Canadian Class Action Lawsuit Reveals Secret Insurance Kickback Scheme

A Quebec class action lawsuit has recently been launched against some 20 Canadian insurance companies, over accusations that the defendant insurers engaged in secret kickback agreements with contractors, who were promoted to clients by the insurers. If you are a home or business owner covered by one of the defendant insurers, among them, Desjardins, La Capitale, CAA-Québec and Aviva, you may have over-paid for your insurance premiums for years.

The insurance kickback class action lawsuit Canada includes three categories of Class Members.

Class Members covered by the class action lawsuit Canada include all individuals and businesses residing in Quebec who have been insured under a homeowner’s insurance policy or a business insurance policy issued or renewed by any of the defendants, and:

• Were offered a contractor, bound by the kickback agreement, to repair a covered loss;
• Suffered a loss covered by the policy which necessitated work, and were offered the choice of a contractor bound by the kickback agreement with any of the defendants; or
• Suffered a loss covered by the policy which necessitated work that was performed by a contractor bound by the kickback agreement with any of the defendants.

The insurance kickback class action lawsuit is seeking compensatory damages in addition to punitive damages.

Insurers’ Kickback Scheme Kicks Back

The insurance kickback class action lawsuit alleges that Desjardins along with the other defendants conspired an elaborate and secret kickback scheme, consisting of providing clients with a list of contractors to repair damage to property covered by the insurance policy.

The controversial kickback scheme allegedly involves insurers offering and encouraging clients to choose from a list of the insurers’ “Network of Trusted Contractors” to repair covered damages.

In turn, once a contractor who is part of the “Network of Trusted Contractors” is hired, they pay the insurance company a kickback, according to the proposed class action lawsuit Canada.

These kickback arrangements have allegedly been kept secret from the insureds– and for good reason. The class action lawsuit argues that the secret kickback scheme resulted in insurance companies making a profit from overpriced insurance premiums.

The insurance kickback class action lawsuit alleges that clients were duped into paying high insurance premiums as well as potentially paying out of pocket for repairs for which the defendant insurance companies were receiving kickbacks.

As such, notes the insurance kickback class action lawsuit, clients were short changed in two ways: Policyholders paid high premiums for insurance coverage that was potentially incomplete. According to the proposed class action lawsuit, the defendant insurance companies never paid policyholders the full amount of coverage, because they allegedly received kickbacks from contractors, while charging the same high fees. This amounts to a discrepancy between the amount paid for insurance coverage and the actual coverage received.

Additionally, the insurance kickback class action lawsuit argues that where repair costs surpass the covered limit, policyholders have to pay out of pocket to the contractor, who in turn, will pay kickbacks to the insurer. Unbeknownst to policyholders, when they pay for repairs out of pocket to a contractor, they are also secretly paying the insurance company.

The class action lawsuit accuses the defendant insurance companies to have engaged in this kickback scheme for years, especially in home and business insurance policies.

The kickback scheme class action lawsuit Canada claims that these agreements have been used “in a secret manner” and that this scheme was so well-hidden from policyholders, because the repairs are typically paid for by the insurance companies. Therefore, insureds had little way of knowing that repair costs covered by the insurers, were in fact, less costly than advertised.

Finally, the insurance kickback class action lawsuit stresses that not only have the insurance companies kept the kickback scheme secret, but they “openly promote their ‘network’ of providers” to clients. The proposed class action lawsuit therefore argues that insureds have been misled by the insurance companies regarding the “true value of the insurance coverage.”

Insurance Class Action Lawsuits Across Canada

The insurance kickback class action lawsuit is but another recent lawsuit filed against Canadian insurance companies. Since the onset of the COVID-19 pandemic, several class action lawsuits have been launched against Canada’s major insurance companies over refusals to cover business interruption claims attributed to coronavirus effects.

The latest insurance class action lawsuit Canada to make news targets Gore Mutual Insurance Company after they allegedly unlawfully denied coverage for business interruption claims amid the COVID-19 crisis.

Are you covered under a homeowner or business insurance policy with one of the defendant insurance companies? What do you think about the insurance kickback scheme? Tell us what you think in the comments below!

The plaintiff is represented by Daigle, avocats fiscalistes inc.

The Insurance Kickback Class Action Lawsuit is Alain Tessier v. Desjardins Groupe D’assurances Générales Inc., et al., Case No. 410-06-000008-209, in the Superior Court of Québec, District of Saint-Maurice, Canada.

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