Unprecedented Times

Unprecedented Times

By Chris Sekine

 

The phrase “these unprecedented times” is one that has been overused during the past few months, but I can find no alternative that is more descriptive or accurate. Now that much nicer weather has arrived across Canada, many are venturing outside more often, finding that it eases some of the mental burden of being cooped up. While we all enjoy the nice weather, I believe everyone needs to remain vigilant about social distancing to protect the health of each other and to protect against further shutdowns of the economy.

While the past few months have been difficult for all of us, I’d like to provide you with an update about Trisura. We initiated our business continuity plan on March 16th, and since then, our staff have been working from home on a full-time basis. I’m very pleased that the transition was seamless and all of our service and business functionality have continued without disruption. I would like to thank the great staff at Trisura, our brokers and all of our business partners for enabling a successful transition to working from home.

One of our top priorities since the lockdown has been to keep you informed of the status of Trisura’s operations, as well as the assistance available to our brokers and insureds, including important resources. While trying not to overwhelm you with too many updates, we aimed to provide necessary and pertinent information to help you with both your business and your transactions and dealings with Trisura.

We recently reported Trisura’s Q1 results, and I am pleased that both Trisura Guarantee’s business in Canada and the consolidated business of Trisura Group Ltd. performed extremely well in the first quarter. Trisura Guarantee experienced almost 25% year-over-year growth in Q1, and we also reported an increase in underwriting income of over 30%, which produced an industry leading combined ratio of just over 82%.

On behalf of everyone at Trisura, I would like to extend a sincere thank you to all of our broker partners for your continued support, especially during these difficult times.

We understand it’s tough out there. The pandemic and the economic consequences are significant obstacles that every person and every business on the planet is facing. A broker friend of mine (Matt, you know who you are) recently gave me a book called The Obstacle Is the Way: The Ancient Art of Turning Adversity to Advantage by Ryan Holiday. The book was first published in 2014, but there is no better time to read this book than today from both a personal and business perspective. Thanks, Matt.

It is remarkable to see the number of familiar and successful businesses that were started during times of economic crisis. As cited in the book, some examples are:

  • Coors (Founded 1873 – Depression)
  • General Motors (Founded 1907 – Panic of 1907)
  • Fortune Magazine (Founded 1929 – 90 days after market crash)
  • Revlon (Founded 1932 – Great Depression)
  • Hewlett-Packard (Founded 1935 – Great Depression)
  • Costco (Founded 1976 – Recession)
  • FedEx (Founded 1973 – Oil crisis)
  • Microsoft (Founded 1975 – Recession)
  • LinkedIn (Founded 2002 – Post-dot com bubble)

In addition, a few other notable companies were started during the most recent financial crisis:

  • AirBNB (Founded 2008 – Recession)
  • Uber (Founded 2009 – Recession)

In addition, Holiday notes, “half the companies in the Fortune 500 were started in a bear market or recession. Half.”

For me, the message is that times of adversity can spawn ingenuity and be transformative for those willing to face their obstacle. Yes, times are uncertain, but we are not picking up our ball and going home. In fact, we are doing the opposite. In May, Trisura Group Ltd. raised over $60 million in new capital to support growth across all of its operations. The strong reception we received from the capital markets will allow us to navigate near term volatility confidently, support our partners and growing platforms and plan for a bigger, better Trisura.

For our broker partners, Trisura’s unwavering commitment to help support you is our essential service. We will continue to underwrite risks based on their individual merit as consistently as possible and provide you with great service. I am confident things will get better.

Wishing you and your loved ones remain safe and well,

Chris

Trisura Guarantee Makes the 2020 “Top Small & Medium Employer” List

Trisura Guarantee Makes the 2020 “Top Small & Medium Employer” List

Mediacorp Canada Inc.’s annual list of Canada’s Top Small & Medium Employers has been released – and Trisura Guarantee has made the cut.

Appearing on the list for the fourth year in a row, Trisura Guarantee is honoured to be named along with so many outstanding organizations.

“It is truly an honour to be recognized among so many top organizations in Canada,” Trisura’s head of human resources, Cindy Grant, says. “When it comes to our employees, we take a simple, uncomplicated approach. It’s our entire team, everyone from Halifax to Vancouver, that make us successful through their unwavering commitment to delivering on our philosophy of excellence, discipline and passion every single day.”

