Third Session, 46th

General Assembly

59 Elizabeth II,

BILL 28

AN ACT TO AMEND THE INSURANCE

COMPANIES ACT NO. 3

Received and Read the First Time ...................................................................................................

Second Reading .................................................................................................................................

Committee ............................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE KEVIN

O'BRIEN

Minister of

Government Services

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Insurance

Companies Act to

provide that appeals of

administrative decisions be made to the Financial Services Appeal Board instead

of to the minister;

revise the current

section 77

of the Act relating to the examination of insurers to ensure compliance with

the Act;

add provisions to the Act to

allow the superintendent to appoint a person to conduct an investigation under

the Act;

provide authority for a judge

to issue a warrant authorizing the superintendent or a person appointed by the

superintendent to enter and search a building, receptacle or place, including a

private residence, and to seize documents or other items;

provide authority for a judge

to issue a production order requiring a person, other than a person who is the

subject of an investigation, to produce documents in his or her possession

concerning a violation of the Act;

provide authority for a person

conducting an investigation or examination to summon and enforce the attendance

of a person and to compel him or her to testify under oath or otherwise, and to

summon and compel a person or company to produce documents and other things;

where necessary for the administration

of the Act, provide authority for the superintendent to issue an order to preserve

property of a person or company until the order is lifted;

provide authority for a judge

to order compensation or restitution where the Act has been violated and a

person has suffered damages;

make it an offence to obstruct

or interfere with an investigator or examiner in the performance of his or her

duty;

set a 2 year limitation period

for prosecutions under the Act; and

consolidate penalty provisions

and increase the penalties that the court may impose on persons who violate the

Act.

A BILL

AN ACT TO AMEND THE INSURANCE COMPANIES ACT

NO. 3

Analysis

S.25 R&S

Appeals

2. S.71 Amdt.

Information to be filed in court

3. S.77 R&S

Examination of insurers

Ss.77.1 to 77.5 Added

77.1 Investigation order

77.2 Powers

77.3 Search and seizure

with warrant

77.4 Production order

77.5 Interim preservation of

property

S.81 Amdt.

Record of fire premium income and losses

6. S.108 R&S

108. Offence

108.1 Offence

108.2 Limitation period

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

RSNL1990 cI-10

as amended

Section 25 of the Insurance Companies Act is repealed and the following substituted:

Appeals

25. An

insurer whose licence has been suspended or cancelled under this Act or whose

application for a licence has been refused under this Act may, in accordance

with the Financial Services Appeal Board

Act, appeal that suspension, cancellation or refusal to the board

established under that Act.

2. Subsection 71(3) of the Act is repealed and the

following substituted:

(3) A liquidator who refuses or neglects to

provide information under subsection (2) is guilty of an offence and may, in

addition, be dismissed or removed.

Section 77 of the Act is repealed and the

following substituted:

Examination of

insurers

(1) The

superintendent, or a person appointed by the superintendent for the purpose, may

conduct an examination at the head office or chief office in the province of an

insurer incorporated under the laws of the province and the superintendent or a

person appointed by the superintendent may examine the statements of the

condition and affairs of each insurer incorporated under the laws of the

province filed under this Act, and make those inquiries that are necessary to

ascertain its condition and ability to provide for the payment of its contracts

as they mature and whether or not it has complied with all the provisions of

this Act applicable to its transactions.

(2) Where the head office of an insurer is not in

the province and the superintendent considers it necessary to make a further

examination into its affairs, the superintendent, or a person appointed by the

superintendent for the purpose, may visit the head office of the insurer to

examine its affairs and to make those further inquiries that the superintendent

considers appropriate.

(3) The officers and agents of an insurer shall

open the books and records of the insurer for the examination of the

superintendent, or a person appointed by the superintendent for the purpose, and

shall otherwise facilitate the examination.

(4) In order to facilitate the examination of the

books and records of an insurer, the insurer may be required by the

superintendent, or a person appointed by the superintendent for the purpose, to

produce the books and records at the head office or chief office in the

province of the insurer or at another convenient place that the superintendent

or the person directs.

(5) For the purpose of an examination under this

section, the superintendent, or a person appointed by the superintendent for

the purpose, may examine documents or other things, whether they are in the

possession or control of the insurer or another person or company.

4. The Act is amended by adding immediately after

section 77 the following:

Investigation

order

77.1 The

superintendent may, by order, appoint a person to conduct an investigation that

the superintendent considers necessary for the administration of this Act.

Powers

77.2

(1) A

person conducting an examination under

section 77 or an investigation under

section 77.1 has the same power to summon and enforce the attendance of a

person and to compel him or her to testify on oath or otherwise, and to summon

and compel a person or company to produce documents and other things, that is

vested in a judge of the Trial Division, and the refusal of the person to

attend or to answer questions, or of a person or company to produce documents

or other things that are in his, her or its custody or possession makes the person

or company liable to be committed for contempt by a judge of the Trial Division

as if in breach of an order of that court.

(2) A person or company giving evidence under

subsection (1) may be represented by counsel and may claim a privilege to which

the person or company is entitled.

