PDF Version [Printer-friendly - ideal for printing entire document] Published by Quickscribe Services Ltd. Updated To: [includes 2009 Bill 6, c. 16 (B.C. Reg. 213/2011) amendments (effective July 1, 2012)] Important: Printing multiple copies of a statute or regulation for the purpose of distribution without the written consent of Quickscribe Services Ltd. is strictly prohibited. Quickscribe offers a convenient and economical updating service for those who wish to maintain a current collection of hard copy legislation. Go to www.quickscribe.bc.ca/hardcopy/ for more details. 227 [RSBC 1996] Go to http://www.quickscribe.bc.ca/disclaimer/ to view the Disclaimer.
CHAPTER 227 [RSBC 1996] [includes 2009 Bill 6, c. 16 (B.C. Reg. 213/2011) amendments (effective July 1, 2012)] Contents 1. Definitions 2. Conflicts with other enactments 3. Application of other Acts to captive insurance companies 4. Use of term "captive insurance company" in company name 5. Permitted business for a captive insurance company 6. Registration of captive insurance companies 7. Superintendent's consent required 8. Shareholders' equity and reserves 9. Reports and statements 10. Inspection of records 11. Conditions, suspension, refusal, revocation 12. Offences 13. Power to make regulations (SUB) (AM) Definitions 1. In this Act: "affiliated corporation" has the same meaning as "affiliate" in section 1 (1) of the Business Corporations Act; "association" means an association of member organizations that has been in continuous existence for at least one year, if all the issued voting shares of the association captive insurance company are owned by (a) all the member organizations, (b) all the member organizations who are insured by the company or who will be insured by the company after purchasing the shares of the company, the association if it has the legal capacity to own the shares, or (d) the association if it has the legal capacity to own the shares and either all the members or all the insured members; "association captive insurance company" means a company within the meaning of the Business Corporations Act, that was incorporated to provide insurance for the purpose referred to in section 5 (3); "captive insurance company" means a company that is a pure captive insurance company, an association captive insurance company or a sophisticated insured captive insurance company; 227 [RSBC 1996] Page 2 of 8 Quickscribe Services Ltd.
(AM) (AM) "member organization" means a person that belongs to an association; "parent" means (a) a corporation that owns all of the issued voting shares of a pure captive insurance company, or (b) a group of affiliated corporations (i) each one of which owns issued voting shares of a pure captive insurance company, and (ii) the member corporations of which collectively own all the issued voting shares of the pure captive insurance company; "pure captive insurance company" means a company within the meaning of the Business Corporations Act, that was incorporated to provide insurance for the purpose referred to in section 5 (2); "registrant" means a captive insurance company registered under this Act; "sophisticated insured" means an insured (a) who, in the opinion of the superintendent, has expertise in insurance matters, and (b) whose aggregate annual premiums for insurance on all risks insured by an insurance company total at least a prescribed amount; "sophisticated insured captive insurance company" means a company within the meaning of the Business Corporations Act, that was incorporated to provide insurance for the purpose referred to in section 5 (4); "sophisticated insured group" means a group of sophisticated insureds each member of which owns issued voting shares of, and the members of which collectively own all the issued voting shares of, a sophisticated insured captive insurance company; "superintendent" means the superintendent as defined in the Financial Institutions Act. 1987-9-1; 1989-47-341; 1990-6-74; 2003-70-189. (SUB) Jul 01/12 (SUB) Jul 01/12 (SUB) Jul 01/12 (AM) Conflicts with other enactments 2. In the case of a conflict between this Act or the regulations and any other Act or other regulations, this Act and its regulations prevail unless the other Act or other regulation contains an express provision that it, or a provision of it, applies despite this Act or its regulations. 1987-9-2. Application of other Acts to captive insurance companies 3. (1) Sections 34 to 37, 39 to 46, 63, 64 (2), 70, 75, 80, 81, 105, 133, 211, 213, 215, 218, 243, 244, 246, 247 and 259 of the Financial Institutions Act and the prescribed provisions of the Insurance Act apply to a captive insurance company. (2) For the purposes of applying the provisions of the Financial Institutions Act referred to in subsection (1) to a captive insurance company, "business authorization" includes registration of a captive insurance company under this Act. (3) The prescribed provisions of the Insurance Act apply to an association captive insurance company and a sophisticated insured captive insurance company. (4) Other than the sections of the Financial Institutions Act referred to in subsection (1) and the provisions of the Insurance Act prescribed for the purposes of subsections (1) and (3), those Acts do not apply to a captive insurance company. (5) Divisions 4 and 8 of Part 9 of the Business Corporations Act do not apply to a captive insurance company. 227 [RSBC 1996] Page 3 of 8 Quickscribe Services Ltd.
