Canadian Underwriter

Category: Ask the Experts

What makes human element programs effective?
Everett McCallum,
Director, Technical Risk Services,
Echelon Insurance

As part of a business’ risk mitigation plan, there is heavy reliance on physical systems and well-established organizational processes to manage risk. While important, their effectiveness is shaped by the way they are operated, maintained, and managed, which ultimately comes down to human behaviour and decision-making. In severe losses, many trace back to a common set of underlying gaps due to human behaviour and decision-making:

Unclear ownership and accountability

Missing or inconsistent standards and procedures

Insufficient training and competency validation

Limited verification, tracking, and continuous improvement

Human element programs are structured policies and procedures that reduce risk by creating consistency in operational processes and decision-making. As operations and hazards become more complex, the impact of human decisions increases, making well-managed programs essential.

How to determine what human element programs your business needs

The human element programs your business needs will depend on how it operates and where exposures exist. While exposures will vary between businesses, the following programs address common areas where human behaviour can affect the likelihood or severity of a loss, and can serve as a strong starting point for business owners:

Preventive maintenance: Equipment, utilities, and building components can deteriorate or fail when maintenance is informal or inconsistent. A preventive maintenance program helps define what needs attention, how often, and who is responsible.

Hot work management: Cutting, welding, grinding, and other heat-producing work can introduce ignition sources near combustibles, dust, or flammable liquids. A hot work program helps control ignition sources before, during, and after the work.

Fire protection inspection, testing, and maintenance: Fire protection systems may not operate as intended if inspections are missed, or deficiencies are not corrected. An inspection, testing, and maintenance program helps identify and address issues before performance is affected.

Contractor management: Contractors can introduce unfamiliar hazards, work practices, or ignition sources. A contractor management program helps confirm expectations, qualifications, and oversight before and during the work.

Housekeeping: Combustible materials, poor storage practices, and obstructed access can allow hazards to build or go unnoticed. A housekeeping program helps maintain orderly conditions and reduce unnecessary fuel sources.

Smoking controls: Improper smoking practices and discarded materials can create ignition sources near combustible storage, waste areas, or exterior exposures. A smoking control program helps define where smoking is permitted and how materials are safely discarded.

Business continuity and emergency readiness: A serious event can quickly expose gaps in response roles, communication, critical operations, and recovery priorities. A business continuity and emergency readiness program helps clarify how the business will respond and recover.

Evaluating whether human element programs are effective.

The effectiveness of a human element program depends on two factors: alignment and execution.

Start by reviewing where losses could occur and how human actions or decisions may influence the outcome. This helps determine whether the right programs are in place and whether existing programs are properly targeted to the risk.

Once the right programs are identified, focus on execution. Effective programs should have clear ownership, documented expectations, comprehensive training, and regular follow-up to confirm that critical tasks are being completed.

When these elements are in place, human element programs are more likely to be applied consistently, remain relevant to the business, and reduce the likelihood or severity of loss.

How can Brokers support business owners with their human element programs?

To support customers in establishing and maintaining effective human element programs, Brokers should collaborate closely with insurers to share risk mitigation expertise and educational resources. Since risks associated with human behavior are always present, it is essential that commercial customers receive ongoing education, coverage tailored to their unique needs, and guidance in implementing – and regularly reviewing – their programs. Providing proactive support can help business owners significantly reduce their exposure.

Copyright © 2026 Echelon Insurance. All rights reserved. This article is provided by Echelon Insurance (“we”) for general information purposes to help Brokers and their commercial customers understand how human element programs can reduce the likelihood and/or severity of loss created by human behaviour. While we believe this article is comprehensive, it is provided “as is” and we do not guarantee it is complete. All responsibility and risk relating to specific incidents, including use of this form, are assumed by the commercial enterprise.

® Registered trademark of Echelon Insurance.
May 19, 2026
From hype to liability: AI washing as a D&O risk

Denis Panariti,
Regional Manager – International Financial Lines, Canada

Our Risk & Resilience report ‘Spotlight on Cyber Threats and Tech Advances 2026’ looks at the new cyber reality including the threats and benefits of AI advancement. Read on for Denis’ insights on the risks of AI washing.

AI is being talked up much like earlier waves of digital, cloud, and big data, but the AI claims are often hard to back, leaving both firms and their investors vulnerable to brewing exposures.

In the laundromat of risk, this kind of AI‑washing¹ is just the latest in a long line of disclosure challenges. Greenwashing² has triggered multi‑million and billion‑dollar fines³, while tariff‑washing⁴ though still an emerging risk, has already sparked class‑action lawsuits in North America⁵, and now AI‑related disclosures face similar scrutiny.

On the investor side, where companies could make sweeping claims about “transformative” AI and still secure strong IPO valuations – the mood has shifted. Investors must and are wising up fast lest they find themselves in the firing line of loss.

The growing gap between AI claims and reality is quickly becoming a tangible risk, with regulatory, legal, financial and reputational consequences.

