Wawanesa among the first insurance providers in Canada to have its entire product suite online
The excerpted article was written by Corey Mintz
Buying insurance is placing a bet you’d rather not have to collect on. It’s hoping for the best but planning for the worst. We pay monthly fees to a company just in case something terrible happens. If it does, the company agrees to cover our financial loss. Then COVID-19 hit, and something terrible happened to all of us.
In the past two months, the issue of insurance has come up repeatedly for restaurateurs, who pay for a specific type called business interruption. It can cover closure due to such events as municipal construction, burst water pipes, and riots. I spoke with two restaurateurs who have successfully claimed coverage after broken pipes forced their closure, in one case for five days and in the other for four months (although she is still waiting on a cheque). Neither has attempted to file a claim based on the pandemic. Most believe, or have been told, that the widespread shutdown of restaurants is not covered under interruption insurance.
Then I spoke with Hemant Bhagwani. The founder of the Amaya restaurant chain, plus a few other dining concepts, he has 29 restaurants in Ontario and more than 600 employees.
Bhagwani is availing himself of the Canada Emergency Wage Subsidy, which covers 75 per cent of payroll and requires employers to take care of the rest. Most of his restaurants are shuttered. A couple are doing takeout. And while he says some of his landlords are being reasonable (and currently exploring the possibility of the Canada Emergency Commercial Rent Assistance for small businesses), the total rent for these properties is about $700,000 a month.
“In 22 years of business, I have not taken a single penny from the insurance companies,” Bhagwani told me on April 24, just as the federal government was announcing the CECRA. “They keep increasing their premiums every year. So this is the time for them to support us a little bit. And they’re just washing their hands.”
“Government is doing so much,” said Bhagwani, as we both paused to listen to the prime minister’s live address. “Landlords are trying their best to help us. The only people who are not coming out are the insurance companies. I feel it’s very wrong. I’m ready to take them to court.”
On May 5, Bhagwani followed through, filing a claim for damages against his insurer, Allianz Global Risk, for $500,000 in combined revenues, $200,000 in punitive damages, and 90-days’ worth of payroll expenses.
“I think he’s wise to bring the action,” says Lawrence Swartz, a professor at Osgoode Hall Law School.
“It’s very rare that people claim insurance. Typically, you pay the premiums, and you don’t make a claim,” says Swartz, who has worked extensively in the financial and insurance sectors. “The reason you buy insurance is to get the coverage for these types of situations. Your typical person who is a restaurateur should think that an interruption includes a pandemic.”
A spokesperson for Allianz told TVO.org via email that the company is “unable to comment on individual claims settlements or pending legal matters” and that, as a result of the pandemic, it “has been notified of a large volume of claims from businesses around the world which we evaluate on a case by case basis to determine coverage.” They added, “We will certainly honor COVID-19-related claims where they are part of our policies and cover is clear. However, many businesses will not have purchased cover that will enable them to claim on their insurance for COVID-19 pandemic losses.”
Swartz can’t speak to the specific merits of Bhagwani’s case without examining his policy. But, in general, he sees the court leaning in favour of the restaurateur.
“If the company wanted to exclude a pandemic, they have to say so in the insurance contract. And if they didn’t, the presumption I think, by the courts, would be that the restaurant should be covered,” he says. “Because courts tend to interpret exclusions narrowly, they give somewhat of a benefit of the doubt to the purchaser of the insurance policy. And they tend to interpret coverage broadly.”
Another factor on Bhagwani’s side, Swartz says, is a legal principle that tends to apply in the case of insurance contracts. Known as contra proferentem, it means that, when the intention is ambiguous, the preferred meaning is the one that works in favour of the party that didn’t draft the contract.
Whatever happens with Bhagwani, Swartz sees this lawsuit as a good example for others in the industry to follow. “Every restaurant should presume that they have coverage,” he says. “This is a situation where they need help. And that’s what insurance is for. It’s for unforeseen disasters.”
