Clawbacks Series Part 7 - The Forgotten King Of Insurance Clawbacks

This article, the seventh in a series about insurance clawbacks, was written by Steven Muller, Vice President Litigation at Share Lawyers. Click here to read the rest of the series.

The forgotten king of insurance clawbacks, Canada Pension Plan Disability Benefits, is now the free meal ticket for the insurance industry.

On June 14, 2023, Carla Qualtrough, the former Minister for Employment, Workforce Development and Inclusion, spoke to Parliament about the Canada Disability Benefit Act.

She stated: "There is a significant gap in our social safety net for persons with disabilities. The Canada child benefit disability supplement is available until age 18 and old age security and the guaranteed income supplement are available after age 65, but there is nothing in between. However, just as the guaranteed income supplement did for seniors and the Canada child benefit did for children, the Canada disability benefit would lift persons with disabilities out of poverty."

So why did Minister Qualtrough forget to mention Canada Pension Plan Disability Benefits that provide payments to the disabled between ages 18 and 65? The Subcommittee on the Status of Persons with Disabilities on CPP(D) (June 2003) has in part some of the answer. Many commentators who appeared before the Subcommittee highlighted the low-profile nature of the CPP(D) program compared to the retirement benefits portion of the CPP and they highlighted that CPP(D)'s beneficiaries are not seen as an important political constituency.

In 1966, the Canada Pension Plan Disability Benefit program was adopted with much fanfare in Canada. As time elapsed, the Federal Government and Disability Insurers have accepted the integration of CPP(D) with disability insurance policies. CPP(D) is a clawback on all group disability policies. The Subcommittee on the Status of Persons with Disabilities on CPP(D) (June 2003) speaks of CPP(D) working in conjunction with private insurance.

The study found that next to CPP(D), payments from private insurers represent by far the second most common source of disability income among CPP(D) recipients. The study accepted the assumption that typically disability policies "insure 70% earnings replacement" and that "eligibility conditions under LTD plans are typically less onerous than those for CPP(D)". So what was missing from the Subcommittee's study? Submissions from Trial Lawyers who represent the disabled. Trial Lawyers were not at the table, but the Insurance lobby was.

Today, insurers have decreased the percentage of coverage from 70% of pre-disability earnings to less than 50% of pre-disability earnings. Long term disability insurers represent to claimants that their eligibility conditions are more onerous than CPP(D). To make matters worse, the Federal Government has now enhanced the Canada Pension Plan Disability Benefit program as described in Canada’s First Poverty Reduction Strategy (2017). An enhanced CPP(D) clawback is now a huge windfall for the insurance industry in Canada.

It is time for us in Canada to rethink our archaic approach to clawbacks in a long term disability scenario.

Denied your long term disability claim?

Contact lawyers for long term disability at Share Lawyers today and put our experience to work for you. Our 35+ years of experience can help you win your case against Canada Life, Desjardins, Manulife, RBC Insurance, Sun Life, and other insurance companies. We offer free consultations and there are no fees unless you win your case. Watch our web show, Your Disability Lawyers, on YouTube, or listen to the podcast on Google Podcasts.