Board of Governors - APPENDIX III, Annex 5 - September 23, 1999

Type 4 Research Institute Proposal

Institute for Catastrophic Loss Reduction (ICLR)


This is a request for approval to establish the Institute for Catastrophic Loss Reduction in partnership with the Insurance Bureau of Canada.

The proposal outlines the purpose, form, function, roles, budget, and financial resources of this proposed Type 4 research institute.

Executive Summary

The Institute for Catastrophic Loss Reduction (ICLR) is the first partnership in the world between academia and industry to comprehensively address catastrophic loss reduction. This joint initiative between The University of Western Ontario (UWO) and the Insurance Bureau of Canada (IBC) will be a unique, world-leading centre for research into mitigating natural hazards.

The mission of this multi-disciplinary project is to reduce loss of life and property. We will accomplish this goal by identifying and supporting sustained actions that improve society's capacity to adapt to, anticipate, mitigate, withstand and recover from natural disasters. Research at the ICLR will lead to safer communities. Our work will focus on mitigation--reducing the human and economic cost of natural hazards, before they become disasters. We will discover new techniques and influence policies that will protect the life and property of Ontarians, and potentially all Canadians.

We wish to establish the ICLR as a Type 4 Research Institute with its own identity, staff and funding.. The relationship between UWO and the ICLR will be defined in an affiliation agreement. The ICLR will also be affiliated with The Insurance Bureau of Canada. Both partners will provide funding. Governance will be handled by a Board of Directors composed of insurance industry and UWO members. UWO's financial participation will be mainly via in-kind contributions of time from participating researchers.

The IBC already committed to the ICLR by starting up a Toronto operation in January 1998; once the ICLR is operating at UWO, both locations will become part of the same legal entity. A Board of Directors has been established, including five insurance industry CEOs and an Executive Director (Paul Kovacs, Vice-President of the IBC). Three UWO people will complete the Board, to be named by the President and Vice-Chancellor. Suggested appointees include: Dr. Alan Davenport as ICLR Research Director, one of the two new industry Chairs, and the Vice President (Research).

The ICLR will coordinate research, facilitate partnerships and accelerate discovery. The IBC brings a comprehensive perspective of the insurance industry's day-to-day business of responding to claims. As our key partner, the IBC will turn academic research findings into practical, life- and money-saving policy and practices. Industry partnership clearly heightens the ICLR's profile, enhancing its ability to attract external funding. Partnerships will also be made with key federal organizations such as Emergency Preparedness Canada and National Research Council.

Two industry Chairs, strong leaders and mid-career individuals who have established a national and international reputation, will be hired to create a synergistic network of academic expertise and expand the breadth of ongoing research. These individuals will mentor emerging researchers who have demonstrated excellent scholarship but are seeking partnership in large projects to accelerate their development. Both Chairs will hold an initial term of five years commencing September 1, 1999, renewable for subsequent five-year periods. Successful candidates will be responsible for some teaching duties and grad student supervision.

Dr. Alan Davenport, the Institute's Research Director, brings immediate international prestige to the ICLR. He will bring together active teams at UWO who currently are working in isolation on problems relating to natural disaster risk and reduction. Dr. Davenport will establish the ICLR at UWO and mentor the two new industry Chairs. After a transition period of three years, one or both of the Chairs will assume the role of Research Director(s), and Dr. Davenport will take a key position on the ICLR's Advisory Council, to be appointed by the Board to provide advice on overall research direction. A Managing Director (already hired) will direct day-to-day business at the Toronto operation and act as industry liaison.

The Chair in Severe Weather and Earthquakes will extend Western's outstanding reputation for research and industrial applications in the areas of wind, water and seismic motion. Initial research activities will include windstorm research, hazard assessment, and risk assessment. Partnership with the IBC presents a valuable opportunity to create a risk assessment system tailored to the Canadian context. Using a 'real event' database being compiled by the IBC, this research will combine physical and socioeconomic data with powerful analytical tools to generate outcome data which can be used to design intervention/mitigation measures to create safer communities (ex. establish priorities for retrofitting existing structures/buildings).

The Chair in Policy for Catastrophic Loss Reduction will be a senior social scientist responsible for implementing the larger vision of ICLR as the hub for catastrophic loss reduction studies in Canada. This individual's primary role will be to coordinate a network of experts in Ontario, nationally and eventually worldwide with a focus on hazard mapping, public policy, and emergency management. Existing and potential partners in Canada include:

Existing and potential international partners include:

This nucleus will identify and conduct multidisciplinary, applied research into one of Ontario's most pressing problems. The two Chairs will also foster a network of key industry and academic partners. With consolidated expertise in place, the ICLR will make great leaps forward: it will be the catalyst for new research, new partnerships and new funding opportunities, attracting and keeping the best researchers in Ontario.

