Insurance brokerage Hub bulking up Canadian benefits business with acquisition spree

The biggest insurance brokerage in Canada has been on a dealmaking blitz that may only be about halfway done, according to the company’s Ontario chairman.

Chicago-based Hub International Ltd. sells insurance, but it has also spent the past year expanding the Canadian side of its business, which advises companies on their employee benefits, such as health or retirement plans. It has been doing so in part by acquiring a number of boutique firms.

On Tuesday, Hub said it acquired for an undisclosed sum Toronto’s PDF Financial Group Inc., an independent brokerage that helps a company’s human-resources department manage employee programs. The acquisition was one of five such deals Hub has announced to date in October, involving three companies in Canada and two in the United States.

Hub is Canada’s biggest property and casualty insurance broker by a “healthy margin,” but it had heard back from some clients wanting advice about benefits and pensions as well, according to Gregory Belton, the executive chairman of Hub Ontario.

“We’re not only getting larger and filling out a geographic footprint, but we’re developing services for what we think is the under-served middle market of Canadian business,” Belton said in an interview with the Financial Post.

After announcing its Canadian benefit strategy in July 2018, Hub noted at the beginning of this year that it had already acquired 13 Canadian employee-benefit and pension brokerages since 2018, increased fee revenue to more than $50 million and opened seven new offices. Hub wants to earn more than $100 million in commission fees by 2021, and said it expected to open an additional 10 offices.

“I would say that we’re about halfway done in our acquisition strategy,” Belton said. “We have a fairly robust pipeline across the country, and you’ll see further acquisitions being closed in the coming months.”

Mike Berris, a partner at accounting firm Smythe LLP who specializes in valuations and M&A consulting in the Canadian P&C insurance industry, said he expects more activity in the benefits space — although not all brokers may be able to pull it off.

Even though it’s a risk-based product, you really have to have scale and expertise to do it properly.

Mike Berris, partner, Smythe LLP

“There’s a lot of desire, but there’s only so many people who are capable of doing that,” Berris said. “Even though it’s a risk-based product, you really have to have scale and expertise to do it properly.”

Hub has been scaling up since it formed in 1998 with the merger of 11 Canadian brokerages. It went public soon after, expanded into the U.S. and in 2007 was bought by private-equity firm Apax Partners and investment bank Morgan Stanley.

In 2013 Hub announced it was being acquired by funds advised by another private-equity firm, Hellman & Friedman LLC, in a deal that valued the brokerage at around US$4.4 billion.

Hub then said in October 2018 that it had agreed to a deal involving “a substantial minority investment” from funds managed by Toronto-based investment firm Altas Partners. The agreement implied a total enterprise value for Hub of more than $10 billion.

Since the deal, Hub’s website shows it has made more than 50 acquisition-related announcements. Currently, the brokerage has more than 11,000 employees, with more than 250 offices in the U.S. and about 200 in Canada, a spokesperson said.

“Like a lot of private-equity-owned brokerages, they have been very, very aggressive and they’re very, very effective in growing through acquisitions,” Berris said.

Belton said most Canadian businesses fit the mid-market mold, but that there is no “dominant player” in that section of the market right now for the sort of benefits business Hub is expanding. Even so, he said there has been “very robust competition” for the types of companies Hub is buying.

“Our aspiration is to become the dominant player, just as we are in the property-casualty side of the business,” Belton said.

Police Officer in Pursuit Found Fully at Fault for Intersection Collision

Reasons for judgement were published today by the BC Supreme Court, Chilliwack Registry, finding a police officer fully at fault for an intersection collision with another motorist.

In today’s case (Burroughs v. Chiasson) the Plaintiff was an RCMP officer involved in a crash in 2013.  At the time, while driving a fully marked RCMP vehicle, she “pursued a truck with an uninsured trailer by attempting to turn left, on a red light, onto Young Road from the westbound curb lane on First Avenue. While making this turn, she collided with a minivan driven by the defendant, Jennifer Chiasson. Ms. Chiasson was driving eastbound on First Avenue.”.

The RCMP officer sued the other motorist claiming damages from the collision.  The claim was dismissed with the Court finding that the Plaintiff entered the intersection when it was dangerous to do so in circumstances with no particular urgency.  In dismissing the claim and finding the officer fully at fault for the crash Mr. Justice Basran provided the following reasons:

[46]         As a trained and experienced police officer, Ms. Burroughs knew that there was a significant risk in turning left on a red light from a curb lane in front of a bus that blocked her view of oncoming traffic. She also knew that expired insurance on a trailer did not pose an imminent threat or danger. There was no need for immediate apprehension of the trailer.

[47]         Ms. Burroughs’ position that the offence was “arrestable” and that this explanation justified her actions demonstrates that she failed to weigh the risk of the required maneuver in relation to the risk to the public of letting the trailer proceed. Ms. Burroughs should have abandoned her pursuit and followed up at the trailer owner’s address instead of pursuing this vehicle by making a dangerous maneuver. In my view, the risk to the public from turning left significantly outweighed the risk to the public posed by expired insurance on a trailer. As in Watkins, there was a safer option, but Ms. Burroughs failed to consider it.

[48]         After deciding to pursue the trailer, Ms. Burroughs should have followed her training and cleared the lanes one at a time by ensuring that she could see, and be seen, by all vehicles in, and approaching, the intersection. She knew that the bus created a blind spot and obstructed her view of oncoming traffic. She therefore should have addressed this by stopping and exercising considerable caution prior to crossing in front of the bus. Her poor visibility of oncoming traffic is a factor that increased the potential harm to the public: Regulations, s. 4(6)(b).

[49]         Both Ms. Burroughs and Ms. Chiasson testified that there was no time to react prior to the accident. By the time they perceived each other, the accident was imminent.

[50]         Ms. Sawatzky had a clear and close view of the events leading to the accident. Ms. Burroughs did not stop in front of the bus. She kept moving in front of it and then accelerated past it causing the accident with Ms. Chiasson’s vehicle.

[51]         No witnesses corroborated Ms. Burroughs’s recollection that the siren was on prior to the U-turn. I do not accept that Ms. Burroughs turned on her siren when she executed the U-turn on First Avenue, 20 to 30 seconds prior to the accident. Ms. Burroughs may have thought she activated the siren well before the accident, but no one, including Ms. Sawatzky and Ms. Marchuk, recalls hearing a siren until mere moments before impact. I find it is more likely that while making the left turn maneuver, Ms. Burroughs knew she could not see past the bus, but was nevertheless determined to pursue the trailer, and activated her siren immediately before accelerating in front of the bus. I accept Ms. Chiasson’s evidence that she heard the siren shortly before the collision and that she had no time to react to it.

[52]         Had Ms. Burroughs stopped in front of the bus and waited for the southbound light on Young Road to turn green, the accident would not have happened. If Ms. Burroughs had done this, it is possible that she may have lost sight of the trailer, but as noted above, immediate apprehension of the uninsured trailer was not required.

[53]         In my view, Ms. Burroughs contravened s. 177 of the MVA by not activating her siren before entering the intersection of First Avenue and Young Road.

[54]         Ms. Chiasson could not see Ms. Burroughs’ car and did not hear a siren until shortly before the collision. Ms. Chiasson had no visual and virtually no audible cue to warn her of the presence of Ms. Burroughs’ vehicle. She had a green light and entered the intersection as she was entitled to do. She could not have avoided the accident and is therefore not liable for it.

[55]         I find that Ms. Burroughs’ actions were the sole cause of the accident and she is 100% liable for it.

bc injury law, Burroughs v. Chiasson, intersection collisions, Mr. Justice Basran, Police Pursuit Cases

Notice Requirements For Professional Liability Insurance

Article by Deepshikha Dutt and Stevan Manojlovic

On June 18, 2019, the Nova Scotia Court of Appeal released its decision in the case involving Trisura Guarantee Insurance Company of Canada (Trisura) and Duncan et al. This decision is noteworthy, as it may lessen an insured’s obligation to notify and disclose potential claims, and increase the burden of diligence on the insurer.

Facts

Trisura provided professional liability coverage to Keybase National Financial Services Inc. (Keybase) from July 2008 to July 2012. Gregory Duncan and James White (Duncan and White) were Keybase advisors during this time.

Duncan and White assumed responsibility for John Allen’s (Allen) clients. Allen was also a Keybase advisor. He was dismissed by Keybase in September 2007. Allen was sued by his former clients in 2009. Allen was convicted for criminal offences, and his former clients were successful in their action against him (2014 NSSC 31 (CanLII)).

However, following the 2014 decision against Allen, the clients (Allen Clients) turned around and commenced a claim against Duncan and White as well, complaining of improper advice concerning mitigation of losses caused by Allen (2015 Action).

