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Normandin Beaudry

Exclusions included in group insurance policies


There, in black and white

NB Bulletin Vol. 4 N. 13, November 2001

Following the September 11¸ 2001 events which took place in the United States¸ several Group Insurance Plan Managers raised questions on their insurance plans.

The answer to the question: "Would my employees have been covered if they had been among the victims of last September 11?" varies from one Insurer to the other¸ and coverage does not necessarily apply in the same way for all Benefits.

In order to understand how each Insurer applies coverage¸ let us first mention that most Insurers have distinct exclusions for each Benefit of their Plans. One must therefore examine carefully the exclusion provisions pertaining to each Benefit in order to identify which one may be subject to a specific type of exclusion.

Among the exclusion provisions most frequently used¸ some include specific terms such as "war¸ declared or undeclared"¸ "act of war" or "assault" while others are more general in nature such as "hostilities of any kind". Moreover¸ Insurers who take a more restrictive approach clearly state in their contracts that exclusions apply¸ whether or not the insured person is "a participant or a victim" relative to acts that are included within the exclusion provisions while other contracts are not explicit on this matter.

However¸ these terms and situations are subject to interpretation according to each particular occurrence. Indeed¸ each Insurer may apply its exclusion provisions differently¸ such as¸ for example¸ when interpreting the term "war". During the days following last September 11¸ a number of Insurers sent notices to their clients stating that they did not consider the said events as "acts of war" and that the coverage applied. Other Insurers did not state their position on the matter. Moreover¸ a number of American Insurers went so far as to publicly state that they would not apply the exclusion provisions related to the term "act of terrorism" included in their policies.

The Insurance companies under the Canadian Life and Health Insurance Association Inc. (CLHIA) examined the exclusion provisions in their contracts after the September 11¸ 2001 events. This examination allowed them to conclude that exclusions related to war or other similar events are not part of and do not generally apply to basic life insurance coverage but that they are relatively more numerous in other types of coverage. While the CLHIA may publish standardization guidelines for the industry¸ each Insurer has his own interpretation of his contractual provisions.

A written confirmation of the Insurer´s contractual provisions interpretation would be warranted for promoters who want to ascertain the position of their Insurer(s) regarding potential act of war or terrorism in the future.

Finally¸ Plan Promoters should pay particular attention to expatriated employees working abroad. A confirmation of applicable exclusion provisions should be obtained from their Insurer in order to confirm that such employees are adequately protected and to be aware of any potential exclusion. It is also possible that some Benefits may not be covered if claims were incurred in specific countries if such countries are considered by the Insurer to be " at war" or at "high risk of war".

Since this situation may change quickly¸ we shall keep you informed of new developments on this matter.


Please feel free to contact us for additional information.

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