2020 marks the seventh year of the competition. The editors of Canada’s Top Small & Medium Employers evaluate employers based on the following criteria:

(1) Physical Workplace;

(2) Work Atmosphere & Social;

(3) Health, Financial & Family Benefits;

(4) Vacation & Time Off;

(5) Employee Communications;

(6) Performance Management;

(7) Training & Skills Development; and

(8) Community Involvement.

Small and medium-sized enterprises (SME) have a large role in Canada, being responsible for over 50% of the nation’s gross domestic product. SME also account for over 90% of the private-sector labour force, and out of all the jobs created in the last 10 years, more than 95% are because of SMEs.

To read up on what makes Trisura Guarantee a 2020 Top Small & Medium Employer, including prioritizing work-life balance and open communication, click here.

To learn more about how winners of the competition are selected, visit the Canada’s Top 100 website.

About Trisura Guarantee:

Trisura Guarantee Insurance Company is a Canadian specialty insurance and surety company with offices across Canada, providing customized solutions and expertise through a select broker network. Trisura Guarantee is uniquely positioned to satisfy Canadian risks in Contract, Commercial and Developer Surety, Directors’ and Officers’ Liability, Fidelity, Professional Liability including Media and Cyber Liability and Warranty products.

Trisura Guarantee Insurance Company is a subsidiary of Trisura Group Ltd., a leading international specialty insurance provider operating in the surety, risk solutions, corporate insurance and reinsurance segments of the market. Trisura has three principal regulated subsidiaries: Trisura Guarantee Insurance Company, Trisura International Insurance Ltd. and Trisura Specialty Insurance Company. Trisura is listed on the Toronto Stock Exchange under the symbol “TSU.”

About Canada’s Top Small & Medium Employers list:

Canada’s Top Small & Medium Employers is an annual editorial competition published by Mediacorp Canada Inc. The list recognizes small and medium enterprises that excel in workplace culture, as well as innovative and progressive human resources initiatives. The competition is open to employers whose head office is in Canada and have less than 500 employees globally. Qualifying companies are commercial, for-profit organizations.

Trisura Cyber Policy Ranked Among the Best in Canada

Trisura Cyber Policy Ranked Among the Best in Canada

By Sara Ametrano

 

Comprehensive cyber coverage is proving more and more crucial each year as hackers continue to become increasingly sophisticated and successful in their attacks. Insurance Business Canada recently surveyed brokers across the nation to uncover the best cyber policies on the market. The publication revealed the top 17 carriers, which included Trisura Guarantee Insurance Company.

Smiling woman with brown hair and blazer in front of buildings backdrop.

Angela Feudo, manager of professional solutions, Trisura.

Trisura’s manager of professional solutions, Angela Feudo, believes the organization’s cyber policy win is a testament to its customization ability. “At Trisura, we really listen to the insured and broker to ensure we understand what they are looking for,” she explains. “Working closely together allows us in to find the right solutions for their unique needs.”

In an ever-changing market, cyber insurance policies have had to adapt. There was a pressing need for policy structures to sustain future losses. With many individuals and companies working remotely for nearly two years, risks were greater, as was the need for education and training. “There is a greater awareness among organizations about cyber threats and, as a result, there have been improvements made around cyber security controls,” Feudo says.

As for what comes next, Trisura’s resident cyber expert anticipates there will be further market growth due to reliance on technology through process automation and internet connectivity. “The exposure for these businesses will grow and evolve and so must the insurance products that protect them. There will also be continued focus on not only cyber security controls, but also the use of cyber experts to aid in risk selection.”

Past cyber struggles and future challenges for the Canadian market are not necessarily unique. The global market must also be prepared to adapt, as Feudo notes, “cyber risk doesn’t have borders.”

About the 5-Star Cyber Awards:

Over the course of 15 weeks, Insurance Business Canada conducted one-on-one interviews with brokers and surveyed thousands more within the publication’s network. Brokers shared their thoughts on current cyber offerings and the most important policy features.

The top carriers were determined based on how they were rated in the following categories:

  • Relationships with brokers
  • Claim-handling abilities
  • Underwriting expertise
  • Product strength

For the official 2021 5-Star Cyber Awards report, click here.

