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The Insurance Amendment Act

This is an unofficial version.
If you need an official copy, contact Statutory Publications.

S.M. 2007, c. 10

Bill 7, 1st Session, 39th Legislature

The Insurance Amendment Act

(Assented to November 8, 2007)

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

C.C.S.M. c. I40 amended

1           The Insurance Act is amended by this Act.

2           Section 1 is amended

(a) by repealing the definitions "aircraft insurance", "boiler and machinery insurance", "employers' liability insurance", "inland transportation insurance", "legal expense insurance", "personal property insurance", "plate glass insurance", "property damage insurance", "sprinkler leakage insurance", "theft insurance", "title insurance" and "workers compensation insurance";

(b) by replacing the definitions "accident insurance", "automobile insurance", "court", "credit insurance", "endowment insurance", "fire insurance", "guarantee insurance", "hail insurance", "life insurance", "livestock insurance", "marine insurance", "public liability insurance", "sickness insurance" and "weather insurance" with the following:

"accident insurance" means the class of accident insurance prescribed in the regulations; (« assurance-accidents corporels »)

"automobile insurance" means the class of automobile insurance prescribed in the regulations; (« assurance-automobile »)

"court" means the Court of Queen's Bench, except

(a) in subsections 410(3), (6) and (7), and

(b) where the context requires a different meaning; (« tribunal »)

"credit insurance" means the class of credit insurance prescribed in the regulations; (« assurance-crédit »)

"endowment insurance" means the class of endowment insurance prescribed in the regulations; (« assurance mixte »)

"fire insurance" means the class of fire insurance prescribed in the regulations; (« assurance-incendie »)

"guarantee insurance" means the class of guarantee insurance prescribed in the regulations; (« assurance de cautionnement »)

"hail insurance" means the class of hail insurance prescribed in the regulations; (« assurance contre la grêle »)

"life insurance" means the class of life insurance prescribed in the regulations; (« assurance-vie »)

"livestock insurance" means the class of livestock insurance prescribed in the regulations; (« assurance-bétail »)

"marine insurance" means the class of marine insurance prescribed in the regulations; (« assurance maritime »)

"public liability insurance" means the class of public liability insurance prescribed in the regulations; (« assurance responsabilité civile »)

"sickness insurance" means the class of sickness insurance prescribed in the regulations; (« assurance-maladie »)

"weather insurance" means the class of weather insurance prescribed in the regulations; (« assurance-intempéries »)

(c) by adding the following definition:

"class", in relation to insurance, means a class of insurance prescribed in the regulations; (« classe »)

3           Subsection 24(6) is repealed.

4           Clause 26(1)(g) is repealed.

5           Subsection 27(1) is amended

(a) in the section heading of the French version, by striking out "Catégories" and substituting "Classes"; and

(b) by striking out everything after "carry on" and substituting "one or more classes of insurance."

6           Subsection 30(3) is amended

(a) in the part before clause (a), by striking out "or an underwriting member of The Canadian Insurance Exchange"; and

(b) by replacing clause (a) with the following:

(a) its net surplus of assets over all liabilities exceeds the paid-up capital stock required under subsection (l) in respect of a joint stock company carrying on the same class of insurance; and

7           Clause 32(1)(a) is amended by striking out "(other than a mutual benefit society)".

8           The following is added after section 37:

Suspending or cancelling a licence

37.1        The Lieutenant Governor in Council may, with or without conditions, suspend or cancel the licence of an insurer if the insurer is found guilty of an offence referred to in section 410.

9           The following is added after section 41:

SUPPLEMENTARY PROVISIONS RESPECTING CORPORATE GOVERNANCE OF INSURERS INCORPORATED IN MANITOBA

Definitions

41.1(1)     The following definitions apply in this section and in sections 41.2 to 41.25.

"affiliate" means an entity that is affiliated with an insurer within the meaning of subsection (2). (« groupe »)

"entity" means

(a) a body corporate;

(b) a trust;

(c) a partnership;

(d) a fund;

(e) an unincorporated association or organization;

(f) Her Majesty in right of Canada or a province;

(g) an agency of Her Majesty in right of Canada or a province; or

(h) the government of, or of a political subdivision of, a foreign country or an agency of such a government. (« entité »)

"indebtedness" includes indebtedness in respect of

(a) commercial paper;

(b) acceptances;

(c) lines of credit to the extent drawn on; and

(d) margin loans made to a director or officer of an insurer. (« dette »)

"insurer" means an insurer incorporated under The Corporations Act. (« assureur »)

"not in good standing", in relation to a loan, means a loan in respect of which

(a) a payment of principal or interest is 90 days or more overdue;

