British Columbia Regulations Adopted under Bill 5, The Finance Statutes Amendment Act

 

An Order in Council brings into force Bill 5 changes effective January 1, 2010 (the date changes to Part XIII of the federal Insurance Companies Act come into force). As of that date, the Financial Institutions Act (FIA) definition of “insurance business” is amended to expressly include the insurance of risks located in the province.  As well, the FIA amendments include a new exemption from the requirement to obtain a business authorization for an unlicensed insurer, when the insurance is placed by a licensed insurance agent.  The current exemption for insurance agents is changed to add a new requirement that insurance agents comply with any prescribed conditions. 

 

A new regulation, the Extraprovincial Insurance Corporation (Canada) Business Authorization Condition Regulation, requires federally licensed insurers to manage their BC insurance business so that this business is covered by their federal licence (and federal solvency regulation and vesting of assets).  This regulation generally maintains the current regulatory scheme for insurers insuring British Columbia risks, under which federal licensed insurers are exempt from core elements of FIA solvency requirements.

 

Amendments were also made to the current Insurance Company Exemption Regulation to require licensed agents placing risk with unlicensed insurers to report quarterly to the Superintendent of Financial Institutions and to prohibit them from soliciting consumers in respect of unlicensed insurance.  The prohibition on solicitation is not new, but has been moved from the statute to the regulations.  The amendments to the current Insurance Company Exemption Regulation also provide an exemption from licensing for reinsurers whose only business in the province is reinsuring a risk.