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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.



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.