The Financial Services Regulatory Authority of Ontario (FSRA), the Ontario insurance regulator, has identified two key areas of assessment of life and health insurers licensed in Ontario for 2020-2021.
What you need to know
FSRA’s two key identified areas of assessment are:
- implementing fair treatment of customers (FTC) principles across distribution channels through the lifecycle of the insurance product; and
- reviewing the relationships between insurance companies and managing general agencies (MGAs) in the context of an ever-evolving distribution system.
Fair treatment of customers
FSRA will be reviewing insurance companies with respect to the following areas.
- Corporate governance—to ensure that reporting relationships between management and senior officers allow for effective oversight, and that FTC is reflected in the insurer’s culture and values.
- Agent training and outsourcing arrangements—to evaluate policies and procedures, agent suitability and agent training.
- Incentives and remuneration—reviewing agent compensation structures and incentives, and confirming that the insurer periodically assesses risks to ensure appropriate products are sold to consumers.
- Product marketing and advertising—ensuring that the insurer provides sufficient product information to allow a customer to make an informed decision at time of sale.
- Information provided to customers—reviewing information provided to customers, including insurer policies and procedures, and ensuring the customer information process incorporates FTC principles.
- Claims handling—ensuring that claims handling process and standard processing times incorporate FTC principles.
- Complaint handling and dispute settlement—reviewing complaint handling and dispute settlement policies and procedures and ensuring that the insurer informs customers of its complaints processing service and its response timelines.
Similar reviews of industry performance with respect to FTC principles are being conducted in Québec and also more generally through the forum of the Canadian Council of Insurance Regulators.
Managing general agencies
FSRA does not currently regulate MGAs (Saskatchewan is the only province that has a separate license class for MGAs). However, FSRA will review the relationship between insurance companies and MGAs in the individual life insurance field with a focus on the following areas to determine if the public interest is well served and whether a revised framework for regulating and supervising distribution channels that rely on managing general agencies is needed:
- distribution channels—exploring the different types of distribution models insurers use, including the proportion of business written through each channel, the number of contracted agents, and the overall product delivery strategy;
- screening and onboarding of MGAs and agents—reviewing the insurer’s practices when screening and onboarding an MGA, its strategy for selecting MGAs, and its due diligence, policies and procedures;
- agreements and contracts between insurance companies and MGAs—reviewing the insurer’s written agreements with MGAs, including contractual conditions and scope, performance measures and obligations, outsourced functions and responsibilities, and agent oversight functions; and
- supervision and monitoring of outsourced functions—reviewing the insurer’s supervision and monitoring of its outsourced functions to MGAs, particularly agent oversight functions and responsibilities which are typically delegated to MGAs.
Title regulation and segregated funds
Along with these key areas of assessment for life insurers, FSRA will continue its work with respect to the title protection framework for financial planners and financial advisors and on increasing regulatory effectiveness for segregated funds.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
The excerpted article was written By Laura Day, Kevin McGivney
In Sky Clean Energy Ltd. v. Economical Mutual Insurance Company, 2020 ONCA 558, the Ontario Court of Appeal (the Court) discussed the availability of insurance coverage to an additional insured. The appeal concerned the interpretation of a common insurance term that requires liability to “arise out of the operations” of a named insured. The Court considered the requisite connection between the contractor’s operations and the additional insured’s liability. The Court upheld the traditional limits to the term “arising out of the operations,” requiring more than a “but for” analysis in order to establish the connection between the liability of the additional insured and the operations of the named insured. In the context of this case, it was not enough that the contractor had installed the equipment at issue.
The project owner (the Owner) was a developer of solar energy projects and the contractor was an electrical contracting company. The Owner entered into contracts with the contractor to install a solar power system that the Owner designed, using equipment selected and sourced by the Owner. The Owner contracted with equipment suppliers to provide the main components of the system, including the inverter and transformer. It was the contractor’s responsibility to install the components.
Before beginning to install the first transformer, the contractor discovered that the transformer delivered by the Owner’s supplier did not conform to the Owner’s design specifications. Due to time restrictions, the Owner asked the contractor to help source new transformers. The contractor’s supplier located a transformer manufactured by a third party. It was the Owner’s decision to accept the third party transformer, and the contractor was not asked to provide an opinion on the suitability of the transformer. Upon completing the first project, representatives of both the Owner and contractor observed an anomaly in the power flow and recommended shutting down and investigating the system. The Owner’s representative decided to leave the system energized for “observation” and the Owner formally took control of the facility.
Three days later, the transformer overheated and caught fire.
After investigating the fire, the Owner determined that the third party transformer was suitable for the projects, as long as a technical adjustment was made to one of the connections. The Owner approved the change and authorized the contractor to proceed with the installation at the second site (and replace the transformer at the first site). Soon after, a fire broke out at the second project site and the transformer destroyed. As a result, both systems were shut down temporarily and replacement transformers installed. The Owner paid for the remediation and lost revenue of just under $600,000.
The Owner commenced various proceedings against the insurer (under which it was an additional insured), the contractor and the manufacturer of the transformer.
