MCD.INTRO

Question 1

identify FEDERAL areas of exclusive authority (this is not specific to insurance) (6)

Answer 1

• regulation of (trade, commerce)
• taxation
• banking
• (bankruptcy, insolvency)
• aliens & naturalization
• criminal law

Question 2

identify PROVINCIAL areas of exclusive authority (this is not specific to insurance) (4)

Answer 2

• provincial taxes
• civil property rights
• hiring & supervising provincial employees
• operating jails & hospitals

Question 3

define intra vires, ultra vires

Answer 3

INTRA VIRES: within the powers of a particular Govt
ULTRA VIRES: beyond the powers of a particular Govt

Question 4

Citizens Ins v Parsons (arson!!!)

Answer 4

FACTS: insurer disuptes ON’s Fire Insurance Act
- the Act required certain statutory conditions for fire policies in ON

ISSUE 1: is ON Fire Act ULTRA VIRES? (relates to regulation of trade, which is federal)

ISSUE 2: insurer claims province can’t legislate to deprive federally incorporated insurer of status & capacity

Ruling (Issue 1):
- ON Fire Act is INTRA VIRES
Reason:
- federal government can’t regulate an insurer operating in a single province
- such insurance contracts are INTRA-provincial and are not covered by federal trade regulations
- trade means INTER-provincial (not INTRA-provincial)

Ruling (Issue 2)
- status & capacity UNAFFECTED
- insurers are all treated equally, regardless of where they were incorporated

Question 5

Insurance Reference Case: AG(Can) v AG(AB)

Answer 5

FACTS: The Federal Insurance Act required a Federal license of all insurers..
..EXCEPT IF (incorporated by Province) AND (operating solely in Province)

ISSUE: is this ultra-vires of the federal government

RULING (JCPC):
- licensing provisions are ‘ultra vires’:
- regulation of trade/commerce didn’t extend to a licensing system of a particular trade
- trespasses on Provincial authority in civil rights
(not covered by Federal power to legislate for Peace, Order, Good Government)

Question 6

Implications of the ruling of the insurance reference case (3)

Answer 6

• a provincial insurer has the capacity, but not the right to operate in another Province
  (need permission from other province)
• federal insurer has the capacity and the right to operate in another province
• federal government can require a federal license for a foreign insurer

Question 7

BC Public Auto: CIC v AG(BC)

Answer 7

FATCS: BC legislature establishes compulsory public auto insurance plan
- legislature refuses license renewal of private insurers
- insurers sue

ARGUMENTS:
- insurers claimed BC legislation is ULTRA VIRES for 2 reasons:
- it relates to regulation of trade, which is federal
- province can’t legislate to deprive federally incorporated insurer of status &capacity

RULING: BC legislature acted within its powers (legislation is INTRA VIRES)

Question 8

identify of examples FEDERAL regulation/legislation regarding insurer solvency (5)

Answer 8

• CONDITIONS for entering business
• INVESTMENTS
• regular REPORTING
• CALCULATION of assets & reserves
• PROTECT policy holders

Question 9

areas & matters under PROVINCIAL insurance legislation/regulation

Answer 9

CONTRACT MATTERS: (ppp-ird)
- (policy contents), (policy terms), (premium payment), (insurable interest), (reinstatement), (designation of beneficiaries)..
TRANSACTION MATTERS: (AUC)
- (Agent licensing), (Unfair practices), (Claims handling)

Question 10

OSFI licensing requirements for domestic insurers (for Minister of Finance to approve letters patent) (6)

Answer 10

• financial resources (must be sufficient)
• business plan (detailed & realistic)
• business record of applicants (check for past bankrupticies)
• (character, competence, experience) of management
• positive effect on Canadian financial system (jobs, GDP growth)
• if owned by a foreign parent, OSFI must be satisfied that subsidiary will be treated fairly