Alberta Regulation 87/2023, formally known as the Adverse Contractual Action Amendment Regulation, revises the existing Adverse Contractual Action Regulation (AR 28/2015) under the Insurance Act. This new regulation introduces significant changes to the way insurance companies manage adverse actions related to automobile insurance policies.

The regulation updates Section 1 by modifying the criteria under which insurers can take adverse contractual actions, such as refusing to issue, update, or renew an insurance policy. Specifically, the new amendments replace the previous clauses (a)(iii) and (a)(iv) with new provisions. These provisions allow insurers to act adversely if there is any misrepresentation in the information provided for obtaining, updating, or renewing an automobile insurance policy, if there is a failure to submit required information on the application form, or if the applicant has a history of fraudulent activity related to automobile insurance policies, with the most recent instance occurring less than seven years before the policy request. Additionally, a new clause (a.1) permits insurers to take adverse actions if they reasonably believe that the insured or applicant intends to use the insurance policy or vehicle for fraudulent purposes.

Another addition is subsection (2.1), which clarifies that an individual’s status as a bankrupt or being in a consumer proposal under the Bankruptcy and Insolvency Act is not, by itself, sufficient to conclude that the individual will use the insurance policy or vehicle fraudulently. Additional evidence of fraudulent intent or activity is required to substantiate such a belief.

The regulation also extends the transitional provisions outlined in Section 2, pushing the implementation deadline from April 30, 2024, to April 30, 2029. This extension allows more time for both insurers and policyholders to adjust to the new provisions.

The new regulation refines the conditions for adverse actions against automobile insurance policies, clarifies the implications of bankruptcy in fraud assessments, and extends the adjustment period for implementing these changes. These updates aim to improve the regulation’s clarity and effectiveness in managing and preventing fraudulent insurance activities.

Source: Alberta (87/2023) April 29, 2023