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Comments regarding Alberta's Estate Administration Reform Project - Discussion Guide


Release Date: 04/30/2013
Staff Reference: Jodi Skeates

April 30, 2013

Alberta Justice and Solicitor General
4th Floor, Bowker Building
9833-109 Street
Edmonton, AB
T5K 2E8

Dear Members of the Estate Administration Reform Team

Re: Estate Administration Reform Project - Discussion Guide

The Canadian Life and Health Insurance Association ("CLHIA") welcomes this opportunity to provide input to the Alberta Justice and Solicitor General through the Estate Administration Reform Team on its "Alberta Estate Administration Reform Project - Discussion Guide" ("Discussion Paper").

The CLHIA, established in 1894, is a voluntary association with member companies which account for 99 per cent of Canada's life and health insurance business. The life and health insurance industry is a significant economic and social contributor in Alberta. It protects about 2.6 million Alberta residents and makes $5.9 billion a year in benefit payments to Alberta residents (of which 90 per cent goes to living policyholders as annuity, disability, supplementary health or other benefits and the remaining 10 per cent goes to beneficiaries as death claims). In addition, the industry has $64.5 billion invested in Alberta’s economy. Seventy-three life and health insurers are licensed to operate in Alberta.

The CLHIA is supportive of the Discussion Paper's stated goal "…to support timely, efficient and effective transfer of property to beneficiaries" and its adoption of Principle 2.2 "The law should reduce delay and cost for Estate Representatives, beneficiaries and their advisors." Designating the beneficiary of life and/or accidental death insurance proceeds (whether within insurance documentation or a will) is an important part of any estate plan. To this end, the CLHIA applauds the work of the Estate Administration Reform Team.

We do have two concerns that, once addressed, would clarify the ability of an insurance company to service and inform beneficiaries of insurance claims and insurance policyholders.

We note that Section C, "Release of Preliminary/Interim Information" of the Discussion Paper includes a reference to insurance companies. Specifically, at page 11, the Discussion Paper states (emphasis added):

      Currently there is a problem that arises with estate administration in relation to the release of information. Some institutions such as banks and insurance companies will not release information unless the individual who is seeking the information can provide court documentation showing that they are the Estate Representative.
      . . .

      Input from consultations in May 2010 indicated that Estate Representatives often experience difficulty in getting information about the assets of the deceased from financial institutions. Financial institutions refer to privacy concerns and often require a formal grant of authority before releasing information…
The Discussion Paper then references the Personal Information Protection and Electronic Documents Act ("PIPEDA") and Personal Information Protection Act ("PIPA") noting that these laws govern federally regulated banks and provincially regulated credit unions respectively and goes on to recommend that new legislation include a statutory list of persons with authority to obtain information only on the assets of the deceased.

While the Discussion Paper references "a problem" with insurance companies, there is no accompanying clarification of what exactly that problem may be. Like banks and credit unions, insurance companies must also comply with the collection, use and disclosure of personal information requirements set out in PIPEDA and PIPA. In the context of life and accidental death insurance, a beneficiary or policyholder may request additional information on the status of an insurance claim but the insurance company is unable to disclose this information without first obtaining additional consent from the Estate Representative.

To address this situation not only in the context of banks and credit unions but in the context of insurance companies, the CLHIA makes the following recommendations:

· That the term "assets" (referred to in section C of the Discussion Paper) be broadly defined to include insurance policies under which the deceased was covered; and

· That the "list of persons with authority to obtain information only on the assets of the deceased" (referred to in section C of the Discussion Paper) be expanded to include "a beneficiary of insurance monies" and "the policyholder of insurance under which the deceased was covered", with regard to the particular assets of the deceased with respect to which the person is the beneficiary or policyholder, respectively.

If the Estate Administration Reform Team is aware of an identifiable "problem" specifically relating to insurance companies, we would be pleased to further discuss possible legislative rectification.

Our second concern is the inverse situation to what the Discussion Paper sets out to be a problem experienced by the Estate Representative in the context of obtaining information from banks and credit unions. That is, in the context of life and accidental death insurance claims, when the Estate Representative refuses to provide the consent (or revokes the existing consent provided by the deceased while living) required for an insurance company to obtain the personal information of the deceased that is necessary to adjudicate the claim.

Most often, this situation occurs when the beneficiary of a life or accidental death insurance benefit is someone other than the Estate Representative especially when there is a complex familial (an unfortunately stereotypical example is where the beneficiary is the former spouse or children of the deceased and the Estate Representative is the current spouse or children) or business (for example, when the beneficiary is a corporate policyholder) situation. In these situations, the insurance company may not able to obtain the financial or medical information necessary to adjudicate the claim.

While insurance companies will obtain the requisite consent from the deceased in the application for insurance completed while the deceased is living (and indeed the ability to rely on the consent obtained prior to death was recognized by the Supreme Court of Canada in its 1992 decision in Frenette v. Metropolitan Life Insurance Co., [1992] 1 SCR 637) as the Discussion Paper accurately points out, ss. 61(1)(d) of PIPA confers the rights and powers of the deceased to the Estate Representative for the administration of the estate. That also means that the Estate Representative can revoke consent, where the matter relates to administration of the estate.

We note that at Section B, "Estate Representative Duties", the Discussion Paper includes within the proposed "duty of care" for an Estate Representative a requirement to consider the "best interests of beneficiaries." Although this concept is likely meant to capture a beneficiary of estate proceeds and not insurance proceeds that pass outside of the will, we recommend that the concept be extended to include co-operation with insurance companies.

Should you wish to discuss our recommendations, please contact me by phone at (416) 359-2015 or by email at jskeates@clhia.ca.

Sincerely

"Original Signed by Jodi L. Skeates"

Jodi L. Skeates
Senior Counsel

Cc: Brad Geddes
Deputy Superintendent of Insurance Regulations & Market Conduct
Alberta Treasury Board and Finance