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Managing Risky Business: Q1/2018


In this issue of Managing Risky Business, read about:


Preparing for Marijuana Legalization

In July 2018, recreational marijuana will become legal. In Ontario this will mean that individuals aged 19 and over will be able to:

  • Purchase marijuana legally from government-operated storefronts
  • Grow up to four plants to a height of one metre or less
  • Consume it on private property and in private residences.

Many of us in the sector are nervous about what’s going to happen. In this article, I’d like to bring you up to speed on some of the issues, let you know about what some providers and Service Managers are doing to prepare and to offer my own take on the matter.

Key issues:

For providers, the issues relating to the cultivation and use of marijuana in social housing fall into three broad categories:

  • Community impacts: managing the smell of smoke and plants; protecting the rights of those who are entitled to reasonable enjoyment of their home or are underage; rules for common areas where tobacco smoking is currently permitted; handling behavioural issues and illegal sales
  • Property damage: damage to units due to smoke residue, growing practices or impaired behaviour; handling indoor pollutants such as pollen and resin resulting from cultivation
  • Costs and liability: increased cleaning labour/costs for unit turnovers and electricity costs in buildings where the landlord pays for utilities; costs associated with filtering out smells; determining who’s responsible for property damage or personal injury resulting from cultivation or consumption

What’s Been Happening

There’s been quite a bit of sector activity on this issue. Earlier in 2017, HSC staff along with Diana Balneaves (Manager of Operations, Housing Services, York Region) and Mary Lynn Cousins Brame (CEO, Kingston Frontenac Housing) participated in a roundtable discussion hosted by the Ministry of Community Safety and Correctional Services on issues involving the home cultivation of cannabis in social housing.

In June, the Cooperative Housing Federation of Canada hosted a session with Lauren Blumas, from the law firm Iller Campbell, and Andrew Noble, from the Smoking and Health Action Foundation. Their presentation focused on how adopting a smoke-free policy mitigates the biggest issues associated with legalization; but also offers legal analysis and some tips ahead of legalization.

CityHousing Hamilton is also looking at banning smoking altogether in buildings. In addition, it’s examining “odour mitigation” techniques.

Deborah Filice, CEO of Haldimand Norfolk Housing, writes on LinkedIn that “as landlords, we should have the right to ‘say’ whether our tenants can grow and use cannabis on or in our properties.” Similarly, the Canadian Federation of Apartment Associations is calling on senior levels of government for the ability to prohibit marijuana smoking in private sector rental units – even if residents are in mid-lease – and cultivation. Though in a recent CBC article, the Association president, acknowledged that he’s open to the idea of having a dedicated marijuana lounges in larger buildings, “if landlords could then ban smoking in rental units.”

Later this month, Shelley Upton, the Manager of Housing Programs at Niagara Regional Housing, is leading a session for housing providers and board members on the impacts cannabis legalization – focusing on balancing “people’s pot rights with people’s rights to be free from substantial interference with reasonable enjoyment of their units.” I will also be speaking at this session from an insurance perspective. HSC is currently organizing a SHARE session in the Spring on marijuana legalization.

The Province is also still working out the finer details of implementing cannabis legalization. It is accepting comments until March 5 on where people should be permitted to consume cannabis. Its proposed ‘place of use’ regulations also note specific residences where there would be conditions around its use – including long-term care homes, retirement homes, supportive housing and special care homes.

In addition, under the section dedicated to multi-unit dwellings, the proposed regulations state that the Province is considering “options for where people can consume cannabis without significantly increasing exposure to second-hand smoke and vapour” including “permitting licensed and regulated cannabis consumption lounges” and “permitting owners and operators of multi-unit dwellings to designate outdoor areas” for cannabis use. Decisions on these items will likely inform the building policies providers adopt.

What’s Next?

Further reading:

HSC has encouraged providers to go smoke-free as a practical measure for managing risk – since it helps reduce fire risk and property damage. Implementing a smoke-free policy ahead of legalization – and letting residents know that it applies to all kinds of smoke – is a good idea. In addition, tracking odour complaints and looking out for plants during unit inspections may also be worthwhile – if only to determine whether there’s a significant change pre- and post-legislation, given the likelihood of evolving place-of-use regulations.

Because cannabis has been in a legal grey area now for many years, a seismic shift is unlikely in July – those who use it are likely already consuming it in their units. With its legalization, we may see even fewer illegal grow-ops than previously due to the emergence of higher quality, legal competition.

That said, we will be monitoring claims and sharing risk management best practices as they develop. We’re also getting clarification from insurers on our Common Room Insurance for Events (since there are currently separate rates for events with or without alcohol). On the question of insurance costs and renewals – we are expecting insurers will be taking a wait and see approach, adjusting their coverages and risk management incentives as legalization unfolds.

Notify me when details on the SHARE webinar on marijuana legalization become available Visit the SHARE website


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2017 Natural Disasters & Their Impact on Insurance Premiums

2017 was marked by a number of major natural disasters around the world. Three major hurricanes – Hurricanes Harvey, Irma and Maria – wreaked havoc in the United States and the Caribbean and led to insurance losses of $100 billion in 2017. Wildfires caused $14 billion of insurance losses. There were also earthquakes in Mexico; floods and Typhoon Hato in China; and drought in Southern Europe.

