10/23/2012 11:35 EDT | Updated 12/23/2012 05:12 EST

A $12.5M out-of-court settlement reached from 1998 Quebec ice storm for expenses

MONTREAL - Intact Financial Corp.(TSX: IFC) said Tuesday that its Quebec insurance subsidiaries have reached an agreement in principle to settle a class action lawsuit related to the province's 1998 ice storm.

The proposed $12.5-million out-of-court settlement with consumer advocacy group Option consommateurs is for additional living expenses related to the natural disaster, Intact said in a news release.

It's subject to approval by the Quebec Superior Court in the next few months.

The agreement with Option consommateurs applies to more than 200,000 clients insured with Intact's Belair Insurance Company, Allianz Insurance Company of Canada, AXA Assurances and ING Insurance Company of Canada (Commerce Group), Intact said.

This agreement in principle involves only Intact's insurance subsidiaries and the class action suit against other insurance companies is still in progress, Intact said.

The class action suit launched by Option consommateurs sought to determine, among other things, whether the insurance companies had an obligation to compensate all policyholders included in the class action for additional living expenses incurred as a result of the power outages, as well as the amount to be reimbursed.

The 1998 ice storm is considered Canada's most costly natural disaster. It forced thousands of Quebecers, many in the Montreal area, out of their homes for days, leaving them without electricity after hydro towers and trees were toppled.

Approximately $1.6 billion was paid out to consumers by insurance companies, including more than $350 million by Intact subsidiaries.

Intact Financial Corp. bills itself as the largest provider of property and casualty insurance in Canada. Intact offers home, auto and business insurance through Intact Insurance, Belairdirect, Grey Power, BrokerLink and Jevco.