Swartz urges owners to contact their lawyer or insurance broker, to look at their contracts to see whether the policy specifically excludes a pandemic, and to ask for claim forms.
“Restaurant owners should be in touch with their insurers and brokers. They should be asserting their rights,” he says. “They should assume that they have coverage, and they should proceed as if they do. It should be on the insurers to explain to them that they don’t if they don’t and to be very specific in why they don’t. Insurance companies shouldn’t be trying to wiggle out of their responsibilities.”
If a court rules in favour of Bhagwani, other suits will likely follow. What would that mean for the insurance industry? The business is predicated on the odds that disasters don’t usually happen every day and to everyone at once. If every restaurant in Canada claims interruption insurance, and the courts support them, could this bankrupt insurers?
“The insurance industry, going into this, was fairly strong,” explains Swartz. Insurance companies are sometimes part of big conglomerates that back them up, and they cede part of their risk to reinsurance companies. “So insurers have insurance themselves.”
However, that doesn’t mean that they’re bulletproof.
“This is a cataclysmic even,” Swartz says. “It wouldn’t be impossible for a number of insurance companies to go bankrupt.”
Corey Mintz is a Toronto-based food writer.
The Globe and Mail
Canadian travellers stuck abroad may find themselves without emergency medical coverage as some insurers impose a March 31 deadline when coverage will expire while refusing extensions for people showing signs of COVID-19.
On Monday, Prime Minister Justin Trudeau urged Canadians to return home while they still can, but made it clear that anyone with symptoms of the virus will not be allowed to travel to Canada until they have recovered.
Canadians showing signs of the novel coronavirus will need to remain quarantined for 14 days in the country they are currently visiting, and not be allowed to board any flights to Canada. For some, that could mean a lapse in their current emergency medical coverage.
The uncertainty in guidance issued by travel insurers – which has been changing by the day in some cases – has left thousands of Canadians unsure of whether they will be covered while they attempt to get home or remain under quarantine.
Out-of-country medical policy coverage can range from $2-million to $10-million a person. But as the coronavirus pandemic continues, insurance companies have deemed the virus a “known event,” which could mean they are not covered for the illness.
Last week, several retired teacher associations alerted their members – many of whom are snowbirds vacationing in the southern United States – that emergency medical coverage provided by their association would be expiring at 11:59 pm on March 23. The policy change was triggered by a March 13 travel advisory to avoid non-essential travel outside Canada.
Many insurance policies allow an individual to purchase an extension or top-up to their coverage. But to qualify for the extension, most Canadian insurance companies require the policyholder to answer several qualifying questions.
Two common questions asked before an extension is granted is whether an insured person is in good health and knows no reason to seek medical attention, and whether he or she has been examined or treated by any physician or been advised by a physician to seek treatment, says Marty Firestone, president of Travel Secure, a seller of travel medical coverage.
“Automatically these individuals – who are being turned away from our border due to coronavirus symptoms – are not going to be eligible to top up or extend their coverage,” Mr. Firestone said.
Canadians who are stranded abroad can apply for an emergency loan from Global Affairs Canada of up to $5,000 for essential needs. But for those without medical coverage, hospital bills can quickly run into the tens of thousands and the government may have to provide further assistance.
“If an elderly traveller comes down with symptoms and ends up in an intensive care room in a hospital, they could be looking at $25,000 a night,” he said. “If their insurance has expired, where are they going to turn? I would suspect the government has to have some contingency fund set up to handle people whose travel insurance ended.”
Manulife Financial Corp.’s individual travel plans for emergency medical coverage allow for extensions as long as “there has been no event that has resulted, or may result in a claim against the policy,” and “there has been no change in your health status.”
Travel insurer Group Medical Service Inc. (GMS) updated its policies to allow clients to extend or top up their coverage until March 31, although the company would not confirm whether people showing symptoms would qualify for the extension.
“[The March 31 deadline] should give clients the additional time they need to arrange travel back to Canada as per the government’s recommendation,” GMS said on its website.
