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.....Below is information from two articles, one published in the January 27, 1996 Toronto, Canada edition of the Globe and Mail, p.A4 and another from the magazine Canadian Insurance, 101(5) May 1996 edition, p 20,21,32.
Pilot Insurance Co.
.....The articles report that a trial judge upheld a jury's award of $1 million (Canadian) in punitive damages as a result of Pilot Insurance Co. accusing a Haliburton, Ontario, couple of setting fire to their home. The award is described as being eight times the amount originally sought.
......One article quotes a Justice Theosion as ordering the "fullest possible indemnification" of the plaintiff's legal bills stemming from the two month trial. The article goes on to quote a Judge Matlow as describing the award as "possibly without precedent" and as "entirely reasonable in light of all the evidence". The judge is reported to have said that the evidence showed that Pilot continued to deny the plaintiff's claim even after its own adjuster had recommended it be paid.
.....The other article provides the information that the plaintiff's lawyer described the circumstances of the fire as having begun in his clients' Haliburton home at 1:00 a.m. on a winter night when the outside temperature was -20C. One of the insured is described as having had nothing on his feet and suffering severe frostbite as a result. The article goes on to report that the fire department did not suspect arson and that the Ontario Fire Marshal's office found no reason to investigate.
.....The article discusses the negligible effect of the cost of litigation and many punitive damage awards on companies whose net worth can range from hundreds of millions to billions of dollars. The article speculates that the only effective deterrent to misconduct by insurers might be adverse publicity and resulting loss of business.
.....The article quotes from the publication Insurance Bad Faith Litigation that the basis for awarding punitive damages "should be an element of outrage similar to that found with the commission of a crime or a tort done intentionally or with reckless indifference to the rights of the other party." The article continues by quoting from the Handbook of the Law of Torts, that punitive damages can be awarded for conduct that is "accompanied by circumstances of aggravation or outrage, such as spite or 'malice', or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interest of others that the defendant's conduct may be called wilful or wanton".
......Certainly this type of behaviour on the part of an insurer isn't something of which the average consumer would be aware or that an agent or broker might necessarily bring to the consumer's attention when recommending the purchase of a particular policy. Without such information it is impossible for a consumer to make an informed choice.
Zurich Insurance
.....The article refers to other litigation. There is reference to Thomson v. Zurich Insurance in which the presiding judge reportedly found that there could be an award of punitive damages against an insurance company if there was "evidence of malice directly or inferentially."
Insurance Corporation of British Columbia
.....The information in the article on Vorvis v. Insurance Corporation of British Columbia, 1989 Supreme Court of Canada finding which quotes Mr. Justice McIntyre as cautioning that "an award of punitive damages should always receive the most careful consideration and the discretion to award them should be most cautiously exercised... but in any case where such an award is made, the conduct must be extreme in its nature and such that by any reasonable standard it is deserving of the full condemnation and punishment."
.....The article comments on the significantly greater bargaining power of an insurer to influence claims settlements compared to that of an insured. Consumers should ask themselves whether punitive damages or widely available information on insurance practices is the best guarantee of fair dealing and good faith.
Guardian Insurance Company of Canada
.....The article refers to 1989 Ontario case, Labelle v. Guardian Insurance Company of Canada in which Mr. Justice Trainor is reported to have found that the insurer breached its duty to provide a claimant with prompt and fair claims service. He is also reported to have found that the claims adjuster had been "arrogant, unreasonable and insulting" towards the plaintiff. The report continues that the judge awarded $10,000 in punitive damages to the plaintiff and that the insurer's conduct towards the plaintiff was so unreasonable that it demonstrated malice towards her. Again you should ask yourself if $10,000 is an adequate deterrent or whether an informed consumer is the answer.
Confederation Life Insurance Company
.....In the report of the 1994 Alberta, Canada case of Adams v. Confederation Life Insurance Company the article touches on the valuable lesson for all insurers with respect to how not to investigate and deny a claim. There is no mention in the article of the valuable lesson here for consumers. The case is reported to have included a claim for both compensatory and punitive damages. The case is reported to have alleged that Confederation Life acted contrary to unanimous medical opinion as well as showing wanton and reckless disregard for the plaintiff's rights by using covert surveillance leading to a unilateral termination of her disability benefits. Again this sort of information is not readily available to consumers. The report goes on to add that the court recognized that an insurance policy was a contract requiring utmost good faith by the insured and the insurer.
.....An insured can know themselves but how can they know the business practices of an insurer. The information is there but not readily accessible to the common sense judgment of consumers. As well, the threat of a claim of libel from a wealthy corporation is a weighty consideration for an already vulnerable insurance claimant and can influence their decision to speak out or take action against a perceived wrong.
.....The report of this case continued with the observation that the law does not require the insurer to act solely for the benefit of its insureds but that the insurer can be held to a duty of good faith and fair dealing and to give equal consideration to the insureds' interest as well as its own interest. It might come as a surprise to consumers that there might be any question in law of good faith and fair dealing by an insurer. Common sense suggests that it would be prudent to only deal with businesses where good faith and fair dealing can be taken for granted.
Manitoba Public Insurance Commission
.....The article mentions a similar 1991 ruling by the British Columbia, Canada, Supreme Court in Shea v. Manitoba Public Insurance Commission, a situation where the consumer might not have a choice for insurance. It is reported that the insurer in this case failed to settle an automobile claim within policy limits and as a result exposed an insured to a judgment beyond those limits. The amount of punitive damages awarded was $7,500. Again the question that can be asked is which is most effective, a small award or wide spread public knowledge of what has occurred?
.....All of these cases make an interesting contrast to some of the observations in this site's Speakers' Corner from insurance brokers that in their decades of experience in the insurance industry they have observed "that no Insurer deliberately sets out to screw its policyholders." If insurance brokers and agents don't know what can happen is it any wonder that consumers are left in the dark. Is it time for a change? Can you help?
Help others to make an informed decision
.....If you are interested in sharing your claims experience with others take the time to add your story concerning an insurance company, adjuster or contractor to our Speakers' Corner or Consumer Survey. In the past this individual experience has been unavailable with a few exceptions, other than as part of a statistic on consumer satisfaction. Become more than a statistic by sharing your experience with others.
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