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LEGAL DECISIONS P&C INSURERS OUGHT TO KNOW

This article provides an overview of personal injury damages assessment, including general damages, special damages, loss of income, future cost of care, and other considerations. It also discusses the responsibility of insurers and the importance of discount rates.

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LEGAL DECISIONS P&C INSURERS OUGHT TO KNOW

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  1. LEGAL DECISIONS P&C INSURERS OUGHT TO KNOW March 9, 2011 CHRISTOPHER R. DUNN DUTTON BROCK LLP

  2. GOAL OF PERSONAL INURY DAMAGES ASSESSMENT • Lord Blackburn in Livingstone v. Rawyards Coal Co. (1880), 5 App. Cas. 25 at 39 (H.L.): • … you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.

  3. BASICS OF PERSONAL INJURY DAMAGES ASSESSMENT • General Damages • Special Damages • Loss of Income/Pension Income • Future Cost of Care/Attendant Care/Housing Cost • Loss of Housekeeping/Handyman Services • Guardianship Costs • Family Law Act Claims

  4. Additional Considerations • Management Fees • Gross-up • Contingencies • Multiplier/Discount Rate

  5. WHO IS RESPONSIBLE?

  6. General Damages

  7. 1978

  8. Supreme Court of Canada Trilogy (1978) • Andrews v. Grand and Toy • Teno v. Arnold • Thornton v. Prince George School District

  9. $100,000

  10. $332,310

  11. Special Damages

  12. Future Loss of Income/Pension Income

  13. Future Cost of Care/Attendant Care/Rehabilitation/ Housing Cost

  14. Loss of Housekeeping/Handyman Services

  15. Guardianship Costs

  16. Family LawAct Claims

  17. Management Fees

  18. Gross Up

  19. Contingencies • Positive • Overtime • Fringe Benefits • Negative • Unemployment • Mortality • Accidents • Depression/Recession

  20. Discount Rate/Multiplier • Lewis v. Todd (1980, Supreme Court of Canada) • The discount rate represents the difference between the interest rate earned on investment income and the rate of inflation • Established by Rule 59.03(1) of the Ontario Rules of Civil Procedure • Discount rate was historically fixed at 2.5% • For trials in 2010 discount rate is 1.25% • For trials in 2011 discount rate is .5%

  21. Examples of Difference inDiscount Rate • Assume 25 year old plaintiff is awarded $50,000 per year for loss of income for 40 years

  22. Hohol v. Pickering, (1985 Alta C.A.) • 39 year old male • Crush fracture of T12 – permanent paraplegia • Employed as a mechanic • Award - $518,648.33 • General damages - $110,000 • Special damages - $42,025.03 • Past loss of earnings - $97,873.30 • Cost of future care - $67,250 • Future loss of income - $201,500

  23. Pickering v. Deacon(1984 B.C.C.A.) • 25 year old male • Severe brain injury • Employed as a farming contractor • Award - $730,794 • General damages - $150,000 • Loss of Earning Capacity - $282,360 • Past loss of earnings - $237,500 • Cost of future care - $425,532 • Management Fees - $64,000 • Special Damages - $15,000

  24. Watkins v. Olafson(1989 S.C.R.) • 33 year old male • Fracture of C6 – complete quadriplegia • Award - $2,075,632 • General damages - $180,000 • Loss of Future Earnings - $540,000 • Past loss of earnings - $263,000 • Cost of future care - $1,046,078 • Management Fees - $75,000 • Special Damages - $19,308

  25. Jacobsen v. Nike (1996 B.C.S.C.) • 19 year old male • Incomplete Quadriplegic • Award - $2,551,435 • General damages - $251,963 • Loss of Future Earnings - $1,000,000 • Cost of Future Care - $1,299,472

  26. Chow v. Hiscock (2005 B.C.S.C.) • 19 year old male • Severe brain injury • Award - $5,679,431 • General damages - $306,500 • Loss of Past and Future Earnings - $1,189,500 • Cost of Future Care - $4,126,407 • Awarded to Mother for Attendant Care - $73,544

  27. Gordon v. Grieg (2007 Ont. S.C.J.) • Severe brain and spinal injuries • Award - $11,369,525 • General damages - $310,000 • Loss of past income - $15,100 • Loss of future income - $1,871,600 • Future care costs - $8,646,900 • Management fee - $525,925 • FLA claim - $150,000

  28. Morrison v. Grieg (2007 Ont. S.C.J.) • Spinal injuries resulting in paraplegia • Award - $12,441,197 • General damages - $310,000 • Loss of past income - $55,400 • Loss of future earnings - $2,298,320 • Future care costs - $8,880,000 • Housing costs - $374,800 • Management fee - $447,164 • Special damages $ 74,713.78 • FLA claim - $165,000

  29. Sandhu v. Wellington Place Apartments (2008 Ont. S.C.J.) • 2 year old male • Brain injury – would function at 12 year old level for remainder of his life • Award - $14,731,945 • General damages - $311,000 • Future loss of earnings - $1,166,283 • Future care costs - $10,942,908 • Guardianship costs - $1,795,800 • FLA claims - $300,000

  30. Sandhu v. Wellington Place Apartments (2008 Ont. S.C.J.) • Summary of Guardianship award • $268,800 – non-corporate guardian • $400,000 legal expenses • $1,127,000 corporate guardian

  31. Marcoccia (Litigation Guardian of) v. Gill (2009 Ont. C.A.) – Jury Award • 20 year old male • Severe brain injury • Award - $16,914,798 • General damages - $312,000 • Loss of future earnings - $1,384,918 • Future care costs - $13,952,064 • Individual guardian fees - $161,250 • Future legal fees - $389,009 • Future corporate co-guardian fees -$715,557

  32. MacNeil v. Bryan(2009 Ont. S.C.J.) • 15 year old female • Severe brain injury • Award - $18,427,207.20 • General damages - $321,968 • Loss of past income - $18,730.33 • Loss of future earnings - $1,374,800 • Loss of future interdependent relationship - $190,300 • Future care costs - $15,158,500 • Management fee - $836,180 • FLA Claims - $312,500

  33. PROGRESSION OF DAMAGE AWARDS (1978-2009)

  34. IMPACT ON INSURERSAND BROKERS • Appropriate limits of coverage – where is the money coming from? • Broker’s duty of care re: appropriate limits • Increased premiums • Reinsurance issues • Catastrophic coverage layers • Reporting issues

  35. IMPACT ON INSURERSAND BROKERS • Excess of loss coverage • Availability • Reporting issues • Bad Faith

  36. Questions?

  37. Thank you!

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