While a first party insurer 'discovers' its claim for
loss transfer on the day after it makes a request for
indemnification1, it was unclear whether there are any
limitation periods relating to when a first party insurer must
deliver an indemnification request to be entitled to seek
indemnification under the loss transfer provision of the
Insurance Act2. This gap in the legislation has
resulted in conflicting decisions by the Superior Court relating to
whether a first party insurer is required to start a loss transfer
dispute within a specified amount of time.
Decision released in the appeals of Intact Insurance
Company of Canada v. Lombard General Insurance Company of
Today the Court of Appeal released its decision in the appeals
of Intact Insurance Company of Canada v. Lombard General
Insurance Company of Canada3 and found that the
doctrine of laches is not available to
second party insurers when defending a claim for loss transfer. The
Court found that loss transfer is not an equitable claim and that
the Limitations Act, 20024 prohibits second
party insurers from raising this defence to defeat a claim for
legal relief that is not subject to the unexpired basic limitation
period prescribed by the Limitations Act. While the second party
insurers argued for the inherent unfairness in allowing a first
party insurer to advance a claim where unreasonable delay has
occurred, the Court highlighted that any unfairness could be
rectified through the enactment of regulations. The Court also
stated that this decision does not address the availability of
other equitable defences (such as waiver, estoppel and
acquiescence) to the extent not founded solely on a first party
insurer's delay in initiating its claim.
While we now know that second party insurers are unable to rely
on the Doctrine of Laches to defeat a claim for loss transfer, this
finding has significant consequences for insurers of heavy
commercial vehicles or for the insurers of vehicles that collide
with motorcycles or motorized snow vehicles. These insurers must
continue to adjust for and acknowledge the possibility of a loss
transfer dispute many years in the future even though a request for
indemnification has never been provided. This decision suggests
that second party insurers ought to conduct thorough investigations
into liability even though they have no knowledge of whether a
demand for loss transfer will ever be presented.
Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA
218 2 R.S.O. 1990, c. I.8 3 2015 ONCA 764 4 S.O. 2002, c. 24, Sched. B ("Limitations
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