On June 22, 2017, new regulations (the "Insurance Regulations1") under Saskatchewan's Insurance Act2 were filed with the Registrar of Regulations. The Insurance Regulations will broaden the availability of insurance covering smart phones in the province.
Smartphones are ubiquitous and fully integrated into all of our daily lives. In 2016, 76 percent of Canadians owned a smartphone.3 Given the widespread and ever-growing use of smartphones, and the ease with which they may be lost, stolen or damaged, there is a burgeoning market for insurance products covering these and other portable electronics.
Programs which cover risk of loss to a product which is unrelated to a defect or failure arising from the manufacture of the product may be considered to cover fortuitous loss, and thus may be viewed and regulated as "insurance". In accordance with applicable legislation, and subject to certain exceptions/exemptions, "insurance" may only be underwritten and offered for sale by licensed insurers and agents. To date, there has been some uncertainty as to whether programs offering coverage for loss or damage to smartphones is truly insurance and subject to insurance regulation. Saskatchewan's new Insurance Regulations clearly set out how these types of programs will be dealt with in that province.
The Insurance Regulations will make it possible for a “portable electronics vendor” to apply for a restricted insurance agent’s licence for the sale of “portable electronics insurance”. Portable electronics insurance is defined as property insurance that provides coverage against damage to or the loss of a portable electronic device. The definition of "portable electronics vendor" in the Regulation includes both:
- a person or entity that sells or leases portable electronic devices, and
- a person or entity that otherwise provides portable electronic devices in connection with a transaction between the person or entity and another person or entity..
This two-part definition incorporates both companies that manufacture and sell devices, as well as service providers that may sell devices in conjunction with the sale of wireless services. The definition deftly recognizes the reality of the market for purchase and sale of smartphones in Canada.
Saskatchewan’s new Insurance Act was passed on May 14, 2015, but has not yet been proclaimed in force. It is anticipated that proclamation of the Insurance Act and the Insurance Regulations will occur in the Spring of 2018 or later in order to allow industry stakeholders time to adapt their businesses in light of the changes. In introducing the Insurance Regulations, Saskatchewan has added certainty to issue of programs covering loss or damage to smartphones. In Saskatchewan, such programs are insurance, but practically, electronics vendors may avoid onerous insurance licencing requirements by applying for a restricted insurance agent’s licence to market the programs.