holes to be covered and proper barriers in place to prevent the public from injury.

Often people lose sight of the reason for regulations concerning individual behaviour. As a motorcyclist who spends a lot of time in the U.S., I’m often asked why I wear a helmet all the time when I ride. The reason is simple: it protects me. The law really isn’t my motivator. When my second child was born, the law still did not provide any incentive to wear a seat belt in an automobile, but we decided to purchase a car seat for our new baby. From the day the car seat was installed, everyone wore a seatbelt in my car to ensure that one of us would survive to look after the guy in the car seat. Funny thought, but a true story. The adjustment period was difficult for the older child who had become accustomed to bouncing around the car and sitting in her (unseat-belted) mother’s lap or sleeping in a bassinette set down on the back the seat. It’s amazing we survived. The aforementioned car seat was likely the cause of many injuries as it was banned from use about ten years after I bought it.

A lot of the risk management procedures that have become regulations initially developed in our industry as attempts to limit the costs of poor individual and business practices. Intense analysis of the causes, consequences, and costs of losses informs the highly competitive selection process in our industry, and we have become very good at it. Our activities eventually prompted the public authority to enact regulations to limit the damage from those individuals who fail to follow the risk-management discipline developed by our industry. Often we hear about the zealous regulator creating obstacles that are both expensive and unnecessary, but these regulations come about not as a result of altruistic attempts to protect people so much as through the reality that limiting personal injury or property damage through regulations reduces the cost to the state in dealing with them. Those who fail to follow the discipline needed to manage their own risks properly offload the costs of this behaviour onto the state which, as the ultimate insurer of the people, receives adverse risks with no selection or mitigation other than by regulation. An actuary might call this the ultimate adverse selection process.

How To Make a Difference in Someone Else’s Life

If you’re around a registry office in our province this month, you’ll see a number of initiatives being made to encourage people to sign the authorization to become a tissue donor when processing an Alberta Health card change. National Organ and Tissue Donation Awareness Week (NOTDAW) is from April 19th until April 25th, 2015. Registry agents will be asking about organ donation and providing informational material in support of giving permission for organ donation. Registry agents will be wearing green lanyards showing their support for this cause.

I find it difficult to understand the need to have a discussion about such a simple thing as allowing your earthly remains to be put to some good use helping another before they are discarded in a ritual of remembrance of what a person gave to the world. No matter how much money you amass and leave to help others, nothing could equal the difference you could make in other people’s lives by simply agreeing to donate tissue and organs. This gift of health and recovery is simple, painless, and important.

Did you know that over 4500 people in Canada are on waiting lists to receive organ transplants and thousands more are waiting for tissue donations? That’s 4500 people in pain and suffering whose lives are diminished by a need that is so simple to fill. Over 700 Albertans are on that waiting list for organ transplants.

So here’s what you need to do. Stop what you’re doing right now. Get out your Alberta Health Card, flip it over, and read what the back says. Discuss it with your family, sign it, and have one of your family members witness it—painless and productive work here, ladies and gentlemen, work that will make a difference in the lives of others sooner than you think!

If you haven’t got an Alberta Health card, or the one you have is old and ratty, get on down to the nearest Registry Office and order one. This is one of the few government services that is still provided for free. After you sign it you can laminate it too!

While much information is available on organ and tissue donation, the Alberta Health website posts some handy FAQs.

While on this topic, I have long said that the premise of organ and tissue donation should be an implied consent and not a formal one. That is, if you don’t have a stated and recorded objection to it, then agreement to donate should be assumed. A consent form should not be required in the normal process. Those who object should have a place to record their wishes and have them honoured, but, otherwise, donation should be a mere formality of notice to family members when organs and tissues are harvested to help others. This debate needs to continue, and I offer this opinion in closing to stimulate that discussion.

In Closing

March has come and gone in its usual chaotic manner. I can’t say it came in like a lion or went out like a lamb as our winter was only a brief inconvenience in Western Canada anyway. Spring, for what it is, has begun in Alberta, and the promise of the new year begins with the cycle of tilling and planting. Economic prospects are not as bad as predicted, nor as good as they could be. We will soon be before the polls once again, asked to choose which brand of conservative principles we wish to govern our prosperous and successful piece of Canada. This is a cynical observation my friends, no need to challenge me on it.

