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How has Harvey affected global reinsurance rates?

Global reinsurance rates are likely to remain low despite Hurricane Harvey’s impact on parts of Texas and Louisiana. Reinsurance provides some of the financial capacity for insurance companies.

The main differentiator between Harvey and other devastating US storms is the amount of flood damage Harvey has inflicted. This has had considerable impact on economic and insured loss estimates.

There are a number of factors affecting the potential size of these losses. Underinsurance plays a big part on the personal lines side. Not many people take out personal lines flood insurance, so this area is likely to see higher economic losses than insured losses.

Despite Harvey’s significant size, Fitch Ratings is not predicting a huge impact on pricing. Harvey is not large enough to cause a widespread turn in pricing, so global rates are likely to remain low.


Here’s why you should pay attention to flood insurance

Flood insurance in Canada is in a state of flux. The Calgary flood of 2013 changed everything. Increased severe weather events across the country continue to shape the private flood insurance landscape.

At the National Insurance Conference of Canada, held in Quebec City the first week of October, a panel of industry experts sat down to discuss the state of the flood insurance market.

IBC consultant and former TD Insurance CEO, Alain Thibault, said there are still glaring gaps in the coverage offered. There’s no solution yet for high-risk properties and we don’t yet have the products that people need.

President of Direct-Line Insurance brokerage and past-president of the Insurance Brokers Association of Alberta, Gord Enders, said a potential problem was the point at which insurance would take over as the default protection, and when and how Government relief funds would cease being a “back stop.”

IBC vice president of federal affairs, Craig Stewart, said discussions between the IBC and Government continued, but more stakeholders needed to begin having a seat at the table. Mortgage lenders and realtors needed to be better informed and have a voice in the discussions.


It is important to be prepared for worsening flood risks

Don Forgeron, president and CEO of the Insurance Bureau of Canada (IBC), has said: “Collectively, we simply need to do a better job to face this risk head on.” He added, “We can start by working together to educate and empower consumers.”

And that is what Canadian authorities and insurance leaders have set out to do – starting with a roundtable, to move the conversation towards improving flood insurance for Canadians.

Planning how to better educate the public on flood risk will be the main objective for the experts at the roundtable. The focus will be on working to help Canadian homeowners understand their flooding exposures.


Usage-based insurance could encourage better driving behaviour

Researchers at the University of British Columbia (UBC) recently conducted a study on usage-based auto insurance and found that the use of telematics to monitor driver behaviour and to help adjust rates could lead to better drivers overall.

The study, which looked at data from 30,000 drivers, suggested that usage-based insurance (UBI) is expected to be used by 142 million by 2023.

“What we found is that women, compared to men, seem to improve their behaviour more, and younger people, compared to older people, also tend to improve their behaviour more,” said Charles Weinberg, UBC marketing professor.

Usage-based insurance allows drivers to receive immediate feedback on their driving behaviour, giving them opportunities to adjust their driving accordingly.


Truck-related fatalities are on the decline

Although collisions related to trucks in Ontario have increased recently, resulting in higher costs for insurance companies, provincial figures show that fatalities have actually decreased.

The latest data from Ontario’s Transportation Ministry found that the number of truck-related fatalities on provincial highways is falling – down 3% between 2010 and 2014. This is despite the fact that the number of trucks on the road climbed by 12% over the same period.

The Ontario Trucking Association (OTA) hopes to address both mechanical issues and driver error to further reduce collision casualties. The OTA has proposed that the provincial government makes electronic trucker driving logs mandatory to help improve the roads.


Trucks and SUVs are booming in Canada

Hagerty’s latest Vehicle Rating has recorded a huge upswing in demand for classic trucks and SUVs across North America. Two-thirds of the vehicles in the newest Top 25 ranking are trucks or SUVs, and nearly 90% of them are valued at $16,000 or less. Millennials are driving the demand for classic trucks and SUVs.

They’re easy to maintain and their parts are available while being affordable. Servicing them is straightforward and they provide multiple experiences that go beyond the services of a regular car.