(b) interest is not being accrued on the books of the lender because it is doubtful whether the principal or interest will be paid or recovered; or

(c) the rate of interest is reduced by the lender because the borrower is financially weak. (« en souffrance »)

"significant borrower", in relation to an insurer, means

(a) an individual who has indebtedness for money borrowed from the insurer or from an affiliate of the insurer, other than a loan secured by a mortgage on the individual's principal residence, the total principal of which exceeds the greater of

(i) $200,000., and

(ii) 0.02% of the insurer's regulatory capital; or

(b) an entity that has indebtedness for money borrowed from the insurer or from an affiliate of the insurer the total principal of which exceeds the greatest of

(i) $500,000.,

(ii) 0.05% of the insurer's regulatory capital, and

(iii) 25% of the value of the entity's assets. (« emprunteur important »)

"subsidiary", in relation to an insurer, means an entity that is controlled by the insurer. (« filiale »)

Affiliated bodies

41.1(2)     An entity is affiliated with an insurer if one of them is controlled by the other or both are controlled by the same person.

Sections 41.1 to 41.25 supplementary to Corporations Act

41.2(1)     Sections 41.1 to 41.25 are supplementary to the provisions of The Corporations Act that apply to insurers.

Precedence over Corporations Act

41.2(2)     If there is a conflict between a provision of sections 41.1 to 41.25 and The Corporations Act, this Act takes precedence.

Unanimous shareholder agreements not allowed

41.3(1)     The shareholders of an insurer shall not enter into a unanimous shareholder agreement, as defined in The Corporations Act.  Such an agreement is of no force and effect.

Shareholders must appoint auditor

41.3(2)     Despite section 157 of The Corporations Act, the shareholders of an insurer shall not resolve not to appoint an auditor.

Control of a body corporate or other entity

41.4(1)     For the purposes of sections 41.1 to 41.25,

(a) a person controls a body corporate if

(i) securities of the body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person, and

(ii) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate;

(b) a person controls an unincorporated entity other than a limited partnership if

(i) more than 50% of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person, and

(ii) the person is able to direct the business and affairs of the entity;

(c) the general partner of a limited partnership controls the limited partnership; and

(d) a person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.

Deemed control

41.4(2)     A person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.

Deemed control — common ownership of securities

41.4(3)     A person is deemed to control an entity if the aggregate of

(a)  any securities of the entity that are beneficially owned by the person; and

(b)  any securities of the entity that are beneficially owned by any entity controlled by the person;

is such that, if the person and all of the entities referred to in clause (b) that beneficially own securities of the entity were one person, that person would control the entity.

Significant interest in insurer's shares

41.5(1)     For the purposes of sections 41.1 to 41.25, a person has a significant interest in a class of an insurer's shares if the aggregate of

(a) any shares of that class beneficially owned by the person; and

(b) any shares of that class beneficially owned by entities controlled by the person;

exceeds 10% of all of the outstanding shares of that class of the insurer's shares.

Substantial investment in a body corporate

41.5(2)     For the purposes of sections 41.1 to 41.25, a person has a substantial investment in a body corporate where

(a) the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10% of the voting rights attached to all of the outstanding voting shares of the body corporate; or

(b) the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25% of the shareholders' equity of the body corporate.

Substantial investment in an unincorporated entity

41.5(3)     For the purposes of sections 41.1 to 41.25, a person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25% of all of the ownership interests into which the entity is divided.

Five directors required

41.6(1)     An insurer shall have at least five directors.

Residency

41.6(2)     A majority of the directors of an insurer shall be residents of Canada.

Majority to be residents

41.6(3)     An insurer's directors shall not transact business at a meeting of directors unless a majority of the directors present are residents of Canada.

Exception

41.6(4)     Despite subsection (3), directors may transact business at a directors' meeting when a majority of the directors present are not residents of Canada, if

(a) a director who is a resident of Canada and who is unable to be present approves in writing, or by telephone or other communication facility, the business transacted at the meeting; and

(b) the required majority would have been present at the meeting had that director been present.

Duties of directors

41.7(1)     The directors of an insurer shall manage, or supervise the management of, its business and affairs.

Duties re audits and controls

41.7(2)     Without limiting the generality of subsection (1), the directors of an insurer shall

(a) establish an audit committee and a conduct review committee;

(b) establish procedures to resolve conflicts of interest, including techniques for identifying potential conflict situations and for restricting the use of confidential information; and

(c) establish policies and procedures to ensure that the insurer applies prudent investment standards.

Appointing actuary

41.7(3)     At the organizational meeting of an insurer required by subsection 99(1) of The Corporations Act, the directors shall appoint a qualified person to be the insurer's actuary.

