OSFI releases advisory on insuring in Canada a risk

A foreign entity is not allowed to insure in Canada a risk as per the Insurance Companies Act (ICA), unless the Superintendent authorizes it to do so and the risk is within a class specified by the order, an advisory issued by Office of the Superintendent of Financial Institutions Canada (OSFI) notes.
If a foreign entity is granted an order, all aspects of the business conducted in Canada, including the risks it insures, is subject to record keeping, vesting of assets and other requirements as specified in part XIII of the ICA, the advisory reads.
However, according to the advisory, the ICA doesnt provide direction as to what qualifies as insuring in Canada a risk, and the courts have not interpreted the concept either.
The location where operations are carried out and where contracts are made is generally important in determining the location of a business, according to the advisory. The jurisdiction with which a contract has its closest and most substantial connection is key to determining the proper law, unless the contract contains a governing law provision.
Underlying these two tests are four indicia, which are relevant when interpreting the concept of insuring in Canada a risk, according to the advisory.
For a complete listing of the indicia, log on to http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?ArticleID=1997