Canadian Underwriter

Ontario auto claims adjusters need to take heed to Supreme Court ruling against Chubb: OIAA speaker

February 3, 2016   by Greg Meckbach, Associate Editor

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A Supreme Court of Canada ruling this past April means Ontario insurance adjusters need to examine all auto accident benefit claims they receive, even if their companies are not involved, an insurance lawyer suggested Wednesday.

A FSCO arbitrator ruled against Zurich. That ruling was reversed by the Ontario Superior Court of Justice - whose ruling was overturned by the Court of Appeal for Ontario

“If you get an OCF 1 and you are an auto insurer of any kind in Ontario, you have got to adjust the claim, do your priority investigation… and put those other insurers, whoever they are, on notice,” said Kadey Schultz, a partner with Schultz Frost LLP.

Schultz made her comments during a presentation at the Professional Development and Claims Conference, organized by the Ontario Insurance Adjusters Association (OIAA) and held at the Metro Toronto Convention Centre. She explained the significance of several court rulings in 2015, including a Supreme Court of Canada ruling – released in April – against Chubb Insurance Company of Canada.

In 2006, Sukhvinder Singh got in a single-vehicle collision involving a vehicle she rented, which was insured by Zurich Insurance Company. She declined to purchase a Chubb accidental death and dismemberment policy offered by the car rental company. But after the accident, she applied for accident benefits with Chubb, which denied her claim on the basis that its policy was not a motor vehicle policy. Zurich administered Singh’s claim on a “without prejudice basis” but argued before the Financial Services Commission of Ontario that Chubb should have administered the claim first.

A FSCO arbitrator ruled against Zurich. That ruling was reversed by the Ontario Superior Court of Justice – whose ruling was overturned by the Court of Appeal for Ontario.

The Court of Appeal for Ontario’s decision was divided. The Supreme Court of Canada ruled in favour of Zurich, citing the dissenting reasons written by Mr. Justice Russell Juriansz of the Court of Appeal for Ontario.

“If you ever touch a file that could involve a priority dispute, even if you don’t think it has anything to do with your company, you’ve got to adjust it and put the other insurer on notice,” Schultz said Wednesday at the professional development and claims conference.

In Chubb v. Zurich, the court found there was a “nexus” between Chubb and the claimant, even though the policy was AD&D, not auto. In 2012, the Superior Court of Justice ruled that Chubb was in fact an insurer for the purpose of Ontario’s “pay first dispute later” regulation. The court then referred the matter back to FSCO to determine the remaining issues on the priority dispute.

The “overriding public policy” in Ontario “is to provide timely delivery” of accident benefits to injured parties, Justice Juriansz suggested in his dissenting opinion – supporting the lower court ruling and ultimately adopted by Canada’s highest court. “That public policy would be seriously eroded by allowing an insurance company that writes motor vehicle liability policies in Ontario to argue, in a case in which the nexus test is satisfied, that it is a ‘non-motor vehicle liability insurer.'”

Another case of note, to Ontario auto adjusters, was a Divisional Court decision last July in Grigoroff v Wawanesa, Schultz said Wednesday.

Angela Grigoroff was injured in a motor vehicle accident in December, 2001. She received attendant care until the summer of 2003 and submitted a retroactive attendant care assessment in February, 2009.

Section 46 of Ontario’s Statutory Accident Benefits Schedule (SABS) stipulates that when amounts are overdue, interest is 2% per month compounded annually. In Grigoroff, the trial judge ruled that amounts were owed 10 business days after payments were found to be owing, but the Divisional Court allowed Wawanesa’s appeal, ruling that interest should not start to be charged until February, 2009.

“I don’t know if any of you are magicians, but I think it is very hard to know what is being claimed until it’s claimed,” Schultz said Wednesday. “I think it is really helpful when the claim is communicated to the insurer before the insurer should be paying the benefit, let alone the interest on the benefit.”

She suggested if Wawanesa had been unsuccessful, an attendant care claim of less than $40,000 could have cost the insurer hundreds of thousands of dollars in interest.

“I don’t have an investment portfolio that gives me anything like that,” she said. “As of June 1, interest will be a much bigger issue” due to changes to accident benefits that take effect for collisions occurring on or after June 1. Those changes include a reduction in the mandatory AB coverage that Ontario motorists must buy, as well as a change to the criteria for a catastrophic impairment.