Regulatory signals

The EU has been ahead of the pack since introducing the AI Act⁶ in mid‑2024, which includes fines of up to €35m or 7% of global annual revenue for misrepresenting whether a system is AI, how it works, or how it is classified⁷.

In the US, scrutiny has also accelerated. In late 2023, then‑SEC Chair Gary Gensler issued a blunt warning⁸, “Don’t do it”, followed by guidance against “unrealistic” AI claims and the first settled charges for AI misrepresentation⁹. While the $400,000 in combined penalties may seem modest – it should be seen as warning shots.¹⁰

Canada presents a different picture. With the proposed Artificial Intelligence and Data Act (AIDA) set aside in early 2025, AI regulation remains fragmented across provincial rules, existing laws and voluntary federal frameworks. One notable exception is financial services, where OSFI has already imposed binding AI and model risk governance requirements, effectively creating a de facto AI regulatory regime for banks and insurers.

AI clarity over hype

For firms claiming AI use: With no standard definition of “AI,” companies often stretch the label to cover basic technology, Directors and Officers (D&Os) should clearly define how the term is used, avoid vague buzzwords and back all claims with evidence to reduce legal and reputational risk.

Conversely, AI tools can now fast scrutinise everything at speed and scale; from decks and filings to social posts and product ads – no channel is exempt. And once AI is tied to growth, differentiation or valuation, any later defences around limitations or underperformance can be upended easily. Boards need company‑wide policies and training to keep AI claims accurate from the outset.

Insurance is shifting too. D&Os must check that AI‑specific liabilities are explicitly covered under cyber or tech clauses. In parallel, insurers can scrutinise AI governance and controls during underwriting, especially in high‑litigation markets.

For investors backing AI‑enabled firms: Investors can suffer substantial financial losses and even come under the spotlight for their own lack of due diligence. As cases increase and sharpen scrutiny, they should emulate regulators by pressing for accurate, balanced disclosures that that can prove companies are not “overhyping capabilities without substance.”¹¹

Where accountability ultimately sits with the board, professional liability insurance can help absorb the cost of shareholder litigation and related claims but should be treated as a financial safety net, not a risk strategy. The real protection starts earlier: clear governance, disciplined decision-making and rigorous due diligence at the consideration stage.

The strongest defence against AI‑washing is to treat AI claims like financial ones: if use, data, governance and outcomes can’t be evidenced, the risk ultimately falls on investors, not just operators.

^[1]_{https://www.beazley.com/en-US/articles/wishful-thinking-and-ai-washing/}

^[2]_{https://www.beazley.com/en-US/articles/greenwashing-environmental-risk-should-be-everyones-radar/}

^[3]_{https://corporateknights.com/leadership/here-are-the-nine-biggest-corporate-greenwashing-fines/}

^[4]_{https://www.beazley.com/en-US/articles/2026-the-year-tariff-washing/}

^[5]_{https://www.insurancebusinessmag.com/ca/news/professional-liability/tariff-washing-is-the-next-big-dando-risk-as-cusma-renewal-looms-561424.aspx}

^[6]_{https://artificialintelligenceact.eu/}

^[7]_{https://artificialintelligenceact.eu/article/99/}

^[8]_{https://www.wsj.com/articles/sec-head-warns-against-ai-washing-the-high-tech-version-of-greenwashing}

^[9]_{https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/artificial-intelligence-fraud}

^[10]_{https://www.sec.gov/newsroom/press-releases/2024-36}

^[11]_{https://capx.cooley.com/2025/11/24/tech-ipo-momentum-are-you-prepared-to-catch-the-wave}

May 11, 2026
How can we tackle fraudulent practices in trucking credentials?
Rupinder Hayer,
AVP, Long-Haul Trucking and Commercial Auto,
Echelon Insurance

Fraudulent practices in licensing and certification are a growing concern in the Canadian trucking industry. Unqualified individuals may use illegal methods, such as forged documents, bribery, or falsified training certificates, to obtain commercial driver’s licences or other professional credentials.

When drivers lack valid qualifications, the risk of collisions increases, putting road safety at stake while simultaneously driving up claim severity and costs. Over time, that pressure can raise insurance costs across the commercial trucking sector, affecting fleets regardless of their operational integrity.

Mitigation and prevention require due diligence at both the driver and carrier levels – and it’s a shared responsibility. Fleet operators must maintain disciplined internal processes to ensure drivers are properly licensed and trained and all these details are documented. Brokers can help keep fraudulent or non-compliant operations out of the market by leveraging thorough verification practices in alignment with insurer standards. Since Brokers are often the first checkpoint in carrier selection and placement, validation at this stage may stop issues before they become losses.

Brokers as the first line of defense

Through proper verification, Brokers can confirm that fleet operators are legitimately authorized to operate and are following correct processes. This can include:

Verifying operating authority and identity: Confirm that a carrier’s operating authority is active and authorized and review their authority history (especially if recently reinstated). Validate driver’s licences regularly, confirm safety fitness certificates with provincial/territorial authorities, and confirm insurance coverage directly with the insurer.

