By Justin Goulet/LethbridgeNewsNOW

Bill 16

Legislation introduced to diversify Alberta’s insurance sector

Apr 19, 2022 | 5:21 PM

The province has introduced legislation to help diversify the insurance sector.

If passed, the Insurance Amendment Act 2022 (Bill 16) would help facilitate easier access to reinsurance within Alberta. Reinsurance is insurance for insurance companies.

The Alberta government believes increasing its availability in the province should have a positive effect on the overall insurance supply in the provincial market. This will help ease shortage and high prices, and better position traditional insurers in serving residents and businesses.

The proposed Act also puts finishing touches on insurance rules before Alberta welcomes captive insurers. If passed, the amendment to the recently introduced Captive Insurance Companies Act will facilitate smooth relocation of foreign captives into the province. This means businesses in Alberta that are looking to bring their foreign captives home would be able to do so without interruption to captive insurance operations.

The Captive Insurance Companies Act was passed in December 2021. The legislation and its accompanying regulation are expected to take effect in summer 2022.

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Captives provide insurance coverage only to the groups and entities that create and own them. British Columbia is the only other Canadian jurisdiction that allows captive insurance. Roughly 20 captives are located in the province.

Alberta’s Finance Minister and President of the Treasury Board, Travis Toews said, “Alberta is creating opportunities in ever sector of our rapidly growing economy.”

“To this end, we’re delivering a regulatory framework that will help generate more insurance activity right here in Alberta – leading to more opportunities for Albertans in sophisticated finance and insurance positions, and boosting the investment potential of our entire financial services sector.”

Additional amendments included in the Insurance Amendment Act are administrative adjustments to ensure various provisions of the Insurance Act are current and aligned with other jurisdictions.

Chair of the Volunteer Reinsurance Taskforce, Jason Montemurro said “the combination of the Captive Insurance Companies Act and updates to the Insurance Act, will allow local businesses and not-for-profit organizations, alongside similar entities internationally, to access Alberta based reinsurance capacity that is needed, will be competitive globally, and will build a vibrant world class insurance/reinsurance industry in our province.”

If Bill 16 is passed, Alberta will be the first Canadian jurisdiction to allow licensed provincial insurance companies to focus solely on reinsurance business and use limited partnerships for boosting their capital needs.

“With the help of the UCP, insurance companies are generating massive profits and continuing to increase premiums on Albertans and businesses at a time when everything is becoming more expensive,” said NDP Finance Critic Shannon Phillips.

“Under the UCP, life is getting less and less affordable,” Phillips said. “In removing the insurance cap, the government would rather appease the insurance lobby than help Alberta drivers. Despite hearing every single day from people across the province, the UCP have failed to help Albertans in any meaningful way.

“I am calling on the UCP to admit the removal of the insurance rate cap put in place by the NDP has led to these spikes, strike a committee to examine the alarming increases over the last three years, and to provide recommendations on how to reduce costs and help Albertans.

“Regardless of the outcome of the motion, my message to Albertans is this: An NDP government will restore the rate cap that protected you from these predatory increases because an NDP government will work for you.”