Alberta Captives Act comes into law
Alberta’s law legalising captive insurance received Royal Assent on Thursday afternoon. It is only the second Canadian province after British Columbia to legalise the arrangements.
The Captive Insurance Companies Act details the rules for forming, operating and dissolving a captive insurer in Alberta; outlines finance and corporate governance requirements; and specifically permits captive insurance companies to be physically located in Alberta.
It allows Alberta-licensed captives to insure risks of a single entity, such as a company, members of an association (an industry group) or a knowledgeable client with complex insurance needs.
The bill was “intended to create new insurance options for businesses and associations to support jobs and economic growth,” Finance Minister Travis Toews said during its third reading in the province’s legislative assembly last week.
“Expanding insurance options in the province is intended to assist businesses in dealing with rising costs and, in some cases, a lack of coverage. Captive insurance could help any business that is underserved in the current insurance market, particularly those undertaking large-scale projects.”
He added: “[C]reating more flexible insurance options is one of the ways we’re making Alberta a great place to do business. We’re only the second province in Canada to allow captives, and, as we know, many Alberta and Canadian companies already have captives abroad. It’s time to bring that business and capital home.”
The industry will now need to wait for related regulations to come into effect before the first captives can be created. According to the local government, these are expected in 2022.