More Oversight for Exemptions: B.C.’s Insurance Council

Terri Goveia | February 8, 2010

The Insurance Council of British Columbia wants more oversight over transactions with unauthorized insurers.

The council has proposed an “unauthorized insurer rule” that would oversee agents conducting insurance transactions under Part XIII exemptions and recent changes to the Financial Institutions Act. The rule would let the council know who’s doing business under the changes—particularly section 76 of the Financial Institutions Act—and determine when the exemptions apply.

Under the proposal, agents must notify the council that they’re doing business with unauthorized insurers and demonstrate agent or licensee expertise and qualifications. “After written notification has been provided to Council, a licensee may proceed with an insurance transaction under section 76,” Gerry Matier, the council’s executive director, states in a proposal overview. “A licensee will not be required to wait for or receive Council’s approval and there will be no fee associated with providing the written notification.”

However, if the licensee or agent isn’t properly qualified, the council would be able to take away their right to use the exemptions. “In such cases, a licensee will be entitled to a hearing and the right of appeal as set out in the Act,” the statement notes.

Clear steps

The council outlines clear steps for agents and licensees doing business with unauthorized insurers. The new rule would also require agents to make sure the coverage they purchase isn’t already available from an authorized, Canadian insurer. “As an example, taking all reasonable steps to find a market with an authorized insurer could include referring a client to another licensee, if it is believed another licensee could place the coverage with an authorized insurer,” according to the January 26 statement.

Licensees doing business under Section 76 would also need client consent after disclosing the risks associated with the transaction.

The council is seeking feedback on the proposal, and will accept comments until March 20, 2010.