Study: Ashton c. Transamerica Life Canada

Ashton c. Transamerica Life Canada, 2007 QCCS 2864

The court ruled that Transamerica had a legal duty to provide statements to its customers. The court ruled that Transamerica had failed to meet its legal obligations. How many clients suffered a financial loss because of Transamerica actions?

No: 500-17-022997-046

Other parties:    None


Mtre Jean El Masri
Attorneys for Plaintiff
Mtre Élisabeth LarocheHEENAN BLAIKIE
Attorneys for Defendant


In 1986, M. Ashton bought an insurance policy with face amount of $250,000 and premium of $2,260 from NN (NN was bought by Transamerica). This policy was a 10-pay and premiums were calculated using an expected rate of return of 15%. The client invested in equity.

Not surprising the return of 15% was not achieved to M. Ashton was asking reimbursement of his premiums since 1996 claiming that Transamerica did not meet its contractual obligations by not advising that the policy was off track and additional premiums were needed to pay the policy.

 The Facts:

  1. The illustrations were done at 15%
  2. The client was advised that this rate was not guaranteed
  3. The NN policy contract states that the company must inform the policy holder if he will not be able to achieve his 10-year premium objective

The Results

  1. Ashton won on the question of Transamerica duty
  2. Ashton lost the entire case based on the fact that the case was prescribed.


This case shows that just 1 hour with an insurance specialist could have allowed the lawyer of M. Ashton to formulate an argument that could have changed the entire decision of the judge even the prescription date.

  1. The duty of Transamerica; while the lawyer won on this question I want to bring all of your attention to this question. Around the industry, it is the position of insurance companies that they have no responsibility to service clients and provide information such as annual statements, lapse notices, renewal and conversion notices. As we can see here this is far from the truth. In fact considering this is probably not a single incident and Transamerica has probably failed its duty to all clients owning this type of product, there may be a way for clients to recover their losses through a class action. In any event, the use of an insurance specialist will help you for any cases in determining the obligations of the insurer as you must not only consider the policy contract but also through which distribution channel this policy was sold.
  2. The advisor, M. Chabot: The whole argument was around whether or not M. Chabot told M. Ashton that the rate of 15% was guaranteed. M. Ashton was very candid and told the truth. He was told the rate was not guaranteed. But there was no other issues raised by the lawyer of M. Ashton. The use of an insurance specialist could have prevented that.
  3. Did M. Chabot meet his duty of care towards his client? This question was not asked in court. You should always question the rate of return used. 15% should have raised a lot of question. An insurance specialist could have established this rate of return was not appropriate even in 1986. In my entire career having evaluated thousands of insurance cases, the highest rate I have seen was 12%. In addition the court seems to have made the wrong conclusion. It took into account that the advisor presented several illustrations to the client. Based on the premiums stated in the court document I can only assume these are illustrations showing premiums in relation to payment duration. I do not believe there were illustrations showing the impact of earning less than 15% since no premiums shown were higher. This could have changed the whole context of the conclusions of the court towards Chabot.
  4. Did the client understand what he was buying: The client mentioned that he agreed to the rate of return of 15% because of high interest rates but he invested in equity? A lot of confusion here. As an insurance specialist and knowing sales, confusion is often used to reduce the importance of a factor. Would you consider a 15% return unless someone convinces you it is probable while shifting the emphasis away that is not guaranteed. Selling is manipulation after all.
  5. Was Transamerica diligent through the sales process.  An insurance specialist would have pointed to you that the illustrations done at 15% were possibly produced not by the advisor but by the company. Looking at the illustration printout it is highly possible. In 1986, not everyone had a computer. As an insurance company with all of its knowledge in investing, how could this company accept to produce illustrations at that rate? Did Transamerica have a responsibility to produce an illustration at 10%? Was the client misled through the whole sale process. Could this conclusion change the prescription date?

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