Duncan and White applied for, and were granted, an order compelling Trisura to defend the 2015 Action (2018 NSSC 92). Trisura appealed this decision. It asserted that the Court erred: (1) in its interpretation of notice obligations under the policy; (2) in finding that Duncan and White complied with those obligations; and (3) in finding that relief from forfeiture was available in the circumstances. The decision was upheld.

The Appellate Court’s decision

Trisura stated that: (1) it was not notified of any claims or potential claims during the policy periods; and (2) Keybase knew or should have foreseen that Duncan and White had exposure when Keybase first applied for insurance in 2008.

With respect to Trisura’s first argument on notification, the Court disagreed. Although the 2015 Action arose after the Trisura policy expired, the policy afforded coverage if Trisura was notified during the policy period. In 2010, Keybase’s third party insurance consultant (the “Consultant”) had reported potential claims from the Allen Clients. Trisura argued that these reports were related to Keybase and Allen’s negligence. They argued that “notice” was not collective. Further, notice respecting one Duncan and White client could not be notice for all clients. The circumstances needed to be differentiated.

The Court stated that Trisura’s knowledge of what transpired between Keybase, Allen and the Allen Clients underpinned its understanding of how Duncan and White, as subsequent advisors, were exposed to claims of liability. Trisura, as a sophisticated player in the insurance industry, with the benefit of prior knowledge and context, should have known the potential for further claims. Without prior knowledge, it was safe to assume that Trisura would have sought more explanation in the reports.

Trisura’s argument that notification with respect to potential liability regarding one client cannot be notification with respect to the others failed, because there was no material difference between the former Allen Clients’ claims against Duncan and White, and the losses sought.

In June 2010, the Consultant indicated there were seven client complaints against Allen and “two current agents”. Furthermore, on July 2, 2010, Trisura received an adjuster’s report stating:

“There could be exposure for the alleged failure by the subsequent Keybase advisors (Jim White and Greg Duncan) to rectify the situation or to have caused an aggravation of the situation”.

Trisura argued that the report was misconstrued. The actual focus was whether potential claims against Duncan and White should have been disclosed prior to placement of coverage with Trisura.

Nevertheless, on December 29, 2010, the Consultant wrote to Trisura’s adjuster:

“We confirm that any subsequent claims will be treated by Trisura as having arisen in the period in which these circumstances were reported … July, 1, 2009 to July 1, 2010.”

Trisura did not respond.

Trisura also argued that claims against Duncan and White were not commenced during the policy period, because Duncan and White themselves did not think they had any exposure. However, the Court noted that it was unnecessary for the insured to provide notice personally. Additionally, the Consultant was reporting to Trisura on behalf of Duncan and White, and Keybase. The purpose of notice was satisfied in light of the adjuster’s assessment of the potential exposure.

Takeaway

Considered alone, this is not a novel decision. However, it may form part of a broader legal framework, which will make it difficult for insurers to challenge the adequacy of notification and disclosure moving forward.

About Dentons

Dentons is the world’s first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world’s largest law firm, Dentons’ global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com

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. Specific Questions relating to this article should be addressed directly to the author.

Source: Mondaq

As Family Dynamics Change, Your Life Insurance Should, Too

As you move through your life, changes to the dynamics of your family and business life may have a direct impact on the type and amount of life insurance you need.

The term “family” has a much different meaning today than it had for previous generations. Many people from older generations grew up knowing the traditional family unit, the one where Dad was the breadwinner and Mom stayed home to raise the children. Today, shifting demographics have helped to reshape the concept of a family. Families come in many shapes and sizes, so there is no longer a single definition of what makes up one. Today you are more likely to know families that include dual-income earners, same-sex couples and blended or extended families living under one roof.

There is one thing that hasn’t changed, though: life insurance. One of the main reasons for life insurance is to provide protection for the family upon one’s death. Traditionally, the death benefit would be there to help replace the income lost, but with changing family dynamics, serving a family’s needs isn’t always so clear. While the replacement of income is important for a family, it is also important to address the role of the surviving spouse. Will he or she need to go back to work? Are there children? If so, how will they be taken care of in the short and long term? All of a family’s wants and needs can be answered with a few simple questions:

1. Do you have a will? Is it up to date?

2. Is there a trust that specifies how property is to be distributed upon death?

3. Do you have enough insurance to take care of your family after you are gone?

Family dynamics can complicate your financial planning process. Understanding these dynamics and asking the right questions is necessary when advising a family on how life insurance can be used to manage the issues they may face, all while providing much-needed protection. To ensure you get the protection you need, it is imperative that you develop a comprehensive plan to guarantee that your wishes are fulfilled. When developing that plan, it is extremely important that you choose the right person to be the executor. This should be someone you trust and who you are confident will carry out your final wishes to the letter.

