Olorenshaw v. Atrens-Counsel Insurance Brokers Incorporated, 2012 HRTO 616

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Denis Olorenshaw

Applicant

-and-

Atrens-Counsel Insurance Brokers Incorporated and Western Assurance Company

Respondents

INTERIM DECISION

Adjudicator: Eric Whist

Date: March 23, 2012

Citation: 2012 HRTO 616

Indexed as: Olorenshaw v. Atrens-Counsel Insurance Brokers Incorporated

APPEARANCES

Denis Olorenshaw, Applicant ) Self-represented

Atrens-Counsel Insurance ) Maria Kotsopoulos, Counsel

Brokers Incorporated, )

Western Assurance Company, )

Respondents )

1This Application was filed on December 4, 2009 under section 34 of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”). The Application alleges discrimination in services on the basis of age. The Application alleges that when the applicant contacted Atrens-Counsel Insurance Brokers Incorporated (“Atrens-Counsel”) he was provided with a quote for an auto insurance premium that was higher than a quote provided to his daughter for a similar car. The Application alleges that this difference in rates was based on the fact that the applicant was over 80 years of age.

BACKGROUND

2On March 30, 2010 the Tribunal received a Request for an Order during Proceedings (“RFOP”) from Atrens-Counsel and Western Assurance. The RFOP submitted that it was appropriate that Western Assurance be added as a respondent given that the insurance rates of concern to the applicant were set by Western Assurance.

3The RFOP submitted that Atrens-Counsel, as an insurance broker, does not set insurance rates including the rate quoted to the applicant but rather acts as an intermediary on behalf of consumers seeking insurance coverage from licensed insurers, such as Western Assurance. Consequently, it was submitted that the Application against Atrens-Counsel cannot succeed and should be dismissed.

4The RFOP submitted that the Application should also be dismissed against Western Assurance because the rates for automobile insurance quoted to the applicant are reasonable and bona fide pursuant to s. 22 of the Code and as such s. 22 provides a defence to the applicant’s allegations. Section 22 states:

22. The right under sections 1 and 3 to equal treatment with respect to services and to contract on equal terms, without discrimination because of age, sex, marital status, family status or disability, is not infringed where a contract of automobile, life, accident or sickness or disability insurance or a contract of group insurance between an insurer and an association or person other than an employer, or a life annuity, differentiates or makes a distinction, exclusion or preference on reasonable and bona fide grounds because of age, sex, marital status, family status or disability.

5On June 2, 2011, the Tribunal issued a Case Assessment Direction (“CAD”) directing the applicant, Atrens-Counsel and Western Assurance to participate in a summary hearing to be held by teleconference pursuant to Rule 19A of its Rules of Procedure. The issue to be determined in a summary hearing is whether an Application should be dismissed in whole or in part on the basis that there is no reasonable prospect that the Application or part of the Application will succeed. The CAD indicates that the applicant would have to show why s. 22 of the Code does not provide a full defence to the respondents’ actions.

6The summary hearing was held on November 7, 2011. During the summary hearing, I heard submissions from the applicant and the respondents’ counsel. I do not need to outline these submissions in their totality for the purposes of my decision.

7The applicant submits that there is no information including statistical data before the Tribunal that would allow the Tribunal to determine whether the rate quoted by Atrens-Counsel and set by Western Assurance for automobile insurance for him is reasonable and bona fide and as such the respondents cannot rely on the defense offered by s. 22 of the Code.

8The applicant submits that it is not evident that the rates quoted to him are reasonable and bona fide in light of the fact that other insurers, unlike Western Assurance, do not have higher automobile insurance rates for persons over 80 years of age. The applicant submits that he has been quoted a rate for auto insurance from another licensed insurer that was the same as a rate offered for his daughter who is less than 80 years of age. He submits that he was also quoted a rate for auto insurance from yet another licensed insurer lower than one it quoted for his daughter.

9The applicant submits that the respondents should be required to show on what basis they have concluded that drivers over 80 pose a greater risk and hence need to be charged higher insurance premiums. He submits that older drivers have been identified as having a number of strengths such as judgment, and experience and he notes his own case of having over 60 years of experience driving, an excellent driving record and having passed all the requisite Ministry of Transportation requirements such as eye testing.

10The applicant referred extensively to the Supreme Court of Canada decision in Zurich Insurance Co. v. Ontario (Human Rights Commission, 1992 CanLII 67 (SCC), [1992] 2 S.C.R. 321. This is a decision that upheld insurance rates based on s. 21 of the previous Ontario Human Rights Code (1981), a section that is virtually identical to s. 22 of the current Code. In Zurich, the Supreme Court held that Zurich could charge higher automobile insurance rates to young, single, male drivers under 25 years of age. The Court ruled that even though these rates were discriminatory on their face based on age, marital status and sex they were reasonable and bona fide under s. 21 of the previous Code.

