Canada: Latest Key Developments And Issues Affecting The Canadian Insurance Industry

The Insurance Group at Stikeman Elliott notes the following legislative and regulatory developments and appeal court decision, which are among the developments and decisions most likely to have a significant impact on the Canadian insurance industry over the next year.

2006 Financial Institutions Legislation Review

  • the federal budget tabled on May 2, 2006 included a planned extension of the sunset date for the financial institutions statutes (including the Insurance Companies Act) for six months, from October 24, 2006 to April 24, 2007
  • a White Paper will be published this spring, with legislation to be tabled in Parliament this fall
  • To view full details of the extension CLICK HERE

Bill C-57

  • to be proclaimed into force in phases, completing by the fall of 2006
  • the first phase, which came into force on April 27, 2006,
  • provides a "due diligence" defence, a right already extended to directors of other corporations,
  • expands the eligibility of medium-sized insurers to apply for an exemption from the requirement to float 35 per cent of their voting shares on a stock exchange, and
  • brings into force a number of technical changes
  • To view details of the scheduled implementation of Bill C-57 CLICK HERE

Senate Standing Committee on Banking, Trade and Commerce

  • is expected to review a draft Report on issues arising in the financial services sector at their in camera meeting on May 10, 2006
  • To view details of the Committee’s activities CLICK HERE

Canadian Council of Insurance Regulators (CCIR) Consultation Paper re: Insurance Agent and Broker Reciprocal Licensing

  • at its spring meeting held in Montreal on April 6 & 7, the CCIR approved the reliance model proposed by the Reciprocal Licensing Committee and further set an implementation deadline of July 4, 2006 in those jurisdictions where it will be possible
  • under the reliance model, a host jurisdiction will rely on most of the requirements of the agent’s home jurisdiction, but can request that the agent meet some further jurisdiction-specific requirements
  • the Reciprocal Licensing Committee has also recommended standards for continuing education and errors and omissions insurance that would facilitate the introduction of a reciprocal licensing system
  • To view full details of the CCIR Spring Meeting CLICK HERE

CCIR Consultation Paper re: Relationships Between Insurers and Sales Intermediaries – Achieving Best Practices

  • at the same meeting, the CCIR also endorsed the following three principles recommended by the Industry Practices Review Committee (IRPC) in its paper Managing Conflicts of Interest: A Consultation Paper on Enhancing and Harmonizing Best Practices:
  • priority of the client’s interest: an intermediary must place the interests of policyholders and prospective purchasers of insurance ahead of his or her own interests,
  • disclosure of conflict or potential conflict of interest: consumers must receive disclosure of any actual or potential conflict of interest that is associated with a transaction or recommendation, and
  • product suitability: the recommended product must be suitable for the needs of the consumer
  • the IPRC will now focus on the implementation of these principles across Canada by following up with the various industry associations that have suggested that the principles be implemented through voluntary guidelines
  • together with these industry associations, the IRPC will determine the next steps and time frames for implementation and will also be working to develop methodologies for a survey of insurers and intermediaries to be undertaken in six to twelve months to confirm the extent that these principles have been embraced by the industry and whether further regulatory action is required

CCIR Consultation Paper re: Privilege and Whistle-Blower Protection

  • at the same meeting, the CCIR reviewed the results of the recent consultation on the discussion paper and determined that the Working Group should meet with some of the parties that have made submissions to request that they elaborate on and clarify some of their specific comments
  • the Working Group will then bring to the CCIR in June their recommendation on whether continued work on the project would be useful

Childs decision from the Supreme Court of Canada

  • the Court’s decision, released on May 6, 2006, upheld lower court rulings that social hosts merely providing a venue owe no duty of care to third parties who may be injured by an intoxicated driver who had consumed alcohol at their residence
  • Stikeman Elliott’s summary of and commentary on the decision can be found in the May 2006 edition of our Litigation Update

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