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1. Canada – Insurance Regulation
C. Canada ‐‐ Canadian Insurance Regulation
Graham D. Smith and Gale Rubenstein
Goodmans LLP
In Canada insurance business is carried on by way of one of two vehicles: (i) as a company incorporated in
Canada under the federal Insurance Companies Act 1 or a similar statute of a Canadian province, or (ii) as a nonincorporated
branch of a “foreign insurance company” (i.e., a non‐Canadian company) under the federal
Insurance Companies Act, pursuant to the authorization of the federal Superintendent of Financial Institutions.
Where the business is carried on through a company incorporated federally or provincially in Canada, it is
subject to regulation by the federal Superintendent of Financial Institutions or the corresponding provincial
regulator, respectively. Where the business is carried on as a branch of a foreign insurance company, it is
subject to the regulation of the federal Superintendent of Financial Institutions.
2. Canada – Insurance Insolvency 2
Under the federal Insurance Companies Act and the corresponding provincial legislation, the applicable
regulator has the power to take control of an insurance company. In the case of a Canadian branch of a
foreign insurance company, the federal Superintendent of Financial Institutions has this power. Control may
be taken in a wide range of circumstances, including insolvency. 3
In the case of the insolvency of any Canadian insurance company, whether incorporated federally or
provincially, and in the case of the winding‐up of a Canadian branch of a foreign insurance company, the
federal legislature has exclusive jurisdiction, and the federal Winding‐up and Restructuring Act 4 governs.
Canada’s more omnibus pieces of insolvency and restructuring legislation, the Bankruptcy and Insolvency Act 5
and the Companies’ Creditors Arrangement Act 6 , do not govern in the case of the insolvency of a Canadian
insurance company or a Canadian branch of a foreign insurance company.
The judicial authority to conduct and supervise the insolvency of a Canadian insurance company, or a Canadian
branch of a foreign insurance company, lies with the superior court of the province where the head office is
located or, in the case of a Canadian branch, where its chief place of business is located. The court will appoint
a professional liquidator as the court’s officer to carry out the winding‐up. The liquidator must be a federally
licensed trustee in bankruptcy. 7
The making of a winding‐up order does not destroy a company’s corporate status, but the company must
cease to carry on its business, except so far as necessary, in the opinion of the liquidator, for its beneficial
winding‐up. 8 On the appointment of the liquidator, all the powers of the directors cease, except to the extent
sanctioned by the court or the liquidator, 9 and the liquidator has the power and authority to deal with the
assets of the company, with the approval of the court. 10 Title to the assets of the company or its Canadian
branch does not vest in the liquidator, unlike the case under Canada’s bankruptcy legislation, however the
liquidator has full power and authority to deal with the assets of the company or the branch with the approval
of the supervising court.
1
S.C. 1991, c. 47, as amended.
2
For an overview of the Canadian insurance insolvency regime, see Gale Rubenstein and Robert O.
Sanderson’s chapter on Canada in Cross‐Frontier Insolvency of Insurance Companies, Gabriel Moss Q.C., Editor,
Sweet & Maxwell Limited: London, 2001.
3
See, e.g., the Insurance Companies Act, section 679.
4
Winding‐up and Restructuring Act, R.S.C. 1985, c. W.11.
5
R.S.C. 1985, c. B.3.
6
R.S.C. 1985, c. C.31
7
Winding‐up and Restructuring Act, sections 2, 11 and 23;
8
Winding‐up and Restructuring Act, section 19.
9
Winding‐up and Restructuring Act, section 31
10
Winding‐up and Restructuring Act, sections 33 and 35.