As a law clerk working in the personal injury field, I find several things interesting about comments by the Insurance Bureau of Canada in your recent article (see “Auto insurance rancour heats up,” April 20) when it came to the focus on lawyers’ fees and the insurance industry’s profit margin.
First, the insurance bureau says $500 million was collected from injury claimants from their insurance settlements in 2013. What isn’t clear is whether that amount includes the fees paid to the insurance company’s lawyer for defending the claims, special award costs, bad-faith claims or just plaintiff lawyers’ fees. Do these numbers include disbursements insurers pay for because of their requests for records to support the claim?
Hundreds of thousands of dollars are spent on obtaining records at the request of the insurer. In some cases where the injuries are well established, the cost of obtaining updated records is completely unnecessary.
Over the last 15 years, there have been several cases that have granted plaintiffs special awards or bad-faith damages on claims where the insurance company unnecessarily withheld benefits payable to clients it insured and was penalized by an arbitrator or judge accordingly.
Are these awards, interest, and costs included in the amount stated by the insurance bureau? If so, what is the breakdown of these amounts versus lawyers’ fees for the work that has been done on the claims?
Second, the salaries insurance company executives are earning are rarely publicized.
Do these numbers not factor into the high insurance premiums in Ontario? Are these amounts part of the costs reported by the insurance industry?
Third, lawyers’ fees haven’t gone up in the last 10 years. It’s true that lawyers are heavily regulated with respect to the amounts they are allowed to charge clients. It’s also true that should clients have an issue with the fees charged to them, they can file for an assessment with the court.
The numbers quoted by the insurance bureau may in fact be correct, but there are questions about them that should be addressed before concluding that lawyers’ fees are to blame. Is the insurance industry taking the position that it has lost profits because it has to pay these fees? Members of the public have a right to know the cost ratio versus the profit margin when they’re paying premiums but not receiving the benefits they expect.