I have had to chase down every single refund requested from Canada Post via Paypal. In my experience, those cancelled labels are never willingly refunded by Paypal. Even when you call in with full details and the refund is weeks past due, they will still try to do everything possible to delay: tell you to wait a few more weeks, to call Canada Post, or EVEN tell you the label has been refunded when it hasn't.
I never have a problem with insurance claims etc. when dealing directly with Canada Post. The problem only occurs when Paypal is the middleman.
I always make a note on the calendar when the refund is due and call Paypal for compensation the day after that.