1987-9-3; 1990-6-75; 2003-70-190; 2004-48-133; 2009-16-107 (B.C. Reg. 213/2011). Use of term "captive insurance company" in company name 4. (1) A captive insurance company must not carry on business under a name that includes the word "insurance" or a form of the word, but it may carry on business under a name that includes the phrase "captive insurance company". (2) A company other than a captive insurance company must not carry on business under a name that includes the phrase "captive insurance company". 1987-9-4. Permitted business for a captive insurance company 5. (1) A captive insurance company must not carry on any type of business other than the business of insurance or the business of risk management. (2) A pure captive insurance company may undertake only prescribed classes of insurance and only for the purpose of insuring (a) its parent and the parent's affiliated corporations, and (b) the officers, directors, employees, agents and independent contractors of itself, its parent or an affiliated corporation referred to in paragraph (a) against losses incurred while acting on behalf of itself, the parent or the parent's affiliated corporation. (3) An association captive insurance company may undertake only prescribed classes of insurance and only for the purpose of insuring (a) the member organizations of its association and their affiliated corporations, and (b) the officers, directors, employees, agents and independent contractors of itself, a member organization or an affiliated corporation referred to in paragraph (a) against losses incurred while acting on behalf of the member organization or affiliated corporation. (4) A sophisticated insured captive insurance company may undertake only prescribed classes of insurance and only for the purpose of insuring (a) the sophisticated insureds that comprise its sophisticated insured group and their affiliated corporations, and (b) the officers, directors, employees, agents and independent contractors of itself, a sophisticated insured or an affiliated corporation referred to in paragraph (a) against losses incurred while acting on behalf of the sophisticated insured or affiliated corporation. 1987-9-5. Registration of captive insurance companies 6. (1) A captive insurance company must not carry on business unless it is registered by the superintendent. (2) The superintendent must not register a captive insurance company unless the company satisfies the superintendent as to (a) its ability to meet its present and future obligations, and (b) other prescribed matters. (3) The superintendent may 227 [RSBC 1996] Page 4 of 8 Quickscribe Services Ltd.
(AM) (a) (b) establish conditions that must be met by an applicant before registration, grant initial registration for a period, or refuse to grant initial registration. (4) The superintendent may refuse to renew registration only in accordance with section 11. (5) Registration expires and may be renewed as set out in the regulations. 1987-9-6. Superintendent's consent required 7. A captive insurance company must not, without first informing and obtaining the consent of the superintendent, (a) amalgamate, (b) wilfully take any action that would facilitate a change in the actual control Shareholders' equity and reserves of the company, or change its memorandum notice of articles or articles. 1987-9-7; 2003-70-191. 8. (1) Before initial registration a captive insurance company must have, and after initial registration a captive insurance company must maintain, shareholders' equity, calculated in accordance with the regulations, of at least the greater of (a) the amount prescribed, and (b) the amount the superintendent considers necessary to maintain the solvency of the company. (2) After initial registration a captive insurance company must maintain reserves, calculated in accordance with the regulations, of at least the greater of (a) the amount prescribed, and (b) Reports and statements the amount the superintendent considers necessary to maintain the solvency of the company. 1987-9-8. 9. (1) Each year a captive insurance company must file with the superintendent, in the form required by the superintendent (a) a financial statement audited by an auditor approved by the superintendent, and (b) an actuarial statement prepared by an actuary or other person or class of person approved by the superintendent. (2) If a captive insurance company enters into a guarantee or indemnity under which a parent, sophisticated insured, member organization or a corporation that is an affiliated corporation with respect to any of them, may incur liability for the benefit of the captive insurance company, the captive insurance company must file a copy of the guarantee or indemnity with the superintendent within 30 days after its execution. (3) 227 [RSBC 1996] Page 5 of 8 Quickscribe Services Ltd.