Sheldon Casavant, illusionistWe are very quickly coming up on the annual IBAA convention, which this year will be held in beautiful Lake Louise. I am as always looking forward to meandering around that venue in my highland garb and will of course be very happy to see in person many of you who have taken the time over the past year to dress me up or down on my commentary here.

Looking forward to it!

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:  common sense risk management  insurance risk management  organ and tissue donation  regulation risk management  risk management 

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Will RBC Leave P&C Insurance or Just Whine about Fair Marketplace Competition? Does Digital Imaging Impact Privacy?

Posted By Thom Young, March 23, 2015

RBC Leaving P&C Insurance?

I suppose it is a good day for the insurance industry when we hear a bank executive whining about how difficult it is to compete in the Canadian insurance marketplace. Of course the banks are not really complaining about the competitive nature of the insurance industry but are whining about the rules and regulations that limit their abilities to cross-sell the insurance product to their clients and use their incredibly extensive distribution system to promote their insurance products.

In a recent interview, David McKay (CEO of the Royal Bank of Canada) is quoted as lamenting the returns on the bank’s Property and Casualty insurance sales, citing the regulatory environment as a troubling factor that does not allow banks to sell their services out of their branches. It is a familiar spin on the issue—somehow the banks’ inability to do good things for their customers is a disservice to the buying public. A cynical person might observe that the public commentary by one of Canada’s senior bankers is simply a positioning play in the ongoing lobbying efforts by the banking industry to change the rules that make them play fair in the marketplace.

Mr. McKay has an unusual background in the senior ranks of Canadian schedule-A bank executives. He’s the only one who has come to his position of authority from a background in personal banking services. Most rise through the ranks on the commercial side of things and read reports about such things as insurance products. This fellow has an intimate knowledge on how the competitive process works and certainly a really good handle on how to maximize the economies of scale in their distribution system. Being forced to separate the marketing and service aspects of the insurance line from their multi-line product marketing approach is clearly a problem for them. He expresses the possibility that the bank may cut and run from the P&C market but stay well entrenched in the Life side of things—such as creditor life coverage and health-coverage extensions in their credit card product.

Most of their Life products are sold from their branches and by bank officers because “creditor life” products are exempt from the restrictions against marketing alongside other bank services, and the bank officers who are “selling” these products do not require a license. These exemptions get the bank into an inter-jurisdictional role on regulations. You see, people in a position of influence on the outcome of an insurance sale aren’t allowed to have a Provincial insurance license because the regulations believe that their authority over the individual buying insurance is considered to be prejudicial to the transaction. Bank officers fall into this category and for good reason. If you’ve acquired a mortgage or loan directly through a bank, you’ll come to understand the why of this when the mortgage insurance is offered in the transaction. To avoid purchasing the insurance, a serious discussion ensues with the mortgage officer, and signatures are required on several waivers before proceeding with the mortgage. Further, if the bank insists on the life insurance as a security covenant for the loan, you are at risk of not getting the financing you are requesting. The inference that the bank officer wants you to purchase the bank’s mortgage insurance product and the pressure to purchase this insurance from the bank is, in my view, unfair. Still, it happens every day and perhaps is why this product is so profitable to the banks.

The banks have disrupted our marketplace over the years. CIBC and the Bank of Nova Scotia both “cut and run” from the direct sales of P&C insurance after poor returns. Their impact on the Canadian marketplace could not have been measured as a positive one from the consumer’s point of view, but CSRs may have enjoyed the increase in baseline salaries that came about by this new competitor for market share. Certainly, as a brokerage owner, competing for staff at these higher salaries wasn’t in the budgets initially, and disruption of the industry was clearly evident for us. The banking industry is functionally driven by results. There’s no patience for under-performance, and success is measured by the target of a business plan that is measured every quarter. It always gave me comfort as an ex-banker to know that every three months someone was answering questions at a board meeting about the returns on funds employed in the Property and Casualty business. The excuse that the regulations are hampering the business plans would begin to wear thin very quickly. Competitive pressure mounted at those board meetings as some banks were able to make the program work. If in fact the Royal Bank is considering leaving the marketplace for P&C insurance, we shouldn’t see this move entirely as a win for our industry. Our point should continue to be that the Canadian public continue to be served by a very competitive insurance marketplace where the industry companies compete fairly with each other to the benefit of the consumer. The regulations for fair competition in this industry seem to be working to ensure that in the end the consumer remains the winner. The withdrawal of one competitor for whatever reason will not have any adverse effects on the consumer or provide a windfall for any insurer. With or without the Royal Bank of Canada, the marketplace for the distribution of P&C products remains healthy in Canada!

