The Financial Services Commission of Ontario (FSCO) has released a Pre-Arbitration Hearing Decision regarding Aviva Canada’s failure to have anyone from the insurer with authority available to resolve an accident benefits claim.
In the decision, Dabrowska and Aviva [FSCO A13-007793] a pre-arbitration discussion was held on February 27, 2014, and counsel for both parties reached an agreement on a “modest resolution” of the insured’s accident benefits claim. While Aviva had legal counsel and a representative present at the discussion, neither of them had authority to approve the settlement and no one with authority was available by either telephone or email.
Arbitrator John Wilson found Aviva in violation of Section 279(5) of the Insurance Act, which reads as follows:
If an insurer or an insured is represented in a mediation under section 280, an evaluation under section 280.1, an arbitration under section 282, an appeal under section 283 or a variation proceeding under section 284, the mediator, person performing the evaluation, arbitrator or Director, as the case may be, may adjourn the proceeding, with or without conditions, if the representative is not authorized to bind the party he or she represents.
The Arbitrator made the following comments:
“Authorized to bind” in the Act means that the representative never has to pick up the telephone to get instructions. Binding authority does not exist where the representative merely has authority to say “no” with no room to vary that position should further information be made available.
This pre-hearing was not a surprise to Aviva. It received the appropriate notices. Indeed, it sent an in-house counsel and an experienced representative, neither with any authority to do more than attend the pre-hearing.
The requirements of the Insurance Act should not have been a surprise to Aviva either. It has a legal department which appears frequently at FSCO arbitrations and pre-arbitrations, and should have been in a position to be aware of its responsibilities under section 279 of the Act and the related jurisprudence.3 Aviva is a sophisticated player and should have known better.
As a result Aviva was ordered to pay the time for the legal representative to prepare and attend the pre-hearing, as well as the actual travel expenses for the insured.
This decision can be read in its entirety by clicking here.