Filling vacancy in actuary's position

41.7(4)     If the position of actuary becomes vacant, the directors shall appoint another qualified person to fill it.  They may not delegate that power to a managing director or a committee of directors.

Superintendent may exempt certain insurers

41.7(5)     At the request of an insurer, the superintendent may exempt the insurer from the requirements of subsection (3), if

(a) the insurer satisfies the superintendent that its insurance business

(i) is limited in scope,

(ii) is seasonal, or

(iii) involves minimal policy liabilities; and

(b) the superintendent believes that the exemption will not prejudice the insurer's policyholders or shareholders.

Statement of actuary

41.7(6)     The actuary of an insurer who resigns or whose appointment is revoked shall submit to the insurer's directors and the superintendent a written statement of

(a) the circumstances of the resignation or revocation; and

(b) the reasons why the actuary resigned or why, in the actuary's opinion, the appointment was revoked.

Duty of replacement actuary

41.7(7)     When an insurer's actuary resigns or the actuary's appointment is revoked, no person shall accept an appointment or consent to be appointed as the insurer's actuary before requesting and receiving from the former actuary the written statement referred to in subsection (6).

Exception

41.7(8)     A person may accept an appointment or consent to be appointed as the insurer's actuary if no reply is received from the former actuary within 15 days after the request under subsection (7) is made.

Effect of non-compliance

41.7(9)     Unless subsection (8) applies, the appointment of a person as an insurer's actuary is void if the person does not comply with subsection (7).

Qualifications of directors

41.8        The following persons are disqualified from being a director of an insurer:

(a) a person who is not an individual;

(b) a person who is less than 18 years of age;

(c) a person who has the status of a bankrupt;

(d) a person who has been found to be of unsound mind by a court in Canada or elsewhere;

(e) a person who is suffering from a mental disorder, as defined in The Mental Health Act, or a person for whom a substitute decision maker for property has been appointed under The Vulnerable Persons Living with a Mental Disability Act;

(f) a member of the civil service of Manitoba whose official duties are concerned with the business or affairs of insurers, insurance agents or adjusters;

(g) an employee of an insurance council;

(h) a person who fails to meet any other qualification requirements of the insurer's by-laws;

(i) a person who, within the preceding five years,

(i) has been convicted of an indictable offence of a kind that is related to the qualifications, functions or duties of a corporate director, or

(ii) has been convicted of an offence under this Act,

if the time for making an appeal has expired without an appeal having been made or the appeal has been finally disposed of by the courts or abandoned.

Limit on directors who are employees

41.9        No more than 20% of an insurer's directors may be employees of the insurer or its subsidiaries, except as the result of the resignation, removal or death of a director.

Limit on affiliated directors

41.10(1)    No more than 2/3 of an insurer's directors may be affiliated directors, except as the result of the resignation, removal or death of a director.

When a person is an affiliated director

41.10(2)    A director is an affiliated director of an insurer if he or she

(a) is an officer or employee of the insurer or any of its affiliates;

(b) has a significant interest in a class of the insurer's shares;

(c) has a substantial investment in an affiliate of the insurer;

(d) is a significant borrower of the insurer;

(e) is a director, officer or employee of an entity that is a significant borrower of the insurer;

(f) controls one or more entities whose total indebtedness to the insurer or its affiliates would cause the entities, if treated as a single entity, to be a significant borrower of the insurer;

(g) provides goods or services to the insurer for which the total annual billings to the insurer exceeds 10% of his or her total annual billings;

(h) is

(i) a partner in or an employee of a partnership, or

(ii) an officer or employee of, or a person who has a substantial investment in, a body corporate,

that provides goods or services to the insurer for which the total annual billings to the insurer exceeds 10% of the partnership's or body corporate's total annual billings;

(i) has a loan from the insurer, or from an affiliate of the insurer, that is not in good standing;

(j) is a director, officer or employee of, or an individual who controls, an entity that has a loan from the insurer, or from an affiliate of the insurer, that is not in good standing;

(k) is a professional adviser to the insurer;

(l) is an insurance agent, broker or adjuster of the insurer;

(m) is the spouse or common-law partner of an individual described in any of clauses (a) to (l); or

(n) is a relative of an individual described in any of clauses (a) to (l) who resides in the same home as the individual.

Determination of affiliation

41.10(3)    Whether or not a person is affiliated with an insurer within the meaning of subsection (2) shall be determined as of the day the notice of the annual meeting is sent to shareholders.  The determination becomes effective on the day of that meeting and continues to be in effect until the next annual meeting of shareholders.

