Disability Insurance Information

Clawbacks Series Part 10 - Why Should The Provinces Care About Disability Clawbacks

This article, the tenth 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.

Prior to the 1970s, long-term disability policies in Canada had confinement clauses requiring a disabled person who is suffering from mental illness to not leave their home or be confined to an institution. Ontario did away with confinement clauses for policies post-1973 as void for public policy. Sadly, not every province has followed. Law reform of the provincial insurance acts that address long-term disability benefits are virtually nonexistent and there has been no government intervention on the issue of clawbacks. But, I would think that the federal, provincial, and territorial governments would want to work cooperatively to protect government monies.

The OECD Report of Sickness, Disability & Work: Breaking the Barriers (2010) concluded that the benefit picture that emerges in Canada was that about 25% of total spending is for provincial social assistance with disability designation and roughly 20% is spent on private disability benefit plans. But these categories of spending are fluid. Some individuals who are on provincial social assistance return to work, contribute premiums to a policy of insurance and years later become disabled again with a claim under a private disability policy. Other individuals have a long-term disability policy that pays very little and continue to receive provincial disability support.

So here is the big policy question for governments, employers, and insurance brokers: if the federal government is unwilling to prohibit clawbacks by private insurance providers with their own tools, why should the provincial governments, through legislative reform, protect federal public benefit schemes? Long-term disability insurers’ steady decrease of coverage and their ever-increasing emphasis on clawbacks in programs such as Canada Disability Benefit, Canada Pension Plan Disability, Canada Pension Plan Dependent Disability, Old Age Security, government-sponsored plans and programs etc. erode the private market product whose aim is to protect the disabled consumer. Federal dollars that could be spent on supplementing provincial social assistance programs are being redirected as profits for insurance companies. 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.

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