notice to policyholders concerning the recent failure of Canadian Millers' Mutual Insurance Company
When an insurance company fails
For well over a century, hundreds of competing property and casualty insurance
companies in Canada have honoured millions of claims -- amounting to billions
of dollars -- promptly, and in full. Insurance company failures, although
rare, can and do occur. That's why Canada's property and casualty (P&C)
insurance companies fund a special program, approved by government regulators,
to protect policyholders and claimants.
When a Canadian P&C insurer like CANADIAN MILLERS' MUTUAL INSURANCE COMPANY ("CANADIAN MILLERS") collapses, the industry-funded, non-profit Property and Casualty Insurance Compensation Corporation (PACICC) will respond to claims of policyholders under most policies. You don't need to apply for protection; it is extended automatically to eligible policies.
The Ontario Superior Court of Justice has ordered Canadian Millers'to be wound-up effective December 11,2001. Canadian Millers' had been writing mainly commercial property business with some commercial liability and habitational business. There are about 3200 policyholders and about 160 outstanding claims. Canadian Millers' was licensed for automobile, boiler and machinery ,credit, fidelity, hail, liability and property insurance. PACICC's coverage does not extend to credit, fidelity or crop insurance.
Procedures
a) With Canadian Millers' having been put into liquidation, you will want
to maintain insurance protection by replacing your Canadian Millers' insurance
coverage right away. Claims will be considered by PACICC in respect of
events which occur on or before the date of the wind-up order and up until
December 31,2001 when the policies are terminated by virtue of the court
order.
b) You must exhaust all other sources of insurance coverage before submitting
a claim to PACICC.
c) The maximum recovery from PACICC is $250,000 with respect to all unpaid claims for losses arising from a single occurrence.
d) Policy deductibles are applied to the total amount of the insured loss.
e) PACICC will also refund 70% of the unearned (unexpired) portion of your premium (maximum payout $700 per policy) applicable from the date of the wind-up order.
f) If you
choose to be compensated by PACICC, you must assign your claim to PACICC.
If your claim exceeds the PACICC limits of $250,000 and $700, you may
eventually be reimbursed for all or part of the shortfall from funds released
by the liquidator. PACICC, however, will have to be reimbursed for the
moneys it has paid to you before you will receive more.
For example, if PACICC pays you $250,000 on an agreed-upon claim of $400,000
and eventually recovers $300,000 from the liquidator, PACICC will pay
you a further $50,000, bringing your total recovery to $300,000. However,
if the recovery were to be $400,000 from the liquidator, you would receive
full payment of your claim. Similarly, if PACICC pays you $630 in respect
of an agreed-upon claim of $900 (0.7 x $900 = $630) for the unexpired
portion of your premium and PACICC eventually recovers $900, PACICC will
pay you the additional $270.
g) An important
advantage of compensation by PACICC, is prompt payment... avoiding the
potentially lengthy delay before the liquidator is able to pay any part
of your claim. Of course, you may claim directly from the liquidator,
if you wish.
Questions and Answers
1) Which insurers are members of PACICC and who funds PACICC?
Unless
they are covered by another authorized plan, all property and casualty
insurers licensed in a province or territory of Canada to write the classes
of insurance covered by PACICC are required to be members of PACICC. The
exceptions include insurers licensed to sell only one or more of the following
- automobile insurance in Manitoba, Saskatchewan or British Columbia,
and specialty lines of insurance such as surety, fidelity, marine, or
aviation. All participating P&C insurance companies pay a small levy
to PACICC to cover its running costs. Should an insolvency occur, PACICC
responds to valid claims and participating insurance companies are assessed
for their share of the cost involved.
For a complete list of the kinds of insurance policies not covered by
PACICC, see Schedule A to PACICC's Memorandum of Operation which can be
found on its website at www.pacicc.com
2) Canadian
Millers' having failed, how do I submit a claim?
Contact your broker as soon as possible following the date of the court
order declaring Canadian Millers' insolvent. When a company is declared
insolvent, a liquidator "winds up" its affairs, including the
processing of claims. The liquidator will write to all policyholders and
claimants concerning claim procedures. Bear in mind, however, that the
liquidator will need some time to examine Canadian Millers's records to
gather the necessary information. If you have purchased your insurance
directly from Canadian Millers' without assistance from a broker, notify
Canadian Millers's head office of the claim.
3) Does PACICC determine the value of my claim?
No, the liquidator determines the value of your claim, but PACICC will want assurance that the amount is reasonable.
4) What happens if I disagree with the amount offered?
If you disagree with the amount offered and you cannot resolve the matter with the liquidator, you can try to bring an action in court; to do this, you will need the court's prior approval.
5) What happens if I am liable for a claim against me for which I am insured
and the claimant doesn't accept the settlement; can I be sued for the
full amount? Who will defend me?
Someone having a claim against you has the right to sue for the full amount and is likely to sue you rather than your insurer. You should direct your inquiry to the liquidator of Canadian Millers' PACICC is involved only with payment of claims where agreement has been reached on the amounts payable.
6) What happens if an insurer cancels its membership in PACICC?
The companies which are members of PACICC can terminate their membership only if they cease doing business everywhere in Canada in those classes of insurance which are covered by PACICC.
Property and Casualty Insurance Compensation Corporation
20 Richmond Street East, Suite 210
Toronto, Ontario M5C 2R9
1-888-564-9199 / 416-364-8677
website www.pacicc.com
announcements
questionsmembersfrançais