Ideally, you would only need to purchase life insurance once or twice in your lifetime. But this does not mean you should just put your plan in a drawer and forget about it. You should review your policy at least once a year. The dynamics in your life change periodically, so it makes sense that your life insurance should be adjusted as your needs change. Some of the common life situations that should make you take a look at your insurance are:

1. Financial changes: Any change here, for better or worse, should result in a review of your coverage. Purchasing a home, caring for a family member and changes in employment or salary should trigger you to take another look at what you have.

2. Family changes: Since it is likely that a family member will be the beneficiary of your policies, any change to the dynamic of your family should facilitate a change in your life insurance.

3. Health changes: Your life insurance coverage is based on your health, and any significant changes will necessitate an adjustment to your policy, particularly in the case of severe illness or disability.

Life insurance is an important component in financial planning. Besides providing a death benefit for your beneficiaries and future generations, many of the options available today can address other needs like chronic illness or disability. As your life changes overtime, to possibly include marriage, having children, purchasing a home, retirement and all things in between, it is important for you to keep your family protected. You are purchasing life insurance to provide such protection, but to make sure it is adequate, you should review your coverage at every major life event, especially if the event changes the number of people depending on you or your financial security.

Source:

How technology is reshaping the insurance industry

Canada has a rich history of innovation, but in the next few decades, powerful technological forces will transform the global economy. Large multinational companies have jumped out to a headstart in the race to succeed, and Canada runs the risk of falling behind. At stake is nothing less than our prosperity and economic well-being. The Financial Post set out to explore what is needed for businesses to flourish and grow. You can find all of our coverage here.


In its simplest form, insurance spreads the risk of loss suffered by one person amongst many. But in today’s modern economy, constantly evolving with the tides of innovation, insurance has never been so complex. Technological drivers of change present the industry with some of its greatest opportunities and risks in decades; however, if not managed carefully, technology could be as catastrophic as it is revolutionary to the industry.

Historically, the growth and establishment of insurance originated in the days of the shipping industry when a vessel and its cargo could be damaged or lost due to storm, loading and unloading, fire, or even pirate attacks.

Today, the rapid and significant changes in technological innovation of products present the insurance industry with its greatest risk – and opportunity – since pirates took to the seas. The most significant agents driving this change in the insurance industry are: the Internet of Things (IoT) and autonomous vehicles.

The IoT is the connector between companies, products and consumers. It can also be the engine behind the creation of a multitude of connected devices and technology that will directly present both risks and opportunities for insurers and consumers alike.

Perhaps the most significant IoT-related development is the category of wearable technology. Wearables have expanded beyond their initial explosion into eHealth and are now equipped with the technology required to communicate with one another – and with insurers. Insurers can use this technology to adjust rates and premiums to more accurately reflect usage, as opposed to simply applying statistical averages that may not represent the specific individual.

This technology has advanced to the point where consumers are beginning to endorse insurer use of wearable data, as has been seen in the auto insurance industry using telematic devices that can be connected to your vehicle to transmit user data to insurers. This technology is being embraced by consumers as an opportunity to reduce premiums for good driver behaviours. Something that should only improve with the introduction of autonomous vehicles.

More than 90 per cent of car accidents are caused by human error. The advent of autonomous vehicles is predicted to eliminate human drivers and therefore human error. This likely won’t result in a 90 per cent reduction in car accidents, at least initially, but even a conservative estimate of cutting accident rates in half means massive savings in claims paid.

Technological innovations on the road today such as advanced braking and lane keep are already reducing collisions and accordingly premiums associated with vehicles equipped with those technologies. Some savings will be offset by the anticipated higher cost of repairing these complex and expensive vehicles, but if claims paid are reduced, premiums should follow suit.

Given that 42 per cent of property and casualty premiums are derived from car insurance, significant questions arise around how the industry is going to survive such reductions in its present structure.

As part of the Insurance Bureau of Canada’s (IBC) paper, Auto Insurance for Automated Vehicles: Preparing for a Future of Mobility, the IBC sets out a “single policy” insurance framework where one policy would respond to any claim made against the “driver,” even if the vehicle is being operated in autonomous mode. In this way, insurers move from insuring not only the negligence of the driver but also any negligence with respect to the autonomous features that may have been involved. Whether the various provinces and territories will adopt this approach remains to be seen, but the insurance industry has correctly perceived a risk and is attempting to mitigate that through new opportunities.

