The Office of the Superintendent of Financial Institutions has decided that a foreign insurer providing insurance coverage to Canadian employees under group insurance policies, solicited and issued outside Canada, is not insuring risks in Canada.

The issue was whether such policies would count as insuring risks in Canada, and therefore would require an order under insurance legislation. Insurance legislation provides that a foreign insurer shall not insure a risk unless the Superintendent has, by order, approved the insurance in Canada of risks by the foreign insurer and the risks fall within a class of insurance that is specified in the order.

In this case, the foreign insurer has no offices or employees in Canada; the group policies are solicited, negotiated, issued and executed outside Canada; the insurer performs all insurance functions outside Canada; the only activities in Canada involve communicating with employees, provided by the Canadian operations of the employer or a third-party administrator; and, the party performing the liaison function in Canada is not acting as agent of the foreign insurer.

In these circumstances, OSFI concluded that the foreign insurer does not insure risks in Canada. “Had the foreign insurer held an order permitting it to insure, in Canada, risks under a class of insurance other than the class of “accident and sickness insurance” and “life insurance”, the foreign insurer could still have provided coverage to residents in Canada under the group policies in the manner described above,” it says.