Rising litigation costs are affecting commercial insurance in Canada

Litigation in Canada compared to the U.S.

IBC commissioned Dentons to research emerging trends in legal practices in both Canada and the United States that are placing pressure on commercial insurance claims. The U.S. Chamber of Commerce recently put a price tag on the cost of lawsuits in the country at 2.1% of the U.S. GDP or $4,207 per U.S. household.

Dentons found that litigation trends driving liability pressure in the United States are, for the most part, the same as those in Canada, although to a lesser degree in this country than can be found in our southern neighbours.

In addition to the growth of litigation funding, Dentons also found that class action litigation has significantly increased across Canada, which a release attributes to an increase in legal advertising that encourages Canadians to launch lawsuits.

The report notes B.C. in particular is a very plaintiff-friendly province.

Canada has a whole is seeing an increase of active civil cases and arbitration as well as an increase in litigation related to cybersecurity, privacy and regulatory matters including environmental and securities disclosures.

At the same time, Canada sees significantly lower damages awards than in the U.S.

"Insurance consumers ultimately foot the bill for legal abuse," said McGuinty. "It's important to have a legal framework that addresses civil wrongs and provides remedies for individuals who have been harmed by the actions of others. But as we're also seeing in the United States, there are weaknesses in the current legal systems that are ripe for exploitation. We hope this report provides some insight for governments and regulators on the need to stay on top of litigation trends in Canada and avoid the type of impact we've seen south of the border."