This section canvasses all of the proposed changes to the new Act and discusses their significance where appropriate. The headings are listed first by the revising provision of the Insurance Amendment Act, 2008, followed by the corresponding section(s) of the new Act or other corresponding statute, which is expressly named (e.g. Section 36 [s. 53] or Section 105 [Financial Institutions Act, s.1]. Many sections are not discussed in detail below because they
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simply update and/or clarify the statutory language of the Act or, alternatively, repeal a current section, rendering the section of no force.9
a. Changes to Introductory Provisions
i. Section 1 [Part 1 Heading]
The Part 1 heading of the Act is changed to “Interpretation, Application of Act and Introductory Provisions.”
ii. Section 2 [s. 1]
The definitions of “prescribed” and “vehicle” are repealed so that the former is now defined by the Interpretation Act, R.S.B.C. 1996, c. 238, and the latter is no longer relevant to the Act. The section also repeals the Legislature’s authority to define classes of insurance for the Act and the Financial Institutions Act.
iii. Section 3 [s.2]
This section concerns the application of the Act. The meaning of “except as provided” is clarified to include “…except as provided under an enactment”. The new Act will not apply to a contract of marine insurance or vehicle insurance because they are dealt with under their own respective statutes.
iv. Section 4 [ss. 2.1 to 2.5]
This section adds new content to the “Application to insurers and contracts” section of the Act. First, it simply moves ss. 4 [Contract not avoided by default of insurer under Act], 27 [Liability of continuing insurer], and 28 [Effect of contracts on violation of law] of the current
9 The sections that update and clarify provisions of the Act include Section 25 [s. 39]; Section 29 [s. 44]; Section 34 [s. 50]; Section 36 [s. 53]; Section 37 [s. 54]; Section 39 [s. 56]; Section 40 [s. 57]; Section 46 [s. 64]; Section 51 [s. 72]; Section 52 [s. 73]; Section 54 [s. 78]; Section 55 [s. 79]; Section 66 [s. 91]; Section 85 [s. 107];
Section 96 [s. 118]. The sections that only update provisions of the Act include Section 43 [s. 60]; Section 49 [ss. 68, 70, 75 and 76]; Section 48 [s. 66]; Section 87 [s. 108]; and Section 92 [s. 112]; Section 94 [s. 114]. The sections that only clarify provisions of the Act include Section 33 [s. 49]; Section 89 [s. 109]; and Section 95 [s.
115]. The sections that repeal sections of the Act include Section 9 [s. 15]; Section 11 [ss. 19 and 21]; Section 44 [s. 61]; Section 69 [s. 93]; Section 97 [Part 5]; Section 98 [s. 189] Section 112 [Insurance (Marine) Act]. The only noteworthy repeal is Part 5, which is discussed above.
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Act into the introductory provision as ss. 2.2, 2.3, and 2.4, respectively, so that they apply to all types of insurance contracts contemplated by the Act.
Section 2.4 incorporates s. 7 of the Limitation Act into the new Act and authorizes the extension by contract of limitation periods prescribed by the Act, all of which is discussed in detail above.
As discussed above, s. 2.5 authorizes insurers to provide documents that under the Act must or may be provided to another person electronically in accordance with the Electronic Transactions Act.
b. Changes to General Insurance Provisions
i. Section 5 [Part 2 Heading]
This section changes the heading from “General Provisions” to “General Insurance Provisions.”
ii. Section 6 [s. 3]
This section clarifies the types of contracts to which Part 2 applies. As discussed above, Part 2 applies to every type of contract except a contract of life insurance, A&S insurance, reinsurance, or those contemplated under Part 7 (e.g. livestock insurance, home warranty insurance, deposit protection).
iii. Section 7 [s. 4, 7 to 11 and 11.1]
This section repeals and replaces ss. 4 and 7 to 11 with ss. 8 to 11.1.
Section 4 [Contract not avoided by default of insurer under Act] is simply repealed and moved to section 2.1(2) of the new Act.
Section 8 [Contents of policy] is simply revised to improve readability.
