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Published January 28, 2021
The BC Financial Services Authority (BCFSA) recently advised that it will temporarily relax current restrictions on agents’ use of unauthorized insurers in certain circumstances. This move by the regulator is intended to help ease current capacity issues in the strata insurance market. An unauthorized insurer is an insurer that is neither authorized nor subject to regulation by BCFSA.
Under the Financial Institutions Act’s Insurer Exemption Regulation, 9(a), while an insurance agent may place an insurance risk with an unauthorized insurer, the agent must not solicit a BC resident to enter into such a contract—the request must come from the party looking to obtain the policy. This condition currently prevents insurance agents from seeking strata insurance coverage from unauthorized insurers when a strata property cannot find capacity from authorized insurers; strata councils are unlikely to be familiar with this option.
BCFSA has said it will temporarily suspend this no-solicitation condition where additional risk-mitigation measures are undertaken through a written agreement with the Superintendent of Financial Institutions. Additionally, agents must comply with the Insurance Council of BC’s Rule 7(11.1) regarding transactions with unauthorized insurers.
Rule 7(11.1) requires that agents 1) notify the Insurance Council in writing prior to conducting any insurance transactions with an unauthorized insurer, and 2) meet the duties and obligations identified in the rule. Specifically, agents must take steps to:
Notice ICN 11-002, Use of an Unauthorized Insurer, contains more detailed information about standards of practice and what needs to be included in the disclosure to clients. Licensees practising in this area are expected to familiarize themselves with these requirements. This practice advisory is available in the Notices section of the Insurance Council website.
If you have any questions about the information above, please contact our Practice and Quality Assurance Team at 604-695-2008 or toll-free at 1-877-688-0321 ext. 3 or email firstname.lastname@example.org.
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