Collector car insurance will cover a classic truck or SUV as long as it’s a passion or pleasure-use vehicle. Insurers are finding that a lot of these trucks and SUVs are being set aside for pleasure-use or collector-use and that’s when a different insurance policy comes into play.

Insurers are continuing to update their policies to get you the best value for your vehicle pertaining to its use.


Cyberattacks are on the increase, so who is most at risk?

Cyberattacks are a growing problem. They’re getting easier for criminals to conduct, they’re happening more often, and they’re hitting businesses harder than ever.

Though cyberattacks can affect everyone, they’re proving to be particularly dangerous to small and medium-sized businesses. The Canadian Chamber of Commerce, in a report this year entitled Cyber Security in Canada, noted statistics that “the number of businesses reporting a loss or exposure of sensitive data… has increased every year for the past three years and 8% overall.”

Furthermore, the report noted, “along with the proliferation of attacks, the scale of losses has also increased. The number of businesses reporting a $1 million-plus loss has risen to 7% from just 1% two years ago.”

The risk of cyber attack is growing quickly and it is imperative that your business be protected against these possible cyber threats.


The adoption of smart home devices

Price continues to be a hurdle in adopting technology that could decrease loss or damage to homes.

What appears to be holding people back from successfully adopting smart home technology are concerns over price, ease of use and whether it all works together reliably.

The seven-question online omnibus survey, conducted by YouGuv in the below listed article, was fielded among 1,116 people in the U.S., 18 and older, this past May. The idea was to better understand reasoning about home management and how a smart home system could help reduce the load.

Survey findings show that the majority of respondents are open to smart home experiences. In all, 73% of respondents indicate they can see ways in which a smart home system could make their day-to-day lives easier.

In all, 93% of respondents who manage their home on a daily basis indicate a range of activities they would participate in if they were able to cut down on time spent managing their home.

We will continue to monitor the use of smart home devices and its development. If you have any questions or concerns, make sure to speak to your broker or company agent.


Post-flooding woes: are you ready?

Quebec’s historic flooding this year could mean critter and pest-related woes in the months and years to come. Heavy water accumulation has created standing pools of water, which could translate into fertile ground for mosquito populations this year as well as other damaging effects to your home and neighbourhood.

Expect a higher number of mosquitoes this year in areas that experienced heavy rainfall due to ponds remaining full after a combination of saturated soil and repeated rainfalls.

In addition to mosquitoes, homeowners could be dealing with a host of other critter-related problems. Flooded homes face potential mould problems, which, in addition to the human health impact, bring their own set of parasites, such as flies.

Broken trees, debris and wood inside homes left humid from long-term water exposure could also be ripe territory for wood lice and carpenter ants.

As recommended by the article referenced below, use the following precautions to help deter pests: cleaning up properties, getting rid of stagnant water, fixing foundations and taking care to dry out parts of the home exposed to water and replacing any wood exposed to said water.

For more information on home insurance options, contact your broker or company agent.


Marijuana legalization raises concerns for insurance

The impending legalization of marijuana in Canada raises a number of legal issues related to property insurance policies, liability coverage and auto insurance. The referenced article below is used as a source to discuss how such insurance policies are affected throughout this post.

The Ontario Court of Appeal upheld a decision in a case that dismissed the insured’s property loss claim under homeowner’s policy. The insured’s home was totally destroyed by an explosion arising from the illegal production of marijuana on the premises by a tenant.

The court found that the exclusion for indirect or direct loss or damage to dwellings used in processing or manufacturing of marijuana applied. Insurers may decide to continue to avoid coverage for illegal mass production of marijuana by individuals, while recognizing that the limited production that will be allowed under the proposed Cannabis Act is lawful.

Regarding liability coverage, it remains to be determined how preliminary underwriting considerations addressed by the application process will be determined, along with how that coverage will apply and any limitations in terms of limits, deductibles or aggregates.

In relation to auto insurance, there could be an increase in impairment cases. Noting that impairment is not as straightforward as alcohol and no test comparable to the breathalyser is currently available.

With the legalization of marijuana around the corner, the Canadian insurance industry will have to adjust to its presence. We will continue to keep you updated with developments, but in the meantime contact your broker or company agent with any questions or concerns.