An insurance agent has just won a case in the Québec Court of Appeal against his personal insurer, which had stopped paying him residual income loss (RIL) benefits following a work stoppage. The three judges overturned a 2019 Québec Superior Court decision and ordered the insurer to pay Jacques Blais $24,504 with interest and the applicable additional indemnity.

Blaissells life insurance and group insurance, but says he specializes in individual disability insurance. In November 1992, he purchased a life and disability insurance policy for himself from an insurance company that was subsequently acquired by ivari (formerly Transamerica). In addition to total disability benefits, this policy provided residual income loss coverage.

Blais became totally disabled due to illness as of January 7, 2013. The insurer recognized his condition and paid him the benefits to which he was entitled under his policy. After gradually returning to work in June 2016, he resumed full-time work the following August.

Insurer stops payments  

The insurer stopped paying Blais RIL benefits in April 2017. ivari subsequently claimed an overpayment balance for benefits it believed it had overpaid Blais from July 2016. It argued that under the terms of the policy, it was no longer possible to link the RIL exclusively to the illness that had caused the disability. In reaching this decision, the insurer relied on facts brought to its attention by Blais himself, which, it believed, had the value of an admission. Blais disagreed and took the matter to court.

A significant “hole” in his income  

During his first four years of almost no work, Blais claimed that the insurance policies he did not sell deprived him of the first year's commission and the ongoing renewals he would have received in subsequent years. In his words, his time off work created a large “hole” in his commission cycle that was now impossible to fill.

Initially, however, a Québec Court judge confirmed that the insurer was within its rights to stop paying benefits as of April 2017. She agreed with ivari's position that on that date, Blais' alleged loss of income was the result of several factors, not only his illness, namely his family situation and the purchase of two new blocks of business, which reduced his availability to seek out new customers.

It was this judgment, initially favourable to the insurer, that Blais contested and brought before the Court of Appeal.

The burden of proof is on the insurer  

Citing a recent Superior Court decision, ivari argued in the Court of Appeal that the onus was on its client to prove the continuation of his disability. Relying on the same judgment, the insurer argued that it did not have to prove by a preponderance of the evidence the existence of factors external to the illness to explain the decrease in Blais’ income: It was sufficient, it said, to establish the existence of such factors.

This argument was rejected outright by the three judges on appeal. In the current state of jurisprudence, they wrote in their judgment, it seems to be well established that the burden of proof of this change in situation lies with the insurer. The insurer can, of course, require the insured to keep it informed of his or her situation, but if there is disagreement between the parties on the resulting legal consequences, the insurer must provide proof of this change in situation.

ivari argued that what was at issue in this case was not its customer’s disability, or illness, but the applicability of the concept of RIL to his case. In the Court of Appeal's view, however, this does not change the case.

The insurer had also claimed that its customer’s new family situation, as well as the investment in time linked to the purchase of blocks of business from two other insurance representatives, explained his decline in income. The Court of Appeal judges added that the insurer can “observe” what it sees fit, and draw the consequences that they see as following from it, but if there is a related dispute about this observation, the proof falls on the insurer.

In the end, in a decision rendered on December 17, the Court of Appeal reversed the trial judgment and ordered ivari to pay Blais the amounts he was claiming.