Determination by superintendent re affiliation

41.11(1)    Despite subsections 41.10(2) and (3), the superintendent may determine that a particular director is affiliated with an insurer for the purposes of this Act if the superintendent believes that the director has a relationship with the insurer or with any of its affiliates that can reasonably be expected to affect the exercise of the director's best judgment.

Effective period of determination

41.11(2)    A determination under subsection (1)

(a) becomes effective on the day of the next annual meeting of the insurer's shareholders unless a written notice from the superintendent revoking the determination is received by the insurer before that day; and

(b) ceases to be in effect on the day of the next annual meeting of the insurer's shareholders after a written notice from the superintendent revoking the determination is received by the insurer.

Statement of dissenting director

41.12(1)    A director of an insurer who

(a) resigns;

(b) receives a notice or otherwise learns of a meeting of the insurer's shareholders called to remove him or her from office; or

(c) receives a notice or otherwise learns of a meeting of insurer's directors or shareholders at which another person is to be appointed or elected to fill his or her office as director, whether because of his or her resignation or removal or because his or her term of office has expired or is about to expire;

is entitled to submit to the insurer a written statement giving the reasons for the resignation or the reasons why he or she opposes any proposed action or resolution.

Resignation of director due to disagreement

41.12(2)    If a director of an insurer resigns as a result of a disagreement with the other directors or the officers of the insurer, the director shall submit to the insurer a written statement of the nature of the disagreement.

Circulating statement

41.12(3)    Without delay after receiving a director's statement under subsection (2) or about a matter referred to in clause (1)(b) or (c), the insurer shall send a copy of the statement

(a) to the other directors and the superintendent; and

(b) to the shareholders entitled to receive notice of meetings under clause 129(1)(a) of The Corporations Act, unless

(i) the statement is attached to a notice of a shareholders' meeting, or

(ii) the directors believe on reasonable grounds that sending the statement will materially and adversely affect the insurer's financial viability.

Refraining from sending statement

41.12(4)    If the insurer's directors decide under subclause (3)(b)(ii) not to send the statement to the shareholders, the insurer shall promptly notify the superintendent in writing and state the grounds for the directors' belief. After receiving the insurer's notification, the superintendent may

(a) allow the insurer to not send the statement; or

(b) order the insurer to send the statement to the shareholders.

Immunity

41.12(5)    No insurer or person acting on behalf of an insurer incurs any liability by reason only of circulating a director's statement in compliance with subsection (3).

When composition of board fails

41.13(1)    Despite subsection 41.6(3) of this Act and subsection 106(4) of The Corporations Act, if — because of a vacancy — the number of directors or the composition of the board of directors fails to meet a requirement of section 41.6 or 41.9 or subsection 41.10(1) of this Act, the directors who, in the absence of any provision in the articles, are empowered to fill the vacancy shall promptly fill it.

Determining affiliation — vacancy

41.13(2)    Despite subsection 41.10(3), the affiliation of a person to be elected or appointed to fill a vacancy shall be determined as at the date of the person's election or appointment.  The determination continues to be in effect until the next annual meeting of the shareholders.

At least four directors' meetings per year

41.14       An insurer's directors shall meet at least four times during each financial year.

Quorum at meeting of directors' committee

41.15       A quorum for a meeting of a committee of the directors is a majority of the directors comprising the committee.

At least one unaffiliated director at meeting

41.16(1)    An insurer's directors shall not transact business at a directors' meeting unless at least one unaffiliated director is present.

Exception

41.16(2)    Despite subsection (1), an insurer's directors may transact business at a directors' meeting if an unaffiliated director who is unable to be present approves in writing, or by telephone or other communication facility, the business transacted at the meeting.

Record of attendance at directors' meetings

41.17(1)    An insurer shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.

Statement to shareholders

41.17(2)    An insurer shall attach a statement to the notice of each annual meeting it sends to its shareholders showing

(a) the total number of directors' meetings and directors' committee meetings held during the financial year immediately preceding the meeting; and

(b) the number of those meetings attended by each director.

Meeting required by superintendent

41.18(1)    If the superintendent considers it to be necessary, the superintendent may, by a notice in writing, require an insurer to hold a meeting of its directors to consider the matters set out in the notice.

Superintendent may attend and address meeting

41.18(2)    The superintendent may attend and address a meeting referred to in subsection (1).

Audit committee

41.19       The audit committee of an insurer shall consist of at least three members,

(a) all of whom are directors of the insurer;

(b) a majority of whom are unaffiliated directors; and

(c) none of whom are officers or employees of the insurer or a subsidiary of the insurer.

