A bill has been introduced to the legislative assembly of Alberta that would allow for the formation of captive insurance companies in the province, making it the second Canadian province to do so following the passage of similar legislation in British Columbia in 1988.
Bill 76, also known as the Captive Insurance Companies Act, was tabled by minister of finance Travis Toews.
In a press conference, Toews notes that the bill will be beneficial to companies in industries where coverage is costly and difficult to obtain, such as energy, agriculture and manufacturing.
The bill provides guidelines for the formation and management of a captive insurance company in Alberta — for example, a captive may be incorporated as a body corporate under the Business Corporations Act.
In addition, the company must have a principal place of business in Alberta, appoint an auditor and actuary at all times, and keep accessible and open records.
Permitted business of a captive based in Alberta is limited to classes of insurance, with the scope of eligible insured risks covering those of the parent or association members. A captive may provide reinsurance of risks ceded by any other insurers.
The Alberta superintendent of insurance would regulate all captive structures, whether pure, association or sophisticated insured, to ensure they hold enough capital to cover claims.
Specific requirements and regulations pertaining to licensing, base capital, liquidity and financial statements are expected to be finalised in spring 2022.
