Long-awaited amendments to the Alberta Insurance Act that passed this week are beneficial to both consumers and insurance companies, according to the Canadian Life and Health Insurance Association.

The widespread amendments to the act, which relate to both life insurance and accident and sickness insurance, received Royal Assent on Nov. 4.

The amendments feature 90 pages of detailed changes. They include new disclosure policies, an extension to the time period in which consumers can reinstate their contracts, new rules for information sharing between insurance companies when a group contract switches from one provider to another, and many others.

“It’s a whole lot of little things, but cumulatively, it makes a lot of changes,” said Frank Zinatelli, vice-president, legal services and associate general counsel, Canadian Life and Health Insurance Association. The association is a voluntary group whose member companies account for 99% of Canada’s life and health insurance industry.

The purpose of the amendments was to codify some of the existing practices in the industry and update the legislation, since it was last updated roughly 40 years ago, according to Zinatelli.

The changes won’t be implemented for about a year, which will allow insurance companies time to update their contracts to comply with the new laws. The changes are largely beneficial to insurance companies since they streamline operations, Zinatelli said.

There are also benefits to consumers, since the amendments provide more options and more disclosure. While many insurance providers were already practicing this higher level of disclosure, its inclusion in the Act will ensure compliance, Zinatelli said.

“It’s a win-win,” he said. “It’s good for everybody.”

The amendments had been in the works for several years, with encouragement from both industry members and government, according to Zinatelli. He said the outdated legislation was not reflecting current practices in the industry.

“It’s been a process that’s been going on for many years, but particularly during the last four or five years, momentum seems to have built up around creating these updates,” he said.

Since the life and accident and sickness insurance legislation is uniform across all of Canada’s common-law provinces, the Life and Health Insurance Association is encouraging the other provinces to make similar amendments to their insurance acts.

British Columbia has already proposed changes almost identical to the ones passed by Alberta, and other provinces are actively working to update theirs, according to Zinatelli. If provinces fail to update their acts in the next few years, he said problems could arise from inconsistencies.

“Companies now have one type of contract that they can use across the country. If the other provinces don’t change their laws, companies are going to have existing contracts in other provinces, and then new and different contracts in Alberta,” he said.

IE