Duties of the audit committee

41.20(1)    The audit committee shall

(a) review the annual financial statements of the insurer before the directors approve them;

(b) review any returns of the insurer that the superintendent requires it to review;

(c) require the insurer's management to implement and maintain appropriate internal control procedures;

(d) review, evaluate and approve the procedures referred to in clause (c);

(e) review any investments and transactions that the insurer's auditor or any of its officers may bring to the attention of the committee as potentially affecting adversely the insurer's well-being;

(f) meet with the insurer's auditor to discuss the annual financial statements, and the returns and transactions referred to in this subsection;

(g) meet with the insurer's actuary to discuss the parts of the annual financial statements and the annual return prepared by the actuary; and

(h) meet with the insurer's chief internal auditor, or the officer or employee of the insurer acting in a similar capacity, and with the insurer's management, to discuss the effectiveness of the internal control procedures established for the insurer.

Report to directors

41.20(2)    In the case of the annual financial statements of an insurer that must be approved by the insurer's directors under subsection 152(1) of The Corporations Act, before the approval is given the insurer's audit committee shall report to the directors about any matter that the committee considers relevant to the directors' decision.

Audit committee may call a meeting of directors

41.20(3)    An insurer's audit committee may call a meeting of the insurer's directors to consider any matter of concern to the committee.

Auditor's statement re s. 162(5) of C225

41.21(1)    Despite subsection 162(5) of The Corporations Act, an auditor described in clause (a), (b) or (c) of that subsection must submit to the insurer a written statement giving the reasons for his or her resignation or the reasons why he or she opposes any proposed action or resolution.

Circulating statement

41.21(2)    Without delay after receiving a statement under subsection (1), the insurer shall send a copy of the statement

(a) to the superintendent; and

(b) unless the statement is included in or attached to a management proxy circular required by section 143 of The Corporations Act, to every shareholder entitled, under that Act, to receive notice of shareholders' meetings.

Application of Division VIII of Part XXIV of C225

41.22       Division VIII of Part XXIV of The Corporations Act applies to an insurer, with necessary changes.  A reference in that Division to a "corporation" must be read as a reference to an "insurer".

Conduct review committee

41.23       The conduct review committee of an insurer shall consist of at least three members

(a) all of whom are directors of the insurer;

(b) a majority of whom are unaffiliated directors; and

(c) none of whom are officers or employees of the insurer or a subsidiary of the insurer.

Duties of the conduct review committee

41.24(1)    The conduct review committee shall

(a) require the insurer's management to establish procedures for complying with Division VIII of Part XXIV of The Corporations Act;

(b) review those procedures and their effectiveness in ensuring that the insurer is complying with that Division; and

(c) review the insurer's practices to ensure that any transactions with related parties of the insurer that may have a material effect on the stability or solvency of the insurer are identified.

Insurer report to superintendent

41.24(2)    An insurer shall report to the superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in clause (1)(a).

Conduct committee to report to directors

41.25       After each meeting of an insurer's conduct review committee, the committee shall report to the directors of the insurer on matters reviewed by the committee.

10          Section 89 is amended by striking out "special broker duly licensed" and substituting "licensed special insurance broker".

11          Section 93 and the centred heading before it are repealed.

12          Subsection 107(3) is replaced with the following:

Failing to provide information

107(3)      The authority that appointed the liquidator may, without notice, dismiss the liquidator if the liquidator neglects or refuses to provide any information required by this section.

13          The centred heading before section 110 is replaced with "FEE FOR LATE OR INCOMPLETE REPORTS, RETURNS OR STATEMENTS".

14          Section 110 is repealed.

15(1)       Subsections 111(1) to (4) are replaced with the following:

Meaning of "default" re reports and returns

111(1)      In this section, "default", in relation to making or filing a report, return or statement to the superintendent, means

(a) that the report, return or statement is not made or filed on or before the day on which it is required to be made or filed; or

(b) that, despite being made or filed when required, the report, return or statement is incomplete or inaccurate.

Fee for default in filing of returns and reports

111(1.1)    If an insurer or other person defaults in making or filing a report, return or statement that the insurer or person is required to make to or file with the superintendent under this Act, the insurer or person shall pay a fee of $200. for each day that the default continues, beginning with the eighth day after the day on which the report, return or statement was required to be made or filed.

Superintendent must give notice of default

111(2)      As soon as practicable after becoming aware of the default, the superintendent shall send the insurer or other person a notice of default.  The notice must state the nature of the default, and may be sent by any means that the superintendent reasonably believes will result in its reaching the insurer or person in a timely manner.

When liability to pay the fee arises

111(3)      The liability of the insurer or other person to pay the fee under subsection (1.1) arises when the superintendent sends the notice under subsection (2).

Fee is a debt to the government

111(4)      A fee payable under this section is a debt owing by the insurer or other person to the government.

