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Big Changes to the Alberta Insurance Industry

Alberta has been on a roll regarding regulatory change of late. First, on January 1, 2022, Alberta moved to Direct Compensation for Property Damage (DCPD) with respect to Auto insurance, DCPD is touted as a fairer and more efficient approach to premium and the settlement of auto claims. Then, effective July 1, 2022, Bill 76 allowed certain captive insurance companies to be licensed in Alberta, making it only the second Province in Canada to do so.

Lastly, also effective July 1, 2022, Bill 16 has reduced the cost of unlicensed insurance by reducing the penalty from 50% of the premium payable to 10%, aligning it closely with other provinces, as explained further below.

What is unlicensed insurance and why use it?

Unlicensed insurance is where an insurance placement is underwritten and insured by a company that has not been licensed in the applicable Province (and/or Federally). Therefore, it is not subject to provincial and federal oversight. Canada has a highly developed and sophisticated licensed insurance market, including major international insurance companies and markets such as Lloyd’s of London. However, there can still be a need to use unlicensed insurers for a variety of reasons.

Up until May 31, 2022, the use of such unlicensed insurers potentially imposed a tax on the Insured of 50% of the payable premium unless the placement was brokered by a licensed “Special Broker” and other provincial regulatory requirements were followed, in which case the tax is reduced to 4%. Effective May 31, 2022, the tax imposed if a Special Broker is not involved has been reduced from 50% to 10%. The solvency of such unlicensed insurers and their home domicile must be carefully considered to ensure their ability to pay claims and the legal framework to seek recourse are client-friendly.

Conclusion:

All of these changes require a careful thought process about your company’s insurance coverage. It is always a good time to talk to your Iridium representative about any recent changes with your company and review the adequacy of your coverage.

If you have questions specific to your business, or would like additional information, please reach out to your Iridium Risk Advisor.

From day one the team at Iridium has shown a commitment to researching and implementing the best possible solution for Pacesetter’s insurance needs which has met both our unique corporate and operational objectives. Iridium has demonstrated their knowledge of the different products and carriers and has demonstrated their commitment to privacy, confidentiality and discretion concerning the corporate information discussed in transacting with Pacesetter. Further, the Iridium team is committed to providing efficient, accurate support and service on all matters concerning our insurance and risk items as they come up.

—Chad Robinson
Chief Financial Officer,
Pacesetter Directional Drilling Ltd.

Iridium’s unique approach and in depth understanding for our business made for a thorough and seamless insurance placement. We can always rely on their guidance and exceptionally prompt responses. Iridium’s knowledge and strong service focus gives us confidence in knowing the job will get done right!

—Dave Hawkins, CA
Chief Executive Officer,
Groundforce geoDrilling Solutions Inc.

Pure is a company that has grown significantly both in size and complexity over the last 10 years and required a new perspective on its overall risk management approach. Through a detailed and in-depth review of our Company and our business, Iridium was quickly able to immediately add value to Pure by helping us develop and implement a comprehensive insurance program that ensured appropriate coverage on a cost effective basis. Our senior management has been very impressed with both the professionalism and responsiveness of the Iridium team as we have made the transition from our previous provider. We look forward to a strong and long term business partnership between Pure and Iridium as our business continues to grow.

—Geoffrey D. Krause, CA, CPA
Vice President and CFO,
Pure Technologies

As we approached our first renewal with Iridium, I was extremely impressed by the team’s operational technical expertise in helping us construct an insurance program most suitable for our risks and their ability to clearly and concisely explain everything as we went through the process. The Iridium team were able to negotiate a fair price for Battle River, in a tough market, and was always quick to respond to any questions we had. Our first renewal went much smoother than I ever could have expected, and we really enjoyed working with them.

—Lance Dunn
Chief Financial Officer,
Battle River Energy Ltd.

We are very pleased with the expertise and service that we receive from Iridium. We take comfort that our representatives at Iridium have a current understanding of market conditions and combined with the investment they make in understanding our business and risks, we are highly confident that we are getting the best coverage and competitive premiums. The people at Iridium are very attentive and responsive to our needs. I would highly recommend them to anyone.

—C. Dean Setoguchi
Vice President & CFO,
Keyera Corp.

The Iridium approach to insurance and risk management is very inclusive, encouraging representation from across the business to fully understand the business risks and requirements. The Iridium team brings extensive oil and gas experience, together with useful benchmarking, market research and relationships with insurers that results in intelligent and cost effective risk solutions. Iridium are an important part of our business and we share similar corporate values as Calgary based, owner managed teams with significant pride of ownership and determination to succeed.

—David French
CFO and VP Finance,
Burgess Creek Exploration Inc.

We engaged Iridium as Crescent Point’s risk management and insurance partner because they encouraged us to take a big-picture view on risk. Their collaborative and analytical approach enabled us to gain a better handle of our exposures and allowed us to put rigour around our many risk-improvement initiatives. Iridium impresses our team with their ability to develop intelligent risk solutions and they have more than delivered on their promise to be our strongest claims advocate. Without question, I would recommend Iridium as a risk management partner to anyone.

—Steve Downing
Manager. Risk and Treasury,
Crescent Point Energy Corp.

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