Insurable Interest Canadian Insurance Blog

2020Q1 Emerging Risks Monitor report highlights executive concerns around strategic assumptions and social instability even before emergence of COVID-19 Stamford, CT (Apr. 22, 2020) – “Strategic assumptions” remained the top concern for senior executives in first quarter of 2020 as numerous other risks are set to be exacerbated by the current COVID-19 crisis, in Gartner, Inc.’s latest Emerging Risks Monitor Report. Gartner surveyed 107 senior executives across industries and geographies on the top concerns facing their businesses with results showing that “strategic assumptions” remained the top emerging risk for the second consecutive quarter (see Table 1). The survey was in the field from mid-February to early March of 2020 and reflects only the early stages of the coronavirus crisis. “Executives had been concerned with the validity of their strategic assumptions well before the current crisis situation,” said Matt Shinkman, vice president with the Gartner Risk and Audit Practice. “The economic and operational fallout as a result of the global COVID-19 pandemic have forced many executives, particularly in the hardest hit industries, to start from scratch, even with a great deal of uncertainty still ahead.” Table 1: Top Five Risks by Overall Risk Score: 2Q19-1Q20 Rank 2Q19 3Q19 4Q19 1Q20 1...

Globe & Mail Insurance Trends Report: April 2020 Toronto, ON (Apr. 24, 2020) – The insurance sector is responding to the immediate impacts of COVID-19 and looking to an uncertain future. Canada’s insurance providers are taking action to help their customers deal with the short-term impacts of COVID-19. At a time when large numbers of Canadians are working from home, many insurers are offering consumers lower auto insurance premiums, to reflect reduced driving. Companies are also providing financial relief to both consumers and businesses losing income and revenues – for example, by deferring premiums and waiving fees. On April 8, 2020, Insurance Bureau of Canada (IBC) announced that its member companies would provide relief measures for a 90-day period. This national association represents private home, auto and business insurers, which collectively make up 90 per cent of the property and casualty (P&C) insurance market in Canada. Separately, digital insurance company Onlia offers its customers flexibility and financial relief, Pieter Louter, CEO at Onlia expands on their basic premise of increased safety “We can play a role in the broader safety of Canadians by rewarding safe behaviour – both on and off the road.” “The purpose is to reinforce safe driving...

Kelsey Rolfe | April 27, 2020 With coronavirus cases starting to peak in some Canadian provinces, employers are likely beginning to prepare for a return to work once lockdown restrictions eventually ease. But work won’t be the same as it was before the pandemic, according to human resources experts speaking in a webinar hosted by the Ivey Business School on Friday. Val Duffey, an HR executive who previously worked as vice-president of HR and corporate services at the Greater Toronto Airport Authority, said there are four stages to employers’ responses to the crisis. Read: Coronavirus pandemic means ‘new normal’ for employers, employees The first phase, which took place in late February and early March, was to dust off crisis and business continuity plans and create work-from-home solutions, and for companies with essential workers to focus on implementing strong workplace health and safety measures. Many employers were also forced to make tough choices about downsizing their workforces or implementing pay cuts. Canadian companies are now in the second phase, said Duffey, which she called the respond phase. Companies with essential workers have ramped up their safety and medical protocols to “mitigate employee and business continuity risks.” Employers that have staff working from home are helping managers engage their teams...

The resolution of a legal dispute in Zaire, South Africa could have major implications on how information collected through health-tracking programs can be used to get benefits from insurers. Discovery, a Johannesburg-based financial services company, sought to block its Standard Bank-owned competitor, Liberty Life, from awarding customers wellness bonuses based on their health statuses under the behaviour-based Vitality Life program. According to a report by fin24, Discovery contended that Liberty Life “infringed on certain Discovery and Vitality trademarks in the marketing [of] its Wellness Bonus product.” Specifically, it viewed Liberty Life’s offer to calculate wellness bonuses based on customers’ Vitality status as an unsanctioned attempt to ride on the coattails of Vitality’s successful shared value model. “Other insurance companies abroad, such as Manulife in Canada and John Hancock in the US, have agreements with Discovery to use Vitality,” fin24 noted, adding that the gyms, pharmacies, and retailers Discovery partnered with all had to sign an agreement with the company. But the Johannesburg High Court dismissed Discovery’s motion with costs, saying that Liberty used the words “Discovery” and “Vitality” in its marketing materials only to confirm which wellness program a customer was signed up with. “Nowhere is there any suggestion by...

default Staff | April 24, 2020 The Canada Pension Plan Investment Board, alongside Dutch pension fund ASG and asset manager ESR Cayman Ltd., has entered into a new strategic agreement to establish a new development joint venture in South Korea with a total equity allocation of US$1 billion. The joint venture, ESR-KS II, will invest in and develop an industrial and warehouse logistics portfolio in the Seoul and Busan metropolitan areas in South Korea. ASG, the CPPIB and ESR have agreed to initial investments of US$350 million, US$450 million and US$200 million, respectively. They will hold 35 per cent, 45 per cent and 20 per cent, respectively, of the total shares of the joint venture. The partners also have allocation expansion options, which could bring the total equity investment capacity to as much as US$2 billion over time, according to a press release. Read: CPPIB invests in Korean logistics facilities “Asia’s consumer sector has been one of our key investment themes,” said Jimmy Phua, head of Asia real estate at the CPPIB, in the release. “The continued growth of South Korea’s e-commerce market is driving the demand for quality logistics facilities. This new joint venture deepens our longstanding relationship with ESR and APG. It will...