15(2)       Subsection 111(5) is amended

(a) in the section heading, by striking out "Penalty" and substituting "Fee"; and

(b) by striking out "it or him" and substituting "the insurer or person".

16          Section 112 is repealed.

17(1)       The definition "person" in subsection 113(1) is amended by striking out ", mutual benefit society".

17(2)       Subsection 113(10) is repealed.

18          Subsection 114(3) is amended

(a) by replacing the section heading with "Regulations"; and

(b) by striking out "and" at the end of clause (e) and adding the following after clause (e):

(e.1) respecting the classes and subclasses of insurance, and governing insurers that undertake a class or subclass of insurance;

19          Subsection 148(1) is amended by repealing the definition "court".

20          Section 203 is amended

(a) by replacing the definitions "beneficiary" and "declaration" with the following:

"beneficiary" means a person — other than the insured or the insured's personal representative — who is designated or appointed in a contract or by a declaration, and to whom or for whose benefit insurance money payable under the contract is to be paid; (« bénéficiaire »)

"declaration" means an instrument, signed by the insured,

(a) with respect to which an endorsement is made on the policy,

(b) that identifies the contract, or

(c) that describes the insurance, the insurance fund or a part of either of them,

in which the insured designates his or her personal representative or a beneficiary as a person to whom or for whose benefit the insurance money payable under the contract is to be paid, or in which the insured changes or revokes a previous designation; (« déclaration »)

(b) by repealing the definition "court".

21          Part XII is repealed.

22(1)       Subsections 363(1) and (2) are replaced with the following:

Exchange must maintain a reserve fund

363(1)      A reciprocal insurance exchange shall maintain with its attorney a reserve fund in cash or approved securities.  The amount of the reserve fund must be at least the amount prescribed in the regulations.

Exchange must maintain a guarantee fund

363(2)      A reciprocal insurance exchange shall maintain with its attorney a guarantee fund in cash or approved securities.  The amount of the guarantee fund must be at least the amount prescribed in the regulations.

Funds must have separate assets

363(2.1)    Cash and securities maintained by a reciprocal insurance exchange in its reserve fund shall not be included in its guarantee fund.

22(2)       Subsections 363(3) and (4) are repealed.

23          Subsection 366(2) is amended

(a) in the section heading of the French version, by striking out "et peine"; and

(b) by striking out everything after "offence".

24(1)       Subsection 367(1) is amended

(a) in the section heading and in the subsection, by striking out "revocation" and substituting "cancellation"; and

(b) by striking out "revoked" and substituting "cancelled".

24(2)       Subsection 367(2) is replaced with the following:

Publication of notice

367(2)       Promptly after the licence of an exchange is suspended or cancelled, the superintendent shall publish a notice of suspension or cancellation in at least two successive issues of The Manitoba Gazette.

25          The following is added after section 368 as part of Part XIV:

Regulations

368.1       The Lieutenant Governor in Council may make regulations

(a) prescribing the minimum amount of reserve funds and guarantee funds for the purposes of section 363;

(b) respecting reserve funds and guarantee funds, including, but not limited to, the assets such funds may include, the valuation of the assets included in a fund and liquidity requirements.

26          Section 374 is repealed.

27          Clause 375(1.1)(b) is amended by striking out "revoke" and substituting "cancel".

28          Section 376 is amended

(a) by replacing the section heading with "No new licence for one year after cancellation";

(b) by striking out "revoked" and substituting "cancelled"; and

(c) by striking out "revocation" and substituting "cancellation".

29          Subsection 378(8) is amended by striking out "revoked or suspended" and substituting "suspended or cancelled".

30(1)       The centred heading before section 381 and subsections 381(1) to (3) are replaced with the following:

SPECIAL INSURANCE BROKER'S LICENCE FOR BUSINESS WITH UNLICENSED INSURERS

Special insurance broker's licence

381(1)      The superintendent may issue to an insurance agent a licence to act as a special insurance broker to negotiate, continue, or renew contracts of insurance in Manitoba with unlicensed insurers, other than life, accident, or sickness insurance.

Application

381(2)      An applicant for a special insurance broker's licence must

(a) be a resident of Manitoba;

(b) hold an unrestricted insurance agent licence for the class of insurance for which the person is seeking the special insurance broker's licence;

(c) file with the superintendent a written application

(i) that is verified in the manner required by the superintendent, and

(ii) that sets out the information required of an insurance agent who applies for a licence, and any further information that the superintendent requires; and

(d) pay the prescribed licence fee.

Issue of licence

381(3)      The superintendent shall issue the licence if

(a) the applicant meets the requirements of subsection (2); and

(b) the superintendent is satisfied with the application and information filed.

