Karen Gavan, president & CEO of Economical Insurance, to retire at end of Dec 2016

"Our new look is very distinct and will help to further differentiate our brand in the marketplace," said Economical's President and CEO Karen Gavan

WATERLOO, ONTARIO, February 19, 2016 – The board of directors of Economical Insurance today announced that Karen Gavan will retire as president and CEO and director at the end of her contract on December 31, 2016.

Gavan joined the board of Economical Insurance in 2008 and assumed the role of president and CEO in 2011. As initial Chair of the Special Committee on Demutualization she spearheaded the decision to proceed with demutualization and then as CEO she successfully led the company through a period of transformational change. Under Gavan’s leadership, the company has established a bold vision and strategy, grown significantly, transformed its operating platform, and positioned itself as a strong competitor.

“Economical Insurance is entering the next stage in our journey to becoming a public company. We do so from a position of strength thanks to Karen’s exceptional leadership,” said John Bowey, board chair. “Now is the right time for transition. Karen has been the perfect leader to guide Economical through the first phase of demutualization. Economical has all the characteristics of a company poised for greatness and growth. Our leadership team brings great energy and stability while our long-term strategy is world-class.”

“It has been a privilege to lead Economical at such an exciting time in its history,” said Gavan. “When I stepped in almost five years ago, I had a mandate to develop a compelling strategy for the future, form a great leadership team and drive the results necessary for longterm success. I’m extremely proud to have delivered on this mandate. Economical is now well positioned for the future. I’d like to thank our amazing leadership team for their support, members of the board and our brokers and policyholders for their trust, and every Economical employee for their dedication. I remain committed to providing ongoing leadership for the company until the end of my contract.”

During Gavan’s tenure to date as CEO – from the second quarter of 2011 through the end of 2015 — total equity has grown by more than $500 million to record levels, with the company surpassing $2 billion in gross written premiums (GWP) for the first time in its 145-year history. In addition to financial performance, Economical achieved notable success in areas of strategic importance under Gavan’s leadership. During this period, the company:

  • Formally began its demutualization process
  • Implemented a business transformation program that reduced operating expenses to competitive levels
  • Developed a multi-channel strategy and announced the launch of a direct-to-consumer business, scheduled for later in 2016
  • Made significant investments in technology and predictive analytics, including a multi-year implementation of our Guidewire PolicyCenter® policy administration system

“Economical would not be where it is today without Karen’s vision and drive,” continued Bowey. “We have incredible momentum. The Economical of tomorrow will excite and impress the Canadian business community, while we continue to deliver superior service and innovative products to our customers, brokers, and partners. Our board remains fully committed to our strategy, and our next CEO will share in our excitement and vision as we continue to expand this great company. On behalf of the board, I’d like to thank Karen for the enormous contribution she has made to the company. We look forward to her continued passion and energy over the balance of the year.”

The board of directors will conduct a process to select Gavan’s successor. Gavan will continue to lead the company during this phase, with the full support of the board and the leadership team.

About Economical Insurance
Founded in 1871, Economical Insurance is one of Canada’s leading property and casualty insurers, with approximately $2.0 billion in annualized premium volume and $5.3 billion in assets as at December 31, 2015. Based in Waterloo, this Canadian-owned and operated company services the insurance needs of more than one million customers across the country. Economical Insurance conducts business under the following brands: Economical Insurance, Economical, Western General, Economical Select, Perth Insurance, Family Insurance Solutions, and Economical Financial.

For further information, contact:

Doug Maybee Manager,
Public Relations and Media Relations
Economical Insurance
(T) 519.570.8249
(C) 519.404.0989
doug.maybee@economical.com

David Bradfield
Vice-president, Communication
Economical Insurance
(C) 647.223.5192
david.bradfield@economical.com

Clash brewing over genetic privacy as insurance industry tries to get as much data as possible to assess risk

Ian MacLeod, Ottawa Citizen

OTTAWA — A clash over genetic privacy and the insurance industry’s need for personal medical data to calculate risk marked the opening day of parliamentary hearings on a Senate bill banning genetic discrimination.