The only advice I might give to Mr. McKay is to take care the door doesn’t catch him on the backside on his way out!

So What Is a Reasonable Expectation of Privacy?

I had a commercial client who many years ago developed a service that kept track of rolling stock for municipalities. The service used geographic positioning satellites (GPS) data to track the location of equipment. The technology seems pretty routine these days with all the standard GPS stuff built into cell phones, computers, and almost all new-model automobiles and trucks, but back then it was a new world of information processing. Analyzing the data produced improved many efficiencies and security for the municipal authorities using the service. However, the benefits of this service were not well received by many of the employees who were soon to discover their whereabouts were no longer in any doubt. I remember several grievances were filed against one city by employees who held onto the belief that their privacy was being violated by this kind of scrutiny after several of them had been caught in some compromising lies about their locations. In the end, it was determined that their privacy was not violated since they were using their employee vehicles. Still, the spectre of big brother played out in the media and in the coffee rooms.

security cameraThe debate about privacy continues to take on new dimensions with the development of modern surveillance equipment and the ability of data mining software to analyze the data gathered. Without getting too deep on the technical side of things, most of us should readily perceive that much of what we do these days is digitally recorded by cameras in the community. Walking into a shopping mall creates a digital image of every individual and, with computer software, an operator can track your movements through the mall, the time you entered and left, and even the stores you visited. Do they have the right to do this? No laws prohibit the gathering of information in such a manner. As long as the information is not used to violate your legal right to privacy, your public activities are free for the review of anyone interested in gathering the data. Sounds kind of creepy, doesn’t it?

I was reading an interesting article about parking lot surveillance of automobiles. The idea of a parking lot attendant holding you up as you enter or leave a parking lot is long disappearing. Digital imaging software paired up with camera surveillance systems is now able to record your vehicle license information on entering the lot and match it to you in the exit queue, producing an invoice at the exit gate. Tap your credit card and away you go—a simple and easy process—but what happens to the data being collected to complete this transaction after you are done? Apparently, the vehicle data created by this software system is being pooled and made accessible for a fee to law enforcement and private contractors. The mining of this data is having great positive results in the recovery of stolen vehicles and finding fugitives hiding from the law. The private contractors who are looking for vehicles as security for loans in default and bailiff defaults are able to track the location of the vehicle and its occupant. Often, they are able to find this data before the vehicle leaves the parking lot it entered. A digital record of the vehicle license plate, driver, and the vehicle itself can all be made available for a fee. Apparently, you can run, but you really can’t hide anymore.

I have been polling friends on this topic, and the opinions I have received range from “If you got nothing to hide, then why would you care?” to “No one has any right to follow me around and no business sharing this information about me without my permission!” Watch for that sign at the parking lot entrance that disclaims responsibility for anything and advises you park at your own risk to expand to include a notice and disclaimer about surveillance. You have been warned.

In Closing

I am travelling again and find myself trying to get this project completed in between jaunts to exotic places. It’s always nice to find time to spend with the family or, as it goes now, for them to find time to spend with us! I received a number of notes on the last issue. A nice one was from someone who sends this on to her 80-year-old mother who looks forward to it. I am happy to see my work enjoyed.