Term of licence

381(3.1)    A person's special insurance broker's licence expires on December 31 of the year for which it is issued, or on the day the person's underlying insurance agent licence expires, whichever occurs first.

30(2)       Subsections 381(5) and (6) are replaced with the following:

Security required

381(5)      The superintendent shall not issue a special insurance broker's licence to a person unless the person provides security to the superintendent, in accordance with the regulations, that the person will comply with

(a) this Act and the regulations under this Act; and

(b) any other applicable Act or regulation.

The person must maintain the security while the licence or any renewal of it is in force.

Suspending or cancelling a licence

381(6)      The superintendent may suspend or cancel a person's special insurance broker's licence for any reason for which the superintendent may take the same action in respect of the person's underlying insurance agent licence.

When suspension or cancellation is automatic

381(7)      A person's special insurance broker's licence is automatically suspended or cancelled if his or her underlying insurance agent licence is suspended or cancelled.

Personal liability of special insurance broker

381(8)      If by reason of a special insurance broker's failure or neglect to remit a premium to the insurer the contract of insurance is not made or is cancelled, the special insurance broker is personally liable to the insured or intended insured in the same manner as if

(a) the insurance contract had been made or had not been cancelled; and

(b) the special insurance broker were the insurer.

31          Section 382 is replaced with the following:

Arranging insurance with unlicensed insurers

382(1)      Subject to subsection (2), a special insurance broker may assist or act on behalf of a person who wishes to enter into or renew an insurance contract with an unlicensed insurer if

(a) sufficient insurance cannot be arranged at reasonable rates with an insurer licensed under this Act; or

(b) sufficient insurance cannot be arranged on the terms stipulated by the person with an insurer licensed under this Act.

Statement from insured required

382(2)      Before the person enters into or renews the insurance contract, the special insurance broker shall obtain from the person a written statement that

(a) is dated and signed by the person;

(b) describes the nature and amount of the insurance the person requires;

(c) states that the person understands that

(i) the unlicensed insurer is not regulated under this Act,

(ii) the superintendent has no authority under this Act with respect to the unlicensed insurer,

(iii) the orderly payment of claims may be more difficult than it would be if the person obtained insurance from an insurer licensed under this Act, and

(iv) the person will not have the protection of any compensation plan operated by a compensation association designated in the regulations; and

(d) contains any further information that the superintendent may require.

Return to superintendent

382(3)      Within 10 days after the person enters into or renews the insurance contract, the special insurance broker shall file with the superintendent a statement setting out

(a) the insured's name;

(b) the subject matter of the insurance;

(c) the name of each unlicensed insurer;

(d) the amount of insurance arranged with each; and

(e) the rate and amount of premium paid to each.

Records of contracts with unlicensed insurers

382(4)      A special insurance broker shall keep separate records, in the form required by the superintendent, about insurance the special insurance broker arranges with unlicensed insurers.

Inspection of records

382(5)      The superintendent or a person authorized by the superintendent may, at any reasonable time, inspect the records required by subsection (4).

Monthly return

382(6)      Within 10 days after the end of each month, a special insurance broker shall file with the superintendent a return

(a) verified in the manner required by the superintendent;

(b) in the form required by the superintendent; and

(c) setting out the particulars of insurance the special insurance broker has arranged with unlicensed insurers during the month.

32(1)       Subsection 385(4) is amended

(a) in the English version, by striking out "he" and substituting "the superintendent"; and

(b) by striking out "revoked" and substituting "cancelled".

32(2)       Subsection 385(9) is amended

(a) by replacing clause (e) with the following:

(e) a lawyer who is entitled to practise law in Manitoba and who is acting in the usual course of his or her profession; or

(b) in subclause (f)(i), by striking out "$2,500. or less" and substituting "less than the amount prescribed in the regulations".

33          Subsection 386(8) is amended by striking out "revoked" and substituting "cancelled".

34(1)       Clause 395(1)(c) is amended by striking out "revokes" and substituting "cancels".

34(2)       Subsection 395(3) is amended

(a) in the section heading, by striking out "revoked" and substituting "cancelled"; and

(b) in the part before clause (a), by striking out "revocation" and substituting "cancellation".

35          Subsection 396(3) is amended by striking out "revocation" and substituting "cancellation".

36(1)       The definition "agent" in subsection 396.1(1) is amended by striking out "non-life" and substituting "general".

36(2)       Subsection 396.1(2) is replaced with the following:

Regulations establishing insurance councils

396.1(2)    The Lieutenant Governor in Council may, by regulation, establish one or more insurance councils.

36(3)       Subsection 396.1(3) is repealed.

