Top 20 fidelity insurers

Dependence on technology is creating loss scenarios in the millions, says #3 insurer The Guarantee Company of North America.

The Guarantee Company of North America (GCNA) placed #3 on Canadian Insurance Top Broker’s list of top 20 fidelity insurers based on net written premiums in 2010 (see full list below). These results are featured in the Canadian Insurance Top Broker 2011 Annual Statistical Issue, now available. For more information on the Annual Statistical Issue, click here.

We spoke to Christopher Campbell, vice president corporate insurance at GCNA about some of the complexities of this insurance. Campbell stressed that cyber crime is a growing concern that will result in new coverages.

Q. Fraud, embezzlement and employee dishonesty are ongoing and growing concerns for companies. How has this affected fidelity insurance?

A. Employee dishonesty is an ongoing threat to all businesses and organizations. People have always embezzled and defrauded and will continue to do so.

What has changed is the means and amounts of loss. As businesses grow and become more sophisticated they must be sure their internal controls keep pace. With increasing development and dependence on computer based operations the opportunities for fraud increase and the amounts of loss invariably increase. In previous times an ordinary loss might have been less than $100,000; now it can easily be in the hundreds of thousands or even millions of dollars.

This has led to the development of specialized policies for not only ordinary organizations, but businesses like banks, stockbrokers and other financial institutions as well. It has also resulted in the need for higher limits of insurance, especially where financial watchdogs have become much more demanding.

Q. What has been the trend with pricing?

A. Pricing has remained stable but in the past three years has gone down. Also, there has been a growth in market capacity and competition. Finding an insurer is not really difficult, but depending on your loss history and how well you run your business will determine whether you get the best terms and conditions.

Q. Any other ongoing trends in this market?

A. A trend in the Canadian insurance market has been the arrival and growth of offshore insurers. This is a good thing for the consumer but it remains to be seen what the long term holds. Historically, a trend of falling prices and over capacity leads to a hardening of prices and relative scarcity. Many are expecting a hardening to happen. While that might happen very suddenly there is no justifiable sign of it happening in 2011. The challenge of this is to be insured with an insurer who is likely to stay with the market even in hard times.

Another challenge that I expect to become increasingly prevalent is cyber crime. At present, some protections are available under some crime policies. The increase of cyber crime incidents will inevitably result in new coverages and demands for insurance.

Q. What risk factors are rates dependent on?

A. Risk assessment made by insurers includes a variety of factors such as the type of industry and the number of locations within and outside the country; the adequacy of internal controls and operational controls; the financial state of the organization; the size based on the numbers of employees in sensitive or exposed areas such as cash or receipts, and inventory or assets management.

Q. How can brokers ensure clients are protected?

A. The main thing brokers should emphasize to clients is to make sure their internal controls over all assets and financial dealings are thoroughly in line with their auditor’s recommendations and good sense. Brokers can also make sure their clients understand that employee dishonesty losses are most often not a single incident but usually the product of systematic stealing over a longer period, often years. The coverage provided must be able to pick up that long period even when there is a change in insurer.

Here are the top 20 fidelity insurers (based on net written premiums in 2010).

  1. Chubb Insurance of Canada ($21,100)
  2. Lloyd’s ($17,775)
  3. The Guarantee Company of North America ($15,131)
  4. Chartis Insurance of Canada ($11,629)
  5. Travelers Canada ($10,045)
  6. CUMIS General Insurance ($9,320)
  7. AXA Canada ($4,481)
  8. Liberty Mutual Insurance ($3,242)
  9. Northbridge Financial ($2,325)
  10. Economical Insurance Group ($2,194)
  11. Desjardins General ($2,116)
  12. RSA Canada ($2,048)
  13. Trisura Guarantee ($1,919)
  14. Zurich Insurance ($1,598)
  15. Great American Insurance ($1,293)
  16. Dominion of Canada ($1,255)
  17. General Re ($1,114)
  18. Ontario School Board ($916)
  19. ACE INA Insurance ($850)
  20. CNA Canada ($792)

*all figures for net written premiums are $,000

For more categories of Top 20 insurers, click here.

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