TuGo travel insurance allows clients to purchase a one-time 10-day extension to their travel medical coverage, as long as clients can sign a “health declaration, have not seen a doctor, and have made no claims.”
If clients need more than 10 days, TuGo offers an option to purchase additional days required to “reasonably evacuate” the country or area they are returning from.
One of the country’s largest travel insurers, Allianz Global Assistance Canada, would not confirm to The Globe and Mail whether their medical coverage would be extended for people unable to return to Canada owing to coronavirus symptoms.
“As the COVID-19 situation is evolving rapidly each day, we are reviewing our policies alongside the Canadian government’s border and travel restrictions to ensure we can assist customers abroad in their safe return to Canada,” spokesman Dan Keon said.
Toronto, ON – DAS Legal Protection Inc. (“DAS”) is proud to announce a new partnership with The Wawanesa Mutual Insurance Company (“Wawanesa”), which protects its commercial policyholders when they encounter unexpected legal events.
“At DAS, we focus on providing Canadian small businesses with the help and assistance they need to ensure their legal risks are well managed. Our new partnership with Wawanesa, Canada’s largest P&C mutual insurer with a rich history and reputation, well advances this goal,” said Rissa Revin, CEO at DAS.
This partnership with DAS will make Legal Expense Insurance available to Wawanesa’s suite of Commercial Property & Casualty products.
“Bringing our two companies together strengthens our commitment to helping our customers get the right protection for their businesses. Wawanesa’s recognition of Legal Expense Insurance as a key differentiator provides their customers with another product innovation to extend the coverage provided by their commercial insurance,” said Alex Manning, Vice President of Sales and Marketing at DAS.
The comprehensive coverage is launching in Q1 2020 for new Wawanesa commercial policyholders, and Q2 2020 for existing Wawanesa commercial policyholders.
“We are delighted to partner with DAS and offer our commercial customers this important new protection,” said Tracy Riley, Wawanesa Vice President of Business Transformation. “Among its many benefits, Legal Expense Insurance can save customers money on their legal costs and give them a place to turn when they have legal questions. For our valued broker partners, this product offering provides yet another reason to recommend Wawanesa.”
Legal Expense Insurance is an essential piece of any business’ commercial insurance portfolio, offering policyholders financial protection against legal expenses and empowering them with general legal assistance for any legal matter. Covered insured events include contract disputes, employment disputes, tax audits, and many other common legal events a business owner can experience.
Legal expense insurance itself is rooted in a longstanding 100-year old history. It can be traced back to Le Mans, France in 1917, when the first company named D.A.S. (“Defense Automobile et Sportive”) offering legal expense insurance coverage opened its doors.
Interested in the history? Watch this video to hear the story behind it all.
About DAS Legal Protection Inc.
DAS Legal Protection Inc. (DAS) is the Canadian market leader and Managing General Agent (MGA) specializing exclusively in Legal Expense Insurance. Working with brokers and corporate partners, we create access to justice solutions so that Canadian individuals, families, and business owners can protect themselves from legal expenses, be empowered to pursue or defend their legal rights, and have unlimited access to legal resources. DAS Legal Expense Insurance policies are underwritten by Temple Insurance Company, and both companies are members of Munich Re (Group). To learn more, please visit www.das.ca.
The Wawanesa Mutual Insurance Company, founded in 1896, is the largest Canadian Property and Casualty Mutual insurer with $3 billion in annual revenue and assets of more than $9 billion. Wawanesa Mutual, with executive offices in Winnipeg, is the parent company of Wawanesa General, which offers property and casualty insurance in California and Oregon; Wawanesa Life, which provides life insurance products and services throughout Canada; and Western Financial Group, which distributes personal and business insurance across Western Canada. With over 5,000 employees, Wawanesa proudly serves over two million policyholders in Canada and the United States. Wawanesa actively gives back to organizations that strengthen communities where it operates, donating well above internationally recognized benchmarks for excellence in corporate philanthropy. Learn more at https://www.wawanesa.com/canada/.