The superintendent may, at any time, require information from a captive insurance company concerning its solvency or the conduct of its business, and the company must provide the information fully, promptly and in the manner required by the superintendent. (4) The superintendent may, at any time, require information from a parent, member organization, sophisticated insured or a person who is an affiliated corporation of any of them concerning the solvency of the captive insurance company or the conduct of its business, and the person must provide the information fully, promptly and in the manner required by the superintendent. 1987-9-9. Inspection of records 10. (1) The superintendent may, personally or by a person appointed by the superintendent, attend the premises of a captive insurance company and inspect its records during normal business hours. (2) A person must not obstruct an inspection under this section. 1987-9-10. Conditions, suspension, refusal, revocation 11. (1) After giving a captive insurance company an opportunity to be heard, the superintendent may report to the minister as to whether (a) the ability of the company to meet its present and future obligations is uncertain, (b) insureds can reasonably rely on insurance written by the company, (d) (e) (f) the company has failed to pay, within the time required by the Insurance Act, an undisputed claim for which the insurer is liable, the company has failed to comply with a requirement of an enactment, an officer, director or person having primary responsibility for the day to day management of the company's affairs is incompetent or untrustworthy, or it is in the public interest for the company to continue to be registered. (2) On receiving a report of the superintendent under subsection (1), after or without hearing the company, the minister may impose conditions on the company, suspend or revoke its registration or order the superintendent to refuse to renew its registration. (3) If the minister considers that the length of time that would be required to give a captive insurance company an opportunity to be heard under subsection (1) would be prejudicial to the public interest, the minister may, without giving the company an opportunity to be heard, decide to impose conditions, suspend or revoke registration or refuse to renew registration, but, in this case, the minister must immediately notify the company in writing of the decision and the reasons for it. (4) If the minister makes a decision under subsection (3), within 49 days after the decision, the superintendent must give the company an opportunity to be heard and make the report to the minister referred to in subsection (1). (5) During a suspension, revocation or refusal of renewal, the company must not carry on business, except for winding up its affairs in British Columbia and 227 [RSBC 1996] Page 6 of 8 Quickscribe Services Ltd.
(AM) complying with this Act and any other applicable law, but nothing in this section prejudicially affects a policy holder or creditor of the insurer. (6) The minister may, after or without a hearing, cancel a condition, suspension or revocation or order refusing renewal, without conditions or on the conditions the minister thinks appropriate. (7) Notice of the imposition of conditions or of a suspension, revocation or refusal to renew, or of a cancellation under subsection (6), must (a) be given to the company by the superintendent, (b) Offences 12. (1) A person who (a) be published by the superintendent in the Gazette at the cost of the company, and be given by the company to its insureds. 1987-9-11; 1989-47-343. is required by this Act to comply with a provision of the Financial Institutions Act, the Insurance Act or the Business Corporations Act, a contravention of which constitutes an offence under that Act or under the Offence Act, and (b) fails to comply with the provision commits an offence under the applicable Act or the Offence Act, as the case may be, and is liable to the penalty provided in the applicable Act or the Offence Act, as the case may be, and a provision that applies to the offence under the applicable Act applies as if the offence were committed under that Act. (2) A person commits an offence who (a) makes a statement in any record or information required or given under section 6, 7 or 9 that would mislead a reasonable person with respect to a statement or omission of a material fact, or (b) contravenes section 4 (2) or 10 (2). (3) A captive insurance company that contravenes section 4 (1), 5, 6 (1), 7, 8, 9, or 11 (5) or (7) (b) commits an offence. (4) If a corporation commits an offence under this section, every director or officer of the corporation who authorized, permitted or acquiesced in the offence also commits the offence. (5) A corporation convicted of an offence under subsection (2), (3) or (4) is liable to a fine of $100 000. (6) An individual convicted of an offence under subsection (2), (3) or (4) is liable to either a fine of $100 000 or to imprisonment for not more than 5 years less one day. (7) Section 5 of the Offence Act does not apply to this Act or the regulations. 1987-9-13; 1989-47-345; 2003-70-192. Power to make regulations 13. (1) The Lieutenant Governor in Council may make regulations referred to in section 41 of the Interpretation Act. (2) Without limiting subsection (1), the Lieutenant Governor in Council may make regulations respecting: (a) the creation of discretionary powers exercisable by the superintendent; (b) the solvency of captive insurance companies; 227 [RSBC 1996] Page 7 of 8 Quickscribe Services Ltd.
(ADD) (ADD) Jul 01/12 (d) (e) (f) (g) (h) (i) (j) (k) registration and renewal of registration, including conditions required to be met before or after registration; fees; advertising or holding out by a captive insurance company; registers; examinations; hearings; disclosure statements; the incorporation of captive insurance companies; the disapplication, in respect of a captive insurance company or class of captive insurance company, of all or part of (i) this Act, (ii) the Insurance Act, (iii) the Company Act, (iii.1) the Business Corporations Act, (iv) the Financial Institutions Act, or (v) regulations made under any of the Acts referred to in this paragraph; (k.1) the application, in respect of a captive insurance company or a class of captive insurance companies, of provisions of the Insurance Act; (l) information required to be supplied by a captive insurance company to the superintendent or Registrar of Companies; (m) the definition, for the purpose of this Act, of any word or expression not defined in this Act. (3) A regulation under this section may prescribe different regulations for different persons or classes of persons. 1987-9-14; 1989-47-346; 2003-70-193; 2009-16-108 (B.C. Reg. 213/2011). 227 [RSBC 1996] Page 8 of 8 Quickscribe Services Ltd.