Mitigating risk is always in fashion


Christopher Nadolny

Insurance Columnist

There was good news for the Canadian auto industry in 2015 as it continued to surpass financial expectations despite a growing number of global economic issues.

However, 2015 was also a year that highlighted the need for Canadian automotive dealers to stabilize their insurability and coverage costs for the future through strategic risk management and a reduction of their exposures.

With this in mind, dealers should embrace specific actions aimed at helping to control claims costs and ensure that the following preventive measures are taken.

-    Fire doors and fire shutters should be inspected regularly and always be in proper working condition.

-    Fire extinguishers and fire systems also require regular inspections to ensure equipment is ready when needed.

-    Ensure signs and light standards are secured and well maintained. No one wants the next high-wind event to shake a sign loose and cause injury or damage.

-    Keep drainage basins clear of debris to reduce the risk of flooding and subsequent frozen ice patches.

-    Snow removal plans should be ready for the first snowfall. A good snow removal plan will help reduce the risk of slip and fall injuries.

-    Remember to maintain temperatures in all buildings during closed periods over the holidays. This will help reduce the risk of frozen and burst pipes.

-    Your customers will usually bring their vehicles in for maintenance before winter weather starts and dealers should definitely service their own fleet at this time as well.

-    Promote defensive driving techniques. We want everyone to be safe and enjoy the holidays with family and friends.

Of special note is security. While we try to stay one step ahead of criminals, we can also often learn of the latest trends from actual claims activity. We are increasingly seeing the theft of vehicles even with electronic start systems.

To facilitate the copying of the vehicle’s electronic start code, the thief will use the key fob to start the vehicle a couple of times and electronically record the code with a computer or tablet device.

Thieves then return to the dealership and drive the vehicle away. One of the best ways to prevent this type of activity is going back to the basics in key control during a test drive and ensuring that the “customer” is not left alone with the vehicle.

Always maintain control of the vehicle key during a demo drive.

Beginning any test drive with the salesperson in the driver’s seat allows the customer to appreciate the ride of the vehicle while the salesperson points out the vehicle’s features.

The vehicle should be parked at a halfway point where the salesperson should remove the key and the customer should take the driver’s seat.

At this point, the salesperson can re-insert the key, if necessary.

When returning to the dealership, the vehicle should be parked in such a way that it will have to be moved again after the customer has left the dealership, thus reconfirming that a key switch has not taken place.

Ask your insurance broker for a test drive procedure checklist for further best practice advice.

Dealers should also review several of their internal documents to ensure they are up-to-date with current loss prevention best practice advice that may help prevent future claims. These documents should include, but are not limited to:
-    Employment manuals

-    Demonstrator agreements

-    Temporary substitute vehicle forms

-    Employment files

The Coverage and Protection (CAP) Dealer Insurance Solutions Program issues a complete internal risk control manual for its client dealers to use. We are also suggesting dealers consider the creation of emergency plans and that these plans be documented, discussed and reviewed on a semi-regular basis.

Your trusted risk management advisors at Marsh Canada would like to wish everyone a safe and happy holiday season. We look forward to sharing more insurance insights with you in 2016!

Christopher Nadolny is the national risk manager, CAP Program, with Marsh Canada Limited. Coverage and Protection (CAP) Dealer Insurance Solutions is an insurance program brokered by Marsh Canada Limited. For more information, reach him at 416-868-2748 or