The pandemic has not slowed down the arrival of self-driving vehicles on our roads. This technological advancement is becoming more and more commonplace, giving rise to a need for deep reflection, especially in the automobile insurance industry. The AMF issue paper On October 20, 2021, the Autorité des marchés financiers (AMF) published an issue paper on self-driving vehicles (SDVs),1 deeming that the developments surrounding them were likely to have “considerable impacts on insurers and on the overall functioning of the automobile insurance system” in Quebec. In it, the AMF addresses several interesting avenues for reflection. The public insurance plan Under the current Highway Safety Code, the Minister of Transport can, through a pilot project, require manufacturers or distributors to reimburse the compensation paid by the Société d'assurance automobile du Québec (SAAQ) following accidents involving an SDV.2 In this context, the AMF is asking whether these manufacturers, distributors and sellers should be able to purchase insurance to protect themselves in the event of this type of claim. Private insurance plans With certain exceptions, the Automobile Insurance Act provides that the owner of a vehicle is liable for property damage caused by their vehicle.3 Human error is currently the primary cause of collisions; however, with the advent of SDVs, attributing liability for accidents will become more complicated. The transfer of liability to vehicle manufacturers and their subcontractors in the event of an accident could lead to a possible shift from insurance policies offering individual coverage to policies designed to protect manufacturers or software developers, for example. The AMF is considering whether the current wording of the automobile insurance policies issued for SDVs should move towards the notion of “using” a vehicle, thus modifying the notion of driving. In addition, direct compensation agreements currently provide that insurers compensate their own insureds for the liability of drivers of other vehicles involved in an accident. They allow subrogation against a third party responsible for the collision, but exclude collisions involving the same vehicle owners. In the context of SDVs, where a manufacturer could retain ownership of the vehicle during use, for example with a fleet of vehicles, there is reason to question the application of these agreements. Their very relevance is in doubt, according to the AMF. The AMF raises other interesting discussion points: Should automobile manufacturers be required to disclose accident data involving SDVs to the SAAQ? What data should be used to determine the insurance premiums associated with an SDV? Should the order of application of manufacturers', subcontractors' and owners' insurance policies in the event of an accident involving SDVs be provided for by regulation? Criminal charges in California As a result of an accident involving an SDV driving in “autopilot” mode, killing two (2) people, the driver of the vehicle was charged with two (2) counts of manslaughter. The accident was caused by the SDV leaving a highway at high speed, running a red light and hitting a vehicle in the intersection. In a previous report, the National Transportation Safety Board (NTSB) already reviewed the concept of “automation complacency,” in which drivers are inclined to rely too much on the self-driving modes currently on the market, which still require drivers' attention. It should be kept in mind that full vehicle automation is not yet available and that drivers remain responsible for the operation of SDVs, which are only partially automated at this time. Disabling Tesla’s “Passenger Play” Since December 2020, Tesla has offered the “Passenger Play” feature in several of its vehicle models, which allows drivers to play video games while the car is in motion. After receiving a complaint from a Tesla driver, the NTSB launched an investigation and determined that this option “may distract the driver and increase the risk of a crash.” In December 2021, Tesla announced that in future updates to the system, Passenger Play would only be available when the car is stationary. Robots as border patrollers The U.S. Department of Homeland Security recently confirmed that a pilot project involving robot dogs in border surveillance at the U.S.-Mexico border is underway. The fleet of robots, called “automated ground surveillance vehicles,” is presented as a “force multiplier.” The project is facing a range of criticism, with regard to its true ability to be a tangible agent of change in terms of border security, but also from community advocates, who accuse the government of going too far for the sake of security. According to the authorities, the robots have the potential to reduce the risk of border officers’ exposure to deadly hazards in an environment that is inhospitable to humans. Driverless buses at Plaza St-Hubert Closer to home, we saw driverless buses circulating freely along Plaza St-Hubert in Montréal last fall. Keolis made its SDVs available for a free 30-minute route with seven (7) stops. The project, implemented by the Ville de Montréal with a grant from the Government of Québec, was designed to test the SDVs in a dense urban environment. Document de réflexion, Préparer le Québec à l’arrivée des véhicules automatisées et connectés, Autorité des marchés financiers, October 21, 2021. Highway Safety Code, CQLR, c. C-24.2, s. 633.1. Automobile Insurance Act, CQLR, c. A-25, s. 108.
- Québec, 2015
Léonie Gagné is a member of the Litigation Group of the Montreal office of Lavery Lawyers. She practices mainly in insurance law, product liability as well as civil and professional liability. She acts both for plaintiffs and defendants.
Ms. Gagné has a strong interest in all the technological developments that are susceptible to have impacts on the insurance industry and on the civil liability of persons and manufacturers in Quebec. More specifically, she has been following the progress of both domestic and international legislation pertaining to autonomous vehicles and is fascinated in general by everything that relates to the driving of automated vehicles.
Before beginning her legal studies, Ms. Gagné worked for more than ten years as a classical ballet dancer in Toronto. For several seasons, she performed for the prestigious National Ballet of Canada.
In 2010, she completed a Certificate in Public Relations at Ryerson University, in Toronto, and in 2011, following her official retirement from the arts world, Ms. Gagné received a major grant from the Dancer Transition Resource Center to support her during the completion of her legal studies.
- Léonie Gagné and Jonathan Lacoste-Jobin. All good things come in threes: A loss is still the prerequisite for the insurer's obligation to defend to come into play, ChADPresse, June 2018
- “Save What Can Be Saved” Or The Insured’s Obligation To Minimize Damages, ChADPresse, September 2017
- Gathering Detailed Information Can Bear Fruit, ChADPresse, December 2016
- Waiving The Insurer’s Right To Deny Coverage, ChADPresse, March 2016
- LL.B., Université du Québec à Montréal, 2014
- Public Relations Certificate, Ryerson University, Toronto, 2010
Boards and Professional Affiliations
- Young Bar Association of Montréal
- Association des femmes en assurance de Montréal
- Canadian Actors’ Equity Association, since 2002
- Alliance of Canadian Cinema, Television and Radio Artists, since 2007
- Dancer Transition Resource Center, 2001-2012
The Autorité des marchés financiers (AMF) has recently published a study that it conducted with the largest active insurers in the Quebec insurance industry, entitled “Critical Illness Insurance Supervisory Report”1 (hereafter the “Report”).The study reveals surprising statistics that have led the AMF to issue recommendations for changes to critical illness insurance: Insurers must try to better explain insurance products to consumers in order to help them better understand the policies they are buying. Critical illness insurance Critical illness insurance is insurance that consumers can purchase for themselves or a loved one. It provides for the payment of a sum of money should the insured suffer from a critical illness that matches the definition set out in their insurance contract. The illnesses that are typically covered by this type of insurance are cancers (at a life-threatening stage), heart attacks and strokes. In general, the following principles apply to critical illness insurance: Each policy has a list of illnesses it covers. An insurance policy may also specify exclusions to covered illnesses. When an insurance policy covers a critical illness and no exclusions apply, it may have other conditions such as a waiting period2 or a survival period,3 which can vary from one insurance policy to another. AMF findings The AMF found that insurers deny one out of five critical illness insurance claims. In its Report, it notes that, in general, consumers face several issues with critical illness insurance, both in terms of understanding the product and with its purchase. These issues appear to result from the lack of information, clarity, support and consumer understanding. Covered illnesses and their characteristics differ from one product to the next and from one insurer to another. This makes it hard for consumers to easily compare available products. Moreover, the language used to describe products and draft policies is often complex. Insurance policies also contain many limitations and exclusions (such as pre-existing conditions) and various time limits that can be hard to grasp. AMF Recommendations Based on its findings, the AMF has developed five recommendations for insurers, and it expects insurers to apply corrective action. For the time being, the AMF does not intend to apply sanctions, but says that it will “take appropriate action when required.”4 Avoid situations where prepared materials and advertising result in confusion for consumers or in an incorrect understanding of the product Insurers must exercise care in how they use statistics and slogans in their materials and advertising. The AMF believes that certain forms of advertising can lead consumers to misunderstand the provided coverage because of statistics and slogans that are broader than the actual coverage set out in a contract. Insurers must keep to information that is relevant to the actual features of the product offered. The AMF insists that “it should not appear to consumers as if the product covers more than it really does or as if they require more insurance than they really need.” Better help