Asking the right questions: Strengthen verification by asking process-based questions, for example, who verifies licences, how often are driving records reviewed, and what happens when information is missing or inconsistent.

Ensuring strong document management: Look for red flags such as incomplete driver files or discrepancies across documents, and maintain accurate records of transactions, insurance certificates, and operating licences for all contracted carriers.

Encouraging consistent onboarding and training: Support carriers in documenting employee orientation, training, and ongoing coaching.

Promoting incident readiness: Confirm fleets have clear post-incident procedures (including collecting driver statements, obtaining dashcam footage, gathering witness information, and preserving documentation) so information is captured quickly and accurately to support claims investigations.

Why it’s important for fleet operators to demonstrate ongoing compliance

For fleet operators, gaps in licensing or certification can lead to increased scrutiny during underwriting, higher premiums, tighter terms, or difficulty securing coverage. After a serious loss, those gaps can also lead to denied claims and significant financial exposure.

Implementing and maintaining structured processes helps demonstrate compliance, reduce the likelihood of errors, and support long-term insurability. This can include:

Maintaining complete, up-to-date documentation: Ensure licensing, training records, and required certifications are legitimate, accurate, organized, and accessible. Assigning clear internal responsibility for managing these files, regardless of fleet size, helps prevent oversights and gaps.

Using consistent onboarding and training processes: A documented approach to orientation, training, and ongoing coaching reinforces expectations and creates a record of due diligence. Fleets that treat training as ongoing, not a one-time requirement, are better positioned to manage evolving risks.

Conducting regular internal reviews of records and processes: Addressing issues early and engaging proactively with their Broker when questions arise supports compliance and helps demonstrate a commitment to safe, authorized operations.

How insurers can support Brokers and fleet operators

To help Brokers and fleet operators strengthen compliance, insurers can clarify expectations and reinforce best practices and risk mitigation strategies before issues escalate.

To reinforce the Broker verification process, insurers can also conduct risk inspections to assess compliance. Regulators can strengthen these efforts by providing insurers with direct access to verify licensing and certifications, helping deter fraud.

Insurers further support Brokers by communicating underwriting expectations clearly and consistently, so they can explain requirements to their customers with confidence. This shared understanding promotes a more collaborative approach to maintaining proper coverage.

When Brokers, fleet operators, and insurers each uphold their responsibilities, these combined efforts strengthen compliance, enhance safety, and help build a more resilient Canadian trucking industry.

Copyright © 2026 Echelon Insurance. All rights reserved. This article is provided by Echelon Insurance (“we”) for general information purposes to help Brokers and their commercial customers understand the risk implications of illegality in trucking licensing and certifications and taking proactive steps to respond to and mitigate these risks. While we believe this article is comprehensive, it is provided “as is” and we do not guarantee it is complete. All responsibility and risk relating to specific incidents, including use of this form, are assumed by the commercial enterprise.

® Registered trademark of Echelon Insurance.
May 4, 2026
Is Water Damage During Construction a Preventable Risk?

Sean Smith,
Branch Manager – BC,
Polygon Restoration

On a construction project, the cost of a water leak is often measured in time as much as in damage. The longer water flows, the greater the impact on materials, labour schedules, and project delivery timelines. A leak that runs for several hours can delay multiple trades and require significant rework, while the same leak detected and addressed quickly may have minimal impact. Technology is changing how construction teams manage this exposure. Instead of relying on someone discovering a leak during a site visit, real-time monitoring systems can identify water issues as they occur, allowing action to be taken immediately.

Controlling the severity of water losses

Water incidents on construction sites have traditionally been managed reactively. A leak is discovered, the water supply is shut off manually, and mitigation and drying begin. While this response is necessary, the extent of the loss has often already been determined by how long the water was allowed to flow.

Today, technology is allowing construction teams to monitor water systems in real time and respond to issues much earlier. Solutions can range from flow sensors and leak detection devices to smart water valves with in-line monitoring and automatic shut-off, which can isolate the water supply when abnormal flow is detected. Leak detection sensors can also be placed in vulnerable areas such as mechanical rooms, near temporary water connections, or in areas where water lines are present, providing early warning when water is detected where it should not be. Project teams can monitor water usage, receive alerts, track trends, and generate reports, allowing them to respond quickly and better manage water risk throughout the construction process. From a loss perspective, earlier detection and faster response can significantly reduce material damage, drying requirements, and project delays.

Large water losses also carry an environmental impact that is often overlooked. Damaged materials are typically removed and disposed of, replacement materials must be manufactured and transported, and drying equipment can run for extended periods. Limiting the size of a water loss not only reduces repair costs and delays, but also reduces material waste, water waste, and energy consumption associated with drying and reconstruction. For project owners and developers focused on sustainability and ESG objectives, preventing losses can also help reduce the overall environmental footprint of a project.

The underwriting and deductible conversation

As water mitigation technology becomes more common, it is increasingly part of the underwriting discussion for construction projects. A site where water can run for hours undetected presents a very different risk profile than a site where water systems are monitored, and the supply can be automatically isolated when a problem is detected.

