The Canadian Council of Insurance Regulators (CCIR) is a national association of provincial and territorial governments. They recently released two related reports: their Annual Statement on Market Conduct (ASMC) and their Cooperative Fair Treatment of Customers (FTC) Review. These lay out the standards expected of insurance companies in dealing with their customers and provide data on how many insurers are meeting these standards (and to what extent) including key issues like denied claims and complaints.

Plaintiff lawyers should be aware of these standards and the defendant insurer’s compliance (or lack thereof). Injured clients may have been misinformed or confused by insurance policies or agents – having government regulators on your side could be an advantage.

The insurance industry is not meeting the required standards in any area, from corporate governance and product design to marketing, agent training and compensation. Among CCIR’s many findings:

  • There were no mechanisms or formal procedures to guide agents as to what information should be given to consumers.
  • The claims process was not always explained in a complete and accessible way.
  • Not all insurers informed customers adequately about why their claims were denied. Denial letters did not include sufficient details or tell customers what they can do to appeal or complain about decisions.
  • Insurers’ reporting of complaints was not done in accordance with ASMC requirements. All insurers had complaints policies and procedures in place, but these processes were not always simple and accessible, which may discourage consumers from filing a complaint. Also, information about expected turnaround times, available options on filing a complaint, and next steps were not always clear.

Looking specifically at auto insurance, CCIR notes several issues, some related to the COVID-19 pandemic. Automobile insurers saw a large reduction in the claim ratio, from 69% in 2019 to 63% in 2020, due to reduced driving. But nationally, five percent (5%) of all auto insurance claims were denied in 2019 and 2020.

Insurers do not pay out claims in a timely manner; the pandemic could be part of the reason. In 2020, the average auto insurance claim took 133 days (more than four months) to be paid.

The reports note increases in insurers cancelling automobile policies, rising to more than two percent (2%) in 2020. This issue has been raised in multiple jurisdictions, through complaints to regulators and in media reports. Auto insurance accounts for more than half of all the Canadian insurance industry’s formal complaints. More than half of all complaints come from Ontario.

The Financial Services Regulatory Authority of Ontario (FSRA) recently scolded the auto insurance industry, reminding them they are required by provincial law to provide all consumers with timely quotes and the lowest rates available to them. The FSRA examined selected insurers, agents, and brokers as part of a review to identify any insurer practices inconsistent with this “Take-All Comers” rule.

For more information, you can contact your government’s insurance regulator here:

We hope that the information we provided was helpful. If we can answer any other questions that you might have about Litigation Loans or ATE Insurance, please contact us at 1-877-342-9590 or email our President, Jeffrey Gottheil at . We look forward to speaking with you soon.