consumers properly understand the product An insurance policy may cover different illnesses and may contain varying features. The vocabulary used in critical illness insurance contracts is often technical and specific to medical and insurance fields. Insurers should provide relevant and complete information written in accessible language to avoid confusion with the insured. The AMF suggests that insurers make tools such as guides, glossaries, summaries, illustrations and timelines available to help consumers better understand the features of their insurance policies, the scope of their coverage and any limitations, exclusions, time limits, and so forth. Provide insureds with post-purchase assistance The AMF indicates that support after purchasing critical illness insurance is key to help the insured better understand their rights and obligations and when to exercise them. It suggests that insurers implement post-purchase information communication mechanisms, such as making information available on a secure website, periodic statements or reminders of options that can be exercised. Better equip the distribution channels to appropriately advise their clients The AMF stresses that the various distribution channel stakeholders must be able to provide clear and relevant information to the insured over the entire lifecycle of the product. To do so, insurers should improve their training programs and provide appropriate reference tools to their distribution channels, which could include product features, the target client group for each product and a comparison with other types of products to assist customers in making choices. Facilitate the claims, complaint examination and dispute resolution processes Insurers must ensure that they provide sufficient information to the insured and fairly process claims. The AMF suggests that insurers make claims processes and claim forms easily accessible on their websites. The reasons for denying a claim should also be clearly explained in the letter to the insured, and the letter should outline the next steps, such as the opportunity to request a review or to file a complaint. Conclusion Insurers offering critical illness insurance products should implement the recent AMF recommendations to better inform consumers on their rights and obligations and on products offered and the coverage they provide. By implementing the AMF’s suggestions into their critical illness insurance activities, insurers will not only reduce the claims denial rate in the industry, but also avoid potential litigation. Autorité des marchés financiers, Critical Illness Insurance Supervisory Report (Report), Québec City, 2021. [Report] Time period that must elapse before critical illness coverage comes into force after the insurance policy is issued. Time period that must elapse before compensation after a critical illness is diagnosed. Report, p. 7.
Introduction There are multiple insurance policies available on the market to protect your property in Quebec. But how well do you know all your options? In 2016, we addressed peer-to-peer insurance, which is essentially a community of users wanting to insure similar goods and services together.1 However, in November 2021, the Superior Court of Québec rendered an interesting decision2 on self-insurance in the context of insurance offered by two (2) student associations. This form of insurance suggests that the first part of compensation be borne by the insured, who cannot therefore transfer this part of the risk to a third party. The decision of the Superior Court of Québec The facts The Association générale des étudiants hors campus de l’Université du Québec à Trois-Rivières and the Association générale des étudiants de l’Université du Québec à Trois-Rivières (hereinafter, the “Associations”) have been providing supplemental health and dental insurance to their 14,000 student members since 2014. They refer to this as a self-insurance plan, which is managed through insurer Major Group Inc. The Autorité des marchés financiers (“AMF”) applied to the Court for a permanent Order of Injunction to require Major Group Inc. and the Associations to cease their insurance activities. It contended that the Associations were acting as insurers and that they cannot do so without its authorization, as provided for under section 21 of the Insurers Act (“IA”).3 Under the IA, the AMF’s authorization is required to carry on insurer activities, if such activities constitute the operation of an enterprise, regardless of any other activities that may be carried on by the operator. The AMF also claimed that the Associations were not practising self-insurance. The Associations maintained that they were not acting as insurers but engaged in self-insurance. Furthermore, they argued that section 21 of the IA cannot apply to their activities as they are non-profit organizations and therefore cannot operate a business within the meaning of the act. The Court’s grounds The Court defined the concept of a self-insurance contract under Quebec law as follows: the insured chooses not to subscribe an insurance contract for all or part of a risk, opting