The “Data” Exclusion And The Duty To Defend

The “Data” Exclusion And The Duty To Defend

The excerpted article was written by  | Jun 16, 2020 | CoverageCyber and Privacy

In a recent decision an Ontario court found that an insurer has a duty to defend both the main action and a third party claim in a privacy class action stemming from the disclosure of an allegedly defamatory report authored by the Family and Children Services of Lanark (“FCS”). The report was stored in a secured portion of the FCS website prior to being exposed by a hacker and posted on various internet sites viewable by the general public. The individuals whose personal information was exposed in the report initiated a class action against, among other parties, FCS and Laridae Communications Inc. (“Laridae”).

Laridae, a third party in the class action, was retained by FCS to ““review and refresh” FCS’s website to ensure that the new website and its components are compliant with privacy and other legislative requirements”.

The insurer in question issued two policies to Laridae; a CGL policy and an E&O policy. The insurer admitted that the claims would be covered by the policies, but for the application of the “data” exclusions in each policy, which differed significantly.

The relevant exclusions provided as follows, according to the decision:

The “data exclusion” clause contained in the E&O Policy provides as follows:

Data Exclusion

There shall be no coverage under this policy in connection with any claim based on, attributable to or arising directly, or indirectly from the distribution or display of “data” by means of an Internet Website, the Internet, an Intranet, Extranet, or similar device or system designed or intended for electronic communication of “data”.

The“ data exclusion” clause contained in the CGL Policy (wherein Laridae is the primary insured and FCS is an additional insured) states:

Data

  1. Liability for:
  2. erasure, disruption, corruption, misappropriation, misinterpretation of “data”;
  3. erroneously creating, amending, entering, deleting or using “data”;

Including any loss of use therefrom;

  1. “Personal injury” arising out of the distribution or display of “data” by means of an Internet Website, the Internet, an intranet, extranet, or similar device or system designed or intended for electronic communication of “data”.

All parties agreed that these specific exclusions had not been interpreted by any court in a prior decision. Despite that, the insurer brought an application for a declaration that it did not have a duty to defend either Laridae or the FCS in the class action.

The Court started from the proposition that as long as there is a “possibility” that one or more of the claims being brought might be covered by the applicable policy, then the insurer would have a duty to defend. The Court noted that the claims being advanced were quite broad and went well beyond simple publication or distribution of data. Based on the broad spectrum of allegations and claims, the Court found that there were at least some claims in the statement of claim that were possibly covered, and as such found that the insurer owed a duty to defend.

The Court also found that given the lack of any jurisprudence on the application of the data exclusions, it was not prepared to accede to the insurer’s denial of a duty to defend at a preliminary stage, and stated that any such determination should be made with a more fulsome record. Considering this position, one wonders what might have been missing from the record before the court in the present applications.

Having found that the insurer owed the Defendants a duty to defend, the insurer was order to pay for counsel of the insured’s choice, and that counsel has no obligation to report to the insurer.

See:   Laridae v. Co-operators2020 ONSC 2198

Source: Mondaq

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Known fraudsters targeting CERB for wrongful benefits

By Jordan Press

THE CANADIAN PRESS

OTTAWA _ Harsh penalties for defrauding the Canada Emergency Response Benefit are needed because organized crime and identity thieves are trying to scam the program, a House of Commons committee was told Thursday

A Canada Revenue Agency official said federal systems have already flagged a number of potential fraudulent applications for the $2,000-a-month CERB, including people involved in criminal activity that have now targeted the pandemic-aid program.

Ted Gallivan, the agency’s assistant commissioner in charge of compliance, said about five people already under a joint police-CRA investigation for other reasons are now being looked at for CERB fraud as well.

The agency is receiving leads on possible fraud and has “a number” of joint operations with local police, but Gallivan told the finance committee that it wants the power to go after fraudsters.

Earlier this week, the Liberals were unable to get unanimous agreement from the opposition parties to swiftly pass a bill that included fines and possible jail time for CERB fraud. NDP Leader Jagmeet has argued that the penalties will hit Canadians who mistakenly applied for the benefit, despite government assurances that they’re intended to deal only with those who knowingly and deliberately defraud the program.

Gallivan said the measures being sought would target people who have filed hundreds of fraudulent claims, such as those who have reportedly gone into retirement homes to have seniors sign up for the benefit.

“We do think it’s important to have a criminal sanction at the end of that,” Gallivan said during an Thursday evening committee video conference.

“Criminal sanctions being sought are really to deter people operating at scale because merely asking them to pay the money back won’t have the deterrent effect we need.”

Gallivan said the system that doles out the CERB was set up to flag possible fraud, such as someone changing their direct deposit information a day before applying for the benefit, or someone filing thousands of claims on behalf of clients.