Under the contract between the Owner and the contractor, the contractor agreed to indemnify the Owner against the contractor’s failure to perform its contractual obligations and for its negligent acts. The contractor also agreed to name the Owner as an insured under its Commercial General Liability insurance policy with its insurer, but only with respect to liability arising out of its operations.
The interpretation of “arising out of”
In interpreting the policy language “arising out of,” the Court reiterated that courts consistently interpret language such as “arising out of” or “arising from” as requiring more than a “but for” connection between the liability of the additional insured and the operations of the named insured. There must be an “unbroken chain of causation” and a connection that is more than “merely incidental or fortuitous.”
The interpretation of “operations”
The Court also considered the meaning of “operations,” which was said to include “the creation of a situation, or circumstance, that is connected in some way to the alleged liability.” It does not necessarily imply an “active” role by the named insured in the creation of the liability.
Findings of the Court of Appeal
The Court agreed with the trial judge and found that the contractor’s connection with the failure of the transformer was “merely incidental.” The trial judge found that the failure of the transformer caused the fire. Though the fire would not have occurred “but for” the fact that the contractor ordered and installed the transformers in the course of its operations under the contracts, the contractor’s “operations” under the contract did not require it to select the transformers to be installed in the projects. That was up to the Owner.
Consideration as to the underlying obligations between the parties necessarily informed the Court’s decision in this case. While the Court rejected the argument that the language of the contract between the Owner and the contractor should affect the interpretation of policy of insurance (other than to explain the commercial context), central to the Court’s decision was that the contractor was not responsible to choose the transformer. The Court noted that the Additional Insured Endorsement provided insurance with respect to the liability arising out of the “operations” of the named insured. The contractual obligations, including the scope of work, therefore formed part of the inquiry.
The Court upheld the traditional limits to the term “arising out of the operations,” requiring more than a “but for” analysis in order to establish the connection between the liability of the additional insured and the operations of the named insured. Despite the finding that the failed transformer caused the fire, the transformer was chosen by the Owner and thus it was not enough that the contractor installed the equipment at issue.
OLHI CEO, GLENN O’FARRELL TALKS LIFE, HEALTH, DISABILITY AND TRAVEL INSURANCE TRENDS
VANCOUVER, BC, Sept. 30, 2020 /CNW/ – In the midst of a pandemic, only one national, impartial and independent service offers Canadians across the country free help with life and health insurance complaints. The OmbudService for Life & Health Insurance (OLHI) is here to help.
Reports from across the insurance industry indicate there has been an increased demand for life insurance since the pandemic hit. With the near decimation of the travel industry, OLHI has seen double the typical number of travel insurance complaints across Canada. Disability claims remain consistently high at OLHI as the pressures of modern life can lead to disability claims due to mental health issues.
Glenn O’Farrell, former President of the Canadian Association of Broadcasters and former Senior Vice President of CanWest Global, will provide an overview of the vital public service OLHI provides to Canadians. O’Farrell will share case studies from consumers across Canada that will demonstrate how OLHI’s relationship with member insurance companies leads to the fair, equitable resolution of insurance complaints for Canadians.
Our unique role helps build confidence in the life and health insurance sector for Canadian consumers.
O’Farrell is scheduling phone interviews with talk radio stations across Canada in October and November.
OLHI is Canada’s insurance complaint resolution service. The OLHI complaint resolution process provides an impartial review of your dispute, determines the merit of your complaint, and works with your insurance company to reach a fair and equitable resolution.
SOURCE OmbudService for Life & Health Insurance
For further information: For more information or the schedule an interview with Glenn O’Farrell, please email firstname.lastname@example.org or call 888-295-8112 x2251
By Colin Perkel
THE CANADIAN PRESS
TORONTO _ A shadowy group of cybercriminals that attacked a prominent nursing organization and Canadian Tire store has successfully targeted other companies with clients in governments, health care, insurance and other sectors.
Posts on their NetWalker “blog” indicate the recent infiltration of cloud-services company Accreon and document company Xpertdoc, although only the College of Nurses of Ontario has publicly acknowledged being victimized.
Experts say NetWalker surfaced about a year ago but its attacks took off in March as the criminals exploited fears of COVID and people working remotely. The ransomware, like similar malware, often infiltrates computer networks via phishing emails. Such messages masquerade as genuine, prompting users to provide log-in information or inadvertently download malware.
Earlier ransomware attacks focused on encrypting a target’s files _ putting them and even backups out of reach. Increasingly, attackers also threaten to publish data stolen during their “dwell time,” the days or weeks spent inside an exploited network before encryption and detection.
The intruders promise to provide a decryption key and to destroy stolen records if the organization pays a ransom, often based on what the attackers have learned about its finances, by a given deadline.
To underscore the extortion, NetWalker criminals publish tantalizing screen shots of information they have, such as personnel, financial, legal and health records.
“The data in these cases is extremely sensitive,” said Brett Callow, a Vancouver Island-based threat analyst with cyber-security firm, Emsisoft. “Lots of companies choose not to disclose these incidents, so the individuals and (third-party) organizations whose data have been compromised never find out.”