instead to assume the financial consequences itself, thereby not transferring the risk to a third party. The Court determined that the Associations were the policy holders, and the student members were the insured. In this sense, it cannot be considered a self-insurance contract since the risk of the student members is transferred to the Associations, which agreed to insure them in exchange for the payment of a premium. The Court then concluded that the supplemental health and dental insurance offered by the Associations constitutes insurer activities in the course of operating an enterprise, in accordance with section 21 of the IA. Even though the Associations are not-for-profit organizations, they can operate an enterprise. Furthermore, the application of section 21 of the IA does not require an analysis of the nature of the organization as a whole. The agreements between the student associations and Major Group Inc. had a pre-established economic objective, namely, to benefit from the profits that an insurer would normally make. The Associations have been offering this product for almost seven (7) years; it is, therefore, not an episodic or occasional activity. Conclusion The Superior Court of Québec granted the AMF’s application for a permanent injunction against the Associations. It issued an order to the Associations to cease, within three (3) months of the judgment, all insurance activities under the IA, and to Major Group Inc. to cease acting as a third-party administrator with respect to any self-insurance plan implemented by the Associations. *** Self-insurance can save a policyholder money on an insurance premium by providing protection on the essentials of a claim at a lower cost. However, it must be practised in accordance with the law. “Peer-to-peer” insurance: a grassroots revolution? (lavery.ca). Association générale des étudiants hors campus de l’Université du Québec à Trois-Rivières (AGÉHCUQTR) c. Autorité des marchés financiers, 2021 QCSC 5090. Insurers Act CQLR c. A-32.1.
Introduction Non-liability clauses are often included in many types of contracts. In principle, they are valid and used to limit (limitation of liability clause) or eliminate (exoneration clause) the liability of a party with respect to its obligations contained in a contract. The recent unanimous decision of the Supreme Court of Canada confirms that under Quebec law, parties may limit or exclude their liability in a contract by mutual agreement. However, a party may have such a clause declared inoperative by invoking the doctrine of breach of a fundamental obligation of the contract. In this case, the Supreme Court of Canada confirmed the validity of the clause at issue and circumscribed the limits of the application of the doctrine. The Supreme Court of Canada’s decision The facts The dispute relates to a contract signed between 6362222 Canada inc. (“Createch”), a consulting firm specializing in the improvement and implementation of integrated management systems, and Prelco inc. (“Prelco”), a manufacturing company specializing in the fabrication and transformation of flat glass. Under the terms of the contract that the parties concluded in 2008, Createch was to provide software and professional services to help Prelco implement an integrated management system. Createch prepared a draft contract and Prelco did not ask for any changes to the proposed conditions. A clause entitled Llimited Liability was included in the contract, which stipulated that Createch’s liability to Prelco for damages attributed to any cause whatsoever would be limited to amounts paid to Createch, and that Createch could not be held liable for any damages resulting from the loss of data, profits or revenues or from the use of products or for any other special, consequential or indirect damages. When the system was implemented, numerous problems arose and Prelco decided to terminate its contractual relationship with Createch. Prelco brought an action for damages against Createch for the reimbursement of an overpayment, costs incurred to restore the system, claims from its customers and loss of profits. Createch filed a cross-application for the unpaid balance for the project. At trial, the Superior Court of Québec concluded that the limitation of liability clause was inoperative under the doctrine of breach of fundamental obligation, because Createch had breached its fundamental obligation by failing to take Prelco’s operating needs into account when implementing the integrated management system. The Court of Appeal of Québec confirmed the trial judge’s decision and held that the doctrine of breach of fundamental obligation can annul the effect of an exoneration or limitation of liability clause by the mere fact that a breach relates to a fundamental obligation. The Supreme Court of Canada’s reasons The Supreme Court of Canada allowed the appeal and set aside the decisions of the lower courts. Per Chief Justice Wagner and Justice Kasirer, the Supreme Court held that the limitation of liability clause in the parties’ contract was valid, despite the fact that Createch had breached its fundamental