In some cases, projects that implement leak detection and smart water valve technology may benefit from reduced deductibles, improved insurability, or more favorable policy terms. This reflects the reduced risk exposure when water flow can be detected and controlled quickly, limiting the potential severity of a loss. For brokers and risk engineers, this creates an opportunity to work with clients on risk mitigation strategies that not only help protect the project but also improve how the risk is evaluated from an insurance standpoint.

Prevention as part of construction risk management

Water damage may always be a risk on construction sites, but technology is making it increasingly possible to manage that risk more effectively. Monitoring systems, leak detection sensors, and smart water valves allow project teams to identify problems early and limit the impact of water incidents. For underwriters, brokers, and risk engineers, the focus is gradually shifting from responding to water damage to preventing large losses from occurring in the first place. Projects that take a proactive approach to water risk are not only reducing potential claim severity, but also protecting schedules, reducing waste, and improving overall project risk performance.

In construction, controlling how long water flows can make the difference between a minor incident and a major claim. Prevention, in this case, is becoming an increasingly practical part of construction risk management.

April 13, 2026
Could Surface Repair Reduce Claim Severity in Property Losses?

David McKeon,
Branch Manager – Ontario,
Polygon Restoration

In many property damage claims, cosmetic surface damage leads to the replacement of fixtures that remain fully functional. Restoration specialists frequently encounter situations where a small chip, burn, crack, or scratch results in the removal of an entire bathtub, countertop, cabinet panel, or tile assembly.

From a restoration perspective, this raises an important question. Does the entire fixture truly need to be replaced? While replacement may appear to be the simplest solution, it often expands both the scope of the claim and its environmental footprint.

When replacement increases claim scope

Replacing a damaged fixture rarely involves a single task. Demolition, disposal of materials, product sourcing, installation, and scheduling trades all add time and cost to the reconstruction process. Each additional step increases labour requirements and extends the timeline needed to close the claim.

Surface Repair provides an alternative approach. Instead of removing and replacing entire fixtures, the damaged portion is restored onsite using specialized repair techniques and colour-matching systems that blend with the surrounding material, avoiding demolition, reducing labour requirements, and allowing many repairs to be completed within a few hours. For claims professionals, this often means faster resolution and a smaller overall claim scope.

Reducing claim severity through targeted repairs

Reducing claim severity remains one of the most effective ways to manage portfolio performance. Although large losses often draw the most attention, a significant share of claims involve smaller incidents that occur frequently. Surface damage claims fall squarely into this category. Chipped bathtubs, scratched countertops, damaged cabinet surfaces, or burned flooring are common issues following water damage, fire or smoke damage, tenant damage, or everyday accidents. When these fixtures are replaced rather than repaired, the cumulative cost across thousands of claims can become significant.

For claims professionals, repair-first solutions can also simplify the claims process. When fixtures are repaired rather than replaced, the need for sourcing materials, coordinating multiple trades, and scheduling extended restoration work is significantly reduced. This can help accelerate claim resolution timelines and streamline project management. In portfolios where similar types of surface damage occur frequently, incorporating repair as an option can contribute to more predictable repair scopes and more efficient claims handling. For property owners and occupants, the benefits are equally practical. Less demolition means less disruption, less debris, and fewer contractors entering the property. In environments such as multi-residential buildings, hotels, and student housing, minimizing downtime can be particularly valuable.

Aligning claims handling with sustainability goals

Sustainability commitments are becoming increasingly visible across the insurance industry. Many insurers are developing Environmental, Social, and Governance (ESG) strategies that focus on reducing emissions, improving operational efficiency, and supporting responsible resource use.

Repair offers a practical way to support these objectives. Restoring existing materials extends the lifecycle of fixtures that would otherwise be removed and replaced. It also reduces waste generated during restoration projects and avoids the emissions associated with manufacturing, transporting, and installing new materials.

Each repair that avoids replacement reduces construction waste while preserving materials that remain functional. By prioritizing repair where appropriate, restoration providers can also support insurers and property owners in advancing their environmental impact goals while maintaining efficient claims resolution. In this way, repair-first restoration strategies can help connect everyday claims decisions with broader sustainability goals.

Rethinking replacement in property claims

The restoration industry has long focused on returning damaged property to its pre-loss condition. However, many claims processes still default to replacement when dealing with cosmetic surface damage.

As insurers and property stakeholders look for ways to manage rising repair costs and improve environmental outcomes, repair-first strategies are receiving increased attention. Surface Repair demonstrates how relatively small decisions within the claims process can create meaningful operational and environmental benefits. Addressing damage at the most localized level possible helps control claim severity, shorten repair timelines, and reduce waste.

For claims professionals, the question may increasingly be whether replacement is truly necessary, or whether a localized repair can restore the surface while limiting both the cost and environmental impact of the claim.

March 30, 2026
Is Canada’s Insurance Market Ready for Proactive Loss Mitigation?

