Daily News Alerts

Underfunded Plans Addressed

A research paper by the Canadian Institute of Actuaries asks if there is a better approach to addressing underfunded pension plans. ‘Protecting Pensioners of Traditional Defined Benefit Plans: A New Approach to Solvency Funding and Benefit Reductions on Plan Wind-up’ says the current system for winding up underfunded defined benefit pension plans involves dividing the segregated pension fund among all plan beneficiaries on a pro-rata basis according to the value of their pension entitlement. This means that if the available funds represent, for example, only 90 per cent of the value of the collective promises, then each beneficiary sees a 10 per cent reduction in their pension. The paper suggests that retiree pensions would be better protected if the solvency funding regime framework and the benefit reduction rules on wind-up recognized the premise that younger workers can tolerate greater risk and have more opportunities to recover from pension losses. As workers age and, in particular, after workers retire, they can tolerate less risk since there is much less time and many fewer options available to remedy the negative impact of lost pensions. Defined benefit pension plans sponsored by a single employer are becoming less prevalent in the private sector as they give way to other arrangements involving fewer guarantees and less risk on the side of the employer. However, for those that remain it calls for changes to solvency funding rules to target different solvency ratios for different categories of members and to determine different ‘tolerable’ cutback levels in case of plan wind-up. As well, new risk sharing measures are needed to reflect different risk levels tailored to different age groups.

Ransomware Pressing Cybersecurity Issue

One of the most pressing and top of mind issues in the security and insurance worlds is ransomware, says Claudiu Popa, security, privacy, and cyber-fraud risk advisor and CEO of Informatica Corporation. Speaking at the ISCEBS Toronto Chapter’s ‘Cybersecurity Risk ? It's an enterprise risk that extends beyond the IT Department!’ session with Patrick Bourk, senior vice-president – national cyber practice leader at HUB International Canada, he said it is no longer just the purview of techies and nerds. “Now there's really no barrier to entry. Anybody can sign up for and receive a dashboard the same day with an investment of less than $500,” he said. Up until about 2018, “we could still count around on our two hands the ransomware families that would be offshoots of one another. Nowadays, we're seeing hundreds and potentially 1,000s of variations of ransomware and each one has its particular quirks and each one has its weaknesses,” said Popa. And when it comes to data breaches, they are not necessarily caused by cyber criminals, but can simply be about user error. “It doesn't have to be a rogue employees, it can simply be either a miscommunication or a misconfiguration of the system. In most cases, it tends to be a vulnerability that has been unpatched or has gone undetected,” he said. The most important thing is underwriters are “scrutinizing what your systems look like and there's pretty much zero tolerance for core risks,” said Bourk. Businesses have to be able to demonstrate that the business can restore information from backups quickly. They want to know if there is patch management and how regularly software that needs to be upgraded is. There’s lots more questions being asked in the application process. Cybersecurity policies are definitely worth having because for companies that don't have these policies, the costs will be astronomical. “There is a recognition that companies have to do their part to make sure that they're properly secured before they can get this coverage in place,” he said.

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