Bill C-22 a Windfall for Disability Insurers

Article written by Steven Muller, Vice President Litigation

UPDATE, April 12, 2023:Steven Muller and Hart Schwartz's proposed changes to BIll C-22 are referenced in submissions to SOCI made by: FAIR Association of victims for Accident Insurance Reform (FAIR), the Alliance of Equity of Blind Canadians, and the Ontario Trial Lawyers Association. All Trial Lawyers Associations in Canada have endorsed Muller and Schwartz's proposed changes.

UPDATE, February 22, 2023: The B.C. Trial Lawyers Association and the Atlantic Provinces Trial Lawyers Association have endorsed the submissions going to the committee. Lawyers across Canada see this as an important issue.

UPDATE, February 20, 2023: On February 16, 2023, Senator Pate spoke on Bill C-22 in debate. Two paragraphs were specifically on the issue of insurance set-offs that has been raised by Steven Muller Vice President of Share lawyers to our Senate. Senator Pate said to 102 sitting Senators:

“Similar concerns abound regarding the failure to prevent insurance company shareholders from experiencing windfalls via clawbacks or set-offs of any disability support monies an individual might receive as a result of insurance benefits. Without the prohibition on deductions or set-offs by private insurance providers, provinces, or territories, targeted beneficiaries of the Canada Disability Benefit may receive no supplemental benefit at all or may even receive less than they currently do, a situation that would undermined the very purpose of the new federal program.

As Senator Cotter and others have acknowledged, rather than achieve its goal of reducing poverty for persons with disabilities, the Canada Disability Benefits could contribute to provincial coffers and increased profits for private insurance providers and no doubt without a corresponding drop in the costs of insurance premiums. Taxpayers could thus end up indirectly and unintentionally supporting private insurance providers or enhance provincial coffers.”

We at Share Lawyers are working to protect the disabled and support Senator Pate’s comments so that monies for the impoverished disabled do not end up being a windfall for the insurance companies.

What is Bill C-22

Bill C-22 is proposed legislation at the federal level that seeks to provide an additional safety net to Canadians by establishing the Canada disability benefit. (An Act to reduce poverty and to support the financial security of persons with disabilities by establishing the Canada disability benefit) is a huge financial windfall for life and health insurers on the backs of those living with disabilities and disabling conditions.

The proposed legislation (which you can read about here), whose purpose is poverty reduction and financial security for those with disabilities, inadequately addresses insurers of group disability insurance policies clawing back this proposed benefit. Section 9 of the proposed legislation specifically fails to address deduction or set-off provisions for disabled persons who may have access to a group disability policy. The absence of clear protections in the proposed legislation will lead to abuse as set-off and deduction provisions are often broadly worded in group disability contracts.

The benefits available under Bill C-22 should be in excess of any insurance indemnifying those with disabilities. The Bill received unanimous, all party support in its second reading and was reported back to the House of Commons on December 14, 2022, after being studied and amended by the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities. It is currently awaiting report stage and third reading before moving to the Senate.

Twelve million Canadians have access to disability benefits. The multiplier here is enormous. There is no doubt persons with disabilities need protections to reduce poverty and support for their financial security. Persons with disabilities also need protection - not just with what they get but also with what they get to keep.

The disability lawyers at Share Lawyers will be closely watching the status of Bill C-22, and will continue to bring to people’s attention and protect our client’s disability insurance rights and benefits.

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