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Loss transfer regime is applicable even when the accident occurred outside of Ontario, if Ontario insurers are involved

February 2010

Primmum Insurance Company v. Allstate Insurance Company, 2010 ONSC 986, involved an application for the appointment of an arbitrator in respect of a loss transfer dispute between Primmum Insurance Company and Allstate Insurance Company.

Kevin Mutch, insured by Primmum, was driving a motorcycle on U.S. Highway 64 in North Carolina when he was struck and injured by a pickup truck driven by Joe Griffith, insured by Allstate. Both Primmum and Allstate are licensed to sell insurance in Ontario.

Mutch applied for statutory accident benefits from Primmum. Allstate was served with a notice to participate and a demand for arbitration. Allstate replied that it was not an Ontario insurer and the accident did not happen in Ontario and, accordingly, it was not subject to the loss transfer scheme.

S.275(1) of the Insurance Act provides indemnification between insurers, for accident benefits, as set out in the regulations. S.275(4) of the Insurance Act requires that insurers submit to an arbitration where there is a disagreement between them. The scheme of the legislation under s.275 of the Insurance Act and companion regulations is to provide for an expedient and summary method of reimbursing the first party insurer for the payment of non-fault benefits from the second party insurer whose insured was fully or partially responsible for the accident.

S.9 of R.R.O. 1990, Reg. 664, "Automobile Insurance", provides that the insurer of an automobile other than motorcycles is a second party insurer that would be required to indemnify the "first party insurer" responsible under s.268(2) for the payment of accident benefits if the motor cycle was involved in the incident out of which the responsibility to pay accident benefits arises.

Allstate argued that its policy was issued in North Carolina by a U.S. insurer with a much lower maximum limit and without accident benefits, which resulted in a lower premium.

The court held that Allstate was an insurer under s.1 of the Insurance Act because it issued a "contract" and because it was licensed to sell insurance in Ontario under s.224(1)(c) of the Insurance Act. The court stated that the premiums that Allstate charged for the insurance or the limits of coverage in North Carolina were not of concern. The court further stated that Allstate can be subject to the statutory cause of action in Ontario even when the accident occurred in North Carolina and that this was not an impermissible extraterritorial exercise of Ontario jurisdiction.


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