11The applicant submits that it is relevant to note that in Zurich the Court was considering a different category of persons and had before it information about the relative risks posed by young male drivers under the age of 25. The applicant submits that the respondents have not presented evidence, including statistical data to establish that drivers over 80 have collectively poorer driving practices or pose greater insurance risks than younger drivers, for example, those persons between 65 and 79 years of age.

12The applicant submits that the Court in Zurich was also mindful of the fact that the insurance industry practices they were considering (dating from 1983) relied on existing classification systems based on Code-related grounds and that the Court determined that it would be inappropriate for it to find that a particular practice was unreasonable when no reasonable alternative existed. The applicant notes that the Court did find that “the insurance industry must be allowed time to determine whether it can restructure its classification system in a manner that will eliminate discrimination based on enumerated group characteristics and still reflect the disparate risks of different classes of drivers” and that “the insurance industry must strive to avoid setting premiums based on enumerated grounds”. The applicant submitted that age should not be a factor used to determine his insurance premium given that the insurance industry has had time since the decision in Zurich (1992) to consider and rely on reasonable alternatives for setting premiums.

13The respondents submit that Western Assurance’s practice of determining rates and premiums for automobile insurance is reasonable and bona fide and, as such, s. 22 provides a defense to the allegation of discrimination

14The respondents submit that automobile insurance companies use a number of factors to determine an individual’s insurance rate (their “Risk Classification System”) Although there are a number of factors that insurers are prohibited from using in establishing their risk classifications (for example a person’s income, employment history, race or creed) age is not a prohibited factor. Indeed, the respondents submit that age is typically used as a risk factor in determining rates for automobile insurance in a risk classification system.

15The respondents submit that pursuant to applicable law all automobile insurers in Ontario must report and provide data to the Financial Services Commission of Ontario (“FSCO”), receive approval from FSCO for its risk classification system and each and every corresponding automobile insurance rate that they make available in Ontario. The respondents submit that in reviewing an insurer-proposed risk classification system FSCO considers an insurer’s projections of what premiums will be needed to meet future claims costs. The projections are based on an insurer’s current data including premiums collected, claims paid out and administrative expenses. Insurers are also statutorily required to compile and report statistics and other insurance data as required about their risk classification system to FSCO.

16The respondents submit that the rate provided to the applicant by Western Assurance would have been approved by FSCO and that an insurer cannot charge a rate lower or higher than an approved rate.

17The respondents rely on the Zurich decision and submits that this decision determined that an insurer can rely on age in determining an automobile insurance rate The respondents submit that the Supreme Court ultimately concluded that a practice which may be otherwise discriminatory is reasonable within this section of the Code if it is a) based on a sound and accepted insurance practice and b) there is no practical alternative and it is bona fide if the practice is adopted honestly, in the interests of sound and accepted business practice and is not for the purposes of defeating the rights protected under the Code.

18The respondents submit the use of age as a risk classification system is a standard insurance practice. They submit that Western Assurance’s use of age as a risk factor in determining the applicant’s insurance rate was undertaken honestly and in good faith in order to achieve legitimate business objectives of charging premiums to policyholders commensurate with the risk in doing so. It submits that its rates have been approved by the insurance industry regulator.

ANALYSIS AND DECISION

19Rule 19A.1 reads as follows:

19A.1 The Tribunal may hold a summary hearing, on its own initiative or at the request of a party, on the question of whether an Application should be dismissed in whole or in part on the basis that there is no reasonable prospect that the Application or part of the Application will succeed.

20In Dabic v. Windsor Police Service, 2010 HRTO 1994 at paras. 7-9, the Tribunal made the following observations on the type of inquiry that may be involved in a summary hearing:

A summary hearing is generally ordered at an early stage in the process. In some cases, the respondent may not have been required to provide a response. In others, the respondent may have responded but disclosure of all arguably relevant documents and the preparation of witness statements, which generally occur following the Notice of Hearing, will not yet have happened.

In some cases, the issue at the summary hearing may be whether, assuming all the allegations in the application to be true, it has a reasonable prospect of success. In these cases, the focus will generally be on the legal analysis and whether what the applicant alleges may be reasonably considered to amount to a Code violation.

