Provincial regulators ask foreign insurers to sign common undertaking on how they will do business post-Part XIII

Canada’s provincial regulators are asking foreign insurers to voluntarily sign a common undertaking on how they will conduct their business in the provinces in light of the implementation of the Office of the Superintendent of Financial Institutions (OSFI)’s Part XIII amendments.
Insurers signing the undertaking agree to abide by its provisions, and to have the provisions added as conditions to their license in all provincial jurisdictions save for that of Ontario.
The insurers’ decision to sign the undertaking (the due date is Dec. 21) is purely voluntary. The failure to sign would not be sanctioned.
The provisions of the undertaking are outlined as follows:
“In respect of all insurance coverage resulting from any activity or activities that cause the insurer to either carry on business under any province’s insurance legislation or transact insurance in any province, the insurer shall maintain an office, or have a representative located, in Canada, from or through which, the insurer shall:
  •    communicate to the policyholder
       o    the offer to provide the insurance coverage; or
       o    the acceptance of the request for the insurance coverage; and
  •    receive payment from the policyholder for the insurance coverage.
Also, the undertaking says, “all risks insured by the insurer as a result of any activity or activities that cause the insurer to either carry on business under any province’s insurance legislation or transact insurance in any province, shall be insured by the insurer only in a manner that requires the Insurer to vest assets in trust in respect of those risks.”
According to the Canadian Council of Insurance Regulators (CCIR), OSFI has advised provincial regulators that the activities outlined above in the undertaking “would be sufficient to cause a foreign insurer to insure in Canada risks under Part XIII (and therefore to be required to vest assets in trust under Part XIII in respect of those risks) so long as, where any of those activities are carried out by a third party (e.g., an insurance broker), that third party is acting as agent for the foreign insurer in accordance with Canadian common law principles of agency, and where applicable, the Civil Code of Quebec.”
The provincial regulators said the common undertaking was designed “in an effort to mitigate the confusion that might result from foreign insurers dealing with each regulator separately.”
The full wording of the undertaking, plus supporting documentation, can be found at the CCIR Web site at:
http://www.ccir-ccrra.org/CCIR/Ptxiii_UTing/index_en.htm