The Benesure Case: National Class Action Suit Against Manulife

By Alain Thériault | November 01 2013 03:31PM

A class action lawsuit was filed against Manulife Financial on Sept. 9 in the Montreal division Superior Court of Quebec. It deals with a group of insured people across Canada and is launched in the wake of two other lawsuits filed in the British Columbia and Ontario provincial courts earlier in 2013. All these lawsuits are being made based on the actions of a company that partners with Manulife in selling mortgage insurance, namely the Benesure Group.According to the plaintiffs, Manulife and its partners working under the Benesure name took part in a scheme to sell mortgage insurance that violated several regulations governing the sale of life insurance. The firm behind the cross-country lawsuit, the Merchant Law Group, is seeking total damages of more than $10 billion. The lawsuit filed in Ontario was for $2.5 billion, while the amount in BC was not specified.

The lawsuit deals specifically with the Mortgage Protection Plan, an insurance program that Benesure Canada distributed through its partnership with Manulife. According to the plaintiffs’ allegations, Manulife’s business partners conducted activities on behalf of an insurer without being licensed to do so. They are also alleged to have used information collected by lending institutions to sell customers mortgage life insurance coverage.

The lawsuit claims that after having responded positively to medical questions, customers were automatically signed up for accident insurance without their knowledge, believing instead that they were covered by a complete life insurance policy. Families therefore ran the risk of not having coverage in the event of death due to natural causes, and policyholders paid more for a product that was actually of a lesser value than they believed. The lawsuit also claims that the right to life insurance was determined at the time of the claim, not the issuance of the policy.

The lawsuit is seeking damages, interest, and to recover funds due to unjust enrichment.

In an interview with The Insurance and Investment Journal, the plaintiff’s lawyer Anthony Merchant said that the sum was calculated based on actuarial evaluations. “The amount of compensation is not only based on the monetary value of the policies, but also the value of the peace of mind and security that customers expect to have when they buy life insurance,” he said.

In some cases, families of deceased clients simply received a refund of premiums rather than the amount of life insurance to which they felt entitled, added Merchant. “This is a scheme in which the insured party believed he had life insurance, but when he dies, the beneficiaries do not have any. What value would you put on this loss of security?”

Baseless allegations

Manulife’s position remains the same that it expressed in the two lawsuits filed earlier. “We strongly deny the allegations of this class action lawsuit. They are baseless and we intend to vigorously defend our position and reputation, said Beverley MacLean, director of media relations at Manulife. “As the case is before the court, it would be inappropriate to make further comments.”