The Ontario Superior Court of Justice has approved a $213.5 million national class action settlement involving Sun Life Assurance Company of Canada, according to a release from class counsel issued Tuesday.
The case, Fehr et al. v. Sun Life Assurance Company of Canada, began in 2010. It concerns the alleged improper administration of three universal life policies: Universal Plus, Flexiplus and OptiMet. Metropolitan Life Insurance Co. (MetLife) agents sold them in Canada from 1987 through 1998. Sun Life has denied any wrongdoing.
Class counsel Kim Spencer McPhee Barristers P.C. calls it the largest reported settlement in any life insurance policy dispute in Canadian history. It covers about 70,000 eligible current and former Flexiplus and Universal Plus policyholders.
The release says the court found the deal “fair, reasonable, and in the best interests of the Class.” It also said “the public interest and the interests of the Class are well-served by the outcome.”
Eligible current and former Flexiplus policyholders will receive direct payments covering a portion of past cost of insurance (COI) and administration fee increases. The settlement also permanently freezes COI rates and administration fees for current Flexiplus policyholders.
The Universal Plus claims centred on the term “Maximum Premium” in earlier versions of the policy. Certain current and former holders of pre-1992 policies will receive compensation if their COI charges exceeded the stated base coverage Maximum Premium. For current pre-1992 holders, future COI charges will be capped at a set multiple of that amount.
The release does not give individual payment amounts. OptiMet class members are no longer included in the settlement, Daily Hive reported, citing the class action website.
Sun Life announced a settlement in principle on April 30. It said then that it expected a charge of about $145 million to first-quarter net income.
The insurer says it inherited the policies through past Canadian acquisitions and that the case involves no products it sold. It has said it will seek full recourse from MetLife under an indemnity if the court approves the deal. A Sun Life spokesperson pointed to those comments, the Canadian Press reported.
“We are pleased to see this litigation finally come to a close,” said representative plaintiff Eldon Fehr. He said class counsel “has fought this case on our behalf for over a decade and a half.” The Ontario Court of Appeal certified the class in 2018.
Megan B. McPhee, class counsel and managing principal at Kim Spencer McPhee, said the settlement “will put money back in Class members’ pockets.”
Insurance Business has reported that ambiguity over how insurers can adjust charges is a recurring theme in universal life class actions. Brokers with clients holding legacy policies may field eligibility questions.
