By James Langton
(October 19 – 09:25 ET) – An Ontario court yesterday struck down a bid to certify a class action against Clarica Life Insurance Co. and the Prudential Assurance Co. Ltd.
Justice Peter Cumming of the Superior Court of Ontario turned down the plaintiffs’ class action certification request in a case claiming that Prudential and its agents produced sales illustrations showing “premium offset” dates that appeared guaranteed when they were not.
Premium offset, also known as “vanishing premiums”, is a sales concept that describes how dividends may be used to pay future premiums. The allegations relate to Prudential life insurance policies sold during the high interest rate environment of the 1980s and early 1990s. Clarica is involved because it bought the Canadian life insurance operations from UK-based Prudential in 1995.
Justice Cumming said, “documentation produced does not support the plaintiffs allegations that Prudential engaged in any organized or systemic marketing of premium offset insurance policies.” He stated that “the evidentiary record establishes that Prudential did not produce a discrete premium offset insurance product, did not require or encourage its agents to use the concept, did not train its agents to use the concept in any specific or common way and provided cautions and warnings about premium offsets in its directions to its agents and in the illustration they employed.”
“We’re very pleased with the judge’s decision,” said Barry Triller, Clarica’s executive vice president, Canadian Customers. ” The court’s ruling is consistent with our approach to respond to customer needs on a case by case basis.”
Clarica has an Alternative Dispute Resolution process in place for vanishing premium complaints. Under this program, customers who are not satisfied with how the company addresses their complaint can have their claim decided by an independent arbitrator. The arbitrator is appointed by ADR Chambers, an independent agency of retired judges and senior counsel.
Justice Cumming said Clarica’s ADR program “is a fair formula for determining compensation. The process provides for procedural fairness and transparency. The costs to a claimant are reasonable.”