In this presentation, Shelley Miller Q.C. and Jennifer Halloran discuss the Amendments to the Alberta and British Columbia Insurance Acts, effective July 1, 2012. Topics include: Revisions of Fire Provisions Statutory Conditions Limitation Periods Full Disclosure Requirements Proportionate Contributions - s. 28.1(1) Recovery by Innocent Persons Subrogation Relief from Forfeiture; Unjust Provisions Electronic Communications Cancellation of Insurance Dispute Resolution Process Access to Documents Court Ordered Advance Payment Retroactive Effect

1. Amendments to the Alberta
and British Columbia
Insurance Acts
EFFECTIVE JULY 1, 2012
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2. Background
Critique of Courts
• Noted prevailing Insurance Acts based on outmoded classes of
insurance
• Modern policies could not be fit under statutory provisions
providing for one year limitation periods
Legislators’ objectives
• Maintain and enhance consumer protection
• Ensure rights and obligations of parties were well‐understood
• Modernize framework for auto, liability, property, commercial,
accident, sickness and life insurance contracts
• AB and BC to harmonize amendments for greater consistency
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3. Background
• British Columbia – December 1, 2011 Order in Council
provided that the Insurance Amendment Act 2009 and
Regulations will come into force effective July 1, 2012
• Alberta – Insurance Amendment Act 2008 proclaimed
July 13, 2011 with many relevant sections proclaimed in
force July 1, 2012 (by Order in Council 325/2011)
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4. Summary of Key Amendments
• Revision of Fire Provisions • Subrogation, Relief from
– Fire exclusions restricted Forfeiture, Unjust or
Unreasonable Conditions
• Statutory Conditions • Electronic
• Limitation Periods Communications
• Disclosure Requirements • Insurance Cancellation
• Dispute Resolution
• Proportionate
• Access to Documents
Contributions
• Court Ordered Advance
• Recovery by Innocent Payment
Persons • Retroactive Effect
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5. Revision of Fire Provisions
Merger of Fire Insurance Part into General Insurance
Provisions
•In Alberta New Part 5 ‐ in British Columbia new Part 2
•General Provisions apply to every contract except life, accident and
sickness insurance, and reinsurance
•Revisions to life, accident and sickness provisions
•Insurer may not exclude fire loss coverage in a policy that
otherwise would include fire coverage
• For a fire loss occurring within 30 days of property being vacant; or,
• After insurer has issued a vacancy permit for insured property
(s. 5.7(4)AB)
** Some exceptions in the Acts and Regulations to the obligation to cover fire loss
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6. Limited Exclusions for Fire Loss
• s. 541 of the Alberta Act and the Alberta Fair Practices Amendment
Regulation, s 5.7(2)(3) permit exclusions for
– fire by goods undergoing any process involving application of heat,
– fire caused by riot, civil commotion, war, invasion, act of a foreign
enemy, hostilities, civil war, rebellion, revolution, insurrection or
military power,
– fire if results in explosions, lightning causing loss to electrical devices or
appliances,
– loss caused by contamination by radioactive material due to fire
lightning or explosion, fire or explosion caused by criminal or
intentional act or omission of insured,
– various biological, chemical or nuclear energy hazards due to fire or
explosion caused by terrorism
– In the case of commercial property, insurers may also exclude all losses
fire and explosions due to terrorism.
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7. Limited Exclusions for Fire Loss
• s. 28.4 of the BC Act and s. 6 B.C. Reg. 213/2011 similar in
principal to AB amendments with some subtle differences
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8. Limited Exclusions for Fire Loss
• If any additional insurance perils are written by insurers, s.
3.2 of the Miscellaneous Provisions Amendment Regulation
will list them
• Triggers requirement that insurer joins general insurance
ombudsman service
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9. Statutory Conditions
• ss. 540 and 556 (1) AB, (s. 27 (1) and 89 (a) BC)state
that:
a) the conditions set out in this section are statutory
conditions and are deemed to be part of every contract and
must be printed in every policy under the heading
“Statutory Conditions”; and,
b) no variation or omission of or addition to any statutory
condition is binding on the insured.
• Exceptions: hail, surety, and by regulation, mortgage,
title, credit, credit protection and travel insurance
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10. Statutory Conditions
• s. 540(3) states that only stat conditions 1, 6‐13 must be
printed on contracts against loss and damage to property
• Best practice is to follow Alberta Standard Auto Policy
model
• General Conditions and Statutory Conditions in separate
stand alone sections
• Regulator will apply the test of whether the insured is
misled
• Depending on facts of each case, any variation can be
strictly enforced against the insurer
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11. Statutory Conditions
• BC regulator suggests where • The regulators state 14 cannot
stat conditions not required be included in the statutory
in policy by other conditions
jurisdictions, wording
should be added to clearly • But did not agree whether
so indicate to insured such a clause could be
• Example: 14. Action included elsewhere
Every action or proceeding • The regulator will provide
against the Insurer for the informal guidance as to the
recovery of any claim shall suitability of the proposed
be absolutely barred unless wording before
commenced within one year implementation
after the loss or damage
occurs, unless legislation
provides otherwise.
