From punitive damages thresholds to the beleaguered LAT, it’s a system stacked against claimants
Canada’s property and casualty insurers posted a combined $7.88 billion in profit in the third quarter of 2025 alone. That number is exactly why Shane Katz thinks the courts have got punitive damages wrong.
“The whole point is to deter bad faith conduct from insurance companies and for some reason the courts have failed to grasp the fact these companies make billions in profit,” says Katz, senior lawyer at Singer Kwinter. “Slapping a $100,000 punitive award on them is essentially just a licensing fee to continue doing business this way. You need to award millions of dollars to make deterrence work.”
Singer Kwinter set the tone for punitive damages awards
Singer Kwinter built its reputation for taking on insurers in the early 2000s, when founding partner Alf Kwinter secured a string of significant punitive damages verdicts. In 2003, a jury awarded punitive damages of $350,000 in Plester v. Wawanesa Mutual Insurance Co. after a five-week trial, once the insurer had denied a fire loss claim by alleging arson; the Court of Appeal upheld the award. Later that year, a St. Catharines jury awarded a combined $2.5 million in punitive damages to Frank Mazza and his tenant after their insurer denied a similar fire loss claim, at the time a new Canadian record. Singer Kwinter remains the only law firm in Canada to have obtained a punitive damages award against an insurer on four separate occasions.
“With the trial results in Mazza and Plester, Alf broke it open a little bit and set the tone for us in terms of what we as a firm can do with respect to punitive damages,” Katz says, adding that Singer Kwinter is one of the few firms that specializes in large property loss work.
Katz’s current frustration centres on a threshold that hasn’t moved much since Kwinter’s streak. Whiten v. Pilot Insurance Co., where the Supreme Court of Canada (SCC) upheld a $1-million punitive damages award against an insurer for bad faith handling of a homeowner’s fire claim, remains one of the only awards of its size in Ontario in over two decades, alongside the $1.5-million jury award in Baker v. Blue Cross Life Insurance Company of Canada, upheld on appeal in 2023.
Why these awards are few and far between
While the firm will pursue them where the facts support it, most bad faith claims never make it to a courtroom because the vast majority settle. Strong evidence of potential bad faith can push an insurer to pay a higher percentage of a claim to avoid trial, Katz says, but insurers will almost never explicitly agree to pay punitive damages as part of that settlement, no matter how strong the case looks. Those that do reach trial have to contend with the standard set by the SCC in Whiten.
That decision established that punitive damages exist to serve retribution, deterrence, and denunciation rather than to compensate the plaintiff, and are awarded only when compensatory damages can’t accomplish those goals on their own. They’re reserved for exceptional cases so even if the insurer is found negligent or in breach of the contract, there’s a higher bar still for punitive damages.
“Lawyers need to remember it’s not enough for an insurance company to have been wrong; there has to be something above that," Katz says.
The conduct must depart markedly from ordinary standards of decency, described as malicious, oppressive, or high-handed. Because these are first-party claims, courts have held the insurer’s duty of good faith extends to how it investigates and assesses a claim, not just the ultimate decision on whether to pay it.
In practice, Katz looks at whether the conduct was planned and deliberate, whether there was pressure to settle, and how long the behaviour went on for.
“Even though most don’t get to trial, we see evidence of bad faith in a lot of these cases,” Katz says. “It makes you think insurance companies aren’t very concerned about punitive damages, which defeats the purpose.”
Judges, he adds, tend to be too cautious even when a case does reach trial. Katz finds the lack of significant awards in Ontario concerning. Insurance companies would argue it’s because they've been behaving better, “but not from what I've seen,” he says.
A fundamentally unequal system
Katz also notes that the judicial system is heavily slanted in favour of the insurance company.
“When you go to the table with one party who is an individual policy holder or even a small corporation, and the other is a company that makes billions in profit, you have a major uphill battle.”
The stakes soar even higher because of the loser-pays costs rule: if the insurer loses at trial, they dust themselves off and carry on but for the other side, the decision may financially ruin them.
Katz points to Ontario’s no-fault auto insurance system as a clear example. Accident benefits disputes go to the Licence Appeal Tribunal (LAT), which generally doesn’t award costs against either side — insurers included — unless a party’s conduct was frivolous, vexatious, unreasonable, or in bad faith. That means an insurer can deny a benefit, force a claimant through a hearing and lose, with no financial consequence beyond paying the benefit it already owed.
It’s unbelievable how far the government has gone, Katz says, when the system was created to allow injured people easier access to the benefits they desperately need to recover. Instead, it almost rewards insurance companies for not paying out claims. If insurers were losing money, the case for a leaner benefits system might hold up. But clearly, they're not.
“I’ve always thought the government should take a hard look at these situations and change the Rules of Civil Procedure in a way that makes the bargaining power more equal,” Katz says.
There are many ways to do that, like creating certain cost consequences to level the playing field. Some might argue that opens the doors for plaintiffs to bring unmeritorious claims, but Katz doesn’t see it that way.
“You can keep cost consequences in place, just make them less harsh for individuals and harsher for insurance companies,” he notes. “It’s a strange system.”
A quest for consequences
None of that stops Singer Kwinter from fighting these cases anyway. Singer Kwinter’s niche of property loss claims means its day-to-day work centres on large commercial and residential losses where an insurer has refused to pay. What makes this area of practice different is points of contention like arson allegations, where Katz and the team must get into evidence regarding motive and opportunity.
Another point of contention is disputes over how water entered a property, because that can be the difference between payout and an uncovered peril. He often sees insurance companies “twist things in certain ways to enable themselves to not cover a loss.”
“We fight for our clients by gathering documentation showing the insurance companies where they were wrong,” Katz says, adding they’re not only one of the few firms practising in this area but also one of the even fewer offering it on contingency.
Although punitive damages awards remain rare, Singer Kwinter remains ready to pursue the damages where appropriate.
“In insurance law, despite the courts’ desire to deter companies from breaching their duty of good faith, I see way too much of it — in a system that’s supposed to have that deterrent,” Katz says. “I’d urge judges and the courts, when faced with these cases, to strongly consider giving awards that will properly deter insurance companies from bad faith conduct.”
This article was produced in partnership with Singer Kwinter LLP
