Yesterday afternoon, the Government of Alberta amendments introduced to Insurance Law (Alberta) and the Captive Insurance Companies Act (Alberta) as the next step in its initiative to provide additional Alberta-based insurance capacity and foster the development of the insurance, risk management and insurtech/fintech industry in Alberta, supporting the economic diversification of the province. This follows the introduction and adoption last year of the Captive Insurance Companies Actas previously discussed here.
If passed, Bill 16, the Insurance Amendment Act 2022will modify both the Insurance Law and the Captive Insurance Companies Act to, among others:
- allow insurance companies incorporated and licensed in Alberta to offer only reinsurance and to operate through a limited partnership structure. Currently, insurers are not required to be licensed in Alberta if they only offer reinsurance in Alberta and not primary insurance. Alberta is considered the first jurisdiction in the world to offer a reinsurer the option of operating through a limited partnership.
- reduce the current tax on unlicensed insurance from 50% of the premium to be paid to 10%, and reduce the current penalty for late payment of charges and the tax on unlicensed insurance from 50% to 10%.
- add new “relocation” provisions to facilitate the relocation to Alberta of existing foreign captives.
Regulations necessary for the implementation of the Captive Insurance Companies Act are expected to be released later in 2022.
Together, these measures aim to achieve several complementary objectives. This includes providing additional Alberta-based insurance capacity to Alberta businesses, particularly in the energy sector, while preserving and creating new opportunities for incumbent insurers to co-insure alongside captives and/or reinsuring captives or provincial reinsurers. In addition, they would help foster the long-term development of the insurance, risk management and insurtech/fintech sector in Alberta, complementing related Alberta government initiatives already underway and supporting long-term economic diversification. Alberta term.