The Canadian Insurance System

Canada today closely resembles the United States in its market-oriented economy, pattern of production, and high living standards, through it differs in many other respects such as its economy, social, political, legal, and healthcare systems; natural disasters; and claims philosophy.

Insurers and government closely cooperate to ensure effective running of the Canadian Insurance system. The conduct of the general insurance in Canada is supervised by both provincial and federal governments. The federal Office of the Superintendent of Financial Institutions is concerned primarily with the solvency and stability of registered insurance companies. The key body governing the activities of Property and Casualty insurers is the Office of the Superintendent of Financial Institutions Act and the Insurance Companies Act.

Premium Payment

Premiums must be paid usually 90 days after inception of the risk. If an insured does not pay it, insurance companies have 15 additional days to effect cancellation of the policy.

Premiums are paid to the Canadian broker. Then the net premium is remitted by him after deduction of commission to the company. Premium payments are tax deductible because it will be accounted for as an expense Insurance property and casualty premiums are paid including taxes for fire departments, boards, bureaus, so on. The premium taxes average 3.5 percent to 4.0 percent. The sales tax is payable in specific provinces and is collected and paid by the broker or by a direct writer for the applicable coverage.

Non-Admitted Coverage.

Non-Admitted property and casualty insurance solutions are allowed in Canada being subject to a non-admittance premium tax which is levied against the total policy premium varying accordingly provincial jurisdiction. Non-admitted faxes range from 10 to 30 percent.

Reinsurance

The top five of 28 active reinsurers in Canada are Swiss Reinsurance Group, Munich Reinsurance Group, and Employers Reinsurance Corp., accounting for 48 percent of the total premium.

A minimum of 25 percent is locally retained by insurance companies on a portfolio basis being limited to a maximum retention for each company based on their capital and surplus.

Claims

The handling of claims in Canada, which is a large country with a population concentrated in a few centers, can be difficult. For this reason a large proportion of claims are handled by third party adjusters although many of the largest insurers have their own staff adjusters.

The largest firms in Canada offer services in most centers of country and a worldwide network for claims handling abroad.

There are also numerous complementary small adjusting firms offering services in local areas.

Canada is very similar to the United States in claims handling but the legal systems differ. Canada is actually more closely related to the British Legal System. Claim settlements are much lower in Canada being less litigious then the United States.

A cap on nonpecuniary or general damage awards for injuries in Canada is $265,000. Awards over $ 1 million are not frequent even when pecuniary damages are added to the general damages.

Canadian legal costs are easier to control than in the United States.

Implement case management procedures are widely used to speed up litigation and to keep legal fees at a reasonable level.

Canada has a national health care system with free access to medical treatments. In comparison, the United States due to the high cost of insurance premiums has many citizens without coverage. This can have a great impact on whether someone decides to take legal action on recovering his expenses.

All these factors keep claims in Canada at a level that is much less costly to control.