Alberta followed British Columbia’s lead in 2022 when a new regulatory framework became effective allowing companies to set up captive insurance companies in that province. “Captives provide insurance coverage for the entities that create and own them. Captives may be set up in any sector as an alternative to using a traditional insurer,” states Alberta’s Minister of Finance, Nate Horner. “Alberta’s captive insurers are licensed and supervised by Alberta’s Superintendent of Insurance.”
Since the new regulatory framework became effective July 1, 2022, the province has licensed 17 captive insurers, according to the minister who also took the opportunity in announcing the development, to tout the province’s six-week turnaround time for licensing approvals. “Alberta’s captive legislation also welcomes captive insurance companies that have been established in the United States or offshore and wish to relocate to Alberta,” the province’s information for captive insurers states.
The number of licensed companies in Alberta today comes close to rivalling the number of companies currently registered in British Columbia. In that province, the Insurance (Captive Company) Act was enacted in 1987 permitting captive insurance companies to register in the province. Despite this lengthy history, today there are just 19 captive insurance companies registered in British Columbia.
“Under a captive arrangement, a business owner forms an insurance company to fund losses, using their own risk capital rather than paying to use the capital of commercial insurers,” says ratings agency, AM Best. “Alberta lawmakers in late 2021 approved a measure to allow the formation of captive insurance companies, making the province the second in Canada to allow the creation of the alternative risk-sharing arrangements.”
