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Industry Briefs |
B.C.
can sue tobacco companies for health costs
The Supreme Court of Canada recently ruled that the
government of British Columbia may sue tobacco companies
to recover health care costs related to smoking. Could
this mean that tobacco insurers would ultimately be
on the hook for any liability tobacco companies may
incur?
In a 1999 report, the Swiss Reinsurance Company Canada
said that “despite the fears of some insurance
analysts that tobacco litigation is an emerging threat
to the insurance industry, developments over the last
two years continue to indicate that these fears are
baseless.”
As of yet, tobacco has not been banned like other harmful
products such as asbestos, silicone breast implants
and DES. The tobacco industry is also not a poor industry,
with a worth estimated at over $45 billion USD. Says
the Swiss Re report, “As a result, the tobacco
industry is clearly in a unique position to continue
funding of its own defence and any settlements without
waging a coverage war with the insurance industry, which
would inevitably result in the fourth wave of litigation
confronting the tobacco industry.”
Katrina may raise reinsurance rates
With speculation of rising reinsurance rates, Lloyd’s
estimates the provisional net loss to its market is
the equivalent of $3 billion CAD.
Lloyd’s said that this estimation is not excessive
but is based on its model of its exposure to a Gulf
of Mexico windstorm. It is also comparable with the
impact of the four U.S windstorms in 2004, which resulted
in a net loss to the market of $2.8 billion.
Reinsurance rate negotiations start next month, with
reinsurers saying more than half the ultimate insurance
claims costs will fall on them.
Anti-auto theft measures entered into Parliament
On September 30, Justice Minister Irwin Cotler announced
that amendments will be made to the Criminal Code of
Canada to address auto theft in this country.
Specifically, Cotler has amended the Code to deal with
Vehicle Identification Number (VIN) tampering. This
move is seen as a crucial first step in the creation
of a Criminal Code section dealing exclusively with
auto theft.
While many insurers see this as a promising inclusion,
they are also seeking specific amendments that would
impose tougher penalties including mandatory minimum
sentences for auto theft to send an even stronger message
that auto theft is treated more seriously than property
crime.
Auto theft is a serious problem in this country, costing
Canadians roughly $1 billion each year. The rate at
which organized crime groups are getting involved in
auto theft continues to be a growing concern to citizens,
insurers and law enforcement.
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Mexico
Trip
from
ILS Learning Corporation
Completing
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As a token of our appreciation, we are giving away an all-inclusive
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Every time
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Education
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For more
information, check out our Web site: www.ilscorp.com
Floods
and Contamination
by
Julie Hawrishok
 A
U.S. company - Risk Management Solutions – has reported
that insured losses from Hurricane Katrina are estimated
to be $40-$60 billion USD, of which $15-$25 billion are
related to the Great New Orleans Flood.
Total economic losses are now expected to exceed $125
billion.
At least 50% of the total economic loss resulting from
the effects of Hurricane Katrina can be expected to come
from the Great New Orleans Flood. According to the Army
Corps of Engineers, the floodwaters in New Orleans are
receding at a rate of four to six inches per day, but
a great deal of the city still remains underwater. Due
to extensive power outages, some of the pumps in the local
areas have not been operational for weeks. It could take
months to drain the water and fully assess the level of
structural damage, as well as the contamination in the
soil and ground water.
With respect to contamination, this could lead to a sticky
situation for insurers and insureds. Standard property
forms provide very limited coverage in connection with
pollution cleanup. Moreover, the debris removal coverage
in standard forms specifically excludes the cost to extract
pollutants from land or water or to remove, restore, or
replace polluted land or water. However, coverage would
apply to the cost of removing or replacing other polluted
property, since no exclusion applies to such loss.
In crisis situations, insurance isn’t always at
the forefront of peoples’ minds. However, some planning
and foresight, with help from local insurers, could assist
insureds in discovering what their policies cover.
Looted!
- Now What?
In the aftermath of Hurricane Katrina, there were a lot
of reports – and photos – of lootings going
on in the ravaged areas. While there is no legal difference
between stealing a bottle of drinkable water and a big screen
television, there are certain moral differences between
the two. Is one more acceptable than the other? What do
insurers think? Your clients might be wondering what would
happen if their homes or businesses were looted. As their
insurers, you should share this information with them.
 The
bottom line is that any looting is typically covered in
an insured’s homeowners’ or business policy.
While we rarely see destruction in Canada that is comparable
to the Hurricane Katrina damage, lootings are not uncommon.
In the August 2003 blackout which left much of Ontario
without power for days, looting was quite prevalent. Ottawa
Police Chief Vince Bevan said that there was serious looting
going on in that city. Damages to property and losses from
looted goods are covered by most policies; however, with
careful risk management planning, some of these losses could
be avoided in the first place.
Consider sharing with your insureds some of the following
risk management tips.
For all insureds:
- Ensure all doors and easily-accessible windows remain
locked.
- Keep all valuables locked in a safe or with you.
- Keep an inventoried list of goods, serial numbers and
value off of your premises.
- Invest in a monitored alarm system or motion lighting.
- Ensure all electronic information is backed up and in
a safe and secure location.
- Consider having security on the premises to keep your
business safe.
- Issue as few keys as possible. Whenever a key is lost,
or an employee leaves the firm without turning in his or
her key, re-key all doors.
- Arrange window displays so police patrols or passers-by
can see clearly into the building.
Local police officials are good sources of information.
If an insured is unsure of crime prevention strategies,
they can contact their local law enforcement office to find
out more information.
Business,
Interrupted
 When
opening a business, people tend to go through their regular
checklists: utility hookups, banking, computers and peripherals,
staff, advertising, stock, property insurance, liability insurance
and so on. All of these are integral to a business’
success. However, what could be just as important is business
interruption insurance.
Business owners rarely think twice about insuring their company
against fire, theft or wind damage. But some business owners
fail to think about how they would manage if a fire or other
insured peril damaged their business premises so that they
were temporarily unusable.
After Hurricane Katrina hit, thousands of businesses owners
found themselves unable to operate. In the Biloxi and Gulfport,
Mississippi regions, 12 casinos were damaged and some were
considered devastated beyond repair. In the New Orleans area,
an additional four casinos suffered structural and interior
damage resulting from the hurricane’s 145-mph winds
and 30-foot storm surge.
Typical business interruption policies have a 12 month cap
and are based on lost net income, temporary relocation expenses
and on-going payroll expenses but not property. It does not
act as a blank cheque, nor does it cover all of the costs
involved in repairing the damaged buildings.
In these cases, where the casinos themselves are multi-million
dollar structures, it seems unlikely that a complete rebuilding
of the establishments will occur before the twelve month mark,
when most of the Business Interruption Policies will expire.
What will happen to the casinos?
Casino representatives maintain that they are focusing now
on safety and ensuring that their employees are paid on time.
No one is saying much about the insurance policies quite yet.
The Louisiana Gaming Control Board will hear from casino representatives
at its Oct. 18 meeting, but beyond that there's not yet a
proposal to build gambling back to where it was before the
hurricanes.
Some strides are already being made. On August 29, the Boomtown
New Orleans riverboat casino was closed indefinitely and all
employees were evacuated. On September 30, just over a month
later, the casino opened its doors again. Daniel Lee, the
chairman of Boomtown’s parent company Pinnacle Entertainment,
said that by reopening his casino, he’s showing his
great faith in the future of New Orleans.
Don't
Forget…
… To send us your nominations of deserving people!
We’re looking to profile normal people who have done
something extraordinary. Maybe you have a coworker who deserves
some recognition for her volunteer work. Maybe there’s
another coworker who’s about to retire. Tell us about
them!
Send your nomination to us at newsletter@ilscorp.com
and keep your eyes peeled in upcoming issues of On Track to
read their stories.
Start sending in your nominations! Each time you nominate
someone, we’ll enter your name in a year-end draw for
a fantastic prize!
A
Touch of Humour Mr. John Mumford III, was a rich old
man dying from a rare disease. On his deathbed, he called
for his insurance agent, doctor and preacher.
"I trusted each of you my entire life,” he said.
“Now I want to give each of you $30,000 cash in an envelope
to put in my grave. I want to take it with me."
Mr. Mumford died soon after. At the funeral, the insurance
agent, doctor and preacher each placed their envelope on top
of the man before he was laid to rest.
On the way from the funeral, the doctor confessed. "I
must tell you gentlemen,” he said. “I only put
$20,000 on top of Mr. Mumford. I wanted to buy this new machine
that would enable me to diagnose his rare disease and save
others. It's what he would have wanted"
Then the preacher said, "I have to confess, I only put
$10,000 on top of Mr. Mumford. We needed that money to help
more homeless, and it's what Mr. Mumford would've wanted"
The insurance agent was angry at both the man. "I can't
believe both of you, stealing from a dead man!” he said.
“I wrote Mr. Mumford a cheque for the full $30,000!”
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