A Solid Win for Plaintiffs on Legal Expense Insurance

There has been great debate in recent years over the issue of disclosure of legal expense insurance (LEI) to defendants who have relentlessly pushed for full disclosure of plaintiffs’ LEI policies (also known as “After the Event” or “ATE” insurance). There have been decisions both for and against, culminating in the January 2017 decision in Fleming v Brown 2017 ONSC 1430 (“Fleming”) which held that a legal expense insurance policy must be disclosed pursuant to Rule 30.02 of the Rules of Civil Procedure. Most lawyers presumed this was the end of the debate, and with it the strategic benefit of maintaining privilege on the terms and details of their clients’ coverage.

Fortunately, Fleming was not the last word!

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Further lessons from El-Khodr

Plaintiffs with tort and Accident Benefit claims should prepare for increased reductions in their awards for damages following the recent Court of Appeal Decision in El-Khodr v Lackie, 2017 ONCA 716 (“El-Khodr”). In the decision, the Court determined that the principle established in Bannon v McNeely (1998), 38 O.R. (3d) 659 (C.A.) (“Bannon”), of matching “apples to apples” in regards to the categories of awards and reduction of the same is no longer relevant.

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Plaintiffs Take Another Hit

At long last, the Court of Appeal has spoken.

We have previously discussed changes to s. 258.3(8.1) of the Insurance Act that on January 1, 2015 reduced the pre-judgment interest rate for non-pecuniary damages from 5.0% to the bank rate at the time the proceeding commenced.

In El-Khodr v Lackie, 2015 ONSC 4766 (“El-Khodr”) the Court was asked to determine if this reduction applied to cases commenced prior to the amendment date. The trial judge determined, to the relief of all plaintiffs with personal injury actions commenced before the amendment date, that the amendment did not apply retrospectively. In the absence of express or implied intention, the Court held that the change in pre-judgment interest rate was to be enacted on a go-forward basis, and to find otherwise would be a windfall for insurance companies and cause disadvantage to insured persons. This was a welcome decision to plaintiff personal injury lawyers already battling defendant insurers on the retroactive application of the rate reduction.

As is often the case with law, however, a conflicting decision followed just months later in Cobb v Long Estate, 2015 ONSC 6799 (“Cobb”). The trial judge in Cobb exercised his discretion under s.130 of the Courts of Justice Act and set a pre-judgment interest rate at 3%.

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FSCO ruling changed third-party funding market

The third-party funding market changed because of a government ruling last year, John Rossos, Chairman and CEO of BridgePoint Risk Management Inc., tells the Law Times.

A Financial Services Commission of Ontario (FSCO) ruling transformed the market after saying that legal cost protection must be underwritten by licensed insurers and sold to clients through insurance brokers under the Insurance Act.

“Any private indemnity or legal cost protection must now be tied to a regulated insurance product,” says Rossos, the Toronto company’s founder. “Lawyers can’t provide an indemnity to their clients because they are not licensed insurers.”

He says the Omega General Insurance Company now underwrites LISC in Canada, where two leading global insurers with AA credit ratings reinsure the risk. Although Rossos says he strongly disagrees with the order, the company reconfigured its products into insurance policies to protect his clients.

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LISC, DAS battle it out with newcomers in the legal protection market

Canadian legal protection insurance is a growing – and evolving – industry sector. This year has seen a shake-up in the way things are done.

It’s a fairly unique form of insurance and, traditionally at least, there have been few players in the Canadian market. But that’s changing – Aon, ARAG, and Arch have all recently entered the space.

And between the two most established companies offering legal cost protection in Canada, there’s no love lost after recent industry change, allegedly prompted by one company to the detriment of the other.

DAS Insurance and BridgePoint Indemnity Company (LISC) are perhaps the two most prominent pioneers in this space – with DAS historically offering insurance, and LISC offering a service as indemnity protection.

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Focus: Third-party funding market diversifies

What has been a small industry to date is growing as the Canadian litigation funding market sees new entrants and the restructuring of existing players. Competitors are embracing starkly different models, which presents claimants and lawyers with the challenge of fitting the right type of funding to the right case.

“We’ve been a bit slower than England and the U.S. to get into third-party funding,” comments Paul Michell of Lax O’Sullivan Lisus Gottlieb LLP of Toronto. “We have had a few homegrown players, but now there are lots of conferences and promotional materials that show international groups are moving into the area.”

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LISC Risk Management Inc. launches personal injury litigation product

Just weeks after LISC Risk Management Inc., formerly BridgePoint Indemnity Company Inc., announced its new legal expense insurance product, LISC Legal Cost Protection™, the market has provided “overwhelming” support, says company chairman and CEO John Rossos.

“We’ve had a massively positive response from clients both converting to the new product, and those interested in purchasing new LISC insurance policies,” he tells AdvocateDaily.com. “It has been very favourable.”

Canadian federal and provincial financial regulators have approved the legal expense insurance product, which is underwritten by Omega General Insurance Company and reinsured by two of the largest global reinsurers who have become LISC’s key strategic partners, says Rossos.

“Being in partnership with global reinsurance partners with A+ and A++ credit ratings ensures that our clients have more-than-adequate protection in place to support our coverage,” he says. “We arguably have access to more insurance capacity for legal expense insurance than any other insurer in the Canadian market.”

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FSCO posts Regulatory Compliant Resolution with LISC

We recently reported on the settlement of our regulatory issues with FSCO and LISC is now servicing all existing contracts and working on phase two of the settlement involving our long term plan.

FSCO has now confirmed the settlement on their website and a link to the full Minutes of Settlement reviewed here: http://www.fsco.gov.on.ca/en/about/enforcement/cdo/Documents/cdo-2016-09-23.pdf

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LISC September 23 Regulatory Update

We are pleased to announce that LISC has reached an agreement with FSCO and FICOM to resume operations, effective immediately. The interim solution enables all LISC Legal Cost Protection contracts to be fully administered on original terms, including the payment of claims. Our primary concern has always been to protect the interests of the tens of thousands of LISC clients and we have worked tirelessly over the past several weeks to achieve this goal.

LISC has consistently maintained that its legal cost protection products are not insurance. However, to avoid a protracted dispute we have worked closely with FSCO and FICOM to create a long term solution that addresses their concerns. Accordingly, LISC has signed Letters of Intent with both a licensed Canadian insurer and an insurance brokerage. This partnership will allow us to offer our products across Canada with regulatory approval. We expect to have this arrangement finalized within the next 90 days or so.

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New Decision Addressing Issue of Privilege

Since our launch in 2013, BridgePoint Indemnity Company (Canada) Inc. (“LISC”) has been routinely asked if our indemnity agreements are privileged and if a defendant can demand disclosure of the cost protection we offer.

In prior blogs, LISC noted that our indemnity agreements are subject to privilege and should not be disclosed (please see our December 31, 2015 blog on the topic). Some recent decisions on point confirm this.

In Hayes v. The City of Saint John (“Hayes“) the Court reaffirmed that an indemnity agreement was subject to “litigation privilege” as the agreement was an integral part of the plaintiff’s litigation strategy.  The Judge noted…

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