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TORONTO-Canada is not the United States. But apparently not all underwriters recognize that fact.

That observation was voiced earlier this month during a session of the Canadian Risk & Insurance Management Society Inc.'s conference that discussed how Canadian risks differ from those in the United States and how many insurers treat them the same.

Canadian risk managers worry that if their risks are confused with U.S. risks, Canadian companies will pay U.S. rates for insurance. U.S. rates generally are higher than Canadian rates, said Michael Jakeman, vp-special lines for Royal Insurance Co. of Canada in Toronto.

For example, underwriters that know the Canadian market charge lower liability coverage rates there than in the United States, because fewer lawsuits are brought in Canada and high jury awards are less common than in the United States.

One reason insurers treat Canadian risks like those from the United States is the lack of liability loss data available in Canada, Mr. Jakeman said. But this information is readily available for the U.S. market.

"So if you are an underwriter faced with the lack of information on analyzing the liability tail, you tend to look at the U.S.," he said.

The result for Canadian companies is higher rates.

Companies in Canada also face a very different legal environment than those in the United States, where large verdicts are common.

In Canada, a $250,000 Canadian ($180,000) cap exists on non-economic awards, except for sexual abuse cases, Mr. Jakeman said. Juries are used less frequently in Canada than in the United States. When judges render a verdict, it's generally lower than a jury verdict.

Canadian litigation differs from the U.S. system in several other ways, Mr. Jakeman said:

The national medical insurance system eliminates the medical expense component of many suits.

Class actions are permitted in only three provinces, thereby reducing the potential for large verdicts.

Alternative dispute resolution is more common in Canada, and that also contributes to lower amounts companies pay as a result of lawsuits.

But the Canadian system is beginning to change. Recently, some Canadian juries have made large awards. "We are going the way of the States," Mr. Jakeman said.

One prominent example is an Ontario jury verdict for punitive damages of $1 million Canadian ($718,300) in January 1996. This came "completely out of left field," he said.

"The more conservative legal environment will be challenged," he added, due to the greater U.S. influence over the Canadian economy from the North American Free Trade Agreement.

Another reason Canadians are lumped in with the United States is size, said Chris Gudgeon, director, North American property division, Lambert Fenchurch Group P.L.C. in London. Non-Canadian underwriters sometimes view Canada as so small that it does not need to be viewed separately from the United States, so it is just folded into their U.S underwriting practices.

In Canada, "there is not enough business," Mr. Gudgeon said, describing it as a niche market. Consequently, London underwriters tend to look toward the United States to write large blocks of business. But, underwriters could generate a large amount of business in Canada by building long-term relationships with Canadian clients, he said.

Art Despard, senior vp with Aon Reed Stenhouse Inc. in Toronto, said Canadian companies should seek an underwriter familiar with the Canadian market. "Otherwise, you will get the U.S. rates," he said.

There is a difference between a risk in Texas and one in Canada, "and you have to sell that difference," he said.

Glenn Leroux, assistant vp-risk management at George Weston Ltd. in Toronto, moderated the session.