Fabio Bernardo,
Canada – Country President,
Polygon Restoration

Water damage remains one of the most consistent and costly drivers of property claims across Canada. While catastrophic flooding events capture national attention, many of the most significant losses for insurers begin with something far less dramatic: a burst pipe, a failed plumbing connection, a leaking appliance hose, or a slow leak inside a wall.

For decades, the industry has been structured around response. A loss occurs. The claim is reported. Adjusters investigate. Contractors restore. Restoration expertise in Canada is highly advanced, and response times have improved significantly, yet even the most efficient reaction takes place after the damage has already expanded.

The question facing insurers, brokers, and risk managers today is whether reacting faster is enough, or whether the more strategic opportunity lies in preventing losses before they escalate.

The Cost Curve of Water Damage

Water losses are uniquely problematic because of how quickly they escalate. A minor leak left undetected for several hours can saturate insulation, migrate behind walls, damage flooring, and impact electrical systems. Secondary issues, including microbial growth, introduce further complexity and cost. By the time mitigation crews arrive, the severity of the claim has already increased exponentially.

When claims occur more frequently and cost more than expected, loss ratios come under pressure. Rising repair costs and increasingly variable weather patterns make outcomes harder to predict. If insurers focus only on restoring damage after it occurs, they remain exposed to the same underlying risks. A reactive model repairs the loss, but it does not reduce the likelihood of future claims.

From Response to Visibility

The foundation of proactive loss mitigation is visibility. Fire risk has long been managed through mandatory alarms, sprinklers, and suppression systems. Water risk requires similar discipline.

Today, continuous monitoring technologies can provide real-time oversight of high-risk areas within buildings. Water detection devices identify moisture at its earliest stage. Environmental sensors track temperature and humidity patterns that signal condensation risk or hidden dampness. A centralized platform enables property owners and risk managers to oversee multiple locations from a single dashboard and receive immediate alerts when conditions change.

This shift transforms water damage from a hidden vulnerability into a measurable and manageable exposure. Earlier detection shortens the window between incident and response. In many cases, what could have evolved into a six-figure claim becomes a contained repair. Across a portfolio, those outcomes add up quickly.

Implications for Underwriting and Claims

For underwriters, properties equipped with active monitoring and documented maintenance programs demonstrate stronger risk governance. These controls provide tangible indicators of operational discipline and can support more refined risk selection.

For claims leaders, proactive mitigation addresses two primary drivers of escalating losses: delayed detection and uncontrolled spread. Faster containment reduces material replacement, shortens drying timelines, and limits overall claim costs. In practical terms, a monitored property might convert what would otherwise become a $100,000+ loss into a $5,000–$10,000 mitigation event simply because the issue was detected before it had time to escalate.

The conversation therefore shifts from “How quickly can we restore?” to “How early can we detect?” That reframing has meaningful implications for portfolio performance.

Alignment with ESG and Asset Resilience

The benefits extend beyond financial metrics. Preventing water events reduces material waste, lowers energy consumption associated with large-scale drying and minimizes landfill impact. As ESG considerations increasingly influence investment and underwriting decisions, mitigation strategies contribute to both resilience and sustainability objectives.

Buildings remain in better condition over time, with less hidden moisture damage and fewer recurring issues. For insurers, fewer severe losses and more consistent claim patterns lead to stronger portfolio stability.

A Strategic Industry Shift

Proactive loss mitigation does not replace restoration expertise. It strengthens it. Organizations that understand how and why damage occurs are well positioned to help insurers and property owners reduce exposure before a claim develops.

Embracing this approach requires alignment across underwriting, claims, and risk engineering, with prevention treated as a measurable performance objective. In a market facing ongoing pressure from climate variability, rising repair costs, and underwriting losses across property portfolios, proactive mitigation is emerging as a key differentiator for portfolio stability and competitive advantage.

March 16, 2026
How do underwriters evaluate Legal Expense Insurance risk today?

Emily King,
Director of Underwriting,
ARAG Legal Solutions Inc.

In traditional P&C insurance, underwriting is about pricing events: a flood, a fire, a theft. In Legal Expense Insurance (LEI), it’s about pricing conflict. And in today’s climate of rising legal risk, brokers have a key role in helping clients understand what that means.

“Like all insurance, LEI is about assessing frequency and severity,” explains Emily King, Director of Underwriting at ARAG Legal Solutions. “But in LEI, the loss is a legal dispute. And that is shaped by behaviour, process, and environment, not just events.”

At ARAG, underwriting doesn’t end once a policy is issued. Claims data, helpline usage and insights from counsel continually feed back into how risk is assessed and how products evolve. This feedback loop enables ARAG to adapt their coverages and services as patterns of legal disputes shift over time.

That means LEI underwriters must assess not only the chance that something will go wrong, but also the likelihood it will escalate into legal action. For clients, whether they’re individuals or small businesses, that uncertainty often leads to inaction, even when their rights are at stake, King says.

LEI changes that equation by making legal support and coverage more accessible and affordable, giving clients a way to protect their rights before problems become lawsuits.

What legal risk means in LEI

Depending on the type of legal dispute, ARAG’s LEI will cover the cost of pursuing or defending the insured’s legal rights. This includes the cost of a lawyer, disbursements such as expert opinions, and opponent’s costs awarded against them.