Search and

seizure with warrant

77.3

(1) Where

the superintendent, or a person appointed by the superintendent under

section 77

or 77.1, believes on reasonable grounds that a person is contravening or has

contravened this Act, the superintendent, or person appointed by the

superintendent may, with a warrant issued under subsection (2), enter a premises

and seize anything that may be there that may provide evidence of the contravention.

(2) A judge of the Provincial Court or the Trial

Division who is satisfied on oath or affirmation that there are reasonable

grounds for believing that a contravention of this Act has occurred, or is occurring,

may issue a warrant authorizing the person named in the warrant to enter

premises, including a dwelling house, and to

(

a) search;

(

b) examine the contents of the premises and make

those inquires that the investigator considers necessary; and

(

c) copy, extract, photograph, video, seize and

take away evidence, books and records

for the purpose of investigating the

suspected contravention.

(3) A person present at a premises referred to in

this

section shall not obstruct the person named in the warrant in its execution.

Production order

77.4

(1) A

judge of the Provincial Court or a judge of the Trial Division may order a

person, other than a person who is the subject of an investigation,

(

a) to produce a document or a copy of a document,

certified by affidavit to be a true copy, or to produce data; or

(

b) to prepare a document based on a document or

data already in existence and to produce it.

(2) An order referred to in subsection (1) shall

require the document or data to be produced within the time, at the place and

in the form specified and to be given to the person making the investigation.

(3) A judge may make an order referred to in

subsection (1) where he or she is satisfied on the basis of an application made

in writing on oath or affirmation and without notice that there are reasonable

grounds to believe that

(

a) a person has contravened or is contravening

this Act or the regulations or is suspected to have contravened this Act or the

regulations;

(

b) the document or data will provide evidence respecting

a contravention or suspected contravention of this Act or the regulations; and

(

c) the person who is subject to the order has

possession or control of the document or data.

(4) An order referred to in subsection (1) may

communication between a lawyer and his or her client.

(5) The order referred to in subsection (1) may be

revoked, renewed or varied.

(6) A copy of a document produced under this

section, on proof by affidavit that it is a true copy, is admissible in

evidence in proceedings under this Act and has the same probative force as the

original document would have if it had been proved in the ordinary way.

(7) Copies of documents produced under this

section are not required to be returned to the person who provided them.

Interim

preservation of property

77.5

(1) Where the superintendent considers it necessary

for the administration of this Act, the superintendent may direct a person or

company having on deposit or under its control or for safekeeping funds or

property of a person or company, to retain those funds or property and to hold it

until the superintendent in writing revokes the direction or consents to

release a particular fund or property from the direction, or until a judge of the

Trial Division orders otherwise.

(2) A direction under subsection (1) that names a

bank or other financial institution shall apply only to a branch of the bank or

other financial institution identified in the direction.

(3) As soon as practicable,

and not later than 7 days after a direction is issued under subsection (1), the

superintendent shall apply to a judge of the Trial Division to continue the direction

or for another order that the judge considers appropriate.

(4) A direction under subsection (1) may be made

without notice but, in that event, copies of the direction shall be sent

immediately by means that the superintendent may determine to all persons and

companies named in the direction.

5. Subsection 81(4) of the Act is repealed and the

following substituted:

(4) An insurer and the principal officer within

the province of an insurer that contravenes this

section is guilty of an

offence.

Section 108 of the Act is repealed and the

following substituted:

Offence

(1) A

person who contravenes this Act or the regulations is guilty of an offence and

liable on

summary conviction to a penalty of not more than $1,000,000 or to a

period of imprisonment of not more than 2 years, or to both a fine and imprisonment.

(2) A person who obstructs or interferes with an

investigator or examiner in the course of a lawful investigation or examination

under this Act or the regulations is guilty of an offence and is liable on

summary

conviction to a penalty of not more than $1,000,000 or to a period of

imprisonment of not more than 2 years, or to both a fine and imprisonment.

(3) A penalty imposed under this Act shall be paid

into the Consolidated Revenue Fund.

(4) Where a person is convicted of an offence

under this Act or the regulations, the court making the conviction may, in

addition to another penalty, order the person convicted to pay compensation or

restitution.

Offence

108.1

(1) An

insurer who fails to comply with

section 5.1 is guilty of an offence and liable

on

summary conviction to a fine of not less than $100,000 and not more than

$1,000,000.

(2) An insurer who fails to comply with a

requirement of

section 96.1 or 96.2 is guilty of an offence and liable on

summary conviction

(

a) for a first conviction to a fine of not less

than $25,000 and not more than $1,000,000; and

(

b) for a second or subsequent conviction, to a

fine of not less than $50,000 and not more than $1,000,000.

(3) In subsection (2), "insurer"

includes the Facility Association.

(4) Where a person is convicted of an offence

under this section, the court making the conviction may, in addition to another

penalty, order the person convicted to pay compensation or make restitution.

Limitation period

108.2 A

prosecution under this Act and the regulations shall not be started later than 2

years from the date the offence was discovered by the superintendent.

Earl G. Tucker, Queen's Printer