McDonald (Life Insurance Laws of Canada) Flashcards
Describe the British North American Act (BNA) of 1867
- Created a new fed gov for the Dominion of Canada
* Distributed all powers between the federal and provincial Parliament
Provide Legislative matters exclusive to federal after the BNA Act of 1867
- Reg of trade and commerce
- Taxation
- Banking
- Bankruptcy and insolvency
- Naturalization and aliens
- Criminal law
Provide Legislative matters exclusive to provincial after the BNA Act of 1867
- Incorporation of cies with provincial objects
- Property and civil rights in the province
- All matters merely local or private in nature
Describe the Judicial Committee Privy Council (JCPC)
- Insurance not specifically mentioned in BNA (too small)
- Lack of clear direction
- Cases decided by Judicial Committee of the Privy Council in England until 1949
- Supreme Court of Canada created in 1949
- Whether a particular piece of legislation contravened the powers provided in the BNA Act
- Within the powers of a particular gov-> intra vires
- Beyond the powers of a particular gov -> ultra vires
Discuss Citizens Insurance Co vs Parsons (1881)
Company disputes Ontario’s requirements for fire policy provisions specified in the Fire Insurance Policy Act
Act ultra vires because subject relates to trade/commr + cie cannot deprive a federally incorporated cie of its status and capacity
JCPC decision: Act is intra vires, trade/commr does not include power over contract
• Federal deals with interprovincial commerce
• Act treats all insurers equally
• Act did not affect cies constitution or status
Describe Insurance Reference Case:
Attorney-General for Canads vs Attorney-General for Alberta (1916)
Contested Fed Ins Act (1910): Required that all insurers operating in multi provinces obtain a federal license
Reg of trade/commr does not extend to licensing
• Provincially incorporated insurer could operate in other provinces, w/o being federally regulated, with permission from those provinces
• Federally incorporated insurer does not require the provinces permission
• Fed gov can require licensing of foreign insurers
Describe Reference re Reciprocal Insurance Legislation:
Attorney-General for Ontario vs Reciproval Insurers
Result of the Insurance Reference Case, new Fed Ins Act (1917), and Criminal Code amended so that soliciting risks for cies that are not federally licensed is an indictable offence
JCPC invalidates the amendments to CC because fed as no power to regulate insurance contracts
Discuss Re the Insurance Act of Canada (1932)
Special War Revenue Act imposed tax for foreign insurer (foreign or British insurer carrying on business in Qc and holding a license under Qc Ins Act) not licensed under Fed Ins Act
Federal legislation found ultra vires
• Not included w/ power to regulate naturalization/aliens
• Found to be an attempt to meddle with the conduct of insurance business
• Following this case, fed passed 3 acts in 1932, which deleted a #areas found in the earlier Fed Ins acts
Discuss Re Section 16 of the Special War Revenue Act (1943)
Three Acts in 1932
• Canadian and British Ins Cies Act (CBICA)
• Foreign Ins Cies Act (FICA)
• Department of Ins Act
JCPC found three sections of CBICA and FICA to be ultra vires because they attempted to regulate the business of insurance within a province
Discuss Canadian Indemnity Company vs Attorney-General of BC (1977)
BC established compulsory auto insurance plan in 1974, eliminating private insurers
- Matter is fed jurisdiction relating to reg of trade/commr
- Interfered with the status and capacity of federally registered insurers
Supreme Court of Canada dismissed and found that the legislation was within powers of BC legislature
What are the Federal Regulation of Insurance Duties?
Primary concern is financial soundness or solvency of federally incorporated and foreign insurers:
• Conditions that must be satisfied for a company to enter into the business of insurance
• Reports relating to the financial condition of the company that must be submitted at regular intervals
• Control over the investments, calculation of asset values and policy reserves
• Protecting the interests of PH
What are the Provincial Regulation of Insurance Duties?
- Supervising the financial soundness of provincially incorporated insurance companies
- Regulatory duties relating to insurance contract and transactions
Guidelines are a simple method to accomplish uniformity without the need for formal legislation
Discuss OSFI Act
- OSFI Act create OSFI presided by Minister of Finance who manages and directs OSFI
- Governor on the advice of JCPC appoints Supt
- OSFI administers ICA, Coop Credit Associations Act, Trust and Loan Cies Act, Bank Act, Investment Cies Act
- OSFI expense: paid by insurance cies NPR - PH dividends prorata basis
- Annual report of OSFI published in “Blue Book”, contains financial data on all companies
The Minister of Finance considers several factors when licensing insurers; list these considerations. How do these relate to the reasons for insurance regulation?
Prevent insolvencies:
• Nature and sufficiency of financial resources
• Soundness of business plans for future dev
Prevent undesirable business practices:
• Business record and expertise
• Character, competence, and xp of cie operators
Consider the economic impact:
• Whether the incorporation of the insurer will be in the best interests of the financial system in Canada
• Evidence that a foreign parent will treat Canadian subsidiary fairly