But unlike property or auto losses, LEI risks are often invisible until a dispute arises. And disputes are driven more by context than by catastrophe, King says.

Employment law offers a good example. “Letting someone go doesn’t automatically lead to a claim,” she says. “But how it’s handled makes all the difference. The right process avoids risk; the wrong one escalates it.”

LEI can also come into play earlier than many expect. “A claim might be triggered by just a legal letter challenging severance,” King explains.

Jurisdiction, access to counsel, and economic conditions all influence risk. “During the pandemic, for example, layoffs increased and so did employment-related claims,” she says. “With LEI risk we see what happens at a societal level filtering down.”

Underwriting what hasn’t happened yet

A key part of LEI underwriting is not just asking whether a dispute is likely, but what kind of dispute it will become if nothing intervenes, King explains. “We ask things like: Will it resolve with a legal letter? Move to mediation? Or harden into multi-year litigation? Those pathway assumptions are central to how legal risk is priced.”

LEI underwriters look for leading indicators, not just loss history, she adds. Traditional factors like industry class still apply. For example, a contractor is more likely to face contract disputes.

But other signals are more behavioural. “If it’s a small business with no HR support, they may not know how to follow the right steps, which increases the chance of a claim,” she says.

Jurisdictional factors play a key role. “Small-claims court limits vary by province, and in some jurisdictions, mandatory mediation or other processes change how a dispute unfolds,” she explains. “That affects how likely someone is to pursue an action, and how complex it becomes.”

For small businesses with less legal resources, even modest disputes can escalate quickly and become financially overwhelming. “A $10,000 issue may be a nuisance for a large company, but it could be devastating for a small business without in-house legal support,” King says. “That’s where LEI makes a real difference. It gives small businesses access to justice they might not otherwise afford.”

ARAG’s underwriting lens directly shapes its product design, not just in what’s covered, but in how risks are managed across the portfolio. Risk-reduction tools like ARAG’s legal assistance helpline don’t just offer support, they’re part of a broader underwriting strategy. By enabling early legal action, these tools help reduce the frequency, severity and duration of claims.

“Sometimes, a five-minute call is all it takes to stop a dispute from escalating,” says King. “It’s that combination of insurance, legal assistance and proactive risk-reduction tools that makes LEI such a powerful solution.”

Helping clients act before a dispute

ARAG has built this solution with a mission to improve access to justice, King says, and brokers can bring that to clients by helping them understand the value of LEI before a dispute arises.

It also clears up the common misconception that LEI helps only once a dispute is underway. “If clients wait until there’s a problem, it’s already too late,” King explains.

The strongest LEI portfolios aren’t built on clients bracing for conflict. They’re built on clients empowered to seek legal guidance early. When brokers position LEI this way, they’re not only offering clients coverage, they help actively shape legal risk before it escalates.

February 17, 2026
Are some MGAs evolving into hybrid insurers?
Michael McLachlan,
President of Trinity Underwriting Managers

The role of Managing General Agencies (MGAs) in Canada is evolving. MGAs have become key players in product innovation, specialized underwriting, and market access, attracting unprecedented attention from private equity and global reinsurers, and larger retail broker consolidators. The Canadian MGA market has lagged behind the US and Europe, due to historic industry structures, but as Canada experiences shifts in risk complexity, distribution dynamics, and capital flows, MGAs are emerging as drivers of growth.

Historically, MGAs served two purposes: consolidators for smaller retail brokers who couldn’t secure contracts with the larger insurers and to fill gaps in underserved or emerging specialty lines (e.g. E&O, marine). Their value was in underwriting agility, entrepreneurial culture, and broker relationships. While that remains, the sector has expanded dramatically in sophistication.

Today’s MGAs operate more like vertically integrated underwriting enterprises. They deploy advanced analytics, cross-border expertise, and technology-enabled platforms to deliver tailored solutions far faster than traditional carriers. They increasingly design product, pricing sophistication, and risk-selection frameworks. For brokers, MGAs now represent not only capacity, but innovation, particularly in fast-changing sectors like technology, med-tech, fintech, cyber, and emerging professional-services risks. MGAs are attracting entrepreneurial minded underwriters who are finding it easier to get financial and capacity backing than ever before. Why work at a stodgy old insurer and get your 3% annual raise when you can move to a fast-paced innovative environment?

One of the recent drivers of change is private-equity investment. Today seventy five percent of the MGA capacity in the US is owned by private equity. Over the past decade, P.E. firms have recognized MGAs as attractive specialty financial-services investments. Canadian MGAs are increasingly part of these transactions, mirroring trends long seen in the U.S. and U.K.

Private equity sees three advantages in the Canadian MGA model:

Capital-light growth: No balance-sheet risk, enabling expansion without tying up significant capital.

Fragmented market: With well over a hundred small to mid-sized MGAs in Canada, P.E. firms see opportunities to build scaled platforms with multi-line capabilities.

