I met my share of these folks – victims of insurance companies whose claims had been wrongfully denied.

I was elated, therefore, when I read in 2002 that the Supreme Court of Canada had upheld a jury decision to award an Ontario couple $1 million in punitive damages after the jurors found the claimants’ insurer, Pilot Insurance Co., had maliciously accused them of arson to get out of paying their 1994 fire claim.

Champagne glasses clinked from coast to coast as businesses and consumers absorbed the full majesty of the landmark decision.

Until then, Canadian courts would have been more likely to sentence a politician to a paddling than make any insurer pay significant punitive damages.

Some insurers, driven by the lust for profit, knew they could deny valid claims and get away with it. They relied on their superior economic strength to crush any lawsuits and they ran little risk of prosecution.

The idea of punitive damages is to give the average business or citizen the incentive to bring justice upon a powerful organization that behaves in an extremely reprehensible manner and, if successful, be rewarded for this public service.

When I heard about how Keith and Daphne Whiten had cleaned Pilot’s clock, I turned my elation into a Reader’s Digest assignment.

Surely, I thought, Canada’s insurance industry would take note of its new accountability. Indeed, as if on cue, a St. Catharines jury later ordered an insurance company to pay a would-be mushroom farmer $2 million in punitive damages.

It turns out, however, that the Whitens’ victory stands as a monument to the tragic consequences that can arise from kicking a powerful industry in its assets.

When I interviewed the couple in November 2002 at the picturesque 19th-century home they had bought with the proceeds of the judgment, I learned that Keith Whiten was undergoing treatment for cancer.

The Whitens, both of whom were health professionals (registered nurses), felt strongly that the stress of the litigation was a contributing factor. Sadly, Keith Whiten died seven months later.

I thought about Daphne Whiten when I heard recently that CTV’s public affairs program, W-5, was about to rebroadcast a program about the Canadian insurance industry’s claims- denial misconduct – a report that featured the Whitens’ saga.

So I telephoned Whiten to find out how she was enjoying her dream home.

Whiten’s reply: She has the acreage up for sale because she can’t get house insurance.

“I have tried five insurance companies in the past two months,” said the widow, who has decided to build a smaller house. “None of them will take my money.”

The problem is, the words ‘Whiten vs Pilot Insurance’ are seared on the flinty souls of every insurer across the land. “It’s discrimination,” she said.

Knowing that W-5 likely would corner at least one insurance bureaucrat, I caught a replay of the show the other day.

Sure enough, W-5 host Tom Clark and his crew flushed Insurance Bureau of Canada’s John Karapita out of his Yonge Street office in Toronto.

“When claims are dealt with in this industry, they are handled to the overwhelming satisfaction of the policy- holders,” Karapita said while the camera rolled.

So . . . what about the industry’s refusal to sell Whiten house insurance? Karapita stared blankly for a second or two, then clung to his mantra. “In dealing with these claims, insurers deal with them to the overwhelming satisfaction of policyholders.”

What particularly galled me in my Reader’s Digest research was a submission to the Supreme Court by the Insurance Council of Canada (ICC), a national trade association of general insurers.

“Any concerns this court may have to punish and deter insurer bad faith in claims processing would be better dealt with by expert regulators operating pursuant to the various provincial insurance acts,” ICC general counsel Randall Bundus said in an affidavit. “Provincial officials . . . have significant powers over insurers.”

An insurance magnate may be fearful of some things – a bad rash, perhaps, or a new tax on profit – but I’ve never met one who quakes at the mention of a regulator.

Insurance cops usually tell victims of bad-faith practices to go to court – the playpen of the rich and powerful.

And whoever heard of a court fining an insurer $1 million for reprehensible behaviour? Ultimately, Pilot’s top executives got booted out last year for a totally unexpected reason – one that may at least partly explain the company’s conduct: Pilot’s parent company discovered a reserve shortfall totalling $195 million for prior-year deficiencies.

“I am pleased to report that . . . Pilot is back on a sound track,” James D. Hewitt, the insurer’s new president and CEO, wrote in the company’s 2003 annual report.

Given the fallout, would Daphne Whiten do it over again? “Yes,” she said, adding the caution that such high-risk litigation is “a big cloud over your head. But I just don’t think they should be able to get away with this.”

In a statement, Hewitt said his company has learned its lesson and will never let this sort of thing happen again. “The case was resolved . . . with the Supreme Court of Canada judgment, which Pilot has accepted.”

How nice of Pilot. We lesser mortals have no choice but to do what the Supreme Court says.

(Brock Ketcham can be reached at brock@businessedge.ca)