Saskatchewan bill contains major changes to market conduct and unfair practices: McMillan LLP

Saskatchewan’s Minister of Justice and Attorney General has introduced Bill 177, which will implement the new Insurance Act and repeal the Saskatchewan Insurance Act. The bill contains significant changes to address market conduct and unfair practices, among other items.

Bill 177, An Act respecting Insurance and Insurers and making consequential amendments to other Acts and regulations, is similar to Alberta’s insurance legislation and is comprised of 11 parts, which deal with items such as preliminary matters, licensing of insurers, insurance intermediaries and councils, unsolicited insurance, reinsurance and special brokers, market conduct and contracts of insurance.

Carol Lyons , co-chair, insurance, financial services regulatory with McMillan LLP noted in a statement on March 3 that that Bill 177 was read by the legislative assembly of Saskatchewan for the first time in December and would come into force on proclamation if it passes the next two readings and receives royal assent.

Among the newly expanded definitions of note, she wrote, is that a person is “carrying on the business of insurance” if that person “solicits, negotiates, provides, promotes, advertises, markets, sells or distributes any contract of insurance by any means that cause communication from the insurer or the insurer’s agents or representatives to reach a person in Saskatchewan.”

The proposed act also includes significant changes to address market conduct and unfair practices, Lyons noted. For example, insurers and intermediaries are prohibited from tying and from inducing prospective customers through direct or indirect payments, allowances or gifts. If an insurer, insurance intermediary or adjuster is notified of a loss and recommends a service to the insured, it must advise the insured in writing that the insured may choose any service provider. Insurers must give written notice to claimants as to the limitation periods applicable to their claims within a prescribed notice period.

Another aspect of Bill 177 that constitutes an important change is the addition of insurance compliance self-evaluative audits, similar to those in the Alberta insurance legislation. The bill defines self-evaluative audits as “an evaluation, review, assessment, audit, inspection or investigation conducted by or on behalf of an insurer, for the purpose of identifying or preventing non-compliance with, or promoting compliance with, legislation, guidelines or industry, company or professional standards.”

An insurer must conduct a self-evaluative audit when it is requested to do so by the superintendent of insurance. The self-evaluative audit is privileged and will not be admissible in a civil or administrative proceeding unless privilege is expressly waived by the insurer, Lyons concluded.