Recurring earnings: Commission income particularly in specialty lines with low loss frequency, generates stable EBITDA that PE values highly.

As a result, Canada is witnessing a wave of acquisitions, platform roll-ups, and growth-equity injections that are transforming many MGAs. New innovations such as AI-driven underwriting, national broker-distribution networks, U.S. expansion, and proprietary technology are now achievable with PE backing. MGAs that don’t take advantage of these new initiatives risk becoming irrelevant. Many of the oldest MGAs in Canada are the ones suffering the most in the current soft market. The risk of becoming too big can sometimes be that you start to resemble a large slow-moving insurer, with poor service and lack of imagination.

Global reinsurers are also supporting MGAs. Reinsurers have always been present in the Canadian market, but as primary insurers expand and retain more risk their involvement is shifting from traditional treaty arrangements toward a more direct engagement with delegated underwriting platforms.

For reinsurers, backing MGAs offers several advantages:

Specialty-line growth: a fast route into complex, emerging, or under-penetrated lines- particularly cyber, technology E&O, and life-science risks.

Underwriting expertise: MGAs often possess deeper specialization than primary carriers, making them attractive partners for reinsurers seeking high-quality, well-segmented portfolios.

Lower friction market entry: In a regulated and relationship-driven market like Canada, supporting an MGA is faster and cheaper than building new primary operations.

This alignment has led to hybrid models where reinsurers not only provide capacity but participate in product design, analytics, and long-term growth strategies. For MGAs, this access to high-quality reinsurance capacity can catalyze expansion into new niches and improve pricing stability even during challenging market cycles.

A More Strategic Role Ahead

Taken together, these forces, private-equity investment, reinsurer engagement, broker demand for specialization, and technology-driven underwriting, signal a fundamental reshaping of the MGA sector in Canada. MGAs are no longer peripheral players; they are becoming strategic partners to carriers, incubators of new specialty products, and engines of innovation for brokers serving increasingly complex needs. As an idea of the potential upside for MGA based premium, the US market is over $100 billion premium. The Canadian market is estimated to be around $4 billion, so lots of room for growth.

As the Canadian market continues to diversify and global capital flows seek efficient pathways to deploy into specialty risk, the role of MGAs will only expand. The coming decade is likely to see even greater consolidation, deeper reinsurer partnerships, and an acceleration of the MGA model into high-growth niches that traditional insurers struggle to serve. In this evolution, MGAs are not simply adapting to change, they are driving it.
December 8, 2025
Risk in Canada’s Innovation Economy: Is Traditional Coverage Adequate for Canada’s Innovation Economy?

Emma McLachlan,
Underwriting Manager,
Financial Lines

Canada’s medical innovation economy is in full stride. From digital therapeutics and AI-powered diagnostics to telepharmacy and personalized medicine, new technologies are transforming how Canadians access care. These advances will make healthcare more accessible, convenient and personalized. They potentially lead to longer, healthier lives, but are also reshaping professional liability, regulatory exposure, and the traditional insurance landscape. For brokers, the need to recognize where standard coverage falls short has never been more important.

Innovation Meets an Aging Population

Canada’s population is aging, with Stats Canada projecting that nearly one in four Canadians will be 65 or older by 2030. This demographic shift is creating an urgent demand for innovative solutions that make healthcare more accessible and convenient. Digital pharmacy platforms now deliver medications directly to patients’ doors, a trend accelerated by the pandemic. Remote monitoring devices allow seniors to manage chronic conditions without ever leaving their home. Telemedicine connects the elderly with healthcare providers without requiring a trip to the doctor’s office.

These innovations aren’t just convenient; they are essential. For an aging population facing mobility challenges and complex medication regimes, convenient access to medicine can make all the difference.

The Coverage Gap

While innovation is driving progress across the healthcare sector, these companies face unique risks that traditional insurance policies were never designed to address.

A company developing an AI-powered medication management app may not be adequately covered by a traditional technology errors and omissions policy. What happens if the algorithm fails and patient takes the wrong dose? What if health data is stolen because of a cyber breach? These companies require professional liability that extends to cover medical professional services, cyber liability, and regulatory defense coverage.

Most standard Tech E&O policies exclude or severely limit coverage for medical services, bodily injury, or regulatory violation, which is precisely the exposures these companies face daily.

Regulatory Complexity

Canada’s regulatory environment adds another layer of complexity. Health Canada is updating its approach to digital health products and software as a medical device. Privacy legislation is strengthening with updates to PIPEDA and new provincial laws. Provincial health regulators are grappling with telehealth oversight. Each regulatory change introduces new compliance obligations and potential liability exposures.

Specialized Support for Innovation Risks

Innovative companies require insurance partners with sector-specific underwriting expertise. Trinity Underwriting specializes in underwriting emerging risks across the Health Tech and Life Sciences sector and understands that a digital health company delivering medication management services isn’t just a “tech company” – it’s a healthcare provider that happens to use technology. Their insurance policy must reflect that reality.