Changes in Surety as the Construction Industry Rebounds Post Pandemic

Changes in Surety as the Construction Industry Rebounds Post Pandemic

By John Thorpe

Construction IndustryThe Canadian construction industry has been remarkably resilient over the past 18 months and has enjoyed a surprisingly low number of contractor defaults notwithstanding the headwinds brought on by the pandemic. As we emerge from the pandemic, the surety industry is placing greater emphasis on a contractor’s ability to navigate and, in some cases, absorb unforeseen costs due to the challenges that remain. Risk mitigation has never been more important.

 

 

 

Scaling up coming out of the pandemic:

Rapid growth by taking on too much work too quickly can place a tremendous amount of stress on working capital as the business scales up. Contractors need to have a firm understanding of the business’s financial capacity and what cash is required to execute the backlog. Things to consider include:

  • Access to working capital like cash and credit facilities to cash flow the backlog;
  • Access to skilled own forces labour and qualified trades;
  • Access to the equipment to execute the work. If more equipment is needed, how will it be acquired (purchased or leased) and what does this do to company financial metrics?
  • Access and timely delivery for materials required to execute the work;
  • Understanding the financial position of the project owners and availability of project funding, if doing private work;
  • Sticking to what you know by being selective in the work being targeted;
  • Understanding the obligations being entered into by reviewing the contracts thoroughly.

Material and equipment price inflation driven by supply chain concerns:

Dealing with material and equipment price escalation is not a new issue for contractors but seems to be quite erratic today. The pandemic has shuttered supply chains globally, causing delays in construction projects while also creating uncertainty for contractors when pricing and submitting a tender package. Material and equipment vendors are also struggling to provide pricing and quote commitment windows are becoming shorter as a result. Lengthy project awards can further compound this problem. Ways to risk mitigate against supply chain concerns include:

  • Thorough review of order confirmations and purchase order and subcontracts and involve a construction solicitor in the geographic area of project, if necessary;
  • Be aware of penalties for late completion or overreaching indemnity provisions;
  • Source common materials in bulk if working capital, credit facility capacity and available storage areas allows for it;
  • Establish strong relationships with lenders and establish temporary increases in short-term financing to assist with material procurement;
  • Work with common vendors for cost certainty;
  • Negotiate with project owners for the inclusion of material cost escalation language in the contracts;
  • If all else fails, contractors should make best efforts to price in the risk of material cost uncertainty or use that as basis to negotiate more reasonable escalation contract terms.

Shortage of skilled labour:

As work programs ramp up, the need for skilled labour intensifies. A skilled labour force on a project can be the difference between a successful project and a project fraught with deficiencies, causing delays in achieving substantial completion, incurring damages due to late completion and increases in insurance claims arising from poor quality and craftsmanship. Contractors never have enough profit to build things twice!

Slowdown of Government assistance:

Many businesses survived the early stages of the pandemic with the assistance of government programs such as the Canadian Emergency Wage Subsidy (CEWS). As these programs wind down later this year, there will be companies that suffer financial challenges, and we are likely to see an increase in contractor defaults as a consequence. Companies that find themselves in a fragile state will need to pivot quickly and adapt to the new circumstances.

New Bond Forms:

The surety industry continues to adapt and work with industry partners to provide bond wordings that respond to specific needs of the industry and demands of the current market conditions.

Understanding these current issues will give you confidence when making decisions around work selection, material procurement and staffing. For further information about changes in the surety industry post pandemic, please reach out to one of the surety underwriting experts at Trisura Guarantee Insurance Company.

 

 

The views expressed in this article are exclusively those of the authors; they do not necessarily reflect the views of Trisura Guarantee Insurance Company, its affiliates or partners.

Cyber 2021: Unpacking the Industry’s Trends and Threats

Cyber 2021: Unpacking the Industry’s Trends and Threats

In a recent panel discussion, Trisura’s manager of professional solutions, Angela Feudo, shared insight about the cyber trends and issues the industry is facing today.

This interview is part of a special report published by Insurance Business Canada. You can read the full report here.

IB | How would you describe the state of the Canadian cyber insurance market? (Rates, capacity, coverage limitations, new buyers etc.)