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12. Statutory Conditions
• We recommend for policies •For policies issued outside of AB
in AB and BC a separate page and BC we recommend a page
be attached to the policy with bold writing that states:
that states:
“These Statutory Conditions “These Statutory Conditions
apply where the insured is apply to policyholders and
domiciled or where the policies covering risks in
insured property is located jurisdictions other than Alberta
in Alberta or British and British Columbia”
Columbia”
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13. Statutory Conditions
Would this clause satisfy the regulators?
• “Terms of this Policy which are in conflict with the statutes of the
province where the Named Insured is domiciled or where the insured
property is located are hereby amended to conform to such statutes.
Such conformity shall in no way limit the insurance provided by this
policy.”
• The regulators were divided
– Suggested insurers could submit wording and circumstances
where a clause could be used
– They would jointly consider the request
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14. Limitation Periods
• Must now add in policy this limitation of actions wording:
– Every action or proceeding against an insurer for the
recovery of insurance money payable under the contract is
absolutely barred unless commenced within the time set out
in the Insurance Act (BC s.8 (1) AB s. 558 (2))
– Best practice suggests place this wording just ahead of
Statutory Conditions
– We recommend also adding a heading : “Limitation of
Actions”
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15. Limitation Periods
• ss. 526(1) AB provides time for commencing action against insurer
– if property, within 2 years from date insured knew or ought to have
known that loss or damage occurred; or
– in any other case, within 2 years from the date the cause of action
arose (except auto and hail)
– (AB auto s. 558(1), life s. 677(1) accident and sickness s.708(1)
– (BC ss. 22(1), 34, 35, 65 and 91.1.)
• In case of life insurance, the limitation is 2 years after s. 62 (AB s. 674)
evidence presented or 6 years from death whichever is earlier
– limitation periods are suspended for persons under a disability
within Limitations Act
– claimant has burden of proving limitation period suspended (s. 5 AB, s.
7 BC)
– insurers can provide lengthier limitation periods (s. 593 AB)
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16. Full Disclosure Requirements
• Fair Practices Amendment Regulation AR128/2001, s.5.1(1) (2)
requires after July 1, 2012
• Plaintiff lawyer to give notice of its retainer within 30 days of
filing action arising from MVA
• Then Insurer must disclose:
– within 30 days existence of auto policy AND POLICY LIMITS
• Insurer may still dispute liability and amount of limits, and such
information not to be disclosed to judge or jury before
judgment given
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17. Full Disclosure Requirements
• s. 5.3 Insurer must provide claimant with written notice of
applicable limitation period within
– 60 days from date notice of claim given to insurer
– 60 days of insured first receiving notice that insured claiming
indemnity for claim by third party against insured
– 60 days of insured first aware that claimant commenced action
under s. 579 of Act
– within 5 business days of denial of claimant’s claim
• If claimant represented by legal counsel, then insurer need not
provide notice of limitation period
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18. Full Disclosure Requirements
• s. 5.2 requires insurer give written notice to the insured
within
– 10 days after insurer determines a dispute has arisen
between the insurer and insured; or,
– 70 days after insured has submitted a proof of loss, if
insurer has not yet decided on the validity or amount
payable in respect of the claim
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19. Full Disclosure Requirements
• Failure to comply in Alberta allows claimant to seek
relief in court to extend limitation period or any other
remedy court deems fit
• Alberta legislators intended each case be determined on
its own facts and such determination occurs only if the
claimant applies to court
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20. Full Disclosure Requirements
BC differs:
• BC Reg. 213/2011 requires insurer give written notice to a
claimant of the limitation period
a) at the time or within 5 business days after the insurer denies
liability for all or part of the claim, and
b) at or within the 10 business days after the first anniversary of the
date the insurer receives a notice
**Unless the insurer has already adjusted the loss acceptably
to the claimant or settled the claim, or already complied with
(b) above, a notice must contain a statement that the
limitation period is set out in the Act (not required for accident
and sickness insurance)
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21. Full Disclosure Requirements
• In BC if the notice not given, limitation period suspended for
period between the date it should have been given and was
given; or 6 years from the date the cause of action arose –
whichever is earlier
• BC does not allow a trial judge any discretion over suspension
of the limitation period
• s. 3.3 (AB) sets out confidential or commercial information
within a group life, accident and sickness insurance policy, an
insurer may withhold when insured requests a copy of the
policy wordings (s. 8 BC)
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22. Proportionate Contributions – s. 28.1 (1)
• If more than one contract covering the loss, insurers each liable to insured
for rateable proportion of the loss, unless insurers otherwise expressly
agreed in writing.
• Regulators offer no guidance as to how these clauses apply to excess
liability coverage covering same loss– eg.
