Insurance Act Reforms

Changes to the British Columbia Insurance Act and regulations

Significant amendments to the Insurance Act, and new regulations implementing the reforms, came into force on July 1, 2012. These changes protect consumers by modernizing the legal framework which regulates insurance contracts (other than vehicle insurance).

The improvements respond to industry needs by reducing red tape and supporting new ways of doing business.

The new regulations were first announced December 2, 2011, but the effective date was deferred to July 1, 2012, to allow for ordrly implementation of the changes and for insurers and insurance agents to adjust insurance contracts and processes to meet the n ew statutory and regulatory requirements.

In fall 2009, the British Columbia Legislature passed the Insurance Amendment Act, 2009, which implements a comprehensive rewrite of legislation governing BC insurance contracts. Measures to protect insurance consumers include:

  • Extending the limitation period in which consumers can make legal claims against insurance companies to two years from one.
  • Clarification that fire coverage includes fires resulting from any cause, including earthquake, unless specifically excluded in the regulations.
  • A 30 day "grace period" for consumers to pay overdue life and health insurance premiums.
  • Providing consumers of group insurance products a right to obtain a copy of the key parts of those insurance policies.
  • New internal complaint resolution procedures and consumer access to ombusperson-type services if disputes cannot be resolved internally.

Regulations necessary to fully implement the 2009 legislative reforms also came into force at the same time as the statutory changes. These regulations:

  • Define classes of insurance for the purposes of the Insurance Act.
  • Contain substantive provisions that:
    • require insurers to notify claimants of limitation periods and dispute resolution processes
    • prohibit the use of e-mail for contract terminations
    • provide a 10-day window for consumers to rescind a life or accident and sickness insurance contract
    • set out specific permitted exclusions from mandatory fire coverage
  • Apply appropriate provisions of the Act to specialty insurance products/providers, such as home warranty insurance and captive insurers.
  • Contain transition rules to clarify that certain new provisions do not apply retroactively to insurance contracts and claims.

A detailed summary of all the regulatory changes can be found here.

Provisions protecting the rights of innocent co-insured individuals to recover damages under insurance contracts were brought into force in June 2011.

Qs & As

Will consumers need to contact their insurers to update their contracts?

  • Consumers with existing contracts do not have to take any action, as insurers will notify their customers of any changes.

Were any regulations for these amendments previously made effective?

  • Yes, the provision allowing an innocent co-insured person to recover damages under a contract of insurance was brought into force in June 2011.
  • The regulation supporting that amendment, which limits the protection to natural persons and requires co-operation with the insurerís investigation, is re-enacted by this regulation package, so it is integrated into the rest of the insurance regulations.

How do these amendments and regulations treat fire coverage?

  • Under the Insurance Act amendments, any exclusion from comprehensive fire coverage must be set out in the regulations.
  • No exclusion for fire following earthquake is included in the proposed insurance regulation. This means that damages from fire following an earthquake are covered under a consumerís comprehensive residential fire coverage.
  • An exclusion for fire following terrorism is included however, it only applies to commercial insurance policies, where the magnitude of potential losses poses a serious risk to insurer solvency. This means damages from fire caused by terrorism might not be covered under commercial comprehensive insurance policies, but would be covered under residential comprehensive fire coverage.

Who should consumers contact if they have any questions about how these regulations affect them?

  • If consumers have questions about their current contracts and the impacts flowing from these regulations, they should contact their insurance broker/agent or insurance company.
  • If consumers require further information on the amendments and regulations, they can contact the Ministry of Finance's Financial and Corporate Sector Policy Branch at fcsp@gov.bc.ca or 250-387-1269.

Links to more information

Questions?

For further information, please phone or e-mail the Financial and Corporate Sector Policy Branch at 250-387-1269 or fcsp@gov.bc.ca.