On April 30, 2008, the Government of British Columbia introduced amendments to the Insurance Act (Act) with the declared purpose of enhancing consumer protection and increasing efficiencies for the insurance industry. These amendments are also intended to clarify and improve the readability of the Act’s language, provide better access to insurance contract information and improve dispute-resolution processes.
The proposed amendments are extensive. One of the most noteworthy involves extending the limitation period applicable to claims against insurance companies from one to two years. In the case of property damage, the period would commence from the date the insured knew, or ought to have known, that the property loss or damage had occurred. In other cases, the period prescribes two years from the date the cause of action arose against the insurer. The government is contemplating drafting regulations that would oblige insurers to inform consumers of these limitation periods.
Another major amendment would see the Part 5 Fire Insurance Provisions of the Act repealed. Instead, both fire and liability insurance would be governed by the General Insurance Provisions. The appraisal procedures previously available would be replaced with a standard dispute resolution procedure that would have a broader application to disputes between insureds and insurers regarding "the value of the insured property, the value of the property saved, the nature and extent of the repairs or replacements required or, if made, their adequacy, or the amount of the loss or damage." The amendments foresee regulations that would describe the procedures to be followed. (This prescribed dispute resolution process would not apply to surety insurance or some other classes of insurance later specified by regulation; rather, regulations under the Financial Institutions Act, amended concurrently with the Act, may be made to resolve those disputes.)
The amendments to the Act would also see certain waiver principles return: the obligation of an insured to comply with a requirement of the insurance contract may be deemed to be waived if "the insurer’s conduct reasonably causes the insured to believe that the insured’s compliance with the requirement is excused in whole or in part, and the insured acts on that belief to the insured’s detriment."
Other significant amendments include:
- permitting an insurer that has a business authorization for property insurance to insure vehicles against loss or damage under a policy that includes coverage for loss or damage to property (through changes to the Financial Institutions Act)
- various changes to contracts of group insurance and related obligations
- providing some protection to "innocent co-insureds" for their "proportionate interest in the lost or damaged property" who may otherwise be denied coverage due to the wrongdoing of another person
- allowing someone to cancel a life insurance contract if they feel their life or health is at risk
- allowing consumers greater access to documents they may need from the insurer at the time of a claim.
While the revisions have been praised by some for modernizing and clarifying the law, other issues have been left unclear and, as described above, must be decided by regulations that are not yet drafted. It is unclear, for example, whether coverage for fires resulting from earthquakes will be excluded by regulation as, in the proposed amendments, there is no statutory exception for such coverage. Another problem not addressed in the proposed legislation is whether there will be an exclusion relating to arson while premises are vacant.
The regulations clarifying these and other issues were to have been completed in approximately one year. Recent political developments in the legislature, however, stalled the passing of the Act’s amendments. As a result, these amendments and any new regulations may possibly have to wait until the fall session of the Legislative Assembly or even until after the next provincial election.
These proposed changes have been the result of ongoing consultation and drafting, and were introduced concurrently with changes to Alberta’s new insurance legislation in the hopes of harmonizing these two western statutory regimes. For these reasons, it is not a question of if amendments to the Act are forthcoming but a question of when. Ultimately, before the new Act comes into effect, and possibly afterwards, there will be transitional provisions and regulations to allow for its implementation. The statutory environment for the insurance industry will be evolving in the near future; we will be monitoring the progress of this legislation closely and be providing updates as matters develop.