Budget estimates include provision for graduate students, research assistants, technicians and administrative support staff. The IBC member companies, our private sector partner, have committed $2.5 million over 5 years towards the ICLR in cash and in-kind support. The University of Western Ontario has committed $2.5 million in in-kind support. The Ontario Research and Development Challenge Fund has agreed to contribute a further $2.5 million. A key objective of the ICLR is to generate additional funding sources, and all parties are confident that the ICLR will become self-sufficient within 5 years.

The Memorandum of Understanding

BetweenInsurance Bureau of Canada, a division of Insurance Council of Canada

and The University of Western Ontario

I. Purpose

The purpose of this Memorandum of Understanding is to establish a working relationship between the Insurance Bureau of Canada, a division of Insurance Council of Canada (IBC) and The University of Western Ontario (UWO).

II. Insurance Bureau of Canada (IBC)

The Insurance Bureau of Canada (IBC) is the national trade association representing Canada's property and casualty insurance industry. IBC works to establish and maintain the industry as an important and positive force in the economic and social structure in Canada. IBC is a division of the Insurance Council of Canada.

III. The University of Western Ontario (UWO)

The University of Western Ontario (UWO) is one of Canada's oldest and most prestigious universities. Since 1878, UWO has focused on quality academic programs and promoting innovative research. UWO has a strong background in engineering, natural sciences, business administration and social sciences.

IV. Methods of Co-operation

Co-operation and co-ordination between IBC and UWO shall be maintained at a level that ensures maximum efficiency and use of the resources of each organization and is consistent with the principles of each. In order that IBC and UWO can work in harmony toward mitigation of the human and economic cost of natural hazards and other issues important to both, the organizations agree to the following:

(1) IBC shall incorporate a corporation under Part II of the Canada Corporations Act under the name of Institute for Catastrophic Loss Reduction/Institut De Prévention Des Sinistres Catastrophiques ("ICLR"). The Letters Patent and the By-Law of ICLR shall be in form and substance satisfactory to both IBC and UWO, each acting reasonably. These documents shall provide for the governance structure outlined in Schedule "A" hereto, with such changes or additional elements to which UWO and IBC may mutually agree.

(2) IBC and UWO agree to work together through ICLR to reduce the loss of life and property resulting from severe weather and earthquakes in Canada, as outlined in the "Institute for Catastrophic Loss Reduction" proposal which was approved for funding by the Ontario Research and Development Challenge Fund and a copy of which is attached hereto as Schedule "B"(available on request).

(3) IBC and UWO will work to complete a mutually agreed upon Affiliation Agreement that will govern their collective efforts involving ICLR. The parties to the Affiliation Agreement shall be ICLR and UWO. The Affiliation Agreement shall be in form and substance acceptable to each of IBC, UWO and ICLR, each acting reasonably, and shall include the following:

- the mission statement of ICLR and rationale for its creation;

- the agreement that the ICLR shall recognize the responsibility and authority of UWO for academic appointments, granting of tenure, and the assumption of obligations, rights and privileges of University appointments in accordance with the policies of UWO with respect to such matters;

- the agreement that all academic research shall be subject to peer review or the equivalent thereof, provided that this proviso shall not apply to industry-specific research;

- all funding provided by the Ontario Research and Development Challenge Fund to the ICLR project, as well as the contributions of UWO and IBC referred to in the proposal attached hereto as Schedule "B", shall be used exclusively for Project Eligible Expenses in accordance with the terms and conditions of the ORDCF Grant Agreement between Her Majesty the Queen in Right of Ontario and UWO dated May 1, 1999 (the "Grant Agreement");

- The respective roles and responsibilities of the Research Director and the Managing Director of the ICLR;

- the acknowledgment by IBC and UWO of the right and obligation of ICLR to develop, define, and apply a scientific and administrative policy and activities on its own and separate initiative and under its own and separate authority, as it deems appropriate, to fulfill its mission and achieve its objectives;

