McDonald

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ED_6C3
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270269
Filename:
McDonald
Updated:
2014-04-12 09:25:44
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6C
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Legal & Historical Cases
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  1. The British North America Act
    Took effect on July 1st, 1867 to create a new federal government for the Dominion of Canada. All the power previously exercised by the provinces is now distributed between federal Parliament and provincial Legislatures.
  2. Matters over which the federal Parliament has exclusive legislative authority:
    • regulation of trade and commerce
    • raising of money by any mode or system of taxation
    • banking
    • bankruptcy and insolvency 
    • naturalization of aliens
    • criminal law
  3. Exclusive legislative authority of the provincial government:
    • incorporation of companies with provincial objects
    • property and civil rights in the province
    • generally all matters of merely local or private nature in the province
  4. Citizens Insurance Co. v. Parsons
    • facts: in 1876, the Legislature of Ontario enacted The Fire Insurance Policy Act. A fire insurance company questioned the constitutional validity of this Act.
    • plaintiff argued that the act was ultra vires because the subject matter related to the regulation and trade of commerce which was exclusively within federal jurisdiction. It also argued that a province cannot legislate so as to deprive a federally incorporated company of its status and capacity
    • decision: act is intra vires and does not encroach upon the powers of federal Parliaments. The authority to regulate trade and commerce does not include the power to regulate the contracts in a single province. The Act treated all companies equally and did not affect their status or constitution.
  5. The Insurance Reference Case
    • aka The Attorney-General for Canada v. The Attorney-General for Alberta
    • facts: in 1910 the Parliament had enacted the federal Insurance Act, requiring all insurance companies operating in more than one province to obtain a federal license
    • decision: licensing provision was ultra vires. The authority to legislate for the regulation of trade and commerce does not extend to the regulation by a licensing system of a particular trade in which Canadians would otherwise be free to engage.
    • aftermath: government passed a new Insurance Act in 1917 and amended the Criminal Code making it an indictable offence for a person to solicit or accept insurance risk except when acting on behalf of a company licensed under the federal Insurance Act
    • note: it is still within the power of federal Parliament to require a foreign company to obtain a federal license prior to carrying on the business of insurance in Canada even if the business will only be carried on in a single province.
  6. Reference re Reciprocal Insurance Legislation
    Privy Council decided that the federal amendments to the Criminal Code were invalid on the basis that in substance the amendments were an attempt to regulate the contracts and business of insurance which were subjects not within the federal jurisdiction
  7. Re the Insurance Act of Canada
    • facts: federal government argued that under the federal Insurance Act a foreign or British insurer carrying on business in the province of Quebec and holding a license under the Quebec Insurance Act was required to comply with certain sections of the federal Insurance Act
    • decision: legislation is not within the authority of the federal Parliament
  8. Three acts of 1932
    • Canadian and British Insurance Companies Act, Foreign Insurance Companies Act, Department of Insurance Act
    • despite many areas deleted from the Insurance Act, Privy Council found that 3 sections of the CBIACA were ultra vires by attempting to regulate insurance within a province
  9. Canadian Indemnity Company, et al. v. Attorney-General of British Columbia
    • facts: in 1974, a BC law created a compulsory auto insurance plan and refused to renew the licenses of automobile insurance companies.
    • plaintiffs argued that matter was properly within exclusive federal jurisdiction, and that it interfered with the status and capacity of a federally incorporated company
    • decision: Supreme Court of Canada found the legislation intra vires
  10. Federal Regulation of Insurance
    Federally regulated insurers underwrite approximately 90% of life insurance in force in Canada.
  11. Federal legislation around financial soundness:
    • conditions that must be satisfied for a company to enter into the business of insurance
    • reports on the financial condition that must be submitted at regular intervals
    • control over the investments, calculation of asset values and policy reserves
    • protecting the interests of policyholders in other areas
  12. Provincial Regulation of Insurance - Contract matters
    • contents of the insurance policy
    • insurable interest
    • payments of premiums
    • duty to disclose
    • incontestability
    • reinstatement
    • designation of beneficiaries
    • insured dealing with the contract
  13. Provincial Regulation of Insurance - other matters
    • licensing of agents
    • unfair practices
    • claims procedures
  14. Insurance Companies Act
    • allows insurers to grow stronger and better be able to compete in the international market by:
    • broadening lending and investment powers
    • giving insurers more power to diversify 
    • allowing flexibility to raise money by issuing shares or borrowing
  15. Considerations before incorporating a company
    • nature and sufficiency of the financial resources of the applicants
    • soundness of the business plan
    • business record and experience of the applicants
    • character, competence and experience of those who will operate the company
    • whether the incorporation will be in the best interests of the Canadian financial system
    • if foreign subsidiary, Canadian insurer will be treated as favourably
  16. Commencement order
    • has to be issued before a company can carry on the business of life insurance
    • stock insurance with shareholders must have start-up capital of at least $10M
    • specifies classes of insurance the company will be permitted to insure
    • once issued, it’s valid for an indefinite period but can be amended or revoked
  17. Conditions for foreign companies to be incorporated
    • must be capable of contributing to the financial system in Canada
    • Canadian insurers should be treated as favourably as in the principal jurisdiction
    • must appoint a natural person who is ordinarily resident of Canada to be its Chief Agent
    • must appoint an auditor and an actuary for its insurance business in Canada
    • must have prescribed value vested in trust, in a trust company approved by Superintendent, as opposed to depositing securities with the Receiver General (former act)
    • must maintain an adequate margin of assets in Canada over liabilities in Canada

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