CANADA Law and Practice Contributed by: Chris McKibbin, Avi Sharabi, Alex Valova and Douglas Treilhard, Stieber Berlach LLP
a liability policy written by TruStar, when in fact no pol- icy existed. The Court noted that the defendant was a party to separate litigation involving TruStar, as well as its own broker, involving complex issues of agency law and ostensible authority, but those disputes did not undermine the validity of the CAD600,000 settle- ment. Ontario has recently amended its Insurance Act to introduce licensing requirements and direct over- sight of life and health insurance MGAs. In light of the TruStar allegations, similar regulation for MGAs in other business lines may soon follow. 4.9 Financial Lines Coverage Trends D&O liability insurers face a plethora of emerg- ing disclosure risks. In addition to coverage issues posed by greenwashing (discussed in 4.7 ESG and Climate-Related Coverage ), D&O insurers face new claims related to “AI washing” and “tariff washing”. AI washing claims allege that companies or executives overstate or otherwise misrepresent artificial intelli- gence capabilities. Tariff washing claims allege that companies or executives miscommunicate or omit material information regarding tariff impacts, mitiga- tion strategies and financial implications. In an era when tariffs can be implemented on a Friday, only to be abandoned the following Tuesday, it can be difficult for executives to keep up with both the ever-evolving tariff landscape and their disclosure obligations. Financial Institution Bonds (FIBs), fidelity insurance and commercial crime insurance remain among the most stable and profitable lines of business for insur- ers. In recent years, two key areas have given rise to coverage disputes, as outlined below. • Insureds, brokers and insurers continue to deal with risks posed by social engineering fraud (SEF), business email compromise and computer hacking incidents. Coverage litigation in these areas has focused on the availability of coverage under “tra- ditional” computer fraud and funds transfer fraud coverages, as well as exclusions. Insurers have generally relied successfully on both “traditional” crime exclusions (such as voluntary parting exclu- sions) and SEF-specific exclusions.
• Many cyber insurers have incorporated first-party SEF, computer fraud and funds transfer fraud coverages into cyber liability offerings. This has led to overlapping coverage with FIBs and crime poli- cies, which, in Canada’s common law provinces, is addressed under the doctrine of equitable contri- bution. In July 2026, Ontario (Canada’s most populous prov- ince) overhauled the Statutory Accident Benefits (SABs) provisions of its auto insurance regime to make numerous coverages optional, rather than mandatory. Insurance brokers may face a broader range of Errors & Omissions claims arising from disputes over which optional SAB coverages were offered, purchased or declined. 4.10 Casualty Coverage Trends One key trend is the growth of historical and long-tail contamination claims. Enabled by fairly broad inter- pretations of “occurrence” in CGL policies, these claims threaten to trigger insurance dating back years or decades. One significant example is the recent series of PFAS (per- and polyfluoroalkyl substances) class actions in Canada, modelled on similar litigation in the United States. The Province of British Columbia sued several manufacturers of PFAS in connection with cleanup and related expenses arising from the release of PFAS into the province’s groundwater. Several class pro- ceedings have been commenced, including claims for personal injury arising from exposure to PFAS without appropriate protection, as well as claims for reme- diation expense, nuisance and diminution of property value said to be due to PFAS contamination of private wells. As with other long-tail contamination and envi- ronmental claims, insurers are expected to rely on pol- lution exclusions, but the class proceedings are still at a preliminary stage and the issue has not been tested.
5. Claims Against Insureds 5.1 Key Exposure Areas for Insureds
There have been increases in claims in the areas of civil sexual abuse, construction and medical malprac- tice litigation.
51 I NSURANCE L I T IGATI O N 2026
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