Following a regulatory statement update issued by the British Columbia Financial Services Authority (BCFSA) concerning warranty insurance, vehicle warranty insurance and automobile insurance in the province, issued back in April 2024, the regulator has been busy entering into undertakings with companies which sold warranty contracts in various forms without being authorized to do so as required under the province’s Financial Institutions Act (FIA).
The latest, an undertaking signed by Mazda Canada Inc., mirrors previous decisions where the companies in question do not admit they breached the FIA, but that they accept the province’s Superintendent is of the opinion that the contracts in question were insurance products.
According to the FIA’s administrative penalties regulation, the maximum penalty the regulator can assess is $50,000 for contraventions of the relevant sections.
Investigations into each of the companies were initiated by insurer examinations, inquiries and open-source marketplace research into motor vehicle original equipment manufacturers and businesses involved in the supply of insurance products incidental to motor vehicle sales. “Preliminary review of the available information suggested the businesses identified in the decisions were supplying insurance products as defined in the classes of insurance regulation,” the BCFSA said in a statement to the Insurance Portal following the release of the Mazda decision.
The April 25, 2024 statement, 24-008 Product Warranty, Vehicle Warranty and Automobile Insurance, sets out the regulator’s position regarding the underwriting, marketing and sales of the products – that is, that product warranties and vehicle warranties are considered insurance. “Businesses have specific compliance obligations when supplying them in BC,” they write. “The requirements in the FIA predate the statement.”
