Lessons learned from the Emergencies Act?

Despite the recently revoked Emergencies Act requiring all insurers to “suspend” coverage, the industry still has received little clarity on how to enforce such rules, especially as most insurers would consider it a policy “cancellation.”

One broker executive questions questions how the Emergencies Act would apply to auto policy suspensions if the act were to be re-introduced in the future.   

“Prior to the Emergencies Act being revoked [last] Wednesday, Canadian insurers were looking for direction and clarity from the government on the scope of suspensions. No direction has been provided since the act was revoked,” says Bernard McNulty, chief agent and head of claims, Allianz Global Corporate Specialty. 

Doug Morrow, CEO at Excel Insurance says it remains unclear how the act might be used in response to future national emergencies and coming elections.

“Whether these ‘extraordinary powers’ – which do absolutely take away consumer and public protections around automobile insurance without notice – are reasonable is a political issue to be considered by the public in future elections. But they are in force, are mandatory, and seem certain to create the result intended by the Federal Government,” he says. Many public assemblies began to disperse following the act’s invocation.  

TruckNews reported 12 suspension and seizure orders were issued to Ontario-based truck operators and 27 seizure orders outside of the province. It is unconfirmed whether insurers have begun to suspend their insurance. 

It is reported that financial institutions have begun to freeze – and now unfreeze – bank accounts connected to offences committed under the act. However, no comment was provided at last week’s government press conference regarding the “treatment of any insurance policies cancelled under the declaration,” Dentons partners Laurie LaPalme, Marisa Coggin and associate Jesse Collins-Swartz reported in a Mondaq article.  

As Morrow pointed out, the Emergencies Act refers to policy “suspensions,” whereas various insurance acts and statutory legislation refer to it as “cancellation;” hence the lack of clarity facing the P&C insurance industry. 

He notes that the federal emergency legislation runs contrary to provincial statutory requirements for suspending insurance.  

“Such a process flies in the face of all of the statutory legislation, carefully put in place over many years, vis a vis insurance cancellation issues; notice of cancellation requirements; the use of registered mail; and the very length of the notice required – 14 days,” he says. 

Morrow emphasizes the importance that “(a) insureds need to know that they are uninsured so that they do not drive, that (b) lenders and lessors need to know that their collateral is at risk to be able to protect their interests, and (c) the general public needs to have confidence that all vehicles operating on a roadway are, in fact, insured.”  

Throughout the week, Insurance Bureau of Canada stated they were in discussion with the federal government to obtain clarity on the act. As of Friday, IBC reported having “a number of discussions with government over the past week to ensure the industry had the information required to comply with the order.” 

As per their most recent statement, IBC told Canadian Underwriter Wednesday: “Insurers have been and are continuing to do their part to fulfill the obligations set out by the federal government…Insurers will investigate each claim to make a determination as to whether or not an insured falls within the qualifying criteria of a designated person at the time of a claim.”

 

Feature image: Trucks from the “Freedom” convoy travel on Highway 401 headed eastbound in Kingston, Ont., headed for Ottawa, on Friday Jan. 28, 2022. THE CANADIAN PRESS/Lars Hagberg