PACCIC has agreed to work with the Insurance Brokers Association of Canada (IBAC) to distribute appropriate information to brokers as quickly as possible. This information will also be posted on the PACICC and IBAC web sites.
Facts that brokers should know before the next insolvency are:
When the insurance regulator decides it is in the public interest that an insurer is no longer viable and should be shut down, they go to court and ask a judge to issue a Court Order under the Winding-Up and Restructuring Act (WURA). This is the law that governs the insolvency process.
Although the insurer is no longer in business the Court Order will stipulate, among other things, that all existing insurance policies are to remain in force for a specified period. This is normally 45 days from the date of the court date, but this will be up to the Court to decide. This is the window provided for brokers to find alternative insurance coverage for their clients.
The Court will also appoint a liquidator to manage the run-off of the insurer. This liquidator is responsible for managing the insurance company and any outstanding claims payments must be approved by this liquidator before funds can be forwarded to consumers. PACICC's role is to provide the liquidator the financial resources required to pay all approved claims to a maximum of $250,000 (auto and commercial) and $300,000 (personal property). While there might be some initial delay in the resumption of claim payments, the liquidator and PACICC will move as quickly as possible to ensure delays are kept to a minimum.
All new claims and enquiries on outstanding claims are directed to the liquidator.
Under the WURA, any unearned premiums are property of the estate. Brokers should treat all unearned premiums as trust funds and segregate them from their own funds. The liquidator will issue unearned premiums refunds in co-operation with the broker. PACICC's role is to provide funds necessary to return 70% of unearned premium to consumers up to a maximum of $700.
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What Brokers Need to Know