Ontario Courts: Insurers Face Higher Bar for Punitive Damages

• Canada's property and casualty insurers posted $7.88 billion in profit in Q3 2025.
• The Supreme Court of Canada's decision in Whiten v. Pilot Insurance Co. raised the bar for punitive damages against insurers.
• Lawyers must demonstrate exceptional conduct by insurers to succeed in punitive damages cases.
• Punitive damages are necessary to deter bad faith conduct by insurance companies.
• The issue of punitive damages against insurers has significant implications for policyholders and the insurance industry.

Lawyers need to remember it's not enough for an insurance company to have been wrong; there has to be something above that,

In recent years, Canada's property and casualty insurers have posted significant profits, with a combined $7.88 billion in profit in the third quarter of 2025 alone. This has led to criticism from lawyers like Shane Katz, senior lawyer at Singer Kwinter, who argue that courts have been too lenient when it comes to punitive damages against insurers. According to Katz, the current system is 'stacked against claimants' and fails to deter bad faith conduct by insurance companies.

Katz's firm, Singer Kwinter, has a reputation for taking on insurers in large property loss cases. In 2003, they secured significant punitive damages verdicts in two separate cases: Plester v. Wawanesa Mutual Insurance Co. and Mazza v. Pilot Insurance Co. The latter case set a new Canadian record with a combined $2.5 million award.

However, the Supreme Court of Canada's decision in Whiten v. Pilot Insurance Co. has raised the bar for punitive damages against insurers. To succeed in such cases, lawyers must demonstrate that the insurer's actions departed markedly from ordinary standards of decency.

The Supreme Court of Canada's decision in Whiten v. Pilot Insurance Co. established that punitive damages exist to serve retribution, deterrence, and denunciation rather than to compensate the plaintiff. This means that compensatory damages must be insufficient to achieve these goals on their own for punitive damages to be awarded.

In practice, this means that lawyers need to show that an insurer's conduct was not only negligent or in breach of contract but also departed markedly from ordinary standards of decency. This can include evidence of planned and deliberate conduct, pressure to settle, and prolonged behavior.

The decision has set a high bar for punitive damages against insurers, making it more challenging for lawyers to succeed in such cases.

The issue of punitive damages against insurers is not just about compensating claimants but also about deterring bad faith conduct by insurance companies. With billions of dollars in profit, insurers have a significant incentive to prioritize their own interests over those of policyholders.

Lawyers like Shane Katz argue that the current system fails to hold insurers accountable for their actions and that punitive damages are necessary to deter such behavior. By setting a high bar for punitive damages, the Supreme Court of Canada has made it more challenging for lawyers to succeed in such cases, but also emphasized the importance of demonstrating exceptional conduct by insurers.

Ultimately, the outcome of these cases will have significant implications for policyholders and the insurance industry as a whole.

Lawyers should be aware that the Supreme Court of Canada's decision in Whiten v Pilot Insurance Co sets a high bar for punitive damages, requiring evidence of malicious, oppressive, or high-handed conduct by insurers. To succeed in such cases, lawyers need to demonstrate that the insurer's actions departed markedly from ordinary standards of decency.

Source: Original reporting via Canadian Lawyer