Of course, as technology advances, so do the accompanying risks. For example, many vehicles have a keyless feature wherein simply approaching your locked vehicle allows you to open the door and drive away without using the key. Car thieves have responded with a device that detects the signal being emitted from the key fob and can boost that signal so that it reaches the locked vehicle in the driveway. The thief can then steal the car while the keys are still “safely” locked inside the home.

Consumer behaviour changes gradually and this gap between initial adoption and understanding creates an opening for criminally-minded technology experts to manipulate.

Like the sea-faring pirates of old, the new security risks will both create opportunities for insurers and raise concerns for consumers and insurers alike. To succeed in the decades ahead, insurance companies of the future need to embrace innovation and adapt rapidly. Consumers will remain the central drivers of these changes as expectations for more personalization and convenience will remain high. But in a fast evolving industry which is as vital to consumers and business as it is the economy, caution and control must be applied. Regulators will need to listen to both insurers and consumers alike to futureproof the industry and develop frameworks that protect both the sector and society.

Special to Financial Post

Robert L. Love is a partner in the Toronto office of Borden Ladner Gervais LLP (BLG) and national leader of the auto industry group. He is one of the contributors for BLG’s latest report, Innovative Industries Reshaping the Canadian Economy.

Source: Canada.com

Here’s how to navigate Employment Insurance from applying to appealing

By Christopher Reynolds

The Canadian Press

Jeremie Dhavernas carries the weary, battle-ready look of someone slugging it out in a perpetual war.

In the fight against poverty, the Quebec community worker is enlisted to help people navigate the employment insurance system.

“It’s a very complicated program, even just getting through to get information about it,” he said at the office of Mouvement Action-Chomage de Montreal, translated as the Montreal unemployment action movement.

In the wake of General Motors’ announcement in November that it plans to shutter its Oshawa assembly plant this year — affecting nearly 3,000 unionized workers and staff and an economy that shows signs of cooling, experts say Canadians would be wise to brush up on EI and stay alert to its limitations.

Typically, anyone who loses their job through no fault of their own  layoffs or work shortages, for example is entitled to benefits.

Those benefits amount to 55 per cent of your weekly wage, up to a maximum takeaway of $562 per week. The cutoff point is a salary of $53,100, above which recipients receive the same amount regardless of income.

Benefits flow for between 14 and 45 weeks, depending on the number of hours worked in the past year and the regional unemployment rate. The minimum threshold for time worked varies by region and hinges on employment levels.

In Vancouver, where unemployment is below 6.1 per cent, an applicant needs to have worked 700 hours over the last year to be eligible. That amounts to more than four months of full-time work at eight hours a day.

Workers in eastern Nova Scotia, where unemployment sits north of 13 per cent, need only have laboured for 420 hours.

The most that any one recipient could reap in regular benefits is about $25,300 in high-unemployment regions and $21,350 in low-unemployment regions.

The application process begins at Canada’s employment insurance benefits page, which lists the personal information and employment details needed to file a request.

The earlier you start the better even without a record of employment from your employer, which they are obliged to provide since a filing delay of more than four weeks after your last day of work can cost you benefits, the government warns.

Employment and Social Development Canada said in an email that “the EI rules can be complicated and everyone’s situation is unique.”

“Service Canada agents undergo extensive training so that they can provide assistance to you, and ensure you receive all benefits to which you are entitled,” the department said.

Neil Cohen, executive director of the Community Unemployed Help Centre in Winnipeg, said many of the people he helps wind up waiting two or three months for a decision on their claims application.

“The program has really been gutted to a large extent,” he said, citing higher thresholds for hours worked since the early 1990s. “That’s a huge problem, particularly for part-time workers, contract workers often women and marginalized communities.”

The appeals process can be exhausting as well, Cohen said.

The Harper government overhauled the system, paring down a tripartite appeals panel that had representation from labour, business and government to a single adjudicator.

Donna Wood, an adjunct professor in political science at the University of Victoria, called on the government to restore the Canada Employment Insurance Commission to a more independent status with more authority to adjust premiums.

“We’ve got a pretty meagre insurance program…It’s better than the United States for sure, but compared to most European countries, it’s pretty skimpy,” Wood said.

Most urgently, though, potential recipients should apply as soon as they can, and seek out the help of community organizations, she said.

Source: The Canadian Press

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