Yesterday afternoon, the Alberta government introduced amendments to the Insurance Act (Alberta) and the Captive Insurance Companies Act (Alberta) as the next step in its initiative to provide additional Alberta-based insurance capacity and foster development of the insurance, risk management and insurtech/fintech sector in Alberta, supporting the province's economic diversification. This follows the introduction and passage last year of the Captive Insurance Companies Act, as previously discussed here.
If passed, Bill 16, the Insurance Amendment Act, 2022, will amend both the Insurance Act and the Captive Insurance Companies Act to, among other things:
- allow Alberta-formed and licensed insurance companies to offer solely reinsurance and to operate via a limited partnership structure. Currently, insurers are not required to be licensed in Alberta if only offering reinsurance in Alberta and not primary insurance. Alberta is believed to be the first jurisdiction in the world to provide the option for a reinsurer to operate via a limited partnership.
- reduce the current tax on unlicensed insurance from 50% of the premium payable to 10%, and reduce the current penalty for late payment of charges and tax on unlicensed insurance from 50% to 10%.
- add new "redomestication" provisions to facilitate the relocation into Alberta of existing foreign captives.
Regulations required to implement the Captive Insurance Companies Act are expected to be released later in 2022.
Taken together, the measures are designed to achieve several complementary goals. These include 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 the captives and/or reinsure the 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 governmental initiatives already underway and supporting long-term economic diversification in Alberta.
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