36(4)       Subsection 396.1(4) is replaced with the following:

Regulations re membership, powers, functions and duties of councils

396.1(4)    The Lieutenant Governor in Council may make regulations

(a) respecting the membership of insurance councils;

(b) prescribing the powers, functions and duties of insurance councils;

(c) governing how insurance councils must exercise their powers and carry out their functions and duties.

36(5)       Subsection 396.1(10) is amended by striking out "section 389" and substituting "sections 389 to 389.3".

37          Section 396.2 is amended

(a) by adding the following after clause (a):

(a.1) prescribing the value of claims for the purposes of subclause 385(9)(f)(i);

(b) by adding the following after clause (d):

(e) for the purposes of subsection 381(5), governing the security to be given in respect of a special broker's licence, including governing forfeiture of the security and the disposition of its proceeds.

38          The following is added after section 409:

PART XVII

OFFENCES AND PENALTIES

Offences

410(1)      A person is guilty of an offence if the person

(a) directly or indirectly provides false, misleading or incomplete information to the superintendent or to an insurance council established under section 396.1, whether the information is required under this Act or is volunteered;

(b) fails to comply with any requirement of this Act or the regulations, or of an order made under this Act or a regulation;

(c) contravenes this Act or the regulations; or

(d) contravenes any condition or limitation imposed on or by the person's licence.

Penalties

410(2)      A person who is guilty of an offence is liable on summary conviction

(a) in the case of an individual, to a fine of not more than $200,000. or imprisonment for a term of not more than one year, or both; and

(b) in any other case, to a fine of not more than $1,000,000.

Additional fine

410(3)      If a person is convicted of an offence under this Act and the court is satisfied that, as a result of the commission of the offence,

(a) the person acquired any monetary benefits; or

(b) monetary benefits accrued to the person;

the court may order the person to pay a fine of not more than the court's estimation of the amount of those monetary benefits. A fine under this subsection is in addition to and not in place of a fine under subsection (2).

Continuing offence

410(4)      When a contravention of this Act or a regulation under this Act continues for more than one day, the person is guilty of a separate offence for each day the contravention continues.

Liability of directors and officers

410(5)      If a person other than an individual commits an offence under this Act or a regulation under this Act, any of the person's directors or officers who authorized, permitted or acquiesced in the commission of the offence are also guilty of an offence and are liable on summary conviction to the penalties set out in clause (2)(b), whether or not the person has been prosecuted or convicted.

Order to comply

410(6)      When a person is convicted of an offence under a provision of this Act or the regulations, the court may, in addition to imposing a fine or imprisonment, order the person to comply with the provision.

Restitution

410(7)      When a person is convicted of an offence under this Act, the court may, in addition to imposing a fine or imprisonment, order the person to pay compensation or restitution in respect of the offence.

Filing restitution order in Court of Queen's Bench

410(8)      The person to whom compensation or restitution is payable under an order made under subsection (7) may file the order in the Court of Queen's Bench.  Once filed, it may be enforced as a judgment of the court in the person's favour.

Time limit for prosecution

411         A prosecution under this Act may not be commenced later than two years after the day the alleged offence was committed.

Application for compliance order

412(1)      The superintendent may apply to the Court of Queen's Bench for an order under subsection (2) if a person contravenes

(a) a provision of this Act or the regulations;

(b) an order made by the superintendent; or

(c) a limitation or condition imposed on or by the person's licence.

Compliance order

412(2)      The court may make an order

(a) directing the person to comply with, or restraining the person from contravening, the provision, order, limitation or condition; and

(b) in the case of a person who is not an individual, directing its directors and officers to cause it to comply with or to cease contravening the provision, order, limitation or condition.

Application by an insurance council

412(3)      An application under subsection (1) in respect of a contravention of Part XV or a regulation made under that Part may be made by an insurance council established under section 396.1.

Consequential amendments, C.C.S.M. c. C225

39(1)       The Corporations Act is amended by this section.

39(2)       The following is added after subsection 3(2):

Non-application of certain provisions to insurers

3(3)        The following provisions do not apply to an insurer to which Part XXIII applies:

(a) section 97;

(b) subsections 100(1) and (3);

(c) subsections 105(2) to (4);

(d) subsections 109(3) and (4);

(e) subsection 140(2);

(f) section 157;

(g) subsection 162(6);

(h) subsection 165(1) to (3).

39(3)       The following provisions are repealed:

(a) subsections 287(1) and (2);

(b) section 302.

Coming into force — royal assent

40(1)        Subject to subsection (2), this Act comes into force on the day it receives royal assent.

Coming into force — proclamation

40(2)       Sections 2, 18, 20, 22, 25 and 30 and subsections 32(2) and 36(2) to (5) come into force on a day to be fixed by proclamation.