GENERAL INFORMATION
What’s the issue?
In addition to its regular licensing process, the Insurance Council has for many years also issued restricted licences—a type of licence with conditions imposed on it to limit the scope of practice. This is done in occasional circumstances where individuals or companies applying for licensure do not meet the standard requirements for a full licence under the Insurance Council Rules, but their insurance activities are limited to the sale, or adjusting of one or more specific products.
A recent legal review of the process for granting product-specific restricted licences determined that while the Insurance Council has the legislative authority to issue restricted licences under the Financial Institutions Act, the process is not set out in the Insurance Council’s Rules. This makes the act of granting these restricted licences ultra vires, i.e., beyond the scope of the powers currently defined in its rules. In order to avoid non-compliance with the Act, the Insurance Council has ceased issuing product-specific restricted licences until the matter can be resolved.
What does this mean? Who is affected?
There will be an impact on new applicants for licences restricted to the sale or adjusting of specific insurance products. No new applications are being accepted for product-specific restricted licences; all pending applications will be closed and application fees refunded.
There is no interruption to those who currently have a restricted licence. These licence holders can continue to carry out the insurance activities for which they are licensed.
There is no disruption to the standard licensing process for insurance agents, agencies or adjusters (General Insurance, Life and/or Accident & Sickness, Adjusters).
There is no disruption to licensing for travel agents or wholesalers with a Restricted Travel Insurance Agent Licence who are also licenced with Consumer Protection BC.
What’s the impact on consumers?
We anticipate that this situation will have minimal impact on consumers, as insurance products continue to be available through current restricted licence holders and licensed insurance agents and agencies.
Furthermore, the validity of insurance products sold by restricted-licence holders is unchanged as they hold a valid insurance licence.
How is this issue being resolved?
We anticipate that addressing this matter will require the creation of one or more new Insurance Council Rules to establish a framework for a revised restricted licensing process. Section 225.1 of the Financial Institutions Act sets out the Insurance Council’s ability to make rules.
How long is this expected to take?
The creation of Insurance Council Rules under the Financial Institutions Act is a complex undertaking and may take anywhere from 18 to 24 months. Any new rule will need to be approved by government following legal analysis and public consultation in compliance with the Act’s Insurance Council Rule-making Procedure Regulation. As such, a new rule is not expected to be in place before August 2022.