If passed, the Captive Insurance Companies Act will create options for businesses facing challenges finding insurance in the current market. This includes Alberta’s key economic sectors such as energy, agriculture, forestry and manufacturing, and many others.
Captive insurance is an ‘in-house’ insurance solution where the insurer is wholly owned by those it insures. This alternative coverage helps businesses when insurance availability is limited and prices are high.
“Our goal is to help Alberta businesses insure their risks. Tight insurance supply globally is making it difficult for commercial entities in Alberta to find adequate insurance at a reasonable price. Enabling captive insurance is an important step to attract businesses and insurance capacity to the province. This will help increase options for insurance business, while helping sustain economic activity and jobs.”
Alberta is only the second province in Canada to allow captive insurance companies. This means captives will be able to operate closer to a company’s base operations. Other benefits of setting up a captive in Alberta include:
- the province’s highly competitive corporate tax rate
- our reputable and responsive regulatory environment
- a highly skilled and diversified financial services sector
“By introducing captive legislation, Alberta is initiating a new domestic option that will enable Alberta-based companies to increase competitiveness and stakeholder protections, attract inward insurance and investable capital and assets into the province, and initiate new professional services. This change will make Alberta a world-class insurance and reinsurance hub.”
“Our members include over 90 per cent of the franchised new vehicle and heavy truck dealerships in Alberta. We help keep Alberta moving. To have an option right here in Alberta to insure our members’ businesses is just good business.”
“Alberta’s forest industry is home to 40,000 jobs in the province. Developing another option for insuring risks, including fire damage, will support our forestry job creators by allowing them more choices and flexibility to help keep their businesses running when unforeseen events occur.”
“Enabling self-insurance will make it easier to do business and will undoubtedly attract new investment to the province. Experience with the captive legislation in British Columbia has been positive. I look forward to seeing a broad option here at home to help many associations and businesses.”
Under the proposed legislation, Alberta-licensed captives will be allowed to insure the risks of:
- a single entity, such as a company
- members of an association, such as an industry group
- a knowledgeable client with complex insurance needs, such as a project financier
Captive insurance companies are subject to regulatory oversight. Rules ensuring sound financial and corporate governance of licensed captive insurers will be outlined in regulations that are expected to be announced in 2022.
Enabling captive insurance in Alberta is part of the government’s efforts to expand and diversify the financial services sector of the economy. The government has already established a Financial Services Concierge, which complements Invest Alberta’s work to engage the world and provide high-end tailored support while knocking down barriers to investment attraction. The concierge saves job creators time and money by providing them a ‘one-stop shop’ in government to guide them through our province’s regulatory environment, providing all the information needed to operate in Alberta’s financial sector.
The Financial Services Concierge, along with expanded insurance options, makes it easier for companies to get a start in Alberta and supports job creation, innovation and economic diversification.
Quick facts
- Captives can be set up by entities in any sector of the economy seeking alternative insurance coverage.
- British Columbia is Canada’s only jurisdiction that currently allows captives.
- Globally, about 70 jurisdictions have some form of captive legislation.
- Alberta’s proposed legislation was developed using best practices from British Columbia, Vermont, Delaware, Bermuda, Barbados and other successful global captive domiciles.
