Canadian Insurance History

January 27, 2019 0 By c.boersma

There’s a lot of content here.  Basically a history of how we understand the  There is a lot of life content – in general there will be no questions on this, but it’s interesting none the less.  The matter of insurance was not specifically mentioned in the BNA Act (1867).  This should not be surprising given the first insurance of any kind was drafted 2 years ago and industry was not well established.  I’m sure by 1920 the federal government wished the writers here would’ve included insurance with banking.  By 1876 (less than 10 years after the confederation) Ontario had enacted their own insurance act and were being challenged under the new BNA act.

A very important piece that is bear worth repeating. The insurance reference case (with a name like that it should be important) meant that an insurance company incorporated in one province could carry on business in another province without being regulated by the federal Government (optional).  A company incorporated by a province with “provincial objects” was not restricted to carry on business in only once province but could operate in other provinces with permission from those provinces: A provincial company had the capacity but not the right to carry on its business is all provinces.  An insurance company is, therefore, usually incorporated federally if it wants to carry on business in more than one province.

Note: overall this is good decision as a small local provincially regulated New Brunswick Insurer could operate in PEI as well as long as it could get PEI’s permission to do so.


1865 – First life insurance act was enacted – lawful to for any person to insure his own life for the benefit of his wife and children

1867 – Canadian Federation along with the British North American Act [wiki]
1 .Regulation of trade and commerce
2. Raising of money by any mode or system of taxation
3. Banking
4. Bankruptcy and insolvency
5. Naturalization and aliens,
6. Criminal law
7. Peace, Order and Good Government

 This was an exhaustive list of federal responsibility (rights) and powers.  Anything outside of the above list was considered ultra-vires (acting or done beyond one’s legal power or authority).  Canada was originally designed to be heavily dependant on the provinces to make the majority of the regional decisions.  That has slowly changed over time, but the federal government is still bound by the above 7 rules.  BNA specified the provinces would: (1) incorporate companies with provincial objects, (2) determine property and civil rights in the province and (3) generally manage all matters of merely local (or private) nature in the province.

1872 – English Married Women’s Property Act of 1870 – life insurance benefits paid in trust

1876 – Citizen v. Parsons (constitutionality of Ontario Fire Insurance Policy Act including statutory conditions)
The Judicial Committee of the Privy Council decided that the legislation was intra-vires (within the powers).
It found that the federal authority to pass legislation to regulate trade and commerce did not include the power to regulate contracts of a particular business (insurance or otherwise) in a single province.

1910 – federal Insurance Act: required all insurance companies, except those incorporated by a province and operating solely within the province of incorporation, to obtain a license from the federal Government.

1916 – The Insurance Reference Case (AG Canada v. AG Alberta)
licensing provisions in the Insurance Act (1910) were ultra-vires as the authority to legislate the regulation of trade and commerce did not extend to the regulation by a licensing system of a particular trade in which Canadian would otherwise be free to engage in the provinces.

1917 – federal Insurance Act (1917): Made it an indictable offence for a person to solicit or accept and insurance risk except when acting on behalf of a company licensed under the federal Insurance Act (see point #6 in BNA)

1924 – Reference re: Reciprocal Insurance Legislation, AG Ontario v. Reciprocal Insurers
Amendments were invalid on the basis that in substance the amendments were an attempt to regulate the contract of insurance and business of insurance which were subjects not within federal jurisdiction (ie. They made up new criminal laws for the sole purpose of regulating insurance).

1932 – Re: the Insurance Act of Canada (1932)
The 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 (tax on policyholders).

1932 – Three Acts – in the hope the would not be found ultra-vires
Canadian and British Insurance Companies Act
the Foreign Insurance Companies Act
the Department of Insurance Act

1942 – Re: Section 16 of Special War Revenue Act (1943) – ultra vires (again – sigh!)

1974 – British Columbia created ICBC

1977 – Canadian Indemnity Company v. AG of BC.
Decision legislation was intra-vires

As a result of these constitutional cases, which have continually supported the position of the provincial legislatures, it might be expected that the federal Government would have little control over the insurance industry.  This, however, has not been the case and even today the federal authorities exercise considerable control over the field of insurance.