On January 1, 2020, The Insurance Act (“New Act”) and The Insurance Regulations (“New Regulations”) came into force in Saskatchewan, marking the first major overhaul to Saskatchewan’s insurance legislation in decades. The New Act was created to modernize the way insurance is regulated in the province and to provide enhanced protection to consumers. Order in Council 478/2019 proclaimed the first day of 2020 as the coming into force date for the majority of the New Act, with a few provisions set to be proclaimed into force at a later date. Saskatchewan’s prior insurance statute, The Saskatchewan Insurance Act, was repealed when the New Act came into force.
Highlighted below are several important changes created by the New Act. Since Alberta and Manitoba have similar insurance legislation, these changes are also compared to their relevant counterparts from the statutes in those provinces.
New Licensing Categories
The New Act creates a licensing regime for insurance intermediaries, which now includes managing general agents (“MGAs”) and third party administrators (“TPAs”). Saskatchewan is the first province/territory in Canada requiring a license to act as an MGA or TPA. In contrast, Alberta and Manitoba’s licensing regimes only require insurers and insurance agents to be licensed.
An MGA is defined in the New Act as an insurance agent that manages all or part of the business of an insurer and carries out specific activities on behalf of that insurer, including:
- soliciting, negotiating or accepting applications for insurance from licensed insurance agents;
- effecting and countersigning contracts of insurance;
- accepting risks;
- underwriting insurance contracts;
- entering into written agency agreements with licensed insurance agents;
- supervising and monitoring the activity of licensed insurance agents with whom it has entered into written agency agreements; and
- undertaking any other prescribed duties or activities.
Once licensed, MGA’s have the authority to sponsor selling agents, and are obligated to perform ongoing monitoring of the persons they sponsor. Employees of an MGA that hold a valid insurance agent’s license specifying that a particular MGA is their employer can only represent that one MGA, and as such will not be issued another license to represent a different MGA, TPA, insurer or business. As well, the New Act notes that the employee’s license is automatically suspended the moment they are no longer an employee. Where such an individual ceases to be an employee of the MGA, the MGA must notify the Superintendent in writing within five days that the agent is no longer an employee, and provide the reasons why.
A TPA is defined in the New Regulations as “a business that, for compensation, carries out activities to administer a contract of insurance on behalf of an insurer, other than solely clerical activities, but does not include a business that is licensed as an insurance agent or managing general agent.”
Similar to MGAs, employees of a TPA that hold a valid insurance agent’s license will not be issued another license to represent a different TPA, MGA, insurer or business. Likewise, the employee’s license will be suspended when their employment ends, and, similar to MGAs, the TPA must notify the Superintendent.
In an effort to further protect consumers, the New Act prohibits certain conduct in the insurance market. Specifically, the New Act prohibits insurers, insurance intermediaries and adjusters from making false or misleading statements, representations or advertisements, engaging in tied selling practices, performing any unfair, misleading, deceptive, fraudulent or coercive acts or practices, and any other act or commission prohibited by regulation.
There is also a prohibition on insurance intermediaries providing gifts, payments or anything of value as a method of inducing customers to purchase insurance, except as permitted by the New Regulations.
These prohibitions on unfair practices are substantially similar to those prohibited by Alberta’s Insurance Act. The Insurance Act in Manitoba contains various provisions that prohibit similar behaviours, however, because the provisions are drafted differently, there may be some variation in how they are applied.
In addition to the prohibitions noted above, the New Act outlines various fair practices that were incorporated for added consumer protection, including:
- a requirement that insurers, insurance intermediaries and adjusters advise policyholders suffering a loss that they have the right to choose a service provider to make repairs;
- a 10-day right of rescission in favour of the consumer in the case of life, accident and sickness or specific travel insurance, and the corresponding right to the return of premiums paid;
- a requirement on insurers in receipt of a notice of claim to notify the claimant of the applicable limitation period; and
- a requirement that insurers advise policyholders of the options available to them in the event a dispute occurs regarding payment of a claim or loss, or the insurer denies the insured’s claim.