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:  banks  competition  privacy  retail insurance  video surveillance 

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Risking Utmost Good Faith, Fraudulent Cop on the Payroll, UBI Conference

Posted By Thom Young, March 10, 2015
Updated: March 11, 2015

The Risks of Utmost Good Faith

Uberrimae fidei is the Latin version of the extra requirement for a legal insurance contract between an insurer and an insured. This condition requires that the insured must disclose to the insurer anything adverse or inordinate about the risks to be insured. After a loss, the insurer can challenge in court whether the customer was playing fairly in what was disclosed. This condition differs from that in other legal sales agreements where that old Latin term caveat emptor applies. Once sales agreements are signed, sealed, and delivered, the buyer is assumed to have done due diligence and expected to suffer the consequences of the vendor’s silence on matters undiscovered. When I teach insurance law, I tend to ramble on about this obscure difference in the way insurance contracts are dealt with versus the routine manner in which other contracts are made. The idea of a legal standard of excellence that ensures that both parties to an agreement are dealing with each other fairly is one of those thing that makes our business special!

Everyone talks about price, but few understand the promise of insurance. Both those buying and those selling insurance hold no real high ground here. At the outset, we do our best to run all insurance applicants through the filter to determine that they have a better-than-even chance of not having a loss, while purchasers do their best to limit their information in the hope that they obtain a better price for the coverage. In providing answers only to the questions asked, purchasers expect to get what they paid for, but the reality is they will get what they paid for only if they deal in good faith and disclose everything the insurer needs to understand the risk fully. Explaining this principle to non-insurance people often is confusing and becomes even more so when the information not provided becomes available in the claims-investigation process.

We sell only a promise to pay. To ensure that promise is kept, we must make our clients aware of the consequences of not providing us with all the information. The insurers we represent need to know their part in this promise too because the expectation that they are to deal in good faith is provided in the contract as well. Claims professionals are expected to deal with insureds in a fair and comprehensive manner in order to get them all that they are due under the contract. Perception of unfair treatment is the number one reason for the public’s view of insurers as being incompetent. These criticisms are often due to a misunderstanding of the process which produces unreasonable expectations. As brokers, we are often culpable as we did not properly explain the process at the outset of arranging the policy, but, even when we do it right, opinions differ on what replacement means, and we all know that owners almost always perceive ideal conditions and value. Still, it is not all that uncommon to find a claim in process where the insurer’s claims examiner seems to be dealing unfairly or, if not “unfair,” then with a certain arrogance that isn’t reserved just for the broker who is trying to find information but also imparted directly to the client. When such a situation occurs, what can you do?

Essentially, the only thing you can do is approach the claims examiner on behalf of your client to see if you can negotiate a logical conclusion to the impasse. Often, the claims examiner is unaware of the issues. An offer has been made to settle the claim with the genuine belief that it is fair and reasonable and meets the conditions of coverage. The insured has not relayed objections to the adjuster in fear of further impasse on the areas in which they agree. As the advocate for the insured and the company, a broker has to listen to both sides of an argument carefully and try to find some common ground. Whichever side is being unreasonable needs to hear a logical explanation as to why, and the broker needs to remember that the bearer of bad news is rarely received with enthusiasm. Taking the company’s correct position back to the client is sometimes difficult, but, if it is a correct one, then it is the task you must complete. Taking the insured’s correct position back to the company can be even more difficult, since you risk fracturing the business relationship with the company. Pointing out the error in the ways of a sometimes senior person representing an incorrect position rarely goes well for the broker, but it is your job.

I remember once having a discussion with a very arrogant claims examiner who had taken a ridiculously wrong position on a claim for my client. I was being diplomatic and direct when this person became entrenched in a final position and very arrogantly stated an unwillingness to consider alternatives and that the client didn’t have any options in the matter. I said of course the client had options and I would have to explain them to the client. When the adjuster asked what options, I replied, “They have the legal option to sue you, and would you please provide for my client a proof of loss form immediately so they can.” A period of dead silence on the other end of the phone was quickly followed up with the threat that we wouldn’t be dealing with that company for very much longer if the adjuster had anything to do with it.

Here’s where you realize that you’ve just stepped in something warm and odorous.

I don’t know if I beat the adjuster to the district manager for that company or not, but I do know that I was doing a political two step for several days trying to get the whole story in front of the senior people of the company for a fair and impartial review. Thankfully as well, my partner at the time was as good at getting me out of trouble as I was getting into it. At the end of this story, everybody won. The client won because the company agreed to settle the claim in the correct manner as prescribed by the insurance contract. Our brokerage won because our reputation for standing up for our clients when they were right was made very clear to a company with a real problem in their claims management, and the company won when it dealt with the real problem it had. I think the claims examiner won too as a hard lesson was learned about not writing a cheque that your credibility can’t cash.

