What’s new in specialty lines?

What’s new in specialty lines?

This article was originally published by Canadian Underwriter on June 5th, 2019

Read the original article here.

Author: Jason Contant

 

Chris Sekine, the new president and CEO of Trisura Guarantee Insurance Company, reveals the hottest of the hot opportunities in commercial insurance lines right now.

cu | Before we hear your thoughts about business insurance, let’s first talk about your new role. You recently took over the helm at Trisura Guarantee Insurance Company from Mike George. How is it going so far?

CU article with Chris Sekine It’s been going very well, and I’m excited to be in the role of CEO. Last year was one of Trisura’s best years ever and we are well-positioned for the future. Over the past couple of weeks, Mike and I have been travelling together and attending a few industry conventions. The timing has been good because we were able to have fun, connect with many of our brokers and highlight together that it’s business as usual for Trisura. Mike has been my friend and mentor for many years and he has been instrumental in helping me with the transition into my new role.

I’ve been with Trisura since the beginning and plan to build on the strategy and formula that has made us successful. A critical part of that is our great team of people who create exceptional experiences for our brokers and their clients. We will continuously work to improve our service levels and product offerings.

cu | Okay, let’s talk about commercial lines. What would you say are the key trends in this area?

Commercial lines is a broad area with different trends. Since Trisura is a specialty lines company, I’ll speak more to our specific lines of business — namely D&O, E&O, fidelity, media, cyber and surety — as opposed to commercial insurance in general.

From a D&O perspective, boards and directors need to be aware of a lot of emerging risks — including climate change. How much information a company discloses about its climate change risks and opportunities, as well as how it discloses the information, can each have a material impact on share price and valuation of the corporation.
Another developing risk is the #MeToo movement. This is a unique exposure that hits all parts of our D&O book of business, including non-profits, private companies and public companies. It continues to be a relevant consideration for company board members and it continues to affect claims activity.

The health of the Canadian economy over the next 12 to 14 months is one of the bigger emerging exposures we are watching. I’m sure you could speak to many different economists and they will all have varying opinions. Certainly, a large risk would be for the economy to head into a downturn over the next couple of years. Companies will need to be ready, especially if there is tightening of credit. A potential catalyst is a change in government and the effect on government spending. The risk is particularly relevant to the construction sector, for example. There are a lot of political unknowns that could affect the economy. For example, there was a change in government in Alberta recently; there’s a federal election coming up later this year; and there will be a U.S. election next year. A lot is going on globally that could potentially affect Canada and the commercial insurance business.

cu | What advice do you have for brokers selling commercial lines?

Not surprisingly, I think one of the biggest opportunities is cyber liability. It’s an often-misunderstood exposure in terms of what exactly the exposures are and what the policies cover. Many brokers say to us: “My client doesn’t have a cyber exposure.” But I think the word ‘cyber’ doesn’t do the product justice. Everybody associates cyber with the internet; we see it as a potential data breach that can come in various forms, putting every company at risk. For example, let’s say a file with private information is left in a person’s vehicle. If the vehicle gets stolen with that file in the car, that is a data breach that doesn’t involve the internet. If brokers can give their clients a complete picture of the various ‘cyber’ exposures, and if they can help clients choose from among all of the coverages available for those exposures, that’s a big opportunity for brokers to set themselves apart. They can win clients by being a trusted advisor.

cu | What trends are you seeing in cyber?

We are starting to see a bit of a shift in the types of claims. Over the past one to two years, we’ve been seeing a lot more in terms of ransomware demands. For example, a company with 200 employees experiences a system shutdown; they can’t do anything until they pay bitcoin to get the system unlocked. Having the proper coverage with the right carrier can address that. Depending on the coverage, the carrier could pay for the ransomware demand, the system restoration costs and first-party expenses. Brokers will know what coverages are available to their clients.

cu | How does cyber coverage mix or not mix with CGL policies?

A CGL policy is a commercial general liability policy, not a cyber general liability policy. The CGL policy is not designed to pick up cyber exposures. If you have cyber exposures, you should buy a cyber liability policy. It provides third-party coverage for liability in addition to first-party coverage for expenses related to ransomware, system restoration costs and business interruption. Our advice is that if a broker’s client has a specific concern, buy a policy that’s designed for that specific exposure rather than just crossing your fingers and hoping the CGL policy will respond. The CGL won’t provide the same breadth of coverage that you can get in a standalone cyber product.

cu | We’ve heard the surety line is hardening. What’s happening there?

Actually, I don’t think the surety market is hardening. It might not be softening, but I don’t think it’s hardening. In my view, the surety market is relatively stable. If anything might lead some to believe there’s a hardening, it’s because of some fairly notable, large construction failures over the last little while. However, I don’t think that’s really had a significant impact on terms and conditions offered in the industry. Certainly, I don’t think it’s been that influential here in Canada in terms of behaviour of surety underwriters.

cu | Are you looking at moving into any new lines of business?

