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The recent outages from Rogers Communications Inc. resulted in some small businesses losing thousands of dollars. Many fear the telecommunications giant will not fully compensate them sufficiently for lost revenue. When businesses are reliant on telecom companies to perform daily transactions, what recourse is there when service outages occur? We look at the business interruption from the Rogers service outage, what the government plans to do to address this issue, and how your insurance can help assist you when it does.

What was affected by the Rogers service outage on July 8, 2022?

  • On July 8th, Rogers’ cellphone and internet services suddenly stopped working, leaving almost 12 million Canadians disconnected from the world. The widespread disruption paralyzed communications across a number of sectors. This includes healthcare, law enforcement and the financial industry. And it wasn’t just Rogers’ direct customers who were affected. Interac’s debit system for e-transfers and retail payments were out of commission for most of the day. Additionally, clients were unable to access emergency services.
  • Small business owners were among those hardest hit by the outage, which left them unable to process debit card payments. Many shop owners needed to turn customers away that could not pay with cash. The outcome was a loss of orders placed and on-site sales. Several owners lost revenue as many customers went in search of another place to work from. For example, because a café’s Wi-Fi was impacted by the service outages, they may not be able to recoup what was lost from people who would have lingered at the café longer had there been internet.
  • Travel was also interrupted by the outages. Many people even found it difficult to go to work, as fuel stations that rely on Interac only accepted cash. Typically, many gas stations make it a policy not to accept $50 and $100 bills due to counterfeit notes. The disruption also made transport and flight bookings more difficult at the height of the summer travel season. Travel agencies found themselves with their hands tied, being unable to assist customers with their bookings.

Weighing up the damage of Business Interruption

One thing to keep in mind is whether your business actually had income loss, or just a delay in income. According to Rob De Pruis, National Director of Consumer and Industry Relations at IBC, “This outage in many areas was [for] a fairly short period of time. So, if you have specific products or services, it’s not like your customers can go across the street to get these same products and services, because the outage was pretty widespread. If you were up and running the following day, you might still be getting that business, it just might be a day or two later for some people.”

It’s important to take a look at your business. Just because you weren’t able to do transactions that day doesn’t mean that many of your customers won’t come back. However, it doesn’t guarantee it, either. Adjusting firm Crawford and Company Canada reports it has yet to see any business interruption claims arising from the service outages, but it doesn’t make it impossible.

Proactive prevention solutions for future service outages

This outage provides a strong argument as to why you should develop a comprehensive risk management strategy for your business. As the outage proves, we are heavily reliant on technology for most aspects of our daily lives. It is important for business owners to understand all of the risks that their operations can be faced with. Educating yourself about what options are available to you and your business is important in order to access appropriate coverage. Making informed decisions on your insurance purchases is critical to ensure that you’re protecting your business adequately so that when outages occur, you’re able to continue your operations.

Government response to Rogers service outages

As this is Rogers’ second significant outage in 15 months, issues of oversight need to be addressed. With Rogers, Bell and Telus controlling 90% of the market, the Rogers deal to acquire Shaw can make things potentially worse for customers. To complicate the equation further, Rogers, Shaw and Quebecor Inc. are widely expected to reach a definitive agreement to have Quebecor Inc. purchase Freedom Mobile in a $2.85 billion dollar deal. The companies assert that their deal will effectively keep alive a “strong and sustainable” fourth wireless carrier in Canada. How? Because the deal will expand Quebecor’s wireless operations nationally.

Because outages affect Canadians, businesses and services across the country, the federal government wants to ensure business interruption from Rogers, or any other provider, never happens again. The House of Commons Industry Committee agreed to study the outage that lasted more than 15 hours. The committee will hold at least two meetings by the end of the month and invite officials from Rogers, the Canadian Radio-television and Telecommunications Committee and Industry Minister François-Philippe Champagne to testify. Industry Minister François-Philippe Champagne mandates that the country’s telecommunications companies come up with formal agreements to help each other — and consumers — during a serious network disruption. The CRTC will also conduct a formal probe into the outage. The Federal government says that it will require all of the formal tele service providers (TSPs) to sign formal agreements to address network resiliency.

The CRTC will ask TSPs to do three things:

  1. Provide “mutual assistance” in case of service outages.
  2. Reach an agreement on emergency cellphone roaming.
  3. Have a communication protocol to better inform Canadians during emergencies.
FYI: Telecom companies already have informal agreements to help each other.

Telecom companies are to come up with a plan within the next 60 days to ensure the business interruption from Rogers Communications last week doesn’t happen again. “I think it’s time that regulators — and this includes Industry Canada, the CRTC and the Competition Tribunal — begin to insist on proper, robust, independently-audited internal controls, so that you don’t have service outages like this,” says Dan Kelly, President and Chief Executive of the Canadian Federation of Independent Businesses. He feels business owners should be given a free month of Rogers services to make up for the outage that came as companies are still recovering from the COVID-19 pandemic.

How your insurance can protect against lost revenue

Despite Interac payment systems and phone lines being down, most businesses still needed to operate. However, they will not have insurance coverage for any type of income loss as a result of the Roger’s outage. According to Rob de Pruis, “A standard insurance business interruption policy is triggered by damage caused by an insured peril. So, think of a fire or an explosion or wind damage that causes your business not to be able to function.” With an outage on its own like this, there is no physical damage to the property. Therefore, there won’t be any type of trigger that will apply to losses to your business as a result of outages.

Business Interruption endorsement

Some policies can include a business interruption endorsement.  A BI endorsement covers damage to property, losses in income, and extra expenses that can happen during a utility failure. This type of insurance coverage can help you be prepared for the unexpected. It can help your business:

  • Prevent loss of income if your business cannot operate
  • Protect yourself from financial obligations that do not stop, even though your business is closed due to a loss, including bills and lease payments
  • Extra expense coverage is available to pay for additional costs in excess of normal operating expenses, such as relocation expenses

Business Interruption insurance can be included in your commercial property insurance or offer it as an add-on to your base policy. The bottom line is most businesses will not have insurance coverage for any type of income loss for business Interruption from the Rogers service outages without a Business Interruption endorsement. Speak to one of our isure representatives today to learn more about this endorsement!

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