- the creation and mandate of the Research Committee, to have responsibility for setting the research agenda for academic research (which shall not include industry-specific research unless the board of directors of ICLR otherwise determines by resolution) including evaluating, approving, monitoring and ensuring the standards of all academic, peer-reviewed research projects, co-ordinating the research portfolio and funding, and making recommendations to the Board of Directors of ICLR; for approving and recommending to the Board of Directors the research budget and for maximizing the allocation and use of research resources; such Research Committee is to be composed of 3 individuals appointed by UWO, 2 insurance industry representatives and 2 non-insurance industry representatives or such other number as the Board of Directors of ICLR shall determine by resolution, provided, however, that in no event shall insurance industry representatives constitute a majority of the Research Committee members;

- an employment policy and recruitment policy which will provide, among other things, for all scientific personnel whose salary and benefits are provided principally by ICLR to be legally employed by ICLR, which will be responsible for paying all salaries and benefits of such personnel and form of the process of recruitment, selection, promotion and termination of employment; all scientific personnel whose salary and benefits are provided partly or only by the ICLR but who have joint status or functional responsibilities associated with UWO, to involve the participation of representatives of UWO;

- the creation and mandate of a committee on intellectual property, responsible for developing a policy on intellectual property for ICLR, and for ensuring the policy is compatible with those of potential research partners at UWO.

(4) IBC and UWO will work co-operatively on natural hazard mitigation and other issues of shared interest, within the objects of the letters patent of the ICLR.

(5) IBC and UWO will work together from time to time on mitigation and other projects that are developed within the Mission of the ICLR.

V. Implementation of Memorandum of Understanding

This Memorandum of Understanding shall be implemented through the Affiliation Agreement, any agreement required by the Grant Agreement regarding funding of the ICLR Project, and other agreements that describe general activities, and project descriptions that describe focused activities. This Memorandum of Understanding does not constitute an agreement for any appropriated funds; if there were to be an obligation, it will be found in the Affiliation Agreement and other agreements referred to above. All such agreements, when executed and delivered, shall replace and supercede this Memorandum of Understanding.

IBC will inform its Board of Directors and UWO will inform its Board of Governors of this Memorandum of Understanding through their usual communication devices. This Memorandum of Understanding becomes effective on the date of execution and shall remain in effect unless terminated by written notification from either party to the other.

Signed by:

INSURANCE BUREAU OF CANADA, a division of Insurance Council of Canada

Paul Kovacs, Vice President, Policy Development Vice-President (Research)


William A. Bridger, Vice-President (Research)



(a) Board of Directors:

- a majority of directors shall be insurance and re-insurance industry members;

- 3 - 10 directors shall be elected from insurance and re-insurance industry members; 3 directors shall be nominees appointed by UWO

- shall supervise management and affairs of ICLR, including setting broad policies for the research and ancillary activities of ICLR;

- shall approve budgets;

- shall develop external relations with industry.

(b) Membership:

- Members - insurers and reinsurers licensed to carry on the business of general insurance, whose application for admission as "Members" is accepted by special resolution of the Board; Members are to pay assessments, based on formulae to be established in the by-laws and subsequently by resolution of the Board;

- Associate Members - organizations which are not insurers or reinsurers or associates or affiliates of insurers or reinsurers, whose applications for membership as "Associate Members" are accepted by resolution of the Board; the fees payable by such members are to be determined by resolution of the Board; such Associate Members will have no liability for any assessment of Members;

- Affiliate Members - organizations which are not insurers or reinsurers or associates or affiliates of insurers or reinsurers, or Associate Members, whose application for membership as "Affiliate Members" are accepted by resolution of the Board - UWO may be an Affiliate Member; the fees payable by such members are to be determined by resolution of the Board; such members will have no liability for any assessment of Members.

(C) Officers:

In addition to the Chairman and Secretary there shall be an Executive Director, who shall have the duties and responsibilities as specified in the by-laws and by Board resolution.

Key Terms Covered in Bylaws

Key Terms for Inclusion in Affiliation Agreement between UWO and ICLR

The following matters will be covered in the Affiliation Agreement:

* IBC advised that IBC does not wish to be a party to the Affiliation Agreement, but needs to be aware of its terms. Thus any provisions relating to IBC's funding obligations will be dealt with in a separate agreement between IBC and UWO, which in any event is required by the terms of the ORDCF grant agreement


The following research program will lead to information and applications which will enable us to make communities safer. The topics selected reflect research capabilities existing at Western or at a research partner.

Severe Weather and the Built Environment

The principal source of insurance losses from natural hazards in Canada is severe weather - windstorms of various kinds including hurricanes, tornadoes, and thunderstorms - as well as snow, ice and flooding.

