IBC issues bulletin to insurers about notification requirements, AB payments in anticipation of possible postal strike

IBC has issued a legal bulletin providing information to insurers about handling notification of policy terminations, as well as payment of accident benefits claims, in the event of a possible postal strike.
Canada Post and the Canadian Union of Postal Workers have failed to date to negotiate a new collective agreement, meaning Canadian postal workers will have a right to strike as of May 24, 2011.
“As a result of the possible mail strike, a number of members have expressed concern as to the correct method of canceling policies of insurance in mid-term and delivery of accident benefits payments,” according to a ‘Legal Bulletin’ issued by the Insurance Bureau of Canada to its insurance company membership.
Legislation requires policy terminations to be done according to certain methods and specified timelines, the IBC notes in its bulletin, dated May 11, 2011. A postal strike may limit these notification options.
For example, “the only permitted methods of canceling [a policy] are by registered mail or by delivering written notice of termination personally,” the IBC’s legal bulletin says. “The mail strike removes the option of cancellation by registered mail.
“Even if the strike is on a rotating basis, cancellation by registered mail would be risky, since the 15 days notice period commences on the date following receipt of the registered letter at the post office to which it is addressed. There could be significant delays before the letter reached that post office.”
Another method of cancellation is by personal delivery.
“It is recommended that if cancellation be necessary, the person who affects the personal delivery prepares an affidavit of service as evidence that the notice was delivered,” the bulletin says. “Note that delivery must be made to the named insured.”
The bulletin goes on to note insurers in Ontario (as required in s. 236 of the Insurance Act) must give 45 days of written notice to brokers (30 days of written notice to the insured) if the insurer does not intend to renew an insurance contract, or renew on varied terms.
“Since failure to comply with these requirements results in the contract of insurance remaining in force until there is compliance, members might consider using couriers to deliver the required written notice,” the bulletin says. “It would be prudent to keep proof of delivery on file.”
The bulletin also provides information about handling payment of accident benefits claims in the event of a strike.
“The mail strike would also cause some disruption of the payment of accident benefits to insureds where accident benefits cheques are mailed,” the bulletin says. “We recommend that companies consider some alternative for getting these payments to their insureds.
“Possible alternatives would be direct deposit of the accident benefits payment into the insured’s bank account, or for the insurer to courier the accident benefits cheque to the insured’s agent or broker for pick-up by the insured at that location, if access to the agent or broker would be easier.”