In other cases, the focus of the summary hearing may be on whether there is a reasonable prospect that the applicant can prove, on a balance of probabilities, that his or her Code rights were violated. Often, such cases will deal with whether the applicant can show a link between an event and the grounds upon which he or she makes the claim. The issue will be whether there is a reasonable prospect that evidence the applicant has or that is reasonably available to him or her can show a link between the event and the alleged prohibited ground.

21The present case falls into the first category; assuming to be true that the applicant’s age was a factor in the applicant being charged a higher rate for automobile insurance, is there a reasonable prospect that the applicant can prove, on a balance of probabilities, that there has been a violation of the Code?

22The Application against Atrens-Counsel is dismissed. Atrens-Counsel, as an insurance broker communicates to potential customers insurance rates set by insurers such as Western Assurance. It does not set nor can it vary insurance rates set by insurers including the rate the applicant finds to be discriminatory. Consequently, the Application has no reasonable prospect of succeeding against Atrens-Counsel.

23The Application against Western Assurance will proceed to a hearing on its merits. I cannot conclude that the Application has no reasonable prospect of succeeding. It is not clear, at this preliminary stage, that s. 22 of the Code provides a full defence to the Application.

24In Zurich, the Supreme Court describes the difficulties in considering insurance practices in the context of human rights:

The determination of insurance rates and benefits does not fit easily within traditional human rights concepts. The underlying philosophy of human rights legislation is that an individual has a right to be dealt with on his or her own merits and not on the basis of group characteristics. Conversely, insurance rates are set based on statistics relating to the degree of risk associated with a class or group of persons. Although not all persons in the class share the same risk characteristics, no one would suggest that each insured be assessed individually. That would be wholly impractical. Sometimes the class or group classification chosen will coincide with a prohibited ground of discrimination, bringing the rating scheme into conflict with human rights legislation. The Code, in s. 21 [section 22 in the current Code] and other sections, has recognized the special problem of insurance. It exempts an insurer from liability for discrimination if based on reasonable and bona fide grounds.

It is an important principle of insurance practice that premiums charged to individual policy holders vary as much as possible in accordance with the degree of risk posed by the policy holder. In view of the fact that individualized assessment cannot be done, it is necessary to classify the degree of risk on the basis of groups who share characteristics which are material to the risk. It is inevitable that some will be placed in a group who do not share the average characteristics of that group. Rates developed on the basis of the average characteristics of this group will thus discriminate against them.

25Justice Sopinka, writing for the majority, then goes on to state the test for when differential insurance rates that are discriminatory can be considered to be reasonable and bona fide:

In my opinion, a discriminatory practice is "reasonable" within the meaning of s. 21 of the Code if (a) it is based on a sound and accepted insurance practice; and (b) there is no practical alternative. Under (a), a practice is sound if it is one which it is desirable to adopt for the purpose of achieving the legitimate business objective of charging premiums that are commensurate with risk. Under (b), the availability of a practical alternative is a question of fact to be determined having regard to all of the facts of the case.

In order to meet the test of "bona fides", the practice must be one that was adopted honestly, in the interests of sound and accepted business practice and not for the purpose of defeating the rights protected under the Code.

26The respondents submit that the rate offered to the applicant is reasonable based on the fact that in considering age as a factor in determining the applicant’s insurance premium, Western Assurance was following a sound and accepted industry practice and one that has been approved by the industry regulator. This potentially addresses the first part of the reasonableness test set out in Zurich, although it is noted that the applicant is challenging whether the proposed premium for the applicant was commensurate with risk.

27However, what is clearer from the information before me is that I cannot conclude that the second part of the reasonableness test set out in Zurich has been met and that the respondents can rely, at this preliminary stage, on s. 22. The issue here is whether Western Assurance had a practical alternative to relying on age as a factor when determining the applicant’s premium. However, the respondents effectively relied on submissions that age is allowed as a risk factor when determining insurance premiums. and it was reasonable for them to rely on this industry practice. The issue of whether practical alternatives are available was not explored at the summary hearing and there was no opportunity to make a factual determination about whether there are such alternatives. Under the circumstances, I cannot conclude that the applicant has no reasonable prospect for success.

28I am of the further view that this decision is consistent with the reasoning applied by the Tribunal in its recent decision in Jacques v. The Dominion of Canada General Insurance Company, 2012 HRTO 504.

29In summary, it is not evident that the applicant has no reasonable prospect of success against Western Assurance. The Application against it will be set down for a two-day hearing on its merits. The applicant may, as part of the hearing, continue to challenge whether the proposed premium for the applicant is commensurate with risk. The Application against Atrens-Counsel Insurance Brokers is dismissed.

30I am not seized of this matter