Regulation (February 01, 2010)

IBC DENOUNCES PROPOSED PROHIBITION ON EXCLUDING FIRE CLAIMS FOLLOWING TERRORIST ATTACKS, EARTHQUAKES:

Canada’s property and casualty insurance industry is “strongly cautioning” the Alberta government to scrap a proposal that would prohibit insurers from excluding claims for fire damage following terrorist or earthquake events.

Primary insurers would run a higher risk of insolvency if the government implements its recommended change to the province’s Insurance Act, the Insurance Bureau of Canada (IBC) and Reinsurance Research Council of Canada (RRC) said in a consultation paper submitted to the government.

“In the absence of a government backstop [which would limit the exposure of private insurance companies to damage arising from terror-ist events], the proposed regulation would severely challenge insurer solvency at the very time when insurance resources are most needed by the community,” the IBC/RCC paper says.

“In light of this, the proposed regulation ultimately runs counter to the intention of the Insurance Act and presumably the passing of such a regulation in the first place, [which is] to provide certainty that Albertans will be compensated in the unfortunate event that a major terrorist attack occurs.”