U.S. ties a disadvantage for liability exposures

THE CLOSE ECONOMIC RELATIONSHIP between the United States and Canada has advantages for both countries, but--as some Canadian companies are finding out--there are some distinct disadvantages, too.

As we report in our Spotlight on professional liability risks, some Canadian companies that have U.S. exposures are finding it increasingly difficult to secure coverage in their home market. Canadian insurers are wary of U.S. plaintiffs, and policyholders that do business in the United States often have to shop their risks outside of their home market in order to obtain errors and omissions coverage.

While everyone should have access to the courts, the unwillingness of some foreign insurers to even touch a risk that has U.S. links is yet another sign, if one was needed, that something needs to be fixed in the U.S. tort system.

On a more positive note, Canadians can at least take solace that their own courts are doing something to keep a cap on rising litigiousness north of the U.S. border while still allowing their citizens to have their day in court.

In Quebec, for example, an appeals court has made what we would regard as a common-sense ruling that a plaintiff that wants to initiate a class action against a group of defendants must have a cause of action against each defendant.

While it would be more than a little optimistic to think that such a ruling would ensure that all plaintiffs direct their litigation at the people who have harmed them rather than whoever has the deepest pocket, it at least goes a little ways along that road.