Practically every business and homeowner obtains insurance to protect themselves against losses to their property or business caused by an unforeseen event. However, sometimes when these events happen, both the insurers and insureds alike find themselves faced with the seminal question of whether such an event is covered by the insurance policy. Two most important aspects of an insurance policy when determining what is covered are: (i) The insurers duty to defend; and (ii) The insurers duty to indemnify. The duty to indemnify is the most common and known aspect of an insurance policy. This duty requires the insurer to pay for any judgment awarded to the third party against its insured, or any settlement that the parties may reach in lieu of judgment.Read more
Over the past ten years, regulation in Canada of insurers has evolved significantly. Prior to the financial crisis, Canada’s primary regulator had begun to move from a “rules-based” approach to regulation to a “principles-based” or “risk-based” approach. After the financial crisis, this trend continued and in many ways accelerated.
Insurers carrying on business in Canada are regulated as to solvency (usually at the federal level by the Office of the Superintendent of Financial Institutions) and as to market conduct (at the provincial/territorial level) by the local insurance regulator. The test for “carrying on business” is not consistent across the country – from a solvency perspective, it usually relates to the location of the insuring activities, such as where negotiations take place, where insuring decisions take place and how marketing is conducted; from a market conduct perspective, it usually relates to the location of the marketing and promotion activities, though in some provinces having a local risk is sufficient.Read more