Section 9 [Dispute resolution] re-enacts the appraisal process as a broader dispute resolution process, as discussed above.
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Section 10 [Court may relieve against forfeiture and termination] is revised for clarity and incorporates s. 24 of the Law and Equity Act into the new Act, giving courts greater authority to relieve against forfeiture or penalties.
Section 11 [Waiver and estoppel] not only re-enacts the waiver by conduct provision from the current Act, but also codifies the common law principle of estoppel by stating that insurers are estopped from relying on an insured’s failure to comply with a requirement under the policy if the insurer’s conduct reasonably causes the insured to believe that the insured’s conduct is excused, and the insured acts on that belief to his or her detriment. Since the estoppel defence has always been available to an insured at common law, its addition into the new Act has little significance, other than making readers of the current Act alive to the issue.
Section 11.1 [Policy in accordance with terms of application] deems policies or coverage issued after an application to be consistent with the application, unless the insurer immediately gives written notice to the insured of the particulars of the differences. Within 2 weeks of receiving the written notice, the insured may reject the policy. The addition of s. 11.1 places the onus on the insurer to review the insured’s application and subsequent policy carefully to ensure that the two documents are consistent. Presumably, an insurer will not be able to deny coverage based on disparities between the application and the policy, unless the notice requirements are met.
iv. Section 8 [s. 12]
Section 12 [Effect of terms and contract note set out in policy] is amended for readability and s. 12(3) is added to clarify that a contract renewed by renewal receipt will comply with subsection (1) if the renewal receipt identifies the number or date of the original contract, assuming, of course, the original contract satisfied the terms and conditions requirement of subsection (1).
v. Section 10 [s. 17]
The revised s. 17 [Effect of unpaid cheque of note for premium] requires insurers to terminate a policy for non-payment of premiums in accordance with a statutory condition or
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other method contemplated by the contract, if any. Like the current Act, termination by registered mail will usually suffice.
vi. Section 12 [s. 22]
As discussed above, the revised s. 22 [Limitation of Actions] extends the limitation period for initiating an action on a policy from 1 to 2 years after the loss occurred or the insured ought to have known the loss occurred, whichever is later, and to 2 years after the cause of action arose in any other case.
vii. Section 13 [ss. 25, 25.1, 26, 26.1, 27, 27.1 and 28]
Section 25 [Insurer to furnish copy of application and policy] addresses only the insurer’s obligation to furnish an application and policy upon request, as opposed to proof of loss forms, which is dealt with under s. 25.1. Section 25 provides that an insurer may charge a reasonable fee for delivering an application or policy. Section 2.5 permits insurers to deliver these documents by email.
Section 25.1 re-enacts section 25(1)(b) and (2), and relieves an insurer from the obligation to furnish a blank proof of loss form if the claim dispute is settled and monies are paid out within 30 days after receipt of the notice of loss. Again, s. 2.5 most likely permits insurers to deliver a blank proof of loss form by email.
Sections 26 [Trafficking], 27 [Liability of continuing insurer], and 28 [Effect of contracts on violation of law] are repealed and re-enacted in Part 8, ss. 2.2, and 2.4 respectively.
The addition of s. 26.1 [Cancellation by insurer] requires an insurer, who made payment under a contract to an individual other than the insured and wishes to alter or cancel the contract, to give notice of any intended alteration or cancellation to the individual who received the payment in the same manner and timeframe that would be required for the insured under the contract.
The current fire insurance statutory conditions listed under s. 126 of Part 5 of the Act (all of which is repealed by s. 97) are revised for readability and enacted as s. 27.1 [Statutory
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conditions], as discussed above. Insurers will be required to revise their policies to incorporate the new statutory conditions verbatim.
viii. Section 14 [ss. 28.1 to 28.6]
Sections 127 [Several policies], 128 [Stamped words on contract], 129 [Unjust exclusions], and 130 [Subrogation] are re-enacted as s. 28.1[Proportionate contributions] (with minor revisions), 28.2 [Limitation of liability clause], 28.3 [Unjust contract provisions], and 28.6 [Subrogation], respectively.
