In International Brotherhood of Teamsters v. Taylor-Read Enterprises Inc. (1980) 109 D.L.R. 3d 653 the Supreme Court of British Columbia was faced with an interesting problem concerning a group life policy taken out by an employer for the benefit of its employees. Before the decision and its implications are examined, it is necessary briefly to outline the nature of this type of insurance. Very broadly, group life involves an insurance policy taken out by an employer on the lives of given employees, normally to be identified by membership of a specified class, for the benefit of their dependants. Policies of this nature are of comparatively recent origin, the first being written in the United States in 1911, and appear to have crossed the Atlantic in 1928. In latter years coverage has been extended from employees to members of other recognisable groups (for example, trade unions), and from death to accident insurance. Schemes may be non-contributory or contributory, although in the latter case employee contributions rarely exceed 50%, and protection may be by means of endowment (payment on death or at the end of a specified period, whichever is the earlier) or whole life (payment on death alone), although it is still common in the U.S. to offer term insurance (payment on death only where death occurs before a specified date, the policy having no surrender value) as a cheap alternative. Normally, all employees falling within a given class are entitled to coverage automatically on joining that class, and employees leaving that class are often allowed to continue individual insurances as own-life policies.

Group life schemes are operated for a number of differing motives; the employer’s object may be purely gratuitous, it may be intended to apply a fringe benefit to senior employees or it may be enforced by collective agreement. Whatever the reason, the fundamental attraction of group life is its comparative cheapness. As there is just one assured, the employer, the insurer is able to make great savings on paperwork, advertising and commission. Perhaps a more important factor in cost is the low risk that group life represents. This is so because those covered are by definition the healthier members of the community, and because employees subsequently suffering poor health are likely to resign and thereby drop out of the scheme: for these reasons the group does not have to be so large as to represent a cross-section of the community, and the inherent filters allow the insurer to dispense with a medical examination of each member of the class, although many insurers do insist upon such examinations where the employee who seeks to join has been employed and eligible for a considerable period of time.

The employer’s role in the insurance may vary between the two extremes of full administration of the policy on the insurer’s behalf, right down to merely forwarding