Ontario’s Superior Court of Justice has approved a settlement valued at $213.5 million in a long-running class action over charges on older Sun Life insurance policies, combining potential cash compensation with limits on future insurance costs.
In Fehr v. Sun Life Assurance Company of Canada, 2026 ONSC 5338, Justice Leiper found the agreement fair and reasonable after litigation dating to 2010. The reasons were released September 23, 2026, and corrected and released September 29.
The approval is not a finding that Sun Life breached its contracts. The insurer denied the allegations and admitted no liability in settling.
Nor is the headline settlement value a cash payment of $213.5 million to policyholders. It comprises up to $142.5 million in cash benefits and $71 million in actuarially valued future policy benefits. Approved legal fees and administration expenses come from the settlement, reducing what is available for distribution. Unclaimed net funds revert to Sun Life.
What the policyholders challenged
The certified proceeding covered certain Universal Flexiplus, Universal Plus and Universal OptiMet policies sold by MetLife in Canada between 1987 and 1998 and later administered by Sun Life.
The plaintiffs alleged that increases in the cost of insurance and administrative fees relied on factors the contracts did not permit. Another dispute concerned whether a policy’s stated maximum premium limited what a policyholder could be required to pay to keep coverage in force. Sun Life maintained that it administered the policies consistently with their terms and industry standards.
The case repeatedly changed shape through motions and appeals. The Court of Appeal restored claims struck at an early stage and, in 2018, reversed the refusal to certify breach-of-contract common issues. It found that the motion judge had gone beyond the preliminary certification inquiry by interpreting the contracts and deciding Sun Life had not breached them.
Negligent misrepresentation was not certified, and Interest Plus policies were removed from the proceeding. A later effort to add a claim concerning investment-spread increases was also unsuccessful. By the time of settlement, the parties had exchanged extensive documents and expert evidence and were preparing competing summary judgment motions.
Cash payments and future charge limits
The agreement distinguishes current from past policyholders by whether they held the policy on March 31, 2026. Eligibility depends on the policy type, charges paid and settlement exclusions—not simply on belonging to the approximately 100,000-member class.
Eligible current and past Flexiplus policyholders receive compensation for part of the insurance-cost and administrative-fee increases they paid. A supplementary cash benefit applies to eligible past Flexiplus policyholders whose policies lapsed or were surrendered after an insurance-cost increase.
For eligible holders of pre-1992 Universal Plus policies, cash benefits compensate for part of the insurance charges paid above a multiple of the policy’s base-coverage maximum premium. Estates of deceased policyholders who otherwise qualify can also claim.
Subject to the exclusions, current Flexiplus holders receive a permanent freeze of their existing cost-of-insurance rates and administrative fees for the remaining life of their policies, whether or not they qualify for cash. Qualifying current holders of pre-1992 Universal Plus policies receive a cap on future insurance charges set at 3.15 times the base-coverage maximum premium.
These are limits on specified charges under qualifying policies, not a universal freeze on every Sun Life premium.
Class counsel’s evidence projected that cash or future benefits would reach about 33,000 current and 27,900 past Flexiplus policyholders, alongside 7,500 current and 1,000 past Universal Plus policyholders. The reasons do not promise an individual payment amount.
Some class members receive no benefits
OptiMet holders, owners of Universal Plus policies in the 1992, 1994 and 1998 series, and people who previously signed releases are excluded from both cash and future benefits. They nevertheless remain bound by the settlement release of class members’ claims.
The court explained why it accepted those distinctions. The evidence showed that OptiMet insurance rates had not been repriced beyond the rates fixed in the original policies. Later Universal Plus contracts used different wording about cumulative premiums, which was more consistent with Sun Life’s interpretation than the wording in the earlier policies.
Prior releasors include participants in Sun Life’s Flexiplus Options Program who received compensation in exchange for signed releases. The existence of the proposed class action and a warning about giving up participation rights had been disclosed before those releases were signed.
How the approved distribution process works
Under the approved protocol, Sun Life provides the claims administrator with lists of current and past policyholders identified in its records as eligible for cash benefits.
Approved current policyholders receive mailed cheques automatically. If a cheque is uncashed or undeliverable because of an address change, the benefit is deposited into the policy’s accumulation fund. The money can then be used for premiums or withdrawn according to the policy terms.
Approved past policyholders, or their estate trustees, must apply. Those on the approved lists do not need supporting documents to prove entitlement. People who believe they were wrongly omitted can submit a disputed-eligibility form with supporting records.
The application deadline must be at least 12 months after the claims period begins. The reasons do not establish an actual calendar deadline or say when payments will arrive.
Why the judge approved the compromise
The court’s task was to decide whether the settlement fell within a defensible range of fair and reasonable outcomes, not whether it achieved a perfect recovery or treated every class member equally.
Justice Leiper emphasized the unresolved contract questions. Canadian guidance was lacking, and American decisions interpreting similar language had taken different approaches. Certification allowed common issues to be litigated; it did not guarantee that policyholders would ultimately prove liability.
The developed evidence gave counsel an informed basis to assess the bargain. Without settlement, the parties faced further summary judgment proceedings, possible trial and appeals, and substantial costs. Even success on common issues could have left individual policyholders needing to establish damages and answer limitation defences.
The future charge protections also mattered for aging policyholders who relied on fixed incomes or could no longer obtain comparable replacement insurance. An actuarial expert supported the valuation and allocation of the benefits. Two class members who submitted concerns sought certainty about compensation and enforcement of future caps; the judge found the agreement was designed to address those concerns.
Legal fees and the final orders
The court approved $63,337,472.66 in legal fees plus HST, and $2,375,091.14 in disbursements including HST. The fee request followed contingency retainers providing for 30 per cent of recoveries excluding costs and disbursements, plus the fee portion of costs obtained during the case—not simply a flat 30 per cent of the headline gross value.
The judge cross-checked the fees against roughly $29.1 million in recorded legal time, producing a multiplier of about 2.2. Counsel had financed the litigation without external funding and undertaken to protect the plaintiffs against adverse costs awards. The court considered those risks, the sustained work, the result and the absence of class objections to the fee request.
The judge also approved $25,000 honoraria for each approved recipient in recognition of exceptional contributions, the distribution protocol, settlement-approval notices and the administrator appointments.
The settlement provides for dismissal of the action and release of class members’ claims. Its practical result is a negotiated recovery and future cost protection for qualifying policyholders, rather than a ruling establishing that Sun Life’s disputed charges were unlawful.