Being a broker isn’t easy sometimes, but dealing in the utmost good faith is necessary to meet the terms of an insurance contract and is something all of us should remember and review from time to time!

How Bad Do You Have To Be To Get Fired?

According to the Brampton Guardian, a police officer representing the Region of Peel, Ontario, has been on administrative leave with full salary for almost four years. This fellow was topping up his retirement fund by cooperating with a bunch of crooks who were filing false claims against a number of insurers. To support the claims, he fraudulently completed police accident reports for a nominal $6000 a pop. The fraudulent claims paid totaled just under $1 million. Since first arrested in the spring of 2011, he has been on administrative leave with full pay and benefits, but wait—there’s more! Several weeks ago, this fine fellow was convicted of more than 40 charges of insurance fraud, breach of trust, and obstructing justice. He’s awaiting sentencing, which isn’t scheduled until May 29th. The perversity of this set of circumstances makes one wonder who’s in charge of the asylum?

Under the collective agreement governing police officers in Ontario, this all is perfectly normal. After his sentencing, a hearing will apparently determine if this guy should remain on the force or not. Kind of makes you wonder, doesn’t it? If I were a resident in Peel, I would not be very happy about my tax dollars continuing to pay for this kind of silliness! Nothing has been said about restitution orders or other remuneration. Our industry will no doubt bring civil charges against the guy for the money owed, but it’s hard to collect from a criminal! This guy legally carries a weapon around with him too.

Some might say that the wheels of justice move in strange ways, but no justice is in play here. It will be interesting to see what the sentencing brings. I’ve marked my calendar to follow up on this case and will report to you in due course!

Telematics and UBI Continue To Make the News

Our association is once again promoting the Insurance Telematics Canada 2015 conference, which will be held in Toronto at the Westin Prince Hotel, April 23rd to 24th 2015. If you are interested in attending, check out the registration and information package.

If you register before March 27th, you can save yourself $100.

I’ve been invited to attend but have other commitments for that time frame.

We’ve seen a lot of discussion on telematics in the industry press lately, much of it coming out of the promotions circulating for this event. I remain very cautious on what benefit, if any, telematics will bring our industry. Certainly, better data mining will provide for better risk selection and categorization, but—and that’s a very large but—overall, the activity will not reduce the costs of insurance for the general pool. In my view, it will simply provide some short-term competitive advantages to those able to make first use of the data being generated. At the end of the day, the dollars in claims paid and administration will be very similar. Some consumers might benefit initially, but that benefit will come at the expense of those who will be losers in the selection process. The end result will be an unsettled marketplace with considerable instability for the consumer that will not see anyone the winner. More so, the disruption may well attract regulatory overview and interference to ensure that the public is not disadvantaged in the selection process.

While others may well disagree, I continue to believe that consumers will experience no real benefit from telematics, and the industry will experience only a limited short-term competitive advantage unless an industry activity reduces claims or reduces administration costs. I have to concede that the use of UBI in regards to the underage marketplace can be demonstrated to reduce claims and change dangerous behaviour, so I have no argument about applying it here. However, other than that, much more discussion is necessary.

In Closing

It wouldn’t be a winter issue without discussing the weather somewhere. Spring is clearly around the corner regardless of how much snow and cold the East receives. I am back on the mainland once again and looking forward to more seasonal weather. I hope you are enjoying it as well.

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.

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Tags:  auto fraud  telematics  UBI  utmost good faith 

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Global Outreach of Bill and Melinda Gates, Aviva Overland Flood Policy

Posted By Thom Young, February 26, 2015
Updated: March 11, 2015

Imitation Is the Sincerest Form of Flattery

When it comes to industry success and marketing strategy, I’m often asked where I get some of my ideas. I’d like to brag about how they are all original thoughts that I developed all by myself, but the truth is there’s rarely any new idea on how to manage any business that hasn’t been tried before with varying degrees of success or failure. Management and marketing are studies that you never complete. The process continually evolves with the changes in social mores and the behaviour of the market you’ve selected. All those boring economic theories really do come into play when developing a market strategy, and a good healthy understanding of human behaviour is the most important management skill you can develop. Remember the basic rule of everything: “People with experience don’t make as many mistakes as those without, but you don’t gain any experience until you’ve made a whole bunch of mistakes.” The trick is to not make those mistakes more than once.

