If a significant nexus exists between an insurer and an insured, the insurer is required to pay the insured accident benefits and then determine the issue of entitlement

The Court of Appeal found that the Motor Vehicle Accident Claims Fund (the “Fund”) was an Insurer under Ontario Regulation 283/95 for the purpose of resolving disputes over the payment of accident benefits.

Kingsway General Insurance Co. v. Ontario (Minister of Finance), [2007] O.J. No. 290, Ontario Court of Appeal, J.I. Laskin, J.M. Simmons, E.E. Gillese, J.L. MacFarland JJ.A. and G.D. Lane J. (ad hoc), January 31, 2007

The appeal rose out of a dispute between the Fund and Manitoba Public Insurance Fund and Kingsway General Insurance Company over the payment of accident benefits. Two days before the accident, Kingsway had cancelled its policy of insurance because of insufficient funds in the Insured’s bank account to pay the monthly premium. When Kingsway later refused to pay accident benefits to the Insured, the Fund paid them and sought reimbursement at an arbitration. The arbitration was conducted under Ont. Reg. 283. The Arbitrator concluded that there was a “significant nexus” between the Insured and Kingsway. As a result, this nexus, under s. 2 of the Insurance Act Regulations, Kingsway was required to pay accident benefits and then dispute its obligation to do so. The Arbitrator ordered Kingsway to pay the injured person’s accident benefits permanently because of its breach of s. 2. The Appeal Court judge held that the arbitration was not conducted under Reg. 283 because the Fund was not an “insurer” within the meaning of the Regulation. He held that it was an arbitration by agreement under the Arbitration Act. The appeal judge accepted that Kingsway ought to have paid accident benefits pending the arbitration but held that the arbitration agreement did not authorize the order for Kingsway to pay benefits permanently for a breach of s. 2 of the Regulations. He remitted that dispute to the Arbitrator to determine whether Kingsway was an “insurer”. This decision was appealed by the Fund.

The appeal was allowed in part. The Court found that the arbitration was conducted under Reg. 283 as the Fund was an “insurer” under this Regulation. The Court rejected the Fund’s argument that the court judge erred when he found that the Arbitrator had not found Kingsway to be an insurer at the time of the accident. The Court of Appeal upheld the ruling of the court judge, concluding that the Arbitrator did not determine the question of whether Kingsway was an insurer when the accident occurred. That question was properly remitted back to the Arbitrator.

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