First there is God, and then there are insurance companies...

Thanks to Alan Shanoff of the Toronto Sun Newspaper, here's another example of how insurance companies set their own rules when it comes to settling claims, and yet NOT ONE level of government seems willing to do anything about it. Why?

 Not reasonable for insurance companies to waste money fighting policy holders

BY ALAN SHANOFF, TORONTO SUN (Sunday, June 15, 2014)

Reasonableness and common sense go a long way in preventing disputes and litigation.

Those are attributes we sometimes find in short supply at insurance companies.

Take the case of Grzegorz Zaprzala who was injured in July, 2009.

He had disability insurance through his employer, Hooper Welding Enterprises.

His disability application was approved with benefits of $3,000 per month commencing in November, 2009.

Every disability insurance policy has an offset provision. Certain specified sources of income are required to be offset or deducted from the disability benefits.

Among the many offsets are CPP disability benefits.

It is customary for disability insurance policies to require those receiving disability benefits to apply for CPP disability benefits.

Any CPP disability benefits obtained are then deducted from the insurer’s disability payments.

If the person receiving benefits doesn’t apply for CPP disability benefits, the insurance company is entitled to reduce its disability benefits by the estimated amount of the CPP benefits that could have been obtained.

In this case, Zaprzala’s application for CPP benefits was denied.

He requested reconsideration of the decision but once again his application was denied.

His insurance company, Manulife* Financial, told him he had an obligation to appeal the denial to the CPP Review Tribunal, even though there wasn’t anything in the insurance policy that specifically spelled out such an obligation.

Before the appeal was launched Manulife prepared a document and told Zaprzala to sign it.

The document stated Manulife would continue to pay the disability benefits without deduction of any estimated CPP benefits, provided that Zaprzala agreed to reimburse Manulife for any subsequent CPP benefits award.

But Manulife had an obligation to continue making the disability payments pending the appeal.

They had no right to deduct estimated CPP disability benefits after his applications had been rejected.

Zaprzala hired a lawyer to handle the appeal to the CPP Review Tribunal. The appeal was successful and Zaprzala was awarded about $34,000 in retroactive CPP benefits.

But his lawyer charged him about half that amount, leaving Zaprzala with a net gain of about $17,000.

Zaprzala offered to pay the net amount of $17,000, to Manulife.

Sounds reasonable to me.

After all, Manulife told Zaprzala to appeal and they received the benefit of the legal work.

No one told him not to retain a lawyer and it was certainly foreseeable he would have to hire a lawyer.

But Manulife wanted the full benefit of the $34,000 CPP payment.

(* Emphasis added by the editor of this blog.)

To read the full comment, go to Alan Shanoff’s Column at Toronto Sun Newspaper.