Smiling woman with brown hair and blazer in front of buildings backdrop.AF | The cyber insurance market has, for the most part, continued to tighten over the last year. There have been numerous carriers who are reducing their capacity, increasing rates, restricting terms and implementing tighter underwriting controls. While capacity contractions generally are becoming more common, there has been a focus on limiting network extortion. There continues to be an increased number of ransomware events, which has led to this response from the market. As both the frequency and severity of claims have increased, the rates have also increased significantly to compensate. There has been a greater focus from insurers on their clients’ cyber risk management and security awareness.  An increase in cyber security awareness and risk management will ultimately be beneficial for everyone. The awareness in cyber attacks has also brought an increased interest in cyber insurance. We are seeing more requests for cyber insurance from first-time buyers as ransomware attacks are no longer viewed as just a large organization concern. Smaller companies have become acutely aware that they too can be targeted.

IB | Ransomware is arguably the hottest topic in cyber insurance today. How have you seen the ransomware threat evolve in recent years, and where do you see this challenging risk headed?
AF |
Ransomware has increased in the number of companies and type of companies being compromised. Ransomware as a service has allowed for an increase in the number of individuals that can launch a ransomware attack. Threat actors no longer necessarily need to be a technically skilled hacker to deploy ransomware because it is now more accessible than ever to utilize. Individuals and organizations have become more cyber savvy in their defences against cyber criminals, and many have concentrated efforts and resources in creating, maintaining and encrypting backups, as well as focusing on their restoration processes. Due to these efforts and, in the event that files were corrupted, companies didn’t necessarily have to pay the ransom. Threat actors have moved to engaging in double extortion, meaning that the hackers would threaten to release private information if the organization doesn’t pay. Threat actors are also using distribution denial of service [“DDoS”] attacks as well on their victims to put pressure on them to pay the ransom. Hackers have expanded ransomware into a business model will use the best method against the victim. This can include encryption, DDoS or releasing of private information to cause the most disruption.

IB | Which industries are most exposed to cyber risk, and are these industries buying cyber insurance?
AF |
Any individual and organization that uses the Internet is exposed! Some industries and businesses, however, may be at a higher risk. Historically, the focus has been on healthcare, government, utility companies, schools and financial institutions. This has not changed; today, these industries continue to be at a higher risk, for different reasons. The health care industry has many older legacy systems that go unpatched. That, coupled with holding patient records, makes them an attractive target. Government, financial institutions and universities also hold a lot of confidential information. The larger organizations in these industry groups have been buying cyber insurance for years. Now, the smaller companies are also purchasing cyber insurance more regularly. We have also seen an increase in claims in the manufacturing, professional services and construction spaces. While there has been an increase in cyber purchases in these additional spaces, there are still a lot of companies who still do not purchase cyber insurance.

IB | How does the hardening market impact insurance brokers? What must they do in order to navigate this market successfully and secure the best solutions for their clients?
AF |
The hardening cyber market has created additional challenges for brokers. With markets reducing capacity, it has left brokers looking for replacement markets for those towers. It is now even more important for underwriters to clearly communicate their appetite to brokers, so they know who might be a viable option for their clients. Cyber is no longer just privacy based; for example, the exposure that a manufacturer has versus that of a law firm is very different. It is critical that insurers understand their client’s exposure in order to develop a trusted advisor relationship with their client. It is important for brokers to stay on top of emerging cyber threats, as this will enable them to educate their clients on where the exposures are. A lot of markets are asking for more underwriting information; understanding where potential exposures lie allows markets to get ahead of risks and be proactive in preparing the necessary increased security measures. The better controls a company has in place, the more likely they will be able to obtain better terms. Better controls are beneficial for the client, as their systems will be better protected from exposure. With the evolving digital landscape, it can be difficult to stay on top of the market, particularly if you are not a cyber specialist. Finding a specialist you can trust to help navigate the market will help.

