Ontario arbitrator orders insurer to produce reserve information to claimant

An Ontario arbitrator has ruled that there is “no protected zone of privacy for adjusting a first-party insurance file,” and thus ordered an insurer to provide reserve information to a claimant pursuing a bad faith claim against it.
Analysis of the decision appeared in the Summer 2009 edition of e-counsel, a quarterly newsletter published by Dutton Brock LLP.
In Uka and Aviva Canada, a Financial Services Commission of Ontario (FSCO) arbitrator considered the issue of whether a claimant was entitled to receive reserve information in support of a claim of bad faith made against Aviva Canada.
“Aviva argued that the reserve information was not relevant and that to provide reserve information was misleading, as reserves consider non-benefit expenses such as legal costs,” the Dutton Brock newsletter says. “It is unclear from the decision whether Aviva made any submissions on the issue of privilege.”
The claimant, on the other hand, said the reserve information was relevant to his case. He argued that “the process by which [the reserves] were set may give insight into how the adjuster viewed the merits of the insured’s claim and the supporting documentary and medical information,” Dutton Brock’s newsletter says. “If such information is inconsistent with the adjuster’s denial, termination or withholding of benefits, then it would be relevant to the reasonableness with which those decisions were made.”
Any special award against an insurer is based on whether or not an insurer unreasonably withheld or delayed payment of accident benefits.
“The arbitrator in Uka considered whether or not the reserve information was privileged,” Dutton Brock’s newsletter says. “The arbitrator quoted with agreement [Rama and Allstate Insurance Company], stating that it was ‘incumbent on insurers’ to tell their first-party insureds exactly what they might be entitled to regarding their claims for accident benefits and while there is ‘a legitimate protected zone of privacy regarding litigation,’ there is ‘no protected zone of privacy for adjusting a first-party insurance file.'”
The arbitrator ordered Aviva to produce the information sought by the claimant.