On May 31, 2022, Alberta's Bill 16, the Insurance Amendment Act, 2022 (the "Act") came into force, making amendments to the Insurance Act and the Captive Insurance Companies Act.
Changes to the Insurance Act now provide greater latitude to provincially licensed insurance companies in their operations, including easier access to reinsurance and the ability to enter into limited partnerships.
The Act also amended the recently passed Captive Insurance Companies Act ("Captives Act") in respect of the rules relating to relocating foreign captives to Alberta by adding "redomestication" provisions.
The Act includes further administrative amendments to align the Insurance Act with insurance laws in other jurisdictions.
Background of the Captive Insurance Companies Act
In late 2021, the Alberta Government introduced the Captives Act, now proclaimed in force as of July 1, 2022. The Captives Act expands risk management options for businesses and allows industrial, commercial, or financial entities or groups to create their own "in-house" insurance known as captive insurance. Availability of captive insurance in Alberta is in part a response to insurance cost and availability pressures on Alberta businesses, in particular those in the resource space.
Traditionally, captive insurance companies with Canadian risks have often been incorporated offshore, or in British Columbia, which was the only Canadian jurisdiction with a specialized captive insurance regime. With the passage of Alberta's Captives Act, captive insurance companies incorporated in Alberta are permitted to insure certain risks. For more details on the background of the Captives Act, and the benefits of captive insurance in assisting with risk management, please visit our December 31, 2021 discussion on the Captives Act.
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