McDonald - Insurance Law Flashcards
Section 91 (BNA Act): Identify FEDERAL areas of exclusive authority (not specific to insurance). (6)
- regulation of trade & commerce
- taxation
- banking
- bankruptcy, insolvency
- immigration
- criminal law
Section 92 (BNA Act): Identify PROVINCIAL areas of exclusive authority (not specific to insurance). (4)
- provincial taxes
- civil property rights
- hiring & supervising of provincial employees
- operation of jails & hospitals
Define ‘Intra Vires’ & ‘Ultra Vires’.
INTRA VIRES: WITHIN the powers of a particular government
ULTRA VIRES: BEYOND (outside) the powers of a particular government
Matters under PROVINCIAL insurance legislation/regulation. (2)
- contract matters
- transaction matters
List the areas under the CONTRACT MATTERS of provincial insurance legislation/regulation. (6)
- policy contents
- policy terms
- premium payment
- insurable interest
- reinstatement
- designation of beneficiaries
List the areas under the TRANSACTION MATTERS of provincial insurance legislation/regulation. (3)
- agent licensing
- unfair practices
- claims handling
Citizens Insurance v Parsons (1881): Facts
insurer disputes ON’s Fire Insurance Act
- the Act required certain statutory conditions for fire policies in ON
Citizens Insurance v Parsons (1881): Main Issues (recall: Citizen’s ultra)
1) Is the ON Fire Act ultra vires? (relates to regulation of trade, which is federal)
2) The insurer claims that the province can’t legislate to deprive federally incorporated insurer of status and capacity (violate rights of a federally incorporated company)
Citizens Insurance v Parsons (1881): JCPC Ruling on Issue #1
The ON Fire Act IS intra vires.
Reason:
- federal government can’t regulate an insurer operating in a single province
- trade means INTER-provincial (not INTRA-provincial)
Citizens Insurance v Parsons (1881): JCPC Ruling on Issue #2
- status & capacity of a federally incorporated insurer is UNAFFECTED
- insurers are all treated equally, regardless of where they were incorporated
Insurance Reference Case - AG(CAN) vs AG(AB) (1916): Facts
(1910) The Federal Insurance Act required that all insurers have a Federal license
EXCEPT IF
the insurer was incorporated by the province and was operating solely in that province
Insurance Reference Case - AG(CAN) vs AG(AB) (1916): Main Issues
Is this version of the Federal Insurance Act INTRA VIRES?
Insurance Reference Case - AG(CAN) vs AG(AB) (1916): Ruling JCPC
Licensing provision are ULTRA VIRES:
- regulation of trade & commerce didn’t extend to a licensing system of a particular trade
- it interferes on the provinces’ authority in civil rights (civil rights are not covered by federal power to legislate for peace, order & good government)
Insurance Reference Case - AG(CAN) vs AG(AB) (1916): Implication for Canadian insurers: provide the 2 scenarios where an insurance company can operate in more than 1 province.
1) A provincially incorporated insurer (which has the capacity, BUT not the right to operate in another province), can operate in another province IF they have the permission from that other province
2) Being a federally incorporated insurer, which has the capacity, AND the right , to operate in another province.
Insurance Reference Case - AG(CAN) vs AG(AB) (1916): Implication for foreign insurers.
The federal government can require a federal license for a foreign insurer, EVEN IF the foreign insurer is operating in only 1 province.
BC Public Auto - CIC v AG(BC): Facts
- BC legislature establishes a compulsory public auto insurance plan
- the legislature then refused to renew the licenses for private insurers
- the insurers decided to sue
BC Public Auto - CIC v AG(BC): Arguments
Insurers claim that the BC legislation is ULTRA VIRES:
- it relates to regulation of trade, which is under federal authority
- province can’t legislate to deprive federally incorporated insurers of status and capacity
BC Public Auto - CIC v AG(BC): Rulings - Supreme Court
BC legislature acted within its power (legislation is INTRA VIRES)
Areas under federal insurance legislation/regulation (similar to CIRCA-F). (5)
- CONDITIONS for entering business
- INVESTMENTS
- regular REPORTING
- CALCULATION of assets & reserves
- PROTECT policy holders
Identify reasons for insurance regulation in Canada. (3)
- Prevent insolvencies
- Prevent undesirable business practices
- Consider economic impact on Canada
AG(ON) v Reciprocal Insurers (1924): Facts
(1917) Parliament amended the Federal Insurance Act so that it became a criminal act to accept risk without a Federal license.
AG(ON) v Reciprocal Insurers (1924): Main Issues
Were Parliament’s 1917 amendments to the criminal code valid?
AG(ON) v Reciprocal Insurers (1924): Ruling - JCPC
NO, JCPC invalidated the 1917 amendments to the Federal Insurance Act
- the Federal government does not have the power to regulate insurance contracts
OSFI Licensing requirements for domestic insurers (for Minister of Finance to approve letters patent). (6)
- financial resources must be sufficient
- have a detailed and realistic business plan
- business record of applicants (check for past insolvencies or legal action)
- character, competence, and experience of management
- positive impact on Canadian financial system (growth of GDP, jobs, etc.)
- if owned by a foreign parent, OSFI must be satisfied that the subsidiary will be treated fairly