As we move forward, it’s really about looking for ways to expand our capacity and appetite within our existing lines of business. If we look at new lines of business, they will be adjacent to lines of business where we are already. Over time, we’re hoping to leverage the capabilities of Trisura Group Ltd., our parent company, which went public two years ago and is trading on the TSX. Trisura Group Ltd. has two other subsidiaries: 1) Trisura Specialty is our U.S. affiliate, focused on excess and surplus business, which resembles our risk solutions business; and 2) Trisura International is a reinsurance arm in Barbados.

A Night’s Sleep in Toronto’s Streets

A Night’s Sleep in Toronto’s Streets

By Michelle McCafferty

 

What do most people think of when they hear the word “homelessness”? I imagine they envision down-and-out individuals who have had no end of bad luck. Or, maybe they think of people who have fallen victim to their own demons of addiction and are atCovenant House Sleep Out 2019_Michelle McCafferty “rock bottom.” But, what sorts of things come to mind when thinking about homeless youth? The young adults who appear to be fit and able, living in a city seemingly brimming with job opportunities, if they really wanted one. It pains me to admit that I once believed most homeless youth were out on the street by choice or because someone refused to put up with their mischief any longer. Older and wiser, I had shed some of those misconceptions. True insight, however, came from hearing from those who have been there and walking a few paces in their shoes.

On May 24, 2019, Covenant House hosted their 3rd annual Sleep Out—Women’s Edition, raising $334,000. Canada’s largest homeless youth agency, Covenant House raises 80% of its $31 million budget from private donors. The event name is meant to be taken literally.  Participants bring a sleeping bag, grab a piece of cardboard and pull up a piece of sidewalk for the night. Well, not exactly, but mostly. Covenant House did a fantastic job of creating a safe, fenced-in area in the middle of downtown Toronto to house the 78 women participating in the event. There was a security guard nearby, bathroom facilities and safety in numbers. Our night of “homelessness” was materially different from the brutal reality of the actual experience. Yet, the night was enough to provide insight, perspective and a long-lasting impression of what it must be like for those out there on a longer-term basis.

Any myth or misconception that someone—especially a youth—would choose to be out there was shattered after touring the shelter and doing the Sleep Out. The shelter and its programs are nothing short of amazing. While it is also a crisis shelter, its primary mandate is to take youth in and develop a plan for them—a path toward independence. This plan is the “covenant” that is undertaken by both the youth and the shelter to guide youth to a life of independence and purpose. Covenant House truly gives homeless youth a hand up and not a hand out.  

Covenant House hosts several different Sleep Outs in Vancouver and Toronto. I encourage anyone who would be interested to pull up a piece of cardboard and give it a try. There is no better cause to give up a good night’s sleep for!

Covenant House Sleep Out 2019_group shot

Keeping up with Technology: The Importance of Cyber Insurance

Keeping up with Technology: The Importance of Cyber Insurance

By Sara Ametrano

 

The more we rely on technology in both our professional and personal lives, the more at risk we, as individuals and companies, are to be targeted by hackers.

Cyber-attacks can come in a variety of forms and steal all kinds of information if successful. Through panel discussions and presentations, April’s NetDiligence conference explored what the evolving nature of cyber can mean for the specialty insurance industry.

A peril:

When cyber coverage first emerged, it centered around liability. As time passed, the cyber risk area expanded, and it included possible scenarios such as social engineering and extortion. And today, clients are at a higher risk than ever before.

Where property and casualty policies are created based on hundreds of years’ worth of information, cyber threats are new in comparison. Creating a sustainable cyber policy plan is proving to be a challenge for underwriters today due to the lack of data available and the ever-evolving nature of the industry.

Ransomware:

One of the cyber areas seeing an increase in attack frequency and severity is ransomware. Beazley Breach Response Services reported that, in 2018, average ransomware demands were $116,000, compared to $15,000 just the year before. The report also revealed that the main targets of ransomware attacks are small to medium-sized business, absorbing 71% of the crimes.

These numbers stress the importance of the need of expertise in the field. Hackers have sharpened their skills to learn their target’s financial position so that they may determine the sum they will demand.

Silent cyber:

Where standalone cyber coverage does not exist, cyber and data breaches may fall under other policies, unbeknownst to insurers. This is what the industry refers to as “silent cyber.” Companies might not take these types of exposures into consideration, which can potentially expose their other policies that do not specifically exclude cyber/data breaches. At a glance, only 10% of silent cyber situations are clearly priced and defined, 40% have definitions but are not priced and the remaining 50% are neither defined nor priced.

So, now what?

The growing nature of technology and lack of data surrounding cyber makes it difficult to create a plan in the event an attack occurs. The conference provided tips on how to mitigate risk and minimize the confusion non-affirmative risk management can bring:

  • Analyze policy language and claims;
  • Collaborate with ethical hackers (the good guys) to better understand the motives behind these attacks and how they might appear in different scenarios;
  • Continue to update policy wording as need be.

 

 

If you have any questions or would like to request a quote, please contact Trisura’s underwriting specialists.