This is the second in the series regarding self-represented people without any resources for advocates. Given how quickly and unexpectedly accidents can occur, many people choose to exercise the option of purchasing an insurance policy to cover the unlikely event of an unexpected occurrence.
Given that some insurance policies are mandatory while others arise out of a desire to protect ourselves when we pay for an insurance policy, we expect that in an event of an occurrence to be protected - including receiving the appropriate financial compensation, this of course gives us peace of mind. Most insured people agree to purchase insurance plans expecting that in an unforeseen circumstance the policy will pay out when the time comes to file a claim. Problems arise when insurance companies deny claims based on the fine print and usually hidden technicalities. When this occurs, we are left to find a way to pay for an expense that we thought was included under the coverage of our premiums.
In a recent mediation that we conducted, the Plaintiff for anonymity, Sam, had purchased an extended travel insurance plan which he had financed for several years. In a medical examination prior to pre-booked travel, his family doctor informed him that on his return he would require surgery to remove an abdominal wall hernia. There was no urgency for the procedure, and he was medically cleared to go on his vacation. While down in the States on holiday he suffered a different medical emergency. On contacting the insurance company, he was given permission for not just the examination but the attendant surgery that was required to fix the new medical issue, which as it turned out was a different type of hernia. Armed with this approval the American surgeon proceeded to repair Sam’s medical condition. After the procedure was complete a bill was tendered to Sam for US$ 150, 000 who proceeded to submit it to the insurance company on his return to Canada. The insurer at this point took the position that since Sam had a pre-existing condition they were not liable for this surgery, albeit a different condition. This despite the fact that in a report the American surgeon confirmed that the surgery performed had nothing to do with Sam’s pre-existing hernia. This medical opinion was collaborated by Sam’s family physician. Despite these reports and without the benefit of a medical opinion the insurer refused to honor the policy, leaving Sam with a bill for US $150,000.
Conceptualizing the Issue
While recognizing at one point in time 15% of claims were indeed illegitimate and therefore, shouldn’t be honored, the writer suggests that insurance companies have since put in measures to prevent fraudulent claims. The problem arises when insurance companies choose to treat legitimate claims as fraudulent for their own benefit. This leaves clients like Sam with financial strain and no recourse. Unfortunately, it would appear insurance companies often use technicalities to reject clients’ large claims, as in Sam’s case. Moreover, it must be remembered that Sam had received approval for his trip from a medical professional. Sam’s surgery was confirmed an isolated and unexpected event from any pre-existing medical issues. Even more significant is that Sam and the surgeon had received the OK for the procedure from the insurance company prior to it being undertaken. Unfortunately, in this instance, the insurance company chose to use his unrelated medical status to not reimburse the very medical services they approved. Sam, like many have invested in insurance be it travel, motor vehicle, or any other type of policy for this exact reason, they have placed trust that the insurance company would honor this agreement. Trust and comfort in some insurance companies is challenging when they seem to be more interested in finding ways to refuse large payouts if and when a claim is filed despite the fact that they are covered in the policy.
This leaves the client with only one option, which is to sue the insurer in an attempt to have them honor the policy and this raises the question of additional challenges faced including bad faith negotiations. Negotiations can be held through mediation and within this process insurance companies may offer nothing or low offers, using mediation as a tool and tactic to intimidate the insured, delay the course of justice and frustrate many claimants into giving up their claim since there is a lengthy time-lapse prior to the matter being heard by a judge. This is especially problematic since mediation is an approach that is intended to create resolutions that can only be reached if both parties approach it in good faith.
This is not an uncommon occurrence so much so that it has been challenged in the case of Ross v. Bacchus when the malicious intentions of the insurance company were penalized. This was a matter in which the insurer attended mediation and offered nothing or nothing. When the facts came before a judge the trier of fact agreed that this was not negotiation, but rather bad faith. This set an important precedent; insurance companies could no longer go into mediation in bad faith. Unfortunately, this judgment was short-lived as the insurance company appealed the decision since they could not afford to open the floodgates and as a result, the decision was overturned. The court’s recognition of the high degree of bad faith used in negotiation demonstrates not just the insurer’s intent but also the clear lack of support and protection towards insured people by the government. If the courts and the government fail to protect insured people from the insurance company, then who can they turn to? How is it the contract cannot be upheld, how are they supposed to challenge big insurance companies, who has the resources, and if they cannot get help from the court then one has to wonder, what is the solution?
