Government Proposes Substantial Revisions to the B.C. Insurance Act

The B.C. government has released a Discussion Paper respecting proposed revisions to that province’s Insurance Act and has invited feedback from both the general public and the industry by the beginning of May 2007.

The industry is already aware that the auto insurance part of the B.C. Insurance Act is to be repealed in its entirety effective June 1, 2007 and will be replaced by separate legislation which governs auto insurance provided by both the provincial insurer, ICBC, and private insurers offering "optional" coverage. That new legislation will be known as the Insurance (Vehicle) Act.

With respect to non-auto insurance, the question had arisen whether structural reform of the Insurance Act was required to reflect the substantial changes in insurance products that are now available in the marketplace. One major issue in that regard was whether the Fire Part of the Act should be merged with the "General Part" or some other mechanism put in place to regulate the "all-risk" nature of modern property insurance.

Several significant changes are being proposed including the following:

• with a view to "allowing more freedom of contract" in the area of commercial insurance, rather than merging the General and Fire parts of the Act, the latter will be expanded so as to apply to homeowners policies, an area the government evidently considers to require "consumer protection provisions";

• coverage for fire following earthquake will be mandatory but fire following terrorism can be excluded;

• the concept of “vacancy” is to be defined so as to provide a statutory grace period of 30 days during which coverage for fire is to continue;

• the statutory conditions will be maintained and updated and will continue to be required to be printed verbatim in policies;

• insurers will no longer be permitted to deny coverage to "innocent co-insureds";

• the limitation period for suing to enforce coverage is to be extended to two years from the date a cause of action arises against the insurer, i.e. the date of loss for property claims or the date of last payment for disability claims;

• insurers are to be required to give notice to the insured respecting potential expiry of the limitation period;

• homeowners insurance is required to have an ADR mechanism for disputed claims;

• insureds making claims under a policy can be required by the insurer to submit to an examination under oath; and

• B.C. will adopt the same amendments under consideration in Alberta respecting distribution and delivery of some but not all insurance documents (policies, termination notices etc.).

All of the above areas have been fertile ground for litigation in the past couple decades. The extent to which any of the proposed changes come to be actually implemented by the government remains to be seen.

Readers interested in reviewing the B.C. government’s Discussion Paper can access the same at:

http://www.fin.gov.bc.ca/scp/
fcsp/consultIAR.htm

If you have any questions about this development, or other insurance related issues, please contact Nigel Kent (tel: 604.643.3135, email: npk@cwilson.com), or any other member of the Clark Wilson LLP Insurance Practice Group.