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2012-10-01

REGULATION

Ruling on catastrophic impairment overturned

The Court of Appeal for Ontario has sided with a claimant and against her insurer, Aviva Canada Inc., in her bid to have the injuries she sustained in a car accident classified as "catastrophic impairment."

The Appeal Court decision, handed down on September 17, overturns a ruling by the Divisional Court in 2011.

In Pastore v. Aviva Canada Inc., Anna Pastore was walking in November 2002 when she was hit by a car and sustained serious injuries to her left ankle. Failing to heal properly, Pastore had surgeries and an eventual right knee replacement when the pain changed her gait.

Pastore became "almost completely dependent on others for her most basic personal care needs."

In May 2005, she applied to Aviva Canada to have her injuries classified as "catastrophic impairment."

A designated assessment centre (DAC) review - based on a section of the Statutory Accident Benefits Schedule (SABS) - found she had catastrophic impairment "due to mental or behavioural disorder."

With regard to daily living, DAC concluded Pastore had "marked impairment" and an overall "moderate impairment" when considering the three other categories, namely social functioning, concentration, persistence and pace, and deterioration or decompensation in work or work-like settings.

Aviva rejected the assessment, leading first to mediation and then to arbitration.

At issue was if "marked impairment" in one category could lead to a catastrophic impairment designation.

The Divisional Court disagreed with the findings of both the arbitrator and FSCO delegate, each of which upheld the DAC assessments. The court determined SABS guides require all four categories to be considered for a catastrophic impairment injury. Ontario's Appeal Court determined otherwise.

CANADIAN MARKET

Investor group to buy Cunningham Lindsey

An investor group led by private equity firm CVC Capital Partners says it will acquire majority ownership in Cunningham Lindsey after a recapitalization agreement.

Stone Point Capital has had a majority ownership of Cunningham Lindsey since 2007, with Fairfax Holdings also retaining a substantial amount of the company. CVC reports both companies will remain "substantial and active shareholders."

In its own statement, Toronto-based Fairfax reports it will "effectively sell its interest in Cunningham Lindsey for proceeds of approximately $260 million." It will then invest $35 million of that into shares of Cunningham Lindsey.

Current CEO Philippe Bès will continue to manage the company with the rest of its existing management team.

The transaction is subject to regulatory approvals and other closing conditions.

New auto insurance plan announced

Mercedes-Benz Financial Services Canada has announced a new affinity auto insurance plan for drivers of the luxury brand's vehicles, what the company calls a first for all of Canada.

The First Class Insurance program was developed by Marsh Canada Ltd. and Aviva Canada Inc. The program is brokered by Marsh and serviced by OIS Ontario Insurance Service Limited and by Services D'Assurance Youville Inc. in Quebec.

It is underwritten by subsidiary companies of Aviva Canada, including Scottish & York Insurance Co. Ltd., Traders General Insurance Co. and Elite Insurance Co.

The program will be the only branded auto insurance program sponsored by a luxury auto finance company.

"The program was designed to protect our customers while providing a high-level of service that is truly commensurate with the Mercedes-Benz brand," Stefan Karrenbauer, the company's president and CEO, says in a statement.

Among other things, the new program includes preferred auto insurance rates; repairs done at a company-approved collision centres; and preferred residential insurance rates, including multi-policy discounts.

CLAIMS

FSCO awards medical marijuana costs 

A Financial Services Commission of Ontario (FSCO) arbitrator has ordered Personal Insurance Co. of Canada to pay a claimant monthly benefits to cover the costs of medical marijuana.

FSCO ruled in late July that T.N., who sustained catastrophic injuries in a car accident in 2000, will receive monthly payments of $567.70, starting March 27, 2007, attendant care benefits of $5,056.80 monthly from October 2000, and housekeeping and nutritional counselling services.

T.N. submitted that using medical marijuana was the only effective relief for her pain, anxiety and symptoms. The FSCO arbitrator determined Personal Insurance had not adequately shown that medical marijuana was experimental in T.N.'s case.

"This is a frustrating comment since it suggests that insurers must prove an experimental treatment is not effective, an almost impossible task," Talaal Bond, a partner at Miller Thompson LLP, wrote in a recent blog on the firm's website.

REINSURANCE

Wildfires, storm hit U.S., Canada: Report

The United States and Canada have had billions of dollars of damages from wildfires, storms and a hurricane in August, notes the Global Catastrophe Recap for August by Aon Benfield.

Claims from storm damages in the Calgary area will reach the hundreds of millions of dollars, after as much as six centimetres of hail hit parts of the region. In the U.S., total economic losses from Hurricane Isaac will reach the single-digit billions of dollars. As well, dozens of fires in Oklahoma also burned 110,000 acres of land and destroyed 603 homes in August, the report notes. More than 1,000 claims were made with payouts topping US$30 million, says the Oklahoma Insurance Department. Total economic losses could reach hundreds of millions of dollars, since 85% of the home damage was uninsured, it adds.

RISK MANAGEMENT

P&C should ready itself for weather trends

The property and casualty industry in the U.S. needs to be proactive in its catastrophe modelling and industry dialogue about climate change, Ceres reports.

By the end of 2011, the While 2012 has not been as and lend expertise to land use industry's net underwriting loss was $34 billion, notes Stormy Futures for U.S. Property-Casualty Insurers: The Growing Costs of Risks of Extreme Weather Events. While 2012 hasn't been as severe, recent disasters speak to a trend that has been growing over the last 30 years.

Ceres advises insurers to work with climate scientists to develop new modelling and lend expertise to land use planners. They also need to look at risk exposure based on emerging weather patterns, and update insurance pricing and underwriting of risks based on Cat trends.

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