Possible Remedies
The Ontario Insurance Act primarily protects the insurance companies this is evidenced by the fact that there is only one mention of protection for the insured. This is troubling when negotiations are done in bad faith since there is no way to consequence the offender. Further concerns are highlighted when insurance is mandatory and people’s choices are taken away. For example, in Ontario, if you are caught driving without car insurance you risk receiving a fine, having your driver’s license suspended or your car towed. Yet, the same government that is requiring drivers to pay into car insurance, does not guarantee or ensure fair reimbursement in the event of a claim. From the perspective of many insured, paying into imposed insurance plans feels futile, especially when coverage from the systems meant to protect us is so uncertain.
The Charter of Rights and Freedoms is supposed to act as a safeguard from the government creating policies that infringe on our rights and freedoms. This recognizes that people are indeed in need of protection. It is the writer’s opinion that similar legislation is needed to ensure that insurance companies are not unnecessarily denying our claims for the purpose of avoiding large lump sum payments. In the case that insurance companies believe the full amount of a claim should not be paid, there at the very least must be an expectation that they will not be attending mediation in bad faith and further, that the reasons for non-payment are clearly spelled out so that the claimant can satisfy them.
One possible solution is a change in legislation, this might be seen as an action by the government that supports bona fide claims. Further, a protocol as to an appropriate code of conduct to be utilized should be clearly dictated by the government for those engaging in mediation. This would reinforce the purpose of paying for an insurance plan. It is the writer’s belief that some insurance companies continue to operate in a grey zone when they generalize all claims and constantly and unreasonably deny the majority. It must be remembered that insurance companies are businesses and very few if any have shown any financial losses in the last decade. Despite this, the benefit level has been decreased significantly for all insured drivers, if one were to consider the automobile insurance plan. Unfortunately, the attitude taken by some insurance companies has fostered distrust and a vilifying of many good companies by the majority of people to the point that some have even found the idea of not paying for insurance and saving the money for self quite appealing. Therefore, if there is an expectation and requisite that we pay for insurance coverage, there must be some sort of guarantee that the insurers will not use every option to avoid responsibility and payouts. More importantly, they must also take the time to ensure that the purchaser of a policy understands not just what they are purchasing but the limitations to the policy. Failing this, we believe it is time for the government to create legislation to start protecting the very people who are forced to have insurance.
In addition to a change in legislation, some people have suggested that the government can establish a hotline with the purpose of supporting insured people when insurance companies challenge the insurance agreement. A further extension of this is if possible avenues of assistance can be created to remedy the situation for those who are in desperate need, similar to the system used in Uninsured Motorist Act, this would be helpful since it could ensure when people are in their time of need they are not being taken advantage of by the insurance company and unsettling their claims just to survive.
Finally, a referral database can be instituted where those seeking coverage have access to concerns and comments from past clients regarding customer service when claims are made. This can help regulate the ill intentions of insurance companies and deter them from not being forthright and having clients commit to an agreement without a full appreciation of what their coverage includes. This is a recently proposed idea and it might include a client’s age, health, location, work, or even how often they drive. Therefore, when a client does file a claim, it should be nearly expected as it’s already accounted for in their payment. This is the only solution that can offer a true answer to the dissatisfaction currently felt by many who have been frustrated with trying to have their claims honored.
ENDNOTES
Ontario Insurance Act Insurance Act, R.S.O. 1990, c. 1.8,
https://www.ontario.ca/laws/statute/90i08#top
Ross v. Bacchus, 2015 ONCA 347 (CanLII), , retrieved on 2022-02-14