No other generation in human history has had the power to so profoundly investigate and tinker with the essence of life and some believe there should be limits on what people and companies can do with the discoveries, products and knowledge flowing from the rapid commercialization of genetic science.

The Senate human rights committee Wednesday heard how the technology capable of tremendous healing and hope also can be used to discriminate against those found to carry genes that predispose them to potentially developing certain diseases.

“Fear of genetic discrimination is stopping many Canadians from having genetic testing that their doctors believe would benefit them,” said Sen. James Cowan, who is making his third attempt at sponsoring Bill S-201 into law. “In Canada, unlike most other western countries, there is no protection for this.”

The bill would outlaw life and health insurers and others from requiring that individuals undergo genetic testing as a condition of doing business. It would ban requiring a person to disclose previous genetic test results or penalizing those who refuse to undergo the test. And it would add genetic discrimination to the prohibitions in Canada Labour Code and federal human rights and privacy acts.

Life insurance, disability insurance, mortgages and employment would be prime areas of concern.

Bev Heim-Myers of the Canadian Coalition for Genetic Fairness told the committee a key problem is that the insurance industry places too much emphasis in the results of genetic tests, which often indicate a person’s genetic predisposition to developing a disease or condition, but not whether they will actually go on to get the disease.

“If a person has a genetic test and it (reveals) a perceived future disability, who knows if it’s going to happen. Perhaps it won’t,” she said. “But the insurance industry or employers are looking at it and saying this (disease) is going to happen. (That’s) not equal.”

She said people who suspect they’re prone to a disease, “will choose not to be tested because of the risk of being uninsurable,” and won’t know to seek medical therapy or make lifestyle or other changes to try to offset their genetic predisposition to a particular disease.

Although Cowan’s bill does not mention the insurance industry, a battery of insurance executives and actuarial experts lined up before the committee to complain the proposed legislation would unfairly blind insurers to the degree of risk they are underwriting.

They argued insurers and prospective policy holders have an obligation to disclose any relevant health information so the contract is entered into on an “equal information” basis. The same, they said, as people now do when disclosing family histories, cholesterol, hypertension, coronary heart disease, cancer, diabetes and other conditions with a genetic component.

“An essential element for insurance to work properly is an equal access to information by both parties,” said Jacques Y. Boudreau, chair of committee on genetic testing for the Canadian Life and Health Insurance Association. “That is why offers to purchase a house are often subject to inspection, or why the seller of a car must disclose any significant collisions.”

An essential element for insurance to work properly is an equal access to information by both parties

But the proposed law creates a material imbalance of information, he said. “Receiving a bad result from a genetic test would be a strong motivator to acquire more insurance. Under the bill, one would be able to acquire insurance at the same price as the general public and well below its true costs, providing a strong incentive to purchase as much as possible.”

He said the industry is “deeply concerned” that a “vast majority” of the public will have to pay more for insurance as a result.

If the bill makes it through the Senate, then House of Commons and into law, the executives hinted at a constitutional legal challenge over federal incursion into an area primarily regulated by the provinces, which have no such legislation.

Cowan first introduced the bill in early 2013, but it died when Parliament was prorogued. He retabled the bill, but it was gutted last spring by the Senate’s Conservative-dominated human rights committee.

Source: National Post

Insurance that takes risk out of reps and warranties gains favour in weak economy

Drew Hasselback | Financial Post

Wherever there’s risk, there’s usually someone willing to insure it for the right price.

Early last year, we introduced you to a novel product popping up in M&A circles called “representation and warranty insurance” or RWI. Lawyers say the product is starting to become a common feature of private deals, particularly those in which a private equity fund is the purchaser.

Bryan Haynes, a lawyer in the Calgary office of Bennett Jones LLP who specializes in private and cross-border transactions, says 2015 was a “banner year” for the use of RWI.

“Three years ago, people didn’t know what it was and they looked at it with a little bit of suspicion and caution. But I think there’s a general acceptance now,” Haynes says. “There’s been a history now of policies being underwritten, of claims being made, and claims being paid. With that, there’s a general comfort level.”

