FSCO ruling changed third-party funding market: Rossos
A Financial Services Commission of Ontario (FSCO) ruling transformed the market after saying that legal cost protection must be underwritten by licensed insurers and sold to clients through insurance brokers under the Insurance Act.
"Any private indemnity or legal cost protection must now be tied to a regulated insurance product," says Rossos, the Toronto company's founder. "Lawyers can't provide an indemnity to their clients because they are not licensed insurers."
He says the Omega General Insurance Company now underwrites BICO in Canada, where two leading global insurers with AA credit ratings reinsure the risk. Although Rossos says he strongly disagrees with the order, the company reconfigured its products into insurance policies to protect his clients.
"We have a personal injury product that offers blanket cover to a law firm, and a similar class-action product that is being introduced as we speak," Rossos says. The policies offer "umbrella coverage that prequalify the firm's cases.”
"If they fit within the parameters of the coverage, they are automatically accepted," he says. "We do due diligence on the law firm instead of spending six or seven months investigating each underlying case."
Rossos says that approach for class action law firms allows the firm to spread its risk among a population of cases while providing law firms with certainty of finance ensuring "the lowest rates and full protection."