– umbrella and a CGL,
– CGL and Wrap Up; or,
– first party property coverage and coverage on CGL for “your work”
• Leaves disputing insurers to seek recourse to the courts
• Court rulings to date have not provided clear guidelines
• Courts permit insurers to contractually limit their obligation as they see fit
• Regulators agree insurers are under no obligation to amend its “Other
Insurance” clauses as a result of these amendments
• But will apply test whether an insurer’s omission would create confusion
in the mind of an insured as to its legal rights or obligations
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23. Recovery by Innocent Persons
• Insurers may not exclude coverage for innocent co‐insureds
who
– did not participate or consent to criminal or intentional acts or
omissions by insureds or person with an insurable interest
Restrictions
• Exclusion applies only to individuals
• the innocent co‐insured must cooperate and provide additional
documents relating to the loss
– (s. 541 of the Alberta Act and the Alberta Fair Practices Amendment Regulation, s 5.; s.
28.4 of the BC Act and s. 6 of the B.C. Reg. 213/2011 ss. 5.9(1) and (2) AR 128/2011)
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24. Recovery by Innocent Persons
• These amendments require changes to policy wording
• Regulators desire wording that expressly advises innocent co‐
insured has additional statutory protection
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25. Subrogation
• Now right of insurer to subrogate (formally limited to auto in s.
651) extends to all insurance contracts except life, accident
and sickness and reinsurance (s. 546 AB)
• When insured entitled to more than only deductible and
parties cannot agree on how to manage the action, either party
can apply for directions
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26. Relief from Forfeiture; Unjust provisions
• Relief from forfeiture‐ if court considers forfeiture inequitable
because of breach of statutory condition or condition or term of
contract, by insured or claimant, court may relieve against
forfeiture (s. 520 AB) (s. 24 Law and Equity Act‐BC)
• Insured may seek relief from contractual term or condition
material to risk regarding use, condition, location or
maintenance of the insured property (s. 28.3 BC)
• Regulator indicates permissible to add wording to indicate
reference should be made to the Insurance Amendment Act and
Regulations
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27. Electronic Communications
• s. 547 allows for the transmission in electronic form of
records, contracts or declarations
• When sent electronically, they are deemed to have been
sent by registered mail within the meaning of Act
• Exceptions
• s. 5.4 of Fair Practices Regulation lists instances where
the parties may not use electronic communications, e.g.
insurer’s notice terminating a contract or insured change
of beneficiary
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28. Cancellation of Insurance
• Previously insurers could terminate a policy “forthwith” by
providing written notice by registered mail as soon as the
insured did not comply with the promise to pay
• Now, insurer may terminate only in accordance with
statutory or policy condition (s. 522 (3) AB)
• If no express statutory condition on this issue, the right to
terminate immediately via registered mail still in force
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29. Cancellation of Insurance
• Act provides the following Insurer’s cancellation
obligations:
– either 15 days notice via registered mail (starting from day
notice delivered to the insured’s postal address); or,
– 5 days written notice via personal delivery to Insured
• Ability to terminate through registered mail preserved for
life insurance and reinsurance claims
**If insurable loss occurs within notice time frame the
Insured still covered under the policy
– (ss. 4, 5(1)(a)(b), 35, 37.1, 47.1 BC)
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30. Dispute Resolution Process (DRP)
• s. 519 – process more extensive than former s. 514
• strengthened consumer protection,
• Representative cannot be employee of insurer or insured
• Process for case where umpire not agreed on
• Insurer must give written notice of the availability of the DRP:
a) within 10 days after insurer determines there is a dispute to which
the DRP applies; or,
b) within 70 days after the insured submits a proof of loss, if at that
time the insurer has not yet made a decision with respect to a
matter to which the DRP applies
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31. Access to Documents
• s. 642 (4) – insurer required to provide insured or claimant, on
request, a copy of the entire contract and any written
statements or other records provided to insurer as evidence of
insurability
• s. 642 (5) and (6) – list of documents and insurer is required to
provide in the cases of a group insurance and creditors group
insurance
• s. 642 (9) – claimants access to documents only extends to
information relevant to the claim or denial of the claim under
the contract
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32. Court Ordered Advance Payment
• s. 5.6 permit a claimant involved in a personal injury
claim to apply for a court order for an advance payment
(s. 581 AB)
• Court may make order under s. 581 where satisfied:
– as a result of the injuries, the claimant is unable to pay for
the necessities of life; or,
– the payment is otherwise appropriate
• Except advance payments not payable when liability in
dispute
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33. Retroactive Effect
• Amendments respecting enforcement of right respecting
Creditor’s Group Insurance for Life and Accident and Sickness
policies are RETROACTIVE in effect
– (s.672 (5) AB (38) Transitional Provisions of AB Regulation s. 15 BC Reg 213/2011)
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34. The preceding presentation contains examples of the kinds
of issues companies dealing with Insurance could face. If you
are faced with one of these issues, please retain
professional assistance as each situation is unique.

35. Questions?
Shelley Miller Q.C. Jennifer Halloran
(780) 423-7212 (780) 423-7114
shelley.miller@fmc-law.com jennifer.halloran@fmc-law.com
Fraser Milner Casgrain LLP
Barristers and Solicitors
2900, Manulife Place
10180 – 101 St
Edmonton, AB T5J 3V5