RWI kicks in if a seller is asked to refund some of the purchase price because of a post-closing event that arguably runs contrary to the representations and warranties that were made during the deal talks.

It’s possible to negotiate a deal in which the seller would directly indemnify a buyer if need be. But this can be a hot topic in M&A negotiations. RWI was invented about 20 years ago to bridge indemnity valuation gaps that would otherwise sink deals.

Kurt Sarno, co-head of the private equity group at Blake, Cassels & Graydon LLP, says the weakening economy will likely broaden the cavern between vendors and buyers in negotiating such indemnification agreements. That makes RWI even more relevant today, he says.

“It can get deals across the finish line where, in times like this, the seller wouldn’t want to take the risks that a buyer wants it to hold in respect of indemnification obligations.”

******

In this day and age, it’s hard to conceive of any company either using or condoning the use of slavery and child labour. Yet the problem persists, at least on a global basis. According to the International Labour Organization, almost 21 million men, women and children work in some form of modern slavery.

Opposing this seems like a motherhood issue, but there’s a hard legal edge to this. Businesses who turn a blind eye to the issue run the risk of having slave labour pop up in their supply chains.

The Canadian Bar Association meets in Ottawa this weekend to consider several policy proposals. One matter on the agenda is a package of “model business principles” a company could adopt to ensure it avoids the use of forced labour, trafficked labour or illegal or harmful child labour in either its own operations or its supply chain.

Putting together the model code wasn’t as easy as you might think. For example, calling for a complete ban on child labour overlooks that there are many situations in which children might work in a family owned business, such as a farm, convenience store or restaurant.

Stephen Pike, a Toronto-based partner with Gowling Lafleur Henderson LLP,  approached a wing of the CBA that represents in-house and corporate lawyers, the Canadian Corporate Counsel Association, with the idea of putting the guideline together. The Canadian model business principles are based on guidelines issued by the United Nations and resemble principles recently adopted by the American Bar Association.

The proposed Canadian principles would be voluntary, and they’re designed so that companies can adopt them to suit their businesses. “They are more of a recommendation than a prescription,” Pike says.

It’s worth noting that some jurisdictions have legislated strict roles. California, for example, requires larges businesses operating there to disclose their efforts to eradicate human trafficking and slavery from their supply chains. The U.K. will mandate the publication of an annual statement on slavery and human trafficking, starting with corporate years that end after March 31 of this year.

******

Save the date: We can now tell you the 2016 Canadian General Counsel Awards gala will take place June 1 at the Fairmont Royal York in Toronto.

Nominations for the 12th annual CGCAs can be submitted via email (nominations@cgca.ca) until March 24. The honours, founded by the National Post and ZSA Legal Recruitment, are the only national awards designed exclusively to recognize excellence in Canada’s in-house counsel community.

The award website (cgca.ca) has a sample nomination form plus detailed information on the eight award categories. Dan Malamet of ZSA (dmalamet@zsa.ca) can also answer questions.

Canada’s Largest Provider of P&C Insurance, Intact Financial Corp, Makes Strategic Investment in Metromile

Metrolife

Today, Metromile, a pioneer in pay-per-mile car insurance in the United States, announced that Intact Financial Corporation (TSX: IFC) has made a strategic investment in Metromile. IFC is the largest provider of property and casualty insurance in Canada. The venture is in line with IFC’s long-term strategy to invest and partner with emerging and innovative businesses.

“Metromile is redefining the marketplace with its unique business model, innovations and smart technology offerings,” said Karim Hirji, Senior Vice-President, International & Ventures, Intact Financial Corporation. “This venture represents an exciting opportunity for Intact Financial to expand its core competencies which will ultimately enhance the customer experience.”

Metromile offers customers a pay-per-mile insurance option that saves low-mileage customers $500 on average each year. With 95 million low mileage drivers in the United States the company has an addressable market of more than $70 billion.

“At Metromile, we work to make owning a car easy and affordable for drivers,” said Dan Preston, CEO at Metromile. “In 2015, pay-per-mile insurance saved our customers an average of $500 per year, and the Metromile app helped customers diagnose their car issues, avoid thousands of parking tickets, and more. We are excited to partner with Intact Financial, who shares similar values in transparency, customer experience, and a technology-driven approach to insurance.”