The Industry Opportunity

Canada’s innovation economy is reshaping expectations across the entire insurance industry. Fast-growing health tech companies need coverage that keeps pace with their risks, and they will invest in sophisticated solutions when the value is clear. This creates an opportunity for everyone involved, including insurers, MGAs, brokers, risk advisors, and clients.

Professionals who take the time to understand these sectors, ask deeper questions about operations and regulatory obligations, and think beyond traditional products will effectively bridge the gap between emerging technologies and insurable risk. This will enable them to support clients through growth and evolving exposures.

Canada’s aging population will continue driving demand for innovative healthcare solutions. The companies transforming how Canadians access medicine need insurance partners who understand their mission. Traditional coverage is no longer adequate and insurance professionals who recognize this reality will define the future of commercial insurance in Canada.

November 24, 2025
How can brokers support customers in mitigating cyber risk?
Everett McCallum,
Director, Technical Risk Services,
Echelon Insurance

Canadian businesses, regardless of size, are facing a surge in cyber threats. In 2023 alone, one in six businesses in Canada fell victim to a cybersecurity incident, exposing them to the potential for financial losses, reputational damage, legal liability, and operational disruptions. Cyberattacks are growing in both frequency and sophistication, with the average cost of a data breach in Canada now surpassing $6 million, according to a recent IBM report. In today’s volatile digital landscape, businesses must go beyond reactive measures and adopt a proactive approach to cybersecurity. Brokers are uniquely positioned to guide business owners through today’s complex risk landscape. By helping clients understand emerging cyber threats, implement preventative strategies, and secure the right coverage, brokers play a key role in building long-term resilience for Canadian businesses.

Common cyber threats businesses face

The spectrum of cyber threats is broad and constantly shifting. Some of the most prevalent types include:

Malware, including ransomware, spyware, and worms, can steal or destroy data and shut down systems.

Phishing, whether through emails, texts (SMiShing), or voice calls (Vishing), is designed to deceive employees into handing over credentials or clicking malicious links.

Denial of Service (DoS) attacks overload a company’s networks, causing operational shutdowns.

Website defacements and QR-code-based ‘quishing’ are newer tactics that disrupt branding and redirect users to dangerous sites.

Each of these threats can seriously compromise a business’s systems, data, and reputation.

Prevention starts with awareness and action

Many small and medium-sized businesses commonly believe they’re too small to be targeted. However, their limited information technology (IT) resources make them prime candidates for an attack.

Business owners should consider adopting core cyber hygiene practices, including, but not limited to:

Regular data backups and encryption.

Automatic patching of software and devices.

Anti-virus and firewall protections.

Two-factor authentication.

Employee awareness training, especially on identifying suspicious emails or links.

Mobile devices, portable media, and cloud services also require proper security and monitoring. Business owners should ensure strong access control policies are in place, which includes regularly evaluating who or what systems have access to their data.

Response and recovery planning

Even with robust safeguards, no business is entirely immune to cyberattacks. That’s why having a cyber incident response plan is just as important as prevention. Business owners should consider the following strategies as part of their cyberattack response plan:

Establish a process to identify and prioritize critical systems and data.

Create a cross-functional incident response team.

Develop clear communication protocols for internal and external stakeholders.

Monitor systems for early warning signs of an attack, such as unusual logins or changes to files.

Recovery plans should be regularly updated to include timelines, testing protocols, and procedures for returning systems to full operational status.

The role of cyber insurance

Beyond covering direct financial losses from cyberattacks, strong policies can also provide access to expert support in the event of an incident, from IT forensics to legal counsel and public relations.

Brokers play an important role in ensuring that their customers not only have appropriate coverage but also understand what their coverage entails. Together, brokers and their customers should discuss potential gaps, clarify policy terms, and walk customers through scenarios to ensure their operations are adequately protected.

When evaluating their needs, business owners should work with their broker to consider incident response and recovery costs, data breach liability, business interruption losses, and cyber extortion (also known as ransomware).

How can brokers help support business owners in mitigating cyberattacks?

Brokers don’t need to be cybersecurity experts to make a meaningful impact on risk mitigation. Simply starting the conversation about a business’s cybersecurity needs can go a long way. Brokers should work collaboratively with insurers to leverage loss prevention expertise and educational materials to support their customers in understanding the myriad of cyber threats and proactive strategies to mitigate an attack. Brokers can also help identify comprehensive coverage options that align with their customers’ unique needs when reviewing insurance needs annually or more regularly as needed.

As cyber threats become more aggressive and sophisticated, ensuring that commercial customers have a robust cyberattack response and mitigation plan, access to education, and coverage tailored to their unique needs can significantly reduce their exposure.

Copyright © 2025 Echelon Insurance. All rights reserved. This guide is provided by Echelon Insurance (“we”) for general information purposes to help Brokers and their commercial customers understand the types of cyber security risks they may be exposed to and how they may enhance their protection and loss prevention. While we endeavour to be accurate and up to date, this information is provided “as is” and we cannot guarantee it is complete or that implementing the recommended loss prevention measures will have the desired results.

® Registered trademark of Echelon Insurance.
November 17, 2025