Request FOr COuncil

In conjunction with changes to Part XIII of the federal Insurance Company Act, which came into effect on January 1, 2010, as well as recent amendments to section 76 of the Financial Institutions Act (the “Act”), Council is proposing to add to Rule 7 - Licence Conditions (11.1) (“Unauthorized Insurer Rule”) to regulate how licensees may conduct insurance transactions under the exemption contained in section 76 of the Act. For reference purposes, sections 75 and 76 of the Act are outlined on page 4 of the complete report, which may be downloaded or viewed from the list at the botton of this page.

The publication of this document represents the start of the 60 day consultation process. Written feedback must be received by Council no later than March 26, 2010. All comments will be considered public information. You are encouraged to review this proposal and provide written feedback to Council via:

email to: rules@insurancecouncilofbc.com;

mail to: Council's office; or

fax to: 604-662-7767

The purpose of the Unauthorized Insurer Rule is twofold. It ensures Council is aware of licensees who are conducting insurance transactions under the section 76 exemption and it also sets out when and how the section 76 exemption is applicable. The registration process will include specific information such as:

the name of the agent/agency;

in the case of an insurance agency, the lead licensee responsible for this area of business;

a brief description of qualifications of the agent or in the case of an agency, the lead licensee to conduct this area of business; and

confirmation the licensee understands the disclosure and trust account requirements.

After written notification has been provided to Council, a licensee may proceed with an insurance transaction under section 76. A licensee will not be required to wait for or receive Council’s approval and there will be no fee associated with providing the written notification.

In the case of an insurance agency, only the agency will be required to provide the written notification. Individual licensees acting on behalf of the agency do not have to submit written notification.

While prior approval of Council is not required, Council will review all notifications and reserves the right to remove the ability for a licensee to rely on the section 76 exemption where it can demonstrate a licensee is not qualified to conduct such insurance transactions or a licensee has conducted such transactions contrary to any governing legislation, including the Rules. In such cases, a licensee will be entitled to a hearing and the right of appeal as set out in the Act.

In order to place business with an unauthorized insurer, a licensee must first take reasonable steps to ensure the coverage was not available from a Canadian authorized insurer. As an example, taking all reasonable steps to find a market with an authorized insurer could include referring a client to another licensee, if it is believed another licensee could place the coverage with an authorized insurer.

Further, a licensee will only be authorized to proceed under section 76 with the prior consent of the client, and the licensee will be required to provide the client with full disclosure of the risks and responsibilities the client is undertaking in entering into the transaction.

Licensees will be required to place all funds received in these transactions in a trust fund established with a recognized Canadian financial institution.

You may view or download the proposed rule including the relevant sections of the Act and the summary of the changes proposed by choosing from the list below.

If you have any questions after you have reviewed the material, you may contact: