A new bill recently tabled in the Alberta legislature would enable groups and corporations operating in the province to create their own captive insurance companies.
In addition to enabling corporations to establish captives, under Bill 76 – also called the Captive Insurance Companies Act – industry associations, construction companies, and utilities will also be given the green light to create their own.
"With limited availability in the insurance market, it's very difficult for some companies to find adequate insurance at reasonable prices," said Finance Minister Travis Toews.
"This is especially true for many of Alberta's energy companies, as global insurance capacity is on the decline. This is impacting their ability to create jobs and invest in projects across the province."
Toews mentioned that school boards could also take advantage of captive insurance.
“Right now in the news, and we’re certainly experiencing in Alberta, school boards are struggling with the high cost of premiums for facility insurance.”
The minister added that allowing captive insurance would additionally enable companies to set up in Alberta to offer captive insurance coverage both inside and outside of the province. Toews also explained that the provincial superintendent of insurance would regulate captive insurance companies to ensure they carry enough reserve capital.
CBC News reported that the Motor Dealers Association of Alberta (MDAA) is interested in creating a capital insurance company for its members.
"Hail damage insurance is very difficult to get, it's incredibly expensive and it’s putting a lot of our members in a position where they have to decide whether they self-insure," MDAA president Gerald Wood told CBC News, adding that if Bill 76 is passed, it would allow dealerships to set up an insurance product to handle such issues.
Only one other Canadian province allows the operation of captive insurance companies – British Columbia, which had passed similar legislation in 1988. In a press conference, Toews cited the BC Veterinary Captive Insurance Company – a captive subsidiary for a college of veterinarians in the province – as an example of a functioning captive.