As discussed above, the new s. 28.4 [Exclusions from coverage] empowers the Legislature to enact regulations that would prohibit insurers from including in their contracts prescribed exclusions in the event of loss by fire. The proposed regulations will likely result in more claims paid out for loss due to fire and insurers may wish to consider the underwriting implications.
As discussed above, the new s. 28.5 [Recovery by innocent persons] maintains coverage for an innocent co-insured despite the criminal or intentional act of the insured.
c. Changes to Life Insurance Provisions
i. Section 15 [s. 29]
The revised s. 29 [Definitions (to Part 3)] updates the following definitions for clarity and/or consistency with modern categories of insurance products: “creditor’s group insurance”,
“declaration”, “family insurance”, “fraternal society”, “group insurance”, “group life insurance”, and “insured”.
To modernize the Act, the section also adds definitions of “blanket insurance”, “debtor insurance”, and “spouse”. Spouse includes same-sex marriages or marriage-like relationships.
ii. Section 16 [s. 29.1]
Section 29.1 [Application of Part 2] provides that of all of the provisions of Part 2, only s. 11 [Waiver and estoppel] applies to Part 3.
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iii. Section 17 [s. 30]
Section 30 [Application of Part] remains the same but for a correction of a revision error and provides that the section is subject to transitional regulations.
iv. Section 18 [s. 31]
Section 31 [Group Insurance] is amended so that Part 3 [Life Insurance] applies not only to the rights and status of beneficiaries as currently drafted, but also to the rights and status of personal representatives who meet the unchanged requirements under the section.
v. Section 19 [s. 32]
Section 32 [Documents required for contract] imposes additional documentary furnishing obligations on insurers. Subsection (1) has been altered for clarity and also requires an insurer entering into a contract to issue a policy and provide the insured the policy and a copy of the insured’s application – even without a request from the insured.
Subsection (4) is repealed and replaced with new subsections (4) to (9), which increases documentary disclosure obligations on the insurer. First, insurers, on request, must provide the insured or claimant with the entire contract and any written statement or document provided to the insurer as evidence of insurability, except in cases of group or creditor’s group insurance.
Second, in cases of group or creditor’s group insurance, insurers, on request, must provide an insured, debtor insured, or claimant a copy of the insured’s application and any written statement or document provided as evidence of insurability. Third, if an insured requests a copy of the policy and gives reasonable notice (which in not defined), the insurer must provide the insured with a copy of the respective policy. The insured’s right to these documents is limited to information that is relevant to a claim under contract or denial of such a claim.
Before delivering the documents, insurers, in accordance with the Personal Property and Protection Act, S.B.C. 2003, c. 63, must redact the documents for any personal information of a third party who has not consented to the release of said information. Insurers may charge a reasonable fee for production of the documents and can likely furnish all documents by email in accordance with s. 2.5 of the new Act.
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vi. Section 20 [s. 33]
The revised s. 33 [Exceptions] no longer requires insurers to list in the life insurance policy, to which this section applies, the circumstances in which the contract lapses.
As discussed above, the policy must include specific language warning that actions against insurers are barred by limitation periods as follows: “Every action or proceeding against an insurer for the recovery of insurance money payable under the contract is absolutely barred unless commenced within the time set out in the Insurance Act.”
Finally, the section includes a requirement that where a policy limits an insured’s ability to designate beneficiaries, the front page of the policy must include specified language in conspicuous bold type as follows: “This policy contains a provision removing or restricting the right of the insured to designate persons to whom or for whose benefit insurance money is to be payable.”
vii. Section 21 [s. 34]
Section 34 [Contents of group policy] is amended by adding three subsections mandating further inclusions. First, the group insurance policy must include any provision limiting the insured’s ability to designate a beneficiary. Second, for a contract replacing another group insurance contract, the contract must include an indication of whether designations of the beneficiaries in the former contract carry over to the new contract. Third, the policy must include specific language warning that actions against insurers are time-barred by limitation periods (see s. 20 above).
