January 7, 2010 by Canadian Underwriter
Contrary to its initial expectations, Registered Insurance Brokers of Ontario (RIBO), the self-regulating body of Ontario’s insurance brokers, says the Part XIII amendments to the federal Insurance Companies Act (ICA) will not likely change the amount of “unlicensed” insurance written in Ontario.
RIBO posted an online ‘news and updates’ item in December 2009 about the Part XIII amendments implemented by the federal Office of the Superintendent of Financial Institutions (OSFI).
The amendments, which came into place on Jan. 1, 2010, spelled out a change in OSFI’s focus when it comes to determining what foreign insurers licensed in Canada have to report to OSFI as “Canadian business.”
Basically, the federal regulator is requiring foreign insurers licensed in Canada to report to OSFI (and vest assets in Canada) based on their business activities in Canada, as opposed to reporting based on the location of their risks.
“There has been concern at RIBO that this change might result in an increase in ‘unlicensed insurance’ if some foreign insurers chose not to conduct their business activities in Canada,” RIBO says in its online update. “However, since all insurers carrying on insurance business in Ontario are also required to maintain a provincial license from the Financial Services Commission of Ontario, it appears that all foreign insurers licensed to carry on business in Ontario will also trigger the federal ICA requirements and continue to maintain their federal license with OSFI.
“Accordingly, RIBO is not expecting any change in the amount of ‘unlicensed’ insurance written in Ontario, as a result of the OSFI proposed changes to Part XIII.”
RIBO further noted that the provincial superintendents, through the Canadian Council of Insurance Regulators (CCIR), has requested all foreign insurers to sign a voluntary consent and undertaking, essentially agreeing to conduct insurance business in Canada for the purpose of Part XIII.
“We note that, following the release of the CCIR undertaking, there have been several questions raised by foreign insurers that CCIR is currently reviewing,” RIBO says in its update notice. “We will keep you advised as developments occur.”