Let’s give them something to talk about: Government solicits input on the proposed Regulations under BC’s new Insurance Act

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Lost amidst the hoopla(w) of Olympic fever the Ministry of Finance released the Insurance Act Regulations Discussion Paper seeking industry comment and input on the policy direction of the regulations proposed under BC’s new Insurance Act.

In sum, the proposed regulations contained within the Discussion Paper are:

General Application

  • Electronic transactions – the Insurance Act specifically provides that documents may be provided electronically in accordance with the Electronic Transactions Act. It is proposed that certain types of documents, specifically terminations of coverage and designations of beneficiaries, be excluded from this regime and would still have to be provided in paper form.
  • Telephonic communications – the proposed regulation provides that application information gathered over the telephone and other important information obtained this way be provided in writing to the applicant for confirmation.
  • Notification of expiring limitation period – the proposal requires insurers to make reasonable efforts to notify a claimant of the date on which the limitation period applicable to the claim will expire. Such notification must be made at two points in time: if a claim is denied, at the time of denial; and secondly, at least 60 but no more than 120 days before the expiry of the limitation period. Failing to provide such notice may suspend the running of the limitation period. It is proposed that “minor” claims will be excluded from the requirement to give notice.
  • Consumer complaints against insurers – the Insurance Act requires insurers develop their own internal process for resolution of consumer complaints. It is proposed that insurers who provide only vehicle insurance, reinsurers and self-insurers be excluded from this requirement. The proposed regulations also mandate insurer membership in one of two named independent ombudservices.

Regulations Applicable to P&C Contracts

  • Applicability of statutory conditions – it is proposed that a number of classes of insurance would be exempt from the requirement to include the statutory conditions in the insurance contract: aircraft insurance, boiler and machinery insurance, credit insurance, credit protection insurance, fidelity insurance, hail insurance, mortgage insurance, product warranty insurance, title insurance, vehicle warranty insurance, baggage or trip cancellation insurance.
  • Fire coverage – it is proposed that the current list of permitted exclusions of fire causes continue to apply (riot, war, invasion). It is suggested that fire following earthquake and fire following terrorism not be permitted exclusions. Fire following a vacancy of more than 30 days will be a permitted exclusion.
  • Notification of dispute resolution processes – The regulations will set out the requirements for an insurer to give written notice of the ADR process to the insured within 10 days of the insurer becoming aware of a disagreement to which the process would apply or no later than 60 days after receipt of a proof of loss.
  • Innocent co-insured claims procedures – It is proposed that the “innocent co-insured” protection found in section 28.6 of the Insurance Act apply only to natural persons and not to claimants that are corporations. Further, the regulations will require such an innocent person to submit to an examination under oath on the request of the insurer.

Regulations Applicable to LAS Contracts

  • Right to rescind insurance coverage – It is proposed that there be a “cooling off” period of 10 days following receipt of the policy or certificate.
  • Access to group insurance contract – The Insurance Act provides for the right of individuals under a group contract to obtain a copy of the policy as well as other information. The proposed regulation will restrict access to information that is not relevant to the contractual rights of the group insured and provides that an insurer may, with court approval, deny access to other aspects of the contract on the basis that the disclosure could harm commercial interests.
  • Insured’s rights where beneficiary is irrevocable – Regulations are proposed to allow the insured to make certain changes such as increasing coverage and providing for payment of other benefits in the contract.

Technical, Transitional and Other Regulations

  • Classes of insurance – are to be brought in line with federal definitions.
  • Transitional provisions – The transitional regulations will be drafted to ensure that new requirements apply only to policies issued after the provisions came into force. Further, new rules respecting the settlement of claims will only apply to losses which arise after the coming into force of the new provisions. Finally, it is proposed that there be a lead time of 12 months to allow insurers to change documents, procedures and systems to comply with the new regime.

The Discussion Paper anticipates that the regulations will be drafted by the Fall of 2010, thus allowing for finalization of all the Insurance Act reforms at that time. It is also planned that implementation of the new regime be coordinated with Alberta.

Submissions on the proposed regulations are due by April 16, 2010.