viii. Section 22 [s. 35]
Section 35 [Contents of group certificate] is repealed and replaced with a revised s. 35 [Particulars of group certificate]. The new section remains essentially the same as the current section, but for three additional requirements. First, the certificate must set out the rights of the group life insured, debtor or claimant to information under the contract to obtain copies of documents under s. 32 (see s. 19 above). Second, if the policy restricts the insured’s ability to designate a beneficiary, the certificate must include specific language notifying the insured of
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such (see s. 20 above). Third, the certificate must include specific language warning that actions against insurers are time-barred by limitation periods (see s. 20 above). This section does not apply to blanket insurance contracts.
ix. Section 23 [ss. 37 and 37.1]
The language of s. 37 [Persons insurable] is updated and clarified. The addition of s. 37.1 [Termination of contract by court] attempts to reduce criminal acts motivated by insurance windfalls. It provides legal recourse for a person whose life is insured under the contract other than the insured, who believes that his or her life or health might be endangered by continuing the contract. On an application to the court, the court may terminate the contract, if just in the circumstances.
x. Section 24 [s. 38]
Section 24 [Contract taking effect] simply replaces the phrase “first premium” with
“initial premium” for consistency with other references to the phrase.
xi. Section 26 [s. 40]
The revised s. 40 [Who pays] updates the current language and excludes the case of creditor’s group insurance (in addition to the current Act excluding only the case of group insurance) from an assignee paying premiums on behalf of an insured.
xii. Section 27 [s. 41]
The current s. 41 [Duty to disclose] is repealed. Subsections (1) and (2) are re-enacted with minor language updates and subsection (3) extends the application of the duty to disclose material information respecting increasing or modifying coverage under an existing contract and renders the change (rather than the whole policy) voidable by the insurer, if the insured fails to discharge its duty.
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xiii. Section 28 [s. 42]
The revised s. 42 [Exceptions] extends the application of this section to increases and changes in coverage as contemplated by s. 41(3) of the new Act. The new section will also apply to creditor’s group insurance. The language of s. 28(1) is also updated.
xiv. Section 30 [s. 47]
The revised s. 47 [Exceptions] excludes both a contract of group insurance and creditor’s group insurance from this section, as opposed to the current section, which excludes the former only.
Moreover, subsection (1.1.) is added, which provides that if a premium payment is made within 30 days after a grace period, this section authorizes automatic reinstatement of a contract for non-payment provided that the insured is still alive. This section effectively adds 30 days to any grace-period in a life insurance policy.
Section 7 of the Court Order Interest Act, R.S.B.C. 1996. c. 79, must be used to calculate interest owing on outstanding premiums.
xv. Section 31 [s. 47.1]
Section 47.1 [Termination and replacement of group policies] is added to the new Act and requires that where a group insurance contract replaces a group policy, the replacement contract still applies to persons who were insured under the former contract, unless coverage was terminated for another reason, and precludes exclusions for non-attendance at work on the date the subsequent policy takes effect. Insurers will want to be cognizant of these carryover provisions when implementing replacement policies for group insurance contracts.
xvi. Section 32 [s. 48]
The new s. 48 [Designation of beneficiary] permits an insurer to restrict or exclude the insured’s right to designate beneficiaries (which currently is not the case) under subsection (4).
If the insurer opts to do so, there must be express language in the policy outlining the terms of the restriction or exclusion, as contemplated by s. 34 of the new Act.
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The addition of subsection (5) allows for designations under the former group insurance policy to apply to the replacing group policy. Moreover, the addition of subsection (6) requires an insurer to notify the group life insureds, if subsection (4) is a term of the group policy.
The addition of subsection (7) provides that an insurer who holds insurance money under a settlement option for a beneficiary must hold the money under a contract on the life of the beneficiary and afford the beneficiary the same rights as the insured.