Wind Storms

Buildings, both low and high rise, houses, bridges, towers, chimneys, transmission lines, and other structures are all vulnerable to severe wind storms. The magnitude of the forces they must withstand are determined by a chain of factors, in particular - the climate of the wind and the type of storm, the exposure (the topography and the terrain), the aerodynamic shape, as well as the strength characteristics of the structure. Some structures are responsive to dynamic effects and resonate in the wind.

The boundary layer wind tunnel laboratory has been in the forefront of research on these topics and has been an international leader. It has effected a number of break throughs, which have led to improvements in the description of wind forces and their code definition. Additional work is needed and would be cost effective. Highly relevant are:

1. The determination of the intensity and spatial structure of tornado wind storms making use of recent Doppler radar and satellite data. This is particularly important in evaluating loading on transmission lines. The feasibility of constructing a "tornado tunnel" (paralleling the development of the boundary layer wind tunnel in the 1960"s for "straight line winds") should be considered for vortex flows.

2. The assessment of ice loading on transmission lines should be studied. This should included the combined action of wind with ice in causing "galloping vibrations" of the conductors - a phenomenon which produces large amplitude motions and dangerous vibrations.

3. The drifting of snow on roofs. This is a subject which is already under investigation in the BLWTL. Further work is needed to establish patterns and snow load standards for codification.

4. Estimation of the vulnerability of structures such as large span roofs and arenas of snow loading is needed. This should be accompanied by an assessment of the "snow hazard" in the regions of Canada. The boundary layer wind tunnel laboratory has already carried out pioneer research in this area.

Seismic Loading

Several regions of Canada are threatened by earthquake loading, in particular the West Coast of

British Columbia and the St. Lawrence. The risks and vulnerabilities of seismic loading have been discussed by the Insurance Bureau of Canada. The catastrophic nature of these hazards needs further exploration and interpretation. Western has already made significant contributions to the seismic zoning and risk mapping of Canada and elsewhere, as well as the dynamic response to seismic shock of structures and foundations. It has collaborated with other active partners.

Structural retrofitting

The retrofitting of existing structures to meet upgraded standards is needed in earthquake, wind as well as snow loading. The purpose of this is to define cost-effective methods for strengthening structures and modifying building codes.

Damage investigation

Arrangements are being made with the Institute for Research in Construction and the National Research Council to establish a network of experts to investigate natural disasters when they occur to obtain the perishable evidence which could indicate the deficiencies and failure mechanisms of structures or their survival mechanisms.

Landslides and Avalanches

Regions vulnerable to these hazards should be identified.

Vulnerability to housing to wind story and earthquake loading

A major cause of disasters is the failure of housing. There is a need to establish better knowledge on the failure mechanisms of housing and to investigate the advantages to insurance and standards of construction of a graduated scale of resistance to natural disasters.


Definition of the 100-year flood plain of a large river is not a straight forward matter and requires clear understanding of both the hydrological features of the river and the distribution of rainfall. Legislation is needed to enforce the limits of safe construction.


Communication systems are of critical importance during a natural disaster storm in the system of communications. Methods of communication during a natural disaster in conjunction with GIS networks can provide important information on the serviceability and safety of key facilities such as hospitals, bridges and highways and utilities.


Warning systems are becoming increasingly sophisticated and can save lives but not necessarily, property. Networks of seismographs offer the promise of almost instantaneous warnings of the functionality of critical infrastructure.


The economics of natural disasters are not well understood and are fundamental to the effective investment of disaster prevention measure. Policy for developing reserves to offset infrequent catastrophes is essential and can be critical to the development of sound fiscal measures.

Local Government

There is a great need for local government and municipalities to be fully conversant with disaster mitigation measures and to provide leadership. Planning issues such as the installation of kerbs and gutters can seriously aggravate the storm water run off leading to potential flooding. Control over building in flood plains needs to be controlled at the local level. The administration of law and order has to be initiated at the local level.

Business Management

Manages of corporations and other large organization carry considerable responsibility in preventing losses and injury. The attitudes toward safety in the workplace were formed at work and very often carry over to awareness at home.


How victims of natural disasters are injured or killed in natural disasters can be of importance in developing stronger houses and protective systems.

Case Studies

Case studies are a powerful tool for teaching how to prepare for natural disasters and mitigating their effect. The Ivey School of Business has considerable experience in the preparation of case studies for classroom use. These cases could be used in a variety of courses in Business, Engineering and Geography to create awareness of decision making, risk taking and preventive measures.

June 21, 1999