Claims (January 01, 2010)

SUPREME COURT THROWS OUT CAP CHALLENGE

The Supreme Court of Canada will not hear a challenge to Alberta’s $4,000 cap on minor auto injuries, meaning a central piece of the province’s 2004 auto reform will be allowed to stand.

“We are pleased the Supreme Court of Canada has decided not to hear this case, therefore finally putting to rest any questions about the constitutional validity of Alberta’s auto insurance system and helping ensure auto insurance remains affordable and accessible for Albertans,” Alberta Minister of Finance and Enterprise Iris Evans said in a statement.

The Insurance Bureau of Canada says the Supreme Court of Canada’s refusal to hear an appeal against the province’s $4,000 minor auto injury cap is “good news for Alberta motorists,” and will open the door for a future review of the province’s overall 2004 reform package.

“We can move on and deal with the government on a number of other important matters relating to auto insurance that were frozen or on hold until these things were resolved, so we’re excited about the future of making the product in Alberta even better,” says IBC vice president, general counsel and corporate secretary Randy Bundus.

Bundus said the IBC is now ready to talk to the Alberta government about a couple of aspects of the 2004 reform package, including a review of the province’s treatment protocols and alternatives to the province’s annual, industry- wide adjustment process.

NOVA SCOTIA APPEAL COURT UPHOLDS CAP LEGISLATION

The Nova Scotia Court of Appeal has upheld the province’s $2,500 cap on minor auto injury claims, finding on Dec. 15 that the cap is not discriminatory.

In Hartling v. Nova Scotia (Attorney General), the Court of Appeal determined that although the province’s cap legislation “disadvantaged” minor injury claimants (in the sense that they can now collect only $2,500 for injuries for which they previously could have collected more), the presence of disadvantage did not necessarily mean there was discrimination under the Charter.

The court found the purpose of the legislation, which is to control escalating auto insurance costs, accommodated the needs, capacities and circumstances of minor injury victims.

For example, although the non-monetary damages of minor injury victims were capped at $2,500, victims nevertheless have recourse to a variety of other, monetary awards. These include “claims for wage loss and other out-of-pocket expenses; the costs of future care; or, where a wrongdoer’s actions are particularly egregious, ‘aggravated’ or ‘punitive’ damages, together with a commensurate contribution towards the victim’s legal bill,” the court wrote.

INSURERS UNDER-REPORTING FRAUD: STATSCAN

Insurance companies beset by fraudulent claims are under-reporting the fraud to police, according to a Statistics Canada report, Survey of Fraud Against Businesses.

The StatsCan report is based on a survey covering about 7,500 business establishments and head offices from the retail, banking, health and property insurance sectors.

The study found just under half (about 45%) of health and property insurance establishments reported experiencing fraud in 2008.

More than three-quarters (77%) of all fraud incidents related to these businesses involved false or inflated claims. Of the individual health and property insurance establishments experiencing fraud, about seven in 10 reported financial losses as a consequence.

And yet, despite the scope and impact of the reported fraud, the study found 46% of all health and property insurance establishments in the survey never or rarely contacted police in cases of fraud.

“Overall, the most common reasons for not contacting police were that the incident was too minor (34%) or that it was handled in some other way (33%),” the StatsCan study says.

The full report can be found at:

www.statcan.gc.ca/dailyquotidien/091210/dq091210ceng.htm.