On March 11th, 2015 Canadian Underwriter magazine and DMTI Spatial partnered to broadcast a webinar on how location can provide the pivot-point to reducing risk exposure on your book of business for the Canadian insurance industry To view the archive - please go to: http://edge.media-server.com/m/p/j8frvavt

1. Glenn McGillivray
Managing Director, Institute for
Catastrophic Loss Reduction
Philip Kaszuba
President, DMTI Spatial

2. The trend to more and
larger catastrophic
losses in Canada
Glenn McGillivray
Managing Director
Institute for Catastrophic Loss Reduction
March 11, 2015

3. ICLR
 Mission - reduce loss of life and property caused by severe
weather and earthquakes
 Created in 1997 by the insurance community to confront
rising disaster losses
 Multi-disciplinary research and education provides an
essential foundation for “science to action”
 Financed by member assessments (formula based on
premiums written), and flat-fee basis for associate members
 Historically, some funding through government programs
 Fee-based for specific research projects

4. Insured losses by peril
CLIMATE
RELATED
EARTHQUAKES
VOLCANOES
GEOPHYSICAL
Earthquake, volcanic
eruption
METEOROLOGICAL
Severe weather, winter &
tropical storms, hail, tornado
HYDROLOGICAL
River & flash flood,
storm surge, landslide
CLIMATOLOGICAL
Heatwave, freeze,
wildland fire, drought
TREND

5. Canadian cats 2013
 Two small events early in the year
 Southern Alberta flood (June 19-21)
$1.7 billion (preliminary)
 GTA flood (July 8-9)
>$850 million (preliminary)
 Ontario/Quebec storm (July 19)
$225 million

6. Calgary, Alberta, Canada
© 2013 AP Photo/The Canadian Press, Jonathan Hayward
>$1.7 billion insured
damage

7. Toronto, Ontario
© 2013 AP Photo/The Canadian Press, Winston Neutel
$940 million
insured damage

8. 2013 high water marks
 Canada’s costliest and third costliest insured loss
events within two weeks of each other
 Ice storm now the second costliest – took 15 years!
 Two billion dollar natural catastrophes in one year –
a first!
 Second place event (Slave Lake) fell not one, but
two notches to fourth place
 5th consecutive year of billion-dollar events

9. Toronto, Ontario
$225 million
insured damage

10. Canadian cats 2014
 Angus tornado (June 17)
>$30 million
 Saskatchewan & Manitoba storms (June 28)
 Ontario storms/Burlington flood (August 4)
$90 million
 Alberta wind & thunderstorms (August 7 & 8)
$450 million
 Ontario/Quebec windstorm (November 24)
 $872 million (preliminary)

11. Aidrie, Alberta hailstorm
$450 million
insured damage

12. Burlington, Ontario
August 4, 2014
© 2013 Reuters/Mark Blinch
$90 million
insured damage

13. Billion-dollar years
 1998 – due solely to the ice storm
 2005 – due greatly to the August 19 GTA rainstorm
 2009 – due greatly to back-to-back windstorms in Alberta
 2010 – due greatly to large hailstorm in Alberta
 2011 – due greatly to Slave Lake wildfire
 2012 – due greatly to one large and two smaller hailstorms in Alberta
 2013 – due to the Southern Alberta flood and GTA flood
 First time ever for two billion-dollar events
 2014 - $872 million (preliminary)

14. Avg. difference between
loss ratios
(Auto vs. personal property)
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
1983-1992 1993-2002 2003-2012

15. Why are losses rising?
 More people and property at risk
 Aging infrastructure
 The climate is changing

16. Residential structures
Source: ICLR, based on data from Statistics Canada

17. Aging infrastructure
Source: Federation of Canadian Municipalities

18. Source: Meteorological Service of Canada, Environment Canada.
Between 1975-1995 and 2080-2100, Canadian climate change model
Projected winter
temperature change

19. Not just personal property…
 Increasing liability concerns
Corporate/professional
Directors and officers
Errors and omissions
Public
Municipal