Figures released last week by the agency showed that 190,000 benefit payments had been repaid online as of June 3.

NDP finance critic Peter Julian said new powers aren’t needed because criminal penalties already exist for fraud or people misusing social insurance numbers. He noted that criminal investigations are already under way without the additional powers.

Demand for the CERB has surpassed federal expectations, pushing its budget to $60 billion from $35 billion.

The most recent figures show that $43.51 billion in benefits have been paid out as of June 4 to 8.41 million unique applicants. But those numbers include $20.56 billion from the employment insurance account to 3.96 million EI-eligible workers who exhausted their benefits and couldn’t find work due to the pandemic.

In a recent interview, Conservative employment critic Dan Albas said the spending raises questions about whether EI premiums will have to go up in the future.

“There’s a lot of different things in play here,” Albas said. “There’s the overall spending trajectory of the government, there’s the current state of finances, particularly with the EI fund and because there’s been no budget, we just don’t know its status.”

Finance Minister Bill Morneau was pressed anew during his appearance Thursday at the finance committee about when the government would provide a budget or fiscal update. But he again said that won’t be possible until there is greater economic certainty.

The total spending package on pandemic-related aid now tops $153.6 billion, not including tens of billions more in loan programs, as detailed by the Finance Department in its latest report to MPs.

A commercial rent relief program has doled out $39 million in loans to landlords as of June 8, representing help to more than 5,000 tenants. Delivered jointly with provinces, the federal government provides almost $3 billion to the program.

Morneau said application numbers have gone up in recent days after provinces announced eviction bans.

“That is starting to change the activity between tenants and landlords,” Morneau said, adding a moment later: “There are very encouraging signs that this program can have a big impact on commercial tenants.”

 

Canada’s Film & TV Industry Presents Unique Insurance Solution with Government Support

The excerpted article was written by Manori Ravindran | Variety

Canada’s production community is working towards a bespoke insurance solution as the country looks to jumpstart production after it ground to a halt in March amid the coronavirus outbreak.

Variety can reveal that producers’ trade body, the Canadian Media Producers Association (CMPA), is developing a proposal for a “market-based solution” that asks the federal government to serve as a backstop for coronavirus insurance claims.

An update from the CMPA sent to producers on Monday and seen by Variety details a plan in which producers would pay premiums to access COVID-19 coverage, which would then go into “a dedicated pot to pay for potential claims.”

“The government would only contribute financially if the funds generated [through] the sale of the policies was insufficient to cover the claims made,” reads the memo.

In Canada, like most other countries, insurers are refusing COVID-19 coverage for the production sector. “Left unaddressed, this would mean the financial consequences associated with another industry-wide shutdown, or an on-set COVID-19 incident, would fall primarily to the producer,” said the CMPA, warning that the repercussions of these scenarios would be “potentially devastating” to the sector and threaten its prospects of a smooth restart.

The org has now raised the insurance issue with the government and is to submit a “detailed proposal” in the coming days, outlining what it calls an “industry-wide solution.”

A CMPA spokesperson told Variety: “Without the availability of insurance policies to cover future COVID-19 risks, most production in Canada will not resume. A government-backstopped insurance program will provide confidence to the marketplace, encouraging insurers to offer COVID-19 coverage, allowing producers to purchase policies, and ultimately allowing Canada’s production sector to re-open, once it is safe to do so.”

In recent weeks, the CMPA has hinted at plans to develop a “made-in-Canada solution” to cover productions post-shutdown. The group has been examining international insurance solutions, such as France’s indemnity fund — a $54 million fund that will cover up to 20% of a project’s budget and work on a case-by-case basis — as well as programs being proposed in the U.K. and other territories.

The CMPA said previously that it was also looking at tax credits, shared risk pools and government liability protections.

As revealed by Variety last week, the U.K. recently submitted a proposal to the government for a guarantee around coverage of suspension or abandonment costs relating to COVID-19. This could manifest in the form a government-backed fund that may amount to hundreds of millions of pounds.

The CMPA estimated in April that Canada’s production shutdown put around 172,000 jobs at risk, and could ultimately cost the Canadian film and TV sector — whose service industry supports myriad Hollywood shoots in provinces such as British Columbia and Ontario — around CAD$2.5 billion ($1.8 billion) in both domestic and foreign production dollars if it continues until the end of June.

There is, however, finally some light at the end of the tunnel, with the first signs of production resuming post-shutdown. Manitoba became the first province to allow its production sector to restart as of Monday, with local soundstages opening back up for business.

The first wave of renewed production in Canada is expected to focus on domestic projects due to the limitations posed by mandatory quarantine periods for inbound travel, making it tricky for any international projects, particularly U.S. studios, looking to shoot up north.

Source: Read more articles like this at Variety

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