We have attached a copy of the decision in Navage v. Pilot Insurance, just released by the Ontario Superior Court. It deals with the consequences of an insurer’s failure to comply fully with the provisions of s. 9.1 of a former version of Ont. Reg. 664 in settling a claim for accident benefits. In this case, a settlement entered into by Pilot Insurance in 1996 (in which both it and the insured were represented by counsel) was set aside. (copy of decision)Although the case dealt with the version of the SABS that applied to accidents after December 31, 1993 and before November 1, 1996, the result of the decision is that settlements of claims governed by that SABS are capable of being set aside at any time. The court found that there is no limitation period restricting the insured’s right to rescind.In Navage, Justice Lederman listed the numerous deficiencies from which Pilot’s disclosure statement suffered. Most of these had to do with inaccurate information about the calculation of the commuted value of the benefits. This was found to be a contravention of s. 9.1(2)(5) of the former Regulation, which required that an insurer give “a statement of the insurer’s estimate of the commuted value of the benefit and an explanation of how the insurer determined the commuted value”.The decision also indicated that Pilot should have advised the insured that, as a result of the indexation provisions of ss. 79-80 of the former SABS, the limit on med-rehab benefits was more than twice the figure of $1 million that it had represented to its insured.
The decision also indicated that Pilot should have advised the insured that, as a result of the indexation provisions of ss. 79-80 of the former SABS, the limit on med-rehab benefits was more than twice the figure of $1 million that it had represented to its insured.Navage arose out of two accidents in 1994 and 1996, both of which pre-dated the current SABS. Thus, for the most part, shortcomings identified by the court (such as failure to provide accurate commutation and indexation information) would no longer be relevant under the present version of s. 9.1, which requires less detailed information.
As noted above, even though this case arose out of the former SABS regime, it is still very topical because Justice Lederman also found that there is no limitation period restricting an insured’s right to rescind a settlement. So, settlements that an insurer entered into ten years ago could be rescinded tomorrow or ten years from now.
This case is another cautionary tale following in the wake of the Supreme Court of Canada’s 2002 decision in Smith v. Co-operators, where the court emphasized the importance of an insurer providing accurate information to its insured.