20. Some of the challenges
 Fire policy has become a water policy
 Need data and information
 Large insurers have resources (eg. GIS), medium and small
players often do not
 Large players often don’t ‘share’
 Past loss experience no longer indication of future losses
 Proliferation of modeling
 Data hungry
 Very competitive market
 Need to make good decisions quickly
 More severe weather ahead
 Need to manage accumulations better

21. Some of the challenges
 Often more data required from reinsurers
 Increasing need to explain market changes to
insureds (i.e. why premiums are rising)
 More demands from regulators (eg. earthquake)
 Need to better understand impact of climate change
on your book of business
 Introduction of a flood insurance product(?)
 Need to keep claims costs down

22. Data issues
 Overall poor government hazard data quality in Canada
 Government data scattered over many departments (no central
repositories)
 Some sources have been destroyed (eg fisheries libraries) or
scaled back (long form census)
 Data often scattered across the provinces (eg. wildfire)
 Government cutbacks over the years have taken their toll
 Downloading/offloading (eg. flood mapping)
 Some hazard info better than others (earthquake is quite good,
flood fairly poor)
 Who’s has what, where, and how do we get at it?

23. Data issues
 Many private sources of data
Some of it is proprietary and owners keep it close to
the vest
Need to be careful of anti-competitive behaviour
Some data has a price tag on it
 Quality varies
If it seems too good to be true…
 Privacy issues abound
 Even if you get good data, does your company have
the resources to analyze and act on it?

24. Thank you!
gmcgillivray@iclr.org
www.iclr.org
www.basementfloodreduction.com
Twitter: @iclrcanada

25. “Intact Financial and DMTI Spatial worked together to create and roll out a new visual user interface to enable
1,200 underwriters to make more informed and faster decisions regarding new and renewal policies.
Efficiencies achieved during the quoting process resulted in a 15% reduction in processing time making the
payback period for this project 6 months.”

26. Potential Risks
How can you constantly assess
risk to minimize the impact on
your book of business?

27. 6 Steps to Leveraging Location
Back OfficeOperationsUnderwriting &
Claims
Post-EventTechnology Marketing

28. Underwriting & Claims
Understand risks
before a policy is
assumed
Connect to
enhanced perils &
data layers
Analyze
concentration

29. Underwriting & Claims
Today:
• Heat mapping of claims
data against new and
renewal policies
Tomorrow:
• Predictive analytics
on claims

30. Operations: Internal
⁺ Connect 5 disparate sources
to 1 single national view
⁺ Consistent processes
⁺ Baseline training
⁺ Best practices sharing
15% productivity improvement

31. Operations: External
Location Based
Ecosystem

32. Back Office
Processes
Claims Mapping vs. Entire
Portfolio
Defining restricted zones
Including additional scrutiny
& re-insurance needs
Portfolio Analysis
Portfolio Analysis – national
concentration and risk
exposure / hit rate vs pricing
vs risks and exposure
Risk mapping across the
portfolio

33. Post EventAnalysis
Service customers more effectively
when an event occurs.
Mitigate future risks by
understanding the impact
of past events.
Understand Events as they
occur, including lists of
customers, affected areas
and satellite imagery.

34. Marketing
Profile your best customers, and find your best prospects.

35. view
analyze
cluster
infill
export
Marketing – Location Predictive Analytics
Analyze Performance
Understand your current market
penetration by policy and by
broker. Analyze portfolio
performance against thousands
of demographic variables.
Find Prospects
Use your base of current
customers to define your best
future prospects using Location –
avoid a one-size fits all solution
and target your messaging in a
way that drives higher
engagement.

36. Technology
Leveraging cloud architectures to lower costs
and increase data currency.
Highly Scalable architectures can grow as you
instill location into more processes.
Big Data Friendly – Geocoding your book of
business allows you to leverage a growing world
of data for deeper analytics.
Secure – communicating using UAID keeps
proprietary data secure.

37. We ignite the power of location for every individual,
allowing every business to reach its full potential.
Connect Analyze Act

38. Questions?