Alberta’s Fair Practices Regulation is substantially similar to Saskatchewan’s fair practices regime, except that Alberta only requires the insurer to notify the insured of the dispute resolution process – not of the options available to them. Manitoba’s statute is fairly different in this regard, as it does not require insurers to advise policyholders of their right to choose the service provider that makes repairs under a claim, advise an insured of the applicable limitation period once a claim is made, nor advise the insured of the options available to them if a dispute occurs after a claim is made.
The New Act requires an insurer, at the request of the Superintendent of Insurance, to self-assess its practices to identify non-compliance, and promote compliance with, insurance legislation, guidelines and other professional standards. This process is to be conducted in accordance with the New Regulations, and a copy of the audit must be provided to the Superintendent.
Documents produced during the self-evaluative audit process are privileged, and any person or entity involved in the process cannot be compelled to give or produce evidence regarding the process in any civil or administrative proceeding. However, these protections do not apply in proceedings commenced against the insurer by the Superintendent.
Alberta’s Insurance Act and The Insurance Act in Manitoba provide substantially similar protections to those identified in the New Act. In all three provinces, there is a positive obligation to conduct the self-evaluative audit when requested by the Superintendent, but in Alberta and Manitoba such a request can also be made by their respective Ministers of Finance.
The Financial and Consumer Affairs Authority of Saskatchewan (“FCAA”) has published two documents to help insurers understand the new regime, and is in the process of creating two more. These publications can be accessed here.
The first FCAA publication is a guideline on where and how non-Saskatchewan insurers (extra-provincial, federal and foreign insurers) are required to keep their records. The other is an interpretation bulletin on the notice that an insurer is required to provide to an insured under section 7-25. Where a dispute arises regarding an insured’s claim, an insurer is required to provide them with written notice of the dispute resolution options that are available. The interpretation bulletin clarifies that, in respect of the references to OmbudServices in section 7-25, the insurer is only required to notify the insured of the applicable OmbudService(s) of which the insurer is a member, and which applies to the type of insurance at issue.
As of January 1, 2020, the New Act and the New Regulations are in force, creating a markedly different insurance regime in Saskatchewan. It remains to be seen whether any other provinces/territories will follow Saskatchewan’s lead to adopt similar licensing measures for MGAs and TPAs.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
In the immediate aftermath of the recent shooting in San Bernardino, much of the focus, apart from concern for the victims and their families, was on understanding whether the violence was in fact an act of terrorism.
As employers and property owners in Canada increasingly turn their minds to the risks of terrorism in our own country, and consider how best to address their own potential liability, the same question could be vital in determining whether an insurance policy would respond in the event of losses from a terrorist event.
This is because following 9/11 many Canadian insurers introduced “terrorism exclusion” provisions in property and liability policies. Such provisions exclude coverage for loss or damage caused by “terrorism” or actions taken to respond to “terrorist” activity – terms that may be but are not necessarily defined in such policies.
For example, would the San Bernardino shooting, or that which occurred on Parliament Hill in October 2014, meet the following definition found in one commercial property policy?
“Terrorism” means an ideologically motivated unlawful act or acts, including but not limited to the use of violence or force or threat of violence or force, committed by or on behalf of any group(s), organization(s) or government(s) for the purpose of influencing any government and/or instilling fear in the public or a section of the public.
In both these cases, it seems likely. In such circumstances, owners with similar policies could find themselves without the benefit of coverage for property damage or third party liability (for example, for not providing adequate security).
To ensure coverage, some property owners have purchased specific terrorism policies, which are generally available in the Canadian market and are required by some lenders. But as incidents like those in Ottawa, Paris and San Bernardino continue to occur, some are concerned that insurers may become reluctant to underwrite such policies. Unlike the United States, France, and some other western countries, which introduced government-backed re-insurance schemes following 9/11, Canada has no such program in place currently.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.