Authors: Sharon Au, Teresa Holmes
Rising commercial insurance costs are making it difficult for Alberta companies to purchase adequate insurance at affordable prices. In response, the Alberta Government has tabled Bill 76: the Captive Insurance Companies Act, which if passed, would allow companies or entities to self-insure if they cannot find suitable insurance elsewhere.
Under the proposed new Act, a company would be allowed to create its own in-house insurance company, i.e. captive insurance companies, that would insure it and any of its related companies from risk. Through this option, companies can set their own insurance costs and provide coverage that is specific to their operations and potential liabilities. The Bill will set up specific requirements for captive insurance companies, including: having to be physically located in Alberta and having to operate under a specific set of rules and requirements to ensure they have a sound financial and corporate governance framework
If Bill 76 passes, then Alberta’s Superintendent of Insurance would regulate captive insurance companies, although the regulations establishing the rules and standards for these companies have not yet been written. The regulations are not expected to be released until Spring of 2022.
The passage of Bill 76 would make Alberta the second jurisdiction in Canada to allow captive insurance. British Columbia passed the Insurance (Captive Company) Act in 1996, and currently has numerous active captive insurance companies licensed in the province, including the B.C. Veterinary Captive Insurance Co., and the LSBC Captive Insurance Company Ltd. who insure the College of Veterinarians of B.C. and the Law Society of British Columbia, respectively.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.