IB | What are the most common cybersecurity attack vectors and breach methods?
AF |
We are still seeing a lot of losses arising from either weak or compromised credentials. Usernames and passwords continue to be exposed in data leaks and phishing scams. When this type of information is stolen or lost, the cybercriminals can easily access the company’s systems. If an employee uses the same password for both personal and business systems and the individual’s password gets compromised on their personal device, the hacker can use this opportunity to hack into the company’s system. Having good password hygiene, using multi-factor authentication or even biometrics can help combat this risk. Phishing continues to be a common method used by hackers, likely because it works. Cybercriminals are expanding on the methods they use in phishing; for example, during the pandemic, we’ve seen phishing scams where criminals are imitating health organizations or use the guise of providing relief money. Continued employee training, phishing tests and employing the principle of least privilege for access in systems can help with combat this risk.

It is important to also note that not all threats come from humans. Unpatched applications and servers are also a common vulnerability that can leave systems open to attacks. A good example of this is the January 2021 Microsoft Exchange Server attacks, which affected over 200,000 servers. Although patches were released by Microsoft in March, they did not retroactively remove any backdoors that might have been installed by hackers. Implementing software updates and installing patches as soon as they are available can help mitigate these vulnerabilities.

IB | In the growing threat landscape, what are some best practice cyber risk mitigation tactics that all companies (large and small) should implement?
AF |
Cyber risk for both individuals and businesses has continued to increase since the inception of the internet. This will only continue to increase over time as we become more connected to the internet and cybercriminals find new ways to take advantage of vulnerabilities. Companies of all sizes are vulnerable to cyber attacks and they should be taking steps to help mitigate those exposures. Human error still remains one of the top factors in cyber breaches, and so, employee awareness training is key to help combat this risk. Multi-factor authentication is becoming a standard security measure that all companies should implement because it improves a company’s security by adding an additional step that a cyber criminal would have to breach to gain access to a company’s system. Employing a patch management process allows you to keep your software functioning properly and maintain good security posture. Being up to date with the most current security fixes to combat any known vulnerabilities in the software. Businesses should also have a current record management system, keeping only records the company needs and getting rid of old data that is no longer useful. If you hold the record, you will need to protect it. If all else fails, it will be useful to have current back ups of important data. Back-up strategies will be different for each company, but the data in the back ups should be current, encrypted and stored securely off-site.

IB | How has the COVID-19 pandemic impacted the cyber risk landscape?
AF |
Since the COVID-19 pandemic started we have seen cyber criminals take advantage of people working from home. A lot of businesses did not have systems or the security designed to accommodate the majority of their staff in a work-from-home scenario. As a result, there has been an increase in phishing attacks and malware. Typically, devices at home are less secure, so multi-factor authentication, a focus on employee training and remote incident response plans are critical. COVID-19 has broadened out the cyber attack surface for cyber criminals to take advantage of due the increase in employees working from home. Many businesses realized the increase in exposure and invested in IT and additional cyber controls to help manage this risk. It is also important to look to the future of post-pandemic business models. It is expected that more businesses will allow for a more flexible workplace; whether that be a full work from home model or a hybrid that could include desk sharing. Technology, security and employee awareness training plans will need to be updated to ensure the best cyber security hygiene is in place for an organization. It will also be important to refresh the organization’s incident response plan to include how the company is currently conducting their business and where their employees are located.

IB | What cyber risks are lurking on the horizon?
AF |
Cybersecurity staffing shortages is a concern for businesses and the insurance industry. As the number of attacks grow and the demand for cybersecurity professional increases, there has been a continued decrease of cybersecurity staff. According to an article from CNN, there is approximately 3.12 million unfulfilled positions globally. With unfulfilled cybersecurity positions, businesses are more vulnerable to breaches. Cybersecurity is a global concern not only because hackers can reside anywhere in the world, but also because they can use other companies’ systems to breach yours by utilizing DDoS, MITM (man-in-the-middle attacks) and cryptojacking techniques. Cybersecurity should be a group effort against cybercriminals. Additionally, as 5G continues to expand (it is faster and can support more devices than traditional networks), it will increase the cybersecurity risk, as there is much more software being used in the network and, therefore, the attack surface has expanded. The increased speed of 5G, while beneficial to users, can prove to be a challenge for cybersecurity professionals. With its ability to support more devices, 5G will allow for more IoT devices. Not all IoT devices are manufactured with security in mind. With billions of IoT devices connected—all with mixed security levels—there could be potentially billions of breach points.