Staff | April 24, 2020 It’s no surprise that Canadian pension funds had a rough first quarter of 2020 and the latest data from Morneau Shepell Ltd.’s universe of pension managers’ pooled funds confirms just that. During the quarter, diversified pooled fund managers saw a median return of negative 10 per cent before management fees, which was 0.9 per cent lower than the benchmark portfolio used by many pension funds, according to the report. “Stock markets experienced a strong correction in the first quarter following the COVID-19 crisis and the oil dispute,” said Jean Bergeron, vice-president of Morneau Shepell’s asset and risk management consulting team, in a press release. “These events generated significant volatility in the stock and bond markets.” Read: 2019 a strong year for pension managers’ pooled funds In particular, the bond market saw a positive return of 1.6 per cent, whereas the Canadian equity S&P/TSX composite index posted a return of negative 20.9 per cent. Also dismal, the U.S. S&P 500 index returned negative 12.2 per cent in Canadian dollars, the MSCI world global markets index returned negative 13.3 per cent and the emerging markets index returned negative 16. 9 per cent. “The current crisis is having a significant impact on...

Apollo Exchange and Trufla Technology partner on broker suite launch Toronto, ON (Apr. 23, 2020) – Apollo Insurance Solutions Ltd., (“Apollo Exchange”) Canada’s largest online insurance marketplace, and Trufla Technology Ltd. (“Trufla”), have partnered to offer brokers a suite of digital marketing services combined with immediate eCommerce insurance fulfillment. Apollo Exchange allows brokers to digitize overnight by white labelling Apollo’s products, selling hundreds of classes of small business insurance directly from their brokerage website in an eCommerce environment. Coupled with Trufla’s suite of digital marketing products including search engine optimization, digital advertising, website optimization for lead conversion, and more, a broker is able to attract and service modern consumers like never before. “With storefronts closed, consumers need the valuable advice and counsel that brokers provide, but expect digital fulfillment to go along with that — the Apollo Exchange solves that problem,” said Apollo Exchange CEO Jeff McCann. “This partnership with Trufla adds a digital marketing component for brokerages to bring in qualified leads to a new digital insurance buying experience.” “At Trufla, we believe that brokers always were, and are, the best way to buy insurance,” said Trufla CEO Sherif Gemayel. “Partnering with Apollo Exchange allows us to couple our best-in-industry...

Yaelle Gang, the Canadian Investment Review | April 24, 2020 The Colleges of Applied Arts and Technology pension plan saw a strong 2019, delivering a 16 per cent return, net of investment management fees, while growing its assets under management to $13.5 billion. “On an absolute basis, all asset classes contributed positively to returns in 2019, with global developed equity, long bonds and real assets being the largest contributors,” said the annual report. “Interest rate and inflation hedging asset classes returned 11 per cent in aggregate, while return-enhancing asset classes returned 20.5 per cent. The plan’s currency hedging policy added 1.8 per cent to returns.”   For 2019, the CAAT plan is 118 per cent funded on a going-concern basis. Read: CAAT pension plan holds steady with 2018 return of 0.5% While 2020 markets have gotten off to a bumpy start, the CAAT plan has a long-term perspective. “Even though we are monitoring what’s going on in the marketplace, I don’t have any real concerns from an investment perspective at this time,” says Derek Dobson, chief executive officer of the CAAT plan. He highlights the plan’s fairly large funding reserve and asset smoothing reserve, at $2.9 billion and $0.8 billion, respectively. “And the...

Other insurance companies are joining Canada Life in lowering premiums on group benefits plans for coronavirus-hit small businesses. Green Shield Canada has announced that in April, May, and June, it will reduce premiums for non-refund clients in the form of a 75% reduction in dental rates, coupled with a 20% reduction in health rates, including vision but excluding drug coverage. The firm said the reductions will be reflected in May billings and retroactive to April 1, 2020; the reduced rates will also be reflected in June billings. “We hope these premium reductions provide some cost relief for our clients as they navigate the complexities of this pandemic,” said Brett Allen, GSC’s executive vice president, Group said. The company it will keep observing the COVID-19 situation and determine the appropriate position for July and succeeding months. In Quebec, La Capitale Insurance and Financial Services has reduced dental care premiums for its group health insurance plan. “A fundamental principle of insurance is that the premiums should reflect the risk,” said Jean St-Gelais, chairman of the Board and CEO of La Capitale Insurance and Financial Services. “The confinement measures ordered by the authorities and the limits on certain services are resulting in fewer...

Staff | April 23, 2020 Retraite Quebec is implementing two temporary easing measures to help supplemental pension plan administrators during the coronavirus outbreak. The measures involve extending deadlines for certain regulatory and legal obligations, as well as an update to the degree of solvency that must be taken into account for transfers and refunds under defined benefit pension plans. Deadlines for annual statements for members and beneficiaries, triennial or annual actuarial valuations and actuarial valuations for an amendment to the plan or for the use of excess assets and notices regarding the plan’s financial situation, as well as notices of annual meetings are extended by three months, from Sept. 30, 2020 to Dec. 31. Read: An overview of Canadian DB pension relief measures during coronavirus The deadline for actuarial valuations for a purchase of annuities, which is normally four months from the date of purchase, is also extended by three months. And the deadline for actuarial valuations required by Retraite Quebec, which is normally within 60 days of the valuation, is also extended by three months. Deadlines for actuarial valuations for a negotiated contribution plan and annual information returns and financial reports are extended from June 30 to Sept. 30. Further, deadlines for recovery...