Over the years I’ve read probably over a thousand motivational and management books. They’re easy to find in the bookstore, on the internet, or in the library in my basement. Literally, tens of thousands of books exist on how to be a better sales person, manager, and business owner. Almost all of them deliver a core message that doesn’t change much. Know your product, know your customers, and know your employees. Treat everybody well, work hard, and you’ll be successful. There’s a lot of ground to cover before you figure all that out though, and getting it right more often than not means getting it wrong first.

The best advice is to associate yourself with successful people and pay attention. I’ve rarely met anyone who has achieved any degree of success who isn’t generous with time and willing to help you address issues you face. Following people who are successful has been a favourite pastime of mine since I first learned how to read, and paying attention to the key turning points that contributed to their success is where you should be making notes. Whether reading Homer or Plato, or the biography of Henry Ford or Winston Churchill, there are as important lessons to learn as in following Steve Jobs, Richard Branson, or Bill Gates.

Speaking of Bill Gates, I have a copy of his original book The Road Ahead, which I bought the day it came out. It was a hard read at the time. Mr. Gates is a much better computer programmer than an entertaining writer, but his perspective on things is interesting to note. Unlike Steve Jobs, who was an innovator, Gates developed standard equipment that dominated the marketplace, and his ideas about what the road ahead would look like certainly weren’t as exciting to me as understanding how he’d managed to create this empire that continues to dominate the business-machine marketplace. He knocked old mechanical standards off the shelves, leaped over the competition, and introduced subscription-based software advances that are now the norm in an industry that barely existed when he started. He did this with what many would describe as a mediocre product that fell far behind the capabilities of his main competitors’ offerings. In doing so, he became the richest man in the world—all from a standing start in a garage in 1975. Quite the story of success. Now Bill Gates and his wife Melinda run a charitable foundation that lets him manage the tremendous amount of wealth he’s accumulated toward the improvement of others in the world. The idea of a foundation bettering others and funded by a single individual is not new. The Carnegie Foundation has probably produced more positive advancement in education than any government organized enterprise. However, the global outreach by a single person is truly new and, in my view, the success of such an endeavour will have a serious positive effect on the further advancement of our species.

Late last month, the Bill and Melinda Gates Foundation put forth a progress report on their efforts to improve the lot of humanity. It was done with both a look at the results they are able to measure on significant markers and predictions of what the future improvements will be fifteen years from now. It is an interesting read and I’m privileged to be able to share it with you:

Fifteen years ago, the two of us made a bet.

We started our foundation in 2000 with the idea that by backing innovative work in health and education, we could help billions of people improve their lives. The progress we've seen so far is so exciting that we are doubling down on the bet we made 15 years ago.

Here's our bet: The lives of people in poor countries will improve faster in the next 15 years than at any other time in history. We're putting our credibility, time and money behind this bet because we think there has never been a better time to accelerate progress and have a big impact around the world.

Here are four big breakthroughs we see coming by 2030:

First, child deaths will go down by half. In 1990, one in 10 children in the world died before age 5. Today, it's one in 20. By 2030, it will be one in 40. Almost all countries will include vaccines for diarrhea and pneumonia, two of the biggest killers of children, in their immunization programs. Better sanitation will cut the spread of disease dramatically. And we're learning how to help more mothers adopt practices such as proper breastfeeding and skin-to-skin contact with their babies that prevent newborns from dying in the first month after they're born.

Second, Africa will be able to feed itself. Today, the continent has to rely on imports and food aid to feed its people, even though seven out of ten people in sub-Saharan Africa are farmers. Part of the problem is that African farmers get just a fraction of the yields that American farmers get. In the next 15 years, however, innovations in farming will erase these brutal ironies. With better fertilizer and hardier crops, African farmers will be able to grow a greater variety of food and sell their surpluses to supplement their family's diet with vegetables, eggs, milk, and meat.

