OSFI issues revised advisory, further clarifies “insurance in Canada of risks”

The Office of the Superintendent of Financial Institutions (OSFI) has revised its Advisory 2007-01—Insurance in Canada of Risks in an effort to further clarify what is meant by “the insurance in Canada of risks.”
The phrase is a key component of OSFI’s proposed changes to Part XIII of the Insurance Companies Act (ICA).
“This advisory provides guidance on key indicia to consider in determining, for the purposes of the ICA, whether a foreign entity is insuring in Canada a risk and how OSFI will apply these indicia to a particular business model,” OSFI says in a statement announcing the revisions. “It also provides guidance regarding other ICA and provincial and territorial insurance matters related to foreign entities.”
The advisory notes that a review of case law indicates the courts have not interpreted concepts such as ‘insuring in Canada a risk’ and ‘insurance business in Canada,’ although they “have interpreted the analogous concept of ‘carrying on business in Canada.’”
Paragraph 2 of the advisory is more detailed than the superceded version. It outlines nine factors to be taken into account when it determines whether a “foreign insurer is insuring in Canada a risk.”
Taking a random sampling of some of the indicia, any person acting for or on behalf of a foreign insurer might be deemed to be insuring in Canada a risk (and thus subject to OSFI’s oversight) if he or she:
•    “promotes the foreign insurer or the foreign insurer’s insurance products through a medium of communication that is primarily circulated, transmitted, broadcasted or otherwise accessible in Canada;”
•    “directly incites a person located in Canada to request insurance coverage (where that person is specifically identified and targeted), and that person is provided with the opportunity and/or means with which to make a request for insurance coverage in the course of that activity (e.g. telemarketing, door-to-door solicitation, direct/targeted mail).”
•    “receives in Canada a request for insurance coverage from a policyholder;”
•    “negotiates from Canada the terms and conditions of insurance coverage;”
•    “receives in Canada an acceptance of the foreign insurer’s offer to provide insurance coverage from a policyholder.”
A complete list of the nine indicia can be found at: http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?DetailID=524#2007-01-R1
The advisory also contains guidance on how the changes to Part XIII cohere with the shared jurisdiction of the federal and provincial governments over foreign insurers.