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Alberta Insurance Act Changes


February 1, 2012   by Delores Thorbourne


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A number of changes to the Insurance Act and related regulations in Alberta coming into effect July 2012, which will impact the handling of claims. Some of these changes are: changes to the limitation periods, notice of retainer by plaintiff’s counsel, disclosures of policy limits in motor vehicle accident claims, a rewrite of the statutory conditions for P & C contracts, a revised dispute resolution process, some new rules relating to conditions, terms and warranties in insurance contracts, court ordered advance payments to plaintiff’s in motor vehicle accidents and new rules for communication via electronic transactions.  

Limitation period      
(Fair Practices Amendment Regulation)

The current limitation for property and automobile policies in Alberta is one year. Effective Jul. 1, 2012, it will be two years, bringing it in line with the Limitations Act. The requirement will be that within 60 days of a notification of a claim, or five days from when a claim is denied, the insured and/or claimant will be advised in writing of the limitation. The exception to this is when a claimant is represented by counsel. This will only apply to claims which occur on or after Jul. 1, 2012.

Notice of retainer by plaintiff’s counsel and disclosure of policy limits in motor vehicle accident claims
(Fair Practices Amendment Regulation)

Currently plaintiff’s counsel is not required to advise they are retained in an action arising out of an automobile accident or that a Statement of Claim has been filed. The rules change for both parties, effective Jul. 1, 2012. Plaintiff’s counsel will be required to notify the defendant’s insurer, within 30 days of filing a Statement of Claim, that they act for the plaintiff and the defendant’s insurer will be required to reveal the existence of a policy of automobile insurance and disclose the policy limits. However, the judge or jury will not be privy to the information.

Revised dispute resolution process    
(Fair Practices Amendment Regulation)

Currently the Insurance Act in Alberta provides a process for arbitration, however it is not widely used. The new dispute resolution process will be amended to strengthen consumer protection.  

According to the Act, either the insured or the insurer may demand, in writing, the other’s participation in a dispute resolution process after proof of loss has been delivered to the insurer. Within seven days of receiving or giving a demand, the insured and the insurer must each appoint a dispute resolution representative. Within 15 days after their appointment, the two representatives must appoint an umpire. The representatives must determine the matters in dispute by agreement and, if they fail to agree, submit their differences to the umpire. The written determination of any two of them determines the matters.

Each party to the dispute resolution process must pay the representative whom the party appointed, and each party must bear equally the expense of the dispute resolution process and the umpire.

The dispute resolution process will be defined in sect. 519 of the Act. Once an insurer is aware of a dispute they must give written notice to the insured of the dispute resolution process within 10 days. Once a proof of loss is submitted by the insured the insurer has 70 days to respond. The written notice to the insured must contain a copy of sect. 519 of the Act.

The superintendent will be providing names of umpires to both insureds and insurers so that the process will be fair and less arduous than the court system.

Court ordered advance payments to plaintiffs in motor vehicle accidents  
(Fair Practices Amendment Regulation)

The court can order an insurer to make an advance payment to a plaintiff who is allegedly entitled to recover damages from a tortfeasor’s motor vehicle liability  policy when the plaintiff is  “unable to pay for the necessaries of life” or if the “payment is otherwise appropriate,” under sect. 581 effective Jul. 1, 2012. The court may make the order in advance of giving  judgment.

Rewrite of the statutory conditions for P & C contracts

Currently the Insurance Act of Alberta mandates that conditions are included in every fire insurance policy. Statutory conditions will be included in every multi-peril property policy, effective Jul. 1, 2012.    

A number of the current exclusions will remain unchanged, however there will be a few new ones added. These are biological, chemical or nuclear energy hazard, resulting from fire or explosion caused by terrorism and also fire or explosion damages caused by terrorism, but only in contracts providing coverage on commercial property.

New rules relating to conditions, terms and warranties in insurance contracts

Sect. 545 clarifies that if a contract contains a stipulation that may be material to the risk, the stipulation is not binding on the insured if it is held to be unjust or unreasonable by the court.

New rules for communication via electronic transactions

Sect. 547 will allow electronic transactions permitting insurers and insureds to use modern technology, effective Jul. 1, 2012. An exception, which would require a written transaction, would be to cancel an insurance policy or if a beneficiary to a life insurance policy is being made.  

The re-write of the Insurance Act in Alberta has been on-going since the mid-90’s and is intended to provide transparency, fairness, innovation and harmonization. For a complete copy of the Act and related regulations please refer to http://www.finance.alberta.ca/publications/insurance/alberta-insurance-act.html

Delores Thorbourne is a branch manager with Granite Claims Solutions in Edmonton.


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1 Comment » for Alberta Insurance Act Changes
  1. Brad Wood says:

    Insurance Companies should not be allowed to send a blank proof of loss, in accordance with the insurance act. Also having repairs done without restoration to original condition should be against the law. I pay for so called guaranteed replacement cost not partial repair with substandard materials.

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