An Act to amend the law governing financial institutions and to provide for related and consequential matters, came into force, for the most part, on April 20.
The amended Part XIII will have a major impact on all foreign marine insurers doing business in Canada, because it eliminates the longstanding exemption from the ICA of risks falling within the class of marine insurance. Part XIII, as amended, will apply in respect of the insurance business in Canada of a “foreign entity”, a term defined to mean “… an entity incorporated or formed by or under the laws of a country other than Canada, and includes an association and an exchange”. The term would therefore include a foreign company. A related term, “foreign marine company” is defined to mean “… a foreign company that is authorized to solely insure risks within the class of marine insurance.” Foreign entities that “insure in Canada a risk” will require an order from the Office of the Superintendent of Financial Institutions (“OSFI”) to do business in this country, and will fall under the OSFI’s regulatory control as regards maintaining solvency, reserves and other matters (e.g. appointments of auditors and actuaries, establishment of chief agencies, etc.).
The amended Part XIII was to have come into force on January 1, 2009. Due to its serious impact on insurance generally, even to the point of requiring changes of corporate structures or the redesign of business models in some cases, the Insurance Bureau of Canada has obtained from the OSFI a one-year extension of the implementation date, until January 1, 2010. BLG has been retained to assist clients in connection with consultations with stakeholders that will be held throughout 2008 concerning the regulations needed to implement the new rules. A central objective in participating in these consultations will be to endeavour to secure adjustments that will moderate the impact of the changes upon foreign marine insurers doing business in Canada.