In practice, clients routinely balked when I slid across broad record authorizations, for records such as tax returns, payroll files, pharmacy histories, pre-accident clinical notes, because much of it didn’t look obviously tied to a whiplash, a concussion, or a loss-of-income claim. The unavoidable question was always: “If I sign this, who else sees my private life?”

My answer, and the assurance I had to give, was that these materials are collected for a limited, lawful purpose and cannot be used as a general warrant to pry or publish. They are confined to evaluating and litigating the claim, not collateral uses, not unrelated fishing expeditions, and not disclosure to third parties (including government) absent clear legal authority, a court order, or a recognized exception.

That tension of necessary disclosure versus principled limits sits at the core of modern AB adjusting, tort defence practice, discovery, and mediation, and it is the reason for this piece.

The Stakes Up Front: AB Versus Tort, and the Government “Pull”

Accident benefits adjusters often assemble sweeping medical and employment files under signed authorizations. Tort insurers collect similar material via investigations and discovery. The law draws a hard line between collecting what is reasonably necessary for the claim and repurposing that same data for other objectives. Ontario’s common-law privacy tort of intrusion upon seclusion makes “snooping” or unjustified internal sharing actionable even without proven financial loss, a reminder that an insurer’s curiosity is not a licence to over-collect or re-use sensitive records (Jones v. Tsige, 2012 ONCA 32^[1]).

Regulators and government bodies sometimes want access to claims material. The starting point is privilege, which creates a zone of privacy for litigation and settlement communications. Compelling production of privileged material requires clear statutory language. The Supreme Court underscored this in Lizotte v. Aviva Insurance Company of Canada, 2016 SCC 52^[2], holding that litigation privilege is not casually displaced by regulatory schemes.

The Legal Foundations of Confidentiality in Insurance Claims

Canadian law doesn’t tuck “insurer confidentiality” into a single section of the Insurance Act^[3]. Instead, it emerges from good-faith contractual performance, privilege doctrines, the deemed (implied) undertaking of discovery, settlement confidentiality, and privacy torts. Bad-faith claims handling can include mishandling sensitive information. Punitive and aggravated damages may follow truly egregious conduct, as recognized in Whiten v. Pilot Insurance Co., 2002 SCC 18^[4], and mental-distress damages are available where the contract’s very object is “peace of mind,” per Fidler v. Sun Life Assurance Co., 2006 SCC 30^[5]. The duty of honest performance in all contracts, articulated in Bhasin v. Hrynew, 2014 SCC 71^[6], reinforces that insurers must deal candidly and within lawful boundaries when they request and use personal information.

Litigation privilege protects documents created for the dominant purpose of litigation and is distinct from solicitor-client privilege. For insurers, that often covers adjuster communications with counsel and investigators. Ontario’s leading treatment remains General Accident Assurance Co. v. Chrusz, 1999 CanLII 7320 (ON CA)^[7], while the Supreme Court in Blank v. Canada (Minister of Justice), 2006 SCC 39^[8], explains the privilege’s purpose as shielding the adversarial process. It can however extend beyond the end of a lawsuit where related litigation is reasonably anticipated, as in Lac d’Amiante du Québec Ltée v. 2858-0702 Québec Inc., 2001 SCC 51^[9].

The deemed (implied) undertaking of discovery, codified in Ontario by Rule 30.1 and articulated nationally in Juman v. Doucette, 2008 SCC 8^[10], prevents parties from using compelled discovery material for collateral purposes. That means a tort insurer cannot share a plaintiff’s discovered records with third parties (including other insurers or government) without Court leave or a narrow, recognized exception.

Settlement privilege protects communications made with a view to compromise. The Supreme Court in Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35^[11], confirmed the privilege and clarified a narrow exception permitting disclosure strictly to prove the existence or terms of a settlement. Ontario’s Divisional Court, applying Wigmore-based analysis in Rudd v. Trossacs Investments Inc., 2006 CanLII 7034 (ON SCDC)^[12], recognized a case-by-case “mediation privilege,” refusing to compel a mediator to testify about caucus communications.

Privacy law closes the circle. Jones confirms a freestanding tort for intentional, highly offensive intrusions into private affairs, and Hopkins v. Kay, 2015 ONCA 112^[13] makes clear that the  Personal Health Information Protection Act, 2004 (“PHIPA”)^[14] does not oust common-law privacy claims for misuse of health information. Insurers that let employees “browse” in claims databases or circulate health data without a claim-related need court avoid liability at their peril.

Government Demands and the Open-Court Reality

When regulators or ministries ask for claims material, the first question is privilege and the second is whether legislation clearly overrides that privilege. Lizotte teaches that vague “produce on request” wording isn’t enough to pierce the litigation zone of privacy. Separately, once records are filed in court, the open-court principle narrows privacy expectations.

Targeted sealing or redaction orders may be needed to protect genuinely sensitive information. The Supreme Court in Goodis v. Ontario (Ministry of Correctional Services), 2006 SCC 31^[15], balanced access to information statutes against privilege and confidentiality claims, a cautionary tale for how sensitive records can spill into public files if not managed deliberately.

Consequences for Misuse—and How Counsel Should Respond

Misusing private information isn’t a technicality. It’s damages exposure and strategic risk. Intrusion upon seclusion supports non-pecuniary awards even without proven loss (Jones). Egregious conduct in handling sensitive records can bolster bad-faith findings with aggravated or punitive damages (Whiten; Fidler). And breaching the implied undertaking invites sanctions or contempt (Juman).

The practical response is straightforward but non-negotiable. Tailor authorizations to issues and relevant periods. Segregate AB and tort files when purposes differ. Route litigation-purpose communications through counsel and mark them accordingly. Invoke Rule 30.1 and, where necessary. Obtain protective orders to contain use and onward disclosure. Treat government requests as exceptional, testing them against privilege before anything leaves the file.

Mediation Isn’t a Megaphone

Mediation thrives on candour, and candour requires confidence that what’s said and shared won’t wander outside the room. Settlement privilege does the heavy lifting, reinforced by carefully drafted mediation agreements.

Still, practitioners must remember Union Carbide’s principle that even robust confidentiality clauses generally do not erase the narrow exception that allows disclosure strictly to prove a settlement’s existence or terms, and courts are rightly reluctant to drag mediators into the witness box, as Rudd illustrates. The safest path is to draft with precision, preserve caucus confidentiality, and keep any written settlement terms clear enough that later proof does not require peeling back caucus communications.

Bottom Line

Clients do have to disclose more than feels comfortable to advance AB and tort claims, but “signed” is not “surrendered.” Insurers are bound by good faith, by privilege, by the implied undertaking, by settlement confidentiality, and by privacy law. Counsel who narrow the ask, defend the perimeter, and educate clients clearly will protect both the case and the person behind it.

Disclaimer: This article is for information only and is not legal advice. Obtain advice tailored to your specific facts and governing law.