Metromile currently offers pay-per-mile insurance in seven states including California, Oregon, Washington, Illinois, Virginia,Pennsylvania and New Jersey. Availability in these seven states means that 30 percent of drivers in the United States can now get car insurance coverage through Metromile.

Metromile also launched an innovative partnership with Uber earlier this year in California, Illinois and Washington and debuted an updated smart driving app experience including a new look and feel as well as data about trips, street sweeping alerts (in select cities), and parked location.

Since Metromile launched in 2011, the company has grown from a small team to more than 150 strong with headquarters in San Francisco and offices in Tempe, Ariz. and Boston. In the last few months, the company has also focused on growing its executive team, which included hiring Chief Financial Officer Joe Selsavage, Chief Marketing Officer James Moorhead and General Counsel John Orta as well as promoting former Vice President of Engineering, Jose Mercado, to Chief Technology Officer.

Policies are sold through Metromile Insurance Services LLC (the Managing General Agent for insurance policies) and are written by insurers in the National General Insurance Group.

About Intact Financial Corporation
Intact Financial Corporation (www.intactfc.com) is the largest provider of property and casualty insurance in Canada with $7.3 billion in premiums. With over 11,000 employees, the company insures more than five million individuals and businesses through its insurance subsidiaries and is the largest private sector provider of P&C insurance in British Columbia, Alberta, Ontario, Québec and Nova Scotia. The company distributes insurance under the Intact Insurance brand through a wide network of brokers, including its wholly owned subsidiary, BrokerLink, and directly to consumers through belairdirect.

About Metromile
Metromile is revolutionizing car insurance through technology with its pay-per-mile insurance model. By offering affordable car insurance, transparent pricing based on the miles you actually drive, data to optimize how you use your car, and instant access to detailed vehicle diagnostics via the driving app, Metromile is transforming car insurance — and car ownership — to be more intelligent, seamless, and accessible than ever before. Metromile is expanding across the US, and currently empowering drivers in California,Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington. For more information, visit metromile.com.

SOURCE Metromile

Twitter:  Off work with a disability takes its toll – 78% say finances are tight & 81% upset while not working

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A.M. Best Assigns Rating to The Empire Life Insurance Company’s New Preferred Shares

A.M. Best has assigned an issue rating of “bbb” to the recently issued CAD 130 million non-cumulative rate reset Series 1 preferred shares of The Empire Life Insurance Company (Empire Life) (Kingston, Ontario, Canada). The outlook assigned to the rating is stable, which is consistent with the outlook for the existing ratings of Empire Life. (For further details, please see A.M. Best’s press release dated May 19, 2015).

Empire Life intends to use the net proceeds from the sale of the preferred shares for regulatory capital and general corporate purposes. The Series 1 preferred shares’ initial dividend rate is set at 5.75%, payable quarterly until April 17, 2021. Subsequent to this initial period, and every five years after, Empire Life will determine on the 30th day prior to the first day of the subsequent fixed rate period the annual fixed dividend based upon the five-year Canadian bond yield. A.M. Best notes that Empire Life’s overall financial leverage is expected to remain below 30%, while interest coverage is expected to remain above five times. Both measures are within A.M. Best’s guidelines for Empire Life’s current rating level.

The rating recognizes Empire Life’s continued earnings growth and sustainable market presence in Canada with multiple lines of business. Empire Life is among the 10 largest life insurance companies in Canada (based on general and segregated fund assets), although the company has a 6% market share or less in its three major product lines. Empire Life markets a broad range of life insurance and investment products, employee benefit plans and financial services to individuals, professionals and the small to medium group market through multiple distribution channels. Additionally, A.M. Best will continue to monitor the company, which has been challenged due to sustained low interest rates and recent equity market volatility given its large segregated fund block of business.

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Erik Miller, 908-439-2200, ext. 5187
Senior Financial Analyst
erik.miller@ambest.com
or
Edward Kohlberg, 908-439-2200, ext. 5664
Managing Senior Financial Analyst
edward.kohlberg@ambest.com
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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