In an interview, Richard Brossoit, CEO of Montreal-based Xpertdoc, said this month’s attack was a “little terrifying” at first. Fortunately, he said, damage was limited and no confidential client or personal information was compromised, although some records might be permanently lost.
“Once we were able to isolate the problem and knew it was minimal that our customers weren’t really affected at all obviously it was a very big relief,” Brossoit said.
With new computers, his several dozen employees were back up and running within days, he said. Still, Xpertdoc did hire specialists to deal with the cyber-criminals.
“We were able to negotiate a very low ransom,” Brossoit said. “They didn’t ask too much and we were able to actually negotiate much lower than what they were asking.”
Morneau Shapell, one of dozens of potential third-party victims, said it accepted Xpertdoc’s assurances no sensitive information had been compromised.
Accreon, which has until the first weekend in October to pay up, would not discuss its situation.
NetWalker did recently publish gigabytes of internal data from a Canadian Tire store in Kelowna, B.C. In response to a query, Canadian Tire Corporation said store computers were hit and authorities were investigating.
“This incident has not affected the Canadian Tire Corporation computer networks that process customer information or purchases,” the company said, adding store employees were told their personal information had been compromised.
The nurses’ college, which angered members by taking more than a week to publicly admit the attack discovered Sept. 8, did say it was getting back on its feet, although some services remained down.
“We share our members’ distress and frustration that this has happened,” college CEO Anne Coghlan said in a statement. “Members can rest assured that we will notify them directly if we identify any risk to individuals.”
The consequences of ransomware can go beyond the financial and reputational. This month, for example, a hospital in Duesseldorf, Germany, was unable to admit a patient for urgent treatment after an apparent cyber-attack crippled its IT system, authorities said. The woman died.
Such attacks have become increasingly frequent. Earlier victims in Canada include municipalities among them Stratford and Wasaga Beach in Ontario and the Regional District of Okanagan-Similkameen in B.C. health-care organizations and charities. Cloud storage companies, with troves of third-party data, have also become attractive targets.
This year, the University of California San Francisco paid US$1.14 million to regain access to its data. The encrypted information, the school said, was “important to some of the academic work we pursue as a university serving the public good.”
Just how often victims pay _ and how much _ is hard to know. One analysis by New Zealand-based Emsisoft, using available data, estimates ransomware losses for Canadian enterprises could run up to US$1.7 billion this year.
“It’s really difficult to get accurate statistics,” said David Masson, a director with cyber-security company Darktrace. “Those who pay won’t be telling you. If you do pay, you’re probably going to be attacked again because very quickly…you’re going to get a reputation that you paid.”
Those behind NetWalker appear to be Russian speaking. They provide the malware for a cut to “affiliates,” who promise not to attack Russian or Russia-friendly targets.
“Their attacks are becoming increasingly sophisticated,” Callow said. “These groups are using the exact same tools as nation-state actors. In some cases, they may actually be nation-state actors.”
Experts say up-to-date anti-virus software, segmenting networks and keeping separate backups are among critical protective measures. In addition, Masson said knowing what is going on within a network is crucial, while Brossoit advised hiring specialists should an attack happen.
This report by The Canadian Press was first published on Sept. 27, 2020.
By Tara Deschamps
Hundreds of productions and thousands of entertainment jobs are on hold because the federal government has yet to intervene and help them get COVID-19 insurance, say two Canadian film and television organizations.
The Canadian Media Producers Association and the Association quebecoise de la production mediatique said Friday that they have identified 214 camera-ready film and TV projects, 19,560 jobs and $1 billion in production volume that have stalled because insurers aren’t offering COVID-19 coverage.
“There’s just a huge amount of production that’s raring and ready to go, but can’t,” said Andrew Addison, the CMPA’s vice-president of communications, marketing and membership.
His organization and the AQPM pitched a federal government-backed insurance program in June and reiterated their plea to Heritage Minister Steven Guilbeault earlier this week.
The proposal asks producers to pay premiums to access COVID-19 coverage.
The premiums would form a dedicated pot to pay for potential claims and the government would only contribute financially through a proposed $100-million backstop if the funds generated though the sale of the policies were insufficient to cover the claims made.
Politicians have yet to act on the proposal.
Guilbeault’s press secretary, Camille Gagne-Raynauld, said in an email that the department takes the matter “very seriously.”
“We understand the urgency of the situation and are hopeful to provide a solution in the near future,” she wrote.
Addison is worried because France, the United Kingdom and Australia have already stepped in to help their entertainment industries and he believes time is of the essence, but little has been done so far.
“If you don’t get to camera in summer or by fall, winter makes it nearly impossible to do a lot of shooting outdoors,” he said.
“We’re really getting to a point of no return. If something comes in November, it’s going to be too late.”
He worries that without quick action productions could be put off by a full year or even worse, suspended forever.
Some productions, he said, have been able to return because of insurance policies they signed before COVID-19’s spread that include pandemic clauses.
U.S. studios with deep wells of cash have also found ways to self-insure themselves, creating a risk of foreign productions moving in and swallowing up resources, so when insurance is found, it is harder for Canadian films and television shows to get started again.
_With files from Victoria Ahearn.
This report by The Canadian Press was first published Sept. 18, 2020.