As Paul McNulty, former US deputy attorney general, once said: “If you think compliance is expensive, try noncompliance.”
Factor into that the complexities of a global landscape and it can become quite the headache, requiring a blend of expertise, collaboration and an intimate understanding of local laws. Nancy Dorvil (pictured), head of property for Canada at Allianz Commercial, has spent her career addressing these challenges, particularly as companies expand their global footprints and face increasingly intricate property risks.
“Collaboration is key,” Dorvil told IB. “When it comes to managing a global program, there’s a lot of complexities, so we want to make sure that there’s this tripartite relationship between the insured, the broker, and the client to make sure that we properly understand what the exposures are.”
This emphasis on partnership is vital in navigating the varied regulatory environments that multinational policies must address, with Dorvil noting that “every jurisdiction has its own set of rules and regulations, and we need to be well-versed to understand the ins and outs of the coverage requirement, the taxes, the reporting standards – and that can vary widely from one jurisdiction to the other.”
“Failing to [comply] can really have important ramifications on our clients,” Dorvil said. “On a “best-case scenario”, we’re looking at hefty fines or impact on reputation, but it can go all the way to imprisonment in some jurisdictions, so it is quite serious. At Allianz, we’re able to issue policies in over 200 countries and territories, of which over 70 are Allianz-owned entities. This very extensive network gives us confidence that we’re well-versed in understanding the various landscapes that our clients operate in. We offer customized solutions to our clients that they can adapt to different situations. We can go from a fully integrated program, or we can support them if they choose to maintain standalone local policies.”
While Allianz centralizes much of the policy design to streamline processes, Dorvil acknowledged the need for local nuance. As she told IB, in order to remove that complexity, they opt to keep things centralized if that is what the client chooses to do.
“We can design and set the terms and conditions with our Canadian partners. Then we will communicate to the global partners in whatever jurisdictions our clients are operating in, providing them with those terms and conditions,” she said. “Even though managing risks across multiple regions can be complex, we aim to provide the same high-level quality of servicing and support wherever our clients operate. It’s about ensuring that all parties – clients, brokers, and insurers – are aligned and well-supported.”
The frequency of natural disasters is also having a huge impact on coverage, especially in regards to high risk properties. Data from the Insurance Bureau of Canada (IBC) found that 2022 witnessed insured losses reaching $3.4 billion, with 2023 following closely at $3.1 billion, marking a 50% increase over the yearly average. And this trend isn’t showing any signs of slowing down.
“There’s no denying that the frequency and severity of catastrophe (cat) losses has been increasing,” Dorvil said. “In fact, the five largest cat years in Canada have all occurred in the last decade. In 2024, Canada experienced its worst year in history, with close to $7 billion in cat losses.”
Major events such as hailstorms in Calgary and flooding in Toronto and Vancouver have significantly affected insurers, causing something of a ripple effect.
“After consecutive years of cat-related losses, capacity started retreating from the reinsurance market,” Dorvil said. “As a result, we saw attachment points increase, pricing rise, and capacity reduce. Consequently, a lot of those losses are being retained by the insurers. While we are starting to see capacity return within the reinsurance market, higher attachment points persist.”
And while Allianz is addressing these challenges with a focus on sustainability, some clients are also looking at exploring more niche solutions.
“Some are contemplating utilizing alternative risk transfer structures like integrated insurance deals,” Dorvil said. “Others are forming stand alone and cell captives to manage their cost of risk. We’re also investing in better catastrophe modelling, which helps us better understand and quantify exposure, enabling informed decisions about coverage. We focus on providing our reinsurance partners with accurate data, ensuring our valuation is adequate. This allows us to negotiate better terms and, in turn, offer optimal coverage to our clients.”
Inflation has only further compounded a complicated landscape, driving up the cost of losses.
“Inflation has certainly impacted the cost of losses, ” Dorvil said. “[However] one approach [here] is considering different risk transfer methods. Clients are looking at either increasing their retention or exploring alternative options to manage expenses more effectively.
“Risk improvement is another key strategy. When clients invest in their assets and implement high-priority recommendations, it can significantly improve their risk profile. We work closely with clients and brokers to identify these differentiators.”
But none of this would really be possible, or at the very least as efficient as it is, without implementing new technologies – specifically AI. Data from Statistics Canada found that AI adoption in Canada's insurance sector is currently at 10.9%. There is a strong trend towards increased implementation, with 70% of executives planning to deploy AI models utilizing real-time data predictions in the near future.
“By partnering with brokers or carrier engineers, our clients can enhance their data,” Dorvil said. “We’re leveraging AI to fill in gaps, ensuring a comprehensive representation of exposures. This allows us to respond faster, better, and more appropriately to risks. Ultimately, our goal is to balance sustainability and affordability, ensuring our clients are protected while managing the realities of rising costs.”
