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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.

The team at Iridium is professional, approachable and knowledgeable. Prior to the sale of our business, insurance was managed by an internal risk management corporate group. Iridium was engaged to establish insurance coverage within a short period of time for the standalone business. Iridium was intimately involved in proposing solutions to mitigate risk and brought significant cost savings to our business. Iridium is a true risk partner for our business; providing education and training, expert contract review and risk assessments, along with a strong understanding of our company’s exposures and insurance coverage.

—Wes Morningstar
Chief Executive Officer and Director,
Canlin Energy Corporation.

We can always count on Iridium to be available at a moment’s notice. Whether it be to discuss a random insurance related topic, review a contract, or request documentation for board level meetings, they always deliver regardless of timing. Iridium has been great at bringing forward ideas, issues and solutions that have helped Perpetual build a better insurance program. They also introduced us to a new marketing strategy of building direct relationships with the underwriting community. Not only did it pay dividends at the time Iridium first became our broker, but it has continued to do so in subsequent renewals. Their professionalism, ability to speak on a technical level and refreshing style are all big reasons why our firms continue to do business.

—Jeffrey R. Green
Vice President,
Perpetual Energy Inc.

Iridium’s knowledge of the international energy sector and our specific business strategy allows us to efficiently develop and continually manage our international operational risk profile. We can always count on the Iridium team to react promptly and professionally to any request, from minor insurance queries to exposure identification. Our experience with Iridium as a risk management partner has been positive and we look forward to our continuing working relationship in the future.

—Scott Budau CA
Chief Financial Officer,
Touchstone Exploration Inc.

Fraser Surrey Docks is undertaking significant changes to our operations and we were looking for an expert who would work with us to address our evolving risk needs. Iridium’s understanding of our objectives, understanding of our industry and their risk-based consultative process was exactly what we needed. Iridium is incredibly responsive and they have become an invaluable member of our risk management team. The benefits to Fraser Surrey Docks in engaging a dynamic firm like Iridium continue to emerge and we would recommend them as a risk management partner to any of our West Coast peers.

—Leonard Cox
Chief Financial Officer,
Fraser Surrey Docks

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.

We engaged Iridium at the same time that we were completing a large asset acquisition and a corporate merger. In order to identify our exposures, the team at Iridium invested the time required to understand our existing business and the new acquisitions. In addition, they worked closely with our staff to compile the data requested by our insurance providers. Overall, I am extremely pleased with the exceptional level of service provided by Iridium and value them as a trusted business partner.

—Brent R, Bracken, CA
Sr. Vice President, Finance & CFO,
Caltex Resources Inc.

The team at Iridium handled our significant pollution liability claim like the consummate professionals we’ve come to know them as. We felt supported throughout the entire process and knew Iridium always had our back. Whether it be in dealings with insurers, adjusters or third party experts, they advocated for us every step of the way. We are very grateful for their level of involvement and the ultimate settlements along the way.

—Graydon Glans
Chief Financial Officer,
Highwood Oil Company Ltd.

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