Even as climate change makes farmers' job more difficult, we can get them enough innovation and information to increase productivity by 50% for the continent overall. Countries like Ghana are also building better roads and adopting policies that make it easier to move food to the places where it's most needed. In 15 years, Africa will still import food when it makes sense to do so, but it will also export much more, eventually achieving a net positive trade balance.

Third, mobile banking will help the poor radically transform their lives. Today, some 2.5 billion people don't have access to cheap and easy financial services—a problem that makes it much more difficult to be poor. If your savings is in the form of jewelry or livestock, for example, you can't very well chip off tiny pieces to cover routine daily expenses.

But in the next 15 years, digital banking will give the poor more control over their assets. The key will be mobile phones. Already, in developing countries with the right regulatory framework—such as Bangladesh—people are using their phones to store money digitally and make purchases. By 2030, 8% of the adults without bank accounts today will be doing the same.

And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.

Fourth, as high-speed cell networks grow and smartphones become as cheap as today's voice-only phones, online education will flourish. Before a child even starts primary school, she will be able to use her mom's smartphone to learn her numbers and letters. Software will be able to see when she's having trouble with the material and adjust for her pace. Of course, software will never replace teachers. But by allowing teachers to do things like upload videos of themselves and get feedback from their peers, it can connect them in new ways.

What will it take to make sure life really does improve faster for the poor? We need advances in technology and we need to deliver them to the people who need them most. We also need to close the gender gap. Countries where girls don't go to school or women can't open a business will be left behind.

Another crucial factor will be people who care about helping those in the world's poorest places improve their lives. We're aiming to recruit millions of new advocates—we're calling them global citizens—to urge world leaders to be ambitious when they meet in September to adopt a new set of goals that will guide the world's efforts to tackle disease, poverty, and climate change for the next 15 years.

Beyond 2015, we hope these global citizens will hold governments and other decision-makers accountable for meeting those goals.

You can show your support by signing up at, where you can learn how to get engaged and connect with other organizations working to make 2015 a historic year. We believe that informed, passionate people can work together to make the world a more equitable place. In fact, we're betting on it.


In The Road Ahead, Bill Gates makes many predictions of improvements in human development as a result of technological advancements, but clearly the ones that will level the social condition are the ones on which he’s making the best progress.

A Turning Point in the Canadian Insurance Marketplace?

Reading in the industry press this week and hearing from a couple of little birdies attending a conference in Houston Texas, there would seem to me to be on the horizon the biggest change in our Canadian insurance market in my life time. The word is that Aviva is about to launch (effective June 2015) the availability of a water damage endorsement to the standard IBC homeowners wordings that includes coverage for overland water damage. This form will be initially available in Ontario and Alberta. Details are very sketchy, and, try as I have in the past several days, I’ve not yet been able to get any more information than that about this.

Many questions are being asked about this policy. We are all anxious to know what the sub-limits might be, what the exclusions are, and how pricing compares to the residual market. I, like many of you, am holding my breath in anticipation of this information, but it is absolutely refreshing to see this positive development for our clients. The competitive marketplace is already buzzing about this, and no doubt some anxious reviews are being undertaken by senior underwriting and actuarial managers in all of the companies competing for personal-lines property clients. Brokers should be enthused that this new desirable product is being introduced first through a broker company and not a direct writer. I will predict that the introduction will begin with a limited form that will be substantially increased over time as loss experience is developed and in response to competitive pressures. This policy is long overdue and will quickly become a marketing touch point with your customers and your insurers. If you’re not talking with them about this yet, you should be!

I am following this closely and promise to report further in my future columns as the information becomes available. A great big “well done” goes to Sharon Ludlow, President, Aviva Insurance Company of Canada, and her team for leading the way on this. I note that Sharon is well positioned as a director on the Institute of Catastrophic Loss Reduction as well, which no doubt has provided factual insights into the viability of such a program. I’ve been often quoted as a believer in the viability of this type of product in Canada and am absolutely ecstatic about its development.

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:  Aviva overland flood policy  Bill and Melinda Gates 

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