According to the global reinsurer Munich Re, this contributed to inflation-adjusted insured catastrope losses of $135 billion – an all-time high. Losses were primarily attributable to extreme weather – 97% of the total in 2017, compared to the average since 1980 of 85%.

Insurers and reinsurers see last year’s losses as a preview of things to come as a result of climate change. Industry data shows many more frequent high-loss events since 2000—many weather-related—than in the two preceding decades. In our program too, we saw a surge in weather-related claims in the summer of 2017 – with flooding in Windsor, Orangeville, Thornhill and Chatham.

Because insurance is a global business, which distributes risk across borders and organizations, losses aren’t local to an individual country’s insurance sector or to an individual type of insurance. They have a ripple effect. Even here in Canada insurers have reported significant losses.

Part of the ripple effect can be increased premiums. That’s because while insurers expect to pay for losses as part of their business, in exceptional years the losses exceed their estimations and deplete their reserves for claims. And when this happens, insurance companies raise premiums.

Thankfully the unique design of HSC’s Group Insurance Program reduces provider exposure to cost spikes in the global insurance market. Because we have a Property Claims Fund Trust that covers smaller, more frequent claims, insurance premiums make up only a portion of your total cost of your risk. HSC’s program also spreads the property insurance component of your coverage across approximately 20 underwriters.

The expert commentary on how the 2017 disasters will affect 2018 premiums is mixed. Reuters reports that for January 1 renewals, “global property reinsurance prices rose less than expected, with strong competition limiting increases to single-digit percentages.” Others are expecting broader impacts.

While we cannot control whether there is a hurricane in Texas or a wildfire in California, there are steps that we can take as homeowners, tenants and housing providers to affect our premiums. And it starts with developing a risk management plan.

Download Contingency Planning Guide & Template Download Guide on Managing Directors & Officers Risk Contact me for advice and guidance

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Property Claims Trust Refund

In early January, we achieved an HSC Insurance Program first: we issued a refund on the Property Claims Fund to program participants!

HSC’s Property Claims Fund Trust was introduced for the 2011/12 policy term and is comprised of annual contributions from providers that participate in the group insurance program. The goal of the Claims Trust Fund is to cover the costs of smaller, more frequent claims so insurers can focus on larger, less regular claims. This helps stabilize premium costs.

Though your Claims Fund contributions are part of your ‘cost of risk’ each year, they’re not premium. As such, if there’s a surplus, it comes back to the program. The size of the Claims Trust Fund is based on the anticipated cost of these smaller, more frequent claims over the course of an annual term. If these are less than what we expect, there’s a surplus at the end. The time it takes for claims to settle, however, can vary considerably.

Recently, an outstanding 2013 fire claim that involved a significant draw on the Claims Fund fully settled. This resulted in a surplus for the 2013/14 term. You will have received your proportionate share of a recovery to that year’s Property Claims Fund.

Please contact us if you have any questions or comments. And thank you for your participation in HSC’s Group Insurance Program.

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Video Case Study: How HSC’s Insurance Program is Different

From time to time, we hear from folks in the sector that think our program is no different than building insurance that’s offered by other brokers.

This time we have a video case study on Royal Canadian Legion Villa, a seniors’ provider in Kingston. Legion Villa had a massive fire in December 2013 and their claim recently settled fully. In the video, you’ll learn about how HSC went the extra mile to help both the provider and residents. You’ll also hear about how our specially designed coverages protect residents from slipping into deeper poverty and homelessness after catastrophic events.

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Recent Insurance Events in the News

While disasters aren’t pleasant to talk about, they can help us get new insights into risk management and lend perspective to the human and economic cost of claims. The following are just some of the stories on claims incidents to the HSC Group Insurance Program reported in the news since my last update:

In other risk management news, Toronto Fire Services recently launched a website relating to highrise fire inspections. It allows visitors to see the results of inspections – where fire code violations have been found and addressed as well as buildings with clean records. I believe the portal is a good idea – it raises awareness among the public about the fire safety of residential buildings (social housing, private rentals and condos), encourages accountability and enables the city to start identifying patterns, trends and solutions. You can check out the actual portal here.

Finally, while it may seem obvious, oxygen tanks and smoking should not mix! This story from Oshawa serves as a reminder to advise those of your tenants that use oxygen cylinders to exercise extra care. Cylinder explosions are a preventable, but unfortunately regular, cause of property claims in our program.

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Risk Management Resources

The Ontario Office of the Fire Marshal’s recent eNews featured some good resources to help plan and promote fire safety including:

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Introducing Katherine!

At the beginning of January, we welcomed Katherine Perrino-Smith, who joined us as a Claims Specialist.

Katherine brings to our team extensive experience in handling claims with more than 15 years experience in the insurance industry – having worked on a wide range of casualty and auto claims for organizations that include Allstate, TD Insurance and RSA Insurance. Katherine’s also an avid volunteer, having helped at a York Region women’s shelter.

I think you will enjoy working with Katherine. Should you have a claim and require assistance, you can reach her at 1-866-268-4451 x310 or by email at

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[view previous issues of Managing Risky Business]


Call Me Maybe
One Life
Turn Me On
Glad You Came
Rack City
Stand Behind The Music
Ninjas in Paris
What Makes You Beautiful
The Motto
Wild Ones
Turn Up The Music
Middle Finger
Sorry For Party Rocking
Is Anybody Out There?
Safe and Sound