After several false starts, insurance legislation in British Columbia has finally been updated so that consumers are given added protection when they deal with insurance companies. The companies themselves will see a reduction in the one aspect of their daily business that many of them hate the most: red tape.

The new legislation also harmonizes rules for the insurance sectors in B.C. and neighbouring Alberta.

Bill 6, which covers the Insurance Amendment Act, 2009, was introduced into the B.C. legislature on Sept. 15 and passed third and final reading three weeks later.

“The proposed amendments will improve coverage for consumers, ensure better access to documents and enhance dispute-resolution mechanisms,” B.C. Finance Minister Colin Hansen said when the bill was introduced. “They are the result of an ongoing review and consultation with consumers, insurance companies, insurance brokers and members of the legal community.”

Among the bill’s highlights, consumers will have a 30-day grace period in which to pay overdue premiums for life and health insurance contracts, to help ensure their policies remain in force. A 10-day cooling-off period also has been included, during which they can rescind a life or health insurance contract.

As well, B.C. insurance companies will be required to set up internal complaint-resolution procedures and offer consumers access to ombudsman-type services if disputes cannot be resolved internally. Furthermore, the period in which consumers can launch legal claims against insurance companies increases to two years from one year.

“These amendments are the result of a comprehensive review that we began in November 2005,” says Graham Currie, the B.C. Finance Ministry’s communications director. “We had representation from many stakeholder groups and received more than 60 submissions.”

The reforms respond to “a number of specific problems,” Currie says, but, primarily, they improve consumer protection.

In one section, the Insurance Act’s language has been strengthened to ensure that fire coverage extends to fires resulting from any cause. “There were some troublesome fire losses that were being excluded by insurance companies, [such as those caused by] earthquake or vandalism,” says Ted Lewis of Nanaimo Insurance Brokers, who was president of the Insurance Brokers Association of B.C. when the review was underway. “From a consumer’s perspective, a fire is a fire is a fire.”

The B.C. government was also persuaded to review its insurance legislation as a direct result of a 2003 Supreme Court of Canada landmark ruling (KP Pacific Holdings v. Guardian Insurance), in which the court referred to the B.C. Insurance Act as “outmoded” and “incapable of coherently addressing the modern multi-peril policy.” The SCC also strongly suggested in that decision that it would be “highly salutary for the legislature to amend the act and to provide specifically for such policies.”

The current amendments also protect “innocent co-insured” who may otherwise be denied coverage due to the wrongdoing of a third person.

Further amendments respond to insurance industry needs by improving efficiency through the removal of unnecessary requirements while also clarifying the legislation. For example, under the new rules, there is only one set of provisions applicable to all property contracts; this avoids the bureaucratic need to ensure that insurance contracts are classified as a “fire” contract or a “multi-peril” contract.

“We had very strong support for these reforms from within the insurance industry,” Currie says. “And harmonizing our legislation with Alberta’s was also a key element, because Alberta’s insurance amendments were passed by its legislature last fall.”

The new Insurance Act (Bill 6)was introduced in the B.C. legislature at the same time as Bill 5, the Finance Statutes Amendment Act, 2009; both make the province’s financial services sector legislation consistent with TILMA — the Trade, Investment and Labour Mobility Agreement — made between B.C. and Alberta.

TILMA, which became fully effective on April 1, reduces and eliminates barriers to the free movement of workers, goods, services and investments between the two provinces. It is also designed to save businesses money, remove red tape and expand employment opportunities by enhancing labour mobility.

Under Bill 5, for example, the Mortgage Brokers Act now gives the B.C. registrar of mortgage brokers new powers to protect consumers and take action against non-compliant mortgage brokers, including those who may be conducting business in Alberta.

“It’s much better to have more streamlined legislation between the two provinces,” says Charanjeet Sidhu, president of the Greater Vancouver chapter of Advocis. “A lot of people conduct business in both provinces, and these two bills will definitely make that easier.”

@page_break@That sentiment was echoed by others in the industry. Although both bills have passed third reading, they haven’t been proclaimed and their accompanying regulations have not been completed.

“As always, the devil is in the details,” Lewis notes. “Until we see the regulations, we won’t know exactly what this legislation contains — although we certainly did have great co-operation from MLAs on both sides of the house during the consultations.”

Lewis doesn’t see any conflict with the federal ombudsman program for financial services; insurance is a provincial jurisdiction.

When are the regulations expected?

“We’re awaiting royal assent on both bills,” Currie says. He expects that to happen before the legislature is due to rise on Nov. 26. The regulations are expected “soon afterwards,” Currie says, which could mean early in 2010. IE