obligation. The Supreme Court addressed the two legal bases for the existence of the doctrine of breach of fundamental obligation: the validity of the clause having regard to public order and he validity of the clause having regard to the requirement relating to the cause of the obligation. In this case, the Court determined that public order could not render the limitation of liability clause inoperative as the contract at issue was one by mutual agreement and the parties were free to share the risks associated with a contractual breach between them, even if the breach involved a fundamental obligation. As for the validity of the limitation of liability clause, the Court determined that it was not a no obligation clause that would exclude the reciprocity of obligations. Createch had significant obligations to Prelco, and Prelco could keep the integrated management system, obtain damages for unsatisfactory services and be compensated for necessary costs for specific performance by replacement, but no higher than what had been paid to Createch. A limitation of liability clause does not therefore deprive the contractual obligation of its objective cause and does not exclude all sanctions. The Court explains: “ Thus, art. 1371 C.C.Q. applies to contract clauses that negate or exclude all of the debtor’s obligations and, in so doing, deprive the correlative obligation of its cause. Where a contract includes such clauses, it can be said that the reciprocal nature of the contractual relationship is called into question (arts. 1371, 1378 para. 1, 1380 para. 1, 1381 para. 1 and 1458 C.C.Q.). To apply a more exacting criterion would amount to annulling or revising a contract on assessing the equivalence rather than the existence of the debtor’s prestation and, as a result, to indirectly introducing the concept of lesion, which is narrowly delimited in the Code.”1 Prelco remains bound by the limitation of liability clause in this case. The Supreme Court of Canada is of the view that the trial judge and the Court of Appeal erred in law in declaring the limitation of liability clause inoperative. It allowed Createch’s appeal. Conclusion This Supreme Court of Canada decision confirms the importance of the principles of autonomy of contracting parties and freedom of contract between sophisticated legal persons in Quebec law. The doctrine of breach of fundamental obligation does not permit the circumvention of the principle of freedom of contract: It cannot be said that an obligation is deprived of its cause when a sanction for nonperformance of obligations fundamental to the contract is provided for in a limitation of liability clause.  6362222 Canada inc. v. Prelco inc., 2021 SCC 39, para. 86..
Léonie Gagné and Jonathan Lacoste-Jobin publish an article on the insured persons' obligation to minimize their damage. (in french only)
On May 11, Léonie Gagné and Jonathan Lacoste-Jobin, respectively an associate and a partner from our Litigation and Dispute Resolution Group presented a seminar to claim adjusters from Cuierrier & Associés and select clients at the Le Mirage Golf Club in Terrebonne. Entitled “Practical advice to claim adjusters: from the loss to the trial”, the seminar provided claim adjusters with advice to assist them when investigating and recovering indemnities paid by the insurer as well as with the insured’s defense. The conference covered among other subjects the drafting a reservation of rights letter, notices that can be sent by claim adjusters, a review of the new Code of Civil Procedure, and an overview of related decisions.
On April 3, Léonie Gagné, a lawyer in our Litigation and Conflict Resolution Group, moderated a seminar during the Insurtech QC 2017 Day, which was held at the Quebec City port terminal as part of the Semaine numérique (Digital Week) in Quebec City. The seminar, entitled Répondre aux besoins des nouveaux consommateurs : l'assurance de l'économie collaborative (Responding to the Needs of the New Consumer: Insurance of Collaborative Economics), the two speakers Emmanuelle Mury, co-founder of InsPeer, a French peer-to-peer insurance platform, and Tim Attia, CEO of Slice Labs, an American on-demand insurance platform, discussed the topic of the transformation of the insurance industry and the emergence of insurance platforms in this new era of Insurance 2.0.
On March 14, Léonie Gagné, a lawyer in the Litigation and Conflict Resolution Group, led a discussion as part of the sixth annual Journée de l’assurance de dommages (damage insurance conference) at the Montréal Convention Centre organized by the Journal de l’assurance, this year’s theme being “Connectés à l’assurance réinventée” (Connected to reinvented insurance). Over the years, the Journée de l’assurance has become an event not to be missed in the insurance industry. The panel discussion, entitled L’économie collaborative change la société : l’assurance en fera-t-elle partie ? (the sharing economy is changing society: will insurance be part of that change?), saw panelists examine the business potential for insurers and insurance brokers in the emergence of the sharing economy.