Finally, minor changes are made to the wording of subsections (1) and (3) to allow for the application of the revised section, and to update the language, respectively.
xvii. Section 35 [s. 52]
The revised s. 52 [Beneficiary predeceasing life insured] clarifies the language in subsection (1), corrects a misplaced conjunction in subsection (1)(a), and adds three new subsections (3), (4), and (5). Subsections (3) and (4) permit a beneficiary to relinquish its right to insurance money by giving the insurer written notice, which, at that point, becomes irrevocable. Subsection (5) applies the current rule regarding predeceasing beneficiaries to disclaiming or disentitled beneficiaries.
xiii. Section 38 [s. 55]
Section 55 [Insured dealing with contract] renumbers the section for uniformity with the new Act. Moreover, a beneficiary designated irrevocably may consent to a change of beneficiary at age 19, as opposed to age 21. The section contains four additional subsections as follows:
subsection (2) allows an insured to exercise contractual rights prescribed by regulation if the beneficiary has not opted for a change of beneficiary; subsection (3) provides that a person who takes an interest in the contract, without consent or court order, does so subject to the rights of the irrevocable beneficiary; subsections (4) and (5) provides that if the irrevocable beneficiary lacks legal capacity, then an insured may ask a court for control of the contract without consent, and the court may do so on any notice and terms it deems just.
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xix. Section 41 [s. 58]
The language of s. 58 [Interest of assignee and effect on beneficiary’s rights] is updated and clarified. Subsection (3.1) is added and provides that, an assignment of a contract made on or after this section comes into force, revokes the designation of a beneficiary (not made irrevocably) and nomination made under 57(1) [Transfer of ownership], unless the assigning document provides otherwise. Therefore, insurers may wish to ensure the assigning document includes express statements contemplated by this section when facilitating the assignment of life insurance policies to protect the intended result of their insureds.
xx. Section 42 [s. 59.1]
The addition of s. 59.1 [Debtor insured’s enforcement rights] authorizes a debtor to enforce the same rights the creditor has under a creditor’s group insurance policy as against the insurer, subject to any defences available to the insurer against the creditor or debtor. If the debtor is successful in its claim, the insurer must pay the money to the creditor, unless the debtor proves that the debt has been paid in full, and then any excess insurance money may be paid to the debtor.
xxi. Section 45 [s. 63]
The language in s. 63 [Payment] is updated and clarified. The addition of subsection (5) allows the insurer to pay the insurance money owed to a deceased person, who was not resident in British Columbia at the time of his or her death, to the deceased person’s personal representative as appointed under the law of the jurisdiction in which the person died, and will discharge the insurer to the extent paid.
xxii. Section 47 [s. 65]
The revised s. 65 [Limitation of actions] extends that limitation in all cases from 1 year to 2 years (or 6 years in the case of death where a proof of loss is not provided). Section 65 also establishes new triggering dates to which the 2 year limitation applies for actions not involving death or declaration of death to the later of (1) the date the event that causes the loss occurred, (2) the date the claimant ought to have known the event occurred, or (3) in the case of money payable on a periodic basis, the date the insurer fails to make a payment.
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xiii. Section 50 [s. 71]
Section 71 [Payment into court] is revised to modernize the language. Moreover, in addition to the existing grounds upon which an insurer may apply to pay insurance funds into court, this section creates two new grounds for payment into court: (1) there is no person entitled to the money, and (2) public policy or other grounds would disentitle the person to whom the funds are payable.
xxiv. Section 53 [s. 77]
The language of the revised s. 77 [Minors] is updated and clarified so that it provides that an insurer may pay insurance funds to an 18 year old or if he or she is younger than 18, to the minor’s trustee in trust, or if no trustee is appointed, to the Public Guardian and Trustee in trust.
d. Changes to Accident and Sickness Insurance Provisions
i. Section 56 [s. 81]
The revised s. 81 [Definitions] updates the following definitions for clarity and/or consistency with modern categories of insurance products: “application”, “beneficiary”, “blanket insurance”, “creditor’s group insurance”, “declaration”, “family insurance”, “fraternal society”,
“group insurance”, “group person insured”, “insurance”, “insured” and “person insured”.
“group insurance”, “group person insured”, “insurance”, “insured” and “person insured”.